CEO 23-4—April 26, 2023
CONFLICT OF INTEREST
EMPLOYEES OF SCHOOL DISTRICT
WHO ARE MEMBERS AND DIRECTORS OF A NONPROFIT CORPORATION
To: Name withheld at person's request (Brevard County Public Schools)
Guidance is provided regarding School District personnel at all levels of the District as to whether they have conflicts of interest under Sections 112.313(3) and (7)(a), and, if so, whether they have the benefit of an exemption under either Section 112.313(12)(f), Florida Statutes, or Section 112.316, Florida Statutes. CEO 81-2, CEO 93-31, CEO 97-21, CEO 99-7, CEO 04-17, CEO 09-1, CEO 10-2, CEO 10-15, CEO 14-12, CEO 14-21, CEO 14-27, CEO 14-28, CEO 16-12, CEO 18-4, CEO 18-5, CEO 19-1, CEO 19-9, CEO 19-14, and CEO 23-2 are referenced.
Will certain School District personnel have a prohibited conflict of interest if the Superintendent, on behalf of the School District, purchases an institutional membership with a nonprofit corporation?
This question is answered as follows.
You are the general counsel for the Brevard County School District (School District) and you write on behalf of the School District and certain individuals in its employ. You explain that the Superintendent is considering a purchase for the School District of an institutional membership with a nonprofit corporation called the Brevard Alliance of Black School Educators (Brevard ABSE). The mission of this entity is "to enhance and facilitate the education and social development of all students in Brevard County, with a particular focus on African-American students." Brevard ABSE accomplishes this mission in a variety of ways. According to the president of the organization, who is also the School District's Director of Elementary Leading and Learning, the organization forms partnerships to financially support recruitment events to attract minority teachers and to supply food for teachers who provide service to the school and its students in after-school hours. Brevard ABSE partnered with a Head Start program by donating needed items to the school. Brevard ABSE also provides a scholarship for a student to attend a historically black college or university.
Brevard ABSE offers individual memberships and numerous teachers, administrators, and department directors of the School District hold individual memberships. Additionally, Brevard ABSE offers institutional memberships at a cost of $250 per year, which is available for purchase by any institution offering instruction from kindergarten through higher ed. With an institutional membership, the School District will receive a Certification of Institutional Membership, the opportunity to network with fellow educators, two (2) complimentary individual memberships, a link on Brevard ASBE's webpage to the School District's webpage, and a 20 percent discount on the organization's paid events.
At present, Brevard ABSE's board of directors consists of teachers, administrators, and department directors within the School District, all of whom are individual members of Brevard ABSE. The members of the board of directors of Brevard ABSE are not compensated for their service.
With that background, you ask whether a conflict of interest will be created for any of the School District personnel associated with Brevard ABSE if the Superintendent purchases an institutional membership for the School District.
Relevant to your inquiry is Section 112.313(3), Florida Statutes, which states:
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 . . . . 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.
The first prohibition of this provision operates to prevent a public employee from acting in his or her public capacity as a purchasing agent, or a public officer acting in his or her official capacity, from purchasing, renting, or leasing any realty, goods, or services for his or her agency from any business entity in which he or she (or his or her spouse or child) is an officer or director or in which the employee or officer (or his or her spouse or child) owns more than a five-percent ownership interest. The second prohibition of this subsection prevents a public employee or officer from acting in his or her private capacity to rent, lease, or sell any realty, goods, or services to his or her public agency or to any agency of his or her political subdivision. "Acting in a private capacity" includes situations where one is an officer, director, or owner of more than a 5 percent interest of a business entity that is selling, renting, or leasing to the agency or political subdivision. See CEO 81-2 and CEO 09-1.
The term "agency" is defined in Section 112.312(2), Florida Statutes, as:
any state, regional, county, local, or municipal government entity of this state, whether executive, judicial, or legislative; any department, division, bureau, commission, authority, or political subdivision of this state therein; any public school, community college, or state university; or any special district as defined in s. 189.012.
