CEO 00-13 -- August 29, 2000
CONFLICT OF INTEREST; VOTING CONFLICT
CITY COMMISSIONER RECEIVING PENSION BENEFITS AS A FORMER EMPLOYEE OF CITY FIRE DEPARTMENT AND VOTING ON COLLECTIVELY BARGAINED FOR INCREASE IN BENEFITS
To: Robert (Bob) J. Shelley, City Commissioner (Pompano Beach)
SUMMARY:
Because pension matters, such as proposed periodic "cost of living" increases, would comprise only a small fraction of the responsibilities of the City Commission, neither a "continuing or frequently recurring" conflict between the City Commissioner's private interests, as a recipient of pension benefits from the City's Firefighter Retirement System, and the performance of his public duties, as a City Commissioner, nor an impediment to the full and faithful discharge of his public duties is created by his service as a member of the City Commission while also receiving benefits as a retiree of the City Fire Department.
A City Commissioner is not prohibited by Section 112.3143(3)(a), Florida Statutes, from voting on the City's ratification of the collective bargaining agreement or on any amendments to the City's ordinances required to effectuate any changes to the Retirement System necessitated by the City's ratification of the collective bargaining agreement. The class of members of the Firefighters Retirement System who would be benefited immediately and directly by the proposed periodic cost of living increases is sufficiently large that any gain or loss attendant to the City Commission's ratification of the collective bargaining agreement would not be "special." There also do not appear to be any circumstances unique to the City Commissioner by which he would stand to gain or lose more than the other members of the class of members of the Firefighter Retirement System who currently receive benefits or who are in DROP. Therefore, there would be no "special" gain or loss inuring to the Commissioner as a result of his voting on an ordinance specifically amending provisions of the Retirement System to provide for periodic cost of living increases to be calculated into the amount of benefits received by retiree members of the System.
QUESTION:
Would a prohibited conflict of interest or voting conflict of interest be created were you, a City Commissioner who is a retiree of the City's Fire Department and a recipient of benefits from the City's Police & Firefighters' Retirement System, to vote on the ratification of a proposed collective bargaining agreement and on any necessary amendments to the City's ordinances required to effectuate any changes to the retirement plan necessitated by the agreement, where one of the provisions of the agreement provides for a periodic cost of living increase in retirement benefits paid?
Your question is answered in the negative.
In your letter of inquiry, you advise that you are requesting an opinion as to whether a prohibited conflict of interest or a voting conflict of interest would be created by your voting to ratify a proposed collective bargaining agreement which would increase the pension of all retired firefighters, including yourself, and to adopt amendments to the City's ordinances required to effectuate changes to the retirement plan.
You advise that you are a former employee of the City of Pompano Beach, having retired in 1985 from the City Fire Department. Currently, you receive a monthly pension benefit from the Pompano Beach Police & Firefighters' Retirement System, which was established by City ordinance [Section 34.046, Pompano Beach, Florida Code of Ordinances] and is governed by Chapter 175, Florida Statutes, with respect to firefighters, and Chapter 185, Florida Statutes, with respect to police officers, you write. You relate further that the amount of pension benefits that you receive is based upon a benefit formula set forth in the City ordinance, which applies equally to all retired firefighters.
You also advise that you were elected in March 2000 to a seat on the City of Pompano Beach City Commission, which currently is engaged in collective bargaining negotiations with the firefighters' union. You relate that the negotiations have focused on the possibility of the City providing periodic cost of living increases in the pensions paid to both current and future retirees, that is, to those retirees currently receiving pensions, such as yourself, and to current employees who would receive the cost of living increases after they retire. You emphasize that the pension increases would be paid to all current and future Fire Department retirees, not just to you.
