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In Re: Barbara McDonnell,
Respondent
{orb V
STATE ETHICS COMMISSION
FINANCE BUILDING
613 NORTH STREET, ROOM 309
HARRISBURG, RA 17120-0400
File Docket:
X -ref:
Date Decided
Date Mailed:
FACSIMILE: 717- 787 -0806
WEBSITE: www.etlilcs.pa.aav
18011
Order No. 1751
5/6119
5/10/19
Before: Nicholas A. Colafella, Chair
Mark R. Corrigan, Vice Chair
Roger Nick
Melanie DePalma
Monique Myatt Galloway
Michael A. Schwartz
Shelley Y. Simms
This is a final adjudication of the State Ethics Commission.
Procedurally, the Investigative Division of the State Ethics Commission conducted
an investigation regarding possible violation(s) of the Public Official and Employee Ethics
Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et sew., by the above -named Respondent. At the
commencement of its investigation, the Investigative Division served upon Respondent
written notice of the specific allegations. Upon completion of its investigation, the
Investigative Division issued and served upon Respondent a Findings Report identified as
an "Investigative Complaint." A Stipulation of Findings and a Consent Agreement were
subsequently submitted by the parties to the Commission for consideration. The Stipulated
Findings are set forth as the Findings in this Order. The Consent Agreement has been
approved.
ALLEGATIONS:
That Barbara McDonnell, a public official /public employee in her capacity as the
Superintendent of the Duquesne City School District, Allegheny County, violated Sections
1103(a), 1104(a), and 1105(a) of the State Ethics Act (Act 93 of 1998) when she utilized
the authorityy of her public employment to authorize and receive advanced payments from
the School District on her bI- weeKly paychecks, absent any approval or authorization to do
same; and when she failed to file Statements of Financial Interests in her position as Acting
Superintendent and /or Superintendent for calendar years 2012, 2014, 2015, and 2016.
II. FINDINGS:
1. Barbara E. McDonnell ( "McDonnell ") served as the Superintendent of Duquesne
City School District ( "District ") from July 1, 2016, until November 2, 2017.
a. McDonnell served as the Acting Superintendent/Community Education
Liaison for the District from July 1, 2013, through June 30, 2016.
b. McDonnell was employed in a variety of other positions with the District from
August 28, 2000, through June 30, 2013.
2. The District is a public school district subject to mandates delineated within the
Pennsylvania Public School Code of 1949 ( "Code ").
McDonnell, 18 -011
age
a. The Code includes multiple Articles relating to the public school system as
well as certain provisions applicable to private and parochial schools.
3. The District currently educates students spanning the grade range of Pre -K through
6th grade.
a. All District students (Pre -K through 6th grade) are currently housed in one
central building.
4. District high school students (grades 9 through 12) and middle school students
Prades 7 and 8 have been educated at West Mifflin Area School District and/or
ast Allegheny School District since the beginning of the 2007 — 2008 and 2012 --
20'I3 school years, respectively.
a. The educational services for District students at West Mifflin Area School
District and East Allegheny School District are provided through legislatively
mandated contracts.
b. District high school and middle school students were transferred to West
Mifflin Area School District and East Allegheny School District due to low
standardized test scores as well as District financial concerns.
5. The District is currently governed by a Receiver on behalf of the elected nine -
Member Board of School Directors ('Board").
a. A Receiver meeting is held on the fourth Tuesday of each month in lieu of
the District's regular legislative Board meeting.
1. Although the elected Board Members attend the Receiver meetings,
the Receiver makes all decisions at the meetings on the Board's
behalf.
b. The District does not hold regularly scheduled agenda /workshop meetings.
C. The Receiver has the authority to call special meetings as needed.
6. The Receiver and elected Board Members are provided with meeting packets the
Friday prior to the Receiver meeting for review.
a. The packets are compiled by the District Business Manager /Board Secretary
after discussion with the Receiver.
b. Items within the meeting packet include, among other items, the agenda for
the Receiver meeting, minutes to be presented for approval, and a Cash
Disbursement Report/Bill List.
7. McDonnell was classified as an Act 93 Administrative /Supervisory Principal during
her employment as the District Acting Superintendent /Community Education
Liaison.
a. As an Act 93 Administrative /Supervisory Principal, McDonnell's employment
term, responsibilities, wages, benefits, etc., were established via an annual
District Compensation Plan.
b. The annual District Compensation Plan established the employment term,
responsibilities, wages, benefits, etc., for multiple positions (including
McDonnell, 18011
ag_9__
McDonnell's) at the District.
8. McDonnell maintained an individual contract with the District in relation to her
employment as the District Superintendent ( "Superintendent ").
a. McDonnell's individual contract identified her employment term,
responsibilities, wages, benefits, etc.
THE FOLLOWING FINDINGS REFERENCE THE HISTORY OF THE DISTRICT'S
CLASSIFICATION AS A FINANCIALLY DISTRESSED DISTRICT AND THE DISTRICT'S
ASSIGNMENT INTO RECEIVERSHIP.
9. Prior to October 2000, the District was governed by an elected, nine- Member Board.
a. At the September 25, 2000, Board meeting, the Board voted unanimously to
send correspondence to the State requesting that the State assume control
of District operations.
b. In October 2000, the Pennsylvania Secretary of Education declared the
District to be financially distressed in accordance with requirements set forth
in the Code.
