Request By:
Mr. David L. Webb
Superintendent
Edmonson County Board of Education
P.O. Box 129
Brownsville, Kentucky 42210
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Robert L. Chenoweth, Assistant Deputy Attorney General and Chief Counsel
You have asked the Office of the Attorney General to consider the legal ramifications of a local school board member being elected to the Board of Directors of the Warren Rural Electric Cooperative. You stated the Warren Rural Electric Cooperative is a nonprofit organization which purchases electrical power from the Tennessee Valley Authority and resells it throughout your area of Kentucky. You further related that the individuals who serve on the Board of Directors of the Cooperative are elected by the membership at large and that each director serves a three-year term and receives no salary. The directors are paid a small per diem ($60 per meeting) and are reimbursed for any expenses incurred as a result of their affiliation with Warren Rural Electric. You inquire whether a conflict of interest under KRS 160.180(2) would be created by a school board member being elected to the Board of Directors of the Warren Rural Electric Cooperative. It is our opinion no conflict will exist even though the Rural Electric Cooperative will supply electricity to the schools in the district.
It is not believed this office has ever considered the relationship between serving on a Rural Electric Cooperative as a director and serving on a local school board. The school law in issue is KRS 160.180(1)(f) and (2) which respectively read as follows:
(1) No person shall be eligible to membership on a board of education:
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(f) Who, at the time of his election, is directly or indirectly interested in the sale to the board of books, stationery or any other property, materials, supplies, equipment or services for which school funds are expended; or
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(2) If, after the election of any member of the board, he becomes interested in any contract with or claims against the board, of the kind mentioned in paragraph (f) of subsection (1) of this section, or becomes a candidate for nomination or election to any office or agency the holding and the discharging of the duties of which would have rendered him ineligible before election, or if he moves his residence from the district for which he was chosen, or if he does anything that would render him ineligible for re-election, he shall be subject to removal from office pursuant to KRS 415.050 and 415.060.
As we have said before, the key is whether the school board member will receive, directly or indirectly, school funds based upon a claim or contract with the school districts. In the present situation the school board member would become associated with a nonprofit organization and would receive no salary or pay but only a per diem and reimbursement of expenses. The Warren Rural Electric Cooperative has been formed for nonprofit operation under KRS Chapter 279. KRS 279.095 states, in part, that "A rural cooperative shall be operated on a nonprofit basis for the mutual benefit of its members and patrons." KRS 279.080(1) provides that directors are to receive "such compensation and reimbursement of expenses as the bylaws provide."
The closest it appears that this office has gotten to considering a situation similar to that you presented was in OAG 72-840, copy attached. In that opinion we concluded that no incompatibility would exist for a school board member to also serve as an officer and director of a private, nonprofit water corporation. As an officer and director of the water corporation there was no pay, profit or remuneration. We pointed out the holding in Commonwealth v. Withers, 266 Ky. 29, 98 S.W.2d 24 (1936) that, under KRS 160.180, "the disqualifying interest must be pecuniary or proprietary by which he stands to gain or lose something." A no disqualification opinion was also issued in OAG 73-530, copy attached, regarding a board of education member serving at the same time as a member of the board of directors of a Southern States Cooperative.
We do note while it is believed no statutory conflict of interest will be created by the situation discussed above, that as a practical matter the individual in issue, while sitting on the board of directors of the Warren Rural Electric Cooperative, should refrain from deliberations and discussions on matters, if any, that focus uniquely on the school district as contrasted to those matters affecting everyone dealing with the cooperative.