March 10, 1999




FACTS:


You are an elected member of a City Council "Council").
You are also an attorney who engages in the practice of law in the
("City") as an associate in a law firm("Firm"). Beginning prior to
your election as a Councilor and continuing through the present,
one of the members of the Firm has served as special counsel
("Special Counsel") to the School Committee ("School Committee"),
a position for which the Committee publicly advertised. You have
been asked to assist the Special Counsel in performing legal work
for the School Committee and the School Department.[1/] Your salary
as an employee of the Firm would not change as a result of your
allocating time to School matters. Your salary compensates you for
such legal work as it does for any work you do for the Firm and its
clients, and is derived from all the Firm's revenues.

Pursuant to statute and the City's Charter,[2/] the
Council and the School Committee are separate, popularly elected
municipal bodies. The independence and broad powers of the School
Committee are well-established.[3/] By statute, the School
Committee has "the power to select and to terminate the
superintendent, shall review and approve budgets for public
education in the district, and shall establish educational goals
and policies for the schools in the district consistent with the
requirements of

Page 723


law and statewide goals and standards established by the board of
education." G. L. c. 71, s. 37. Among its other powers, the School
Committee "may employ legal counsel for the general purposes of the
committee and may expend money therefor from the funds appropriated
by said city or town for school purposes."[4/] G.L. c. 71, s. 37F.

The Council is a legislative body. See G.L. c. 43, s. 3;
Charter. The relationship between the Council and School Committee
is limited to the following. First, according to the Charter, "If
there is a vacancy in the school committee by failure to elect or
otherwise, the municipal council and school committee, sitting
jointly, shall elect a suitable person to fill the vacancy until
the next annual election." Charter, s. 21.

Second, the Council appropriate[5/] money for the School
Department budget as well as for all other municipal departments.
Charter, s. 11. Pursuant to G.L. c. 44, s. 32, which governs the
general municipal budget process, the Mayor submits to the Council
the annual budget, which is a statement of the amounts he
recommends for proposed expenditures for the City for the next
fiscal year. G.L. c. 44, s. 32 (para 1). The Council may either
approve, reduce or reject the recommended amounts with respect to
all departments, including the School Department. Id. (para 3).
However, several special statutory provisions apply to the School
budget, as described below.

As a result of the enactment of the Massachusetts
Education Reform Act of 1993, St. 1993, c. 71 (Act), every
municipality in the commonwealth "shall annually appropriate for
the support of public schools in the municipality" an amount
determined by a statutorily prescribed formula and calculated by
the commissioner of education, known as the district's "foundation
budget."[6/] See G.L. c. 70, s.s.2 & 6; 603 CMR s. 10.06. Thus,
taking into account the required foundation budget among other
things, the School Superintendent and School Committee recommend to
the Mayor a proposed School Department budget. The Mayor, in turn,
proposes a School budget to the Council.[7/] As with other proposed
municipal department budgets, the Council may either approve,
reduce or reject the total recommended School Department
budget.[8/] G.L. c. 44, s. (13). However, in contrast to the
situation with other department budgets, the Council cannot
increase or decrease line items within the School Department
appropriation nor can it place any restrictions on those funds.
Rather, it can only make non-binding monetary recommendations about
increasing or decreasing line items within the total School
Department appropriation. G.L. c. 71, s. 34.[9/] For example, the
Council cannot decrease or increase the line item within the School
budget for legal expenses.


QUESTION:


For the purposes of qualifying for the G. L. c.
268A, s. 20(b) exemption, which would allow you to have an indirect
financial interest in the Special Counsel's contract with the
School Committee by being compensated for legal work performed for
the Special Counsel, are you as a Councilor "employed by... an
agency which regulates the activities of the contracting
agency"(the School Committee), or do you have "official
responsibility for any of the activities of the contracting
agency"?


ANSWER:


As a Councilor, you are not "employed by. .. an agency
which regulates the activities" of the School Committee, and you do
not have "official responsibility for any of the activities" of the
School Committee. Accordingly, you may be able to qualify for an
exemption under G. L. c. 268A, s. 20(b) if you can satisfy all the
other exemption requirements.


