CEO 94-45 -- December 1, 1994
CONFLICT OF INTEREST
RETIRED POLICE OFFICER RECEIVING PENSION
BENEFITS SERVING ON CITY POLICE AND
FIREFIGHTERS RETIREMENT BOARD
To: Howard B. Lenard, City Attorney (City of North Miami Beach)
No prohibited conflict of interest would be created were a retired police officer, who receives pension benefits from the a city's police and firefighters retirement fund, to be elected as the fifth member of the city's police officers and firefighters retirement board, which is authorized to decide questions that arise in the administration, interpretation, and application of the fund. The retired police officer's private interest in the trust fund would not present a continuing or frequently recurring conflict of interest with his duties as a member of the board, as board members have little discretion in determining who qualifies for a pension or the pension amount, and he is prohibited by both statute and ordinance from taking part in any action in connection with his own participation in the fund. Because there is no requirement that the fifth person elected to the board be an active plan participant, Section 112.313(7)(b) would not apply to exempt a conflict of interest, if there were one. CEO's 86-10, 87-77, and 88-75 are referenced.
Would a prohibited conflict of interest be created by the election of a retired city police officer who receives retirement pension benefits to a city's police and firefighters retirement board?
Your question is answered in the negative.
In your letter of inquiry and responses to questions from staff, you advise that you are requesting this opinion on behalf of the North Miami Beach City Council, who are in doubt about the application of Section 112.313(7)(a), Florida Statutes, with respect to their ratification of the appointment of Lieutenant Alfred Drake Sturtz to the City's Police and Firefighters Retirement Board ("Board"), and on behalf of Lieutenant Sturtz. You advise that the City of North Miami Beach by ordinance established a Police and Firefighters Pension Trust pursuant to Chapters 175 and 185, Florida Statutes. In accordance with statutory requirements, two Retirement Board Committee members were appointed by the City Council, one was elected from the active City police officers, and one was elected from the active City firefighters. You also advise that the four members elected the subject police lieutenant, who retired after serving 27 years on the police force and who is currently receiving pension benefits, as the Board's fifth member. He also is currently employed as a civilian contract (non-civil service) employee of the City Police Department, you advise, as Forfeiture Asset Officer, a non-sworn, non-union position involving no pension benefits. He also maintains his status as a reserve police officer in order to retain his State certification.
Section 112.313(7)(a), Florida Statutes, to which you refer, provides as follows:
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 is an officer or employee . . . ; 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 private interests and the performance of his public duties or that would impede the full and faithful discharge of his public duties. [Section 112.313(7)(a), Florida Statutes.]
This provision prohibits the Lieutenant from having or holding any employment or contractual relationship with any business entity or agency which is doing business with or is regulated by his public agency. It also prohibits him from having an employment or contractual relationship which creates a continuing or frequently recurring conflict between his private interests and the performance of his public duties, or which impedes the full and faithful discharge of his public duties. For purposes of the Code of Ethics, a "conflict of interest" is defined to mean "a situation in which regard for a private interest tends to lead to disregard of a public duty or interest."
In CEO 86-10 we found that a prohibited conflict of interest under the second part of Section 112.313(7)(a) would be created were a retired chief of police to serve on the board of trustees of a municipal police officer's retirement trust fund. We opined there that the retired police chief's vested right in the retirement trust fund created a contractual relationship with the city and that his ongoing interest in the trust fund would present a continuing or frequently recurring conflict with the duties he would have as a member of the board of trustees, as the board's duties included determining qualified pensioners, pension amounts, and cost-of-living increases. While we also noted that the appointment of the current chief of police and two regularly employed police officers to the board also would seem to create a prohibited conflict of interest, we found that because their appointments were required by Section 185.05, Florida Statutes, Section 112.313(7)(b), Florida Statutes, permitted their appointments. Section 112.313(7)(b), provides:
This subsection shall not prohibit a public officer or employee from practicing in a particular profession or occupation when such practice by persons holding such public office or employment is required or permitted by law or ordinance.
In CEO 87-77 we distinguished CEO 86-10 and found that no prohibited conflict of interest existed under Section 112.313(7)(a) where a retired city employee receiving pension benefits served on the board of trustees of the city's general employees' and sanitation employees' retirement trust. There, we did not find a 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 found that no prohibited conflict of interest would be created if a retired police chief who was receiving benefits from a city employee retirement fund were to be elected to the city commission, where the city commission served as the board of trustees for the retirement fund. We noted that the Florida Supreme Court, in Florida Sheriffs Association v. Department of Administration, 408 So. 2d 1033 (Fla. 1981), and Stringer v. Lee, 2 So. 2d 127 (Fla. 1941), had ruled that once a participating member of a retirement plan reaches 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 be affected or adversely altered by subsequent statutory enactments. Consequently, we concluded that it would be unlawful for the members of the city council to adversely affect the benefits due present recipients.
