CEO 13-04--May 1, 2013
SUNSHINE AMENDMENT, CONFLICT OF INTEREST, VOTING CONFLICT
STATE SENATOR CONSULTANT FOR PRIVATE EQUITY
AND VENTURE CAPITAL FIRM
To: Mark Herron, Attorney for State Senator (Tallahassee)
Advice is provided to a Senator regarding his consulting in behalf of businesses interested in the actions of the Legislature and other government entities. CEO 89-6, CEO 90-8, and CEO 97-3 are referenced.1
Would the Sunshine Amendment to the Florida Constitution prohibit a member of the Senate from representing a firm or its subsidiaries before state universities or state university boards of trustees?
This question is answered in the affirmative.
You write in behalf of the Honorable Jeremy Ring, a member of the Florida Senate, inquiring as to whether Article II, Section 8(e), Florida Constitution (the "Sunshine Amendment"), would prohibit his representing a firm, or the firm's subsidiaries, before state universities or boards of trustees of state universities. In addition, you state that the Senator serves as Chair of the Governmental Oversight and Accountability Committee, Vice-Chair of the Appropriations Subcommittee on Finance and Taxation, a member of the Appropriations Committee, a member of the Appropriations Subcommittee on Transportation, Tourism and Economic Development, a member of the Commerce and Tourism Committee, a member of the Judiciary Committee, and a member of the Rules Committee; and that he is considering working as an independent contractor2 (consultant) for a private equity and venture capital firm. Continuing, you relate that the firm has investments in education, healthcare, business services, direct marketing, specialty manufacturing and distribution, and technology companies, among other investments. Further, you state that pursuant to his contract with the firm, the Senator would identify potential business opportunities for the companies the firm is invested in (subsidiaries) and would market the services of the subsidiaries to potential customers, including Florida counties, municipalities, school districts, charter schools, water management districts, state universities, community colleges, state colleges, and special districts (including hospital districts).
Article II, Section 8, Florida Constitution, provides in relevant part:
(e) . . . . No member of the legislature shall personally represent another person or entity for compensation during term of office before any state agency other than judicial tribunals . . . .
This provision of the Constitution, and its statutory counterpart,3 would prohibit the Senator from representing, while he holds office as a member of the Legislature, the firm, its subsidiaries, or any other person or entity for which he would perform compensated service, before a state university, if a state university is a "state agency" within the meaning of the provision. For the reasons expressed below, we find that a state university is a state agency4 within the meaning of the provision, and, thus, that the Senator is subject to the prohibition regarding his consultant contact5 with a state university during term of office.
Initially, we note that Section 112.313(9)(a)2.c., Florida Statutes, defines "state agency" to mean
an entity of the legislative, executive, or judicial branch of state government over which the Legislature exercises plenary budgetary and statutory control.
On its face, this definition of state agency would seem to fit a state university. Also, the Legislature's use of particular terms in describing a government entity is relevant to its status. In re George Stuart, Commission on Ethics Complaint No. 90-250, COE Final Order No. 94-01. And, regarding state universities, Section 1001.705(1)(d), Florida Statutes,6 provides that
"[s]tate university" or "state universities" as used in the State Constitution and the Florida Statutes are agencies of the state which belong to and are part of the executive branch of state government . . . ."
Further, regarding the Legislature's budgetary and statutory role regarding state universities, Section 1001.705(3), Florida Statutes, provides that the Legislature shall have the following responsibilities:
a) Making provision by law for the establishment, maintenance, and operation of institutions of higher learning and other public education programs that the needs of the people may require.
(b) Appropriating all state funds through the General Appropriations Act or other law.
(c) Establishing tuition and fees.
(d) Establishing policies relating to merit and need-based student financial aid.
(e) Establishing policies relating to expenditure of, accountability for, and management of funds appropriated by the Legislature or revenues authorized by the Legislature. This includes, but is not limited to, policies relating to: budgeting; deposit of funds; investments; accounting; purchasing, procurement, and contracting; insurance; audits; maintenance and construction of facilities; property; bond financing; leasing; and information reporting.
(f) Maintaining the actuarial and fiscal soundness of centrally administered state systems by requiring state universities to continue to participate in programs such as the Florida Retirement System, the state group health insurance programs, and the state casualty insurance program.
(g) Establishing and regulating the use of state powers and protections, including, but not limited to, eminent domain, certified law enforcement, and sovereign immunity.
(h) Establishing policies relating to the health, safety, and welfare of students, employees, and the public while present on the campuses of institutions of higher learning.
Additionally, the courts have held that a Constitutional amendment vesting governance of the state university system in a board of governors did not divest the Legislature of its plenary authority over tuition and fees. Graham v. Haridopolos, 75 So. 3d 315 (Fla. 1st DCA 2011); Graham v. Haridopolos, 108 So. 3d 597 (Fla. 2013).7
Question 1 is answered accordingly.8
Would the Senator's contractual relationship as a consultant create a prohibited conflict of interest under Section 112.313(7)(a), Florida Statutes?
