CEO 07-11 -- April 25, 2007

CONFLICT OF INTEREST

SCHOOL BOARD MEMBER EMPLOYED
WITH TAX-EXEMPT EDUCATION FOUNDATION

To: Dr. Martin Karp, Vice-Chair, Miami-Dade County School Board

SUMMARY:

Under the circumstances presented, neither Section 112.313(3) nor Section 112.313(7)(a), Florida Statutes, would be violated were a member of a district school board to be employed by a nonprofit, tax-exempt foundation cooperating with the school district to provide education enhancement programs. Regarding Section 112.313(3), under the situation presented, the district would not be purchasing services from the foundation and the foundation would not be selling services to the district. Regarding Section 112.313(7)(a), under the situation presented, the exemption codified at Section 112.313(15) is applicable to negate a conflict. CEO 78-18, CEO 82-9, CEO 82-22, CEO 86-24, CEO 94-17, CEO 97-5, CEO 01-16, and CEO 04-5 are referenced.1


QUESTION:

Would a prohibited conflict of interest be created were you, a member of a district school board, to become employed with a foundation funding programs involving the district?2


Under the scenario presented by you, your question is answered as set forth below.


By your letter of inquiry, a memorandum accompanying the letter, and additional written information supplied by you at the request of our staff, we are advised that you serve as a member of the Miami-Dade County School Board (popularly elected to office in November 2004). In addition, we are advised that you are considering accepting part-time employment with a foundation (a nonprofit corporation/tax-exempt organization) 3 that funds various education programs and that is offering to fund more education programs for the Miami-Dade County School District, but that the foundation may not fund some programs unless the District contributes a share of program funding.4


In addition, you advise that the District and the foundation are expected to enter into a relationship to allow programs to be implemented in District schools, exemplified by a three-way agreement (between the District, the foundation, and a program provider) allowing a program to be implemented in a school, with the program being partially funded by the foundation but under the supervision of the District.5 Further, you advise that your employment with the foundation would involve identifying for the foundation worthy groups, institutions, and providers that may benefit from foundation grants and that the worthy may include entities that are, or may become, affiliated with the District as exemplified above. Also, you advise that your work as a foundation employee would involve communicating with District staff about District programs that may benefit from the foundation's grants, but that your private work would not involve your contacting District officers or personnel in order to have the District enter into relationships with the foundation in which the foundation would provide services in exchange for money or other consideration from the District.6 Additionally, you advise that the sources of foundation moneys include contributions by individuals and by corporations and that the foundation draws sufficient funding from sources unrelated to the District (and that the foundation's internal accounting mechanisms will be constructed) such that you will be paid by the foundation regardless of whether the District partly funds any programs promoted by the foundation.7


Sections 112.313(3) and 112.313(7)(a), Florida Statutes, provide:


DOING BUSINESS WITH ONE’S AGENCY.—No employee of an agency acting in his or her official capacity as a purchasing agent, or public officer acting in his or her official capacity, shall either directly or indirectly purchase, rent, or lease any realty, goods, or services for his or her own agency from any business entity of which the officer or employee or the officer's or employee's spouse or child is an officer, partner, director, or proprietor or in which such officer or employee or the officer's or employee's spouse or child, or any combination of them, has a material interest. Nor shall a public officer or employee, acting in a private capacity, rent, lease, or sell any realty, goods, or services to the officer's or employee's own agency, if he or she is a state officer or employee, or to any political subdivision or any agency thereof, if he or she is serving as an officer or employee of that political subdivision. The foregoing shall not apply to district offices maintained by legislators when such offices are located in the legislator's place of business or when such offices are on property wholly or partially owned by the legislator. This subsection shall not affect or be construed to prohibit contracts entered into prior to:


(a) October 1, 1975.

(b) Qualification for elective office.

(c) Appointment to public office.

(d) Beginning public employment.

[Section 112.313(3), Florida Statutes.]


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 . . .; 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.]


Under the circumstances described in your inquiry, we find that Section 112.313(3) would not be violated by your employment with the foundation. The situation presented does not indicate that the District would be purchasing services from the foundation or that the foundation would be selling services to the District.8 Rather, the situation presented indicates that the foundation would be providing funding and cooperating with the District to provide educational enhancements to students.9


Section 112.313(7)(a), Florida Statutes, potentially has a broader application than Section 112.313(3). The first part of Section 112.313(7)(a), absent the applicability of an exemption 10and absent the applicability of Section 112.316, Florida Statutes (e.g., absent the finding of a "unity of interest"), would prohibit your employment with the foundation if the foundation is subject to the regulation of the District or if the foundation is doing business with the District. We find that the foundation is doing business with the District by virtue of the relationship or agreements between the foundation and the District concerning the District, groups/institutions/providers, programs, and the foundation which create rights and obligations for which there would be a cause of action in the event of a breach. 11 We have found that a business entity 12is doing business with a public agency where they have entered into a lease, contract, or other type of arrangement where one would have a cause of action against the other in the event of a breach or default. See, for example, CEO 86-24.


