CEO 96-10 -- May 1, 1996
CONFLICT OF INTEREST
SCHOOL BOARD MEMBER EMPLOYED BY NONPROFIT AREA
COUNCIL ON AGING WHICH CONTRACTS WITH SCHOOL BOARD
To: Donna Hart, School Board of Osceola County (Kissimmee)
Under the circumstances described, the employment of a School Board member with a private tax-exempt organization under S.501(c) of the Internal Revenue Code, which contracts with the School Board, would be exempt from the prohibitions of Section 112.313(7)(a), Florida Statutes.
Section 112.313(12)(f), Florida Statutes, exempts transactions if the total amount does not exceed $500. Assuming that the School Board and the nonprofit, tax-exempt organization are doing business by virtue of their agreement giving the organization access to the School District=s campuses in order to permit the organization to select School District students for its mentoring program, because the amount of the transaction between the School Board and the organization does not exceed $500 per calendar year, the School Board member=s employment is exempt from the prohibitions of Section 112.313(7)(a).
Notwithstanding the prohibitions of Section 112.313(7)(a), Section 112.313(15), Florida Statutes, also exempts prohibited conflicts of interest arising out of the business relationship between an agency and a tax-exempt organization under s.501(c) of the Internal Revenue Code, where, as here, the public officer is not directly or indirectly compensated as a result of the contract and the officer has not participated in the contracting process.
Although the School Board member is coordinator of a program contacting targeted students of her School District and, therefore, by necessity, requires interaction with School District personnel on a regular basis in order for her and her program to gain access to the students, no continuing or frequently recurring conflict of interest or impediment to the full and faithful discharge of her public duties as a member of the School Board exists. CEO 89-29 is referenced.
Does Section 112.313(7)(a), Florida Statutes, prohibit you, a member of a School Board, from being employed by a private, nonprofit, 501(c)3 organization which contracts with the School Board relative to a program that you are the coordinator of and which is funded by an agency other than the School Board, but which requires you to have access to the School District=s campuses?
Under the circumstances presented, your question is answered in the negative.
In your letter of inquiry and your conversation with our staff, you advise that after you were elected to the School Board of Osceola County in November 1992, which office you still hold, you became employed on or about August 1994 with the Osceola County Council on Aging, Inc. (ACouncil@), a private nonprofit corporation recognized as a Section 501(c)(3) organization under the Internal Revenue Code and designated by the Florida Department of Elderly Affairs as the Department=s planning and service area agency on aging under the federal Older Americans Act of 1965. The organization=s purpose is to ensure the coordinated and integrated provision of long-term services and prevention and early intervention services to the elderly in the Osceola County area. See Sections 20.41(6), 430.203(1), 430.204, and 430.205, Florida Statutes. You advise that you were hired as coordinator for the Bridges program at a salary which has not changed since you were hired. You also write that the Bridges program originally operated as an Attorney General=s program, with its funding being derived from a motor vehicle trust fund. You advise further that your title was changed to Intergenerational Programs Coordinator, which translated into the broadening of your responsibilities without a corresponding increase in your salary.
The Council, you write, is the fiscal agent and operating agency for the grant-funded program, ABridges.@ While you operate under the direction and supervision of your superiors at the Council, you also are in charge of the Bridges program which was initially funded in 1994 in the amount of $84,000 to your Council under a Juvenile Justice Partnership Grant, a Department of Juvenile Justice grant, you advise. You advise further that during the second year that you were in charge of the grant application and administration process, the amount of the Bridges grant received by the Council from the Department of Juvenile Justice was $50,000. The Council, you advise, received an additional $71,000 from a Title II federal grant administered through the Department of Juvenile Justice. You advise that for its third year of operation, the Title II Bridges grant will be approximately $63,000, and for 1996-97, the Community Juvenile Justice Partnership Grant application request is for $50,000.
No portion of your salary is derived from Title II grant funds, you advise. However, your salary is paid out of Juvenile Justice Partnership Grant funds. Moreover, no portion of the grant funds received by your employer comes from the School Board of Osceola County; nor has the School Board suffered Aany financial prejudice@ as a result of the availability of the grant funds to the Council, you write.
You write that the purpose of the Bridges program is to bring senior citizens and targeted students together into a mentoring relationship. You attempt to accomplish this goal by enlisting senior citizens at congregate meal sites administered under the auspices of the Council. Your program also reaches into the middle schools within your School District and targets up to 90 students within the District=s middle schools. You advise that the students and senior citizens meet periodically. When they are not meeting together, the program works with the students and senior citizens separately in an attempt to Amaximize the benefit and gains from the mentoring process.@
Once a year and usually by letter, you advise, the Executive Director of the Council presents a proposed interagency agreement between the Council and the School Board for the School Board=s ratification. The agreement authorizes the Bridges program to come onto the School District=s campuses for the purposes of gaining access to the middle school students who will participate in the mentoring program. The Council also conducts follow-up sessions with the students once they enter high school in order to track their progress and determine whether any gains were realized from the program. You emphasize, however, that no School Board funds are involved in the process and the involvement of the School Board and the District are only incidental in that they only provide the targeted middle school students who participate in the program and permit Areasonable and necessary@ access by you and other Bridges= program staff to the District=s schools.
