Attorney General’s office issues opinions on the State Officials and Employees Ethics Act*
Attorney General Lisa Madigan's office recently issued two opinions regarding the implementation of the new State Officials and Employees Ethics Act (added by Public Act 93-615, effective November 19, 2003, as amended by Public Act 93-617, effective December 9, 2003, to be codified at 5 ILCS 430/1-1 et seq.). In opinion No. 04-002, issued March 30, 2004, to John Keith, Chairman of the State Board of Elections, Attorney General Madigan addressed the applicability of the State Officials and Employees Ethics Act and the Lobbyist Registration Act to the State Board of Elections. Informal opinion No. I-04-009, issued June 17, 2004, to Letitia Dominici, Deputy General Counsel for the Illinois Department of Central Management Services, discusses the application of the State Officials and Employees Ethics Act to certain discounts offered by vendors that have entered into contracts with State agencies, when the discounts are offered to State employees to be used for purchasing goods or services for their personal use. The complete text of the two opinions follows.
Opinion No. 04-002, issued March 30, 2004
Dear Mr. Keith:
I have General Counsel Colleen Burke's letter wherein she inquired, on behalf of the State Board of Elections, whether the provisions of section 5-55 of the recently enacted State Officials and Employees Ethics Act (added by Public Act 93-615, effective November 19, 2003, as amended by Public Act 93-617, effective December 9, 2003, to be codified at 5 ILCS 430/5-55) and new section 3.1 of the Lobbyist Registration Act (added by Public Act 93-615, effective November 19, 2003, as amended by Public Act 93-617, effective December 9, 2003, to be codified at 25 ILCS 170/3.1) are applicable to the members of the State Board of Elections. Section 5-55 of the State Officials and Employees Ethics Act prohibits persons with significant interests in State contracts, their spouses and immediate family members living with those persons from serving "on a board, commission, authority, or task force authorized or created by State law or by executive order of the Governor." Section 3.1 of the Lobbyist Registration Act contains a similar prohibition which is applicable to lobbyists and their immediate families. For the reasons stated below, it is my opinion that members of the State Board of Elections are subject to the provisions of section 5-55 of the State Officials and Employees Ethics Act and section 3.1 of the Lobbyist Registration Act.
Enacted by the General Assembly as part of a comprehensive ethics reform package designed to apply to all public officers and public employees, the State Officials and Employees Ethics Act was intended, among other things, to ensure the integrity of the State's boards and commissions by prohibiting lobbyists and individuals with personal financial interests in State contracts from serving on the State's numerous boards and commissions. Accordingly, section 5-55 of the State Officials and Employees Ethics Act provides:
Prohibition on serving on boards and commissions. Notwithstanding any other law of this State, on and after February 1, 2004, a person, his or her spouse, and any immediate family member living with that person is ineligible to serve on a board, commission, authority, or task force authorized or created by State law or by executive order of the Governor if (i) that person is entitled to receive more than 7 1/2 percent of the total distributable income under a State contract other than an employment contract or (ii) that person together with his or her spouse and immediate family members living with that person are entitled to receive more than 15 percent in the aggregate of the total distributable income under a State contract other than an employment contract; except that this restriction does not apply to any of the following:
(1) a person, his or her spouse, or his or her immediate family member living with that person, who is serving in an elective public office, whether elected or appointed to fill a vacancy; and
(2) a person, his or her spouse, or his or her immediate family member living with that person, who is serving on a State advisory body that makes nonbinding recommendations to an agency of State government but does not make binding recommendations or determinations or take any other substantive action. (Emphasis added).
Similarly, section 3.1 of the Lobbyist Registration Act provides:
Prohibition on serving on boards and commissions. Notwithstanding any other law of this State, on and after February 1, 2004, but not before that date, a person required to be registered under this Act, his or her spouse, and his or her immediate family members living with that person may not serve on a board, commission, authority, or task force authorized or created by State law or by executive order of the Governor; except that this restriction does not apply to any of the following:
(1) a registered lobbyist, his or her spouse, or any immediate family member living with the registered lobbyist, who is serving in an elective public office, whether elected or appointed to fill a vacancy; and
(2) a registered lobbyist, his or her spouse, or any immediate family member living with the registered lobbyist, who is serving on a State advisory body that makes nonbinding recommendations to an agency of State government but does not make binding recommendations or determinations or take any other substantive action. (Emphasis added).
