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Interpretative Opinion 05-004: Conflict of Interest

January 31, 2006

Russell A. Smith, Executive Director
District of Columbia Public Schools
Board of Education
825 North Capitol Street, NE
Washington, DC 20002

Re: Conflict of Interest

Dear Mr. Smith:

Pursuant to your request for an opinion concerning whether a potential conflict of interest would exist if Jeff Smith, a member of the Board of Education, which serves as a Chartering Authority and exercises oversight over various charter schools in the District of Columbia, enters into a contract with D.C. Public Charter School Association (PCSA), a local non-profit, which you stated the Board of Education does not have oversight authority over, to perform professional services in the area of medical billing, the Office of Campaign Finance issued Interpretative Opinion 2005-04 on April 1, 2005.

Subsequent to the issuance of the opinion, you appealed the opinion to the Board of Elections and Ethics (Board). Although your appeal was withdrawn, the Board remanded the matter for further review on August 9, 2005.

The issue that was not resolved to the satisfaction of the Board was whether a potential conflict of interest existed, between Mr. Smith’s dual roles as a member of the District of Columbia Board of Education, and his relationship as an independent contractor with the PCSA. Simply stated, would Mr. Smith be required to take actions as a school board member which would benefit his personal financial interest as a consultant with PCSA?

You indicated that, under a contractual agreement with PCSA, Mr. Smith would work with charter school association members of PCSA as an independent contractor to assist with Medicaid reimbursement and he would produce a report for each association member that outlined the process for obtaining Medicaid reimbursement. You further asserted that the contractual relationship between PCSA and Mr. Smith was in no way related to Mr. Smith’s status as a member of the District of Columbia Board of Education but, rather for services he would provide based upon expertise he acquired prior to his membership on the Board.

D.C. Official Code § 1-1106.01(b) (2001 Edition) provides that “[n]o public official shall use his or her official position or office to obtain financial gain for himself or herself, any member of his or her household, or any business with which he or she or any member of his or her household is associated with, other than that compensation provided by law for said public official. This subsection shall not affect a vote by a public official: (1) On any matter which affects a class of persons (such a class shall include no less than 50 persons) of which such public official is a member if the financial gain to be realized is de minimis…”

D.C. Official Code § 1-1106.01(i) (2) defines the term “business” as “any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self-employed individual, holding company, joint stock, trust, and any legal entity through which business is conducted for profit.”

D.C. Official Code § 1-1106.01(c) provides, “[n]o person shall offer or give to a public official or a member of a public official’s household, and no public official shall solicit or receive anything of value, including a gift, favor, service loan gratuity, discount, hospitality, political contributions, or promise of future employment, based on any understanding that such public official’s actions or judgment or vote would be influenced thereby, or where it could reasonably be inferred that the thing of value would influence the public official in the discharge of his or her duties, or as a reward, except for political contributions publicly reported pursuant to § 1-1102.06 and transactions made in the ordinary course of business of the person offering or giving the thing of value.”

D.C. Official Code § 1-1106.01(g) requires recusal by public officials when “[a]ny public official who, in the discharge of his or her official duties would be required to take an action or make a decision that would affect directly or indirectly his or her financial interest or those of a member of his or her household, or a business with which he or she is associated, or must take an official action on a matter as to which he or she has a conflict situation created by a personal, family or client interest…”

In accordance with D.C. Official Code § 1-1103.02(a) (1) (A), the Director ordered Mr. Smith to appear in person and provide testimony under oath regarding the matter. Additionally, in accordance with D.C. Official Code §1-1103.02(a) (1) (C), the Director ordered PCSA to provide a copy of Mr. Smith’s contract with the organization.

On October 12, 2005, Mr. Smith underwent an examination which was conducted by William O. SanFord, Senior Staff Attorney. During the examination, Mr. Smith provided credible testimony under oath that his contract with PCSA, which commenced on April 1, 2005 and expired on June 30, 2005, was not related to nor contingent on his position as a member of the Board of Education.

It was noted by PCSA representatives that the work Mr. Smith actually performed involved using a charter school as a pilot for the development of guidelines for PCSA member schools to qualify for Medicaid reimbursement. The Elsie Whitlow Stokes Public Charter School was the pilot for the Medicaid program. Mr. Smith performed the following duties: (a) conducted meetings at the pilot school to determine which students were Medicaid eligible, (b) commenced the process to determine to which Managed Care Organization (MCO) students should be assigned, and (c) planned parent nights at the school to facilitate Medicaid registration. He also stated that he did not derive any benefits, financial or otherwise, through the contract as a result of his official position nor did he engage in any action as a member of the Board of Education regarding Medicaid benefits for charter schools.

Additionally, Jenaine Butler, Director of Operations for PCSA provided a letter dated October 5, 2005, attesting to the fact that Mr. Smith was paid for services through June 15, 2005 and that the Association has no formal relationship with the Board of Education. Ms. Butler also provided a copy of Mr. Smith’s contract which described among other things, specific task related to “Medicaid reimbursement” and did not include any references which could be remotely related to his duties as a member of the Board of Education. Specifically, his duties as a consultant under the contract included the following activities:

• In a “pilot” capacity, work directly with a charter school to take it through the process of being eligible for Medicaid reimbursement.

• Participate in Medicaid-related meetings, including meetings with Association/Cooperative staff, the pilot school, DCPS, and District agencies as needed.

• Produce a brief report that documents the process and outlines any challenges of the pilot.

Also, the contract stated that Mr. Smith would be compensated at an hourly rate of $50.00 not to exceed $5, 000.00. Please refer to Group Exhibit #1 attached herewith.

It should be noted that Mr. Smith’s compensation was not dependent upon the number of charter schools chartered by the Board of Education. Moreover, Mr. Smith did not process Medicaid applications or take any action with regard to Medicaid benefits for specific schools or students.

Based upon the foregoing and additional information included in the case file, as originally concluded, it does not appear that the services Mr. Smith provided under a contract with PCSA were related to his official duties as a member of the District of Columbia Board of Education. It is further apparent that the expertise Mr. Smith provided PCSA was gained prior to his membership on the Board of Education.

Accordingly, it is the opinion of the Office of Campaign Finance that the original Interpretative Opinion (2005-04) in this matter should be reinstated and incorporated by reference into this issuance.

The foregoing is an Interpretative Opinion of the Director of the Office of Campaign Finance. Pursuant to D.C. Official Code §1-1103.05, you are entitled to request an Advisory Opinion from the Board of Elections and Ethics on this transaction or activity.