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 March 1, 1996.

May members of a county owned community hospital's board of trustees, who are also officers and/or board members of a non-profit foundation established to fund academic projects within the municipal public school system, propose and encourage the entire hospital board to vote to make an annual donation to the non-profit foundation during a regularly scheduled and official hospital board meeting?

    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 or not 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 25-4-101 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(c), (d), (f)(i)(ii), (g)(i)(ii)(iii)(v), (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 be 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.

I am requesting a ruling from the Mississippi Ethics Commission regarding the following circumstances:

A county owned public hospital has a 7 member board of trustees. The president of the board and the vice-president are also vice-president and president, respectively of a local non-profit foundation for excellence in education. One other hospital board member also serves on the foundation board, which is comprised of 15 members. The hospital board members receive no compensation from either the hospital nor from the foundation board.

On two different occasions in regularly scheduled and official hospital board meetings the members of the hospital board who are also on the foundation board have verbally proposed and encouraged the entire hospital board members to vote that the hospital make a substantial annual donation to the foundation for excellence in education.

Is this a violation of law or ethical conduct for public servants? Can the hospital board now or later vote on this matter after the board members who serve on both boards have openly proposed and discussed it in an official hospital board meeting?

    The Commission formally adopts Advisory Opinion No. 96-006-E in response to this request and by attachment incorporates it into this opinion.

    As set forth in the attached opinion, the Commission, although finding the non-profit foundation to be quasi-governmental in nature, advised that the board members serving both the hospital and the non-profit foundation to be keenly aware of the above cited Code Section 25-4-105(1).

    Even though the non-profit foundation is quasi-governmental in nature, the three board members serving both the hospital and the non-profit foundation would be prohibited by Code Section 25-4-105(1) from using their official positions to obtain a pecuniary benefit for the non-profit foundation if it is a "business with which they are associated."

    The Commission must look at the definitions of "business" and "business with which they are associated" set forth in Code Section 25-4-103(c) and (d), respectively, to determine if the non-profit foundation is a "business with which they are associated."

    Since the three hospital trustees are officers and directors of the non-profit foundation, the non-profit foundation is a "business with which they are associated" if, in fact, it meets the definition of a "business" as set forth in Code Section 25-4-103(c).

    In order for a non-profit corporation to qualify as a "business" as defined in Code Section 25-4-103(c), it must be receiving public funds. Therefore, the non-profit foundation must be receiving public funds for it to be a "business" and for it to be a "business with which they are associated."

    Should the non-profit foundation be receiving public funds thereby making it a "business" and therefore a "business with which they are associated," the three hospital trustees by their actions of proposing and encouraging the hospital board of trustees to fund the non-profit foundation would have violated Code Section 25-4-105(1) if their actions resulted in the non-profit foundation obtaining the annual funding from the hospital.

    Whether or not the hospital board of trustees may at some future date vote to provide funding to the non-profit foundation without the three hospital trustees being in violation of Code Section 25- 4-105(1) would require examining the particular facts and circumstances of the specific situation. Furthermore, it would ultimately be a question for a court of competent jurisdiction to decide whether or not the hospital trustees' past actions resulted in the use of their official positions to obtain a pecuniary benefit for the non-profit foundation through a later action by the hospital board of trustees.

    Notwithstanding the above, the Commission finds that the hospital board of trustees' approval of the funding for the non-profit foundation clearly is prohibited by Code Section 25-4-105(1) if such approval comes within the proximity of the meetings in which the trustees who are also on the foundation board verbally proposed and encouraged the hospital board of trustees to vote for the funding.

    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 three hospital trustees' verbally proposing and encouraging the hospital board of trustees to vote to make a substantial annual donation to the non-profit foundation of which they also are officers and directors has the potential of creating suspicion among the public and reflecting unfavorably upon the hospital.

    Also, the Commission feels it is necessary to restate its position from the attached opinion on what actions would result in a proper recusal.

    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 F. Crowe Executive Director