ADVISORY OPINION NO. 06-098-E

December 8, 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 25-4-103, Miss. Code of 1972.

(a) “Authority” means any component unit of a governmental entity.

(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.

(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.

(j) “Intellectual property” means any formula, pattern, compilation, program, device, method, technique or process created primarily as a result of the research effort of an employee or employees of an institution of higher learning of the State of Mississippi.

(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.

(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.

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

(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:

(b) May be a contractor or vendor with any authority of the governmental entity other than the 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 or vendor with any authority of the governmental entity other than the authority of the governmental entity of which he is a member, officer, employee or agent where such contract is let to the lowest and best bidder after competitive bidding and three (3) or more legitimate bids are received or where the goods, services or property involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws.

(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.

II. FACTS

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

I am the School Board Attorney for the Municipal Separate School District. Recently, a couple of issues have come before the school board and we would like clarification before proceeding.

The facts are as follows: A certain employee of the school district who is employed as the school district’s maintenance supervisor has recently informed the school board that he has purchases a local hardware store. Is it proper for the school district to purchase any items at all from the local hardware store that the maintenance supervisor of the school district owns? Also, could you address whether or not the school district could purchase items from this hardware store if the maintenance supervisor has no connection with the purchase? For example, if the science club needed batteries for some of their equipment, could they purchase batteries from the local hardware store?

Secondly, it has come to the school board’s attention that a spouse of a teacher of the school district owns a trophy shop. Would it be proper for the school district to purchase award trophies from the teacher’s spouses shop if the teacher has no connection or input with the purchase request?

III. ANALYSIS

Pursuant to Section 25-4-105(3)(a), Miss. Code of 1972, no employee of a school district may be a vendor to the district or have a “material financial interest” in a business which is a vendor to the district. The owner of a business certainly has a material financial interest in that business, as the term is defined in Section 25-4-103(k), above. Certain limited exceptions to this prohibition are codified in Section 25-4-105(4). The particular exception found in Section 25-4-105(4)(b) will not apply here as the school district has no separate “authority” or “component unit,” as contemplated in Section 25-4-103(a). The only remaining exception which might apply is that of Section 25-4-105(4)(d), which requires the goods be “reasonably available from two (2) or fewer commercial sources” and comply with the public purchase laws.

Mere inconvenience does not make availability unreasonable. The Commission has repeatedly found geographic boundaries like city, district and county lines do not necessarily affect reasonable availability. Nor would increased costs incurred by using an alternative source necessarily make the use of that source unreasonable. Therefore, the school district will be prohibited from purchasing from the employee’s hardware store if the necessary item can be obtained from another source. However, purchases made by private organizations with private funds are not subject to this restriction.

Yet the outcome may be different with regard to a business owned by the spouse of a district employee. The teacher will not have a “material financial interest” in the spouse’s trophy shop if (1) the income from the business is that of the spouse and (2) the teacher exercises no control, direct or indirect, over the purchase, as set forth in Section 25-4-103(k)(iv). If both these conditions are met, then no violation of Section 25-4-105(3)(a) should arise from the school district purchasing from the trophy shop owned by a teacher’s spouse.

MISSISSIPPI ETHICS COMMISSION


BY: Tom Hood, Executive Director and
Chief Counsel