This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on March 3, 2000, basing its approval solely on the facts and circumstances stated herein.
May a county continue as a member of a nonprofit opportunity agency and thereby continue to fund the nonprofit opportunity agency when a newly elected supervisor's spouse is employed by the nonprofit opportunity agency?
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 25-4-101 states:
"The legislature declares that elective and public office and employment is a public trust and any effort to realize personal gain through official conduct, other than as provided by law, or as a natural consequence of the employment or position, is a violation of that trust. Therefore, public servants shall endeavor to pursue a course of conduct which will not raise suspicion among the public that they are likely to be engaged in acts that are in violation of this trust and which will not reflect unfavorably upon the state and local governments."
Code Section 25-4-103(c), (d), (e), (f)(i)(ii), (g)(i), (h), (i), (k)(i)(ii)(iii)(iv), (l), (o), (p)(i)(ii)(iii) and (q) 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.
(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);
(iii) The income as an employee of a relative if neither the public servant or relative is an officer, director or partner in the business and any ownership interest would not be deemed material pursuant to subparagraph (i) or (ii) herein; or
(iv) The income of the spouse of a public servant when such spouse is a contractor, subcontractor or vendor with the governmental entity that employs the public servant and the public servant exercises no control, direct or indirect, over the contract between the spouse and such governmental entity.
(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.
(o) 'Public funds' means money belonging to the government.
(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.
(q) 'Relative' means the spouse, child or parent."
Code Section 25-4-105(1), (2), (3)(a) and (4)(d) 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.
(4) Notwithstanding the provisions of subsection (3) of this section, a public servant or his relative:
(d) May be a contractor, subcontractor or vendor with any authority of the governmental entity of which he is a member, officer, employee or agent or have a material financial interest in a business which is a contractor, subcontractor or vendor with any authority of the governmental entity of which he is a member, officer, employee or agent: (i) where such goods or services involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws; or (ii) where the contractual relationship involves the further research, development, testing, promotion or merchandising of an intellectual property created by the public servant."
Pertinent facts and circumstances provided by the requestor, absent identifying data, are set forth as follows and considered a part of this opinion.
As attorney for the County Board of Supervisors, I seek an opinion on the following facts:
Facts: The County is a member of the opportunity agency, an agency created in 1964 under the EEO Act and composed of eight (8) counties. The County appropriates money and funds for the opportunity agency. The spouse of a newly elected county board of supervisor has been employed for a number of years with the opportunity agency. The board of supervisors does not approve the opportunity agency's budget nor the hiring or firing of employees by the opportunity agency.
Under these facts, may the spouse of the newly elected county supervisor continue to be employed by the opportunity agency without violating Section 109, Mississippi Constitution, and §25-4-105(2), Mississippi Code of 1972, as amended?
In addition to the above facts set forth in the requestor's letter, the requestor has provided the Commission's staff with the following additional facts. The opportunity agency is a private nonprofit community action agency. The county board of supervisors has the discretion to terminate its membership and funding to the nonprofit opportunity agency. The county's current membership agreement has a beginning dated of October 1, 1999 and an ending date of September 31, 2000. The current amount of funding the county board of supervisors has appropriated to the nonprofit opportunity agency is $15,960.00. The $15,960.00 is used as matching funds to assist in securing federal funds for the operations of programs that consist of summer youth, housing repair, community services block grant, energy assistance, weatherization, business loans, transportation, prescription drugs for the elderly, single family affordable houses and summer food service. The nonprofit opportunity agency's total budget is approximately $3,500,000.00.
Based solely on the facts and circumstances presented by the requestor, the Commission's opinion is as follows.
Constitutional Section 109 and Code Section 25-4-105(2), cited above, prohibit a county supervisor from having an interest, direct or indirect, in any contract authorized by the county supervisor's board during the county supervisor's term and for one year thereafter.
The county's agreement to be a member of the nonprofit opportunity agency and to fund the nonprofit opportunity agency is a "contract" as defined in the above cited Code Section 25-4-103(f)(i)(ii). In addition, a grant or loan will qualify as a "contract" as defined in Code Section 25-4-103(f)(i)(ii).
The Mississippi Supreme Court, in Frazier v. State, 504 So. 2d 675 (1987) and Cassibry v. State, 404 So. 2d 1360 (1981), held that an order of a public official's board that appropriates funds that directly or indirectly benefit the public official through a governmental contract is part of the contract authorization process. The county budget is approved by the county board of supervisors and is the means by which the county board of supervisors appropriates funds.(1)
Also in Frazier, supra, the Mississippi Supreme Court held that a public official always has a prohibited interest in the public official's spouse's contract as anticipated in Constitutional Section 109 and Code Section 25-4-105(2).(2)
Based on the above, Constitutional Section 109 and Code Section 25-4-105(2) will absolutely prohibit the county from continuing its agreement to fund the nonprofit opportunity agency as the newly elected supervisor will have a prohibited interest in the agreement through his spouse's employment with the opportunity agency. [Emphasis added to bold text]
A violation of Constitutional Section 109 and Code Section 25-4-105(2) will occur when and if either of the following actions occur.
