Whether members of the Board of Pension Trustees may make recommendations regarding and members of County Council may vote on ordinances which would permit County officials and employees, including some members of the Board of Pension Trustees and County Council, to transfer from participation in the County Employees' Pension Plan ("3% Plan") to the Employees' Retirement System ("5% Plan") or "buy into" the 3% Plan.
Conclusion:
Under the New Castle County Ethics Code, making recommendations regarding or voting on these ordinances would not create a conflict of interest, because adoption of these ordinances would "affect to the same degree . . . a subclass consisting of an industry, occupation or other group . . ."1
Analysis:
Full-time County employees may join the 3% Plan, funded via automatic payroll deductions. If the employee leaves the County prior to completing ten years of service, the amount of the contributions is refunded without interest. If the employee completes ten years of service, annuity benefits equal to the amount accrued during the period of service is payable at normal retirement.
An employee who has prior service with certain government entities within Delaware may receive credit for those prior years of government service if he or she pays the missing contributions. This option is open until the first anniversary of the employee's County service.
Many County employees were erroneously advised that they could not be credited for prior service with other government entities. As a result, many ( - anticipating not reaching the ten year vesting point - ) opted not to participate in the 3% Plan.
Between March 23, 1988 and March 23, 1989, employees were allowed to transfer from the 3% Plan to the 5% Plan. The employee was required to pay the difference in contributions for each prior year of service.
The 5% Plan, under which employees receive higher benefits, is not currently available to new employees.
To address the inequities created by the situation described above, under consideration are proposed ordinances which would:
allow county employees to buy credit for prior service with any state or local government.
for an eighteen month period, allow employees to buy prior County service;
for an eighteen month period, allow employees to buy prior state and local government service;
for an eighteen month period, allow employees to transfer from the 3% Plan to the 5% Plan.
The Board of Pension Trustees must decide whether to recommend to Council adoption of ordinances effectuating these proposals. Council then must vote on the ordinances.
Some members of the Board of Pension Trustees and Council would be potentially affected by these ordinances, e.g., members currently participating in the 3% Plan may transfer to the 5% Plan. The question has been asked whether this situation creates a conflict of interest, such that the potentially affected members would have to recuse themselves from recommending or voting.
Section 2-172(a) of the Ethics Code bars county officials and employees from "engag[ing] in conduct that constitutes a conflict of interest."
Conflict of conflict of interest means use by a county official or county employee of the authority of his or her office or employment . . for the private pecuniary benefit of himself or herself . . [C]onflict of interest does not include an action . . which affects to the same degree . . a subclass consisting of an industry, occupation or other group which includes the county official or county employee . 2
The second sentence of the definition states explicitly what is implicit in the first. Use of authority for one's "private pecuniary benefit" is forbidden. But this prohibition does not bar action which affects equally an entire group, even though the employee or official may be a member of that group and even though the action may inure to the employee or official's personal financial advantage.
Finding:
Accordingly, members of the Board of Pension Trustees may make recommendations and members of Council may vote regarding the proposals outlined above.3
____________________________
L. Susan Faw, Ethics Counsel
June 30, 1996
Footnotes:
1 New Castle County Ethics Code Section 2-172. Definitions. Conflict or conflict of interest.
2 New Castle County Ethics Code Section 2-172. Definitions. Conflict or conflict of interest.
3 It is interesting to note that even if a conflict of interest were created by this situation, recusal would probably not be required because so many members of each body are potentially affected. Section 2-173(f) states that if a voting conflict arises, the county employee or official should disclose the conflict and abstain from participation, "provided that whenever a governing body would be unable to take action on a matter before it because the number of members of the body required to abstain from voting under this section makes the majority or other legally required vote of approval unattainable, such members shall be permitted to vote if disclosures are made as otherwise provided in this section."
