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HomeMy WebLinkAbout07-506 YORCZYKRobert S. Yorczyk B.A. Yorczyk & Associates P.O. Box 823 Exton, PA 19341 Dear Mr. Yorczyk: ADVICE OF COUNSEL February 5, 2007 07 -506 This responds to your letter of December 29, 2006, by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa. .S. § 1101 et seq., would present any prohibitions or restrictions upon a school director with regard to participating in matters before the school board that would involve: (1) private customers /clients of the school director's publishing business; or (2) a multi - municipal regional recreation organization that employs the school director's spouse. Facts: You are a School Director for the Downingtown Area School District. You pose two inquiries, the first of which is based upon the following facts. You own a publishing business that sells publications and advertising to various businesses. The annual sales to any one business will range from $10.50 to $220 for publications and from $165 to $3800 for advertising. Each month the Downingtown Area School Board ( "Board ") votes on an average of fifteen to twenty contracts and on making disbursements for an eighty -page list of purchases. The Board also approves payment of bills for a credit card, which is used to charge purchases at various businesses. You ask whether there is a set dollar amount of sales that you could use as a guideline to determine whether you would have a conflict of interest in voting on a matter before the Board that would involve a customer of your business. You state that the number of businesses spending more than $1000 per year with your business is small enough that you could give a list of those businesses to the Board Secretary with the instruction that you would automatically abstain from any votes involving those businesses. You state that in the past, you have abstained if you recognized that a contract was with one of your larger customers. You assert, however, that voting would become very laborious and difficult if the list of businesses for which you would have a conflict of interest would include those businesses with lesser amounts of sales. Yorczyk, 07 -506 February 5, 2007 Page 2 Your second inquiry is based upon the following facts. Your spouse is employed by a multi - municipal regional recreation organization (the "Recreation Organization "). The Recreation Organization is run by the municipalities in the school district and is subsidized with tax dollars by the municipalities. You express your view that you would have a conflict of interest in any matter that would be related to the school district's position on salary and benefits for the Recreation Organization's employees, and you state that you would abstain from voting on such matters. You ask whether you would transgress the Ethics Act by participating in other matters that would involve the Recreation Organization. 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. It is further initially noted that, pursuant to the same aforesaid Sections of the Ethics Act, an opinion /advice may be given only as to prospective (future) conduct. If the activity in question has already occurred, the Commission may not issue an opinion /advice, but any person may then submit a signed and sworn complaint, which will be investigated by the Commission if there are allegations of Ethics Act violations by a person who is subject to the Ethics Act. To the extent that your inquiries relate to conduct that has already occurred, such past conduct may not be addressed in the context of an advisory opinion. However, to the extent that your inquiries relate to future conduct, your inquiries may and shall be addressed. As a School Director for the Downingtown Area School District, you are a public official subject to the provisions of the Ethics Act. Sections 1103(a) and 1103(j) of the Ethics Act provide: § 1103. Restricted activities (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. (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 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 Yorczyk, 07 -506 February 5, 2007 Page 3 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(a), (j). 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. Pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is prohibited from using 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 which he or a member of his immediate family is associated. In each instance of a conflict of interest, Section 1103(] of the Ethics Act requires the public official /public 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. The abstention requirement is not limited merely to voting, but extends to any use of authority of office including, but not limited to, discussing, conferring with others, and lobbying for a particular result. Juliante, Order 809. In the event that the required abstention results in the inability of the Yorczyk, 07 -506 February 5, 2007 Page 4 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. It is noted that the above statutory definition of "conflict" or "conflict of interest" includes two exclusions, hereinafter referred to as the "de minimis" exclusion and the "class /subclass exclusion." The de minimis exclusion precludes a finding of conflict of interest as to an action having a de minimis (insignificant) economic impact. Thus, when a matter that would otherwise constitute a conflict of interest under the Ethics Act would have an insignificant economic impact, a conflict would not exist and Section 1103(a) of the Ethics Act would not be implicated. See, Kolb, Order 1322; Schweinsburq, Order 900. In order for the class /subclass exclusion to apply, two criteria must be met: (1) the affected public official /public employee, immediate family member, or business with which the public official /public employee or immediate family member is associated must be a member of a class consisting of the general public or a true subclass consisting of more than one member; and (2) the public official /public employee, immediate family member, or business with which the public official /public employee or immediate family member is associated must be affected "to the same degree" (in no way differently) than the other members of the class /subclass. 65 Pa.C.S. § 1102; see, Kablack, Opinion 02 -003; Graham, Opinion 95 -002 (citing Van Rensler, Opinion 90- 017); Rubenstein, Opinion 01 -007. The first criterion of the exclusion is satisfied where the members of the proposed subclass are similarly situated as the result of relevant shared characteristics. The second criterion of the exclusion is satisfied where the individual /business in question and the other members of the class /subclass are reasonably affected to the same degree by the proposed action. Kablack, supra. In applying the above provisions of the Ethics Act to the instant matter, it is noted that Section 1103(a) of the Ethics Act pertaining to conflicts of interest 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 or private client(s). Miller, Opinion 89- 024; Kannebecker, Opinion 92 -010. If a private employer or business with which the public official /public employee is associated or a client of the private employer or business would have a matter pending before the governmental body, the public official /public employee would have a conflict of interest as to such matter. Miller, supra; Kannebecker, supra. In