Download ASBO Agendas, Minutes, Conflict of Interest

2017 ASBO
SPRING CONFERENCE
• AGENDAS
• MINUTES
• CONFLICT OF INTEREST
Gerry Kaufman
ASBSD Director of Policy
and Legal Services
AGENDA
A violation of SDCL 1-25-1.1
is a Class 2 misdemeanor.
(up to 30 days and/or $500)
AGENDA
SDCL 1-25-1.1
All public bodies… shall provide public
notice, with proposed agenda, that is visible,
readable, and accessible for at least an
entire, continuous twenty-four hours
immediately preceding any meeting, …
AGENDA
• by posting a copy of the notice,
visible to the public, at the
principal office of the public
body holding the meeting.
AGENDA
• The proposed agenda shall
include the date, time, and
location of the meeting.
AGENDA
• The notice shall also be posted
on the public body's website
upon dissemination of the
notice, if such a website exists.
AGENDA
SD OPEN MEETINGS COMMISSION
IN THE MATTER OF BUTTE
COUNTY COMMISSION,
June 23, 2009
AGENDA
OMC – Butte County
• “The language of SDCL 1-25-1.1 contains no
information as to how specific an agenda should
be.”
• “In particular there is no requirement in SDCL 125-1.1 that the agenda is to indicate whether
the listed items are for discussion only or
whether the items require a vote at the
meeting.”
AGENDA
OMC – Butte County
“Obviously the reason for requiring
the posting of an agenda is to
apprise the public of the time,
place, and nature of the meetings.”
AGENDA
OMC – Butte County
“Accordingly, the agenda must contain
sufficient information to advise the public as
to each of the issues that will be addressed.
In the situation here, the agenda did contain
sufficient information so as to advise the
public of the time, place, and subject matter
of the meeting.”
AGENDA
OMC – Butte County
“The agenda was adequate. In particular, it
should be noted that an agenda item stating
that interviews would be conducted affords
the public with sufficient information to
conclude that a hiring decision may be
conducted at the meeting.”
AGENDA
• CAN SOMETHING GET ADDED TO OR
REMOVED FROM THE AGENDA AFTER IT
HAS BEEN POSTED?
• IF SOMETHING CAN BE ADDED TO OR
REMOVED FROM THE POSTED AGENDA,
WHEN AND HOW IS IT DONE?
AGENDA
Molden v. Grant-Deuel School Dist.
• In 2012, the SD Supreme Court
affirmed a South Dakota Circuit Court
decision which held that a preliminary
agenda may be amended when the
board takes action to formally adopt
the meeting agenda.
AGENDA
Open Meetings Brochure
• Generally the school board adopts
the “final” agenda upon convening
the meeting. At this time, the
school board may add or delete
agenda items and may also change
the order of business.
AGENDA
• BE SPECIFIC IN THE MINUTES WHEN
REFERENCING AMENDENTS TO THE
POSTED AGENDA –
• Identify the changes/amendments
• Need more than “adopt agenda as
amended”
AGENDA
• New items cannot be added
after the agenda has been
adopted by the school
board.
AGENDA
STAY AWAY FROM AGENDA HEADINGS AS:
• New Business
• Old Business
• Other Business
FOR EXECUTIVE SESSION, USE FOR EXAMPLE:
• “Personnel (SDCL 1-25-2(1))”
AGENDA
Open Meetings Brochure
“Public bodies are strongly
encouraged to provide 24 hours
notice of all agenda items so as to be
fair to the public and to avoid
dispute.”
AGENDA
SDCL 1-25-1.1
• For any special or rescheduled meeting,
the information in the notice shall be
delivered in person, by mail, by email,
or by telephone, to members of the
local news media who have requested
notice.
AGENDA
SDCL 1-25-1.1
For any special or rescheduled meeting,
each public body shall also comply with
the public notice provisions of this
section for a regular meeting to the
extent that circumstances permit.
AGENDA
Open Meetings Brochure
“For special or rescheduled meetings,
public bodies are to comply to the extent
circumstances permit. In other words,
posting less than 24 hours in advance
may be permissible in emergencies.”
