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HomeMy WebLinkAbout06-560 KriseRussell A. Krise 776 Woodland - Bigler Highway Woodland, PA 16881 Dear Mr. Krise: ADVICE OF COUNSEL May 26, 2006 06 -560 This responds to your letter of April 20, 2006, by which you requested advice from the State Ethics Commission. Issue: Whether under the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq., a township auditor who, in a private capacity, is an executive director for a local YMCA, must resign from his position at the YMCA, where the township has agreed to make an annual donation to the YMCA to fund a free summer program. Facts: As an elected Auditor for Bradford Township ( "Township "), you seek an advisory from the State Ethics Commission. You have submitted facts, the material portions of which, may be fairly summarized as follows. As an Auditor, your job duties include ensuring that the Township's elected officials are held accountable for their actions while in office; balancing the books; ensuring that payroll is completed properly; making sure that funds are spent for the right items and reasons; setting the pay rates for the Supervisors, all of whom are Roadmasters; and approving all items pertaining to the Supervisors' compensation package. In a private capacity, you are the full -time Executive Director of the Bigler YMCA, located in the Township. Since 1950, the YMCA has operated a totally free summer playground program ( "Program ") for area youth. The YMCA hires three local college students to run free programs for area youth to keep them active during ten weeks of the summer. The Program offers arts and crafts, sport related camps, hiking, day trips, bike hikes, team building activities and games, and much more on a seven -acre site that includes two baseball fields, an outdoor basketball court, an outdoor volleyball court, a large fenced in playground area, bocce ball, and horseshoe pits. You state that at the current time, operational costs for the Program are estimated at over $10,000. In 2005, the total cost was broken down as follows: wages for three college staff playground assistants at $5.50 - $6.00 per hour ($5,214.00); Krise, 06 -560 May 26, 2006 Page 2 insurance (approximately $1,000.00); equipment /materials /weekly field trip expenses (approximately $1,500.00); use of building and grounds (approximately $1,500.00); employer payroll taxes /training (approximately $1,000.00). You state that this amount does not include any supervisory fees which are included as your position as Executive Director because you are responsible for the entire program, especially in supervising and training the college students that the YMCA employs for the Program and dealing with all of the "unexpected" issues of the Program. You have submitted copies of the Payroll Summary for May through September 2005, which documents are incorporated herein by reference. Several years ago, due to declining donations and much lower interests rates on many of its endowments, the YMCA approached the Township for financial assistance. The Township Board of Supervisors agreed to donate $5,000 to help defray the expenses of operating the Program and the YMCA agreed to change the name of the Program to the Bradford Township Summer Playground Program. At the April 2006, Township Supervisors' Meeting, the President of the YMCA requested the annual donation of $5,000 to the YMCA for use in helping fund the Program for 2006. You state that the YMCA's request was denied because all three Supervisors felt that you as an Auditor were violating Section 916 of the Township Code, which you quote as follows: Any auditor who is financially interested, directly or indirectly, in any township transaction commits a summary offense. The auditor shall forfeit the office and forfeit to the township any financial benefit derived from the transaction. You state that at the meeting, the Supervisors suggested that you could solve the matter by resigning as Auditor, which would dispel the controversy and allow for the funds to be released. You state that you would never entertain the idea of resigning given that you would not stand to gain financially from the $5,000 donation to the YMCA. Based upon the foregoing facts, you ask whether the Ethics Act would require you to resign from your position as a Township Auditor where the Township has agreed to make a $5,000 donation to the local YMCA for which you serve as Executive Director. 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 requester based upon the facts that the requester has submitted. In issuing the advisory based upon the facts that the requester has submitted, the 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 requester 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 requester has truthfully disclosed all of the material facts. As a Township Auditor, you are a public official as that term is defined in the Ethics Act, and hence you are subject to the provisions of that Act. Section 1103(a) of the Ethics Act provides: § 1103. Restricted activities (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. Krise, 06 -560 May 26, 2006 Page 3 65 Pa.C.S. § 1103(a). The following terms are defined in the Ethics Act as follows: § 1102. Definitions "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. The term does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a business with which he or a member of his immediate family is associated. "Authority of office or employment." The actual power provided by law, the exercise of which is necessary to the performance of duties and responsibilities unique to a particular public office or position of public employment. "Business." Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self - employed individual, holding company, joint stock company, receivership, trust or any legal entity organized for profit. "Business with which he is associated." Any business in which the person or a member of the person's immediate family is a director, officer, owner, employee or has a financial interest. 65 Pa.C.S. § 1102. In addition, Sections 1103(b) and 1103(c) of the Ethics Act provide in part that no person shall offer to a public official /employee anything of monetary value 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. Section 1103(j) of the Ethics Act provides as follows: § 1103. Restricted activities (j) Voting conflict. - -Where voting conflicts are not otherwise addressed by the Constitution of Pennsylvania or by any law, rule, regulation, order or ordinance, the following procedure shall be employed. Any public official or public employee who in the discharge of his official duties would be required to vote on a matter that would result in a conflict of interest shall abstain from voting and, prior to the vote being Krise, 06 -560 May 26, 2006 Page 4 taken, publicly announce and disclose the nature of his interest as a public record in a written memorandum filed with the person responsible for recording the minutes of the meeting at which the vote is taken, provided that whenever a governing body would be unable to take any action on a matter before it because the number of members of the body required to abstain from voting under the provisions of this section makes the majority or other legally required vote of approval unattainable, then such members shall be permitted to vote if disclosures are made as otherwise provided herein. In the case of a three - member governing body of a political subdivision, where one member has abstained from voting as a result of a conflict of interest and the remaining two members of the governing body have cast opposing votes, the member who has abstained shall be permitted to vote to break the tie vote if disclosure is made as otherwise provided herein. 