This Advisory Opinion concerns the following issues as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on October 9, 1998, basing its approval solely on the facts and circumstances stated herein.
 

ISSUE 1. May a legislator do business with a county which is located in the legislator's district?

ISSUE 2. May a legislator do business with a school district located in the legislator's district?

State law restricts the Mississippi Ethics Commission to interpreting and issuing opinions on Sections 25-4-101 through 25-4-119, 1972 Mississippi Code Annotated and Article IV, Section 109, Mississippi Constitution of 1890. Therefore, this opinion does not address the Mississippi laws outside the Commission's jurisdiction nor the governmental entity's internal rules and regulations.

The pertinent conflict of interest laws to be considered here are:

Constitutional Section 109 states:

"No public officer or member of the legislature shall be interested, directly or indirectly, in any contract with the state, or any district, county, city, or town thereof, authorized by any law passed or order made by any board of which he may be or may have been a member, during the term for which he shall have been chosen, or within one year after the expiration of such term."

Code Section 25-4-103 (c), (d), (e), (f)(i)(ii), (g)(i)(ii)(v), (h), (i), (k)(i)(ii), (l), and (p)(i)(ii)(iii) states:

"(c) 'Business' means any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, holding company, self-employed individual, joint stock company, receivership, trust or other legal entity or undertaking organized for economic gain, a nonprofit corporation or other such entity, association or organization receiving public funds.

(d) 'Business with which he is associated' means any business of which a public servant or his relative is an officer, director, owner, partner, employee or is a holder of more than ten percent (10%) of the fair market value or from which he or his relative derives more than One Thousand Dollars ($1,000.00) in annual income or over which such public servant or his relative exercises control.

(e) 'Compensation' mean money or thing of value received, or to be received, from any person for services rendered.

(f) 'Contract' means:

(i) Any agreement to which the government is a party; or

(ii) Any agreement on behalf of the government which involves the payment of public funds.

(g) 'Governmental' means the state and all political entities thereof, both collectively and separately, including but not limited to:

(i) Counties;

(iii) All school districts; and

(v) Any department, agency, board, commission, institution, instrumentality, or legislative or administrative body of the state, counties or municipalities created by statute, ordinance or executive order including all units that expend public funds.

(h) 'Governmental entity' means the state, a county, a municipality or any other separate political subdivision authorized by law to exercise a part of the sovereign power of the state.

(i) 'Income' means money or thing of value received, or to be received, from any source derived, including but not limited to, any salary, wage, advance, payment, dividend, interest, rent, forgiveness of debt, fee, royalty, commission or any combination thereof.

(k) 'Material financial interest' means a personal and pecuniary interest, direct or indirect, accruing to a public servant or spouse, either individually or in combination with each other. Notwithstanding the foregoing, the following shall not be deemed to be a material financial interest with respect to a business with which a public servant may be associated:

(i) Ownership of any interest of less than ten percent (10%) in a business where the aggregate annual net income to the public servant therefrom is less than One Thousand Dollars ($1,000.00);

(ii) Ownership of any interest of less than two percent (2%) in a business where the aggregate annual net income to the public servant therefrom is less than Five Thousand Dollars ($5,000.00);

(l) 'Pecuniary benefit' means benefit in the form of money, property, commercial interests or anything else the primary significance of which is economic gain. Expenses associated with social occasions afforded public servants shall not be deemed a pecuniary benefit.

(p) 'Public servant' means:

(i) Any elected or appointed official of the government;

(ii) Any officer, director, commissioner, supervisor, chief, head, agent or employee of the government or any agency thereof, or of any public entity created by or under the laws of the State of Mississippi or created by an agency or governmental entity thereof, any of which is funded by public funds or which expends, authorizes or recommends the use of public funds; or

(iii) Any individual who receives a salary, per diem or expenses paid in whole or in part out of funds authorized to be expended by the government."