AGENDA
Consult with your school attorney
about OMC’s special or rescheduled
meetings “emergency” exception in
SDCL 1-25-1.1 to the 24 hour prior
notice requirement” !!!
Minutes
ATTORNEY GENERAL
OFFICIAL OPINION NO. 74 - 11
Minutes - Minimum Requirements
Minutes
AGO 74-11
“A school board speaks through its
records and such records constitute
prima facie evidence of its actions. In
general, the minutes of a school
board need not be formal or
technical in nature.”
Minutes
AGO 74-11
“The
minutes should show what
actions were taken by the board
and should show that the board
acted within the requirements of
the statutes.”
Minutes
AGO 74-11
“They should also show that the
required number of votes were cast in
favor of each proposal adopted or
approved (see SDCL 13-8-33).”
[SDCL 13-8-33 was repealed in 1995]
Minutes
AGO 74-11
“It is my opinion that the statutory requirements
for the keeping of minutes is directory and in
answer to your specific question No.2, it is my
opinion that the above paragraph sets forth the
minimum information that must be shown in
school boards' minutes in order that such minutes
will constitute an adequate official record of the
school board.”
Minutes
SDCL 1-27-1.17
• The unapproved, draft minutes of
any public meeting held…shall be
available for inspection by any
person within ten business days
after the meeting.
Minutes
SDCL 1-27-1.17
• However, this section does not apply if
an audio or video recording of the
meeting is available to the public on
the governing body's website within
five business days after the meeting.
• Violation is a Class 2 misdemeanor.
Minutes
SDCL 13-8-35
• Within twenty days after a meeting of
the school board, the board shall cause
to be published in the designated legal
newspaper a full account of the
unapproved proceedings of such
meeting,…
Minutes
SDCL 13-8-35
• … giving a detailed statement of all
expenditures of money, with the
names of persons to whom
payment is made, showing the
service rendered or goods
furnished, a detailed statement of
receipts, and balance on hand.
Minutes
SDCL 13-8-35
• Expenditures and receipts of trust
and agency funds may be published
in total only.
• The business manager shall sign
each legal publication submitted to
the newspaper.
Minutes
SDCL 13-8-35
• If the published minutes of the previous
meeting of the board are modified,
amended, or corrected by such board
subsequent to such publication and prior to
approval by the board, such changes shall
be reflected in the minutes of the meeting
at which such modifications, amendments,
or corrections are made.
Minutes
SDCL 13-8-34
• The school board shall approve the
minutes of every meeting of the board
within forty-five days after such meeting.
The presiding officer and the business
manager shall sign the minutes of all
annual, regular, and special meetings
after they have been approved.
Minutes
SDCL 1-25-1. The official meetings of … political
subdivisions …are open to the public unless a
specific law is cited by the … the political
subdivision … to close the official meeting to the
public.
SDCL 1-25-2. An executive or closed meeting shall
be held only upon a majority vote of the members
of such body present and voting, …
Minutes
SDCL 1-27-18
• The governing body of each …any public
corporation … shall promote and
implement the principles of efficient
records management for local records.
The governing body may, as far as
practical, follow the program established
for the management of state records.
Records Management
• SD Bureau of Administration
• https://boa.sd.gov/
• Records Management Division,
Dana Hoffer, Director 773-3589
Records Management
• South Dakota Local Schools
Retention Manual, Revised 2015
• https://boa.sd.gov/divisions/rec
ords/documents/Local_Schools_
2015_Revised.pdf
Conflict of Interest
Conflict of Interest
SDCL 6-1-1. It is unlawful for any elected or
appointed officer of a school district to be
interested, either by himself or agent, in any
contract entered into by the school district, either
for labor or services, or for the purchase of
commodities, materials, supplies, or equipment of
any kind, which is paid from public funds, or in the
purchase of any real or personal property
belonging to the school district.
Conflict of Interest
Such contract shall be null and
void from the beginning.