The City's Police & Firefighters' Retirement System, you write, currently pays retirement benefits to 60 service retirees, disability retirees, and beneficiaries, including yourself. There are 28 currently active employees in the DROP plan,[1] you advise, who also will benefit from the proposed increase. In addition, you relate that there are two terminated employees, who, when they become old enough to receive a pension, will benefit from this increase. Finally, you advise that 116 actively employed members of the Retirement System will benefit from the proposed change in the pension ordinance when they become eligible to receive their pensions.[2]
Once the Firefighters' Union and the City reach a tentative collective bargaining agreement, you write, it must be ratified by the City Commission, and, if the terms of the ratified collective bargaining agreement require any amendments to City Ordinances (such as would be required if the collective bargaining agreement provides for an increase in pension benefits), the City Manager is required to present a proposed ordinance amendment to the City Commission for adoption. You relate that, as a City Commissioner, unless a voting conflict of interest exists, you are required to vote both upon the proposed collective bargaining agreement and on any required ordinance amendments. You do not believe that a voting conflict of interest would be created by your voting on these matters because the proposed cost of living adjustment formula will increase all retirees' benefits by an equal percentage and you will receive the same benefit as everyone else. In other words, you believe that any proposed increase in pension benefits will not specially apply to you, but will apply to all of the 206 participants in the Retirement System who now or in the future will receive pension benefits. You claim that you will receive the same "gain" as the other 205 pension plan participants -- no more and no less.
Relevant to your inquiry are the following provisions of the Code of Ethics for Public Officers and Employees:
CONFLICTING EMPLOYMENT OR CONTRACTUAL RELATIONSHIP.--No public officer or employee of an agency shall have or hold any employment or contractual relationship with any business entity or any agency which is subject to the regulation of, or is doing business with, an agency of which he or she is an officer or employee, excluding those organizations and their officers who, when acting in their official capacity, enter into or negotiate a collective bargaining contract with the state or any municipality, county, or other political subdivision of the state; nor shall an officer or employee of an agency have or hold any employment or contractual relationship that will create a continuing or frequently recurring conflict between his or her private interests and the performance of his or her public duties or that would impede the full and faithful discharge of his or her public duties. [Section 112.313(7)(a), Florida Statutes.]
VOTING CONFLICTS.--No county, municipal, or other local public officer shall vote in an official capacity upon any measure which inures to his or her special private gain or loss; which he or she knows would inure to the special private gain or loss of any principal by whom the officer is retained or to the parent organization or subsidiary of a corporate principal by which he or she is retained, other than an agency as defined in s. 112.312(3); or which he or she knows would inure to the special private gain or loss of a relative or business associate of the public officer. Such public officer shall, prior to the vote being taken, publicly state to the assembly the nature of the officer's interest in the matter from which he or she is abstaining from voting and, within 15 days after the vote occurs, disclose the nature of his or her interest as a public record in a memorandum filed with the person responsible for recording the minutes of the meeting, who shall incorporate the memorandum in the minutes. [Section 112.3143(3)(a), Florida Statutes.]
The first part of Section 112.313(7)(a), Florida Statutes, prohibits you from having an employment or contractual relationship with a business entity or agency which is subject to the regulation of, or is doing business with, your agency, the City Commission. The second part prohibits you from having an employment or contractual relationship which creates a continuing or frequently recurring conflict between your private interests and the performance of your public duties or an impediment to the full and faithful discharge of your public duties.
In CEO 86-10, we found that this provision prohibited a retired chief of police who was receiving monthly pension benefits from the city from serving on the board of trustees of the municipal police officers retirement trust fund. In our view, the retired police chief had a contractual relationship with the city by virtue of his vested right in the retirement trust fund. We also determined that his ongoing private interests in the fund presented a continuing or frequently recurring conflict of interest with his duties on the board of trustees, as the board's duties included determining qualified pensioners, pension amounts, and cost of living increases.