DISCUSSION:


As an initial matter, we note that as a Councilor, you are a
municipal employee within the meaning of the conflict of interest
law.[10/] As such, s. 20 of G.L. c. 268A is relevant to your
inquiry. In pertinent part, that section provides:

A municipal employee who has a financial interest, directly or
indirectly, in a contract made by a municipal agency of the same
city ... in which the city. . . is an interested party of which
financial interest he has knowledge or has reason to know shall
be punished by a fine of not more than three thousand dollars or
by imprisonment for not more than two years, or both.

 

G.L. c. 268A, s. 20(a).


Section 20 serves two purposes. First, this section is
intended to prevent a municipal employee from influencing the
awarding of contracts by any municipal agency in a way which might
be beneficial to the employee. EC-COI-81-93; EC-COI-95-9. See also
W.G. Buss,
The Massachusetts Conflict of Interest Law: An Analysis,
B. U. Law Rev. 299, 368, 374 (1965).

Second, the conflict law "is concerned with the
appearance of and the potential for impropriety as well as with
actual improprieties." Quinn v. State Ethics Commission, 401 Mass.
210,214 (1987) (holding that s. 7, the state counterpart to s. 20,
prohibited a state employee from having an interest in his contract
as a bail commissioner). Thus, in drafting this restriction, "the
Legislature did not want a[n] ... employee to use his position as
a[n] ... employee to obtain for himself a financially beneficial
contract, and the Legislature did not want the . . . employee's
actions and judgment to be clouded because of an extracurricular
contract." Id. at 221 (Liacos, J. dissenting) (emphasis added). See
also EC-COI-95-9
("The section [7] seeks to avoid the perception
and the

Page 724

 

actuality of a state employee's enjoying an 'inside track' on state
contracts or employment").

Here, you would have at least an indirect financial
interest in the Special Counsel's contract with the School
Committee because of your compensated legal work with the Special
Counsel on School matters.[11/] See, e.g., EC-COI-85-60 (any salary
that is derived from a firm's public contract constitutes an
indirect financial interest in that contract); EC-COI-84-98 (all
financial interests, no matter how insubstantial or insignificant,
are covered by the prohibition except financial interests
consisting of ownership of less than one percent of stock in a
corporation that has a municipal contract). See also EC-COI-95-9;
EC-COI-93-10
.

Section 20, however, also contains certain exemptions,
providing in relevant part:

This section shall not apply: ...

(b) to a municipal employee who is not employed by the
contracting agency or an agency which regulates the
activities of the contracting agency and who does not
participate in or have official responsibility for any of
the activities of the contracting agency,
if the contract
is made after public notice or where applicable, through
competitive bidding, and if the municipal employee files
with the clerk of the city or town a statement making
full disclosure of his interest and the interest of his
immediate family,[12/]. . .

G.L. c. 268A, s. 20(b) (emphasis added). As one commentator has
noted, this exemption "contains as its central purpose a
requirement that the financial interest of the ... employee be in
a contract made by an agency in which that employee is not an
important participant." Buss, supra p. 4, at 377. This is the only
exemption from the general prohibition which might allow you, as a
Councilor, to have an indirect financial interest in the Special
Counsel's contract to provide legal services to the School
Committee.[13/] A municipal employee must be able to comply with
each condition contained in s. 20(b) in order to qualify for the
exemption. See, e.g., EC-COI-93-7.

Here, the "contracting agency" is the School Committee.
Thus, in order to qualify for the s. 20(b) exemption, you must not,
as a Councilor, participate In, or have official responsibility
for, any activities of the School Committee and the Council must
not regulate the activities of the School Committee.[14/]

As an initial matter, we consider whether the joint role
of the Council and the School Committee in filling a vacancy on the
School Committee constitutes an activity of the School Committee
within the meaning of s. 20(b). "Activity" is not defined in G. L.
c. 268A. Based on the well-established canon of statutory
construction, statutory words are presumed, unless the contrary
appears, to be used in their ordinary sense, with the meaning
commonly attributed to them. Hashimi v. Kalil, 388 Mass. 607, 609
(1983). Thus, we look to the dictionary definition of "activity"
which reads, "function or duties" or "natural or normal function or
operation." Webster's Third New International Dictionary (1993).

