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HomeMy WebLinkAbout04-016 HaferHonorable Barbara Hafer, State Treasurer Commonwealth of Pennsylvania Office of the Treasurer 129 Finance Building Harrisburg, PA 17120 Re: Former Public Official /Public Employee; Section 1103(g); Executive -Level State Employee; Section 1103(i); State Treasurer; Commonwealth of Pennsylvania; Treasury Department; Member, Boards /Commissions; Consulting Services; Public Sector Clients. Dear Ms. Hafer: OPINION OF THE COMMISSION Before: Louis W. Fryman, Chair John J. Bolger, Vice Chair Daneen E. Reese Donald M. McCurdy Michael Healey Raquel K. Bergen DATE DECIDED: 11/29/04 DATE MAILED: 12/08/04 04 -016 This responds to your letter of October 6, 2004, by which you requested advice from the State Ethics Commission. I. ISSUE: Whether the Public Official and Employee Ethics Act ( "Ethics Act ") would impose any restrictions upon a former Pennsylvania State Treasurer with regard to providing consulting services to clients including but not limited to the Commonwealth of Pennsylvania, departments and agencies of the Commonwealth of Pennsylvania, states, municipalities, and other public sector entities, but specifically excluding the Pennsylvania Treasury /Treasury Department and all boards and commissions on which she served as State Treasurer. II. FACTUAL BASIS FOR DETERMINATION: As State Treasurer of the Commonwealth of Pennsylvania (also referred to herein as the "Commonwealth "), you request an advisory opinion from this Commission regarding the restrictions of the Ethics Act that will apply to you following the completion of your second term as State Treasurer. You have submitted facts that may be fairly summarized as follows. Hafer, 04 -016 December 8, 2004 Page 2 In your current capacity as State Treasurer, you oversee the operation of the Commonwealth's Treasury/Treasury Department. Additionally, you serve on the following boards and commissions, hereinafter collectively referred to as the "Boards and Commissions ": the Board of Finance and Revenue, the Board of Commissioners of Public Grounds and Buildings, the State Employees' Retirement System, the Public School Employees' Retirement System, the Pennsylvania Municipal Retirement Board, the State Public School Building Authority, the Pennsylvania Higher Educational Facilities Authority, the Pennsylvania Housing Finance Agency, the Delaware River Port Authority ("DRPA'), the Port Authority Transit Corp., the State Workers' Insurance Fund Board, the Mine Subsidence Insurance Board, and the Tuition Account Program Advisory Board. We take administrative notice that DRPA is a bi -state agency, having been formed by an interstate compact between Pennsylvania and New Jersey, and that the Port Authority Transit Corp. is a subsidiary of DRPA. We take administrative notice of the statutory duties of the Tuition Account Program Advisory Board: § 6901.304. Tuition Account Program Advisory Board (d) DUTIES. -- The board shall consider, study and review the work of the Tuition Account Programs Bureau, shall advise the . . . [Treasury Department of the Commonwealth] on request and shall make recommendations on its own initiative for the improvement of the tuition account programs. The board shall report annually to the Governor and to the General Assembly, and may make such interim reports as are deemed advisable. 24 P.S. § 6901.304(d). You state that upon the expiration of your current term of office as State Treasurer, you will not hold any elected public office. You plan, in your private capacity, to provide consulting services either as a sole proprietor or through a business entity. You state that your initial client base could include public sector clients, including the Commonwealth and departments and agencies of the Commonwealth, as well as states, municipalities, and departments within states and municipalities such as state or municipal treasuries. However, your initial client base would specifically exclude the Pennsylvania Treasury/Treasury Department and the aforesaid Boards and Commissions on which you have served as State Treasurer. Your consulting work would involve personally consulting with clients as well as employing or working with other professionals. The consulting services that you would provide could include, but would not be limited to, assisting clients with the following: the implementation of best practices for state or municipal investments and management of public dollars, the creation of innovative investment programs and loan programs, the development of fraud prevention programs, the formation of citizen advocacy programs and services, and the development of referral services for local businesses. Such consulting services could also include assisting clients in the efficient operation of state or municipal departments, in the consideration of effective department structure, and in the development of web site tools to facilitate communication between the public and private sector. You provide the following assurances to this Commission: • You will not use your position as State Treasurer or emoluments of public office or confidential information that you gained therein for your private pecuniary gain, for the private pecuniary gain of a member of your Hafer, 04 -016 December 8, 2004 Page 3 immediate family, or the pecuniary gain of any business entity you may create to perform