April 5, 2002
This Advisory Opinion concerns the following issues as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on April 5, 2002, basing its approval solely on the facts and circumstances stated herein.
Issue 1:May a school board member’s spouse contract with the school district to perform electrical work?
Issue 2: May a school board member’s spouse’s partner form a business separate from the school board member’s spouse and contract with the school district to perform electrical work?
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(b),
(c), (d), (f)(i)(ii), (g)(iii), (h), (k)(i)(ii), (p)(i)(ii)(iii) and (q)
states:
“(b) ‘Benefit’ means any gain or advantage to the beneficiary, including any gain or advantage to a third person pursuant to the desire or consent of the beneficiary.(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, anonprofit 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.
(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:
(iii) All school districts.
(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.
(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).
(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(2)
and (3)(a) states:
“(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.
Thank you for taking the time to review this correspondence.I am the school board attorney for the Municipal Separate School District.The purpose of this letter is to request a formal ethics opinion.I have discussed this matter at length with your assistant, Mitchell Adcock, and believe you are already aware of our situation.However, I, nor the school district, feel comfortable moving forward without a “formal ethics opinion.”
The facts concerning the “potential” conflict of interest are as follows: First, the Town has recommended the appointment of an individual as a school board member/trustee.At this time, she has not been sworn into that position, nor has she attended any school board meting in any official capacity.The potential conflict of interest arises because the individual’s spouse is a partner/owner of an electronic business, which, from time to time, contracts with the School District to perform electrical work.I believe, after diligent research, that the individual’s appointment to the school board, if carried through, would violate both Article 4, Section 109 of the Mississippi Constitution and Section 25-4-105(2) of the Mississippi Code.Does the Ethics Commission agree?
Secondly, there have been discussions that the spouse’s partner in the electronic business, could form his own separate company.For arguments sake I will call it Company, Inc.At that point, Company, Inc. would perform all of the work for the School District.The electronics business and the partner would not be involved withCompany, Inc.However, the individual’s spouse and the partner would continue to be principal owners in the electronic business.Frankly, after discussing this type of arrangement with your assistant, this type of situation concerns me.Therefore, could you please provide me the Ethics Commission’s comments regarding such an arrangement?
We, the Board attorney, the Board members, the Superintendent and the Town want to make absolutely sure that we stay well within the required ethical boundaries when appointing board members.Additionally, we want these issues resolved before moving forward.
Based solely on the facts and circumstances presented by the requestor, the Commission’s opinion is as follows.
Issue 1:Constitutional Section 109 and Code Section 25-4-105(2), both cited above, prohibit a school district’s board member from being interested, directly or indirectly, in any contract authorized by the school district’s board during the school board member’s term or for one year thereafter.
In Frazier v. State, 504 So. 2d 675 (1987), the Mississippi Supreme Court set forth the four elements for applying the prohibition imposed by Constitutional Section 109 and thereby Code Section 25-4-105(2).The four elements are:
1. Is there a governmental contract with the state, county, municipality or district?
2. Does the public officer have an interest, direct or indirect, in the contract?
3. Is the contract authorized by a law passed or order made by a board or public body of which the public officer is a member?
4. Was the authorizing law or order passed during the public officer’s term or within one year after the expiration (or termination) of such term?
Element one is clearly met if the school district enters into a contract or makes payment for electrical services thereby constituting a governmental contract for purposes of Constitutional Section 109 and Code Section 25-4-105(2).
Element two clearly applies, in this instance, as the school district board member will have an interest in the service contract by way of his spouse’s ownership of the electrical business.[1]
Element three would be satisfied as the school district’s board is asked to authorize the electrical service contract either by directly authorizing the contract or through authorizing the payment of expenditures related to the services.
Regarding element four, the authorization of the electrical service contract between the board member spouse’s business and the school district would be entered into during the school district board member’s term of office.
Based on the above, Constitutional Section 109 and Code Section 25-4-105(2) will prohibit the school district’s board of trustees from entering into a contract or purchasing services from the board member spouse’s business.This prohibition will apply during the school district board member’s term of office and for one year thereafter.
Code Section 25-4-105(3)(a), cited above, prohibits a school board member’s spouse, from having a material financial interest in a company, in this case an electrical company, that is contracting with the school district.In this instance, the board member’s spouse would have a material financial interest in the electrical company if he makes an aggregate annual net income of $5,000.00 or more, as defined in the above cited Code Section 25-4-103(k)(ii).
The requestor is cautioned to advise the school district board member 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.
Issue 2: Concerning the issue as to whether a school board member’s spouse’s partner can form a business separate from his and the school board member’s spouse’s existing business and his separate business contract with the school district to perform electrical work.It is possible that the partner could perform these services if he did so through a completely separate business.
A completely separate business means a business at a different location with a different name and with its own license and permit and its own insurance and/or bond coverage.In addition, the partner’s business must not use any of the physical plant,resources, equipment, employees, funding sources, business reputation or other items that have been developed through the partner and school board member’s spouse’s business or relationship.
Also, the board member’s spouse will not be able to participate in any of the work related to the partner’s business and contracts with the school board, whether the spouse was compensated or uncompensated.If the partner’s supposedly separate business is not completely separated from the partnership as described above, then the school board member’s spouse will have a prohibited interest in its contracts with the school district, and therefore, the contracts will be prohibited under Constitutional Section 109 and Code Section 25-4-105(2).
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, the partner doing business in any way with the school district that the other partner’s spouse is a member of has the potential of creating suspicion among the public and reflecting unfavorably upon the school district.Therefore, such a circumstance should be avoided so as to comply fully with the public policy mandate set forth in Code Section 25-4-101.
Scott Rankin