CEO 94-16 -- April 21, 1994

CONFLICT OF INTEREST

COUNTY SCHOOL BOARD MEMBER ACCEPTING

UNSOLICITED INVESTMENT ACCOUNTS

FROM SCHOOL BOARD EMPLOYEES

To: (Name withheld at the person's request.)

SUMMARY:

No prohibited conflict of interest would be created under Section 112.313(7)(a), Florida Statutes, were a school board member who also is a broker for an investment firm to accept unsolicited 403(b) investment (payroll deduction annuity) accounts from school board employees. However, because of the school board's authority over its personnel, a school board member would be prohibited by that section from soliciting such accounts.

QUESTION:

Does a prohibited conflict of interest exist where you, a county school board member, accepted unsolicited investment accounts from employees of the school district?

Your question is answered in the negative.

In your letter of inquiry, you ask whether a prohibited conflict of interest is created if a school board member accepts unsolicited 403(b) investment accounts from employees of the School Board. You advise that you are both a member of the Bay County School Board and a broker with an investment firm which is an authorized and approved provider of 403(b) investments (payroll deduction annuities) by the School District. You also advise that you have accounts with 20 School District employees who have purchased these types of investments.

You advise that the question of a possible conflict of interest in connection with your activities as a broker and account representative arose out of the findings of an auditor's report of the District. The report noted that School Board Policy 6Gx-3.132 authorizes up to 12 companies to offer tax-sheltered annuities to School Board employees through payroll deductions when at least 25 School Board employees have made "appropriate" application for the annuity. The report also indicates that the Board's policy does not require specific School Board approval for each company that qualifies to sell its policies.

The part of the report that you provided to us includes the following facts and conclusions:

* Effective January 31, 1992, a company employing a member of the Bay County District School Board obtained the required number of participants to offer its tax-sheltered annuities to employees of the School Board.

* 35 School Board employees were enrolled in the Company's tax-sheltered annuity program during the 1992-93 fiscal year.

* The School Board member is employed by the company as the company representative for 20 School Board employees.

* Based upon the District's records, the School Board member was involved to some extent in the transactions for the sale of these annuities to District employees.

Without referencing any specific opinion, the Auditor's report also states that the Commission on Ethics has indicated that solicitation of business by public officers from persons over whom they exercise substantial authority would appear to conflict with their public duties. Therefore, the report recommends, an opinion should be requested from the Commission in order to establish the "standard of public duty" under the circumstances described.

Relevant to the facts that you have provided to us is the following provision of the Code of Ethics for Public Officers and Employees:

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.]

The first part of this provision prohibits you from having or holding any employment or contractual relationship with any business entity or agency which is doing business with or is regulated by your public agency. Inasmuch as we have no information to indicate that the investment firm with which you are associated either is doing business with or is regulated by your agency, the School Board, this part does not apply. We previously have advised that an agency is not purchasing services where sales are to individuals employed by the agency, as is the case here, rather than to the agency itself. See CEO 75-127, CEO 82-77, and CEO 89-39.

With respect to the prohibitions of the second part of this provision, which address frequently recurring conflicts of interest and impediments to the faithful discharge of public duties, we advised in CEO 75-127 that because of the school board's authority over its personnel, a school board member should not solicit the sale of life and disability insurance to school personnel at their residences during their off-duty hours. In CEO 80-68, we also advised that a school board member should not act as an insurance broker to administer an insurance program offered privately to school district employees and organizations who were immediately affected by decisions of the school board. However, we noted in CEO 84-50 that we do not believe that the Code of Ethics absolutely prohibits a school board member from making any type of sale to an employee of a school district.

In CEO 84-50, we found that a school board member could sell weight loss products to employees of the school district who approached the member, without solicitation on the part of the member, to purchase the product from him. Our opinion remained consistent with CEO 75-127, where we found a significant distinction between a retailer/customer relationship where a prospective buyer comes to the seller without solicitation by the seller, and the relationship which results from direct solicitation by the seller of persons over whom the public officer exercises substantial authority. With respect to the latter relationship, we noted in CEO 80-68 that it was not difficult to envision situations in which regard for the school board member's/broker's private interests in administrating or enhancing insurance programs would tend to lead to disregard of his administrative and personnel decisions.

Here, because you have indicated through your question that the 20 School Board employee investment accounts you have accepted have not been solicited by you, we find that no continuing or frequently recurring conflict of interest or impediment to the full and faithful discharge of your public duties is created by your acceptance of them. Accordingly, under the circumstances presented, we find that no prohibited conflict of interest is created by your acceptance of unsolicited 403(b) investment accounts from employees of the School District.