10. From approximately November 2000 through October 2012, the District was
governed by a three - Member Board of Control appointed by the Pennsylvania
Department of Education ( "PDE ").
a. Although the District's elected Board remained in place from November 2000
through October 2012, District operational decisions were made by the
Board of Control.
11. In July 2012, the Pennsylvania General Assembly passed Act 141 of 2012 which
introduced various amendments to the Code, including, in part, the addition of
Article VI -A (School District Financial Recovery).
a. The passing of Act 141 essentially converted the classification of a school
district from that of being in financial distress to being in recovery status and
identified the criteria for entering and exiting recovery status.
12. The Board of Control in place at the District was dissolved at or about the end of
October /beginning of November 2012 in conjunction with the passing of Act 141 of
2012.
a. Governance of the District reverted to the elected Board at that time.
13. On November 16, 2012, the Pennsylvania Secretary of Education issued a
declaration that the District was in severe financial recovery status.
a. The Pennsylvania Secretary of Education subsequentlyy appointed Dr. Paul
Long ( "Long ") as the District Chief Recovery Officer ( °CRO').
As the CRO, Long (with the assistance of PDE) was responsible for
the development, implementation, and administration of a recovery
plan for the District.
aa. Long's ultimate plan addressed both financial and educational
recovery for the District.
McDonnell, 18 -011
Page
14. Long's recovery plan was presented to the Board for consideration on or about
February 11, 2013.
a. The Board rejected the acceptance of Long's recovery plan via 0 -8 -1 vote at
a special meeting held on February 21, 2013.
15. After the Board refused to ratify the recovery plan, PDE petitioned the Allegheny
County Court of Common Pleas to place the District into receivership, appoint a
Receiver, and implement the recovery plan.
a. The petition was filed in the Allegheny County Court of Common Pleas on
February 26, 2013.
16. The Allegheny County Court of Common Pleas granted PDE's petition on April 2,
2013.
a. April 2, 2013, is recognized as the effective date of receivership for the
District.
b. April 2, 2013, is recognized as the formal date of implementation for the
District's recovery plan.
17. The Allegheny County Court of Common Pleas subsequently appointed Long to the
position of District Receiver ( "Receiver ") effective April 2, 2013, upon nomination by
the Pennsylvania Secretary of Education.
a. Upon appointment as the Receiver, Long assumed all powers and duties of
both the CRO and the elected Board, except as noted below.
b. Once in receivership, the powers and duties maintained by the elected Board
were limited to setting District tax rates, modifying District debt, and
reorganization.
18. The Pennsylvania Secretary of Education subsequently appointed Dr. Paul Rach
( "Rach ") as the new CRO effective July 1, 2013.
a. Act 141 of 2012 allows for the appointment of a new CRO if the original CRO
is appointed to the Receiver position.
b. As the CRO, Rach's duties focused primarily on serving as an advisor to
Long.
1. Rach was serving as the District Acting Superintendent when the
District was placed into receivership.
19. Effective March 1, 2018, the Allegheny County Court of Common Pleas appointed
Rach to the position of Receiver upon nomination by the Pennsylvania Secretary of
Education.
a. Rach was appointed as the Receiver upon Long's resignation from the
position effective February 28, 2018.
THE FOLLOWING FINDINGS RELATE TO DISTRICT EMPLOYEES RECEIVING
PAYROLL ADVANCES /LOANS FROM THE DISTRICT.
McDonnell, 18 -011
agp e�
20. The District maintains a General Fund Account and a separate Payroll Account at
PNC Bank in relation to District operations.
a. The Superintendent and the District Business Manager ( "Business Manager")
maintain signature authority over District accounts.
1. The CRO and the Business Manager maintained signature authority
over District accounts immediately prior to McDonnell's employment
as the Superintendent.
b. Required signatures are computer generated on District checks when
printed.
21. The District issues payroll to its employees on the 15th day of each month and on
the final day of each month (semimonthly).
a. Payroll issued to Act 93 Administrative /Supervisory Employees is issued for
the current payroll period.
b. Specific salarieslwages paid to Act 93 Administrative /Supervisory Employees
are delineated by position within the annual District Compensation Plan.
22. In or about September 2013, the District (Acting) Elementary Principal (the
"Principal ") experienced financial hardship wich led to the need for additional
income.
a. The Act 93 Administrative /Supervisory Employees Compensation Plan in
effect at the District at that time allowed for administrative personnel to be
compensated at their per diem rate for up to five unused vacation days.
1. Issuance of per diem compensation for the unused vacation days
required the approval of the Superintendent.
2. The Act 93 Administrative /Supervisory Principal Compensation Plan
identified the payment date for unused vacation days to be to "... the
June pay."
23. The Principal subsequently initiated contact with the District Business Office
Specialist ('Business Office Specialist ") and inquired into the possibility of "selling"
five unused vacation days to the District.
a. The Principal intended to "sell" five vacation days immediately to the District
and receive payment at that time.
b. The Business Office Specialist informed the Principal that "sale" and
payment for unused vacation days was permitted only in June.
