Source: https://www.ag.state.mi.us/opinion/datafiles/1980s/op06211.htm
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Opinion #6211
Opinion No. 6211
Member of governing board of a state university--interest in a contract with a state college
Const 1963, art 4, Sec. 10--interest of member of a governing board of a state university in contract with state college
Member of governing board of a state university engaging in a business or practicing a profession during period of service on board
Member of governing board of state university--interest in a contract with a state college
State ethics act--elected member of governing board of state university not subject to provisions of Act
A member of the Board of Regents of the University of Michigan, of the Board of Trustees of Michigan State University, or of the Board of Governors of Wayne State University, is not precluded by either Const 1963 or statute from engaging in a business or practicing a profession during the period of service on the respective board.
A member of such a governing board may be pecuniarily interested in a contract entered into by a business organization with the state or its agencies other than the university upon whose governing board the member serves, or with a political subdivision of the state, without violating Const 1963, art 4, Sec. 10 or 1968 PA 318.
A member of such a governing board with a minimum ownership interest in, or as an officer or director of a business organization as specified in 1968 PA 318, Sec. 4, may not have an interest in a contract, entered into or amended during service of the member, between the business organization and the university upon whose governing body the member serves; however, a member of such a governing board may have an interest in a contract between a business organization and the university upon whose governing body the member serves if the contract is awarded to the lowest qualified bidder upon receipt of sealed bids pursuant to a published notice therefor as set forth in 1968 PA 318, Sec. 4(d), regardless of the extent of the interest of the member in the contract.
A member of the governing board of the University of Michigan, of Michigan State University, or of Wayne State University is not subject to the provisions of the state ethics act, 1973 PA 196.
State Respresentative
You have each requested my opinion on a question which may essentially be stated as follows:
Does either the Constitution of Michigan or any statute speak to the business or profession which members of the governing board of the University of Michigan, Michigan State University or Wayne State University may engage in during the period of their service on the respective board?
At the outset, it should be stated that in Const 1963, art 8, Sec. 5, the people have constituted the regents of the University of Michigan, the trustees of Michigan State University, and the governors of Wayne State University as body corporates and vested with each the 'control and management of the affairs and the property' of the respective university. Glass v Dudley Paper Co, 365 Mich 227, 229; 112 NW2d 489 (1961).
In addition to the constitutional powers and duties conferred by Const 1963, art 8, Sec. 5, upon the respective governing bodies, statutory powers and duties have also been granted and imposed by 1851 PA 151; MCLA 390.1 et seq; MSA 15.901 et seq (University of Michigan), 1909 PA 269; MCLA 390.101 et seq; MSA 15.1121 et seq (Michigan State University), and 1956 PA 183; MCLA 390.641 et seq; MSA 15.1350(1) et seq (Wayne State University). The Legislature has provided only for reimbursement of actual and necessary expenses of members of each governing body. 1851 PA 151, supra, Sec. 22 (University of Michigan); 1909 PA 269, supra, Sec. 3 (Michigan State University); and 1956 PA 183, supra, Sec. 4 (Wayne State University). Thus, members of the respective governing bodies serve without compensation.
The office of regent of the University of Michigan, of trustee of Michigan State University, and of governor of Wayne State University are constitutional state offices continued by the people in Const 1963, art 8, Sec. 5. Attorney General, ex rel Cook v Burhans, 304 Mich 108; 7 NW2d 370 (1942); OAG, 1967-1968, No 4587, p 118 (September 26, 1967); OAG, 1965-1966, No 4492, p 216, 230 (March 10, 1966).
It should also be noted at the outset that your question raises a substantially different issue than that involved in two opinions issued last year which concluded that the Director of the Department of Licensing and Regulation and the Director of the Office of State Employer held offices which were incompatible with the office of member of the governing board of a state university. Those opinions, OAG 1983-1984, No 6134, p ___ (March 17, 1983), and OAG, 1983-1984, No 6135, p ___ (March 17, 1983), did not concern business or professional relationships between a member of a university governing board and another state agency. Instead, they were concerned with persons who held public offices.
Application of Const 1963, art 4, Sec. 10
which prohibits a state officer from having an interest in
a contract with the state or political subdivision thereof
and which shall cause a substantial conflict of interest and
implementing 1968 PA 318
to members of the governing board of the University of
Michigan, Michigan State University, or Wayne State
A response to your question should begin with consideration of Const 1963, art 4, Sec. 10, which provides:
It is noted that the predecessor provision to Const 1963, art 4, Sec. 10 was Const 1908, art 5, Sec. 25, which, in pertinent part, provided:
'Fuel, stationery, blanks, printing and binding for the use of the state shall be furnished under contract or contracts with the lowest bidder or bidders who shall give adequate and satisfactory security for the performance thereof. . . . No member of the legislature nor officer of the state shall be interested directly or indirectly in any such contract.'
