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Board Bylaw BB 9270 Board Bylaws
Conflict Of Interest Incompatible Activities
Note: Government Code 1126 prohibits district officers and employees from engaging in any employment or activity which is inconsistent, incompatible, in conflict with or inimical to their duties with the district. Attorney General opinions have indicated that it would be incompatible for Governing Board members to serve on other elected or appointed boards, councils or commissions that have interests which may conflict with the interests of the district. (68 Ops.Cal.Atty.Gen. 171 (1985), 65 Ops.Cal.Atty.Gen. 606 (1982)) Such incompatible service or assumption of office results in termination of the prior incompatible office.
Governing Board members shall not engage in any employment or activity which is inconsistent with, incompatible with, in conflict with or inimical to the Board member's duties as an officer of the district. (Government Code 1126)
Note: Pursuant to Education Code 35107, an employee of a school district may not be sworn into office as an elected or appointed member of that district's Board unless he/she resigns as an employee. If the employee does not resign, the employment automatically terminates when he/she is sworn into office.
Conflict of Interest Code
Note: The Board is required to adopt a conflict of interest code in compliance with Government Code 87300-87313. The following paragraph provides for the incorporation of 2 CCR 18730, and any additional amendments to the Political Reform Act adopted by the Fair Political Practices Commission (FPPC), as the district's conflict of interest code. In some counties, the county provides the conflict of interest code to be used.
Pursuant to Government Code 87303, the district's conflict of interest code must be approved by the appropriate code reviewing body as specified in Government Code 82011. The code reviewing body is the Board of Supervisors of the county in which the district is located if the district is located entirely in one county. The FPPC is the code reviewing body for school districts with jurisdiction in more than one county. Those districts that submit their code to the FPPC for review are only required to submit the following to the FPPC: (1) the following paragraph (the "incorporation statement") and (2) the list of designated employees with corresponding disclosure categories (see the Appendix to this Bylaw).
The district's conflict of interest code shall comprise of the terms of California Code of Regulations, Title 2, Section 18730 and any amendments to it adopted by the Fair Political Practices Commission, together with a district attachment specifying designated positions and the specific types of disclosure statements required for each position.
When a change in the district's conflict of interest code is necessitated by changed circumstances such as the creation of new positions, amendments or revisions shall be submitted to the code reviewing body within 90 days. (Government Code 87306)
The Board shall review the appropriate district conflict of interest code in even-numbered years and send the code reviewing body either an amended code or, by October 1 of that year, a statement to the effect that no change is necessary. (Government Code 87306.5)
When reviewing and preparing conflict of interest codes, the district shall provide officers, employees, consultants and members of the community adequate notice and a fair opportunity to present their views. (Government Code 87311)
Note: The code establishes financial disclosure requirements for persons holding specified positions in the district. However, officials who manage public investments should not be designated in the district's code; they must instead annually file a full financial disclosure statement in accordance with Government Code 87200. As interpreted by the FPPC, "officials who manage public investments" are school board members and/or Superintendent/Principal and/or other officials who manage investments in districts that have surplus or special reserve funds to invest in permitted securities and investments pursuant to Education Code 41015. Individuals who direct the investment of these funds, formulate or approve policies for the investment of these funds, or approve investment transactions involving these funds are considered "officials who manage public investments." Even if the Board delegates day-to-day investment decisions to the Superintendent/Principal or designee, Board members are considered "officials who manage public investments" if they set or approve policy as to the investment of these funds. Option #1 below applies to such districts.
Option 2 applies if (1) the district does not have any surplus or special reserve funds to invest and merely deposits all funds it receives in the county treasury pursuant to Education Code 41001-41002.5 or (2) the district participates in a fund where a Tax and Revenue Anticipation Note (TRANs) is issued. Board members and Superintendent/Principal in these types of situations are not considered to have discretion regarding the investment of the district's money and are therefore not "public officials who manage public investments." Instead of being required to file full financial disclosure statements, they are subject to their district's conflict of interest code and should be listed as designated employees.
Designated employees of the district, including Board members, shall adhere to the financial disclosure requirements of the district's conflict of interest code adopted pursuant to the provisions of Government Code 87300.
Note: Specific filing arrangements vary; the following paragraph should be revised to reflect local practice as established by the district's code reviewing body pursuant to Government Code 87500.
Upon receiving the statements of employees designated in Category 1 of the district's Appendix, the Superintendent or designee shall make and retain copies in the district office.
Statements of economic interests submitted to the district by designated employees in accordance with the conflict of interest code shall be available for public inspection and reproduction. (Government Code 81008)
Financial Interest
Note: Pursuant to Government Code 1092, if any one Board member or designated employee has a financial interest in a contract, that contract may be void. In addition, the Attorney General has opined in 69 Ops.Cal.Atty.Gen. 255 (1986) that the prohibitions specified in Government Code 1090 cannot be avoided by having the financially interested Board member abstain from participation in the making of the contract, or in any other way.