Conversely, in CEO 87-77 we found no prohibited conflict to exist where a retired city employee receiving pension benefits served on the board of trustees of the city general employees' and sanitation employees' retirement trust. We concluded that there was no continuing or frequently recurring conflict between the retired employee's private interest in the trust and his public duties as a member of the board of trustees because the board members had little or no discretion in the determination of qualified pensions, pension amounts, and cost-of-living increases, and exercised whatever discretion they did have on infrequent occasions. Similarly, in CEO 88-75, we opined that because of the limited capability of the City Commission to affect pension rights, no prohibited conflict would be created were a former city employee who was receiving retirement benefits from the city pension fund which was administered by the city commission to be elected to the city commission. We noted there that the Florida Supreme Court had ruled that once a participating member of a retirement plan reached retirement status, the benefits under the terms of the act in effect at the time of the employee's retirement vest, and the contractual relationship may not thereafter be affected or adversely altered by subsequent statutory enactments.[3] Therefore, we concluded that it would be unlawful for the members of the city commission to adversely affect the benefits due the present recipients. We also based our determination of no prohibited conflict of interest under Section 112.313(7)(a) on the fact that pension-related matters constituted only a small portion of the city commission's duties. The city commission met as the pension board only once or twice a year. Therefore, we opined, any conflict of interest situation would not be so "continuing or frequently recurring" as to prohibit the city retiree from being elected as a city commissioner.
Here, we note that you have not indicated that you are one of the three appointive trustees of the Police and Firefighters Retirement System appointed by the City Commission. Nor have you indicated that you are one of the three elective trustees of the Fire Department. Furthermore, Section 34.047(A) of the Pompano Beach, Florida, Code of Ordinances, provides that the general administration and responsibility for the proper operation of the pension system is vested in the nine (9) person Board of Trustees rather than the City Commission. Thus, as in CEO 88-75, we find that because pension matters, such as the proposed periodic "cost of living" increases, would comprise only a small fraction of the responsibilities of the City Commission, neither a "continuing or frequently recurring" conflict between your private interests, as a recipient of pension benefits, and the performance of your public duties, as a City Commissioner, nor an impediment to the full and faithful discharge of your public duties is created by your service as a member of the City Commission while also receiving benefits from the Firefighters Retirement System, as a retiree of the Fire Department.
However, your primary concern relates to the application of Section 112.3143(3)(a) under the circumstances set forth above. Section 112.3143(3)(a) prohibits you, as a City Commissioner, from voting on matters which would inure to your special private gain or loss, to the special private gain or loss of a principal by whom you are retained, or to the special gain or loss of your relative or business associate. Because we had questions as to whether his vote on a pension fund matter which would result in an increase in benefits to employees would be classified as "inuring to the special private gain" of the subject city retiree/city commissioner, we were not able to definitively say in CEO 88-75 that the city commissioner would be faced with a voting conflict situation within the purview of Section 112.3143. Nevertheless, we suggested that in the interest of avoiding even the appearance of a conflict, it would be advisable for him to follow the mandate of Section 112.3143(3), Florida Statutes.[4]
In contrast, here, the circumstances are set forth in greater detail. For example, you have advised that out of the 206 members of the retirement system, 60 members currently are receiving retirement benefits and 28 current employee members are participants in the DROP plan, which means that their retirement benefits also are vested and, in effect, are being received by them, albeit in a deferred account. Thus, you are one out of 88 members of the Firefighters Retirement System who would immediately and directly benefit from the City's ratification of the collective bargaining agreement were it to provide, among other things, for a periodic cost of living increase in the pensions paid to both current and future retirees. Similarly, you are one out of 88 members of the Firefighters Retirement System who would immediately and directly benefit from the City Commission's adoption of an ordinance effectuating the collective bargaining agreement by amending the Firefighters' Retirement System so as to provide for a cost of living increase in the amount of pensions paid to both current and future retirees.
In a number of opinions, we have analyzed whether a particular vote would inure to the "special gain or loss" of a public officer by examining the "size of the class" of persons who stand to benefit or lose from the measure to be voted upon. See CEO 77-129. Where the class of persons is large, we have concluded that "special gain" will result only if there are circumstances unique to the officer under which he or she stands to gain more than the other members of the class. Where the class of persons benefiting from the measure is extremely small, we have concluded that the possibility of "special gain" is much more likely. See CEO 90-56. In other words, we have long held that when a measure affects a class of sufficient size, the gain is of a "general" nature and thus is not the "special" gain addressed by the voting conflicts law.