the consulting services or of any personnel of same. • You will not engage in the performance of the consulting services until such time as your current term as State Treasurer ends. • You will not represent any person, with promised or actual compensation, on any matter before the Treasury or any of its departments (including any Treasury program or initiative) or any of the Boards and Commissions for one year after your term as State Treasurer expires. • You will not be employed by, receive compensation from, assist or act in a representative capacity for a business or corporation that you actively participated in recruiting to the Commonwealth or that you actively participated in inducing to open a new plant, facility, or branch in the Commonwealth, or that you actively participated in inducing to expand an existent plant or facility within the Commonwealth, for a period of two years following the expiration of your term as State Treasurer, to the extent such activity is prohibited by the Ethics Act. Based upon all of the above, you ask whether the Ethics Act would impose any restrictions upon you as a former Pennsylvania State Treasurer in providing consulting services to clients including but not limited to the Commonwealth, departments and agencies of the Commonwealth, states, municipalities, and other public sector entities, but specifically excluding the Pennsylvania Treasury/Treasury Department and the Boards and Commissions on which you served as State Treasurer. By letter dated November 8, 2004, you were notified of the date, time and location of the public meeting at which your request would be considered. III. DISCUSSION: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requestor based upon the facts that the requestor has submitted. In issuing the advisory based upon the facts that the requestor has submitted, this Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts that have not been submitted. It is the burden of the requestor to truthfully disclose all of the material facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a defense to the extent the requestor has truthfully disclosed all of the material facts. The term "public official" is defined in the Ethics Act as follows: § 1102. Definitions "Public official." Any person elected by the public or elected or appointed by a governmental body or an appointed official in the executive, legislative or judicial branch of this Commonwealth or any political subdivision thereof, provided that it shall not include members of advisory boards that have no authority to expend public funds other than reimbursement for personal expense or to otherwise exercise the power of the State or any political subdivision thereof. 65 Pa.C.S. § 1102. The regulations of the State Ethics Commission similarly define the term "public official" and set forth additional criteria used to determine whether the advisory board exception applies. 51 Pa. Code § 11.1. Hafer, 04 -016 December 8, 2004 Page 4 The term "Executive -level State employee" is defined in the Ethics Act as follows: § 1102. Definitions "Executive -level State employee." The Governor, Lieutenant Governor, cabinet members, deputy secretaries, the Governor's office staff, any State employee with discretionary powers which may affect the outcome of a State agency's decision in relation to a private corporation or business or any employee who by virtue of his job function could influence the outcome of such a decision. 65 Pa.C.S. § 1102. As State Treasurer of the Commonwealth of Pennsylvania, you would be considered both a public official and an "executive -level State employee" subject to the Ethics Act and the Regulations of the State Ethics Commission. See, 65 Pa.C.S. § 1102; 51 Pa. Code § 11.1. Likewise, for most of the aforesaid Boards and Commissions, you would in your capacity as a Board Member be considered a public official subject to the Ethics Act. However, you would not be considered a public official in your capacity as a Board Member of DRPA or of its subsidiary, the Port Authority Transit Corp., for reasons cited by the Commonwealth Court of Pennsylvania in Delaware River Port Authority v. Pennsylvania State Ethics Commission, 585 A.2d 587 (Pa. Cmwlth. 1991). Additionally, you would not be considered a public official in your capacity as a Member of the Tuition Account Program Advisory Board to the extent that Board is purely advisory and lacks authority to expend public funds other than reimbursement for personal expense or to otherwise exercise the power of the State. See, 24 P.S. § 6901.304(d). Upon termination of public service, you would become a former public official and a former executive -level State employee subject to the restrictions of Section 1103(g) and Section 1103(i) of the Ethics Act. Section 1103(i) restricts former executive -level State employees as follows: Section 1103. Restricted activities (i) Former executive -level employee. - -No former executive -level State employee may for a period of two years from the time that he terminates employment with this Commonwealth be employed by, receive compensation from, assist or act in a representative capacity for a business or corporation that he actively participated in recruiting to this Commonwealth or that he actively participated in inducing to open a new plant, facility or branch in this Commonwealth or that he actively participated in inducing to expand an existent plant or facility within this Commonwealth, provided that the above prohibition shall be invoked only when the recruitment or inducement is accomplished by a grant or loan of money or a promise of a grant or loan of money from the Commonwealth to the business or corporation recruited or induced to expand. 