We conclude that the School Committee's joint role in
filling a vacancy among its membership is not an activity of the
School Committee within the meaning of s. 20(b) because the School
Committee(as well as the Council) lacks unilateral authority to
make such an appointment. Instead, the Charter expressly makes
filling a vacancy the responsibility of both bodies sitting
jointly. Moreover, filling such a vacancy appears to be an unusual
event rather than a "normal function" of either the School
Committee or the Council.[15/]


Participation in Any School Committee Activities


Chapter 268A defines "participate," in pertinent part, as
"participate in agency action or in a particular matter personally
and substantially as a ... municipal employee, through approval,
disapproval, decision, recommendation, the rendering of advice,
investigation or otherwise." G. L. c. 268A, s. ](J). Thus, if you
were to approve, disapprove, discuss, recommend, advise about
and\or vote on any Council non-binding monetary recommendations
regarding School Department line items, you would be deemed to have
participated in the formulation of the School Department budget.
See Graham v. McGrail, 370 Mass. 133, 139-140 (1976) ("[A]
'decision' is a 'particular matter.' The formulation of a budget
may include a multitude of particular decisions"...). You may,
however, satisfy the s. 20(b) "no participation" requirement simply
by abstaining from all participation[16/] as a Councilor concerning
all Council non-binding monetary recommendations about line
items.[17/]


Official Responsibility for Any Activities of the School Committee


In addition, to qualify for the s. 20(b) exemption, you
must not have official responsibility for any activities of the
School Committee. Official responsibility turns on the authority to
act, not on whether that authority is, in fact, exercised.
EC-COI-92-36. See also Buss, supra p. 4, at 321-322. Thus, even if
you recuse yourself from all Council participation relating to
School Department line items, you could not shed your "official
responsibility" for those matters if such responsibility exists.

"Official responsibility" is defined by statute as "the
direct administrative or operating authority, whether intermediate
or final, and either exercisable alone or with others, and whether
personal or through subordinates, to approve, disapprove or
otherwise direct agency action."[18/]

Page 725


G.L. c. 268A,s. 1(i). The statute does not define "operating
authority" or "administrative authority."

However, federal regulation, which has provided certain
guidance in interpreting G.L. c. 268, reads, "'Administrative'
authority as used in the [federal] definition means authority for
planning, organizing and controlling matters rather than the
authority to review or make decisions on ancillary aspects of a
matter such as the regularity of budgeting procedures, public or
community relations aspects, or equal employment opportunity
considerations." 5 CMR s. 2637.202(b)(3). Thus, the federal
regulation provides the example that a "comptroller would not have
official responsibility for all programs in the agency, even though
she must review the budget, and all such programs are contained in
the budget." 5 CFR s. 2637.202(b)(3). According to the dictionary
definition, 'administrative' "connotes or pertains to
administration, especially management, as by managing or
conducting, directing, or superintending, the execution,
application or conduct of persons or things." Black's Law
Dictionary (5th Ed).

The issue here is whether the Council, by approving,
reducing or rejecting the School Department budget and\or by making
non-binding monetary recommendations, has official responsibility
for any of the activities of the School Committee. We conclude that
it does not for the following reasons.

First, we do not believe that simply because the Council
appropriates the total School Department budget it has official
responsibility for any activity of the School Committee. Rather, as
the Supreme Judicial Court has observed, appropriation of funds
specified in a budget is a uniquely legislative function performed
by the Council in a city government. The preparation and submission
of the budget are executive acts performed by the Mayor, with input
from the School Committee and Superintendent in the case of the
School Department budget. Bell v. Assessors of Cambridge, 306 Mass.
249, 254 (1940).

