CEO 89-58 -- October 26, 1989

CONFLICT OF INTEREST

SCHOOL BOARD MEMBER EMPLOYED BY NONPROFIT ORGANIZATION CONTRACTING WITH BOARD

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

SUMMARY:

Under the described circumstances, no conflict of interest would be created under Section 112.313(7), Florida Statutes, were a school board member to be employed by a nonprofit organization which contracts with the school board. Although the member would be employed by an entity doing business with the board, Section 112.313(12)(f) exempts transactions which do not exceed $500. Under the current terms of the contract between the organization and the board, the organization does not appear to receive any benefit which would exceed $500 in value. Therefore, the $500 exemption would appear to apply. CEO 88-24 and CEO 80-10 are referenced.

QUESTION:

May a school board member become an employee of a nonprofit organization which contracts with the school board without violating the Code of Ethics?

Under the circumstances described in this opinion, your question is answered in the affirmative.

In your letter of inquiry, you advise that . . . , a member of the Broward County School Board, desires to be employed by a private, nonprofit corporation which has the status of a tax exempt organization under Section 501(c) of the Internal Revenue Code. This organization is licensed by the Department of Health and Rehabilitative Services as a drug treatment and education center and operates and supervises day care and residential programs for socially maladjusted juveniles who range in age from thirteen to seventeen.

Currently, there is an agreement between the School Board and the organization which was effective July 1, 1989 and is to continue through June 30, 1990. The agreement has been in effect since 1984 and is renewable on a yearly basis; therefore, it is anticipated that similar agreements will be placed before the Board in future years for its approval. This agreement provides that in order to meet the educational needs of juveniles referred to the organization, the School Board will furnish teachers, their salaries and benefits, support services, inservice training for teachers in current instructional/behavior methods, and teaching materials and supplies necessary to provide the appropriate curriculum and instructional programs for juveniles referred to the organization.

The School Board member voted to renew the agreement under which the School Board and the organization are now operating, but she was not employed by the organization at the time of the vote. The organization now has offered her the position of Director of Development, where she would be responsible for all agency development, fund raising, and corporate and governmental gifts. In this position, she would plan and implement fund raising drives and special events with the assistance of the Community Relations Coordinator, serve as a community and governmental liaison, and handle other special projects assigned by the Executive Director. Her duties and responsibilities would include developing and maintaining contacts with potential donors, governmental agencies, municipalities, foundations, board members, and other individuals and organizations.

According to your letter, these tasks do not involve the subject matter of the agreement with the School Board. The position will be funded by the organization's general income fund, which is not associated with funds received from federal, state, or county sources, but is comprised of public donations, monies from fund raising events, foundation gifts, and monies received from the United Way. In a telephone conversation with our staff the member indicated that she would not contact the School Board in her capacity as an employee of the organization.

In regard to your question, Section 112.313(3), Florida Statutes, 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 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 of 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.

(c) Appointment to public office.

(d) Beginning public employment.

In addition, Section 112.313(7)(a), Florida Statutes, states:

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.

From the information that you have provided, it does not appear that Section 112.313(3) would prohibit the member from working for the organization. The School Board member would not be acting in a private capacity to sell anything to the School Board, and it does not appear that the School Board is purchasing, renting, or leasing anything from the organization. Rather, the contract between the Board and the organization appears to be a mechanism for the Board to fulfill its obligation to provide educational services to the juveniles placed at the facility, defining the respective duties of the Board and the organization in this process. No money or property interest is transferred between the Board and the organization. Therefore, we do not believe that this situation would constitute a violation of Section 112.313(3), Florida Statutes.

We believe that the member would have an employment relationship with an entity doing business with the School Board, therefore constituting a relationship that would fall within the prohibitions of Section 112.313(7)(a). In CEO 88-24, we determined that a school board member's employment with a private, nonprofit university which was doing business with the board fell within the scope of Section 112.313(7)(a). We believe that the analysis of that opinion is applicable here.

Section 112.313(14) provides for the following exemption to Section 112.313(7)(a):

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 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 his interest in the matter from which he is abstaining, and files a written memorandum as provided in s. 112.3143.

Because the member voted to renew the contract with the organization which wishes to employ her, we do not believe that the requirements of this exemption have been met. Although this vote occurred prior to the organization's offer of employment to the member, if we were to determine that votes prior to employment are not included in Section 112.313(14)(b), an official could orally agree with a nonprofit organization to vote in favor of their contract with his agency in exchange for an employment position with the organization at a later time. We certainly do not mean to imply in any way that the member has so misused her public position. We merely point out that to construe the exemption to apply in the circumstances you describe could allow an unscrupulous official to circumvent certain prohibitions of the Code of Ethics.

In the future when the contract is brought before the Board for renewal, this exemption could apply if the member were to abstain from participating in the Board's decision to contract. The renewal basically would be a new contract which the Board would not be required to approve automatically. Therefore, if the member did not participate in the Board's decision to contract with the organization in the future and complied with all other requirements of the exemption, Section 112.313(14) would permit her to be employed by the organization.

At present, however, the exemption in Section 112.313(12)(f), Florida Statutes, for transactions which do not exceed $500, would appear to apply to the current contract. The current agreement, specifies that the School Board shall provide educational programs in facilities (classrooms) of the organization. These programs are administered in accordance with the Florida State Board of Education Administrative Rules and Regulations and School Board rules and policies. The School Board agrees to provide the teachers (along with their salaries and benefits), support services, and inservice training for teachers in current instructional programs for the students, along with teaching materials and supplies. The fees collected by the organization are not collected as a condition of juveniles' participation in the educational program. Therefore, it does not appear that the School Board is providing anything to the organization, but rather is fulfilling its duty to educate the individuals placed therein. In return, the organization allows the School Board to use its facilities as classrooms for educational programs. Although the value of the teachers and their services would certainly exceed $500, the services are provided to the juveniles placed in the organization and not to the organization itself. Therefore, we believe that the current terms of the contract do not give the organization anything exceeding $500 in value, and, pursuant to Section 112.313(12)(f), the Board member may be employed by the organization. See CEO 80-10.

Accordingly, under the circumstances described in this opinion, no prohibited conflict of interest would be created were the school board member to accept employment with a nonprofit organization which contracts with the School Board.