Advisory Opinion No. 2016-21 Rhode Island Ethics Commission Advisory Opinion No. 2016-21 Approved: June 21, 2016 Re: Mario P. Celico QUESTION PRESENTED: The Petitioner, a member of the Westerly Town Council, a municipal elected position, requests an advisory opinion regarding whether he may participate in the Town Council’s discussions and voting relative to the management and annual funding of the Town’s police pension fund, given that he is a retired Westerly police officer and pension recipient. RESPONSE: It is the opinion of the Rhode Island Ethics Commission that the Petitioner, a member of the Westerly Town Council, a municipal elected position, may participate in the Town Council’s discussions and voting relative to the management and annual funding of the Town’s police pension fund, given that his pension benefits are already set and because the Town Council’s decisions would not affect the Petitioner to any greater or lesser extent than any other similarly situated beneficiary of the pension fund. The Petitioner was elected to serve on the Westerly Town Council in 2014. He states that in 1989 he retired from employment with the Westerly Police Department and, thereafter, began receiving a monthly pension from the Westerly police pension fund. According to the Petitioner, the Town Council makes an annual appropriation to the pension fund through the Town budget. Prior to making each appropriation, the Town Council votes to hire an actuarial firm to study the fund and to recommend an appropriation amount necessary to keep the fund solvent. Finally, the Petitioner notes that the Town Council chooses a financial institution to manage the pension fund. The Petitioner represents that these decisions by the Town Council do not affect his pension, the terms of which were set in 1989 at the time of his retirement. Rather, he states that changes to the pension fund would only potentially impact future retirees. Nevertheless, the Petitioner seeks an opinion as to whether he is permitted to participate in the Town Council’s discussions and voting relative to the pension fund’s management and appropriation. Under the Code of Ethics, a public official may not participate in any matter in which he has an interest, financial or otherwise, that is in substantial conflict with the proper discharge of his duties or employment in the public interest. R.I. Gen. Laws § 36-14-5(a). A substantial conflict of interest exists if an official has reason to believe or expect that he, any person within his family, a business associate or an employer will derive a direct monetary gain or suffer a direct monetary loss by reason of his official activity. Section 36-14-7(a). Additionally, a public official may not use his office for pecuniary gain, other than as provided by law, for himself, a family member, employer, business associate, or a business that he represents. Section 36-14-5(d). However, section 36-14-7(b) of the Code, sometimes referred to as the “class exception,” states that a public official will not have an interest which is in substantial conflict with his official duties if any benefit or detriment accrues to him or any person within his family “as a member of a business, profession occupation or group, or of any significant and definable class of persons within the business, profession, occupation or group, to no greater or lesser extent than any other similarly situated member of the business, profession, occupation or group, or the significant and definable class of persons within the business, profession, occupation or group.” When determining whether any particular circumstance supports and justifies the application of the class exception, the Commission will consider the totality of the circumstances. Among the important factors considered are: 1) the description of the class; 2) the size of the class; 3) the function or official action being contemplated by the public official; and 4) the nature and degree of foreseeable impact upon the class and its individual members as a result of the official action. In prior advisory opinions the Commission has applied the class exception to fact patterns involving pension plans. For example, in Advisory Opinion 2013-5, an East Providence City Council member was permitted to also serve on the Town’s Police and Fire Pension Fund Board provided that her official actions on the Board did not affect her husband (a pension recipient) to any greater or lesser extent than any other similarly situated beneficiary of the pension fund. See also A.O. 2003-57 (opining that a state senator was permitted to participate in the Rhode Island Senate’s consideration of legislation concerning the state pension plan, of which he was a member, given that the legislation would affect all state employees and all teachers in the state); A.O. 2008-16 (opining that the Director of Administration for Providence, who had a vested interest in the municipal employees’ pension plan administered by the state, could serve on a special House Commission to study the state retirement system, given that the petitioner would be financially impacted to no greater or lesser extent than any other similarly situated participants in the state and municipal employees’ pension plan). Here, the Petitioner is a member of a class of 91 current and retired officers in Westerly who are participants in the pension fund, and he is one of 39 retired officers already receiving a pension. The Petitioner contends that any official actions by the Town Council relative to annual appropriations, the appointment of an actuarial firm or the selection of a financial institution to manage the fund will not affect his pension. Rather, he states, such changes would only impact future retirees. Even assuming arguendo that such actions would impact the Petitioner’s pension in some way, these management decisions would affect all of the current retirees equally. For all of these reasons, it is the opinion of the Ethics Commission that the Petitioner may participate in the Town Council’s discussions and voting relative to the police pension fund’s annual appropriation as well as the selection of the fund’s actuarial firm and fund manager, provided that these decisions do not affect the Petitioner to any greater or lesser extent than any other similarly situated beneficiary of the police pension fund. However, the Petitioner is required to recuse from any Town Council matters that solely impact or relate to himself or his pension benefits. Notice of recusal must be filed with the Ethics Commission in accordance with § 36-14-6. This Advisory Opinion is strictly limited to the facts stated herein and relates only to the application of the Rhode Island Code of Ethics. Under the Code of Ethics, advisory opinions are based on the representations made by, or on behalf of, a public official or employee and are not adversarial or investigative proceedings. Finally, this Commission offers no opinion on the effect that any other statute, regulation, ordinance, constitutional provision, charter provision, or canon of professional ethics may have on this situation. Code Citations: § 36-14-5(a) § 36-14-5(d) § 36-14-6 § 36-14-7(a) § 36-14-7(b) Related Advisory Opinions: A.O. 20013-5 A.O. 2008-16 A.O. 2005-22 A.O. 2003-57 Keywords: Class Exception Pensions