Moreover, although the Council can approve, reduce or
reject the total School Department budget, by doing so it "may not
limit the authority of the school committee to determine
expenditures within the total appropriation." G. L. c. 71, s. 34
(emphasis added). Thus, the Legislature expressly has prohibited
the Council from directing, managing, conducting or superintending
the School Committee's use of its budget. Additionally, by
definition, non-binding monetary recommendations cannot direct or
control the School Committee's actions. Thus, for example, by
making a non-binding monetary recommendation and\or approving,
reducing or rejecting the total School Department budget, the
Council could not direct or control the School Committee regarding
whether or how to spend money on legal services. The decisions
about allocations within the School budget and the programs and
services those allocations fund are activities uniquely within the
official responsibility of the School Committee.

Accordingly, we conclude that the Council does not have
official responsibility for any activity of the School Committee
within the meaning of G.L. c. 268A, s. 20(b). Compare EC-COI-84-125
(s. 20(b) deemed not available to a city council or who wished to
be appointed a reserve police officer where the city council voted
on each budget line item for city departments and the city council
may authorize reserve police officers to be paid); EC-COI-86-7
(Designer Selection Board (DSB) has official responsibility for
activities of the Division of Capital Planning and Operations
(DCPO) because the DSB is responsible for the actual selection of
designers for DCPO projects).


 

Regulates the Activities of the School Committee


We must also decide whether the Council "regulates the
activities" of the School Committee within the meaning of s. 20(b).
The word "regulate" is not defined in G.L. c. 268A. We have said
that "'regulate' means to govern or direct according to rule or
bring under the control of constituted authority, to limit and
prohibit, to arrange in proper order, and to control that which
already exists." EC-COI-83-158 (from Black's Law Dictionary, 5" ed.
West, 1979); EC-COI-91-9; EC-COI-85-80 (distinguishing "those ...
agency relationships which have an indirect, incidental effect on
the contracting ... agency's activities from those relationships
where one agency has determinative or regulatory authority over the
other").

As described above, some obvious similarities exist
between the definitions of "regulates" and "official
responsibility." At the same time, we recognize that, by using the
two different terms in the same section, the Legislature likely
intended to mean something different by each.[19/] We find it
unnecessary, however, to reach that issue as explained below.

Section 20(b) requires not only that the employee not
have "official responsibility for any of the activities of the
contracting agency," but also that he not be employed by "an agency
which regulates the activities of the contracting agency." As both
a theoretical and practical matter, a municipal employee may
personally lack official responsibility for any activity of the
contracting agency, yet he may be employed by an agency which
regulates the activities of the contracting agency. In such a case,
the employee would not be eligible for the s. 20(b) exemption.

In your case, your official responsibility as Councilor
vis-a-vis the School Committee's activities is the same as the
Council's official responsibility for the School Committee's
activities. Because we have determined that the Council lacks
official responsibility for any of the ac-

Page 726


tivities of the School Committee, it follows that the Council does
not regulate the activities of the School Committee. Under no set
of circumstances could we conclude that the Council directs or
governs the activities of School Committee, particularly given that
the Legislature has expressly stated otherwise with respect to the
School Department budget allocations, and educational policy and
programmatic issues. See G.L. c. 71, s.s. 34 & 37.

For all the foregoing reasons. we conclude that, as a
Councilor, you are not "employed by ... an agency which regulates
the activities of the School Committee and you do not "have
official responsibility for any of the activities of the School
Committee for purposes of G. L. c. 268A, s. 20(b). Accordingly if
you can satisfy the remaining requirements of the 20(b)
exemption (including obtaining the approval of the City Council as
required in s. 20(b)(4); see language quoted in footnote 12), you
will be allowed to perform and be compensated for private legal
work for the Special Counsel to the School Committee.

We believe that our conclusion is consistent with the
underlying purposes of s. 20 and the conflict of interest law,
generally. As one commentator has noted in the context of s. 7 (the
state counterpart to s. 20), "even an indirect interest should
entail an actual interest-a stake - rather than a mechanical
connection."[20/] Buss 9 supr a p. 4, at 375. As we observed at the
outset, the Special Counsel's contract with the School Committee
and your related legal work antedated your election as a Councilor.
If you satisfy the other requirements of the s. 20 (b) exemption
described above. we believe you will eliminate the actuality and
perception of an "inside track" on prospective issues relating to
the Special Counsel's contract, such as renewal and compensation.

