CEO 06-23 -- December 6, 2006

CONFLICT OF INTEREST


DISTRICT SCHOOL BOARD MEMBER EMPLOYED AS ASSISTANT PRINCIPAL AT CHARTER SCHOOL SPONSORED BY THE SCHOOL BOARD


To: Franklin R. Harrison, School Board Attorney (Panama City)

SUMMARY:

A continuing or frequently recurring conflict of interest and an impediment to the full and faithful discharge of public duty would be created were a member of a district school board to remain employed as an assistant principal of a charter school sponsored by the district school board due to the responsibilities, obligations, and potentially differing interests between the district school board and the charter school. CEOs 01-9, 93-11, 91-19, and 88-43 are referenced.1

QUESTION:

Would a prohibited conflict of interest be created were a member of a district school board to be employed as an assistant principal at a charter school sponsored by the school board?


Your question is answered in the affirmative.


By your letter of inquiry and accompanying materials, we are advised that Ginger Littleton (member) was recently elected as a member of the Bay County School Board.2 Further, we are advised that the member, prior to qualifying to run for office, accepted employment with a management company which was hired (August 1, 2005, prior to the member's qualification to run for office) by a charter school to assist in the management and operation of the charter school. The member's job for the management company, you advise, is to serve as assistant principal of the charter school. In addition, we are advised that the management company hires and employs the charter school employees, but that the employees are recruited, interviewed, and identified by the charter school. Also, we are advised that the member (as assistant principal) is an at-will employee of the management company, is furnished a management company employee handbook, and is paid by the management company. Further, you advise that the Bay County District School Board is the charter school's sponsoring entity under Section 1002.33, Florida Statutes, and that the charter school receives public funds through the Bay County District School Board in accordance with Section 1002.33.3 However, you also advise that no public funds are sent by the Bay County School Board directly to the management company employing the member.


Thus, you inquire for the member whether Section 112.313(7)(a), Florida Statutes, would prohibit her from continuing as an employee of the management company (after she takes office as a School Board member) under the circumstances described above.


As you recognize, Section 112.313(7)(a) is the portion of the Code of Ethics for Public Officers and Employees at issue regarding the member.4 The statute provides:


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 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.

In addressing your inquiry, we necessarily focus on the second part of the statute, the part which concerns continuing or frequently recurring conflicts or impediments to the full and faithful discharge of public duty.5

We find that the member's employment as assistant principal will create a continuing or frequently recurring conflict between her private interests (as an employee of a management company assigned to work in an important position at a charter school contracting with/sponsored by her School Board), or the private interests of the management company/charter school, and the performance of her public duties as a School Board member, and would impede the full and faithful discharge of her public duties. Here, primarily because of the detailed contract/charter interface between the School Board (a party to the charter school contracts) and the charter school (the other party to the contracts), including the charter school's duty to perform certain functions under the contracts and the Schol Board's responsibility to monitor or achieve performance by the charter school, we find that the School Board member's ability to objectively evaluate the performance of the charter school would be compromised if she continues to be employed to perform services and functions at the charter school.6 In essence, a public officer cannot serve two masters with potentially differing interests regarding the same subject matter.7 Zerweck v. State Commission on Ethics, 409 So. 2d 57 (Fla. 4th DCA 1982). Our finding in this regard is in accord with our finding in CEO 01-9 (city mayor contracting to promote charter schools with subsidiary of company doing business with city). See also CEO 91-19 (city commissioner employed by affiliate of corporation contracting with city for third party administration of health insurance plan).


Accordingly, we find that the member is prohibited from simultaneously holding office as a School Board member and being employed at the charter school.


ORDERED by the State of Florida Commission on Ethics meeting in public session on December 1, 2006 and RENDERED this 6th day of December, 2006.


________________________
Norman M. Ostrau, Chair



[1] Prior opinions of the Commission on Ethics are available on its website: www.ethics.state.fl.us
[2] You advise that the member will take office on November 21, 2006.
[3] The materials you provided include a charter school contract between the sponsor and the charter school for the charter school's elementary school and include a charter school contract between the sponsor and the charter school for the charter school's middle school.
[4] Section 112.313(3), Florida Statutes, is not at issue because your inquiry does not indicate that the member (or her spouse or child) is an officer, director, material interest holder, etc. of any business entity selling, renting, or leasing any goods, realty, or services to the School District; and because your inquiry does not indicate that the member is acting in a private capacity to sell, rent, or lease any goods, realty, or services to the District. CEO 91-19. Section 112.313(3) provides:

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. The foregoing shall not apply to district offices maintained by legislators when such offices are located in the legislator’s place of business or when such offices are on property wholly or partially owned by the legislator. 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.


[5] We find that the first part of Section 112.313(7)(a), which prohibits a public officer's holding of employment or a contractual relationship with a business entity or agency which is doing business with the officer's public agency, is not applicable to the member's situation because the business entity with which she is employed (the management company) is not doing business with the Bay County School District. Stated differently, the business entity which is doing business with the School District is a separate legal entity (a nonprofit corporation-charter school) from the legal entity (the limited liability company-management company) which employs the member. It is our view that one does not hold employment or a contractual relationship with a business entity which is doing business with his or her agency because he or she holds employment or a contractual relationship with a business entity which is doing business with another business entity, which in turn is doing business with his or her public agency. See, for example, CEO 88-43, CEO 93-11, and CEO 01-9.
[6] Examples of the detailed responsibilities and potentially differing interests of the School Board (the charter school's sponsor or sponsoring entity) and the charter school, as memorialized in the contracts between the two:

C. DISPUTES
If a conflict arises out of the terms, construction, rights or obligations contained in this agreement, the Sponsor and the School shall attempt to resolve the conflict in the following manner . . . .

E. ANNUAL REPORTS
(1). . . .The School will provide an annual financial report and balanced program cost report information in the state required formats for inclusion in the Sponsor's reporting in compliance with section 236.02(1), Florida Statutes. This completed information shall be submitted to the Sponsor on or before August 1st of the current reporting year.

A. FINANCIAL MANAGEMENT
(6)Total funding shall be calculated and adjusted during the school year to reflect actual WFTE reported by the School for each FTE survey period. Additionally, funding for the School shall be adjusted as follows: In the event of a state holdback or a pro-ration which reduces the Sponsor's funding, the School's funding will be reduced proportionally.

F. ADMINISTRATIVE MANAGEMENT
(2)The School agrees to demonstrate sufficient capital reserves or a letter of credit equal to two month's operating revenue to insure adequate per student funding prior to FTE counts. The School will provide monthly invoices to the Sponsor.


[7] In making our finding of a prohibited conflict, we do not impugn the character or personal integrity of the member. As the Zerweck court noted, the statute is purely preventive in nature; it is concerned with what "might happen." The statute requires no intentional or wrongful transgression on the part of the member such as would be required for a corrupt use of position under Section 112.313(6), Florida Statutes; and we find no such transgression on the part of the member. Our opinion herein addresses only the incompatibility of simultaneously holding both the School Board seat and employment as assistant principal of the charter school.