24. Discussions were subsequently held at various times between the Principal and
Rach; the Principal and McDonnell; and Rach and McDonnell in relation to the
Principal's situation and potential options available.
a. At the conclusion of the discussions among the various individuals, a
determination was made that the Principal could obtain an advance on her
contracted salary allotment due for the 2013/2014 school year.
1. The Principal was instructed to submit a written request for the pay
advancelloan to McDonnell for approval as the Superintendent and
ultimate processing through the Business Office.
McDonnell, 18 -011
Page
2. The pay advancelloan was to be repaid to the District by the end of
the school year in which issued via automatic payroll deduction.
25. The Principal submitted a written request dated September 27, 2013, to McDonnell,
which resulted in the issuance of a pay advancelloan to the Principal in the amount
of $1,000.00.
a. McDonnell approved the pay advancelloan and forwarded the request to the
Business Office Specialist for processing.
b. The Business Office Specialist calculated the repayment schedule upon
receipt of the request.
1. The repayment schedule was calculated by dividing the pay
advancelloan amount by the remaining number of pay periods
existing for the 2013 -2014 school year.
2. The Business Office Specialist's calculations were verified by the
District Business Office Consultant ( "Business Office Consultant "),
James Graham ( "Graham ").
3. The Business Office Specialist input into the District ayroll system
the amount to be automatically deducted from each of the Principal's
remaining 2013 -2014 paychecks.
C. The request was subsequently provided to the Business Manager for
coding /processing and ultimate check generation and issuance by Business
Office personnel.
d. The pay advancelloan was repaid to a zero balance by June 30, 2014, via
automatic payroll deduction from the Principal's net wages.
26. Various District employees became aware of the issuance of the pay advancelloan
to the Principal, due to participation in the pay advancelloan issuing process and/or
through general conversation.
a. Individuals involved in the issuing process included McDonnell, the Business
Office Specialist, the Business Office Consultant, the Business Manager,
and the District Business Office Assistant.
b. The District Elementary School Secretary ( "Elementary School Secretary ")
gained knowledge of the pay advancelloan through direct conversation with
the Principal.
27. Issuance of the initial pay advancelloan in the fall of the 2013 -2014 school year
resulted in multiple pay advances /loans being issued to at least three additional
District employees over the course of the 2013 -2014 through 2016 -2017 school
years.
a. Pay advancelloan recipients included McDonnell, the Business Office
Specialist, and the Elementary School Secretary.
28. Between the 2013 -2014 and 2016 -2017 school years, a minimum of twenty -two
pay advances/loans, totaling approximately $41,250.00, were received by four
separate District employees as detailed below:
McDonnell, 18 -011
age
Employee 2013-2014 2014-2015 2015-2016 2016-2017 Total
a. All pay advancelloan checks that were issued originated from the District
General Fund Account.
b. All reimbursement due the District was reclaimed via automatic payroll
deduction from each individual's respective net wages due prior to
conclusion of the school year in which the pay advance/loan was issued.
29. McDonnell and/or the Business Manager authorized the issuance of at least ten pay
advances/loans to the Principal, the Business Office Specialist, and the Elementary
School Secretary by signing or initialing the written requests submitted and
forwarding the requests to the Business Office.
a. McDonnell approved a total of three pay advances/loans for the Principal and
four pay advances/loans for the Business Office Specialist.
b. Business Manager Nedene Gullen ("Gullen ") approved one pay
advance/loan for the Principal and two for the Elementary School Secretary.
1. Gullen approved the pay advance/loan requests under McDonnell's
authority due to McDonnell's absence from the District at the time the
requests were submitted.
30. The Principal, the Business Office Specialist, and the Elementary School Secretary
did not approve their own pay advance/loan requests.
a. Pay advance/loan request approval was granted by McDonnell as the
Superintendent or Gullen (under McDonnell s authority).
b. The Principal, the Business Office Specialist, and the Elementary School
Secretary were all subordinate to McDonnell in the District chain -of-
command.
31. Pay advances/loans received by McDonnell during the individual school years
between July 2013 and June 2017 totaled as follows:
2013 — 2014: $2,000.00
2014 — 2015: $3,500.04
No. of
Loans
Total
Dollars
No. of
Loans
Total
Dollars
No. of
Loans
Total
Dollars
No. of
Loans
Total
Dollars
No. of
Loans
Total
Dollars
McDonnell.
1
$2,000.00
3
$3,500.00
5
$10,050.00
2
$7,600.00
11
$23,150.00
Principal:
2
$3,000.00
1
$3,000.00
1
$2,000.00
1
$2,000.00
5
$10,000.00
Business
0
$0.00
1
$2,040.00
0
$0.00
3
$4,900.00
4
$6,940.00
Office
Specialist:
Elementary
0
$0.00
0
$0.00
0
$0.00
2
$1,160.00
2
$1,160.00
School
Secretary:
Total
3
$5,000.00
5
$8,540.00
6
$12,060.00
8
$15,660.00
22
$41,250.00
a. All pay advancelloan checks that were issued originated from the District
General Fund Account.
b. All reimbursement due the District was reclaimed via automatic payroll
deduction from each individual's respective net wages due prior to
conclusion of the school year in which the pay advance/loan was issued.
