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HomeMy WebLinkAbout07-550 ConfidentialADVICE OF COUNSEL June 27, 2007 07 -550 This responds to your letter dated May 25, 2007, by which you requested a confidential advisory from the State Ethics Commission. Issue: Whether a member of the board of trustees of State - related University A orate-related University B would be considered a "public official" subject to the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq., and the Regulations of the State Ethics Commission, and particularly, the requirements for filing Statements of Financial Interests. Facts: You request an advisory from the State Ethics Commission on behalf of two Ds of Governmental Body C as to the following. You state that each of the aforesaid Es (hereinafter referred to as "E1" and "E2 ") serves on the board of trustees of a state - related university. You state that El serves on the Board of Trustees that was created by [Section and Act]. It is administratively noted that said Act establishes the status of State - related University A as a state - related university in the Commonwealth's higher education system and provides for the composition of the Board of Trustees of said University. You state that E2 serves on the Board of Trustees that was created by [Section and Act]. It is administratively noted that said Act establishes the status of State - related University B as a state - related university in the Commonwealth's higher education system and provides for the composition of the Board of Trustees of said University. You note that the Board of Trustees of each of the aforementioned State - related Universities consists of [number] voting members, [number] of whom are appointed by elected state -level officials. You state that El and E2 file annual Statements of Financial Interests in other capacities. You state that one of the Es files a Statement of Financial Interests with the state - related university for which that E serves as a trustee, but the other E, based upon Confidential Advice, 07 -550 June 27, 2007 Page 2 your advice and interpretation of prior Commission precedent, does not file a Statement of Financial Interests with the state - related university for which that E serves as a trustee. Citing McQuaide, Opinion 80 -043, you express your view that filing a Statement of Financial Interests is voluntary for members of the boards of trustees of state - related universities. You seek guidance as to whether El and E2, in their respective capacities as an appointed member of the Board of Trustees of State - related University A and of State - related University B, would be considered "public officials" as defined in the Ethics Act and therefore would be required to file Statements of Financial Interests with the respective state - related universities for which said Es serve as trustees. 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 you have inquired as to conduct that has already occurred, such past conduct may not be addressed in the context of an advisory opinion. However, to the extent you have inquired as to future conduct, your inquiry may, and shall be addressed. The Ethics Act defines the term "public official" 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 related term "political subdivision" is defined as follows: "Political subdivision." Any county, city, borough, incorporated town, township, school district, vocational school, county institution district, and any authority, entity or body organized by the aforementioned. 65 Pa.C.S. § 1102. Confidential Advice, 07 -550 June 27, 2007 Page 3 The regulations of the State Ethics Commission define the term "public official" as follows: Public official —A 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 the Commonwealth or a political subdivision thereof. The term does not include members of advisory boards that have no authority to expend public funds other than reimbursement for personal expense, or to exercise otherwise the power of the Commonwealth or a political subdivision thereof. (i) The following criteria will be used to determine if the exception in this paragraph is applicable: (A) The body will be deemed to have the power to expend public funds if the body may commit funds or may otherwise make payment of monies, enter into contracts, invest funds held in reserves, make loans or grants, borrow money, issue bonds, employ staff, purchase, lease, acquire or sell real or personal property without the consent or approval of the governing body and the effect of the power to expend public funds has a greater than de minimis economic impact on the interest of a person. (B) The body will be deemed to have the authority to otherwise exercise the power of the Commonwealth or a political subdivision if one of the following exists: (1) The body makes binding decisions or orders adjudicating substantive issues which are appealable to a body or person other than the governing authority. (11) The body exercises a basic power of government and performs essential governmental functions. (111) The governing authority is bound by statute or ordinance to accept and enforce the rulings of the body. (IV) The body may compel the governing authority to act in accordance with the body's decisions or restrain the governing authority from acting contrary to the body's decisions. (V) The body makes independent decisions which are effective without approval of the governing authority. (VI) The body may adopt, amend and repeal resolutions, rules, regulations or