Thus, our inquiry proceeds to the issue of whether the exemption codified at Section 112.313(15), Florida Statutes, is applicable to your situation.13 Section 112.313(15) provides:


ADDITIONAL EXEMPTION.—No elected public officer shall be held in violation of subsection (7) if the officer maintains an employment relationship with an entity which is currently a tax-exempt organization under s. 501(c) of the Internal Revenue Code and which contracts with or otherwise enters into a business relationship with the officer's agency and:


(a) The officer’s employment is not directly or indirectly compensated as a result of such contract or business relationship;

(b) The officer has in no way participated in the agency's decision to contract or to enter into the business relationship with his or her employer, whether by participating in discussion at the meeting, by communicating with officers or employees of the agency, or otherwise; and

(c) The officer abstains from voting on any matter which may come before the agency involving the officer's employer, publicly states to the assembly the nature of the officer's interest in the matter from which he or she is abstaining, and files a written memorandum as provided in s. 112.3143.


Based on the information submitted in your inquiry, we find that the exemption will be applicable to you to negate Section 112.313(7)(a), provided that after you become employed by the foundation, 14you do not participate in the District's decisions to contract with or to enter into a business relationship with the foundation and provided that you abstain from voting on any matter which may come before the School Board involving the foundation (also publicly stating your relationship and filing CE Form 8B as required by Section 112.3143(3)(a), Florida Statutes).


Accordingly, under the circumstances presented, we find that your proposed employment with the foundation is not prohibited.


ORDERED by the State of Florida Commission on Ethics meeting in public session on April 20, 2007 and RENDERED this 25th day of April, 2007.

________________________
Norman M. Ostrau, Chair

[1]For prior opinions of the Commission on Ethics, go to www.ethics.state.fl.us

[2]Our opinion rephrases your inquiry as one question but responds to the totality of the issues raised in your inquiry, notwithstanding that your written inquiry contained an "overall question" and questions numbered I, II, III, and IV.

[3]You advise that you would not be an officer, director, or owner of the foundation, but that you merely would be its employee.

[4]You advise that the foundation does not receive any funding from the District and that it is not expected to receive any funding from the District. In addition, you advise that an agreement exists between the District and the foundation that allows the foundation the opportunity to help children in after school tutorial programs and to support paraprofessionals who assist teachers in classrooms.

[5]You add that the foundation would fund an agreed upon amount of costs associated with the implementation of programs, that the foundation would fund programs where the District would partly fund the same programs (perhaps through the use of space, materials, or training), but that the foundation would not provide "no strings attached money."

[6]You emphasize that the District will not be paying the foundation or providing anything of value to the foundation in exchange for the foundation's provision of legally-mandated services to a clientele of the District. Rather, you advise that the foundation will be funding "extra or enhancement programs" (programs not legally required) at times using District facilities.

[7]As noted above, you advise that the foundation does not receive and is not expected to receive any funds from the District. However, if in the future a situation arises in which the foundation may become the recipient of District funding, you should contact us or our staff for further advice.

[8]Note that Section 112.313(3) does not prohibit a sale, rental, or lease from one's public agency to one's private employer. CEO 01-16; CEO 04-5.

[9]In making this finding, we have not overlooked CEO 82-9 and CEO 82-22, which hold that an entity sells services to a government agency within the meaning of Section 112.313(3) when it provides services to a clientele that the agency itself would be obligated to serve but for the proxy actions of the entity paid for or supported by the agency. While it is arguable that the District is "paying" or "compensating" the foundation via the provision of District space or facilities for use in the enhancement programs, you have represented that the District is not legally obligated to provide the programs.

[10] Possible exemptions are codified at Sections 112.313(12) and 112.313(15), Florida Statutes.

[11]As you represent, the foundation is not providing "no strings attached money."

[12]Nonprofit organizations are "business entities." CEO 78-18.

[13]The facts presented in your inquiry are not concrete enough to indicate whether an exemption under Section 112.313(12) [business rotation system; sealed, competitive bidding; or sole source of supply] would be applicable. However, contact us for further advice should potential business indicating a possible use of one of these enumerated exemptions presents itself in the future. Also, we find that a unity of interest is not present in your situation such that we can apply Section 112.316 to negate Section 112.313(7)(a). We have found that the existence of a unity of interest requires several factors, including the factor that the public officer not be compensated in his private capacity; your position with the foundation would be compensated. CEO 94-17.

[14]Votes or participation by you regarding the foundation occurring before your employment by it do not nullify the exemption. CEO 97-5.