Board members and designated employees shall not be financially interested in any contract made by the Board or in any contract they make in their capacity as Board members or designated employees. (Government Code 1090)
A Board member shall not be considered to be financially interested in a contract if his/her interest includes, but is not limited to, any of the following: (Government Code 1091.5)
1. That of an officer who is being reimbursed for his/her actual and necessary expenses incurred in the performance of an official duty
2. That of a recipient of public services generally provided by the public body or board of which he/she is a member, on the same terms and conditions as if he or she were not a member of the board
3. That of a landlord or tenant of the contracting party if such contracting party is the federal government or any federal department or agency, this state or an adjoining state, any department or agency of this state or an adjoining state, any county or city of this state or an adjoining state, or any public corporation or special, judicial or other public district of this state or an adjoining state unless the subject matter of such contract is the property in which such officer or employee has such interest as landlord or tenant in which even his/her interest shall be deemed a remote interest within the meaning of, and subject to, the provisions of Government Code 1091
4. That of a spouse of an officer or employee of a public agency if his/her spouse's employment or officeholding has existed for at least one year prior to his/her election or appointment
Note: In 80 Ops.Cal.Atty.Gen. 320 (1997), the Attorney General found that a Board member's spouse who has no previous contractual relationship with the district could not be hired by the district, whether as a substitute teacher or in any other employment capacity. While this opinion involved the initial hiring of the substitute teacher by the district, the Attorney General has previously interpreted the phrase "employment for at least one year" to mean the same employment with the district. This opinion, 69 Ops.Cal.Atty.Gen. 255 (1986), stated that a spouse employed by the district at the time the Board member was elected or appointed may continue annual employment as a substitute teacher, since the status quo with respect to the spouse's employment would continue. However, if the spouse were to attempt to become a permanent employee, the Board would be required to make a new contract, an action which would be prohibited under Government Code 1090.
In addition, in 81 Ops.Cal.Atty.Gen. 327 (1998), the Attorney General opined that a first-year probationary teacher whose spouse becomes a board member during his first year of probation, may not return the following year as a second-year probationary teacher since a new contract would be required for the following year.
5. That of a nonsalaried member of a nonprofit corporation, provided that such interest is disclosed to the Board at the time of the first consideration of the contract, and provided further that such interest is noted in its official records
6. That of a noncompensated officer of a nonprofit, tax-exempt corporation which, as one of its primary purposes, supports the functions of the board or to which the Board has legal obligation to give particular consideration, and provided further that such interest is noted in its official records
Note: As amended by SB 689 (Ch. 349, Statutes of 1999), Government Code 1091.5 revised item #7, as specified below, to be an interest in salary, per diem or reimbursement for expenses.
7. That of a person receiving salary, per diem, or reimbursement for expenses from a governmental entity, unless the contract directly involves the department of the government entity that employs the officer or employee, provided that the interest is disclosed to the Board at the time of consideration of the contract, and provided further that the interest is noted in its official record
8. That of an attorney of the contracting party or that of an owner, officer, employee or agent of a firm which renders, or has rendered, service to the contracting party in the capacity of stockbroker, insurance agent, insurance broker, real estate agent, or real estate broker, if these individuals have not received and will not receive remuneration, consideration, or a commission as a result of the contract and if these individuals have an ownership interest of less than 10 percent in the law practice or firm, stock brokerage firm, insurance firm or real estate firm
In addition, a Board member or employee shall not be deemed to be interested in a contract made pursuant to competitive bidding under a procedure established by law if his/her sole interest is that of an officer, director, or employee of a bank or savings and loan association with which a party to the contract has the relationship of borrower or depositor, debtor or creditor. (Government Code 1091.5)
Note: Pursuant to Government Code 87101, even if no exception in Government Code 1091.5 applies, an official may still enter into a contract if the rule of necessity applies. In general, this rule will permit a district to acquire an essential supply or service. The rule also permits a Board member to carry out an essential duty of his/her office where he/she is the only one who may legally act, as long as the Board member describes with particularity the nature of the financial interest creating the conflict before participating in the decision making and to state the reason that there is no alternative source of decision-making authority other than to permit the conflicted official to participate (2 CCR 18701). Case law has held that the nature of the conflict must be explained in detail in the Board minutes and there must be an explanation in the minutes as to why the Board is the only body able to make the decision (Kunec v. Brea Redevelopment Agency). It is recommended that the district consult legal counsel when situations arise involving financial interests in contracts or the rule of necessity.
A Board member shall not be deemed to be financially interested in a contract if he/she has only a remote interest in the contract and if the remote interest is disclosed during a Board meeting and noted in the official Board minutes. The affected Board member shall not vote or debate on the matter or attempt to influence any other Board member to enter into the contract. Remote interests are specified in Government Code 1091(b); they include, but are not limited to, the interest of a parent in the earnings of his/her minor child. (Government Code 1091)
Note: Board members who willfully fail to disclose a remote interest in a contract may be subject to a fine or imprisonment pursuant to Government Code 1097.
