CEO 81-40 -- June 18, 1981

CONFLICT OF INTEREST

SCHOOL BOARD MEMBER SERVING AS TRUSTEE OF FLORIDA SCHOOL BOARDS ASSOCIATION INSURANCE TRUST

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

SUMMARY:

No prohibited conflict of interest would be created were a school board member to serve as a trustee of the Florida School Boards Association Insurance Trust, a nonprofit self-insurance program to enable school districts to self-insure as a group statewide, if the board member's district participates in the trust. Although it appears that the school board member would be acting in an official capacity to purchase services for his district from a business entity of which he is an officer or director under Section 112.313(3), Florida Statutes, service as a trustee would not interfere with the full and faithful discharge of his public duties under the circumstances presented. Therefore, Section 112.316, Florida Statutes, requires that no prohibited conflict of interest be found to exist. In addition, Section 112.313(7)(a), Florida Statutes, would not apply since noncompensated service on the board of directors of a nonprofit organization does not constitute an employment or contractual relationship. CEO 77-16 and CEO 78-98 are referenced.

QUESTION:

Would a prohibited conflict of interest be created were you, a School Board member, to serve as a Trustee of the Florida School Boards Association Insurance Trust?

Your question is answered in the negative.

In your letter of inquiry you advise that you are a member of the Alachua County School Board and that you would like to serve as a Trustee of the Florida School Boards Association Insurance Trust, a nonprofit self-insurance program which will enable school districts to self-insure as a group statewide. The Trustees receive no compensation for their service, and will be reimbursed only for travel and expenses. You question whether a prohibited conflict of interest would be created in the event your School District participates in the trust.

According to the Associate Director of the Florida School Boards Association, the Association is a nonprofit organization which represents all the school boards within the state and which is governed by an Executive Committee composed of twenty-seven school board members. The Associate Director also advised that the Association has created the Insurance Trust in order to allow school districts to form a statewide consortium for the purchase of insurance. Section 237.211(5), Florida Statutes (Supp. 1980), authorizes school boards to contract with an approved service organization to provide self-insurance services. The trust is governed by a Board of Trustees consisting of five school board members, one school superintendent, and one school district employee with expertise in the area of insurance. Trustees are appointed by the President of the Association for the first year the Trust is in existence, but thereafter Trustees will be elected by a vote of the general membership of the Association. The Board of Trustees will set the general policies of the Trust, which is to be administered by a private corporation under contract with the Association. School districts wishing to participate in the Trust will contribute funds to the Trust for workers' compensation, which presently is the only form of self-insurance offered through the Trust, according to contribution rates set by State law. The Trust, then, is responsible for evaluating, settling, and paying claims.

The Code of Ethics for Public Officers and Employees provides in part:

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 or 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.

(d) Beginning public employment.

[Section 112.313(3), Florida Statutes (1979).]

This provision prohibits you from acting in an official capacity to purchase services for your School District from a business entity of which you are an officer or director. The Insurance Trust constitutes a "business entity," as that term is defined in Section 112.312(3), Florida Statutes. Although technically you would be designated a "Trustee" of the Insurance Trust, we do not perceive that this position is significantly different from that of a "director" under the statute. Finally, we are of the opinion that if your School Board participates in the trust, you will be acting in a "official capacity" to purchase services for your agency. See CEO 75-201, a copy of which is enclosed. Therefore, it appears that you would be prohibited from serving on the Board of Trustees of the Insurance Trust if your School Board were to participate in the Trust.

However, in construing the Code of Ethics, we must consider also another provision, which states:

Construction. -- It is not the intent of this part, nor shall it be construed, to prevent any officer or employee of a state agency or county, city, or other political subdivision of the state or any legislator or legislative employee from accepting other employment or following any pursuit which does not interfere with the full and faithful discharge by such officer, employee, legislator, or legislative employee of his duties to the state or the county, city, or other political subdivision of the state involved. [Section 112.316, Florida Statutes (1979).]

In our view, your service as a Trustee for the Insurance Trust would not interfere with the full and faithful discharge of your public duties as a member of the School Board. First, we note that you would not stand to benefit privately were the School Board to obtain self-insurance through the Trust, since the Trust is a nonprofit program and since you would receive no compensation for your service as Trustee. Secondly, we note that you would be appointed as Trustee because of your public position with the School Board, as are all other members of the Board of Trustees school district officers or employees. Finally, it is especially significant that the Trust has been created by the nonprofit Association of School Boards, which in turn has been created to assist the school boards of this state. Given these circumstances, it appears that there would be a unity of interest, rather than a conflict of interest, in your serving as a Trustee.

The Code of Ethics also 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 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 (1979).]

This provision prohibits a public officer from being employed by or having a contractual relationship with a business entity which is doing business with his agency. In previous opinions we have advised that noncompensated service on the board of directors of a nonprofit organization does not constitute an employment or contractual relationship. CEO 77-16 and CEO 78-98. As you would not receive any compensation for serving on the Board of Trustees, we find that you would not have any employment or contractual relationship with the Trust.

Accordingly, we find that no prohibited conflict of interest would be created were you to serve on the Board of Trustees of the Florida School Boards Association Insurance Trust if your School District participates in the Trust.