This Advisory Opinion concerns the following issues as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on November 1, 1996, basing its approval solely on the facts and circumstances stated herein.

Issue 1. May a school district purchase from a business part owned by a teacher employed by the school district?

Issue 2. May a school district purchase from a business that employs school district employees (certified and non-certified) on a part-time basis?

The pertinent conflict of interest laws to be considered here are:

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), (g)(iii), (h), (k)(i)(ii), (1) 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 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.

(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).

(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 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(1) and (3)(a) 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.

(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."

Pursuant to our telephone conversation earlier, I pose the following questions to you that I need answers to as soon as possible:

(1) A teacher employed by a school district has a part ownership in a local business. Can the school district make purchases with that vendor in which the employee is part-owner?

2) A school employee (certified and non-certified) works at a local business after school hours or on week-ends. Can the school district make purchases with the vendor who employs school personnel on a part time basis?

Issue 1. Code Section 25-4-105(3)(a), cited above, prohibits a public servant, including a public school teacher, from having a material financial interest in a business that is a vendor with the public servant's governmental entity, including a public school district.

Therefore, the teacher/part-owner's business may not be a vendor with the school district if the teacher/part-owner has a material financial interest in the business as defined in the above cited Code Section 25-4-105(k)(i)(ii). An ownership interest often percent (10%) or more results in a material financial interest regardless of aggregate annual net income.

Issue 2. Code Section 25-4-105(3)(a), cited above, prohibits a public servant, including a public school employee (certified or non-certified), from having a material financial interest in a business that is a vendor with the public servant's governmental entity, including a public school district.

Therefore, a business employing a public school employee, either full-time or part-time, may not be a vendor with the public school district if the public school employee has a material financial interest in the business. A public servant with less than two percent (2%) ownership in a business must have an aggregate annual net income of Five Thousand Dollars ($5,000.00) or more to have a material financial interest in the business.

Furthermore, the requestor is cautioned to advise the public school employees to remain keenly aware of the above cited Code Section 25-4-105(1) and Code Section 25-4-101. Even if the public school employees addressed in Issue 1 and Issue 2 are determined to not have a material financial interest, they may still violate Code Section 25-4-105(1) or have an appearance of impropriety under Code Section 25-4-101.

Code Section 25-4-105(1) prohibits a public servant from using his or her position to obtain a pecuniary benefit for a "business with which he (or she) is associated." A "business with which he (or she) is associated" is defined in the above cited Code Section 25-4-103(d). The definition includes, among other circumstances, a holder of more than ten percent (10%) of the fair market value of a business or deriving more than One Thousand Dollars ($1,000.00) in annual income from the business. An example of a violation of Code Section 25-4-105(1) is where a public school employee with the maintenance department has the authority to requisition parts or services and requisitions the same from a "business with which he is associated."

Code Section 25-4-101 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, a public school employee, certified or non-certified, having an ownership interest in a business or being employed by a business that contracts with the public school district has the potential of creating suspicion among the public and reflecting unfavorably upon the public school district.

Ronald E. Crowe Executive Director