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Exceptions to conflict-of-interest law
A Partial List of Compatible/Incompatible Offices for Board of Education Members

Note: The information contained within this article should not be construed as legal advice. Specific questions should be referred to your school district's legal counsel.

Since the turn of the twentieth century, the state of Illinois has gone to great lengths to ensure that its public officials avoid conflict of interest. Statutory and case law, as well as numerous opinions of the Illinois Attorney General’s office, have attempted to clarify the laws to address the more common conflicts of interest that may arise during an official's term of office. Typically, these statutory laws and judicial opinions apply to most local officeholders, but this article focuses solely on conflicts that members of local boards of education should avoid.

The Illinois Compiled Statutes include two key statutory provisions regarding conflict of interest by school board members: the Illinois School Code and the Illinois Corrupt Practices Act. The purpose of these statutory provisions is not only to stop actual abuse of power for an official’s personal benefit, but also to prevent creation of relationships that may have the potential for abuse.

The Illinois School Code, Section 10-9 (105 ILCS 5/10-9) addresses interests of school board members in awarding contracts, work or business, or sale of any article. This section provides that no board member shall be directly or indirectly interested in any transaction of the district whenever the price of the contract is paid either from the treasury or by levied assessment.

The statute does provide several exceptions in which contracting with an interested member of a board of education would not be considered a conflict of interest. See "Exceptions to Conflict of Interest Law," on page 25.

Secondly, Section 10-9(f) regulates transactions between board members and local financial institutions. This provision states that it is not considered a conflict of interest for a board member to also serve as an employee, an officer, or an owner of less than 7.5 percent of any local financial institution, for purposes of depositing money, securing loans, or any other financial services a district may have with a local bank.

Two final points should be made regarding Section 10-9 of the School Code. First, although there appears to be some disagreement on this issue, it seems that a board member need not derive a financial benefit as a condition for conflict, but rather, that solely the opportunity to make the contract more desirable or more probable could be sufficient finding for conflict in most Illinois courts.

Lastly, the School Code not only prohibits the interested board member from voting on said contract, but also prevents the interested board member from participating in the deliberation relating to awarding the contract. However, if the award of a contract would otherwise constitute a conflict of interest, the conflict is not resolved by a voting abstention or absence from a board meeting: the contract must not be awarded.

The School Code provides that any board member who violates the provision regarding conflict of interest is guilty of a Class 4 felony. If convicted, the board member would lose his or her seat on the board.

A second provision found in the School Code provides that no officers (including board members) or teachers shall have an interest in the sale, proceeds or profits in books, apparatus or furniture used by the school district (105 ILCS 5/22-5).

Very similar in nature to the provisions found in the Illinois School Code, the Illinois Corrupt Practices Act (50 ILCS 105/3) addresses conflict of interest for all municipal governmental officeholders, which also includes members of local school boards. Like the School Code, this Act prohibits direct and indirect interest in any contract upon which the official may be called to vote. Moreover, no official may receive anything of value to influence a vote. This Act, too, has exceptions very similar to the provisions in the School Code for the awarding of contracts for materials, merchandise, property, and services.

This Act provides that it is not necessary to prove "bad faith" or fraud to establish a statutory violation. Case law has established that it is possible to have "good intentions" and even bring benefit to the district, but still be in violation for failure to disclose a conflict of interest.

Any contract procured in violation of this Act is void. (This Act does not apply to members of an advisory panel or commission.)

The Illinois judiciary, along with the Illinois Attorney General’s office, have interpreted many substantive areas of these two laws. Two areas of potential conflict of interest are worthy of further exploration: family relationships and incompatibility of office.

Potential conflicts of interest often arise concerning the spouse of a board member. Unfortunately, the guidelines on this issue are not clear. Illinois courts are evenly divided regarding whether the employment of the spouse of a board of education member constitutes a conflict of interest.

One argument is that it is not a per se violation of statutory law to have a spousal employee-board member relationship. As long as the spouse was employed before the board member was seated, it is typically agreed that the employment decision was made free from conflict.

In support of this notion, Illinois courts have held that the interest of a public officer’s spouse does not reflect that of the officeholder; therefore, it does not automatically disqualify the officeholder from serving in an official capacity. For example, in 1977, an Illinois appellate court held that a married woman has the right to contract as if she were single and it was her separate property. This issue obviously becomes more prone to conflict when a spouse is first hired during the term of the school board member.

It is, however, possible to show a conflict of interest if the spousal contractual relationship is subterfuge established solely to conceal the official’s financial interest in the contract. This principle was established when the Illinois Attorney General found a statutory violation because a board member married to a teacher took an active role in the negotiation of the district's teacher contract. An Illinois court went even further by voiding a collective bargaining agreement, even though the board member in question declined to vote on the contract.

Those who believe there is no conflict argue that other statutory provisions specifically include the prohibition of spousal employment. An Illinois court agreed, stating that the Illinois School Code contained no provisions regarding spousal employment, while other statutes (Illinois Purchasing Act) contain precise language prohibiting spousal employment.

Nonetheless, some Illinois courts have found that the new or continued employment of a spouse of a school board member is prohibited. The courts have argued that it is foolhardy to disavow the "natural and probable sharing of assets" between husband and wife.

Two last points are important to note. First, there is no significant case law regarding family relationships other than spousal. However, it is still wise policy to disclose all family relationships, including children, cousins, siblings, aunt/uncles, and in-laws. Lastly, a board of education must be aware of and comply with its policy regarding nepotism and be aware of possible litigation regarding discrimination.