Of interest also is the predecessor provision, Const 1908, art 5, Sec. 7, which contained a provision applicable to members of the Legislature only, which prohibited them from having direct or indirect interest in a contract with the state or any county, authorized by any law enacted during the time for which the member of the Legislature is elected nor for one year thereafter.
Comparing Const 1963, art 4, Sec. 10 with the predecessor provision contained in Const 1908, art 5, Sec. 25, it is seen that the people, in ratifying Const 1963, art 4, Sec. 10, have not only inserted a new provision, but have fundamentally changed the public policy of this state. A state officer and members of the Legislature are no longer prohibited from being interested, directly or indirectly, in certain contracts with the state, but, in order for the constitutional prohibition to apply, the interest in the contract with the state or any of its political subdivisions of the state officer or the member of the Legislature must be such as to cause a substantial conflict of interest.
Since Const 1963, art 4, Sec. 10, in barring substantial conflicts of interest on the part of state officers in contracts with the state or a political subdivision thereof, is a new provision, it is appropriate to examine the Address to the People and the convention debates to ascertain the circumstances surrounding its adoption and the purpose sought to be accomplished thereby. Advisory Opinion on Constitutionality of 1978 PA 426, 403 Mich 631, 640-641; 272 NW2d 495 (1978).
The Address of the People states that the revision to Const 1908, art 5, Secs. 7 and 25, is being made 'to indicate clearly that persons who serve the state in elected or appointed positions shall not have substantial conflicting interests.' (Emphasis added.) 2 Official Record, Constitutional Convention 1961, p 3372.
An examination of the debates of the framers reveals that the convention first considered the matter as Committee Proposal 115. It provided:
'NO MEMBER OF THE LEGISLATURE OR STATE OFFICER SHALL BE INTERESTED DIRECTLY OR INDIRECTLY IN ANY CONTRACT WITH THE STATE OR ANY SUBDIVISION THEREOF WHICH SHALL CAUSE A SUBSTANTIAL CONFLICT OF INTEREST. THE LEGISLATURE MAY IMPLEMENT THIS PROVISION BY APPROPRIATE LEGISLATION. '2 Official Record, Constitutional Convention 1961, p 2361.
Mr. Hoxie, Chairman of the Committee on Legislative Powers, submitted the following reasons in support of Committee Proposal 115:
'The proposed section amends article V, section 25. The committee is of the opinion that it should be clearly expressed that persons who serve the state in elected or appointed positions should not have conflicting interests.
'The detailed restrictions of section 25 were inserted in the 1850 constitution and are legislative matter which do not deserve inclusion. There is no question of the legislature's power to act in these fields and it should be free to do so.
'The prohibition against conflict of interest is self executing in form, but flexibility is given so that the legislature may pass suitable legislation.
'The committee does not feel that a detailed prohibition had to be written concerning conflicts of interest and that a self executing statement of principle is sufficient.' (Emphasis added.) Ibid.
A proposed amendment to Committee Proposal 115 was immediately offered by Delegates Marshall and Mahinske to strike the term 'substantial' therefrom and to add new language thereto prohibiting involvement directly or indirectly in financial transactions for profit to which the state or its political subdivision is a party in order to provide for better government. Ibid.
Delegate Powell responded:
'Mr. Chairman and fellow delegates, I'm sure that I can say, on behalf of our subcommittee and the full committee on legislative powers, that we would not favor the inclusion of this language in the proposal. To my mind it seems very idealistic and puritanical and impractical. For instance, under its terms a member of the legislature that happened to have any business back home couldn't transact any business with any local governmental agency. If he was a coal dealer, he couldn't sell a ton of coal to the local school board. If he were a printer, he couldn't do any printing for any governmental unit. If he had a general store, a department store or any sort of retail establishment, he couldn't sell to any unit of government.
'And then, by striking out this word 'substantial' you open up a whole field of technicalities in this age when there is widespread distribution of stock in big corporations. A person who held a share of stock in General Motors would be in trouble if he were in the legislature and the state purchased a General Motors car for the state police, or for the state motor vehicle pool. And so on with utilities. It seems to me that this is totally impractical and unrealistic and unreasonable. I think the report of our committee goes far enough and that this is just making the matter ridiculous.' Ibid.