each instance of a conflict of interest, the public official /public employee would be required to abstain from participation and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. In applying the above provisions of the Ethics Act to the instant matter, you are advised that pursuant to Section 1103(a) of the Ethics Act, you would generally have a conflict of interest in matters that would financially benefit you, your spouse, a business with which you or your spouse is associated, or the customers /clients of such a business. Yorczyk, 07 -506 February 5, 2007 Page 5 Turning to your first specific inquiry, you are advised as follows. Your publishing business is a business with which you are associated. The Ethics Act would not prohibit you in your private capacity from continuing to do business with customers /clients who would have matters before the Board. However, if a matter involving a private customer /client of your business would come before the Board, you would generally have a conflict of interest and would be required to abstain from participation and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. As a general rule, a conflict would not exist as to former customers /clients, but under certain circumstances, a conflict could exist as to a former customer /client depending upon factors such as the number of prior business transactions involving the given customer /client and the period of time over which such occurred. You are advised that you would not have a conflict of interest as to a customer /client from which you would receive only a de minimis (insignificant) financial benefit. 65 Pa.C.S. § 1102. The Commission has determined the applicability of the de minimis exclusion on a case -by -case basis, considering all relevant circumstances. In the past, the Commission has found amounts ranging from $2 to approximately $500 to be de minimis. See, Bixler v. State Ethics Commission, 847 A.2d 785 (Pa. Cmwlth. 2004). However, you are cautioned that an economic impact may aggregate over time, rather than be limited to a particular increment of time such as a month or year. Confidential Opinion, 05 -001. For a customer /client involved in multiple transactions, the aggregate financial benefit received from such transactions should be considered in order to determine whether the de minimis exclusion could have applicability. With regard to your second specific inquiry, you are advised as follows. The submitted facts are insufficient to determine whether the Recreation Organization with which your spouse is employed is a business or a governmental body for purposes of applying the Ethics Act. Therefore, this Advice must necessarily be limited to providing the following general guidance. If the Recreation Organization would be considered a business, then p ursuant to Section 1103(a) of the Ethics Act, you would generally have a conflict of in matters before the Board that would financially impact the Recreation Organization or your spouse as an employee of the Recreation Organization. In each instance of a conflict of interest, you would be required to abstain from participation and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. However, if the Recreation Organization would be considered a governmental body or political subdivision (for example, if it was actually organized by the municipalities, see, 65 Pa.C.S. § 1102 (definition of "political subdivision ")), you would not have a conflict of interest in matters before the Board that would financially impact the Recreation Organization but not your spouse. A pecuniary benefit flowing solely to a governmental entity does not form the basis for a conflict of interest under Section 1103(a ) of the Ethics Act. See, Confidential Opinion, 01 -005; McCarrier, Opinion 98- 005; Warso, Order 974. However, subject to the aforesaid statutory exceptions to the definition of "conflict" or "conflict of interest," you would generally have a conflict of interest in matters before the Board that would financially impact your spouse as an employee of the Recreation Organization. In each instance of a conflict of interest, you would be required to abstain from participation and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. 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 Public School Code. Yorczyk, 07 -506 February 5, 2007 Page 6 Conclusion: As a Member of the Downingtown Area School Board ( "Board "), 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. Your publishing business would be considered a business with which you are associated. Pursuant to Section 1103(a) of the Ethics Act, as a Board Member, you would generally have a conflict of interest in matters that would financially impact you, your spouse, a business with which you or your spouse is associated, or private customer(s) /client(s) of such a business. If a matter would come before the Board involving a private customer /client, you would generally have a conflict of interest and would be required to abstain from participation and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. As a general rule, a conflict would not exist as to former customer(s) /client(s), but under certain circumstances, a conflict could exist as to former customer(s) /client(s) depending upon factors such as the number of prior business transactions involving the given customer /client and the period of time over which such occurred. You would not have a conflict of interest as to a customer /client from which you would receive only a de minimis (insignificant) financial benefit. You are cautioned that an economic impact may aggregate over time, rather than be limited to a particular increment of time such as a month or year. For a customer /client involved in multiple transactions, the aggregate financial benefit received from such transactions should be considered in order to determine whether the de minimis exclusion could have applicability. If the Recreation Organization that employs your spouse would be considered a business, then pursuant to Section 1103(a) of the Ethics Act, you would generally have a conflict of interest in matters before the Board that would financially impact the Recreation Organization or your spouse as an employee of the Recreation Organization. If the Recreation Organization would be considered a governmental body or political subdivision, you would not have a conflict of interest in matters before the Board that would financially impact the Recreation Organization but not your spouse. A pecuniary benefit flowing solely to a governmental entity does not form the basis for a conflict of interest under Section 1103(a) of the Ethics Act. However, subject to the aforesaid statutory exceptions to the definition of "conflict" or "conflict of interest," you would generally have a conflict of interest in matters before the Board that would financially impact your spouse as an employee of the Recreation Organization. In each instance of a conflict of interest, you would be required to abstain from participation and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. 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 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 Yorczyk, 07 -506 February 5, 2007 Page 7 file such an appeal at the Commission within thirty (30) days may result in the dismissal of the appeal. Sincerely, Robin M. Hittie Chief Counsel