CONFLICT OF INTEREST DISCLOSURES:
SUBSTANTIAL INTEREST AFFIDAVIT AND ABSTENTION |
If a local public official or a person related to a local public
official in the first degree by either affinity or consanguinity has a substantial
interest in a business entity or in real property, the local public official, before a
vote or decision on any matter involving the business entity or the real property, shall
file an affidavit with an official Board recordkeeper stating the nature and extent of the
interest and shall abstain from further participation in the matter if:
1.
In the case of a substantial interest in a business entity,
the action on the matter will have a special economic effect on the business entity that
is distinguishable from the effect on the public; or
2.
In the case of a substantial interest in real property, it
is reasonably foreseeable that an action on the matter will have a special economic effect
on the value of the property, distinguishable from its effect on the public.
Local Gov’t Code 171.004
CONTRACTS PERMITTED |
The Board may contract with a business entity in which a Trustee has a
substantial interest if the Trustee follows the disclosure and abstention procedure set
out above.
Atty. Gen. Op. JM-424 (1986)
DEFINITIONs SUBSTANTIAL INTEREST |
A person has a substantial interest in a business entity if any of the
following is the case:
1.
The person owns at least:
a.
Ten percent of the voting stock or shares of the business
entity, or
b.
Either ten percent or $15,000 of the fair market value of
the business entity.
2.
Funds received by the person from the business entity
exceed ten percent of the person’s gross income for the previous year.
A person has a substantial interest in real property if the interest is
an equitable or legal ownership with a fair market value of $2,500 or more.
The local public official is considered to have a substantial interest
if a person related in the first degree by either affinity or consanguinity to the local
public official, as determined under Government Code Chapter 573, Subchapter B [see DBE],
has a substantial interest as defined above.
Local Gov’t Code 171.002
LOCAL PUBLIC OFFICIAL |
“Local public official” shall mean a member of the governing body or
another officer, whether elected, appointed, paid, or unpaid, of any district (including a
school district), central appraisal district, or other local governmental entity who
exercises responsibilities beyond those that are advisory in nature.
Local Gov’t Code 171.001(1)
BUSINESS ENTITY |
“Business entity” means a sole proprietorship, partnership, firm,
corporation, holding company, joint-stock company, receivership, trust, or any other
entity recognized by law.
Local Gov’t Code 171.001(2)
MAJORITY CONFLICT |
If a Trustee is required to file and does file an affidavit, that
Trustee shall not be required to abstain from further participation in the matter or
matters requiring such an affidavit if a majority of the trustees are likewise required to
file and do file affidavits of similar interests on the same official action.
Local Gov’t Code 171.004
SEPARATE VOTE ON BUDGET |
The Board shall take a separate vote on any budget item specifically
dedicated to a contract with a business entity in which a Trustee has a substantial
interest. The affected Trustee shall not
participate in that separate vote, but may vote on a final budget if he or she filed the
affidavit and the matter in which he or she is concerned has been resolved.
Local Gov’t Code 171.005
VIOLATIONS |
Except as provided above, the local public
official shall not knowingly:
1.
Participate in a vote or decision on a matter involving a
business entity or real property in which the local public official has a substantial
interest if it is reasonably foreseeable that an action on the matter will have a special
economic effect on the business entity or value of the property that is distinguishable
from the effect on the public.
2.
Act as surety for a business entity that has a contract,
work, or business with the District.
3.
Act as surety on any official bond required of an officer
of the District.
Local Gov’t Code 171.003
If a Trustee has a substantial interest in a bank with which the
District is considering entering into a loan or other transaction besides a depository
contract, then the Trustee must comply with the affidavit and abstention requirements.
Atty. Gen. Op. JM-1082 (1989); Local Gov’t
Code 171.004
VOIDABLE ACTIONS |
The finding by a court of a violation of Local Government Code Chapter
171 does not render an action of the Board voidable unless the measure that was the
subject of an action involving a conflict of interest would not have passed without the
vote of the person who violated the chapter.
Local Gov’t Code 171.006
CONFLICTS DISCLOSURE STATEMENT |
A local government officer shall file the required conflicts disclosure
statement, as adopted by the Texas Ethics Commission, with respect to an applicable vendor
if the vendor enters into a contract with the District or the District is considering
entering into a contract with the vendor; and the vendor:
1.
Has an employment or other business relationship with the
local government officer or a family member of the officer that results in the officer or
family member receiving taxable income, other than investment income, that exceeds $2,500
during the 12-month period preceding the date that the officer becomes aware that a
contract has been executed or the District is considering entering into a contract with
the person; or
2.
Has given to the local government officer or a family
member of the officer one or more gifts that have an aggregate value of more than $250 in
the 12-month period preceding the date the officer becomes aware that such a contract has
been executed or the District is considering entering into a contract with the vendor.
A local government officer is not required to file a conflicts
disclosure statement in relation to a gift accepted by the officer or a family member of
the officer if the gift is:
1.
Given by a family member of the person accepting the gift;
2.
A political contribution as defined by Title 15, Election
Code; or
3.
Food, lodging, transportation, or entertainment accepted as
a guest.
A local government officer shall file the conflicts disclosure
statement with the records administrator of the District not later than 5:00 p.m. on the
seventh business day after the date on which the officer becomes aware of the facts that
require the filing of the statement.