Conflict of Interest
SDCL 6-1-2. The provisions of § 6-1-1 are not
applicable if the contract is made, without fraud or
deceit, pursuant to any of the following. The contract
is voidable if the provisions of the applicable
subdivision are not fully satisfied or present at the
time the contract was entered into. (1) Any contract
involving $5,000 or less regardless of whether other
sources of supply or services are available within the
school district, if the consideration for such supplies or
services is reasonable and just;…
Conflict of Interest
SDCL 6-1-17. No … school official may
participate in discussing or vote on any issue
in which the official has a conflict of interest.
Each official shall decide if any potential
conflict of interest requires such official to be
disqualified from participating in discussion
or voting. However, no such official may
participate in discussing or vote on an issue
if the following circumstances apply:
Conflict of Interest
(1) The official has a direct pecuniary interest in the
matter before the governing body; or (2) At least twothirds of the governing body votes that an official has
an identifiable conflict of interest that should prohibit
such official from voting on a specific matter.
If an official with a direct pecuniary interest
participates in discussion or votes on a matter before
the governing body, the legal sole remedy is to
invalidate that official's vote.
Conflict of Interest
Hanig v. City of Winner, 2005 SD 10, ¶ 19
(1)
(2)
(3)
(4)
“Direct pecuniary interests”
“Indirect pecuniary interests”
“Direct personal interest”
“Indirect Personal Interest”
Conflict of Interest
HB 1170
and
SDCL Ch. 3-23
Conflict of Interest
• school board members, business managers,
chief financial officers, superintendents,
chief executive officers, and any other
person with the authority to enter into a
contract or spend money in an amount
greater than $5,000, …
Conflict of Interest
• or multiple contracts in an amount
greater than five thousand dollars
with the same party within a 12
month period,
Conflict of Interest
•must disclose their personal
interest in any contract between
their school district and third party.
Conflict of Interest
the law specifically refers to …
(1) a person having “an interest in a
contract”
the law requires a person
who has an interest in a contract disclose
that interest, and to …
Conflict of Interest
(2) a person who “derives a direct
benefit from a contract”
the law
requires the person to disclose the direct
benefit and get governing board
authorization to derive the direct benefit
from the contract.
Conflict of Interest
Before disclosure in required, there
must be 3 things
• an interest in a contract, or
• a direct benefit from a contract,
and
Conflict of Interest
• the interest or direct benefit must
have a value of more than $5,000 (or
multiple contracts in an amount
greater than $5,000 with the same
party within a 12 month period).
Conflict of Interest
What is meant by “or other person
with the authority to enter into a
contract or spend money” in an
amount greater than $5,000 ?
Conflict of Interest
ANSWER: A person may have been authorized by
the board to enter into contracts and spend school
district funds. For example, employees may have
been authorized to use a school district credit
card, sign vouchers, purchase orders or contracts
on behalf of the school district. The disclosure
laws would apply to those people.
Conflict of Interest
What is meant by “multiple
contracts” in an amount greater
than $5,000 with the same party
within a 12 month period?
Conflict of Interest
ANSWER: multiple contracts within a 12
month period (not calendar or fiscal year)
between the school district and a 3rd party,
total value greater that $5,000; the person
having an interest in or receiving a direct
benefit from those contracts must disclose to
the school board their interest in, or direct
benefit from, the contracts.
Interest in the Contract
What is meant by “an interest in a
contract” and when does it apply?
ANSWER: HB 1170, Sec. 12: A person
described in § 3-23-6 has an interest in a
contract if the person, the person's
spouse, or any other person with whom
the person lives and commingles assets:
Interest in the Contract
(1) is employed by a party to any contract with the
local service agency, school district, cooperative
education service unit, or education service
agency; or (2) receives more than nominal
compensation or reimbursement for actual
expenses for serving on the board of directors of
an entity that derives income or commission
directly from the contract or acquires property
under the contract.
Interest in the Contract
What must a person who only has an interest in a
contract do in order to comply with the law?
Answer: The person must disclose the
existence of a contract in which the person has an
interest and the person's role in the contract. [The
law does not require the disclosure of an interest
in a contract be in writing; however, ASBSD
recommends the disclosure of an interest in a
contract be in writing.]