The prohibitions contained in section 5-55 of the State Officials and Employees Ethics Act and section 3.1 of the Lobbyist Registration Act are clear; the ultimate issue is whether the State Board of Elections constitutes "a board * * * authorized or created by State law," for purposes of these provisions. The phrase "authorized or created by State law" is not defined in either the State Officials and Employees Ethics Act or the Lobbyist Registration Act. It will be necessary, therefore, to determine the meaning to be given to the phrase.
Turning first to the phrase "State law," although the word "law" may be broadly or narrowly interpreted depending on its context (In re Cameron T., 949 P.2d 545, 550 (Ariz. Ct. App. 1997), the term "law" generally includes constitutions, statutes, the common law and the various rules which the courts or administrative agencies from time to time adopt. See, e.g., People v. Cornille, 136 Ill. App. 3d 1011, 1016 (1985); Gorton v. American Cyanamid Co., 533 N.W.2d 746, 751 (Wis. 1995), cert. denied, 516 U.S. 1067, 116 S. Ct. 753 (1996); State ex rel. Conway v. Superior Court, 131 P.2d 983, 986 (Ariz. 1942), overruled in part on other grounds, 247 P.2d 617 (Ariz. 1952); In re Cameron T., 949 P.2d at 550 (Ariz. Ct. App. 1997). Likewise, the word "create" commonly means "[t]o bring into being; to cause to exist; to produce; to make, for example, a machine or a corporation." Ballentine's Law Dictionary 287 (3rd ed. 1969); see also Webster's Third New International Dictionary of the English Language Unabridged 532 (1993). Based upon the commonly understood meaning of the foregoing words and because of the General Assembly's intent to adopt an act applicable to all public officers and public employees, it is my opinion that the phrase "created by State law" in this context refers to those bodies that have been established or otherwise provided for by the Illinois Constitution or by Illinois statute.
The State Board of Elections is provided for in article III, section 5 of the Illinois Constitution of 1970, which simply states:
A State Board of Elections shall have general supervision over the administration of the registration and election laws throughout the State. The General Assembly by law shall determine the size, manner of selection and compensation of the Board. No political party shall have a majority of members of the Board.
Clearly, article III, section 5 of the Constitution is a mandate to the General Assembly both to create a State Board of Elections and to enact legislation that addresses the membership of and other details pertinent to the operation of the State Board of Elections. Consequently, because the State Board of Elections is provided for in the Constitution, and thereby a board "created by State law," it is my opinion that the members of the State Board of Elections are subject to the provisions of section 5-55 of the State Officials and Employees Ethics Act and section 3.1 of the Lobbyist Registration Act.
Even assuming, arguendo, that the State Board of Elections is not a board created by the Illinois Constitution, it is clear that the State Board of Elections would constitute a board created by State statute. In accordance with the constitutional mandate, the General Assembly has enacted legislation that establishes the State Board of Elections and addresses the membership of and other details pertinent to the operation of the Board. 10 ILCS 5/1A-1 et seq. (West 2002). Specifically, section 1A-1 of the Election Code (10 ILCS 5/1A-1 (West 2002)) provides:
A State Board of Elections is hereby established which shall have general supervision over the administration of the registration and election laws throughout the State, and shall perform only such duties as are or may hereafter be prescribed by law. (Emphasis added).
In opinion No. S-372, issued December 16, 1971 (1971 Ill. Att'y Gen. Op. 140), Attorney General Scott was asked to determine the status of the State Electoral Board, the predecessor to the State Board of Elections, because the General Assembly had not enacted any law relating to "the size, manner of selection and compensation" of the State Board of Elections or otherwise provided for its activation prior to the effective date of article III, section 5 of the Illinois Constitution. In concluding that the State Electoral Board would continue to function "[u]ntil such time as there is an existing and functioning State Board of Elections" (1971 Ill. Att'y Gen. Op. at 142), Attorney General Scott stated, "[t]he essential question is whether said [article III,] Section 5 [of the Illinois Constitution] is self-executing. It is my considered judgment that it is not self-executing and, pending action of the General Assembly, the State Board of Elections, even though named in the Constitution, will be without legal existence and without effect on the status of the State Electoral Board. * * * It seems obvious that a State Board of Elections will not exist either de jure or de facto until its members have been selected, its size set and other factors effecting its viability, have been determined, all by legislative enactment of the General Assembly." 1971 Ill. Att'y Gen. Op. at 141.
