CEO 11-14 – September 14, 2011

CONFLICT OF INTEREST

DISTRICT SCHOOL BOARD CASH AND INVESTMENTS MANAGER
MARKETING COMPUTER WORKBOOK TOOL

To: Name withheld at person's request (Pinellas District Schools)

SUMMARY:

Advice is provided to a school board employee regarding his enhancement and marketing of computer tools derived from, and other computer tools not derived from, tools accessed in his public capacity. CEO 07-11, CEO 92-18, CEO 89-26, and CEO 86-24 are referenced.1


QUESTION:

Would a prohibited conflict of interest be created were you, a school district employee, to market a computer workbook tool?


Your question is answered as set forth below.


By your letter of inquiry and additional information provided to our staff via a telephone conversation, we are advised that you are an employee of the District School Board of Pinell as County, serving currently and for approximately sixteen years in a position which manages the District's cash and investments. Further, you advise that in analyzing the District's cash position, you use a computer workbook tool (workbook) which you "inherited" from the predecessor in your District position.2 Continuing, you advise that you use the workbook to determine how long the District has cash available and when the District needs to raise cash from its investment portfolio to meet expenditures, and that over the years you have revised and enhanced the workbook to suit changing needs.3Further, you advise that you have shown the workbook and the process you use to analyze the District's cash position at various conferences over the years, and that you have shared the workbook with several local government entities.

Recently, you advise, you had an inquiry from a treasury advisory firm (TAF) that is interested in using the workbook for its clients. However, you advise further, the workbook, in its current form, requires a lot of manual input and manipulation to make it suitable for the TAF's clients; consequently, you advise, you have taken a copy of the workbook home and started enhancing it, mainly by adding programming, to make it a much more useful product.4 Additionally, you advise, the District/Board currently does not do any business with the TAF. However, you advise that the owners of the TAF own a second firm that runs an SEC-registered bond fund for government entities, and that the District owns shares of this fund.5

Also, you advise that you have received a proposal from the TAF outlining what it would be willing to pay you for use of an enhanced workbook, based on a per-user (per-their-clients) charge, and that you have identified three possible scenarios under which this might occur. However, before proceeding, you request our opinion as to Code of Ethics ramifications to you, if any, which could result. The scenarios, as labeled and described by you, are:


Scenario One—School Board Retains Ownership of Property

You enter into an agreement with the School Board that outlines the Board's ownership of the workbook, as well as your ownership of the programming contained within the workbook. The agreement also would outline the sharing with the TAF of any revenue generated.6 A second agreement would be made between the Board/District and the TAF, giving the TAF exclusive rights to market the workbook.


Scenario Two—Transfer Ownership of the Workbook to You
You enter into an agreement with the School Board whereby you purchase the rights to the workbook from the Board for an agreed price. The agreement also would specify that you would continue to use and enhance the workbook as needed to fulfill your duties as an employee of the Board. Then, you would enter into an agreement with the TAF giving the TAF exclusive rights to market the workbook, with you keeping any revenues generated from the sale of the exclusive rights.


Scenario Three—Create a Unique Product
You would create a unique product, using your time and resources, to which you would own the intellectual property rights, with the School Superintendent and possibly the School Board having knowledge of this endeavor and approving of it.


As to Scenario One, we find that a prohibited conflict of interest would be created under the first part of Section 112.313(7)(a), Florida Statutes.7 In such a situation, your entry into an agreement with the School Board that outlines the Board's ownership of the workbook and that outlines your ownership of the programming contained within the workbook would amount to your holding employment or a contractual relationship with a business entity (your company, your sole proprietorship, etc.)8 that would be doing busine with (via the agreement)9 the Board (your public agency). Also, we find that Scenario One would create a prohibited conflict under the second part of Section 112.313(7)(a) because it would be difficult to determine whether the ideas from the enhancements you would market privately came from using information gained from your public position, and because your development and private marketing of enhancements to the workbook would impede the full and faithful discharge of your public duties, since you could develop these enhancements in your public capacity and thereby further improve the functions of your public agency. In this regard, CEO 92-18 (clerk of court employees developing software for private sale to other clerk's offices) and CEO 89-26 (employee of judicial circuit marketing enhancements to software developed as part of his public position),10 in which we found a prohibited conflict, are analogous to your situation.


Similarly, we find that you would have a prohibited conflict regarding Scenario Two.


As to Scenario Three, we find that no prohibited conflict would be created were you to create, on your own time and using your own resources, a unique product or tool, which you then would market privately, provided that you do not market it to your own School Board/District, other than under any applicable exemption of Section 112.313(12), Florida Statutes, and provided that you do not market it to businesses which are doing business with your School Board/District.

Your question is answered accordingly.


ORDERED by the State of Florida Commission on Ethics meeting in public session on September 9, 2011 and RENDERED this 14th day of September, 2011.


____________________________________

Robert J. Sniffen, Chairman


[1]Prior opinions of the Commission on Ethics may be obtained from its website (www.ethics.state.fl.us) or may be obtained directly from the Commission.

[2]You advise that the workbook was made using MS Excel, but that the workbook itself is not a product to which Microsoft has intellectual property rights.

[3]You acknowledge that the intellectual property rights to the workbook, in its current form, belong to the Board/District because you, and your predecessor, developed the workbook in your capacities as employees of the Board/District. Further, you advise that no person, company, or government entity, other than the Board/District, has intellectual property rights to the workbook in its current form.

[4]In enhancing the workbook at home, you advise, you use licensed software which you privately have purchased (MS Office).

[5]In your capacity as manager of the District's investments, you advise that you have invested in the fund since its inception approximately ten years ago; that the District's current position in the fund is approximately $37 million dollars, out of an annual budget of approximately $1.2 billion; and that over the life of the District's investment in the fund, the District's returns from the fund have equaled or exceeded the returns you have achieved for the District through management of individual securities.

[6]You advise that the Board/District has an account agreement with the firm that runs the SEC-registered bond fund, the fund in which the District owns shares.

[7]Section 112.313(7)(a) 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.


[8]Section 112.312(5), Florida Statutes, defines "business entity" to mean "any corporation, partnership, limited partnership, proprietorship, firm, enterprise, franchise, association, self-employed individual, or trust, whether fictitiously named or not, doing business in this state."

[9]We have found "doing business with" to include situations in which the parties have entered into a lease, contract, or other type of arrangement where one party would have a cause of action against the other in the event of a breach or default. CEO 86-24, CEO 07-11. We find that the agreement between you and the School Board would constitute such a contract or arrangement.

[10]In CEO 89-26 and opinions cited therein, we also found that Section 112.313(8), Florida Statutes, would be violated were a public official or public employee to use a program designed or developed by him in his public job capacity. Section 112.313(8) provides:

DISCLOSURE OR USE OF CERTAIN INFORMATION.—A current or former public officer, employee of an agency, or local government attorney may not disclose or use information not available to members of the general public and gained by reason of his or her official position, except for information relating exclusively to governmental practices, for his or her personal gain or benefit or for the personal gain or benefit of any other person or business entity.