29. McDonnell and/or the Business Manager authorized the issuance of at least ten pay
advances/loans to the Principal, the Business Office Specialist, and the Elementary
School Secretary by signing or initialing the written requests submitted and
forwarding the requests to the Business Office.
a. McDonnell approved a total of three pay advances/loans for the Principal and
four pay advances/loans for the Business Office Specialist.
b. Business Manager Nedene Gullen ("Gullen ") approved one pay
advance/loan for the Principal and two for the Elementary School Secretary.
1. Gullen approved the pay advance/loan requests under McDonnell's
authority due to McDonnell's absence from the District at the time the
requests were submitted.
30. The Principal, the Business Office Specialist, and the Elementary School Secretary
did not approve their own pay advance/loan requests.
a. Pay advance/loan request approval was granted by McDonnell as the
Superintendent or Gullen (under McDonnell s authority).
b. The Principal, the Business Office Specialist, and the Elementary School
Secretary were all subordinate to McDonnell in the District chain -of-
command.
31. Pay advances/loans received by McDonnell during the individual school years
between July 2013 and June 2017 totaled as follows:
2013 — 2014: $2,000.00
2014 — 2015: $3,500.04
McDonnell, 18 -011
ag�9 - —
2015 — 2016: $10,050.00
2016 — 2017: 7,600.00
Total: $23,150.00
32. Rach was consistently made aware of McDonnell's requests for pay advances.
a. McDonnell submitted her requests to the Business Office Specialist, who
verbally informed Rach of McDonnell's requests.
b. McDonnell, as the Superintendent, was subordinate to Rach in his position
as the CRO.
C. Rach, as the CRO, had the authority to deny or limit any requests for pay
advances, including those for McDonnell.
33. All of McDonnell's payroll advances were documented on the applicable District
Cash Disbursement Reports presented for ratification at monthly Receiver
meetings, as shown below:
11/26/13
01/15/14
11/24/14
01/21/15
11/24/14
01/21/15
02/17/15
03/17/15
07/01/15
09/18/15
01/20/16
02/17/16
03/15/16
04/08/16
04/09/16
05/13/16
04/09/16
05/13/16
10/20/16
11/28/16
02/17/17
03/23/17
Total
-- 38508
12/17/13
Barbara
Yes
NIA
McDonnell
-- 39817
11/24/14
Barbara
$1,027.38
01/27/15
McDonnell
-- 39916
12/23/14
Barbara
Yes
NIA
McDonnell
– 40087
02/24/15
Barbara
$3,560.00
02/23/16
McDonnell
– 40550
07/23/15
Barbara
Yes
NIA
McDonnell
– 41405
02/10/16
Barbara
$550.00
05/24/16
McDonnell
– 41585
04/01/16
Barbara
Yes
03022017
McDonnell
– 41643
04/19/16
Barbara
McDonnell
– 41679
04/25/16
Barbara
McDonnell
– 42435
11/07/16
Barbara
McDonnell
– 42909
03/01/17
Barbara
McDonnell
NIA
$3,836.66
01/21/14
Yes
NIA
$1,000.00
01/27/15
Yes
N/A
$1,027.38
01/27/15
Yes
NIA
$2,000.00
03/24/15
Yes
NIA
$2,000.00
09/29/15
Yes
N/A
$3,560.00
02/23/16
Yes
NIA
$3,200.00
04/19/16
Yes
NIA
$800.00
05/24/16
Yes
NIA
$550.00
05/24/16
Yes
11012016
$5,600.00
12/06/16
Yes
03022017
$2,000.00
03/28/17
Yes
$23 150.00^
res are computer printed upon check generation
Notes; Check No. 38508 includes $1,836.66 in tuition and mileage reimbursement in
addition to $2,000.00 advance /loan
Check No. 39916 includes $527.38 in mileage reimbursement in addition to $500.00
advance /loan
Check No. 41405 includes $60.00 in mileage reimbursement in addition to $3,500.00
advance/loan
^: Total reflects advance/loan total only
a. bong and Rach routinely received the monthly Receiver meeting packet for
review at least three days prior to the Receiver meeting.
McDonnell, 18 -011
ag'lgee 9
Cash Disbursement Reports were routinely included in the monthly
meeting packets.
2. Neither Long nor Rach questioned any of the loan entries attributable
to McDonnell or any other District employee receiving a ay
advance/loan as documented on the Cash Disbursement Reports.
b. Long ratified all of the applicable Cash Disbursement Reports at public
Receiver meetings, which documented issuance of pay advances/loans to
McDonnell.
As Receiver, Long was responsible for acting on behalf of /in place of
the elected Board on all Board matters, with the exception of setting
District tax rates, modifying debt, and Board reorganization.
34. McDonnell consistently reimbursed the District the specific amount(s) she was
advanced /loaned by June 301h of each respective school year in which the pay
advance/loan was received.
a. McDonnell's reimbursements to the District were made via automatic payroll
deduction.
b. McDonnell's net pay represented payroll /salary received after the automatic
deduction of the repayment amount identified.
G. McDonnell reimbursed the District the full amount of salary advances
received prior to the conclusion of the fiscal year /school year in which the
advances were issued.