Shortly thereafter Delegate Mahinske stated:
'In order to cut off any further debate on this proposition, I just consulted with Mr. Marshall, and we are willing to withdraw the section that deals with the deletion of the word 'substantial.' We feel that this could lead to difficulties here. We would let the balance of the insertion stand.' Id. at 2362.
The Marshall-Mahinske amendment, the proposed striking of the term 'substantial' having been deleted, was not adopted. Id. at 2363.
On second reading, the brief debate on Committee Proposal 115 fixed on the term 'substantial.' Delegate Hoxie emphasized the intent of the Committee on Legislative Powers 'that it be something of a substantial nature where there would be a conflict' and in response to a question posed by Delegate Ford, identified the conflict of interest to be one involving a pecuniary or money interest. Id. at p 2959.
In adopting the prohibition against state officers and members of the Legislature having an interest in a contract with the state or its political subdivision causing a substantial conflict of interest, the framers and the people made a marked departure from the public policy expressed in Const 1908, art 4, Sec. 25 which barred a state officer from any interest, direct or indirect, in a state contract, regardless of the extent of possible conflict of interest which may be involved.
There are no reported decisions of Michigan appellate courts construing Const 1963, art 4, Sec. 10.
The Attorney General has rendered opinions upon the meaning and effect of Const 1963, art 4, Sec. 10 before and after the passage of 1968 PA 318; MCLA 15.301 et seq; MSA 4.1700(21) et seq, enacted 'for the purpose of implementing the provisions of section 10 of article 4 of the Constitution.' 1968 PA 318, supra, Sec. 1. A number of these opinions bear upon your question. Their reasoning and holdings will be distilled and set out in order to assist in the analysis of the issue raised.
Consideration of these opinions begins with OAG, 1965-1966, No 4522, p 239, 243 (March 16, 1966) which responded to the question whether a member of the Legislature who, as an attorney serving as an officer of the court, votes on legislation affecting the judiciary and practices law before executive branch agencies is, inter alia, in violation of Const 1963, art 4, Sec. 10. A fundamental test for the application of the prohibition contained in Const 1963, art 4, Sec. 10, was therein set out and it was concluded that it is 'the existence of a contract with the state or any political subdivision thereof which shall cause a substantial conflict of interest with the duties owed to the state' by the officer in question. (Emphasis added.)
OAG, 1965-1966, No 4492, p 216 (March 10, 1966), considered the meaning of the adjective 'substantial' in connection with the forbidden conflict of interest employed by the framers and the people in Const 1963, art 4, Sec. 10 in the context of a series of contractual relationships between a private corporation owned by a member of the governing body of a state university empowered to grant baccalaureate degrees and the university upon which the private corporate owner served on its governing body. This opinion reviewed both the prevailing common law and the constitutional history of Const 1963, art 4, Sec. 10, explicated above, and concluded that the term 'substantial' appearing therein meant material rather than trivial and involved a pecuniary or beneficial interest. Implicit in this application of Const 1963, art 4, Sec. 10 and the finding of a substantial conflict of interest on the part of the state officer involved was his pecuniary and beneficial interest in several contracts and his involvement in the contracts both as a member of the governing body of the university with which his company had contracted, on the one hand, and as owner of the contracting company, on the other hand.
In OAG, 1967-1968, No 4587, p 118 (September 26, 1967), responding to a question involving members of governing bodies and officers of state institutions of higher education serving on the board of directors of a bank doing business with the educational institution, the underpinnings for the public policy prohibiting conflicts of interest embedded in Const 1963, art 4, Sec. 10 were found to rest upon the language of the Michigan Supreme Court in People v Twp Bd of Overyssel, 11 Mich 222 (1863), holding that public officers are agents of fiduciaries. The public is entitled to their best judgment on a matter unaffected by their private interests. The underlying thrust of conflict of interest permeating a contract is whether a personal pecuniary interest of the public officer is such as to affect the judgment and actions of the public officer in connection with advancing the competing interest of the public vis-a-vis his or her own personal interest. Thus, an unlawful substantial conflict of interest in a contract exists where the pecuniary interest of the state officer in the contract 'causes a substantial conflict with his [or her] public duties.' OAG, 1967-1968, No 4646, p 253, 262 (June 18, 1968).