---------------------------

[1/] You report that the Special Counsel also serves as
counsel to the Superintendent and the School administration. You
assisted the Special Counsel in providing legal services to the
School Committee and School Department prior to your election as a
Councilor.

[2/] [Deleted]

[3/] As stated by the Supreme Judicial Court. "The policy of
the Commonwealth from early times has been to establish a board
elected directly by the people separate from other governing boards
of the several municipalities and to place the control of the
public schools within the jurisdiction of that body unhampered as
to details of administration and not subject to review by any other
board or tribunal as to acts performed in good faith." Leonard v.
School Committee Of City of Springfield
, 241 Mass. 325, 329 (1922);
see also Davis v. School Committee of Somerville, 307 Mass. 3 54
(1940).

[4/] Additional school committee powers include receiving and
expending grants or gifts for educational purposes (G.L. c.71, s.
37A), entering into contracts regarding employee retirement
programs (id. s. 3713), adopting educational objectives to promote
racial balance (id. s. 37C), establishing disciplinary policies and
procedures regarding the conduct of students and teachers (id. s.
37H), and applying to the board of education for a grant for the
cost of a magnet school (id. s. 37J).

[5/] The dictionary defines "appropriation" in the public law
context to mean, "the act by which a legislative department of
government designates a particular fund, or sets apart a specified
portion of the public revenue or of the money in the public
treasury, to be applied to some general object of governmental
expenditure, or to some individual purchase or expense." Black's
Law Dictionary
(Fifth Ed.)

[6/] This amount need not all be included in a school
department's budget but also may be met by including amounts
appropriated in other municipal department budgets, such as the
health department.

[7/] The Mayor is not required to recommend the budget amount
the School Committee and Superintendent recommend to him. See
Superintendent of Schools of Leominster v. Mayor of Leomin
ster, 386
Mass. 114 (1982). However, you report that since the adoption of
the Act, the Council has never been presented with a budget that
exceeds the foundation budget. Rather, you state that the City has
had difficulty in reaching the required appropriation.

[8/] Statute 1987. c. 329 provides that in municipalities
which accept that Act's provisions, the city council on
recommendation of the school committee may by a two-thirds vote
increase the total amount appropriated for the support of the
schools. However, based on the records of the Secretary of State
and on City municipal records, it does not appear that the City has
accepted this Act. Accordingly, the Council cannot increase the
School budget.

[9/] That statute provides: "Every city ... shall annually
provide an amount of money sufficient for the support of public
schools .... provided however, that no city . . . shall be required
to provide more money for the support of public schools than is
appropriated by vote of the legislative body of the city .... In
acting on appropriations for educational costs, the city ...
appropriating body shall vote on the total amount of the
appropriations requested and shall not allocate appropriations
among accounts or place any restriction on such appropriations
. The
superintendent of schools ... may address the local appropriating
authority prior to any action on the school budget as recommended
by the school committee ... The city ... appropriating body may
make non-binding monetary recommendations to increase or decrease
certain items allocating such appropriations
. The vote of the
legislative body of a city or town shall establish the total
appropriation for the support of the public schools, but may not
limit the authority of the school committee to determine
expenditures within the total appropriation.
"G.L. c. 7 1, s. 34
(emphasis added).

[10/] "Municipal employee," a person performing services for
or holding an office, position, employment or membership in a
municipal agency, whether by election, appointment, contract of
hire or engagement, whether serving with or without compensation,
on a full, regular, part-time, intermittent, or consultant basis
... G.L. c. 268A, s. 1 (g).