35. The District pay advances/loans which McDonnell, the Principal, the Business Office
Specialist, and the Elementary School Secretary received were issued with no
costs, fees, interest rates, or security required.
a. Calculated pay advance/loan repayments required repayment only at face
value of the pay advances/loans received.
36. In December 2017, the Pennsylvania Department of the Auditor General released
its 2012 -2013 through 2015 -2016 District audit report.
a. The audit identified District employees' receipt of interest -free loans (pay
advance) as one of four findings relating to the District's failure to apply best
practices /non- compliance with relevant requirements.
37. Following issuance of the audit report, Graham calculated the approximate amount
of interest the District lost from its General Fund Account as a result of the pay
advances/loans issued as well as the approximate amount of statutory interest the
advance/loan recipients avoided.
a. Interest lost from the General Fund Account was calculated at the interest
rates the District was receiving on its account at the times the pay
advances/loans were received.
The loss to the General Fund Account was calculated as $5.55.
McDonnell, 18 -011
ag�F-
2. Long reimbursed the District the calculated interest lost from the
General Fund Account via issuance of a personal check to the
District.
b. An interest rate of six percent (6 %) was utilized to calculate the interest fees
avoided by the pay advance/loan recipients.
1. The six percent rate was utilized in accordance with 41 P.S. § 201
(Maximum Lawful Interest Rate).
aa. Pursuant to 41 P.S. § 201, a maximum lawful interest rate of
six percent applies for all loans or uses of money totaling
$50,000.00 or less where no specific lesser rate is set.
38. On March 14, 2018, the District issued individual correspondence to McDonnell and
the remaining District pay advance/loan recipients via certified mail, requesting
voluntary payment of interest fees calculated in relation to his/her respective total
advance/loan received.
a. Interest fees assessed to McDonnell as a result of receiving interest -free pay
advances /loans from the District were identified in the correspondence to
McDonnell as detailed below:
School Year
2013 —2014
2014 —2015
2015— 2016
2016— 2017
Total
Interest Calculated
$44.34
$50.38
$145.77
$132.78
$373.27
39. On March 28, 2018, McDonnell made voluntary payment of the calculated interest
fees totaling $373.27 via issuance of a personal check dated March 23, 2018,
payable to the District.
a. McDonnell documented "Interest" in the "For" section of the personal check.
b. McDonnell issued personal payment to the District in the amount of $373.27
representing interest fees associated with her salary advances received.
1. The amount requested in payment of interest fees was calculated by
the District.
40. During a sworn statement provided to State Ethics Commission Investigators on
September 6, 2018, McDonnell asserted the following, among other information:
a. The concept of issuing salary advances to District personnel did not originate
with McDonnell.
b. Rach was aware of McDonnell's salary advance requests prior to processing
the requests.
C. McDonnell followed the same process for her own salary advance request
that was utilized for the issuance of the original salary advance to the
Principal which had been approved.
d. McDonnell repaid the entire balance of salary advances received prior to the
conclusion of the fiscal year /school year in which issued.
McDonnell, 18 -011
ag' e
e. McDonnell voluntarily offered to pay interest on the salary advances she
received upon notification that the propriety of the advances was being
questioned.
f. McDonnell did not receive any funds /advances from the District in excess of
her contracted annual salary to be received.
THE FOLLOWING FINDINGS RELATE TO MCDONNELL FAILING TO FILE
STATEMENTS OF FINANCIAL INTERESTS FOR CALENDAR YEARS 2012, 2014, 2015,
AND 2016.
41. On March 1, 2018, and March 27, 2018, contact was made with the District during
which copies of McDonnell's Statements of Financial Interests ( "SFIs ") for calendar
years 2012 through 2016 were requested.
a. McDonnell's calendar year 2013 SFI was the only SFI maintained by the
District for McDonnell within the requested date range.
42. McDonnell failed to file or otherwise maintain SFIs for calendaryears 2014 through
2016 with the District as required by the State Ethics Act.
43. McDonnell voluntarily submitted newly - completed SFIs to the Investigative Division
for calendar years 2014, 2015, and 2016 which were received at the State Ethics
Commissions Pittsburgh Regional Office on September 17, 2018.
a. McDonnell was informed of her lack of SFIs on file with the District for
calendar years 2014, 2015, and 2016 during a September 6, 2018, interview
with State Ethics Commission Investigators.
b. All of McDonnell's newly- submitted SFIs bear a completion date of
September 13, 2018.
III. DISCUSSION.
As the Acting Superintendent of the Duquesne City School District ( "District ") from
July 1, 2013, through June 30, 2016, and as the Superintendent of the District from July 1,
2016, until November 2, 2017, Respondent Barbara McDonnell, also referred to herein as
"Respondent," "Respondent McDonnell," and "McDonnell," was a public officiallpublic
employee subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics
Act'), 65 Pa. C.S. § 1101 et seq.
The allegations are that McDonnell violated Sections 1103(a), 1104(a), and 1105(a)
of the Ethics Act when she utilized the authority f her public employment to authorize and
receive advanced payments from the District on her bi- weekly paychecks, absent any
approval or authorization to do same; and when she failed to file Statements of Financial
Interests ( "SFIs ") in her position as the Acting Superintendent and/or the Superintendent
for calendar years 2012, 2014, 2015, and 2016.