We also typically have concluded that no voting conflict was presented in situations where the interests of the public official involved one percent or less of the class. See CEO 78-96 (38 out of 5,000 acres involved); CEO 84-80 (1 out of 500 persons whose property would be down zoned); CEO 85-5 (90% of 250 residents affected); CEO 87-18 (300 out of 29,000 acres); CEO 87-27 (involving the rezoning of a town having a population of 210); CEO 87-95 (650 property owners affected); CEO 91-18 (385 other property owners in the area affected by varying degrees); CEO 92-20 (land-use measures affecting 1,000 condominium units and specifically 500 which could have their northerly view impeded by high-rise construction on their north); CEO 92-52 (owner of two five-acre parcels out of 276 parcels of varying size affected by a 4.5 mile road-widening project); CEO 93-12 (297 persons is not so small a class that gain to a firefighter pension board trustee, as an individual member of the class, would be "special"); and CEO 96-12 (owner of four non-residential parcels out of 605 similar parcels affected by a proposed convention center project.)
In contrast, in CEO 90-64, we found that a city commissioner was prohibited from voting on a renovation project which would benefit property in which he owned an interest. There, the commissioner owned a 50% interest in one of 55 parcels which was to be affected by an assessment, and the parcels were owned by more than 40 persons or entities; and the property's frontage was 2.7% of the total frontage upon which the assessment was to be based. Thus, we concluded that despite the commissioner's low proportionate share of the benefit of the renovation and of the relatively low assessment, the measure would inure to the "special private gain" of the commissioner because the situation involved a clearly defined class that consisted of a relatively small number of persons whose interests would be affected by the outcome of the vote on the project. See also CEO 92-37 (two percent or eight percent of the property to be affected or 5 of 60 sites and 5 of 168 sites is of sufficient size to result in a "special" gain); CEO 93-19 (measure to construct a sidewalk affecting 40 homes would not affect enough persons in order for its effect not to be considered "special" under the voting conflicts law); and CEO 99-12 (airport authority commissioner's home was one of 20 homes that would be directly affected by the extension, improvement, and realignment of an airport road and a planned greenway in the quadrant of the airport fronting the commissioner's home.)
Under the facts presented, because you are 1.14% of the class of members of the Firefighters Retirement System who would be immediately and directly benefited by a periodic cost of living increase in pension benefits received, we find that the class is sufficiently large that any gain or loss attendant to the City Commission's ratification of the collective bargaining agreement would not be "special." Moreover, where the "periodic cost of living increase" is but one of a number of items contained within the entire collective bargaining agreement that the City Commission is asked to ratify, we are reluctant to find that that one item would create a voting conflict, particularly where the agreement taken as a whole benefits a much larger class of people and the cost attendant to the proposed periodic cost of living increases is but a fraction of the cost to the City of the entire collective bargaining contract taken as a whole. We also are of the opinion that, because there do not appear to be any circumstances unique to you by which you would stand to gain or lose more than the other members of the class of members of the Firefighter Retirement System who currently receive benefits or who are in DROP, there would be no "special" gain or loss inuring to you as a result of your voting on an ordinance specifically amending provisions of the Retirement System to provide for periodic cost of living increases to be calculated into the amount of benefits received by retiree members of the System.
Accordingly, we find that you are not prohibited by Section 112.3143(3)(a), Florida Statutes, from voting on the City's ratification of the collective bargaining agreement or on any amendments to the City's ordinances required to effectuate any changes to the Retirement System necessitated by the City's ratification of the collective bargaining agreement.
ORDERED by the State of Florida Commission on Ethics meeting in public session on August 24, 2000 and RENDERED this 29th day of August.
_______________________________
Howard Marks, Chair
a local law plan retirement option in which a firefighter may elect to participate. A fighter may retire for all purposes of the plan and defer receipt of retirement benefits into a DROP account while continuing employment with his employer. However, a firefighter who enters the DROP and who is otherwise eligible to participate shall not thereby be precluded from participating, or continuing to participate, in a supplemental plan in existence on, or created after, the effective date of this act.