We have opined in the past, when interpreting this definition, that the agency of a public officer or public employee is the lowest unit of government to which one's influence could be said to extend. See CEO 93-31 and CEO 99-7. For a teacher or administrator whose position is within a school, we have found that their agency is the school where they work. See CEO 04-17, CEO 10-15, CEO 16-12. However, the agency of an employee of a school district's central office was found to be the department where he or she worked. See CEO 14-28. For school board members, though, we have found their agency to be the entire school district. See CEO 14-21 and CEO 14-27. The agency of the superintendent of a school board is the school district. See, generally, CEO 97-21.
Unless an exemption applies to negate the conflict, a prohibited conflict of interest under Section 112.313(3) will be created for those School District personnel who also serve on Brevard ABSE's board of directors when the Superintendent, on behalf of the School District, purchases an institutional membership. In that instance, those individuals will be acting in a private capacity either to sell an institutional membership to their agency or an agency of their political subdivision, depending where their public positions are within the School District.
Also, if the Superintendent is a member of the Board of Directors of Brevard ABSE, then he will be acting in an official capacity to purchase from a business entity of which he is a director. That would present a conflict for the Superintendent under Section 112.313(3) in the absence of an applicable exemption.
To provide a complete analysis of the possible conflicts of interest arising from the scenario you present, a second statute, Section 112.313(7)(a), Florida Statutes, must be applied. Section 112.313(7)(a) states:
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.
The first clause of this statute prohibits a public officer from having any contractual relationship with a business entity or an agency that is regulated by or is doing business with his or her agency. The second clause prohibits a public officer from having a contractual relationship that would create a continuing or frequently recurring conflict of interest or would create an impediment to the full and faithful discharge of his or her public duties. In determining whether a contractual relationship exists, we have often said that membership in a nonprofit corporation creates a contractual relationship between a public officer or public employee and that nonprofit corporation. See, e.g., CEO 19-1, CEO 14-12, and CEO 10-2.
Without the benefit of an exemption, if the Superintendent or any staff of the Superintendent's Office1 holds an individual membership while the School District is contemporaneously doing business with Brevard ABSE (through the purchase of an institutional membership or by other means), they will have a conflicting contractual relationship under the first clause of Section 112.313(7)(a). They will hold contractual relationships (through their individual memberships) with Brevard ABSE, which will be a business entity doing business with their agency.
If the Superintendent or personnel of the School District who have a role in the approval process for the purchase of the institutional membership are also both (1) individual members of Brevard ABSE and (2) members of its board of directors, then they will have a conflict of interest under the second clause of Section 112.313(7)(a). They will have, on the public side of the transaction, an operational role in their agency's treatment of the business entity while at the same time having a representational role on behalf of the same business entity. As we recently opined, such a relationship can tempt a public officer or public employee to dishonor their public responsibilities as they relate to decisions about business entity. See, e.g., CEO 23-2 and the opinions therein cited.
All other School District personnel, even those who have individual memberships with Brevard ABSE or sit on the organization's board of directors, will not have a conflicting contractual relationship under Section 112.313(7)(a). They will merely hold contractual relationships (individual memberships) with a business entity (Brevard ABSE) that is doing business with the Superintendent's Office, which is an agency other than their own. Such a relationship does not create a prohibited conflict of interest under the first clause of Section 112.313(7)(a). Also, there is nothing in the fact pattern to suggest that their memberships in Brevard ABSE will tempt these individuals to dishonor their public responsibilities. See Zerweck v. State Commission on Ethics, 409 So.2d 57, at 61 (Fla. 4th DCA 1982).