Per the Consent Agreement, the Investigative Division has exercised its
prosecutorial discretion to nol pros the allegation under Section 1105(a) of the Ethics Act.
Based upon the nol pros, we need not address the Section 1105(a) allegation that is no
longer before us.
Pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is
prohibited from engaging in conduct that constitutes a conflict of interest:
§ 1103. Restricted activities
McDonnell, 18 -011
Page 2
(a) Conflict of interest. ---No public official or public
employee shall engage in conduct that constitutes a conflict of
interest.
65 Pa.C.S. § 1103(a).
The term "conflict of interest" is 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.
65 Pa.C.S. § 1102.
Section 1103(a) of the Ethics Act prohibits a public official /public employee from
using the authority of public office /employment or confidential information received by
holding such a public position for the private ecuniar 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.
Section 1104(a) of the Ethics Act provides that each public official /public employee
must file an SFI fort the preceding calendar year, each year that he holds the position and
the year after he leaves it.
As noted above, the parties have submitted a Consent Agreement and Stipulation of
Findings. The parties' Stipulated Findings are set forth above as the Findings of this
Commission. We shall now summarize the relevant facts as contained therein.
McDonnell served as the Acting Superintendent/Community Education Liaison for
the District from July 1, 2013, through June 30, 2016, and as the Superintendent of the
District from July 1, 2016, until November 2, 2017.
Effective April 2, 2013, the District was placed into receivership pursuant to the
provisions of the Public School Code of 1949, and Dr. Paul Long ( "Long ") was appointed
as the District Receiver ( "Receiver "). Once the District was placed into receivership, the
powers and duties of the Districts elected nine - Member Board of School Directors
( "Board ") were limited to reorganization, setting District tax rates, and modifying District
debt, and Long, as the Receiver, assumed all other powers and duties of the Board. Dr.
Paul Rach ( "Rach ") was appointed as the District Chief Recovery Officer ( "Chief Recovery
Officer "), with duties that focused primarily on serving as an advisor to Long.
The District maintains a General Fund Account and a Payroll Account at PNC Bank
in relation to District operations. An annual District Compensation Plan establishes the
salaries/wages and benefits for the District's Act 93 Administrative /Supervisory Employees.
During McDonnell's employment as the Acting Superintendent/Community Education
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Liaison, her wages were established by the annual District Compensation Plan.
McDonnell's wages as the Superintendent were established by an individual contract that
she had with the District.
In or about September 2013, the District (Acting) Elementary Principal (the
"Principal ") needed additional income due to financial hardship. The District Compensation
Plan in effect at that time allowed for administrative personnel to be paid in June for up to
five unused vacation days with the approval of the Superintendent. When the Principal
contacted the District Business Office Specialist ( "Business Office Specialist ") and inquired
into the possibility of immediately "selling" five unused vacation days to the District and
receiving payment at that time, the Principal was Informed that "selling" and being paid for
unused vacation days was permitted only in June. After discussions were held between the
Principal and Rach, the Principal and McDonnell, and Rach and McDonnell in relation to
the Principal's situation and potential options available, a determination was made that the
Principal could obtain an advance on her contracted salary allotment due for the
2013/2014 school year. The pay advance /loan was to be repaid to the District by the end
of the 2013/2014 school year via automatic payroll deduction.
The Principal was instructed to submit a written request for the pay advance/loan to
McDonnell for approval as the Superintendent. McDonnell approved the Principal's pay
advance/loan request dated September 27, 2013, and forwarded the request to the
Business Office Specialist, who calculated the repayment schedule for the pay
advance/loan and input into the District payroll system the amount to be automatically
deducted from each of the Principal's remaining paychecks for 2013 -2014. A pay
advance/loan in the amount of $1,000.00 was subsequently issued to the Principal. The
payladvance loan was repaid to a zero balance by June 30, 2014, via automatic payroll
deduction from the Principal's net wages.
After various District employees became aware of the issuance of the pay
advance/loan to the Principal, multiple pay advances/loans were issued to at least three
other District employees, including McDonnell, over the course of the 2013 -2014 through
2016 -2017 school years. The pay advances/loans were issued with no costs, fees,
interest rates, or security required. During that time period, McDonnell or the District
Business Manager —under McDonnell's authority— approved at least ten pay
advances/loans for the Principal, the Business Office Specialist, and the Elementary
School Secretary by signing or Initialing the written requests submitted and forwarding the
requests to the Business Office. McDonnell submitted her requests for pay advances/loans
to the Business Office Specialist, who verbally informed Rach of McDonnell's requests.
McDonnell, as the Superintendent, was subordinate to Rach in his position as the Chief
Recovery Officer, and Rach had the authority to deny or limit any requests for pay
advances, including those from McDonnell.
From the 2013 -2014 school year through the 2016 -2017 school year, McDonnell
received eleven pay advances/loans totaling $23,150.00, as detailed in Fact Findin 28.
McDonnell repaid the District in full for each pay advance/loan prior to the end oY the
school year in which she received the pay advancelloan. McDonnell repaid the District for
the pay advances/loans via automatic payroll deduction.