It is clear from Attorney General Scott's opinion that although the Constitution requires the creation of the State Board of Elections, the Board actually came into existence only upon the General Assembly's passage of legislation specifying the membership of the Board, the manner of selection of the Board's members and their compensation.
Ms. Burke's letter notes that section 1A-1 of the Election Code uses the word "established" with respect to the origins of the State Board of Elections and not the term "created." The term "establish" ordinarily means "[t]o originate, to create; to found and set up; to put or fix on a firm basis; to put in a settled or efficient state or condition." Ballentine's Law Dictionary 417 (3rd ed. 1969); see also Webster's Third New International Dictionary of the English Language Unabridged 778 (1993). Applying the commonly understood meaning of the term "establish," it is my opinion that in enacting the language of section 1A-1 of the Election Code, the General Assembly has "created" the State Board of Elections "by State law."
For the reasons set forth above, it is my opinion that regardless of whether the State Board of Elections is characterized as having been created by the Illinois Constitution or by Illinois statute, the Board has been "created by State law," for purposes of section 5-55 of the State Officials and Employees Ethics Act and section 3.1 of the Lobbyist Registration Act. As a result, its members are subject to the prohibitions contained therein.
Very truly yours,
LISA MADIGAN
Attorney General
Informal Opinion No. I-04-009, issued June 17, 2004
Dear Ms. Dominici:
I have your letter wherein you pose several questions regarding the application of the State Officials and Employees Ethics Act (added by Public Act 93-615, effective November 19, 2003, as amended by Public Act 93-617, effective December 9, 2003, to be codified at 5 ILCS 430/1-1 et seq.) to certain discounts (e.g., a reduced price on computers or wireless telephone service) offered by vendors that have entered into contracts with State agencies, when the discounts are offered to State employees to be used for purchasing goods or services for their personal use unrelated to their State employment. Specifically, you have inquired: (1) whether a discount on goods or services provided to State employees constitutes a "gift," as that term is used in the State Officials and Employees Ethics Act; (2) whether a vendor is a "prohibited source," as that term is used in the State Officials and Employees Ethics Act, with respect to those State employees who possess the authority to approve the purchase of equipment from the vendor pursuant to a master contract; (3) whether a vendor is a "prohibited source" with respect to a State employee who uses equipment purchased from the vendor pursuant to a master contract; and (4) if a discount does constitute a gift from a prohibited source and the discount exceeds $100 within a calendar year, whether such a discount falls within any of the exceptions set out in the State Officials and Employees Ethics Act, thereby allowing the employee to accept the discount. Because of the nature of your inquiry, I do not believe the issuance of an official opinion is necessary. I will, however, comment informally upon the questions you have raised.
Enacted by the General Assembly as part of a comprehensive ethics reform package, the State Officials and Employees Ethics Act (hereinafter the "Ethics Act") generally prohibits State officers, General Assembly members and State employees from accepting gifts from "prohibited sources," as defined in the Ethics Act. Specifically, section 10-10 of the Ethics Act (to be codified at 5 ILCS 430/10-10) provides:
[e]xcept as otherwise provided in this Article, no officer, member, or State employee shall intentionally solicit or accept any gift from any prohibited source.
The term "employee" is defined in section 1-5 of the Ethics Act (to be codified at 5 ILCS 430/1-5) to refer to:
(i) any person employed full-time, part-time, or pursuant to a contract and whose employment duties are subject to the direction and control of an employer with regard to the material details of how the work is to be performed or (ii) any appointee.
Similarly, the phrase "State employee" is defined in section 1-5 of the Ethics Act to include "any employee of a State agency."
Against this background, you have inquired, first, whether a discount on goods or services provided by a State vendor to a State employee, to be used when acquiring goods or services for his or her personal use, constitutes a "gift," as that term is used in the Ethics Act. Section 1-5 of the Ethics Act defines the term "gift" to include:
any gratuity, discount, entertainment, hospitality, loan, forbearance, or other tangible or intangible item having monetary value including, but not limited to, cash, food and drink, and honoraria for speaking engagements related to or attributable to government employment or the official position of an employee, member, or officer. (Emphasis added).