The underlying facts relative to the City of North Miami Beach's Retirement Board, such as the Board members' fiduciary responsibilities, the administrative and professional counsel and assistance available to the Board under the City's pension ordinance, the established methodology for determining the City's contribution to the trust as well as who is entitled to receive benefits, etc., are very similar to those enumerated in CEO 87-77 and distinguish it from CEO 86-10, you claim. In addition, you contend that you can find no provisions in Chapters 175 or 185, Florida Statutes, that would preclude a retired police officer from serving as the elected fifth member of the City of North Miami Beach's Police Officers and Firefighters Retirement Board. Any interest that the Lieutenant would have as a member of the entire group of retirees is no greater and poses no greater potential conflict than the interest of the active plan participants sitting pursuant to Section 185.05, Florida Statutes, you argue.
We are not persuaded by your argument that the interest of the Lieutenant poses no greater potential for conflict than the interest of the active plan participants sitting pursuant to Section 185.05, Florida Statutes, and therefore that no conflict of interest exists. In CEO 86-10, we recognized the apparent conflict of interest of the other members of the board who were vested plan participants. However, we opined that because Section 185.05 required those plan participants to sit on the board, Section 112.313(7)(b) negated the apparent conflict of interest. Here, Sections 185.35(4)(a)2 and 175.351(15)(a)2 and your City's plan require membership of active participants on the Retirement Committee. However, there is no requirement that the fifth person, who is elected by the other four participants, be an active plan participant. Therefore, Section 112.313(7)(b) does not apply to exempt the possible conflict of interest of the fifth Board member, if he is an active plan participant.
In addition, although, as you contend, neither Chapter 175, Florida Statutes, nor Chapter 185, Florida Statutes, precludes participation of a retired plan participant who is receiving benefits under the plan on a retirement board, neither Chapter requires participation by a plan participant/beneficiary. If we apply the rule of statutory construction that statutes should be harmonized, if possible, so as to find a reasonable field of operation to preserve the force and effect of each [See Ideal Farms Drainage District v. Certain Lands, 19 So. 2d 234 (Fla. 1944)], we find that applying Section 112.313(7)(a) to prohibit the participation of a retirement plan participant/beneficiary as the fifth member on the Retirement Committee would not thwart the intent of either Chapter 185 or Chapter 175, with respect to membership on the Board. A non-vested participant can still be elected by the other four members of the Committee in order to avoid any potential conflict of interest.
The remaining issue, therefore, is whether, under the circumstances presented, the Lieutenant would have a continuing or frequently recurring conflict of interest or impediment to the full and faithful performance of his duties as a member of the Retirement Board. After reviewing the Ordinance ("plan") and the other information provided by you, we find that the City of North Miami Beach's ordinance compares to that reviewed by us in CEO 87-77. Although here the Board seemingly has discretion to decide any questions that arise in the administration, interpretation, and application of the plan and to make equitable adjustments for any mistakes or errors made in the administration of the plan, it is still limited, for the most part, by the terms of the plan. For example, the Board, with limited exception, does not determine who receives a pension or the amount of the pension. "Normal Retirement," "Early Retirement," "Disability Retirement," and "Line of Duty" disability are specifically defined, and the conditions under which these categories of benefits may be obtained are specifically set forth in the plan. Likewise, specific formulas for determining the amount of benefits corresponding to each of these categories also are set forth in the plan. In addition, while the Board may determine whether a participant is disabled for purposes of receiving disability retirement benefits, that determination must be based on evidence, exhibits, the Board's findings, and the reports of a duly licensed physician selected by the Board, a licensed physician selected by the participant, and, in the case of a disagreement between the two physicians, a licensed physician mutually agreeable to the two physicians. Certain conditions also are presumed to be accidental and suffered in the line of duty, unless otherwise shown by competent evidence for purposes of a participant's eligibility for receipt of "Line of Duty" disability benefits. Further, before a participant's benefits can be forfeited, he is entitled to a hearing under Chapter 120, Florida Statutes. Finally, amendments to the plan, for example, to increase plan benefits and/or benefit levels, are brought about upon approval by the Board after approval by 60% of the active plan members, unless the amendments pertain to the actuarial soundness of the plan, usually upon the advice of the Board's actuary and attorney, and upon subsequent approval by the City Council.
Under these circumstances, we are of the opinion that the Lieutenant's private interests in the trust fund would not present a continuing or frequently recurring conflict of interest with his duties as a member of the Board. As in CEO 87-77, we find that the Board members here have little discretion in the determination of who qualifies for a pension or the pension amounts. They also are prohibited by Sections 175.071(2) and 185.06(2), Florida Statutes, and by Section 5.03(d) of the Plan from taking part in any action in connection with their own participation in the fund. Therefore, we believe that the Lieutenant would stand to gain only remotely by any discretionary decision that he might make as a Board member.
Accordingly, we find that no prohibited conflict of interest would be created were the subject retired police Lieutenant to be elected as the fifth member of the City of North Miami Beach Police Officers and Firefighters Retirement Committee.