The county board of supervisors authorize a new membership agreement with the nonprofit opportunity agency employing the newly elected supervisor's spouse during the newly elected supervisor's term of office or within one year thereafter. [Emphasis added to bold text]
The county board of supervisors fund the nonprofit opportunity agency employing the newly elected supervisor's spouse with monies approved in a budget authorized by the county board of supervisors during the newly elected supervisor's term of office or within one year thereafter. [Emphasis added to bold text]
Specifically, the facts presented by the requestor indicate a violation of Constitutional Section 109 and Code Section 25-4-105(2) will occur if the above actions are taken by the board of supervisors at the current membership's ending date and the current budget's ending date both being September 30, 2000.
In addition, the county acting as a conduit by obtaining a grant or loan from the state government or the federal government in which the nonprofit opportunity agency will have contracts or receive funding is a violation of Constitutional Section 109 and Code Section 25-4-105(2) if the grants or loans are authorized by the board of supervisors during the newly elected supervisor's term of office and for one year thereafter.
The requestor is cautioned to advise the newly elected supervisor 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 board member's vote, the authorization by the member's board nonetheless results in a contract in which the board member has a prohibited interest. [Emphasis added to bold text]
The requestor is cautioned to advise the newly elected county supervisor that he may already be in violation of the Code Section 25-4-105(3)(a) since he became a public servant of the county on the date he was sworn in as a member of the board of supervisors.
Code Section 25-4-105(3)(a) would prohibit the nonprofit opportunity agency from being a contractor, subcontractor or vendor with the county if the newly elected supervisor has a material financial interest in the nonprofit opportunity agency by way of his spouse's compensation. Code Section 25-4-105(3)(a) is applicable in this instance because the nonprofit opportunity agency is considered a "business" as defined in Code Section 25-4-103(b), cited above, because it is receiving public funds.
In determining whether the newly elected supervisor is in violation of Code Section 25-4-105(3)(a), it would be necessary to determine whether he has a "material financial interest" in the nonprofit opportunity agency through his spouse as defined in Code Section 25-4-103(k), cited above, and whether the exception set forth in Code Section 25-4-105(4)(d), cited above, is applicable.
Notwithstanding the above observations regarding Code Section 25-4-105(3)(a), an advisory opinion is not the proper process to determine whether or not a violation of the state conflict of interest laws has already occurred. An investigation is the only method whereby a determination can be made as to whether probable cause exists to believe that a violation of the state conflict of interest laws has occurred.
Regarding the period between the date the newly elected supervisor took office and the September 30, 2000 termination date of the current budget period and the current membership agreement, the requestor is cautioned to advise the supervisor to remain keenly aware of the above cited Code Section 25-4-105(1).(3)
Code Section 25-4-105(1) prohibits a public servant, including a county supervisor, from using his official position to obtain a pecuniary benefit for himself, a relative or a business with which he is associated.
To avoid a violation of Code Section 25-4-105(1), the supervisor must totally and completely recuse himself from any matters concerning the opportunity agency and its funding, as a spouse is a "relative" as defined in Code Section 25-4-103(q), cited above, and the opportunity agency, as a nonprofit organization receiving public funds, is a "business with which he is associated" as defined in Code Section 25-4-103(d), cited above.
An abstention is a vote with the majority of the governing entity's board 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 board 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 should state the public servant left the meeting by showing him or her absent for that matter.
Again, the requestor is cautioned to advise the supervisor that an abstention or a recusal will not prevent a violation of Constitutional Section 109 and Code Section 25-4-105(2). [Emphasis added to bold text]
The issue presented by the requestor also must be viewed as it relates to Code Section 25-4-101, set forth above. This code section sets the tone for the conflict of interest laws as the Legislature's "Declaration of Public Policy." This public policy can be summarized as any circumstance having the potential of creating suspicion among the public and reflecting unfavorably upon the state or local government should be closely reviewed by public servants with the intent to reduce or eliminate any suspicion on the part of the public which detracts from the public's trust in state or local government.
Clearly, a county board of supervisors contracting with and/or funding
a nonprofit organization that employs the spouse of one of the supervisors
is a circumstance that has the potential of creating suspicion among the
public and reflecting unfavorably upon the county. Therefore, such a circumstance
should be avoided.
Ronald E. Crowe
Executive Director
1. §19-3-59: The board of supervisors shall direct the appropriation of money that may come into the county treasury, but shall not appropriate the same to an object not authorized by law.
2. Also, see Waller v. Moore, 604 So. 2d 265 (1992) and Towner v. Moore, 604 So. 2d 1093 (1992).
3. §19-11-5: Each county of the State of Mississippi shall operate on a fiscal year basis, beginning October first and ending September thirtieth of each year.