Source: https://www.azag.gov/sgo-opinions/I01-009
Timestamp: 2014-03-08 23:08:15
Document Index: 543598239

Matched Legal Cases: ['§ 38', '§ 38', '§ 38', '§ 15', '§ 15', '§ 15', '§ 15', '§ 15', '§ 38']

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Opinion No:I01-009 (R01-001)
Re: Board Member Conflict of Interest
Charles W. HerfQuarles & Brady, Streich, Lang, L.L.P.
Under Arizona conflict of interest statutes, a public officer or employee has a conflict of interest if he or she has a “substantial interest” in any decision. A.R.S. § 38-503(A), (B). If a board member has a substantial interest in a decision, the board member must disclose that interest and refrain from voting on the issue. A.R.S. § 38-503(A). A substantial interest is “any pecuniary or proprietary interest, either direct or indirect, other than a remote interest.” A.R.S. § 38-502(11). The interest for purposes of disqualification does not include "a mere abstract interest in the general subject or a mere possible contingent interest." Yetman v. Naumann, 16 Ariz. App. 314, 317, 492 P.2d 1252, 1255 (1972). It must involve a "pecuniary or proprietary interest, by which a person will gain or lose something as contrasted to general sympathy, feeling or bias." Id. Within the conflict of interest laws, “[p]ecuniary means money and proprietary means ownership.” Shephard v. Platt, 177 Ariz. 63, 65, 865 P.2d 107, 109 (App. 1993). Governing board members are not paid for their service, so they have no pecuniary interest in holding the position. The issue, then, is whether board members have a proprietary interest in their positions for the purposes of the conflict of interest statutes. Unlike traditional conflict of interest situations, the board members who may reside outside the district if unification proceeds have no outside financial or ownership interest that may influence their vote; rather, it is the board position itself that is at stake. Cf. Ariz. Att’y Gen. Op. I83-111 (finding a conflict when a school district administrator is also an employee for a corporation that contracts with the district). Board members may vote on issues that affect their duties as board members. See, e.g., A.R.S. § 15-321(D) (board members can prescribe rules for their own governance). Conflict of interest laws also have not precluded elected officials from voting on issues such as redistricting that may affect their political futures. See George v. City of Cocoa, 78 F.3d 494, 496-98 (11th Cir. 1996) (concluding Florida conflict of interest laws did not ban participation on city redistricting issue).
Mecham v. Gordon, 156 Ariz. 297, 302, 751 P.2d 957, 962 (1988) (Governor has no due process property right in retaining his position) (internal quotations omitted; emphasis added). Although Arizona courts have not addressed this issue in the conflict of interest context, the same logic should apply. Board members face the loss of their seats at any time by the will of the voters. Because a board member has no right to retain that elected position, the potential loss of that position is not a proprietary interest within the conflict of interest laws. Cf. Ariz. Att’y Gen. Op. I89-067 (public officer may have proprietary interest in voting on freeway alignments when he owns property in the vicinity of the proposed routes). Therefore, Mingus Union board members who may reside outside the district boundaries if unification proceeds do not have a conflict of interest on the unification issue.
Under A.R.S.§ 15-421(D), “[n]o employee of a school district or the spouse of such employee may hold membership on a governing board of a school district by which such employee is employed.” This Office has previously recommended that if a board member is married to a district employee, “the Board member’s resignation [should] be solicited, but if it is not immediately forthcoming, appropriate action should be taken to remove the Board member from office.” Ariz. Att’y Gen. Op. I78-240. The statutory prohibition in A.R.S. § 15-421 thus affects the ability of a person to serve on the governing board. It does not affect an employee’s ability to continue working for a district.(3) Therefore, in this situation, if the Mingus Union and Cottonwood Oak Creek districts unify, a Mingus Union board member whose spouse works for the new unified district may not continue to serve as a board member. The statute does not cause the spouse to lose her job.
The materials submitted for review suggest that the Mingus Union and Cottonwood-Oak Creek governing boards previously voted to unify, and the issue now whether that unification will proceed. Under A.R.S. § 15-448(D), all governing board members continue to serve until January 1 following the first general election after unification. This provision appears to apply to all board members of the unifying districts, regardless of where they reside. Your opinion notes that Article VII, section 15 of the Arizona Constitution requires that any person elected to an office “be a qualified elector of the political division . . . in which such person shall be elected” and concludes that this constitutional residency requirement prohibits governing board members who reside outside the unified district from remaining on the board as described in A.R.S. § 15-448(D). See also A.R.S. § 38-291(5) (office vacant if person ceases to be resident of district for which person elected). This Opinion does not address this issue and instead addresses only the conflict of interest questions.