Advisory Opinion No. 2003-10

Re: Donald DeFedele

QUESTION PRESENTED

The petitioner, the Chairperson for the North Kingstown School Committee, a municipal elected official, who in his private employment is a financial planner with the Pioneer Financial Group, requests this advisory opinion as to whether he may participate and/or vote in teacher contract negotiations given that he provides financial planning services to several North Kingstown schoolteachers.

RESPONSE

It is the opinion of the Rhode Island Ethics Commission that the petitioner, the Chairperson for the North Kingstown School Committee, a municipal elected official, who in his private employment is a financial planner with the Pioneer Financial Group, may participate and/or vote in teacher contract negotiations. This opinion is based on Section 7(b) of the Code which provides that the petitioner may participate in matters as a public official as long as they do not affect him or his business associates to any greater extent than any other similarly situated member of a significant and definable class.

The petitioner represents that he was elected as the Chairperson for the North Kingstown School Committee on November 5, 2002 and sworn in on December 2, 2002. He further advises that in his private employment he is a financial planner with the Pioneer Financial Group in Warwick, RI. He states that in that capacity he offers financial advice to clients, including some teachers presently employed by the North Kingstown School Department. He represents that this advice pertains to personal investments that are not related to employment benefits. Furthermore, the petitioner represents that the teachers’ contract is due to expire on August 31, 2003 and he has agreed to be a member of the negotiating team representing the North Kingstown School Committee. This contract affects all teachers in the North Kingstown School District, here numbering approximately 370. The petitioner seeks an advisory opinion as to whether he may simultaneously provide personal financial planing services to North Kingstown schoolteachers and participate in negotiations for the teacher’s contract.

Under the Code of Ethics, a public official or employee may not have an interest that is in substantial conflict with the proper discharge of his duties or employment in the public interest. See R.I. Gen. Laws § 36-14-5(a). An official will have an interest in substantial conflict with his official duties if it is likely that a “direct monetary gain” or a “direct monetary loss” will accrue, by virtue of the public official’s activity, to the official, a family member, employer, business associate, or a business that he represents. See R.I. Gen. Laws § 36-14-7(a). However, the Code provides an exception whereby the official will not have an interest in substantial conflict with his public duties if any benefit accrues to him, his business associate, or any business by which he is employed or represents “as a member of a business, profession, occupation or group, to no greater 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.” R.I. Gen. Laws § 36-14-7(b).

A person subject to the Code of Ethics is prohibited from using his public position or confidential information received through his position to obtain financial gain, other than that provided by law, for himself, a business associate or a family member. See R.I. Gen. Laws § 36-14-5(d). “Business associate” is defined as any individual or entity joined with a public official “to achieve a common financial objective.” R.I. Gen. Laws § 36-14-2(3). Here, the petitioner and those teachers for whom he provides financial planning services are business associates as defined under R.I. Gen Laws §36-14-2(3).

Finally, Commission Regulation 5011 prohibits any person subject to the Code of Ethics from engaging in a financial transaction, including participating in private employment or consulting, with a subordinate or any person over whom he exercises supervisory authority. However, that prohibition does not apply where the employment is initiated by the subordinate or is in the normal course of a regular commercial business or occupation. See Commission Regulation 5011.

Here, the petitioner is providing financial planning services to North Kingstown schoolteachers in the normal course of commercial business as a financial planner. This is a service that the Pioneer Group provides to the general public and relates solely to personal investments, not employment benefits. Additionally, the petitioner represents that his clients, who are teachers, initiated all transactions. As such, the prohibitions of Commission Regulation 5011, relating to transactions with subordinates, do not apply.

As to the prohibitions contained in Section 5(a) of the Code, the Commission finds that the class exception of §7(b) applies. In analogous past advisory opinions, the Commission has opined that school committee members with family members in the school system could participate in negotiations and voting on the school employee contracts as long as the family members were part of a significant and definable class (for example, all of the teachers in a school system). The Commission generally applies the 7(b) class exception where the matter at issue concerns large groups, such all members of a community, all hunters, all state pension recipients or all teachers within a school system. See A.O. 2002-27; A.O. 2002-12; and A.O. 2002-10. Conversely, the Commission has concluded that school committee members with family members in the school system may not participate in negotiations or voting on issues concerning a family member's subset of teachers or employees (e.g., nurses or teachers aides), particularly where the subset was not large or concerning a family member individually. See A.O. 98-32, A.O. 97-65 and A.O. 95-23. Here, a teacher’s contract that would affect all teachers in the North Kingstown School District, here numbering approximately 370, and not a subset of teachers, clearly falls within that exception.

Accordingly, it is the opinion of the Rhode Island Ethics Commission that the petitioner may participate in negotiations and voting with regard to the teachers’ contract while simultaneously providing financial planning services to individual teachers, as long as all North Kingstown teachers are affected to no greater or lesser extent than are petitioner’s teacher/clients. We further caution the petitioner that he may not in any way use his position or confidential information received through his position to obtain financial gain for himself or his clients. See R.I. Gen. Laws 36-14-5(d).

Code Citations:

36-14-2(3)

36-14-5(a)

36-14-5(d)

36-14-5011

36-14-7(a)

36-14-7(b)

Related Advisory Opinions:

2002-27

2002-11

2002-10

99-82

99-55

99-36

98-162

98-41

98-40

98-32

97-118

97-79

97-65

95-23

Keywords:

class exception

contracts

private employment

transactions with subordinates