School District Officers and Employees Conflict of Interest Overview
The general provisions of the law applicable to conflicts of interest by school district officers and employees are found in Article 18 of the General Municipal Law. In addition to the requirements of Article 18 of the General Municipal Law, the board must adopt a code of ethics setting forth for the guidance of its officers and employees the standards of conduct reasonably expected of them (General Municipal Law §806).
- Conflicts of Interest Prohibited.
No school district officer or employee may have an interest in any contract with the district when such officer or employee, individually or as a member of a board, has the power or duty to (a) negotiate, prepare, authorize or approve the contract or authorize or approve payment thereunder (b) audit bills or claims under the contract, or (c) appoint an officer or employee who as any of the powers or duties set forth above and no chief fiscal officer, treasurer, or his deputy or employee, shall have an interest in a bank or trust company designated as a depository, paying agent, registration agent or for investment of funds of the district. General Municipal Law §801.
- Code of Ethics.
The code of ethics may contain other and further provisions defining conflicts of interest that are either prohibited or that require disclosure in order to insure that the district’s business is carried out with integrity. Areas of particular vulnerability, where a board would be prudent to consider defining conflicts of interest beyond those provided by law, include family relationships and private employment and business relationships.
- Disclosure and Sanctions.
A district officer or employee who has, will have, or later acquires an interest in any actual or proposed contract with the district must publicly disclose the nature and extent of the interest in writing to the board as soon as the officer or employee has knowledge of such actual or prospective interest. Disclosure of the interest does not cure the conflict. If the conflict is one prohibited by the General Municipal Law, the board may not enter into it even if the board member with the conflict abstains from the vote. Contracts willfully entered into by the board in which there is a prohibited conflict of interest are null, void and wholly unenforceable. Any district officer or employee who willfully or knowingly violates the conflict of interest provisions of Article 18 of the General Municipal Law shall be guilty of a misdemeanor. General Municipal Law ~803. 804. 805.
For the purposes of Article 18, the term “contract” is defined very broadly to include any claim, account, or demand against or agreement with the district, express or implied. The term “interest” is also defined inclusively to mean a direct or indirect pecuniary or material benefit accruing to an officer or employee as a result of a contract with the district. A district officer or employee is deemed to have an interest in the contract of a spouse, minor children and dependents, except a contract of employment with the district. A district officer or employee also is deemed to have an interest in a contract with any firm, partnership, association or corporation of with the officer or employee is a member, officer, director, employee, or shareholder. General Municipal Law §800.
- Statutory Exceptions – General Municipal Law §802
Section 802 of the General Municipal Law enumerates several exceptions to the general prohibition of conflicts of interest expressed in §801. Certain of these exceptions are particularly applicable in communities where board members are likely to own, operate, or be employed by businesses that do business with the school district. The exceptions are quite specific, and anyone with a potential conflict should check §802 to see if there is an applicable exception.
- Gratuities and Improper Influence.
No district officer or employee may use confidential information obtained in their official capacity to further their personal interest. No district officer or employee may accept compensation for services to be rendered in relation to any matter before the board or any agency of the board. General Municipal Law ~805-a.
- Conflicts on which the Commissioner of Education has ruled.
In Appeal of Golden, 32 Ed Dept Rep 202, the Commissioner ruled that the board of education’s contract to purchase fuel oil from a company of which the board president was president and owner of more that 5% of the stock violated §801 of the General Municipal Law. Although the board president disclosed his interest pursuant to General Municipal Law §803, the disclosure did not in any way cure the defect. The Commissioner order the board to discontinue the contracts or face potential removal of any board member engaged in this willful violation of the law.