65 Pa.C.S. § 1103(i). Section 1103(i) restricts the ability of a former executive -level State employee to accept employment or otherwise engage in business relationships following termination Hafer, 04 -016 December 8, 2004 Page 5 of State service, under certain narrow conditions. The restrictions of Section 1103(i) apply even where the business relationship is indirect, such as where the business in question is a client of a new employer, rather than the new employer itself. See, Confidential Opinion, 94 -011. However, Section 1103(i) would not restrict you from being employed by, receiving compensation from, assisting, or acting in a representative capacity for a new employer or client(s) provided and conditioned upon the assumptions that you did not actively participate in recruiting the new employer / client(s) to Pennsylvania, and that you did not actively participate in inducing the new employer /client(s) to open or expand a plant, facility, or branch in Pennsylvania, through a grant or loan of money or a promise of a grant or loan of money from the Commonwealth of Pennsylvania to the new employer /client(s). Unlike Section 1103(i), Section 1103(g) does not prohibit a former public official /public employee from accepting a position of employment. However, it does restrict the former public official /public employee with regard to "representing" a "person" before the governmental body with which he has been associated ": Section 1103. Restricted activities (g) Former official or employee. - -No former public official or public employee shall represent a person, with promised or actual compensation, on any matter before the governmental body with which he has been associated for one year after he leaves that body. 65 Pa.C.S. § 1103(g) (Emphasis added). The terms "represent," "person," and "governmental body with which a public official or public employee is or has been associated" are specifically defined in the Ethics Act as follows: Section 1102. Definitions "Represent." To act on behalf of any other person in any activity which includes, but is not limited to, the following: personal appearances, negotiations, lobbying and submitting bid or contract proposals which are signed by or contain the name of a former public official or public employee. "Person." A business, governmental body, individual, corporation, union, association, firm, partnership, committee, club or other organization or group of persons. "Governmental body with which a public official or public employee is or has been associated." The governmental body within State government or a political subdivision by which the public official or employee is or has been employed or to which the public official or employee is or has been appointed or elected and subdivisions and offices within that governmental body. 65 Pa.C.S. § 1102. The term "Person" is very broadly defined. It includes, inter alia, corporations and other businesses. It also includes the former public employee himself, Confidential Opinion 93 -005, as well as a new governmental employer. Ledebur, Opinion 95 -007. Hafer, 04 -016 December 8, 2004 Page 6 The term "representation" is also broadly defined to prohibit acting on behalf of any person in any activity. Examples of prohibited representation include: (1) personal appearances before the former governmental body or bodies; (2) attempts to influence; (3) submission of bid or contract proposals which are signed by or contain the name of the former public official /employee; (4) participating in any matters before the former governmental body as to acting on behalf of a person; and (5) lobbying. Popovich, Opinion 89 -005. Listing one's name as the person who will provide technical assistance on a proposal, document, or bid, if submitted to or reviewed by the former governmental body, constitutes an attempt to influence the former governmental body. Section 1103(g) also generally prohibits the inclusion of the name of a former public official/ public employee on invoices submitted by his new employer to the former governmental body, even though the invoices pertain to a contract that existed prior to termination of public service, Shay, Opinion 91 -012. However, if such a pre - existing contract does not involve the unit where the former public employee worked, the name of the former public employee may appear on routine invoices if required by the regulations of the agency to which the billing is being submitted. Abrams/Webster, Opinion 95 -011. A former public official /public employee may assist in the preparation of any documents presented to his former governmental body. However, the public official/ public employee may not be identified on documents submitted to the former governmental body. The public official /public employee may also counsel any person regarding that person's appearance before his former governmental body. Once again, however, the activity in this respect should not be revealed to the former governmental body. The Ethics Act would not prohibit or preclude making general informational inquiries to