All of McDonnell's pay advances/loans were documented on the applicable Cash
Disbursement Reports presented for ratification at monthly Receiver meetings. Lon and
Rach routinely received the monthly Receiver meeting packet, which included a Cash
Disbursement report, for review at least three days prior to the Receiver meeting Neither
Long nor Rach questioned any of the pay advance/loan entries attributable to McDonnell or
any other District employee as documented on the Cash Disbursement Reports. At public
Receiver meetings, Long ratified all of the Cash Disbursement Reports which documented
the issuance of pay advances/loans to McDonnell.
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In December 2017, the Pennsylvania Department of the Auditor General released its
2012 -2013 through 2015 -2016 District audit report, which identified the receipt by District
employees of interest -free pay advances/loans as one of four findings relating to the
District's failure to apply best practices/non-compliance with relevant requirements. The
District Business Office Consultant subsequently calculated that the District General Fund
Account had sustained a loss of approximately $5.55 in interest as a result of the pay
advances/loans being issued to District employees. Long issued a personal check to the
District as payment for the lost interest.
The District Business Office Consultant also calculated the approximate amount of
interest that McDonnell and other District employees had avoided payin g as a result of
receiving interest -free pay advances/loans from the District. The District Business Office
Consultant calculated the interest by utilizing a statutory maximum lawful interest rate of six
percent pursuant to 41 P.S. § 201. Based upon a six percent interest rate, the total
amount of interest that would have been associated with McDonnell's pay advances/loans
was calculated to be $373.27, with interest attributed to each school year's pay
advances/loans as follows: (1) $44.34 in interest for the 2013 -2014 school year; (2) $50.38
in interest for the 2014 -2015 school year; �3y $145.77 in interest for the 2015 -2016 school
year; and (4) $132.78 in interest for the 2 6 -2017 school year.
By correspondence issued on March 14, 2018, the District asked McDonnell for
voluntary payment in the total amount of $373.27 as interest assessed in relation to the
pay advances/loans that she had received. On March 28, 2018, McDonnell voluntarily paid
the District the amount of $373.27, which represented interest associated with her pay
advances/loans.
As for McDonnell's SFIs, on March 1, 2018, and March 27, 2018, the Investigative
Division of the Commission requested copies of McDonnell's SFIs for calendar years 2012
through 2016 from the District. McDonnell's SFI for calendar year 2013 was the only SFI
within the requested date range that was on file with the District.
Having highlighted the Stipulated Findings and issues before us, we shall now apply
the Ethics Act to de (ermine the proper disposition of this case.
The parties` Consent Agreement sets forth a proposed resolution of the allegations
as follows:
3. The Investigative Division will recommend the following in
relation to the above allegations:
That no violation of Section 1103(a) of the Public
Official and Employee Ethics Act, 65 Pa.C.S. §
1103(a), occurred in relation to Barbara
McDonnell, in her capacity as the
Superintendent of the Duquesne City School
District, authorizing advances of biweekly pay to
herself, in that insufficient evidence exists to
establish either:
1. A use of office to acquire a pecuniary
benefit in violation of the Ethics Act; or
Receipt of a private pecuniary benefit in
violation of the Ethics Act.
b. Additionally, any use of office in authorizing
advances of bi- weekly pay to herself, or other
employees of the Duquesne City School District,
McDonnell, 18 -011
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Loccurred] with the tacit approval of the District
Chief Recovery Officer and/or District Receiver.
C. That a transgression of Section 1104(a) of the
Public Official and Employee Ethics Act, 65
Pa.C.S. LcDonnell, 1104(a), occurred in relation to
Barbara in her capacity as the
Superintendent of the Duquesne City chool
District, failing to file Statements of Financial
Interests in her position as Acting
Superintendent and/or Superintendent for
calendar years 2012, 2014, 2015, and 2016.
d. That nofurtheraction be undertaken pursuantto
Section 1105(a) of the Public Official and
Employee Ethics Act, 65 Pa.C.S. § 1105(a), as
the events merge with that of paragraph 3(b)
above.
McDonnell has, prior to the issuance of the Investigative
Complaint/Findings Report, made repayment of any and all
pay advance, as well as payment of statutory interest as
calculated by the Duquesne City School District, and as such
no further action is deemed necessary.
McDonnell has, prior to the issuance of the Investigative
Complaint/Findings Report, filed complete and accurate
Statements of Financial Interests with the Duquesne City
School District, through the Pennsylvania State Ethics
Commission, for calendar years 2012, 2014, 2015, and 2016.
As such no further action is deemed necessary.
6. The Investigative Division will recommend that the State Ethics
Commission take no further action in this matter; and make no
specific recommendations to any law enforcement or other
authority to take action in this matter. Such, however, does not
prohibit the Commission from initiating appropriate
enforcement actions in the event of Respondent's failure to
comply with this agreement or the Commission's order or
cooperating with any other authority who may so choose to
review this matter further.
Consent A regiment, at 1 -2.
In considering the Consent Agreement, we agree with the parties that there is an
insufficiency of evidence to establish a violation of Section 1103(a) of the Ethics Act in this
matter.
