September 8, 1994
Hon. J. Stephen Kirby
Kentucky School Boards Association
260 Democrat Drive
Frankfort, Ky. 40601
Dear Mr. Kirby:
As General Counsel for the Kentucky School Boards Association, you have asked our office for an interpretation of KRS 156.480 which was recently amended in Senate Bill 174 during the 1994 General Assembly and prohibits some school employees from doing business with the school district. Historically, all school employees and their spouses were prohibited from doing business with the school system. Senate Bill 174 greatly reduced the number of employees prohibited from doing business with the school districts and clarified that the conflict provision applies to those employees with decision-making authority over the financial position of the school district.
KRS 156.480(2) was amended by Senate Bill 174 and provides:
No employee of any county or independent school district with decision-making authority over the financial position of the school district shall have any pecuniary interest, either directly or indirectly, in an amount exceeding twenty-five dollars ($25) per year, either at the time of or after his appointment to office, in supplying any goods, services, property, merchandise, or services, except personal services that are in addition to those required by contract for employment, of any nature whatsoever for which school funds are expended. If any person specified in this subsection receives, directly or indirectly, any gift, reward, or promise of reward for his influence in recommending or procuring the use of any goods, services, property, or merchandise of any kind whatsoever for which school funds are expended, he shall upon conviction be fined not less than fifty dollars ($50) nor more than five hundred dollars ($500), and his office or appointment shall without further action be vacant.
In your first question you ask:
1. Which school district employees have "decision making authority over the financial position of the school district" as provided in the new language of KRS 156.480? What are the characteristics of "decision-making authority"?
It is the opinion of this office that an "employee with decision-making authority over the financial position of the school district" includes, first of all, certain school officials with broad authority over the financial position of the school district including the superintendent, the assistant superintendents, principals and school council members.
Other school employees with power to make financial and budgetary decisions with regard to the allocation of funds and the purchase of goods, services, property, or merchandise, also have "decision-making authority." The authority to recommend expenditure items also represents such authority. These employees also have an impermissible conflict and are prohibited pursuant to KRS 156.480(2) from doing business with the school district. An example of a school employee included within the conflict provision of KRS 156.480(2) is a food service director who determines the quantity and brand of milk to be purchased for the cafeteria. This employee has the authority to make a financial decision and could not directly or indirectly do business with the school district. We provide an analysis of this situation in response to your next question.
2. Does the scope of the employee's authority have any effect on whether the employee has decision-making authority?
Yes, we believe that the scope of the school employee's authority is directly related to whether the employee has decision-making authority. The purpose of the conflict provision in KRS 156.480 is to prevent school employees with "influence," or the authority to make certain financial decisions, from using that influence in order to advance their own interests.
As previously mentioned, certain school officials with broad authority over budgetary and financial questions would be covered under the conflict statute regardless of the situation. Additionally some employees make financial decisions only in certain areas; however, in that particular area the employee has a great deal of influence. This latter group of employees is also within the purview of KRS 156.480 as this statute excludes all employees with "decision-making authority" over the financial position of the school district from doing any business with the school system. The employee and his or her spouse would be prohibited from conducting business with the school district.
Except those employees specifically delineated in our response to question one, the determination of whether an employee is included within the conflict provisions of KRS 156.480(2) requires an analysis on a case by case basis.
In order to conclude whether an employee is covered under KRS 156.480(2) it may be necessary to review the employee's job description and determine the extent of influence extended over purchases by the school system. Some school employees, especially classroom teachers, may suggest that the school purchase a particular textbook, lab equipment, art supplies, or athletic equipment but have no decision-making authority beyond the mere suggestion. These school employees would ordinarily not be included within the conflict provisions of KRS 156.480(2). This conflict statute is geared at removing the possibility of personal financial gain from those in charge of expending school funds. This statute should not foreclose the exchange of ideas and recommendations by school employees who are seeking valuable methods of educating children and efficient ways to operate a school system.
Assistant Attorney General