VIOLATIONS |
A local government officer commits a Class C misdemeanor if the officer
knowingly violates this law. It is an
exception to the application of the penalty that the local government officer filed the
required conflicts disclosure statement not later than the seventh business day after
receiving notice from the District of the alleged violation.
Local Gov’t Code 176.003–.004
DEFINITIONs LOCAL GOVERNMENT OFFICER |
“Local government officer” means a member of the governing body of the
District; a director, Superintendent, administrator, President, or other person designated
as the executive officer of the District; an employee of the District who has the
authority to approve contracts on behalf of the District, including a person designated as
the representative of the District for purposes of Chapter 271, and with respect to whom
the District has, in accordance with Local Government Code 176.005, extended the
requirements of Local Government Code 176.003 and 176.004.
Local Gov’t
Code 176.001(4)
FAMILY MEMBER |
“Family member” shall mean a person related to another person within
the first degree by consanguinity or affinity, as described by Subchapter B, Chapter 573,
Government Code, except that the term does not include a person who is considered to be
related to another person by affinity only as described by Government Code 573.024(b).
Local Gov’t Code 176.001(2)
RECORDS ADMINISTRATOR |
“Records administrator” means the director, Superintendent, or other
person responsible for maintaining the records of the District or another person
designated by the District to maintain statements and questionnaires filed under Local
Government Code 176 and perform related functions.
Local Gov’t Code 176.001(5)
[See CPC]
INVESTMENT INCOME |
“Investment income” means dividends, capital gains, or interest income
generated from:
1.
A personal or business:
a.
Checking or savings account,
b.
Share draft or share account, or
c.
Other similar account;
2.
A personal or business investment; or
3.
A personal or business loan.
Local Gov’t Code 176.001(2-b)
INTERNET POSTING REQUIREMENT |
A district that maintains an Internet Web site shall provide access on
the District’s Internet Web site to the conflicts disclosure statements and questionnaires
required to be filed with the records administrator.
Local Gov’t Code 176.009
AFFIDAVIT DISCLOSING INTEREST IN PROPERTY |
If a public servant has a legal or equitable interest in any property
that is to be acquired with public funds, and has actual notice of the acquisition or
intended acquisition of the property, the public servant shall file an affidavit as
follows:
1.
The affidavit shall be filed with the county clerk(s) of
the county or counties in which the property is located and of the county in which the
public servant resides within ten days before the date on which the property is to be
acquired by purchase or condemnation.
2.
The affidavit must:
a.
State the name of the public servant and the public office
title or job designation held or sought.
b.
Fully describe the property.
c.
Fully describe the nature, type, and amount of interest in
the property, including the percentage of ownership interest and the date the interest was
acquired.
d.
Include a verification of the truth of the information in
the affidavit. [See BBFA(EXHIBIT)]
e.
Include an acknowledgment of the same type required for
recording a deed in the deed records of a county.
Gov’t Code 553.002, 553.003
VIOLATIONS |
A public servant who fails to file the affidavit when required is
presumed to have the intent to commit an offense.
An offense under this section is a Class A misdemeanor.
Gov’t Code 553.003
DEFINITION OF PUBLIC SERVANT— GOVERNMENT CODE |
“Public servant” shall mean a person who is elected, appointed,
employed, or designated, even if not yet qualified for or having assumed the duties of
office, as:
1.
A candidate for nomination or election to public office, or
2.
An officer of government.
Gov’t Code 553.001
ANNUAL FINANCIAL MANAGEMENT REPORT |
The District’s annual financial management report shall include summary
reports of reimbursement received by each Board member, reports of certain gifts from
school vendors, and reports of Board member business transactions with the District.
[See CFA]
Education Code 39.083; 19 TAC 109.1005
TRUSTEE FINANCIAL STATEMENT |
The Board by resolution adopted by majority vote may require each
member of the Board to file the financial statement required of state officers under
Subchapter B, Chapter 572, Government Code, with the Board and the Texas Ethics
Commission.
Not later than the 15th day after the date the Board adopts this
resolution, the Board shall deliver a certified copy of the resolution to the Texas Ethics
Commission. A resolution applies beginning on
January 1 of the second year following the year in which the resolution is adopted.
A member of a board that has adopted a resolution is not required to include, in a
financial disclosure statement, financial activity occurring before January 1 of the year
following the year in which the resolution is adopted.
The Commissioner by order shall require the members of the Board to
file the financial statement required of state officers under Subchapter B, Chapter 572,
Government Code, in the same manner as the members of a board that have adopted a
resolution if the Commissioner determines that:
1.
A Board member has failed to comply with filing and recusal
requirements applicable to the member under Chapter 171, Local Government Code;
2.
District financial accounting practices are not adequate to
safeguard state and District funds; or
3.
The District has not met a standard set by the Commissioner
in the financial accountability rating system.
The Commissioner may require the filing of financial statements
covering not more than three fiscal years and beginning on January 1 of the second year
following the date of the Commissioner’s order.
A member of a board subject to an order issued by the Commissioner is not required
to include, in a financial disclosure statement, financial activity occurring before
January 1 of the year following the year in which the order is issued.
The Commissioner may renew the requirement if the Commissioner determines that a
condition described above continues to exist.
VIOLATIONS |
A Trustee serving in a school district that has adopted a resolution or
that is subject to an order issued by the Commissioner commits an offense if the Trustee
fails to file the statement required by the resolution or order.
An offense under this section is a Class B misdemeanor.
Education Code 11.064
Note: See also CBB for requirements when federal funds are involved.