Before the provisions of 1968 PA 318, supra, are examined, it should be noted that the Legislature first enacted 1966 PA 317 to prohibit conflicts of interest on the part of government officers and employees. By its terms, 1966 PA 317 applied to state and local officers and employees. 1966 PA 317, Sec. 1(a) and (b). As to contracts, 1966 PA 317, Sec. 2, prohibited a state officer from having a direct or indirect interest, financial or otherwise, in a contract with the state or any of its political subdivisions, which contract is in substantial conflict of interest with the proper discharge of his duties in the public interest. 1966 PA 317, Sec. 3 declared a substantial conflict of interest to exist where government officers or employees engage in a business transaction as a representative or agent of the governmental unit in dealing with a business entity in which he or she is a director, officer or general manager, or owns directly or indirectly a substantial portion of the entity. Impermissible contracts were made voidable only. 1966 PA 317, Sec. 5. The Act provided for no criminal penalties, although persons violating the provisions were subject to certain disciplinary action or civil action.
The provisions of 1966 PA 317 were considered in OAG, 1967-1968, No 4555, p 36, 42 (April 12, 1967), in the context of questions relating principally to local governmental officers. The opinion concluded that Const 1963, art 4, Sec. 10 applied to state officers only and did not apply to local officials. However, the opinion expressly noted that the Legislature had authority to prohibit conflicts of interest on the part of local officials since the Constitution did not limit the authority of the Legislature to impose higher standards than those prescribed in the Constitution or to require other public officers not designated therein to meet the same, or a higher, or a lower, standard.
As stated in its title, the Legislature enacted 1968 PA 318, supra, 'to implement the provisions of section 10 of article 4 of the constitution relating to substantial conflicts of interest on the part of members of the legislature and state officers in respect to contracts with the state and political subdivisions thereof; . . ..' 1968 PA 318, supra, Sec. 9, in effect, repealed 1966 PA 317.
The intent and purpose of 1968 PA 318, supra, was forthrightly stated by the Legislature in section 1:
'This statute is enacted for the purpose of implementing the provisions of section 10 of article 4 of the constitution. Therefore, this act shall be taken into consideration in determining the construction and effect to be given the constitutional section, insofar as the same is constitutionally possible.'
This statement of purpose is significant because it not only manifests an intent to implement Const 1963, art 4, Sec. 10 in a constitutional manner, but there is no indication whatsoever in either the title to 1968 PA 318, supra, or in section 1 that the Legislature intended to set higher standards than ratified by the people in Const 1963, art 4, Sec. 10.
1968 PA 318, supra, Sec. 2, provides:
'No member of the legislature, herein referred to as a 'legislator,' nor any state officer shall be interested directly or indirectly in any contract with the state or any political subdivision thereof which shall cause a substantial conflict of interest.'
In 1968 PA 318, supra, Sec. 4, the Legislature has provided:
'The word 'interested' as used in section 2 refers to a pecuniary interest if there is a conflict of interest on the part of a legislator or state officer in respect to a contract with the state officer in respect to a contract with the state or a political subdivision thereof, in order to come within the prohibitions of this act, his personal interest must be of such substance as to induce action on his part in promoting the contract for his own personal benefit. In the following cases, there shall be deemed to be no conflict of interest which is substantial:
'(a) In respect to a contract between the state or any political subdivision thereof and:
'(i) a corporation in which a legislator or state officer is a stockholder owning 1% or less of the total stock outstanding in any class where such stock is not listed on a stock exchange or stock with a present total market value not in excess of $25,000.00 where such stock is listed on a stock exchange; or
'(ii) a corporation in whose stock a trust owns 1% or less of the total stock outstanding in any class where such stock is not listed on a stock exchange or stock with a present total market value not in excess of $25,000.00 where such stock is listed on a stock exchange where a legislator or state officer is a beneficiary under such trust.
'(i) a corporation in which a legislator or state officer is a stockholder owning more than 1% of the total stock outstanding in any class where such stock is not listed on a stock exchange or stock with a present total market value in excess of $25,000.00 where such stock is listed on a stock exchange or a director, officer or employee;
'(iii) a corporation or firm from which an indebtedness is owed to a legislator or state officer; or
'(iv) a trustee or trustees under a trust in which a legislator or state officer is a beneficiary or trustee; or a corporation in whose stock such trust funds are invested, if such investment includes more than 1% of the total stock outstanding in any class where such stock is not listed on a stock exchange or stock with a present total market value in excess of $25,000.00 where such stock is listed on a stock exchange; if the legislator or state officer does not solicit the contract, takes no part in the negotiations for or in the approval of the contract or any amendment thereto, and does not in any way represent either party in the transaction and if the contract is not with or authorized by the department or agency of the state or a political subdivision thereof with which the state officer is connected.'