For those individuals who have a conflict of interest under Sections 112.313(3) and/or (7)(a), as described above, there appears to be an exemption available that will operate to negate the conflicts. According to Section 112.313(12)(f), Florida Statutes, a conflict of interest under Sections 112.313(3) or (7)(a) will be exempted if "[t]he total amount of the transactions in the aggregate between the business entity and the agency does not exceed $500 per calendar year." If the School District only buys the institutional membership each calendar year, the total amount of the transactions in the aggregate between the School District and Brevard ABSE will be $250 in each calendar year, and the exemption will apply to negate the conflicts for everyone who would otherwise have a conflict. Of course, if the School District transacts additional business with Brevard ABSE—for example, if the School District makes use of its 20 percent discount on the organization's paid events by purchasing admissions to those events—the individuals with conflicts will lose the benefit of the exemption when the total aggregated business transacted between the School District and Brevard ABSE exceeds $500. In that event, a second exemption will be needed.
There is, though, a second exemption available, through an application of Section 112.316, Florida Statutes. Section 112.316 states:
Construction.—It is not the intent of this part, nor shall it be construed, to prevent any officer or employee of a state agency or county, city, or other political subdivision of the state or any legislator or legislative employee from accepting other employment or following any pursuit which does not interfere with the full and faithful discharge by such officer, employee, legislator, or legislative employee of his or her duties to the state or the county, city, or other political subdivision of the state involved.
Section 112.316 only operates to negate certain conflicts arising under Section 112.313(3) and the first clause of Section 112.313(7)(a). Because Section 112.316, by its plain meaning, precludes its application to any pursuit that interferes with the full and faithful discharge of a public officer's or employee's duties, as is precisely defined to be a conflict under the second clause of Section 112.313(7)(a), those individuals with conflicts under the second clause of Section 112.313(7)(a), as described above, will not benefit from this exemption and, therefore, will have a prohibited conflict.
We have interpreted Section 112.316 to negate conflicts derived from Section 112.313(3) and the first clause of Section 112.313(7)(a) when the public officers and employees who might otherwise have a conflict played no public role in their agency's dealings with or oversight of the business entity. See, e.g., CEO 18-4, CEO 78-7418-5, CEO 19-9, CEO 19-14. The conflicts of School District personnel who are not involved in the process of approving the School District's purchasing of the institutional membership from Brevard ABSE will be negated by an operation of Section 112.316. For those personnel who are involved in the process—not just the Superintendent, who provides the final approval of the purchase, but anyone else who offers legal, financial, or other preliminary approvals prior to the Superintendent's final approval and exercise of his or her purchasing authority—a negation of their conflicts through an application of Section 112.316 is not available.
In conclusion, so long as the total amount of the transactions in the aggregate between the School District and Brevard ABSE does not exceed $500 in any calendar year, all school district personnel described above who might otherwise have a conflict of interest will benefit from the exemption in Section 112.313(12)(f) and their conflicts will be negated. If, however, the total amount of the transactions in the aggregate between the School District and Brevard ABSE does exceed $500 in any calendar year, then a prohibited conflict of interest will be created for those individuals who (1) are individual members of Brevard ABSE and/or are members of the board of directors of Brevard ABSE and (2) are involved in the School District's approval process for transactions with Brevard ABSE. However, Section 112.316 will operate to negate the conflict of interest for those who are individual members of Brevard ABSE and/or are members of the board of directors of Brevard ABSE, but are not involved in the School District's approval process for the purchase.
Your question is answered accordingly.
ORDERED by the State of Florida Commission on Ethics meeting in public session on April 21, 2023, and RENDERED this 26th day of April, 2023.
Glenton "Glen" Gilzean, Jr., Chair
An organizational chart on the Brevard Schools website shows that the Superintendent is the head of the Superintendent's Office, which is a School District department staffed by: district and school security, a staff attorney, a chief of staff, five assistant superintendents, a deputy superintendent, a chief financial officer, a chief of human resources, and a chief operating officer. We find that the agency of these positions is the entire School District, due to the scope of the influence of these high-level positions. The identity of the agency, for purposes of Section 112.313(7)(a), of specific support staff to those high-level positions will either be the School District or the Superintendent's Office, depending on the nature and duties of their individual positions; for specific guidance on how this opinion might affect those support staff, which will require a fact-dependent determination of their agency, please contact Commission staff.