Advisory Opinion No. 97-79

Re: Barbara R. Binder

A. QUESTION PRESENTED

The Petitioner, the General Treasurer for the State of Rhode Island, a state elected position, who also serves as Chair of the State Retirement Board, requests an advisory opinion as to whether the General Treasurer and her staff and the staff and members of the Retirement Board may participate in a review and/or other matters concerning a recent decision by a Retirement Board Hearing Officer awarding interest on the return of retirement contributions, given that they are members of the State retirement system.

B. SUMMARY

The Code of Ethics does not prohibit the staff and members of the Retirement Board from participating in a review and/or other matters concerning a Retirement Board Hearing Officer's decision to award interest on the return of retirement contributions. The staff and Board members, as past, present and future members of the State retirement system, clearly would be affected by any global decisions reached by the Board regarding the awarding of interest on the return of retirement contributions, as well as a host of other issues. That private financial interest is not in substantial conflict with the proper discharge of their duties and responsibilities in the public interest, however, because its benefit or detriment would affect the staff and Board members to no greater extent than any other similarly situated members of a significant and definable classes of persons. See R.I. Gen. Laws § 36-14-7.

C. DISCUSSION

1. Facts

On March 12, 1997, a Retirement Board Hearing Officer rendered a decision regarding an employee who had recently left state service, and who with fifteen years of service was vested in the State's retirement system. The Officer awarded the employee interest on retirement contributions that he chose to have returned to him in lieu of leaving the contributions in the State system and later collecting a State pension. The Hearing Officer's decision, and related issues, fall within the jurisdiction of the Retirement Board and are scheduled to be considered at the Board's May 12, 1997, meeting.

Among the members of the Retirement Board are State employees and teachers, all of whom are present or potential future members of the State's retirement system, depending on their numbers of years of service. In addition, the State's General Treasurer, members of her senior staff, and high-level staff members of the Retirement Board itself, all of whom may have input regarding the review of the March 12 decision, also are members, or potential future members of the retirement system. Several of these State employees previously worked in State service and left to work in the private sector or for other reasons. In each instance the employee withdrew his or her retirement contributions from the State system but did not receive interest on those contributions. Both the receipt of contributions in past years, as well as the potential future receipt of withdrawn contributions, could be impacted by the Retirement Board's review and/or other consideration of the Hearing Officer's March 12 decision.

2. Analysis

The Code of Ethics prohibits a public official or employee from taking any public action if the official or employee has an interest, usually a private financial interest, which is in substantial conflict with the proper discharge of their public duties. R.I. Gen. Laws § 36-14-5(a) and (7)(a). A private financial interest is not in such substantial conflict, however, if the potential benefit or detriment to be realized would affect the public official or employee to no greater or lesser extent than any other similarly situated member of a significant and definable class of persons. R.I. Gen. Laws § 36-14-7(b). This is commonly referred to as the "class exception" to the conflict of interest laws.

The statute itself offers little guidance as to what constitutes a cognizable "business, profession, occupation or group, or...significant and definable class of persons within the business, profession, occupation or group," warranting exception as a significant and definable class. The absence of firm guidelines presumably recognizes the difficulty in anticipating the variety of sizes and contours of "classes" that might exist in the public and private sectors. As a result, the General Assembly left it to the Ethics Commission to provide additional edification and interpretation.

Over the years the Ethics Commission has developed a body of advisory opinions that provide guidance on this issue. For example, in A. O. 95-101, the Commission concluded that a Town Solicitor and owner of rental property with trash receptacles could advise the town on an ordinance which applied to all municipal waste whether it was from a single or multiple family dwelling. In another instance the Commission found that a DEM employee could apply for hunting or fishing licenses and fish in streams stocked by DEM since he was a member of a significant and definable class of persons, i.e., the thousands of citizens of the State that take advantage of the outdoor activities under DEM's jurisdiction. A.O. 93-65. The Commission has also found that legislators could vote on matters when they were part of a sufficiently large and, therefore, significant and definable class. See A.O. 94-25, A.O. 95-48, A.O. 95-55. However, where legislators were part of smaller, subgroups of a class, the Commission has concluded that the legislator could not participate in various matters. A.O. 95-55, A.O. 95-56, A.O. 95-63, A.O. 93-64, A.O. 95-65, A.O. 95-69, A.O. 95-70, A.O. 95-75. See also, A.O. 96-66 (concluding that sponsorship of an ordinance to reduce the Town Inventory Tax did not fall within the "class exception" since a Town Councilor would benefit more than any of the estimated 100 businesses in the municipality since he was a supermarket owner; therefore, the class was not so large as to dissolve the appearance that the petitioner's actions were being influenced by the potential financial benefits to him).

The Commission has also issued advisory opinions where the group was more limited. See A.O. 91-97 (concluding Zoning Board of Review member could participate in Water District matters since as a customer of the Water District, he was a member of a significant class of similarly situated persons); A.O. 94-27 (concluding that the public official could participate in contract deliberations while her mother was a member of the union); A.O. 95-35 (finding that no violation would result for members of Pension Committee voting on general pension issues unless the plan would affect them either individually or as a member of a defined group). In these opinions, despite the somewhat narrower contours of the class at issue, the Commission concluded that the petitioners were members of a "group," and, therefore, warranted treatment as an excepted class, rather than of a subgroup.

Based on this Commission's interpretation of R.I. Gen. Laws § 36-14-7(b), and in line with previous advisory opinions, the Commission concludes that the General Treasurer and her staff and the staff of the and members of the State Retirement Board may participate in a review and other matters concerning awarding of interest on returned retirement contributions notwithstanding the fact that the staff and Board members are themselves present or potential future participants in the retirement system. As discussed above, this opinion is based on the class exception provided in R.I. Gen. Laws § 36-14-7(b). Here, the Retirement Board must decide how to handle a recent decision of a Hearing Officer awarding interest to an employee that withdrew his retirement system contributions. Any action by the Board will impact former and current Retirement System participants who chose, or in the future choose to withdraw contributions after leaving state employment. Each of the potential groups referenced by the Petitioner (ie., retired employees who withdrew contributions, active State employees, active vested state employees, inactive state employee members who have not removed their contributions) bear the characteristics of significant and definable classes as those terms are used in the Code of Ethics and have been interpreted by this Commission over the years.

Code Citations:

36-14-5(a)

36-14-7(a)

36-14-7(b)

Related Advisory Opinions:

95-101

95-55

95-35

Keywords:

class exception

pension benefit