If a Board member or designated employee determines that he/she has a financial interest in a decision, as described in Government Code 87103, this determination shall be disclosed and made part of the Board's official minutes. In the case of a designated employee, this announcement shall be made in writing and submitted to the Board. (2 CCR 18700)
A Board member shall abstain from voting on personnel matters that uniquely affect a relative of the Board member. A Board member may vote, however, on collective bargaining agreements and personnel matters that affect a class of employees to which the relative belongs. "Relative" means an adult who is related to the person by blood or affinity within the third degree, as determined by the common law, or an individual in an adoptive relationship within the third degree. (Education Code 35107)
Note: The following paragraph reflects the common law definition of "relative within the third degree."
A relationship within the third degree includes the individual's parents, grandparents and great-grandparents, children, grandchildren and great- grandchildren, brothers, sisters, aunts and uncles, nieces and nephews, and the similar family of the individual's spouse unless the individual is widowed or divorced.
Gifts
Note: The following paragraph is for use in districts that selected Option #1 above (under Conflict of Interest Code), where Board members are considered to be managing public investments and therefore subject to Government Code 87200-87210. Option #2 is for use by districts that selected Option #2 under Conflict of Interest Code.
Pursuant to 2 CCR 18730, the prevailing gift limitation is currently $300. This amount is adjusted annually by the FPPC.
Designated employees shall not accept from any single source in any calendar year any gifts in excess of the prevailing gift limitation specified in law if the employee would be required to report the receipt of income or gifts from that source on his/her statement of economic interests. (Government Code 89503)
Note: The remainder of this section is for use by all districts.
The above limitations on gifts do not apply to wedding gifts and gifts exchanged between individuals on birthdays, holidays and other similar occasions, provided that the gifts exchanged are not substantially disproportionate in value. (Government Code 89503)
Gifts of travel and related lodging and subsistence shall be subject to the above limitations except as described in Government Code 89506.
A gift of travel does not include travel provided by the district for Board members and designated employees. (Government Code 89506)
Honoraria
Note: The following paragraph is for use in districts that selected Option #1 above (under Conflict of Interest Code), where Board members are considered to be managing public investments and therefore subject to Government Code 87200-87210. This paragraph should be deleted in districts that selected Option #2, where Board members do not make decisions related to the investment of public funds.
Board members and any employees who manage public investments shall not accept any honorarium, which is defined as any payment made in consideration for any speech given, article published, or attendance at any public or private gathering. (Government Code 89501, 89502)
Note: The following paragraph is for use by all districts. The FPPC considers that Board members who do not manage public investments are "designated employees." Board members in districts that selected Option #2 above (under Conflict of Interest Code) are therefore covered by following paragraph and may choose to clarify by adding the phrase "and Board members" below.
Designated employees shall not accept any honorarium which is defined as any payment made in consideration for any speech given, article published, or attendance at any public or private gathering, if the employee would be required to report the receipt of income or gifts from that source on his/her statement of economic interests. (Government Code 89502)
The term "honorarium" does not include: (Government Code 89501)
1. Earned income for personal services customarily provided in connection with a bona fide business, trade or profession unless the sole or predominant activity of the business, trade or profession is making speeches
2. Any honorarium which is not used and, within 30 days after receipt, is either returned to the donor or delivered to the district for donation into the general fund without being claimed as a deduction from income for tax purposes
Note: Exceptions exist within the Government Code's definitions of gifts, income, interest in real property and investment; see Government Code 82028, 82030, 82033 and 82034.
Legal Reference: EDUCATION CODE 1006 Qualifications for holding office 35107 School district employees 35230-35240 Corrupt practices 35233 Prohibitions applicable to members of governing boards GOVERNMENT CODE 1090-1098 Prohibitions applicable to specified officers 1125-1129 Incompatible activities 81000-91015 Political Reform Act of 1974, especially: 82011 Code reviewing body 82019 Definition of "designated employee" 82028 Definition of "gifts" 82030 Definition of "income" 82033 Definition of "interest in real property" 82034 Definition of "investment" 87100-87103.6 General prohibitions 87200-87210 Disclosure 87300-87313 Conflict of interest code 87500 Statements of economic interests 89501-89503 Honoraria and gifts 89506 Travel payments, advances and reimbursements 91000-91015 Enforcement CODE OF REGULATIONS, TITLE 2 18100-18730 Regulations of the Fair Political Practices Commission COURT DECISIONS Kunec v. Brea Redevelopment Agency (1997) 55 Cal.App. 4th 511 ATTORNEY GENERAL OPINIONS 82 Ops.Cal.Atty.Gen. 83 (1999) 81 Ops.Cal.Atty.Gen. 327 (1998) 80 Ops.Cal.Atty.Gen. 320 (1997) 69 Ops.Cal.Atty.Gen. 255 (1986) 68 Ops.Cal.Atty.Gen. 171 (1985) 65 Ops.Cal.Atty.Gen. 606 (1982)
Management Resources: WEB SITES FPPC: http://www.fppc.ca.gov
Bylaw PALOS VERDES PENINSULA UNIFIED SCHOOL DISTRICT adopted: December 11, 2000 Palos Verdes Estates, California |