[11/] "The Ethics Commission has consistently taken a broad
view of what constitutes a contract for purposes of the conflict of
interest law. "The term 'contract' is hot limited solely to a
formal, written document setting forth the terms of two or more
parties' agreement. Rather, any type of agreement or arrangement
between two or more parties under which each undertakes certain
obligations in consideration of the promises made by the other(s)
constitutes a contract for [c. 268A] purposes." EC-COI-85-5; EC-COI

[12/] If the initial exemption requirements are satisfied, s.
20(b) further requires that if the contract is one for personal
services:

(1) the services will be provided outside the normal
working hours of the municipal employee,

(2) the services are not required as part of the
municipal

Page 727


employee's regular duties, the employee is compensated
for not more than five hundred hours during a calendar
year,

(3) the head of the contracting agency makes and files
with the clerk of the city or town a written
certification that no employee of that agency is
available to perform those services as part of their
regular duties, and

(4) the city council, board of selectmen or board of
aldermen approve the exemption of his interest from this
section,

G. L. c. 268A, s. 20(b).

[13/] Apparently to mitigate the harsh application of s. 20 to
selectmen and town councilors who held appointed municipal
positions prior to their election, the Legislature passed what we
refer to as the 1, selectman's exemption" and "town councilor's
exemption," respectively. See G.L. c. 268A, s. 20 (para. 12 & 14); St.
1982, c. 107 as amended by St. 1984, c. 459; EC-COI-93-4; and St.
1985, c. 252, s. 3
. The Legislature, however, has not enacted an
analogous exemption for city councilors or alderman in city forms
of government, and we have refused to conclude that such an
exemption is implied. EC-COI-93- 7. We also note that G.L. c. 268A,
s. 7 (the state counterpart to s. 20) contains an express exemption
for members of the General Court. See G.L. c. 268A, s. 7(c).

[14/] By doing work for the Special Counsel through your
salaried position at the Firm, we do not consider you to be
employed by the School Committee for purposes of s. 20(b). We do
not offer an opinion on whether the other s. 20(b) criteria can be
satisfied because you have asked us to focus solely on these
threshold criteria.

[15/] Further, even if making a joint appointment to the
School Committee were an activity of the School Committee, you
could abstain from participation in such an activity. Additionally,
we do not believe the Council would have official responsibility
for or regulatory control over such an activity within the meaning
of s. 20(b) because it could not direct, govern, manage,
superintend or control the School Committee's vote in filling the
vacancy. See discussion below about "official responsibility" and
"regulates."

[16/] The Supreme Judicial Court has noted, "Ordinarily the
wise course for one who is disqualified from all participation in
a matter is to leave the room." Graham v. McGrail, 370 Mass. at 138.

[17/] Under G.L. c. 268A, s. 19, which prohibits a municipal
employee from participating in a particular matter in which he or
an organization by which he is employed has a financial interest,
you would be prohibited from participating in non-binding monetary
recommendations about School Department line items, as well as all
other particular matters affecting your financial interest and\or
that of the Firm. However, if those particular budget line items
from which you abstain are considered separately and are approved
by a qualified quorum of the Council, and those items then are
included in a consolidated vote on all or part of the School
budget, you may participate in the consolidated vote. See Graham v.
McGrail
, 370 Mass. at 140-141.

[18/] This definition is based on federal law, Title 18 U.S.C.
s. 202(b), which has served as guidance in interpreting G. L. c.
268A because the latter statute was modeled in large part on
federal law. See Buss, supra p. 5, at 32 1; EC-COI-98-1. Under the
federal regulation which interprets Title 18 U.S. C. s. 202(b),
"the scope of an employee's 'official responsibility' is determined
by those areas assigned by statute, regulation, . . . job
description or delegation of authority." 5 CFR s. 2637.202(b)(2 ).

[19/] See, e.g., St. 1982, c. 612; State Ethics Commission
Bulletin, January, 1983, Vol. V, No. 1
.

[20/] As Buss further notes:

Conflict-of-interest legislation accomplishes its purpose when
it produces disinterested public employees; to the extent
the statutory language permits, it should be interpreted
with that objective in mind and not regardless of the
effect on recruiting able public employees. Buss su pra p.
5, at 375.

Page 728



End of Decision