This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The opinion is based solely on the facts and circumstances as stated below and was approved by the Commission on February 8, 1996.

May a county owned community hospital appropriate funds to a non-profit foundation established to fund academic projects within the municipal public school system when three members of the hospital's board of trustees also are on the board of directors of the non-profit foundation?

    The Mississippi Ethics Commission is restricted 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, Mississippi laws outside the jurisdiction of the Commission and internal rules and regulations of the governmental entities are not addressed by this opinion.

    The question of whether a county owned community hospital may legally expend funds for the purpose of supporting public education, specifically a municipal school district, is one such area not within the Commission's jurisdiction. Therefore, the requestor is advised to contact the State Auditor's Office and the Attorney General's Office regarding the question of whether this would be a legal expenditure.

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), (f)(i)(ii), (g)(i)(ii)(iii)(iv), (h), (1) and (p)(i) 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 non-profit 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:

(i) Counties;

(ii) Municipalities;

(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.

(1) '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 government.

Code Section 25-4-105(1) and (2) 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"

    Pertinent facts and circumstances provided by the requestor, absent identifying data, are set forth as follows and considered a part of this opinion. The additional documentation referenced in the requestor's letter because of its size is not attached but is available for review, absent identifying data, in the Commission's office.

May a not for profit county owned hospital make a donation to a non-profit foundation for excellence in education? This foundation was established in 1990 by local citizens to give support to our local public school system to improve academics.

For your information, a copy of the foundation's charter and its by-laws are enclosed as well as a promotional brochure.

Although, our hospital is county owned, it does not presently receive any mileage or tax support from the county.

The hospital is governed by a seven person board of trustees who receive no pay. The foundation for excellence in education is governed by a fifteen person board of directors who also receive no pay.

Three of the seven person hospital board of trustees serve on the fifteen member board of directors of the foundation for excellence in education.

The hospital board is unanimously in favor of making this donation to the foundation for excellence in education. Should the three people who serve on both boards abstain when the hospital board votes to make a donation to the foundation?

There is no possible way that any of the seven hospital trustees or the fifteen foundation directors can receive one cent of financial gain from the above. The only thing that any of us can receive is the satisfaction of offering the children of this community a better education. A better educated community will be of great benefit to our hospital.

    The Commission formally adopts Advisory Opinion No. 95-098-E in response to this request and by attachment incorporates it into this opinion.

    Based solely on the facts and circumstances presented by the requestor, the Commission finds that the non-profit foundation, like the non-profit trust in the attached opinion, is quasi-governmental in nature.

    Its purpose, as set forth in its bylaws, is to improve public education by funding academic projects that cannot be funded by other revenues of the municipal school district with final approval of all projects resting with the municipal school district's board of trustees. The support and funding of the public education system are clearly public and governmental in nature. Therefore, the hospital trustees' serving on the non-profit foundation's board while it receives funding from the community hospital does not as such violate the conflict of interest laws.

    This finding is based on any contractual interests being public in nature rather than private. The conflict of interest laws are applicable to competing private interests, not the competing interests of governmental or quasi-governmental entities.

    Notwithstanding the above, the trustees would violate certain or all of the above cited conflict of interest laws should they receive compensation as members of the foundation's board of directors or should they receive any personal pecuniary benefits from contracts with the non-profit foundation.

    Furthermore, the trustees' relatives and/or businesses with which they are associated cannot receive pecuniary benefits from contracts with the non-profit foundation while it is receiving funding approved and/or supported by the trustees.

    In order to avoid using their official positions as community hospital trustees as prohibited in Code Section 25-4-105(1), cited above, the hospital trustees serving on the non-profit foundation's board should totally and completely recuse themselves from any action by the community hospital board that concerns the non-profit foundation.

    An abstention is a vote with the majority of the governing entity's board and therefore does not qualify as a recusal. [Emphasis added]

    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 in order 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.

    The requestor is advised that a recusal or an abstention will not prevent a violation of Constitutional Section 109 or Code Section 25-4-105(2). Even without the trustees' votes, the authorization by the hospital's board nonetheless results in a contract in which the trustees have prohibited interests.
 
 

Ronald B. Crowe Executive Director