Where statutory language is clear and unambiguous, it must be given effect as written. Land v. Board of Education, 202 Ill. 2d 414, 426 (2002). Under the language quoted immediately above, it is clear that the General Assembly, by express provision, has determined that the word "gift" includes discounts. Consequently, a discount on goods or services offered to State employees by a vendor with a State contract constitutes a "gift," as that term is used in the Ethics Act.
Second, you have inquired whether a vendor which has one or more State contracts is a "prohibited source," as that term is used in the Ethics Act, with respect to those State employees who possess the authority to approve the purchase of goods or services from the vendor pursuant to a master contract executed with the State. You have indicated that the vendors which are the focus of your inquiry each have an existing contractual relationship with the State through the execution of a "master contract" with the Department of Central Management Services. Under the Department of Central Management Services' procurement rules, the chief procurement officer may establish a "master contract," a contract with a vendor that may be utilized by other State agencies in the procurement of goods and services. 44 Ill. Adm. Code §1.1040 (January 31, 2003).
Section 1-5 of the Ethics Act defines the phrase "prohibited source" to refer to any person or entity which, among other things:
(2) does business or seeks to do business (i) with the member or officer or (ii) in the case of an employee, with the employee or with the member, officer, State agency, or other employee directing the employee. (Emphasis added).
Under the provisions of section 1-5 of the Act, a vendor is a "prohibited source" with respect to an employee if the vendor "does business or seeks to do business" with a State employee or with the State agency or another employee directing the State employee. Direct involvement by the State employee in the execution or administration of the contract is not required. Under the plain language of the statutory definition, a vendor constitutes a prohibited source when it "does business or seeks to do business * * * in the case of an employee, with the employee." A State employee who possesses the authority to approve, on behalf of a particular State agency, the purchase of goods or services from a vendor pursuant to a master contract would be someone with whom the vendor either "does business or seeks to do business." Thus, a vendor would be a "prohibited source," as that term is used in the Ethics Act, with respect to State employees who have the authority to approve the purchase of goods or services through a master contract with the vendor.
Your third inquiry concerns whether a vendor constitutes a "prohibited source" within the provisions of the Ethics Act, with respect to a State employee who, within the scope of his or her State employment, uses equipment sold by such vendor pursuant to a master contract. Under the plain language of the definition of "prohibited source," a vendor that provides goods or services to a State agency pursuant to a master contract would be "do[ing] business * * * in the case of an employee, with the * * * State agency * * * directing the employee." Consequently, a vendor that provides goods or services to a State agency under a master contract executed with the State would constitute a "prohibited source" for all the agency's employees.
In reaching this conclusion, it is important to note both the plain, broad language of the Ethics Act and the history of this statute. The Ethics Act was enacted amidst a scandal that produced dozens of Federal and State corruption convictions of former State employees for accepting bribes and improperly awarding lucrative government contracts and leases to benefit their own personal interests. Thus, the Ethics Act was enacted, at least in part, to address the ethical indiscretions of those State employees who are in a position to award State contracts and those State employees whose direct or supervisory involvement in the purchasing or procurement process would provide the opportunity for malfeasance. The current language of the statute, however, does not permit an interpretation which is limited to those individuals. Rather, it bars all employees of a contracting State agency from accepting a gift from a prohibited source.
Last, you have inquired whether any of the exceptions set out in section 10-15 of the Ethics Act (to be codified at 5 ILCS 430/10-15) would permit a State employee to accept a discount on goods or services from a prohibited source, if the value of the discount exceeds $100 within a calendar year. Section 10-15 sets out 12 exceptions to the Ethics Act's gift prohibitions and provides, in pertinent part:
The restriction in Section 10-10 does not apply to the following:
(1) Opportunities, benefits, and services that are available on the same conditions as for the general public.
(2) Anything for which the officer, member, or State employee pays the market value.
(3) Any (i) contribution that is lawfully made under the Election Code or under this Act or (ii) activities associated with a fundraising event in support of a political organization or candidate.
(4) Educational materials and missions. This exception may be further defined by rules adopted by the appropriate ethics commission or by the Auditor General for the Auditor General and employees of the Office of the Auditor General.
(5) Travel expenses for a meeting to discuss State business. This exception may be further defined by rules adopted by the appropriate ethics commission or by the Auditor General for the Auditor General and employees of the Office of the Auditor General.