'(c) In respect to a contract between the state and a political subdivision thereof or between such political subdivisions.
'(d) In respect to a contract awarded to the lowest qualified bidder, upon receipt of sealed bids pursuant to a published notice therefor provided such notice does not bar, except as authorized by law, any qualified person, firm, corporation or trust from bidding. This subsection shall not apply to amendments or renegotiations of a contract nor to additional payments thereunder which were not authorized by the contract at the time of award; and
'(e) In respect to a contract for public utility services where the rates therefor are regulated by the state or federal government. (Emphasis added.)
It is noted that the Legislature has, in 1968 PA 318, Sec. 4, supra, specified certain minimum ownership in a business entity where there shall be no substantial conflict of interest in a contract between the state or any political subdivision thereof and:
1. a corporation in which the state office owns 1% or less of the total stock outstanding of any class of stock not listed on a stock exchange or stock with a present total market value not in excess of $25,000.00 where such stock is listed on a stock exchange; or
2. a corporation in whose stock a trust owns one percent or less of the total stock outstanding in any class of stock not listed in a stock exchange or stock with a present market value not in excess of $25,000.00, the stock being listed on a stock exchange, where the state officer is beneficiary under such trust; and
3. the state officer is not a director or officer of the corporation.
This statute also relates to contracts between copartnerships or unincorporated association in which the state officer is a partner or a member and the state or a political subdivision thereof and provides that there shall be no substantial conflict of interest without specifying any specific amount of ownership interest, provided that the contract is not negotiated by the state officer and the contract is not with the department or agency of the state or political subdivision thereof with which the state officer is connected.
1968 PA 318, supra, Sec. 9 provides that all acts or parts of acts in conflict are repealed, it being the intention of the Legislature that Const 1963, art 4, Sec. 10 as implemented by 1968 PA 318, supra, constitute the sole law with respect to conflicts of interest involving legislators and state officers in contracts with the state or its political subdivisions. It also is noted that the Legislature enacted 1968 PA 317; MCLA 15.321 et seq; MSA 4.1700(51) et seq, relating to the conduct of public servants in respect to contracts with public entities. 1968 PA 317, supra, Sec. 9 expressly repealed 1966 PA 317.
As to the opinions of the Attorney General rendered after the enactment of 1968 PA 318, supra, examination of these should commence with OAG, 1973-1974, No 4799, p 116, 119 (February 1, 1974), which considered the question whether a member of the state board of hearing aid licensing was in a prohibited conflict of interest if he held a contract with the Department of Social Services to provide hearing aids to eligible persons to be reimbursed by that department. It was concluded that 1968 PA 318, Sec. 4, supra, explicates Const 1963, art 4, Sec. 10 in a fair manner and that any conflict of interest in a contract with the state is not 'substantial' if the state officer was entirely removed from the contract making functions in both his public and private roles and the contract is with the agency of state government other than the one with which the state officer is connected.
It must be recognized that the analysis employed in OAG, 1973-1974, No 4799, supra, focused entirely on the statutory definitions of the term 'not substantial' employed in 1968 PA 318, Sec. 4, supra. The opinion did not cite or consider OAG, 1967-1968, No 4587, supra, and OAG, 1967-1968, No 4646, supra, for the analyses therein contained of the conflict of interest provision in Const 1963, art 4, Sec. 10. Nor did the opinion refer to the test for the application of the constitutional prohibition against substantial conflict of interest with the duties owed to the state by the state officer. OAG, 1967-1968, No 4522, supra, p 243. While the opinion cited and quoted from 1967-1968, No 4555, supra, it did so solely for the purpose of dealing with the self-executing nature of Const 1963, art 4, Sec. 10, and the express power conferred upon the Legislature to implement it. It is, of course, true that OAG, 1967-1968, No 4555, supra, p 42, stated that the Legislature may enact higher standards than those imposed in Const 1963, art 4, Sec. 10, but only for those public officers not enumerated therein. Assuming, arguendo, power in the Legislature to impose higher standards on state officers and legislators, neither the title to 1968 PA 318, supra, nor the statement of purpose found in section 1 thereof convey any indication of intent on the part of the Legislature to impose such higher standards.
