CEO 75-196 -- November 5, 1975

CONFLICT OF INTEREST

SCHOOL-RELATED ORGANIZATIONS PURCHASING TROPHIES FROM SHOP PARTLY OWNED BY A SCHOOL BOARD MEMBER

To: Winston W. Gardner, Jr., Brevard County School Board, Titusville

Prepared by: Gene Rhodes

SUMMARY:

Section 112.313(3), F. S., as amended by Ch. 75-208, Laws of Florida, provides in part that no public officer or employee may, in his private capacity, rent, lease, or sell any realty, goods, or services to his own agency if he is a state officer or employee, or, if he serves in a political subdivision, to that subdivision or to any agency thereof. Where one owns a material interest in a business entity, he is deemed to be acting in his private capacity in relation to the above-cited section regardless of whether or not he is personally involved in business transactions. Consequently, a business in which a school board member owns a material interest may not sell merchandise to schools within the district. Such business may, however, sell to school-related organizations so long as such organizations receive no financial support from the school board or from the schools and so long as no personal solicitation is made of school instructors who may serve as sponsors for such groups.

QUESTIONS:

1. Does a prohibited conflict of interest exist where I, as a school board member and owner of a material interest in a retail trophy shop, sell trophies to public schools in my county?

2. Does a prohibited conflict of interest exist where I, as a school board member and owner of a material interest in a retail trophy shop, sell trophies to school-related organizations?

Question 1 is answered in the affirmative.

Your letter of inquiry advises us that you were elected a member of the Brevard County School Board and thereafter became part owner of the only retail trophy shop in the northern part of Brevard County. The school board does not purchase trophies directly, but the individual schools do purchase trophies from their internal accounts. You advise us that you are not an active participant in the business but may be at some future date; however, your participation would not include personal solicitation for the sale of trophies to school personnel. In a recent letter you informed us that you own approximately 30 percent of the business, with options for an additional 20 percent.

The relevant portion of the recently revised Code of Ethics for Public Officers and Employees provides:

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

(a) The effective date of this act;

(b) Qualifications for elective office;

(c) Appointment to public office;

(d) Beginning public employment

[Section 112.313(3), as amended by Ch. 75-208, Laws of Florida; emphasis supplied.]

Your specific question turns on whether an inactive part ownership in a business selling to public schools constitutes "acting in a private capacity." We note in the first place that the ownership of a material interest in a business enterprise tends to identify the owner with the business in the mind of the public. Thus, at the very minimum, any sales of merchandise by Award Trophy Company to a school in Brevard County would appear to the public to be a transaction between you and the school. Of perhaps greater significance is the fact that in owning approximately 30 percent of the trophy business, you would stand to profit indirectly from any sales to the public schools of Brevard County. The acceptance of such profits by the holder of a material interest in a business entity is sufficient in our view to constitute "acting in a private capacity." This decision is consistent with the statement of legislative intent of the Code of Ethics which states:

It is essential to the proper conduct and operation of government that public officials be independent and impartial; that public office not be used for private gain other than remuneration provided by law . . . ." [Section 112.311(1), F. S. (1974 Supp.).]

We thus conclude that your membership on the school board under the facts as described herein would preclude your trophy shop from selling merchandise to Brevard County schools.

Question 2 is answered in the negative.

Your letter of inquiry informs us that many school-related organizations purchase trophies from your shop. Examples of these organizations are booster clubs and band parent associations. It is our understanding that these organizations receive no financial support from the school board or from individual schools, and that neither the school board nor particular schools exercise any direct control over them. Your partner in the trophy shop does solicit the business of these school-related organizations, and because of the newspaper coverage given this situation, it is common knowledge that you are an inactive partner in the shop.

Neither the previously quoted portion of the Code of Ethics for Public Officers and Employees nor any other section of the code would preclude the sale of merchandise by the trophy shop of which you are a part owner to school-related organizations that receive no financial aid from and are not directly controlled by the school board or by individual schools.

However, in a previous opinion of this commission, CEO 75-127 (copy enclosed), we found that a school board member was prohibited from soliciting the sale of insurance to school personnel. There we stated that school personnel would at a minimum feel "pressured" to make a purchase because of the power of the school board to hire, to terminate, and to exert other significant influence over school personnel. Thus, solicitation of school personnel who may serve as sponsors or advisors to the organizations in question would be violative of the spirit and intent of s. 112.311(1), F. S. (1974 Supp.).