From the 2013 -2014 school year through the 2016 -2017 school year, McDonnell
received eleven pay advances /loans totaling $23,150.00 from the District. McDonnell
submitted her requests for pay advances /loans to the Business Office Specialist. Rach,
who as the Chief Recovery Officer had the authority to deny or limit any requests for pay
advances /loans, was verbally informed by the Business Office Specialist of McDonnell's
requests. Neither Rach nor the Receiver, Long, questioned any pay advance /loan entries
attributable to McDonnell as documented on Cash Disbursement Reports that Rach and
Long received for review. At ublic Receiver meetings, Long ratified all of the Cash
Disbursement Reports which documented the issuance of McDonnell's pay
advances /loans. McDonnell repaid the District in full for her pay advances/loans, and at
McDonnell, 18 -011
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the request of the District, she voluntarily paid the District the amount of $373.27 as
interest associated with her pay advances /loans. There is no basis in the Stipulated
Findings for concluding that McDonnell used the authority of her public position(s) as the
Acting Superintendent and/or the Superintendent of the District to authorize her own pay
advances/loans or that she realized a private pecuniary benefit as a result of receiving
those pay advances /loans.
Accordingly, based upon the Stipulated Findings and the Consent Agreement, we
hold that no violation of Section 1103(a) of the Ethics Act, 65 Pa.C.S. 1103(a), occurred
in relation to the allegation that McDonnell, in her capacities as the Acting Superintendent
and the Superintendent of the District, authorized advances of bi- weekly pay to herself, in
that: (1) insufficient evidence exists to establish either a use of office to acquire a private
pecuniary benefit in violation of the Ethics Act or the receipt of a private pecuniary benefit
in violation of the Ethics Act; and (2) any use of office in authorizing advances of bi- weekly
pay to herself or other employees of the District occurred with the tacit approval of the
Chief Recovery Officer and/or the Receiver.
We agree with the parties, and we hold, that a transgression of Section 1104(a) of
the Ethics Act, 65 Pa.C.S. § 1104(a), occurred in relation to McDonnell, in hercapacities as
the Acting Superintendent and the Superintendent of the District, failing to file SFIs for
calendar years 2012, 2014, 2015, and 2016
We note that the Consent Agreement provides that prior to the issuance of the
Investigative Complaint/Findings Report in this matter, McDonnell filed complete and
accurate SFIs for calendar years 2012, 2014, 2015, and 2016 with the District, through this
Commission.
We determine that the Consent Agreement submitted by the parties sets forth a
proper disposition for this case, based upon our review as reflected in the above analysis
and the totality of the facts and circumstances.
IV. CONCLUSIONS OF LAW:
1. As the Acting Superintendent of the Duquesne City School District ( "District ") from
July 1, 2013, through June 30, 2016, and as the Superintendent of the District from
July 1, 2016, until November 2, 2017, Respondent Barbara McDonnell
McDonnell") was a public official /public employee subject to the provisions of the
Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seg.
2. No violation of Section 1103(a) of the Ethics Act, 65 Pa.C.S. § 1103(a), occurred in
relation to the allegation that McDonnell, in her capacities as the Acting
Superintendent and the Superintendent of the District, authorized advances of bi-
weekly pay to herself, in that: (1) insufficient evidence exists to establish either a
use of office to acquire a private pecuniary benefit in violation of the Ethics Act or
the receipt of a private pecuniary benefit in violation of the Ethics Act; and (2) any
use of office in authorizing advances of bi- weekly pay to herself or other employees
of the District occurred with the tacit approval of the District Chief Recovery Officer
and /or the District Receiver.
3. A transgression of Section 1104(a) of the Ethics Act, 65 Pa.C.S. § 1104(a),
occurred in relation to McDonnell, in her capacities as the Acting Superintendent
and the Superintendent of the District, failing to file Statements of Financial Interests
for calendar years 2012, 2014, 2015, and 2016.
In Re: Barbara McDonnell, File Docket: 18 -011
Respondent Date Decided: 516119
Date Mailed: 5110119
ORDER NO. 1751
1. No violation of Section 1103(a) of the Public Official and Employee Ethics Act
( "Ethics Act "), 65 Pa.C.S. § 1103(a), occurred in relation tote allegation that
Barbara McDonnell ( "McDonnell "), in her capacities as the Actin Su erintendent
and the Superintendent of the Duquesne City School District ('District'), authorized
advances of bi- weekly pa to herself, in that: (1) insufficient evidence exists to
establish either a use of office to acquire a private pecuniary benefit in violation of
the Ethics Act or the receipt of a private pecuniary benefit in violation of the Ethics
Act; and (2) any use of office in authorizing advances of bi- weekly pay to herself or
other employees of the District occurred with the tacit approval of the District Chief
Recovery Officer and/or the District Receiver.
2. A transgression of Section 1104(a) of the Ethics Act, 65 Pa.C.S. § 1104(a),
occurred in relation to McDonnell, in her capacities as the Acting Superintendent
and the Superintendent of the District, failing to file Statements of Financial Interests
for calendar years 2012, 2014, 2015, and 2016.
BY THE COMMISSION,
Nicholas A. Colafella, Chair