ADVISORY OPINION NO. 06-040-E

June 9, 2006

The Mississippi Ethics Commission issued this opinion on the date shown above in accordance with Section 25-4-17(i), Mississippi Code of 1972, as reflected upon its minutes of even date. The Commission is empowered to interpret and opine only upon Article IV, Section 109, Mississippi Constitution of 1890, and Article 3, Chapter 4, Title 25, Mississippi Code of 1972. This opinion does not interpret or offer indemnity from liability for any other laws, rules or regulations. The Commission based this opinion solely on the facts and circumstances provided by the requestor as restated herein. The indemnity provided under Section 25-4-17(i) is limited to the individual who requested this opinion and to the accuracy and completeness of these facts.

I. LAW

The pertinent Ethics in Government Laws to be considered here are as follows, to wit:

Section 109, Miss. Const. of 1890.

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.

Section 25-4-103, Miss. Code of 1972.

(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.

(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.

Section 25-4-105, Miss. Code of 1972.

(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.

II. FACTS

Facts provided by the requestor are set forth below, with identifying information redacted, and are considered a part of this opinion.

As I had indicated to you in a phone conversation the governor’s office has asked me to serve on the Mississippi Community College Board.

Our [insurance] agency, which I am the majority owner, places the insurance program for the [local] Community College. I see no ethical conflict, but wanted to be sure before accepting the position.

III. ANALYSIS

A preliminary distinction to be made here is between the state community college board and the local community college boards of trustees. The state board is an authority of state government which provides general oversight for the statewide community college system. Section 37-4-3, Miss. Code of 1972. The local community college boards supervise the operations of the individual community colleges, including the authority to secure insurance for the college. Section 37-29-67(6), Miss. Code of 1972. The local boards are, by law, local governmental entities and not agencies of state government. Section 37-4-1(1)(k), Miss. Code of 1972. The Ethics Commission only has the authority to interpret the ethics in government laws listed at the beginning of this opinion. The Commission is not interpreting other laws cited in this opinion but is merely applying them to an interpretation of the ethics laws. Legal opinions on all other laws are issued by the Office of the Attorney General.

Section 109, Miss. Const. of 1890, and its statutory parallel, Section 25-4-105(2), Miss. Code of 1972, both quoted above, prohibit a member of a public board from having any direct or indirect interest in a contract with the government authorized by that board during his or her term or for one year thereafter. Frazier v. State, ex rel. Pittman, 504 So.2d 675, 693 (Miss. 1987). In this context “authorized” means more than just the obvious act of approving a contract. It also means appropriating money. An appropriation of public money which ultimately funds a contract is an action which authorizes that contract. See Frazier at 693, citing Cassibry v. State, 404 So. 2d 1360, 1366-67 (Miss. 1981). The insurance policy in issue here is a contract between the insurance provider and the local community college board of trustees. The requestor, as the majority owner of the insurance agency which handled the policy, presumably has an interest in that contract in the form of commissions or other compensation.

The current policy will not give rise to a violation of Section 109 and Section 25-4-105(2) since it was authorized prior to the requestor’s government service. The primary question is whether the state community college board will fund or otherwise authorize any future extension or renewal of the insurance agreement between the local board of trustees and the insurance provider in violation of Section 109 and Section 25-4-105(2). It appears no such violation will occur under current law.

As stated above, the local community college boards make their own arrangements for insurance coverage without any involvement from the state board. Yet the state board operates as a conduit for state funding provided to the local colleges. This conveyance of state funds to the local level could be considered an appropriation of money by the state board which funds the colleges’ contracts, such as the insurance policy at hand. However, the Mississippi Supreme Court has held where a board has no discretion, no violation of Section 109 and Section 25-4-105(2) will arise. Frazier at 699-702. See also Op. Miss. Ethics Commn. 05-082-E.

During the 2006 Regular Session, the Legislature enacted Senate Bill No. 3023, which appropriates state funds to the various community colleges. That money is disbursed by the State Board for Community and Junior Colleges according to a highly structured formula set forth in Section 4 of the bill. This formula appears to leave no discretion in the hands of the state board with regard to the levels of funding for the individual colleges. Since the state board has no discretion in funding the colleges, no violation of Section 109 and Section 25-4-105(2) will arise if a member of the State Board for Community and Junior Colleges has an interest in a contract authorized by a local community college board.

One more potential issue should also be addressed. Section 37-29-67(6), cited above, gives the local community college boards the authority “to enter into agreements with...state agencies [and other governmental entities] to pool their [insurance] liabilities.” Such action, if taken by the particular community college involved here, would obviate the need for the insurance policy in which the requestor has an interest. If the state board has any involvement in the establishment of a such a risk pool for any community college, such as a cooperative or coordinating role, the requestor will be obligated to recuse himself to avoid violating Section 25-4-105(1), Miss. Code of 1972.

Pursuant to that subsection, the requestor is prohibited from using his position in government to obtain a monetary benefit for any “business with which he is associated,” as defined in Section 25-4-103(d). Avoiding an economic loss is equivalent to obtaining a benefit. A total and complete recusal requires that the public servant not only avoid debating, discussing or taking action on the subject matter during official meetings or deliberations, but also avoid discussing the subject matter with staff or any other person. This includes casual comments, as well as detailed discussions, made in person, by telephone or by any other means. An abstention is considered a vote with the majority and is not a recusal. Furthermore, the minutes of the meeting should state the recusing member left the room before the matter came before the public body and did not return until after the vote.

MISSISSIPPI ETHICS COMMISSION

BY: Tom Hood, Executive Director and
Chief Counsel