Interest in the Contract
• ASBSD also recommends that the same 5 things
which are required in a disclosure of a direct
benefit be included in the disclosure of an
interest in a contract: (i) all parties to the
contract, (ii) the person's role in the contract,
(iii) the purpose or objective of the contract,
(iv) the consideration or benefit conferred or
agreed to be conferred upon each party, and
(v) duration of the contract.
Interest in the Contract
• The law says disclosure of an interest in
a contract is to be given at the annual
reorganization meeting if the contract
extends into consecutive fiscal years.
Interest in the Contract
• ASBSD recommends the time frame applicable to
disclosure of a direct benefit be used for
disclosing an interest in a contract, i.e., given
before entering into any contract that requires
disclosure or within 45 days after entering into
the contract, and if the contract extends into
consecutive fiscal years, disclosure is also given at
the annual reorganization meeting.
Interest in the Contract
• No governing board authorization is
required after a person discloses an
interest in the contract.
• The interest disclosure must be included in
the official minutes. Schools are not
required to send the official minutes to the
auditor-general and attorney general.
“derive a direct benefit”
What is meant by
“derive a direct benefit” ?
“derive a direct benefit”
ANSWER: to receive a direct benefit from a
contract between his/her school district and
a third party, the person, the person's
spouse, or any other person with whom the
person lives and commingles assets --(1) must be a party to or intended beneficiary
of the contract , or
“derive a direct benefit”
(2) must have more than a five percent
ownership interest in an entity that is a
party to the contract, or
(3) must acquire property under the
contract; or
“derive a direct benefit”
(4) must receive compensation,
commission, promotion, or other
monetary benefit directly attributable
to any contract.
“derive a direct benefit”
What does a person who derives a
direct benefit from a contract have
to do in order to comply with the
law?
“derive a direct benefit”
• The person may derive a direct benefit
from a contract that the school district is a
party to the contract if disclosure is given
and the direct benefit is authorized by the
school board.
• The disclosure of a direct benefit must be in
writing.
“derive a direct benefit”
Five things must be identified in the
disclosure of a direct benefit: (i) all parties to
the contract, (ii) the person's role in the
contract, (iii) purpose or objective of the
contract, (iv) consideration or benefit
conferred or agreed to be conferred upon
each party, and (v) duration of the contract.
“derive a direct benefit”
Any person receiving a direct benefit
from a contract must submit the
authorization request before entering
into the contract that requires disclosure
or within 45 days after entering into the
contract.
“derive a direct benefit”
If authorization by the governing board is
given, no further disclosure or authorization
is required unless the contract extends into
consecutive fiscal years. If the contract
extends into consecutive fiscal years,
disclosure shall be made at the annual
reorganization meeting.
“derive a direct benefit”
What must the governing board
do when a disclosure is presented
from a person who derives a
direct benefit from a contract?
“derive a direct benefit”
(1) After the governing board receives
a disclosure of a direct benefit, the
governing board must review the
disclosure and decide if the terms of the
contract are fair and reasonable, and
decide if the contract is contrary to the
public interest.
“derive a direct benefit”
(a) If the governing board determines
the contract terms from which a direct
benefit is derived are fair and reasonable,
and that the contract is not contrary to the
public interest, the governing board would
vote to authorize (approve) the person
deriving a direct benefit from the contract.
“derive a direct benefit”
(b) If the governing board determines the
contract terms are not fair and reasonable, or is
contrary to the public interest, the governing board
would vote to not approve the person to derive a
direct benefit from the contract. The contract is
voidable and subject to disgorgement (the act of
giving up on demand or by legal compulsion
something that was obtained illegally or
unethically), or the person may resign.
“derive a direct benefit”
(2) The school board should carefully review each
disclosure and decide if the terms of the contract
are fair, reasonable, and contrary to the public
interest. If the contract terms are fair, reasonable,
and not contrary to the public interest, the
governing board must authorize the person’s
deriving a direct benefit from the contract. If the
board voted to deny authorization, the board
decision may be appealed to circuit court.
“derive a direct benefit”
(3) After the governing board acts on the
disclosure of a direct benefit, the disclosure
and governing board action are public record.
The official minutes must include the board
action on each disclosure and request for
authorization to derive a direct benefit. A
copy of the official minutes must be sent to
the auditor-general and attorney general.