ordinances. (VII) The body has the power of eminent domain or condemnation. Confidential Advice, 07 -550 June 27, 2007 Page 4 (VIII) The enabling legislation of the body indicates that the body is established for exercise public powers of the Commonwealth or a political subdivision. (ii) The term does not include judges and inspectors of elections, notary publics and political party officers. (iii) The term generally includes persons in the following offices: (A) Incumbents of offices filled by nomination of the Governor and confirmation of the Senate. (B) Heads or executive, legislative and independent agencies, boards and commissions. (C) Members of agencies, boards and commissions appointed by the General Assembly or its officers. (D) Persons appointed to positions designated as officers by the Commonwealth or its political subdivisions. (E) Members of municipal, industrial development, housing, parking and similar authorities. (F) Members of zoning hearing boards and similar quasi - judicial bodies. (G) Members of the public bodies meeting the criteria in paragraph (i)(A). 51 Pa. Code § 11.1. Status as a "public official" subject to the Ethics Act is determined by applying the above definition and criteria to the position held. The Commonwealth Court of Pennsylvania has directed that coverage under the Ethics Act be construed broadly and that exclusions under the Ethics Act be construed narrowly. See, Philips v. State Ethics Commission, 470 A.2d 659 (Pa. Cmwlth. 1984). A straightforward application of the first portion of the Ethics Act's definition of "public official provides that a public official is a person who: (1) is elected by the public; (2) is elected or appointed by a governmental body; or (3) is an appointed official in the executive, legislative, or judicial branch of the Commonwealth or a political subdivision of the Commonwealth. Muscalus, Opinion 02 -007. In McQuaide, supra, the State Ethics Commission held that members of the Board of Trustees of the Pennsylvania State University ( "PSU "), a state - related university and instrumentality of the Commonwealth, 24 P.S. § 2510 - 503(6), would not be considered "public officials" subject to the Ethics Act. The Commission determined that PSU is not the Commonwealth or an agency of the Commonwealth. The Commission noted that PSU is clearly not encompassed within the legislative or judicial branch of the Commonwealth. The Commission further noted that PSU is a "state - related" as opposed to a state owned institution and that the Administrative Code (Act of April 9, 1929, P.L. 177, 71 P.S. § 61 et seq.) does not include PSU in the executive branch of the Commonwealth. The Commission additionally noted that there is neither Confidential Advice, 07 -550 June 27, 2007 Page 5 Executive Branch nor Legislative Branch control, input, or direction to the PSU Board of Trustees as to the operation or activities of the University, and that governmental representation on the PSU Board of Trustees constitutes only a minority. The Commission finally noted that PSU is not a "political subdivision" as that term is defined in the Ethics Act and the Regulations of the State Ethics Commission. Based upon these factors, the Commission concluded that members of the Board of Trustees of PSU are not "public officials" subject to the Ethics Act and the Regulations of the State Ethics Commission. In Novak, Opinion 91 -009, decided under Act 9 of 1989, the Commission cited McQuaide in concluding that PSU is a "business" as that term is defined in the Ethics Act. Based upon the above Commission precedents, the necessary conclusion is that for purposes of the Ethics Act, State - related University A and State - related University B are not to be considered institutions within the executive, legislative or judicial branches of the Commonwealth or political subdivisions of the Commonwealth. Factually, there is no basis upon which to distinguish McQuaide, supra. As for the definition of "public official" contained within the current version of the Ethics Act, on its face, the definition continues to apply to persons who are elected or appointed to public positions. Given that State - related University A and State - related University B are only state - related, and are not institutions within the executive, legislative or judicial branch of the Commonwealth or political subdivisions of the Commonwealth, you are advised that El and E2, in their respective ective capacities as appointed members of the Boards of Trustees of State-related A and of State - related University B, are not to be considered "public officials" as that term is defined in the Ethics Act. Accordingly, El and E2 are not required to file Statements of Financial Interests with the respective state - related universities for which they serve as trustees. 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. Conclusion: Two Ds of Governmental Body C, in their respective capacities as appointed members of the Boards of Trustees of State - related University A and of State - related University B, are not "public officials" as that term is defined by the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq., and therefore are not required to file Statements of Financial Interests with the respective state - related universities for which they serve as trustees. 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 Confidential Advice, 07 -550 June 27, 2007 Page 6 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 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