OAG, 1979-1980, No 5489, p 162 (May 11, 1979), concluded that a member of the Board of Governors of Wayne State University, who was an attorney and partner in a law firm doing legal work for that university, was not in a prohibited conflict of interest under 1968 PA 318, supra, provided that legal services were rendered by other members of the legal firm. The opinion relied upon the analysis employed in OAG, 1973-1974, No 4799, supra, and contained the caveat that 1968 PA 318, supra, bars any new contract between the university and the law firm or amendments to the existing contract after the partner assumed his office as a member of the governing body of that university.
OAG, 1979-1980, No 5689, p 732 (April 22, 1980), concluded that the president of a state university granting baccalaureate degrees was in a conflict of interest prohibited by both Const 1963, art 4, Sec. 10 and 1968 PA 318, supra, if he were to simultaneously serve as a member of the board of directors of a local bank doing business with the university. However, this opinion noted that in accordance with OAG, 1973-1974, No 4799, supra, a state university president may serve upon the board of directors of a local bank doing business with other state agencies, provided that the state officer plays no part in the negotiation for the execution of or amendment of the contract involved. OAG, 1979-1980, No 5689, supra, is consistent with OAG, 1967-1968, No 4587, supra, which was rendered prior to enactment of 1968 PA 318, supra.
In Const 1963, art 4, Sec. 10, the people have prohibited a state officer from having an interest, direct or indirect, in a contract with the state or its political subdivision which shall cause a substantial conflict of interest. Meaning and effect must be given to every word contained in Const 1963, art 4, Sec. 10, and it may not be assumed that the terms 'substantial' and 'conflict of interest' were inserted in Const 1963, art 4, Sec. 10 without the intention of conveying some significant meaning. Romano v Auditor General, 323 Mich 533, 539; 35 NW2d 701 (1949).
It is impossible to read Const 1963, art 4, Sec. 10, which prohibits state officers and members of the Legislature from any interest, direct or indirect, in any contract with the state 'which shall cause a substantial conflict of interest' as though the underscored phrase was not part of the sentence in question. Had such been the intent of the framers in proposing and the people in ratifying Const 1963, art 4, Sec. 10, this language would have been omitted and the language contained in Const 1908, art 5, Secs. 7 and 25, 'shall be interested directly or indirectly in such contract' would have been retained without change.
1968 PA 318, Sec. 4(b)(iv), supra, as construed in OAG, 1973-1974, No 4799, supra, provides that there is no substantial conflict of interest in a contract if the state officer takes no part in the negotiations for the contract and the contract is with a state agency other than the one with which the state officer is connected. Implicit in this reading of 1968 PA 318, Sec. 4(b)(iv), supra, is the conclusion that if the state officer is involved in the negotiations with a state agency, he or she is in a conflict of interest even though the state agency with whom negotiations are conducted is not the one with which the state officer is connected.
This reading of 1968 PA 318, Sec. 4(b)(iv), supra, although required by the language employed by the Legislature, reimposes the letter and the spirit of Const 1908, art 5, Secs. 7 and 25, which prohibited any interest, direct or indirect, in a contract with the state without regard to the performance of the duties of the state officer negotiating the contract. Moreover, such a reading of the statute would manifest an intent to impose a higher standard than ratified by the people in Const 1963, art 4, Sec. 10, an intent plainly eschewed by the Legislature in both the title to 1968 PA 318, supra, and in section 1 thereof.
A constitutional construction must be afforded 1968 PA 318, Sec. 4(b)(iv), supra, if at all possible. McQuaid v Oakland County Bd of Auditors, 315 Mich 234; 23 NW2d 644 (1946). O'Brien v Hazelet & Erdal, 410 Mich 1; 299 NW2d 336 (1980).
In the construction of statutes, it is the duty of the court to ascertain the intent of the Legislature. In order to do this, courts are often compelled to construe the statutory term 'and' as 'or' to accomplish the obvious purpose of the statute. Elliott Grocer Co v Field's Pure Food Market, Inc, 286 Mich 112, 115-116; 281 NW 557 (1938). The obvious purpose of 1968 PA 318, Sec. 4b(iv), supra, as noted in the title to the Act and as expressly stated in section 1 thereof is to implement Const 1963, art 4, Sec. 10 'in determining the construction and effect to be given the constitutional section.' This may be constitutionally accomplished only by reading the term 'and' in the disjunctive as meaning 'or' in 1968 PA 318, Sec. 4b(iv), supra, in accordance with the manifest intent of the Legislature.