(6) A gift from a relative, meaning those people related to the individual as father, mother, son, daughter, brother, sister, uncle, aunt, great aunt, great uncle, first cousin, nephew, niece, husband, wife, grandfather, grandmother, grandson, granddaughter, father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law, stepfather, stepmother, stepson, stepdaughter, stepbrother, stepsister, half brother, half sister, and including the father, mother, grandfather, or grandmother of the individual's spouse and the individual's fiancé, or fiancee.
(7) Anything provided by an individual on the basis of a personal friendship unless the member, officer, or employee has reason to believe that, under the circumstances, the gift was provided because of the official position or employment of the member, officer, or employee and not because of the personal friendship.
* * *
(8) Food or refreshments not exceeding $75 per person in value on a single calendar day; provided that the food or refreshments are (i) consumed on the premises from which they were purchased or prepared or (ii) catered. For the purposes of this Section, "catered" means food or refreshments that are purchased ready to eat and delivered by any means.
(9) Food, refreshments, lodging, transportation, and other benefits resulting from the outside business or employment activities (or outside activities that are not connected to the duties of the officer, member, or employee as an office holder or employee) of the officer, member, or employee, or the spouse of the officer, member, or employee, if the benefits have not been offered or enhanced because of the official position or employment of the officer, member, or employee, and are customarily provided to others in similar circumstances.
(10) Intra-governmental and inter-governmental gifts. For the purpose of this Act, "intra-governmental gift" means any gift given to a member, officer, or employee of a State agency from another member, officer, or employee of the same State agency; and "inter-governmental gift" means any gift given to a member, officer, or employee of a State agency, by a member, officer, or employee of another State agency, of a federal agency, or of any governmental entity.
(11) Bequests, inheritances, and other transfers at death.
(12) Any item or items from any one prohibited source during any calendar year having a cumulative total value of less than $100.
Your question assumes that the amount of the discount offered by the State vendor exceeds $100 per calendar year. Therefore, the provisions of subsection 10-15(12) are of little assistance in resolving your inquiry.
Subsection 10-15(1) of the Ethics Act permits State officials and employees to accept opportunities, benefits and services that are available to the general public on the same terms as those provided to the general public. Implicit within the language of subsection 10-15(1) is a limitation on State employees accepting discounts offered solely based upon their status as government employees. For example, if a prohibited source offered a $200 discount on the purchase of a computer to someone because he or she is a State employee, that opportunity would not fall within the provisions of subsection 10-15(1) of the Act. Rather, that discount is precisely the type of benefit that the language of section 10-10 of the Act is intended to prohibit. Conversely, if the prohibited source offered a $200 discount to every person ordering a computer through its Web site, the discount would fall within the provisions of subsection 10-15(1) of the Act and the State employee could take advantage of that offer. Therefore, before a State employee may accept a discount from a prohibited source it will be necessary to determine whether the opportunity is being provided to the State employee because of his or her position with the State or whether the discount is available to the general public on similar terms. If the discounts are offered to the general public or to a segment of the general public and the State employee is a member of that group, irrespective of his or her employment with the State, then under the language of subsection 10-15(1) of the Act, the State employee would not be precluded from accepting the discount merely because of his or her State position. If, however, a discount is being offered only to State employees, subsection 10-15(1) would not except such an opportunity from the general gift prohibition.
Similarly, subsection 10-15(2) of the Ethics Act permits a State employee to undertake the purchase of an item, if the employee pays the market value for the good. If a State employee is being offered a discount on a product, then he or she would necessarily be paying less than the normal selling price or the market value for that product. Consequently, such a discount is not excepted from the Act's prohibitions by subsection 10-15(2) thereof.
The remaining exceptions also do not appear to be applicable to the circumstances you have described.
Based upon the foregoing, the Ethics Act precludes a State employee from accepting a discount on goods or services from a prohibited source, where the value of the discount equals or exceeds $100 in a calendar year and where the discount is extended solely based upon the individual's status as a State employee.
This is not an official opinion of the Attorney General. If we may be of further assistance, please advise.
Very truly yours,
LYNN E. PATTON
Senior Assistant Attorney General
Chief, Opinions Bureau
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*This article was originally published in the ISBA's Local Government Law newsletter, July 2004, Vol. 41, No. 1 and is reprinted with permission.