65 Pa. C. S. § 1103(j). In each instance of a conflict, Section 1103(j) requires the public official/ employee to abstain and to publicly disclose the abstention and reasons for same, both orally and by filing a written memorandum to that effect with the person recording the minutes or supervisor. In the event that the required abstention results in the inability of the governmental body to take action because a majority is unattainable due to the abstention(s) from conflict under the Ethics Act, then voting is permissible provided the disclosure requirements noted above are followed. See, Pavlovic, Opinion 02 -005. In applying the above provisions of the Ethics Act to the instant matter, it is noted that Section 1103(a) of the Ethics Act does not prohibit public officials /public employees from having outside business activities or employment; however, the public official /public employee may not use the authority of his public position - -or confidential information obtained by being in that position - -for the advancement of his own private pecuniary benefit or that of a business with which he is associated. Pancoe, Opinion 89 -011. Examples of conduct that would be prohibited under Section 1103(a) would include: (1) the pursuit of a private business opportunity in the course of public action, Metrick, Order 1037; (2) the use of governmental facilities, such as governmental telephones, postage, staff, equipment, research materials, or other property, or the use of governmental personnel, to conduct private business activities, Freind, Order 800; Pancoe, supra; and (3) the participation in an official capacity as to matters involving the business with which the public official /public employee is associated in his private capacity Gorman, Order 1041; Rembold, Order 1303; Wilcox, Order 1306), or private customer(s)/client(s) (Miller, Opinion 89 -024; Kannebecker, Opinion 92 -010). The Commission has also held that a reasonable and legitimate expectation that a business relationship will form may support a finding of a conflict of interest. Amato, Opinion 89- 002. In the instant matter, the YMCA would be considered a business with which you, as its Executive Director, are associated. Although the Ethics Act would not require you to resign from your position as Township Auditor where the Township has agreed to make an annual donation to the YMCA, pursuant to Section 1103(a) of the Ethics Act, you may not use the authority of your office or take action as an Auditor to obtain an unauthorized financial gain or a private pecuniary benefit to yourself or the YMCA, a business with which you are associated. Absent some use of authority of office for a private pecuniary benefit, a conflict of interest cannot exist. See, Messick, Order 1155. Thus, as a Township Auditor, you would be prohibited from using the authority of your Krise, 06 -560 May 26, 2006 Page 5 public office or confidential information to solicit donations from the Township Board of Supervisors for the YMCA. You would also be prohibited from auditing the portion of the books pertaining to the Township's donation(s) to the YMCA. In each instance of a conflict of interest, you would be required to abstain from participating and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. As to the Second Class Township Code, it is noted that you may have a problem under Section 916 quoted above separate and apart from the Ethics Act. Because the State Ethics Commission in the exercise of its jurisdiction is limited to making determinations under the Ethics Act and does not have the express statutory jurisdiction to interpret other laws, it is suggested that you seek legal advice as to the applicability of the Second Class Township Code. 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. Specifically not addressed herein is the applicability of the respective municipal code. Conclusion: As an Auditor for Bradford Township ( "Township "), you are a public official subject to the provisions of the Public Official and Employee Ethics Act ("Ethics Act "), 65 Pa.C.S. § 1101 et seq. The YMCA of Bigler would be considered a business with which you, as its Executive Director, are associated. The Ethics Act would not require you to resign from your position as Township Auditor where the Township has agreed to make an annual donation to the YMCA. However, pursuant to Section 1103(a) of the Ethics Act, you may not use the authority of your office or take action as an Auditor to obtain an unauthorized financial gain or a private pecuniary benefit to yourself or the YMCA, a business with which you are associated. Absent some use of authority of office for a private pecuniary benefit, a conflict of interest cannot exist. Thus, as a Township Auditor, you would be prohibited from using the authority of your public office or confidential information to solicit donations from the Township Board of Supervisors for the YMCA. You would also be prohibited from auditing the portion of the books pertaining to the Township's donation(s) to the YMCA. In each instance of a conflict of interest, you would be required to abstain from participating and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. It is noted that you may have a problem under Section 916 of the Second Class Township Code separate and apart from the Ethics Act. Because the State Ethics Commission in the exercise of its jurisdiction is limited to making determinations under the Ethics Act and does not have the express statutory jurisdiction to interpret other laws, it is suggested that you seek legal advice as to the applicability of the Second Class Township Code. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11), an Advice is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any other civil or criminal proceeding, provided the requester has disclosed truthfully all the material facts and committed the acts complained of in reliance on the Advice given. This letter is a public record and will be made available as such. Finally, if you disagree with this Advice or if you have any reason to challenge same, you may appeal the Advice to the full Commission. A personal appearance before the Commission will be scheduled and a formal Opinion will be issued by the Commission. Any such appeal must be in writing and must be actually received at the Commission within thirty (30) days of the date of this Krise, 06 -560 May 26, 2006 Page 6 Advice pursuant to 51 Pa. Code § 13.2(h). The appeal may be received at the Commission by hand delivery, United States mail, delivery service, or by FAX transmission (717 - 787 - 0806). Failure to file such an appeal at the Commission within thirty (30) days may result in the dismissal of the appeal. Sincerely, Vincent J. Dopko Chief Counsel