It follows that 1968 PA 318, Sec. 4(b)(iv), supra, must be read that no substantial conflict of interest in a contract with the state exists if a state officer is not with the state agency entering into the contract, even though the state officer may take part in the negotiations with the contracting state agency. No prohibited conflict of interest exists because the state officer's public duties do not extend to acting on behalf of the contracting state agency. This construction of 1968 PA 318, Sec. 4(b)(iv), supra, is consonant with Const 1963, art 4, Sec. 10 and in harmony with the manifest intent of the Legislature in its enactment of 1968 PA 318, supra. OAG, 1973-1974, No 4799, supra, is modified accordingly.
The question raised by Representative O'Connor relates to the following factual situation.
An individual was elected to the office of trustee of Michigan State University Board of Trustees at the November general election in 1982, took the oath of office on January 1, 1983, and is presently serving in that office.
The individual owns 50 percent of the stock of a Michigan corporation providing governmental consulting services. In February of 1983, the corporation entered into a written contract for governmental consulting and lobbying services with the Board of Control of Ferris State College for the term of one year for a consideration of $2,000.00 per month. The contract specifies that the corporation shall serve as an independent contractor.
Although the terms of the contract were largely negotiated by the equal owner of the corporation, the individual participated in some of the negotiations. After the contract was entered into, on several occasions in the absence of his co-owner associate, the individual consulted with officers and representatives of the college. On one or two occasions, the individual has spoken to members of the Legislature on behalf of the college.
As an elected member of the Board of Trustees of Michigan State University, the individual's constitutional and statutory powers and duties relate specifically to that institution of higher education. Const 1963, art 4, Sec. 10 does not preclude the individual from having any interest, direct or indirect, in a contract to provide governmental consulting and lobbying services to be rendered to Ferris State College. 1968 PA 318, Sec. 4(b)(iv), supra, as constitutionally construed in accordance with the intent of the Legislature, does not declare a prohibited substantial conflict of interest in such contract since the individual does not serve on the governing body of Ferris State College. Thus, the individual does not have to choose between a duty to act in the best public interest as a member of the governing body of the contracting college and the individual's personal interest in the contract as an equal owner of the governmental consulting services corporation providing services to the college.
I recognize that some may feel that a member of a university governing board should avoid even the appearance of a conflict of interest, and that a higher standard of conduct than the law requires should be observed by public officers. Certainly, the people are entitled to the best exertions of their public officers, unbiased by their private interests and unaffected by even the appearance that their private interests may be hostile to those of the public. However, both the constitutional history and a literal reading of Const 1963, art 4, Sec. 10, as ratified by the people, command its observance. The remedy rests with the people. Only they may, by amendment to Const 1963, art 4, Sec. 10, order a more exacting standard.
Addressing the question posed, it is my opinion that a member of the Board of Regents of the University of Michigan, of the Board of Trustees of Michigan State University or of the Board of Governors of Wayne State University, with the requisite minimum ownership in, or as an officer or director of, a business organization as set forth in 1968 PA 318, Sec. 4, supra, may not have an interest, direct or indirect, in a contract between the business organization and the university upon whose governing board he or she serves, unless the contract is awarded to the lowest qualified bidder upon receipt of sealed bids pursuant to published notice therefor. It is my further opinion that a member of a governing body of such a university is not precluded by Const 1963, art 4, Sec. 10 from having an interest in a contract with any other agency of the state or a political subdivision thereof.
Application of the State Ethics Act,
1973 PA 196, Prescribing Standards of Conduct
for Public Officers to Members of Governing Boards
of the University of Michigan, Michigan State University,
or Wayne State University
The title to 1973 PA 196; MCLA 15.341 et seq; MSA 4.1700(71) et seq, states the purpose of the Act is 'to prescribe standards of conduct for public officers and employees; to create a state board of ethics; and prescribe its powers and duties.' In 1973 PA 196, supra, Sec. 2(5), (6), and (7), the Legislature has imposed certain standards of conduct which, by their terms, may arguably apply to members of governing bodies of such state universities. However, in 1973 PA 196, supra, Sec. 1(c), the Legislature has seen fit to define the term 'public officer' as used in the Act to mean 'a person appointed by the Governor or another executive department official.' (Emphasis added.)
The State Board of Ethics in In Re: Honorable William Faust, No. 81-EA-01, responding to a question of the relationship between the Lieutenant Governor and a certain life insurance company, concluded that the Lieutenant Governor is a constitutional officer elected by the people and does not fall within the definition of public officer or employee in 1973 PA 196, Sec. 1, supra. The opinion stated:
'Therefore, it is the opinion of the Board of Ethics that it has neither the jurisdiction nor the authority to render advisory opinions relating to the activities of elected officials.' Slip Opinion, p 2.
