Request By:
Mr. Billy Ray Turner
Route 2, Box 108
East Bernstadt, Kentucky 40729
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Robert L. Chenoweth, Deputy Attorney General
As a member of the Laurel County Board of Education you have asked the Office of the Attorney General for our consideration of a matter of believed potential conflict of interest. You related you are a dairy farmer and that you soon intend to start selling milk to Dairyman, Inc., which has the contract award for supplying milk to the county schools. Your questions are as follows:
1. Does this now create a conflict of interest since I will be selling my milk to a subsidiary of Dairyman, Inc., and they have a contract to sell the entire school system milk?
2. In future votes on the regarding of the contract to supply milk to the entire school system must I remove myself from the voting on this contract since Dairyman, Inc., will be bidding on this matter and since they are additionally a cooperative. "
It is the opinion of this office no conflict of interest will arise if you begin selling milk to Dairyman, Inc.
The pertinent statutory provisions in issue are KRS 160.180(1)(f) and (2). Under these provisions a local school board member is prohibited from being directly or indirectly interested in the sale to the board of property, materials, supplies, equipment or services for which school funds are expended. One of the principal cases interpreting these provisions is Commonwealth v. Withers, 266 Ky. 29, 98 S.W.2d 24 (1936), which reads in part as follows:
"It is a salutary doctrine that he who is intrusted with the business of others cannot be allowed to make such business an object of profit to himself. This is based upon principles of reason, of morality, and of public policy. These are principles of the common law and of equity which have been supplemented and made more emphatic by the foregoing and other statutory enactments. Nunemacher v. City of Louisville, 98 Ky. 334, 32 S.W. 1091, 17 Ky.Law Rep. 933. In their application and operation it is impossible to lay down any definite rules defining the nature of the interest of the officer, or indicating the line between that which is proper and that which is unlawful. In general, the disqualifying interest must be pecuniary or proprietary by which he stands to gain or lose something."
We do not see that the fact you have a personal business arrangement with a company that does business with the board of education creates any legal impropriety. You noted that Dairyman, Inc. is a cooperative and we have already concluded in OAG 75-530, copy attached, that no disqualification existed where a board of education member was also serving on the board of directors of Southern States Cooperative.
In view of our response to your first question, we do not believe you need to disqualify yourself from voting as a board member on the milk contract. However, so as to avoid even an appearance of impropriety, you may wish to disqualify yourself and not vote on this matter when it next comes before the board of education.
Lastly, so as to remove any doubts, we are of the opinion the conflict of interest provisions of the Model Procurement Code, KRS 45A.445 and 45A.455, are inapplicable to the situation you have presented.