Code Section 25-4-105 (1), (2) and (3)(a) states:

"(1) No public servant shall use his official position to obtain pecuniary benefit for himself other than that compensation provided for by law, or to obtain pecuniary benefit for any relative or any business with which he is associated.

(2) No public servant shall be interested, directly or indirectly, during the term for which he shall have been chosen, or within one (1) year after the expiration of such term, in any contract with the state, or any district, county, city or town thereof, authorized by any law passed or order made by any board of which he may be or may have been a member.

(3) No public servant shall:

(a) Be a contractor, subcontractor or vendor with the governmental entity of which he is a member, officer, employee or agent, other than in his contract of employment, or have a material financial interest in any business which is a contractor, subcontractor or vendor with the governmental entity of which he is a member, officer, employee or agent."

Pertinent facts and circumstances provided by the requestor, absent identifying data, are set forth as follows and considered a part of this opinion.

I would like to request an opinion from the Attorney General on whether it would be considered a conflict of interest for a legislator to do business with the Board of Supervisors of a county which is located in that legislator's district.

I would also like to request an opinion on whether it would be considered a conflict of interest for a legislator to do business with a school district located within that legislator's district.

The Commission formally adopts Advisory Opinions No. 98-056-E and No. 97-073-E in response to this request and by attachment incorporates them into this opinion.

Based solely on the facts and circumstances presented by the requestor, the Commission's opinion is as follows.

ISSUE 1. As a county is a governmental entity as defined in Code Section 25-4-103 (g)(i), cited above, it is necessary to determine if any legislative funding going to the county would in fact fund the legislator's contracts with the county. If such legislative funding is being used by the county to fund its contracts with the legislator, then Constitutional Section 109 and Code Section 25-4-105(2), both cited above, would be violated. ⁽¹⁾

Certainly, counties on occasion and for specific purposes receive funding directly and indirectly from the Legislature. However, this funding is generally for specific purposes related to grants and loans for promotion of government, industrial, business and social programs. Such funding is not an appropriation for the general operation of the county.

A county's general fund and/or road and bridge fund generally are used by the county to purchase its commodities and contractual services for its basis operations. Assuming the county's contracts with the legislator are related to the county's basis operations, then such contracts would normally be funded from the county's general fund and/or road and bridge fund. Both these funds are primarily supported by local ad valorem taxes and certain fuel taxes that are mandated by state statutes.

Therefore after considering the above, Constitutional Section 109 and Code Section 25-4-105 (2) do not prohibit a county from contracting with a legislator when the county is funding its contracts with the legislator with monies from its general fund and/or road and bridge fund.

However, should the Legislature provide direct or indirect appropriations, during the requestor's term or one year thereafter, to the county that could be used for the county's contracts with the legislator, then the legislator's contracts with the county would be in violation of Constitutional Section 109 and Code Section 25-4-105 (2).

The above cited Code Section 25-4-105 (3)(a) would not be violated if the legislator contracts with the county as a county is a separate governmental entity from the State for purposes of the state conflict of interest laws.

Notwithstanding the above, the requestor is advised to remain keenly aware of the above cited Code Section 25-4-105 (1).

Code Section 25-4-105 (1) prohibits public servants from using their official positions to obtain a pecuniary benefit for themselves, a relative or a business with which they are associated.

To avoid using their official positions to obtain a pecuniary benefit, the public servants must totally and completely recuse themselves from subject matters providing the pecuniary interests. An abstention is a vote with the majority of the governing entity's board or body and therefore does not qualify as a recusal.

A total and complete recusal requires that the public servant not only avoid debating, discussing or taking action on the subject matter during the official meeting, but also avoid discussing the subject matter with other members, staff or any other person prior to and after the official meeting. This includes casual comments, as well as detailed discussions, made in person, by telephone or by any other means.

Also to properly recuse oneself from a matter, the public servant must leave the room or area where such discussions, considerations and/or actions take place. The minutes of the governing entity's board or body should state the public servant left the meeting by showing him or her absent for that matter.