There is not a per se conflict of interest established because of the outside occupation of a local school board member or because of another public office on which a school board member may simultaneously serve. A conflict arises when the duties of a public office/outside occupation interfere with the school board member's ability to faithfully perform his or her duties to the other position.

The Illinois Attorney General’s office has issued various opinions regarding the compatibility of select positions for members of the local board of education. For example, there is no conflict established if a school board member is employed by another school district. (See table on this page for a list of compatible and incompatible offices.) A public official who accepts a second, incompatible position would be advised to resign from the first position.

Listed below are six hypothetical situations that could arise as potential conflict of interest situations for a local board of education. The answers that follow each example should NOT be considered as legal advice, but rather should be a guide toward best practice to avoid even the appearance of impropriety for local board of education.

1) The board of the regional special education cooperative was considering awarding a contract for some special year-end awards, certificates, and trophies to be presented to the students. During deliberation, a fellow board member questioned another member, asking whether he was the owner of one of the companies being considered. The member replied that it was his wife who now owned the company. Later, the board member voted with the majority in awarding the contract to his wife's company.

Response: The board member probably has a conflict of interest. It would appear that the spousal contractual relationship may be subterfuge to conceal the true financial arrangement. But regardless, statutory law provides that the accused board member should have abstained from voting.

2) A member of the local board of education voted to award a 3.5 percent raise to all custodians in the district. The vote was unanimous, but it was not publicly disclosed that the member’s son was a head custodian at one of the high schools in the district.

Response: The law is not specific regarding a conflict between parent and child. However, to err on the side of safety, it would seem prudent to disclose the conflict and abstain from deliberation and the final vote. Moreover, it may also depend upon the role of the board member in negotiating the raise.

3) The local board of education was considering a proposal to award a major national firm a contract to install a heating and cooling system in the local middle school. During public deliberation, one of the members stated that she would abstain from discussion and voting because she and her husband owned 100 shares of stock in the company. Did the board member correctly handle the situation?

Response: Yes, the Illinois School Code requires a board member that has less than a 7.5 percent share in the ownership of an interested corporation to disclose the ownership interest and abstain from voting. This, however, does not prohibit the board of education from approving the contract by a majority vote of the remaining members.

4) The local board of education was considering which school law firm it should retain for the coming school year. A member of the board has a brother who is a new member of one of the firms. Need she disclose this relationship?

Response: Like other family relationship conflicts, the relationship of a sibling is not specifically addressed. But again, erring on the side of caution, the board member should disclose the conflict, and abstain from deliberation as well as the final vote. It should be noted that this type of contract need not be awarded to the lowest responsible bidder (105 ILCS 5/10-20.21).

5) A local school board member was employed by the local utility company that supplied power to the whole town, including the school district. He was troubled every time he voted to approve the electric bill, wondering whether he should abstain from voting. Moreover, the agenda for the next meeting included a vote to have the local utility company install additional light poles on school property.

Response: The School Code and the Corrupt Practices Act both specifically address this situation. Each provide that there is no conflict as long as the board member is an employee or officer of the utility company. However, if the board member had an ownership interest, it could not exceed 7.5 percent, unless the district had a population of 7,500 and the utility rates were approved by the Illinois Commerce Commission.

6) The local board of education was considering the purchase of land to use for a new elementary school. A member of the board wanted to sell some of his farmland to the board. The member knew that the board was willing to pay more per acre than was the fair market value of his property. He doesn’t want to do anything illegal, but still would like to have the board purchase his farmland. What should he do?

Probable Answer: Unfortunately for the landowner/board member, there is a statutory provision in the Illinois School Code that states that no school board member shall be interested, directly or indirectly, in the purchase of any property which belongs to the school district (Section 10-9a), except that a school board member may purchase a house constructed by the school district’s vocational education students if the property is to be used as the board member’s primary residence (Section 10-9d).

The State of Illinois has made it very clear that it does not desire to have any public official, including members of boards of education, abuse his or her official capacity in such a way as to gain a personal benefit. Since "bad faith" intent is not necessary to violate these statutory provisions, board members must be certain to disclose during public deliberation any direct or indirect conflict that may be present. Moreover, the member should abstain not only from further deliberation, but from the final vote as well. It is important that documentation of the disclosure be recorded in the minutes of the board of education. Remember the spirit of law is not only to stop actual abuse -- but to avoid even the appearance of impropriety.

Brad Colwell and William L. Sharp are faculty members of educational administration at Southern Illinois University at Carbondale.

There are several exceptions to the conflict-of-interest provisions in The School Code.

For example, a board member may provide materials, merchandise, property, or labor/services to the district if (1) that interest is publicly disclosed prior to or during deliberation of the awarding the contract, and (2) the member abstains from voting.

In addition to meeting the above requirements, if a member has no ownership interest in a company, the company can contract with the school district if the amount of the contract does not exceed $1,000 and the total amount of all contracts do not exceed $2,000 in a fiscal year (unless the contracted services/materials cannot be secured from another source). But, if a board member has an ownership share in an interested company (must be less than 7.5 percent), the board must (1) award any contract over $1,500 to the lowest responsible bidder, and (2) the board of education cannot contract with that company after total contract amounts exceed $25,000 during any fiscal year.

Two further exceptions to the rule regarding conflict of interest include public utilities and dealings with financial institutions. First, Section 10-9(e) provides that it does not constitute a conflict if board members serve as an officer or an employee of a public utility company, or if their ownership interest is less than 7.5 percent. An ownership interest may be any size if the school district population is over 7,500 and the Illinois Commerce Commission approves the public utility's rate.

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