CEO 87-17 -- March 11, 1987

CONFLICT OF INTEREST

SCHOOL BOARD MEMBER OWNING INSURANCE AGENCY

CONTRACTING TO PROVIDE INSURANCE TO SCHOOL BOARD

To: Mr. Richard D. Childers, Member, District School Board of Sumter County, Wildwood

SUMMARY:

A prohibited conflict of interest exists under Section 112.313(3), Florida Statutes, where a district school board member's insurance agency contracts to provide insurance to the school board, unless the transaction comes within the terms of one of the exemptions contained in Section 112.313(12), Florida Statutes. Nevertheless, that provision would not prohibit the school board member from serving on the board when he is appointed to that office while the board is insured under an existing policy provided by his insurance agency.

QUESTION:

Would a prohibited conflict of interest exist where a district school board member's insurance agency contracts to provide insurance to the school board?

Your question is answered in the affirmative, subject to the exceptions noted below.

In your letter of inquiry you advise that you recently were appointed to a remainder of a term on the District School Board of Sumter County. You own an insurance agency which currently writes the general liability, workmen's compensation, and property insurance policies for the School Board. This account was awarded to your insurance agency last spring for a three-year term. At that time you were not affiliated with the School Board or with any of its members.

The Code of Ethics for Public Officers and Employees provides in relevant part:

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 purchase, rent, or lease any realty, goods, or services for his own agency from any business entity of which he or his spouse or child is an officer, partner, director, or proprietor or in which such officer or employee or 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 to any political subdivision or any agency thereof, if he 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. This subsection shall not affect or be construed to prohibit contracts entered into prior to:

(a) October 1, 1975.

(b) Qualification for elective office.

(d) Beginning public employment.

[Section 112.313(3), Florida Statutes (1985).]

While this provision allows you to serve on the School Board while that board is insured under the existing program, it generally prohibits a public officer from acting in a private capacity to sell any services to his own agency. Nevertheless, there are a number of exemptions provided by Section 112.313(12), Florida Statutes, to this prohibition.

In particular, where the business is awarded by the agency under a system of sealed, competitive bidding to the lowest or best bidder, Section 112.313(12)(b), Florida Statutes, creates an exemption, provided that the following conditions are met:

1. The official or his spouse or child has in no way participated in the determination of the bid specifications or the determination of the lowest or best bidder;

2. The official or his spouse or child has in no way used or attempted to use his influence to persuade the agency or any personnel thereof to enter such a contract other than by the mere submission of the bid; and

3. The official, prior to or at the time of the submission of the bid, has filed a statement with the Department of State, if he is a state officer or employee, or with the Clerk of the Circuit Court of the county in which the agency has its principal office, if he is an officer or employee of a political subdivision, disclosing his, or his spouse's or child's, interest and the nature of the intended business.

Additionally, Section 112.313(12)(e), Florida Statutes, would permit you to sell insurance to the School Board if your insurance agency is the only source of supply within the county, provided you make disclosure to the School Board on CE Form 4A, Disclosure of Business Transaction, Relationship, or Interest.

Please be advised, however, that if any measure concerning the insurance program comes before the School Board, you must abstain from voting and follow the disclosure requirements of the following provision:

No county, municipal, or other local public officer shall vote in his official capacity upon any measure which inures to his special private gain or shall knowingly vote in his official capacity upon any measure which inures to the special gain of any principal, other than an agency as defined in s. 112.312(2), by whom he is retained. Such public officer shall, prior to the vote being taken, publicly state to the assembly the nature of his interest in the matter from which he is abstaining from voting and, within 15 days after the vote occurs, disclose the nature of his interest as a public record in a memorandum filed with the person responsible for recording the minutes of the meeting, who shall incorporate the memorandum in the minutes. However, a commissioner of a community redevelopment agency created or designated pursuant to s. 163.356 or s. 163.357 or an officer of an independent special tax district elected on a one- acre, one-vote basis is not prohibited from voting. [Section 112.3143(3), Florida Statutes (1985).]

Accordingly, we find that a prohibited conflict of interest would be created were your insurance agency to provide insurance to the School Board after the expiration of the existing policy, unless the sale would come within the terms of one of the exemptions contained in Section 112.313(12), Florida Statutes.