Opinion  EC-COI-85-5

Date:	01/31/1985
Organization:	State Ethics Commission

A part-time member of a state board may not receive financial assistance from a state agency within the authority of that board unless he obtains a §7(e) gubernatorial exemption.

Facts

You own a business and have applied for financial assistance under a state department's (Department) program providing payment for certain business expenses. Although there is federal agency involvement in the program, the final review and payment is made by the Department.

You are also a member of the state Board which, by statute, has supervision and control over the Department.

Question

Does G.L c. 268A permit you to receive financial assistance from the Department's program while holding your present position?

Answer

No, unless you obtain a gubernatorial exemption.

Discussion

As a member of the Board, you are a state employee within the meaning of G.L. c. 268A, s. 1(q). Due to the part-time nature of your position, however, the conflict law will apply less restrictively to you as a special state employee^[1] under certain circumstances. Section 7 of c. 268A prohibits a state employee from having "a financial interest, directly or indirectly, in a contract made by a state agency in which the commonwealth or a state agency is an interested party..." While it is clear that you would have a financial interest in the receipt of Department monies, an issue is raised as to whether that interest would be "in a contract made by a state agency.

The Commission has taken a broad view of what constitutes a contract for c. 268A purposes. In prior advisory opinions, the Commission has determined that the term "contract" is not 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 s. 7 purposes. See, e.g. EC-COI-84-74 (employment arrangements are "contracts" under s. 7); 84-10 and 83-37 (bonds issued by state agencies are contracts); 82-24 (arrangement providing compensation from state-funded program for daily training to a retarded child constitutes a contract); and 81-64 (a state grant is a contract).  

Under the Department's program, you will receive a financial assistance payment from the Department once it is verified that you have had the work done on your business. Based on prior conflict opinion precedent, the Commission concludes that this arrangement constitutes a contract.^[2]

There are, however, a number of exemptions from the s. 7 prohibition. Two of these exemptions, the s. 7(b) and s. 7(d) exemptions, require that you not participate in or have official responsibility for any of the activities of the contracting agency. In other words, these two exemptions have the prerequisite that the contract in which you have a financial interest be made by a state agency other than your own. Because the Department is within the overall authority of the Board, you necessarily share in the official responsibility for Department activities and so are ineligible for these exemptions. As a Board member, the sole exemption which would allow you to receive Department program funds would be s. 7(e). This exemption would require that you file a statement with the State Ethics Commission disclosing your interest in the Department program funds and obtain an exemption from the Governor, with the advice and consent of the Executive Council.

In the event that you obtain the s. 7(e) exemption, you will still be subject to the restrictions set forth in s. 6. In relevant part, that section prohibits a state employee from participating^[3] as such an employee in any particular matter^[4] in which he has a financial interest. Section 6 would therefore require your abstention from any Board vote or action taken which would impact financially on your application with the Department. Additionally, should such a matter come before you, you must advise the Governor and the Commission of the nature and circumstances of the particular matter and make a full disclosure of your financial interest therein.

 

End Of Decision

[1] Included within the definition of "special state employee" are those state employees who in fact do not earn compensation as a state employee for more than eight hundred hours during the preceding three hundred and sixty five days. G.L. c. 268A, s. 1(o)(2)(b). As a Board member, you qualify as a special state employee under this subsection.

[2] In this opinion, Commission does not reach the issue of whether the receipt of monies from an entitlement program based solely on status constitutes a Contract.

[3] G.L. c. 268A, s. 1(j) defines participate as "participate in agency action or in a particular matter Personally and substantially as a state, county or municipal employee, through approval, disapproval, decision, recommendation, the rendering of advice, investigation or otherwise."

[4] G.L. c. 268A, s. 1(k) defines particular matter as "any judicial or other proceeding, application, submission, request for  a ruling or other determination, contract, claim, controversy, charge, accusation, arrest, decision, determination, finding, but excluding enactment of general legislation by the General Court."