1. May a school district purchase auto supplies from an auto parts store after an employee of the auto parts store is sworn in as a school board member if the purchases are through a term bid it accepted prior to the auto parts store's employee being elected to the school district's board of trustees?

2. What is the potential liability to the school district if it does not purchase through the term bid and it is later held to be a binding one year contract?

    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 entity are not addressed by this opinion.
 

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)(iii), (h), (k)(i)(ii) and (p)(i)(ii)(iii) 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 or 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."

Code Section 25-4-105(2), (3)(a) and (6) 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.

(6) Any contract made in violation of this section may be declared void by the governing body of the contracting or selling authority of the governmental subdivision or a court of competent jurisdiction and the contractor or subcontractor shall retain or receive only the reasonable value, with no increment for profit or commission, of the property or the services furnished prior to the date of receiving notice that the contract has been voided."

Pertinent facts and circumstances provided by the requestor, absent identifying data, are

A Board member asked that I present the following questions regarding my previous submission.

1. Is the contract to buy parts from the auto parts store a binding one year contract or is a separate contract created with each individual purchase of parts?

2. If the school ceases to purchase parts from the auto parts store after 12/31/95, what is potential liability to the school if the contract is later held to be a binding one year contract?

    The Commission formally adopts Advisory Opinion No. 95-126-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's opinion is as follows.

    Issue 1. The attached opinion in Issue 1 addresses this question. Specifically, it opined:

    "Furthermore, Constitutional Section 109 and Code Section 25-4-105(2), cited above, prohibit a board member from having a direct or indirect interest in a contract authorized by the board of which he or she is a member during his or her term or for one year thereafter.

    Therefore, each approval of an auto parts store claim by the school board for purchases by the school district after the board member-elect is sworn into office will result in an authorization of a contract in violation of the Constitutional Section 109 and Code Section 25-4-105(2)."

    Issue 2. In regard to this question, only a court of competent jurisdiction can determine the question of liability.

    However, the requestor is directed to the above cited Code Section 25-4-105(6). It addresses the issue of declaring void a contract made in violation of the Ethics in Government laws.

    In addition, the State Supreme Court in Smith v. Dorsey, 530 So.2d 5 (Miss. 1988), in
upholding the chancellor's order where teachers' contracts were found to be in violation of Constitutional Section 109, affirmed that the contracts in violation of Constitutional Section 109 were null and void and enjoined any further payments.
 
 
 

Ronald E. Crowe Executive Director