The requestor may avoid violating Code Section 25-4-105 (1) by recusing himself from any matter coming before the Legislature that concerns a county doing business with the requestor or his business when that matter would provide a pecuniary benefit to the legislator or his business.

The requestor is advised that a recusal or an abstention will not prevent a violation of Constitutional Section 109 and Code Section 25-4-105 (2). Even without a legislator's vote, the authorization by the Legislature nonetheless results in a contract in which the legislator has a prohibited interest. [Emphasis added to bold text]

ISSUE 2. Constitutional Section 109 and Code Section 25-4-105 (2), both cited above, would prohibit a state legislator from contracting with state's public school districts.

The reason a state legislator is prohibited by Constitutional Section 109 and Code Section 25-4-105 (2) from having an interest, direct or indirect, in a contract with a state school district is that the State Legislature appropriates funds to state school districts and the State Supreme Court has ruled that the appropriation of funds is part of the contract authorization process. ⁽²⁾

State funds account for as much as 48% to 75% of the state's school districts' total funding. The majority of the state's funding to public schools is provided through the Minimum Education Program allotments. The current Minimum Education Program laws allow the state's funds to be commingled within the school districts' maintenance funds and to be expended for the same purposes as the local or other monies in the school districts' maintenance funds. The commingling of the state and local funds results in the school districts' contracts being funded by the school districts' total revenues. Stated another way, the school districts' contracts could not exist without the school districts' continuing to receive their current level of revenues, including state, local and other funding.

Also, Title I federal funds are appropriated by the State Legislature to the State Department of Education for disbursement to the state's public school districts. In the 1995-96 fiscal year, approximately $116,800,00 in Title 1 funds were appropriated for use by the state's public school districts.

In Cassibry , the State Supreme Court concluded, "Appropriation bills authorizing expenditure to Department of Public Welfare for purpose of providing for purchase of services were necessary before Department had authority to obligate State to make payment of money, and therefore 'authorized' contract between corporation, for which legislator-defendant was attorney, and the Department within meaning of statute prohibiting a legislator from being interested in a contract with the State authorized by any law passed during his term of office . . . "

In Frazier , the State Supreme Court considered two appropriation bills much broader and more generalized in nature than in Cassibry ; however, the Court concluded the appropriations were authorizations subject to application of Constitutional Section 109.

The Court in Frazier raised this question, "When is a contract 'authorized by law, or an order of a board of which the public officer is a member?'" Citing Cassibry , the Court stated, " . . . we found no difficulty in determining that Cassibry has been interested in a contract with the State, even though the contract was not with him individually, because the contract enabled his client to employ him virtually full time as an attorney for two years. We were also confronted with the question of whether the appropriation bill to the State Department of Public Welfare, which funded programs such as the one paid under the contract in which Cassibry was interested, was a 'law authorizing the contract.' We found it did, because without the appropriation, no such contract would have been legally binding upon the State."

In following the observations and conclusions of the State Supreme Court in the above cases, the finding must be that the State Legislature's funding of public school districts in the amount and manner currently required by state law has the effect of authorizing contracts with the public school districts for their overall operations. Therefore, the state legislator is prohibited from contracting, directly or indirectly, with the state's public school districts.

As stated above in ISSUE 1, a recusal or an abstention will not prevent a violation of Constitutional Section 109 and Code Section 25-4-105 (2). Even without a state legislator's vote, the State Legislature's passage of the appropriation bills is part of the authorization process resulting in contracts in which the state legislator will have a prohibited interest. [Emphasis added to bold text]
 
 

Ronald E. Crowe
Executive Director

1. An appropriation bill funding programs that allow payments under contracts in which legislators are interested are 'laws authorizing the contracts'. See Frazier v. State , 504 So. 2d 675 (1987) and Cassibry v. State , 404 So. 2d 1360 (1981).

2. Frazier v. State and Cassibry v. State , supra .