“derive a direct benefit”
After the board approves the meeting minutes
when the disclosure was presented to the board
and acted upon by the board, the minutes are
sent to the Auditor-General and Attorney
General. The Auditor-General has indicated the
minutes may be emailed to the Auditor-General.
The Attorney General has indicated the minutes
are to be mailed to the Attorney General’s Office.
“derive a direct benefit”
• The law does not give a time frame within which
the minutes must be sent, but minutes should be
sent within thirty (30) calendar days of the board
meeting when the minutes were approved.
• If disclosure of a direct benefit was acted on by
the governing board at the same board meeting
when there was disclosure of an interest in a
contract, the entire minutes could be sent.
“derive a direct benefit”
(4) “No board member … may
participate in or vote upon a decision of
a local service agency, school district,
cooperative education service unit, or
education service agency relating to a
matter in which the member derives a
direct benefit.”
Exceptions
Are there any exceptions to the disclosure
requirements?
ANSWER: Yes. [HB 1170 Sec. 13] If any of
the following apply, the person would not
have an interest in the contract or derive a
direct benefit from a contract, and
disclosure (and authorization, if applicable)
is not required:
Exceptions
(1) when the person’s relationship to the
contract is based solely on the value
associated with the person's publicly-traded
investments or holdings, or the investments
or holdings of any other person with whom
the board member, business manager, chief
financial officer, superintendent, or chief
executive officer lives or commingles assets;
Exceptions
(2) when the person’s relationship
to the contract is due to participating
in a vote or a decision in which the
person's only interest arises from an
act of general application;
Exceptions
(3) when the person’s relationship to the
contract is due to the person receiving
income as an employee or independent
contractor of a party with whom the local
service agency, school district, cooperative
education service unit, or education service
agency has a contract, unless …
Exceptions
… the person receives compensation
or a promotion directly attributable
to the contract, or unless the person
is employed by the party as a board
member, executive officer, or other
person working for the party in an
area related to the contract;
Exceptions
(4) when the contract is for the sale of
goods or services, or for maintenance or
repair services, in the regular course of
business at a price at or below a price
offered to all customers;
Exceptions
(5) when the contract is subject to a
public bidding process;
(6) when the contract is with the official
depository as set forth in SDCL 6-1-3;
Exceptions
(7) when the person only receives income or
compensation, a per diem authorized by law or
reimbursement for actual expenses incurred; or
(8) when the total value of the contract or
multiple contracts with the same party within a
12 month period with whom the local service
agency, school district, cooperative education
service unit, or education service agency
contracts is less than $5,000.
Consequences
What are the consequences for
not complying with the conflict of
interest laws?
Consequences
ANSWER: Any person who knowingly violates the
conflict of interest law must be removed from
office or employment and the person is guilty of a
Class 1 misdemeanor ($2,000 fine and/or one year
in jail). The person is also guilty of theft under the
criminal statutes with the criminal penalties
increased because of the conflict of interest.
Consequences
However, the law also says that a
person who submitted a good faith
disclosure and, if applicable, an
authorization request, may not be
convicted of a crime.
Consequences
• Any person convicted of theft [under § 2230A-10] for unlawfully obtaining property
of any its political subdivisions, shall, in
addition to other criminal and civil
penalties, be disqualified from holding any
public office, elective or appointive.
Consequences
• Any benefit derived from the person's
knowing violation of the conflict of interest
disclosure and authorization requirements
is subject to “disgorgement” (the act of
giving up on demand or by legal compulsion
something that was obtained by illegal or
unethical acts).
Consequences
• Any contract made in violation of the
conflict of interest laws is voidable (i.e., the
school board may, through formal board
action, and unenforceable). *A school
board should consult with its attorney
before to taking any action to declare the
contract void.
Conflict of Interest Policy
“Each local service agency, school district,
cooperative education service unit, or
education service agency shall develop a
written conflict of interest policy, including
any disclosure and authorization form that
includes the list of any disclosable interest in
contracts or direct benefits covered by this
Act.” HB 1170, Sec. 15
QUESTIONS ????
• Agenda
• Minutes
• Conflict of Interest