The people have commanded in Const 1963, art 8, Sec. 5 that the members of the Board of Regents of the University of Michigan, of the Board of Trustees of Michigan State University, and of the Board of Governors of Wayne State University 'shall be elected as provided by law' for terms of eight years. (Emphasis added.)
It is noted that OAG, 1983-1984, No 6134, p 66 (March 17, 1983, and OAG, 1983-1984, No 6135, p 73 (March 17, 1983), respectively applied the provisions of 1973 PA 196, Sec. 1(c), supra; first, to the person serving as Director of the Office of State Employer, an appointee of the Governor, Executive Order 1979-5, who simultaneously served as a member of the Board of Trustees of Michigan State University, and, second, to the person serving as Director of the Department of Licensing and Regulation, an appointee of the Governor in accordance with Const 1963, art 5, Sec. 2, who simultaneously served as a member of the Board of Trustees of Michigan State University. The provisions of 1973 PA 196, supra, were impacted in each instance because the person was serving in an appointive state office, even though the person simultaneously held an elective state office. None of the questions submitted for opinion suggest that a member of such a governing board holds an additional appointive state office.
It follows that the ethical standards imposed by the Legislature in 1973 PA 196, Sec. 2, supra, do not apply to the members of the governing boards of the University of Michigan, of Michigan State University or of Wayne State University.
Incompatibility of public offices or positions
under 1978 PA 566
Since your basic question relates to a private business or profession that a university governing board member may engage in or practice during his or her term of office, this opinion will not address the question of incompatibility of public offices or positions simultaneously held by the same person. In this regard, it should be observed that the prohibition against holding incompatible public offices imposed by 1978 PA 566; MCLA 15.181 et seq; MSA 15.1120(121) et seq, is inapplicable where the public officer holds only one public position or employment. OAG, 1979-1980, No 5689, supra.
Michigan's law prohibiting conflict of interest in contracts as it applies to state officers with an interest in a contract with the state or its agencies is based on Const 1963, art 4, Sec. 10, which differs from its predecessor. Under Const 1908, Sec. 25, a public official could not have an interest in certain contracts with the state, while Sec. 7 prohibited a legislator from having any interest in contracts with the state and local governmental units authorized by the Legislature.
Although the facts presented here clearly indicate the appearance of a conflict of interest, Const 1963, art 4, Sec. 10 and implementing 1968 PA 318, supra, do not prohibit the appearance of conflict of interest on the part of state officers in a contract with the state or any of its political subdivisions. The interest in such a contract is prohibited only if it results in 'a substantial conflict of interest.'
The Legislature, in the enactment of 1968 PA 318, supra, to implement Const 1963, art 4, Sec. 10, presumably was aware that many state officers, like the members of the Board of Trustees of Michigan State University, occupy part-time, unpaid public offices. If such persons were unable to have an interest in a contract with any governmental unit, only the very wealthy would be available to serve the public in such posts and the number of able persons willing to serve in such public offices would be severely limited.
While many good persons may conclude that a member of a state university governing board should avoid even the appearance of a conflict of interest in a contract with the state or its agencies, neither Michigan's present Constitution nor the statute enacted by the Legislature pursuant thereto impose that standard of conduct on public officers at this time.
It is my opinion, therefore, that:
(1) a member of the Board of Regents of the University of Michigan, of the Board of Trustees of Michigan State University, or of the Board of Governors of Wayne State University, is not precluded by either Const 1963 or statute from engaging in a business or practicing a profession during the period of service on the respective board;
(2) a member of such a governing board may be pecuniarily interested in a contract entered into by a business organization with the state or its agencies other than the university upon whose governing board the member serves, or with a political subdivision of the state, without violating Const 1963, art 4, Sec. 10 or 1968 PA 318, supra;
(3) a member of such a governing board with a minimum ownership interest in, or as an officer or director of, a business organization as specified in 1968 PA 318, Sec. 4, supra, may not have an interest in a contract, entered into or amended during service of the member, between the business organization and the university upon whose governing body the member serves; however, a member of such a governing board may have an interest in a contract between a business organization and the university upon whose governing body the member serves if the contract is awarded to the lowest qualified bidder upon receipt of sealed bids pursuant to a published notice therefor as set forth in 1968 PA 318, Sec. 4(d), supra, regardless of the extent of the interest of the member in the contract; and
(4) a member of the governing board of the University of Michigan, of Michigan State University, or of Wayne State University is not subject to the provisions of the state ethics act, 1973 PA 196, supra.