No. 06-I-25 State Ethics Commission Advisory Opinion November 9, 2006
The Indiana State Ethics Commission ("Commission") issues the following advisory opinion concerning Indiana Code 4-2-6. Any opinion rendered by the Commission, until amended or revoked, is binding on the Commission in any subsequent allegations concerning the person who requested the opinion and who acted in good faith in accordance with the advice rendered, unless material facts were omitted or misstated by the person in the request for the opinion or testimony before the Commission.
SUMMARY
IC 4-2-6-8 Financial disclosure; filing false statement; penalty
SEC concluded that since no individual members of the PERF board of trustees were permitted to transact business on behalf of the fund, none of them could properly be characterized as having final purchasing authority for purposes of IC 4-2-6-8(a)(6).
BACKGROUND
On November 3, 2006, the Commission received a joint request for an advisory opinion from the respective General Counsels for the Indiana State Teachers’ Retirement Fund (TRF), the Indiana Public Employees’ Retirement Fund (PERF), and the Indiana Finance Authority (IFA) regarding the application of IC 4-2-6-8(a)(6) to the board members of each entity. The request for an opinion noted that IC 4-2-6-8(a)(6) requires any agency employee, special state appointee, former agency employee, or former special state appointee with “final purchasing authority” to file a written financial disclosure statement with the Inspector General. The term “final purchasing authority” has not yet been defined by statute, administrative rule, or written advisory opinion. The General Counsels indicated their belief that whether their respective board members would be required to file a financial disclosure statement in accordance with IC 4-2-6-8(a)(6) hinged on the definition of the term “final purchasing authority” and whether their respective board members would be considered to have such authority in the performance of their duties as special state appointees with the entities in question.
While the General Counsels collectively asked for a written advisory opinion as to the application of IC 4-2-6-8 to their respective boards, the Commission notes that each entity must be analyzed separately given that each entity has different statutory authority. Accordingly, the Commission issues separate written advisory opinions to each entity. The analysis in this opinion relates specifically to PERF.
ISSUE
Are members of PERF’s board of trustees required to file financial disclosure statements in accordance with IC 4-2-6-8?
RELEVANT LAW
IC 4-2-6-8, Financial disclosure; filing false statement; penalty
ANALYSIS
As a threshold matter, the Commission finds that it has jurisdiction over the six (6) individuals who comprise PERF’s board of trustees. The Commission renders this advisory opinion by virtue of its authority under IC 4-2-6-4(b)(1)(A). This analysis is limited to the factual representations made to the Commission by Andrea Unzicker, General Counsel of PERF, and the Commission’s understanding of the PERF’s statutory authority set forth in IC 5-10.3.
The Commission notes that PERF’s board is composed of six (6) trustees. See IC 5-10.3-3-1. The board of trustees appoints a director, subject to approval of the Governor. See IC 5-10.3-3-7. The statutory duties of the director are set forth in IC 5-10.3-3-9. Ms. Unzicker represents to the Commission that PERF’s procurement policies provide that the Executive Director shall have full and complete authority to enter into contracts. Ms. Unzicker also represents that PERF’s board of trustees is responsible for approving investment contracts, but that no individual board member can expend money or sign a contract on behalf of PERF. According to IC 5-10.3-3-6, four (4) trustees constitute a quorum for the transaction of business. Various duties and powers of the board of trustees are set forth in IC 5-10.3-3-7 and IC 5-10.3-3-8 respectively. The board’s powers specifically include the expenditure of money, including income from the fund’s investments, for effectuating the fund’s purposes. See IC 5-10.3-3-7(12).
With regard to the application of IC 4-2-6-8 in this case, the Commission finds that members of PERF’s board of trustees are not subject to IC 4-2-6-8(a)(6). Specifically, the filing requirement set forth in IC 4-2-6-8(a)(6) appears to be intended to apply to an individual employee or special state appointee, current or former, who has or had individual discretion to exert final purchasing authority. Given that no individual board member may transact business on behalf of the fund, but rather, a quorum vote is required for the transaction of business, it appears that the no individual board member may properly be characterized as having final purchasing authority for purposes of IC 4-2-6-8(a)(6).
The Commission notes that members of PERF’s board of trustees are subject to state ethics laws prohibiting various conflicts of interest that are set forth in IC 4-2-6. To the extent that any individual board member would have a potential conflict of interest as contemplated by IC 4-2-6-9, any other state ethics statute, or PERF’s enabling statute, such member has a mandatory duty to disclose the potential conflict of interest for review.
Conclusion
Subject to the foregoing analysis, members of PERF’s board of trustees are not required to file financial disclosure statements under IC 4-2-6-8(a)(6); however, this advisory opinion does not relieve any individual board of member of any filing requirement the respective board member may have under another provision of IC 4-2-6-8(a). Members of PERF’s board of trustees must ensure compliance with this advisory opinion and all state ethics laws and rules.