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Are Board of Education Members Subject to Conflict of Interest Restrictions?

Brad Banasik

By Brad Banasik, MASB Legal Counsel/Director of Labor Relations & Policy

DashBoard, April 12, 2017

Yes, board of education members are subject to a statute (PA 317 of 1968, M.C.L. 15.321 et seq) that regulates the conduct of public officials and employees with respect to contracts with public entities. Subsection (1) of M.C.L. 15.322 explicitly prohibits a public official or employee from being a party, directly or indirectly, to any contract between himself or herself and a public entity that he or she is an officer or employee. Additionally, Subsection (2) of M.C.L. 15.322 sets forth four scenarios that specifically limit a public official or employee’s ability to solicit a contract for a public entity that he or she is serving. If any one of the four situations applies, the public official or employee cannot represent either party in the contractual transaction, and cannot take part in negotiating or approving the contract in question.

However, under specific circumstances, M.C.L. 15.323 limits the above prohibitions and restrictions by selectively narrowing the application of M.C.L. 15.322 to public officials and employees who work more than 25 hours a week for a public entity that is not a public institution of higher education. To be exempted from the application of Subsections (1) and (2) of M.C.L.15.322, all other public officials, such as school board members, who are personally interested as a direct or indirect party in a contract being considered by the public entity, or who have a conflict of interest as outlined in Subsection (2), must disclose their personal interest to the board in a manner based on how much of a financial benefit the contract will produce for the board member. In order to approve a contract that involves this type of financial conflict of interest, a board of education must approve the contract by a two-thirds’ vote of the full board in open session, minus the vote of the board member who disclosed the pecuniary interest (M.C.L. 15.323(2)(b)). In the case of a seven-member board of education, there must five affirmative votes in order to approve the contract.

There is also a provision in the Michigan Constitution that provides that no state officer “shall be interested directly or indirectly in any contract with the state or any political subdivision thereof which shall cause a substantial conflict of interest” (1963 Const, Art IV, Section 10). The Attorney General has ruled that this prohibition applies to school board members (Op.Atty.Gen.1967, No.4555).

Further, Section 169b of the State School Aid Act of 1979 (M.C.L. 388.1769b) should also be taken into consideration when a board is confronted with a conflict of interest situation. Section 169b generally requires a board member to abstain from voting on any contract in which the board member has a conflict of interest.

Lastly, Section 1203 of the Revised School Code (MCL 380.1203) is a conflict of interest law that applies to a board member who “believes or has reason to believe” he or she has a conflict of interest regarding a contract or financial transaction that requires the board’s approval. This law requires a board member to disclose the conflict of interest and to abstain from voting on the contract or financial transaction in question. A board member is presumed to have a conflict if the board member, or his or her "family member," has a financial interest or a competing financial interest in a contract or financial transaction with the school or if the board member’s family member is an employee of the district.

The law defines “family member” as a person’s spouse or spouse’s sibling or child; a person’s sibling or sibling’s spouse or child; a person’s child or child’s spouse; or a person’s parent or parent’s spouse, and includes these relationships as created by adoption or marriage. The law makes clear that having a child who is a student in the district does not create a conflict for the board member.

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