Recent Attorney General Opinions
PUBLIC AGENCY CANNOT AVOID CONFLICT OF INTEREST BY DELEGATING AUTHORITY TO CONTRACT TO SUPERINTENDENT / ADMINISTRATIVE FEES CANNOT BE CHARGED TO DEFERRED COMPENSATION PLAN PROVIDERS
The California Attorney General recently issued an opinion concerning prohibited financial interests under Government Code section 1090, addressing two situations, one involving an employee who was the spouse of a member of the governing board, and one involving a lease of school equipment. In a separate opinion, the Attorney General has addressed administrative fees on deferred compensation programs.
Delegation of Authority to Promote Board Members’ Spouse. As you are aware, Government Code section 1090 prohibits the entire governing board from acting on a transaction in which a board member has a financial interest, unless the interest qualifies under safe harbor provisions as a ”remote interest” or a ”non-interest.” The financial interest of a board member extends to contracts involving the board member’s spouse. Under that theory, school districts are not permitted to enter into a contract for employment with a board member’s spouse. A spouse already employed for at least one year prior to the board member’s taking office may remain in employment, but cannot be promoted, since this would require approval by the board and a modification of the employment contract.
Since districts are permitted to delegate the authority to enter into contracts to the superintendent or the superintendent’s delegee, some districts have established a policy under which the authority to grant promotions is delegated to the superintendent, on the theory that this would distance the board from potential conflict situations and remove the financial interest on the part of the affected member of the decision-making body.
The Attorney General noted that the authority to contract remains vested in the board even when properly delegated to the administration, and that official actions (including employment contracts) must be approved by the board. Accordingly, the Attorney General found that a district cannot avoid the conflict of interest provisions of section1090 by delegating to the superintendent the right to approve promotions.
Lease of School Equipment. In that same opinion, the Attorney General considered a situation in which the spouse of another board member took a job with a firm which had leased copy machines to the district for many years. The cases have interpreted section 1090 to prohibit the leasing of equipment from a firm which employs a board member or the board member’s spouse, unless a remote interest can be established. Again, the district’s policy permitted the superintendent to approve the contract. The Attorney General similarly concluded that the delegation of authority would not cure the prohibited financial interest. (Opinion No. 03-508)
Deferred Compensation Plan Fees. In a separate opinion, the Attorney General, revisiting an issue addressed in a 1974 opinion, concluded that school districts may not assess a fee upon providers of deferred compensation plans to cover the cost of administering the plans for district employees. (Opinion No. 03-1005, February 18, 2004)
Opinions of the Attorney General are not binding on courts but are entitled to great weight and considered persuasive authority in the absence of controlling precedent.