the former governmental body to secure information which is available to the general public, but this must not be done in an effort to indirectly influence the former governmental body or to otherwise make known to that body the representation of, or work for the new employer. Section 1103(g) only restricts the former public official /public employee with regard to representation before his former governmental body. The former public official /public employee is not restricted as to representation before other agencies or entities. However, the "governmental body with which a public official /public employee is or has been associated" is not limited to the particular subdivision of the agency or other governmental body where the public official /employee had influence or control but extends to the entire body. See, Legislative Journal of House, 1989 Session, No. 15 at 290, 291; Sirolli, Opinion No. 90 -006; Sharp, Opinion 90- 009 -R. For purposes of Section 1103() of the Ethics Act, the governmental body with which you will have been associated upon termination of public service, hereinafter referred to as your "former governmental body," will include the Pennsylvania Treasury/ Treasury Department in its entirety and all of the governmental boards and commissions on which you served as State Treasurer for the Commonwealth of Pennsylvania except for those boards and commissions whose members are not considered public officials subject to the Ethics Act, such as the Delaware River Port Authority, the Port Authority Transit Corp., and the Tuition Account Program Advisory Board. Therefore, for the first year following termination of your service with the Commonwealth of Pennsylvania, Section 1103(g) of the Ethics Act would apply and restrict "representation" of "persons" before your "former governmental body" as delineated above. Based upon the facts that have been submitted, this Advice has addressed the applicability of Sections 1103(g) and 1103(1) only. Section 1103(a) of the Ethics Act prohibits the use of the authority of public office /employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official /public employee himself, any member of his immediate family, or a business with Hafer, 04 -016 December 8, 2004 Page 7 which he or a member of his immediate family is associated. Further, you are advised that Sections 1103(b) and 1103(c) of the Ethics Act provide in part that no person shall offer to a public official /employee and no public official /employee shall solicit or accept anything of monetary value based upon the understanding that the vote, official action, or judgment of the public official /employee would be influenced thereby. Reference is made to these provisions of the law not to imply that there has been or will be any transgression thereof but merely to provide a complete response to the question presented. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Act has not been considered in that they do not involve an interpretation of the Ethics Act. IV. CONCLUSION: Upon termination of service, a former State Treasurer of the Commonwealth of Pennsylvania would become a former public official and a former executive -level State employee subject to the restrictions of Sections 1103 § ) and 1103(i) of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. 1103(g), (i). Under Section 1103(i) of the Ethics Act, the former State Treasurer would not be prohibited from being employed by, receiving compensation from, assisting, or acting in a representative capacity for a new employer or client(s) based upon the assumptions that she did not actively participate in recruiting the new employer /client(s) to Pennsylvania and did not actively participate in inducing the new employer /client(s) to open or expand a plant, facility, or branch in Pennsylvania through a grant or loan of money or a promise of a grant or loan of money from the Commonwealth of Pennsylvania. With regard to Section 1103(g), the restrictions as outlined above must be followed. The former governmental body would be the Pennsylvania Treasury/Treasury Department in its entirety and all of the governmental boards and commissions on which the individual served as State Treasurer for the Commonwealth of Pennsylvania except for those boards and commissions whose members are not considered public officials subject to the Ethics Act, such as the Delaware River Port Authority, the Port Authority Transit Corp., and the Tuition Account Program Advisory Board. The propriety of the proposed conduct has only been addressed under the Ethics Act. Further, should service be terminated, as outlined above, the Ethics Act would require that a Statement of Financial Interests be filed by no later than May 1 of the year after termination of service. Pursuant to Section 1107(10), the person who acts in good faith on this Opinion issued to him shall not be subject to criminal or civil penalties for so acting provided the material facts are as stated in the request. This letter is a public record and will be made available as such. Finally, a party may request the Commission to reconsider its Opinion. The reconsideration request must be received at this Commission within thirty days of the mailing date of this Opinion. The party requesting reconsideration must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with 51 Pa. Code § 21.29(b). By the Commission, Louis W. Fryman Chair