This question is answered in the negative, provided that the Senator does not personally lobby the Legislature and is completely separated from the firm's efforts, or the efforts of its subsidiaries, to lobby the Legislature.
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.
We have found no prohibited conflict under the first part of Section 112.313(7)(a) due to any "regulation" by the Legislature over businesses (e.g., the firm or its subsidiaries) being addressed by the language of Section 112.313(7)(a)2, Florida Statutes, which provides:
When the agency referred to is a legislative body and the regulatory power over the business entity resides in another agency, or when the regulatory power which the legislative body exercises over the business entity or agency is strictly through the enactment of laws or ordinances, then employment or a contractual relationship with such business entity by a public officer or employee of a legislative body shall not be prohibited by this subsection or be deemed a conflict.
CEO 90-8. Also, regarding the second part of the statute, the Senator's complete separation from Legislative lobbying and from Legislative lobbying efforts for the firm or its subsidiaries guards against a prohibited conflict. CEO 90-8.9
Question 2 is answered accordingly.10
ORDERED by the State of Florida Commission on Ethics meeting in public session on April 26, 2013 and RENDERED this 1st day of May, 2013.
Susan Horovitz Maurer, Chair
Prior opinions of the Commission on Ethics may be obtained from its website (www.ethics.state.fl.us).
Your written inquiry states that the Senator would be "employed" by the firm; however, you orally clarified with our staff that the Senator would serve the firm as an independent contractor.
Section 112.313(9)(a)3, Florida Statutes, which provides in relevant part:
. . . . No member of the Legislature shall personally represent another person or entity for compensation during his or her term of office before any state agency other than judicial tribunals or in settlement negotiations after the filing of a lawsuit.
Apparently, you do not inquire as to whether the various other entities mentioned in your correspondence are "state agencies," presumably because you feel that they are not. We agree that private entities and local government entities are not "state agencies." CEO 89-6. More particularly, regarding community colleges and state colleges, we find that they are not legislative, executive, or judicial branch state government entities; rather, they are district-based government entities. CEO 97-3; Sections 1004.65 and 1004.66, Florida Statutes. Further, Section 1004.65 ("flush left" language at the end of the statute) provides that authority to offer one or more baccalaureate degree programs does not alter the governance relationship of a Florida College System institution (e.g., "state college," "community college," "junior college") with its district board of trustees; and Section 1001.60(3), Florida Statutes, provides that each institution within the Florida College System shall be governed by a local board of trustees.
"Represent" or "representation" is broadly defined in Section 112.312(22), Florida Statutes, to mean
actual physical attendance on behalf of a client in an agency proceeding, the writing of letters or filing of documents on behalf of a client, and personal communications made with the officers or employees of any agency on behalf of a client.
We are not unaware that Section 1001.705(d) goes on to provide that
This definition of state universities as state agencies is only for the purposes of the delineation of constitutional lines of authority. Statutory exemptions for state universities from statutory provisions relating to state agencies that are in effect on the effective date of this act remain in effect and are not repealed by virtue of this definition of state universities.
However, we are aware of no statutory exemption which would operate to remove state universities from the meaning of the prohibition.
We also find that the prohibition would apply to include any consultant contact the Senator would have with a state university board of trustees or a member of such a board. "Representation" includes contact with officers of an agency and a state university is an agency; thus, it is inescapable that a state university's board of trustees and its members are encompassed within the prohibition. Further, Section 1001.72(1), Florida Statutes, provides that
Each board of trustees shall be a public body corporate by the name of "The (name of university) Board of Trustees" . . . .
After initial receipt of your inquiry, you provided the following written information:
Prior to entering into any negotiations with [the firm] regarding this consulting agreement, [the Senator] engaged in discussions with State University personnel about maximizing foreign student admissions that result in higher tuition fees than in-state student admissions. One of the entities in which [the firm] invests is a provider of enrollment services to both public and private higher education institutions. [The Senator] was not compensated in any way for these discussions nor was there any agreement [for] future compensation, consideration or other thing of value tied to these discussions.
While we appreciate the Senator's candor in providing this additional information, our advice in the instant opinion is prospective; we express no view as to whether the conduct described in the information indicates or does not indicate any conflict under the Sunshine Amendment or the Code of Ethics.
As in CEO 90-8, we do not find that the Senator would be precluded from participating in firm or subsidiary activities leading to a decision to approach the Legislature concerning an issue. However, once such a decision is made, the Senator's consulting should not include any activities related to accomplishing the goals of the firm or its subsidiaries before the Legislature.
Your inquiry quotes Section 112.3143(2), Florida Statutes, the voting conflicts law applicable to State-level officers, such as Legislators; and the inquiry cites and discusses several of our opinions dealing with voting conflicts. However, since the inquiry poses no voting conflicts question, we provide no answer, herein. Nevertheless, should a particular measure/vote, about which the Senator has doubts under the voting conflicts law, arise in the future, he should not hesitate to contact us, or our staff, for further advice.