You advise that the School Board votes on the interagency agreement relative to the Bridges Program and its implementation only once during the year and no other matters related thereto come before the School Board at any other time. You also advise that although you always abstain from voting on the interagency agreement, you are not required to abstain from voting on any other matter which comes before the School Board because of your employment with the Council. Finally, you advise that your duties as Coordinator for the Bridges program and your work with the middle school students are unrelated to your duties as a School Board member.
The Code of Ethics for Public Officers and Employees provides in relevant part:
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, excluding those organizations and their officers who, when acting in their official capacity, enter into or negotiate a collective bargaining contract with the state or any municipality, County, or other political subdivision of the state; 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. [Section 112.313(7)(a), Florida Statutes.]
This provision prohibits you from having any employment or contractual relationship with a business entity which is doing business with or is subject to the regulation of your agency or which creates a continuing or frequently recurring conflict between your private interests and the performance of your public duties. For purposes of Section 112.313(7)(a), the phrase "conflict of interest" is defined in the Code of Ethics to mean "a situation in which regard for a private interest tends to lead to disregard of a public duty of interest." Section 112.312(8), Florida Statutes.
At first glance, it appears that you have an employment relationship with a Abusiness entity,@ as that term is defined at Section 112.312(5), Florida Statutes, which is doing business with the School Board contrary to the prohibition of the first part of Section 112.313(7)(a). We have previously found that the term Abusiness entity@ is broadly defined in Section 112.312(5), Florida Statutes, to include Aany corporation . . . doing business in this state,@ making no distinction based upon the fact that a corporation has been organized as a profit-making or nonprofit enterprise. See CEO 82-9, CEO 82-38, CEO 88-24, CEO 91-30, and CEO 94-17. Therefore, we find that the Osceola County Council on Aging, Inc. is a Abusiness entity@ for purposes of Section 112.313(7)(a). We also have advised that a business entity is doing business with an agency where the parties have entered into a lease, contract, or other type of legal arrangement under which one party would have a cause of action against the other in the event of a default or breach. Thus, in CEO 88-24, we found that the University of Miami and a school board were Adoing business@ through a number of Acooperative arrangements@ with each other. In CEO 89-58 we also found that a school board was doing business with a private nonprofit Section 501(c) organization licensed by the Department of Health and Rehabilitative Services as a drug treatment and education center which operated and supervised day care and residential programs for socially maladjusted juveniles. Under the agreement between the school board and the nonprofit organization, the school board agreed to 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.
In both opinions, we noted that the Code of Ethics contains several express exemptions to the prohibitions of Section 112.313(7)(a). See Section 112.313(12), Florida Statutes. One of these exemptions is Section 112.313(12)(f) which exempts transactions if the Atotal amount of the subject transaction does not exceed $500.@ In CEO 89-58, for example, we opined that the school board member could be employed by the private nonprofit tax-exempt organization under s.501(c) of the Internal Revenue Code because, although the value of the educational programs, teachers, support services, inservice training, teaching materials, and supplies provided by the School Board exceeded $500 in value, they were provided by the School Board as part of its fulfillment of its duty to educate the students placed therein in exchange for the use of the organization=s classrooms for educational programs. We found that the services and materials were provided to the juveniles placed in the organization rather than to the organization itself. Therefore, we concluded that the terms of the contract did not give the organization anything exceeding $500 in value.
Similarly, if we assume that the School Board and the Council are Adoing business@ by virtue of their agreement giving your program access to the School District=s campuses to permit you to target some of the District=s students, because the amount of the transaction between the School Board and the Council does not appear to exceed $500 per calendar year, we are of the opinion that the Section 112.313(12)(f) exemption applies to permit you to be employed by the Council.
In addition, we believe that notwithstanding the prohibition of Section 112.313(7)(a), Section 112.313(15), Florida Statutes, also applies under the circumstances to permit your employment. Section 112.313(15) provides as follows:
ADDITIONAL EXEMPTION.--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 or her 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 the officer=s interest in the matter from which he or she is abstaining, and files a written memorandum as provided in s.112.3143.
This exemption from the prohibitions of the Section 112.313(7) conflicts of interest arising out of the business relationship between your employer and the School Board is conditioned upon your not being directly or indirectly compensated as a result of the contract and on your not participating in the contracting process. Inasmuch as you have indicated that no School Board funds are involved in your program, you are not compensated through the use of any School Board funds under the contract, the Executive Director of the Council, rather than you, makes the request to the School Board that it contract with the Council, and you abstain from voting on the contract, we are of the opinion that the exemption applies here so long as you also have publicly stated the nature of your interest in the matter prior to the vote being taken on the contract from which you abstain from voting and, within 15 days of the vote, you file a memorandum of voting conflict (CE Form 8B) which is incorporated in the minutes of the meeting at which the contract between the School Board and the Agency on Aging is voted on.
Finally, we find that while your employment necessitates contact with targeted students of your School District and therefore by necessity with School District personnel in order for you to gain access to the students, no continuing or frequently recurring conflict of interest or impediment to the full and faithful discharge of your public duties as a member of the School Board in violation of the second part of Section 112.313(7)(a) is created under the circumstances. See CEO 89-29.
Accordingly, under the circumstances described, we find that no prohibited conflict of interest is created by virtue of your employment with the nonprofit, tax-exempt Council on Aging which contracts with the School Board of which you are a member.
ORDERED by the State of Florida Commission on Ethics meeting in public session on April 29, 1996, and RENDERED this 1st day of May, 1996.
William J. Rish