An employee of the Mental Retardation and Developmental Disabilities Administration (the Employee) of the Department of Health and Mental Hygiene (DHMH) has requested our opinion as to the propriety of selling giftware and jewelry to a volunteer Auxiliary associated with a facility operated by DHMH.
The Employee is a Program Administrator I in the Office of the Director of the Mental Retardation and Developmental Disabilities Administration (MRDDA), which directs the State's system of services to mentally retarded and developmentally disabled persons. The MRDDA operates numerous residential facilities and also purchases care for patients from contractors known as private care providers. The Employee works in community residential programs, which is responsible for community residential care of patients in group homes and other "alternative living units." These types of care arrangements often involve private care providers; MRDDA staff negotiate contracts with private care providers which are essentially annual grants for the operation of homes. The Employee indicates that she reviews proposals from private care providers and has prepared the Program Coordinator for negotiation sessions. She has also set up a grant management system for the program and has performed other administrative duties. It is anticipated that the Employee will be working with the private providers as well as with MRDDA facilities (including the facility served by the Auxiliary) to identify patients that can be placed in the group homes.
The Employee operates and is associated as an owner or partner with two private businesses which sell giftware and jewelry, one located in Waynesboro, Pennsylvania and the other in Sykesville, Maryland. She has inquired as to whether it would be appropriate for either of the businesses to sell goods to an auxiliary organization (the Auxiliary) of an MRDDA residential facility. The purpose of the sale is to provide goods to the Auxiliary for resale at its annual bazaar to raise funds to be used for the residents of the facility.
The Auxiliary was incorporated in 1970 as a nonprofit, charitable, nonstock corporation, and has sponsored various activities to raise money to be used for the residents of the facility. The monies collected from these activities have been used to purchase equipment for the institution, start programs, and provide gifts to the patients. The Auxiliary also operates the canteen service for the residents of the institution, staffed during the weekdays by its own Auxiliary-paid employees. The Auxiliary does not receive any State funding; it maintains its own financial records and files corporate reports as required with the State.
The Auxiliary functions under DHMH policies for the organization and operation of auxiliary organizations, as set forth in DHMH Policy Memorandum 6. 3 and implemented through the agency's Volunteer Services Program. Under these policies each auxiliary organization must be incorporated as a nonprofit corporation and have a formal charter, bylaws, and regulations; each organization must receive the formal approval of the Secretary of DHMH or his designee. Auxiliary organizations are also required to submit written reports and audits of their financial records to DHMH annually. Another Policy Memorandum (12.0) establishes departmental policy on volunteer services and authorizes the Coordinator of Volunteer Activities to terminate as well as recruit individual volunteers and organizations.
This request raises outside employment issues under §3-103(a) of the Public Ethics Law (Article 40A, §3-103(a), Annotated Code of Maryland, the Ethics Law). Subsection (a)(1)(i) of this provision bars a State employee from being employed by or having a financial interest in an entity under the authority of or having contractual dealings with his agency. We conclude that this provision does not serve to bar the Employee's activities, even though in our view the Auxiliary is plainly subject to the authority of the Employee's agency. (Though the Auxiliary is privately incorporated, its activities and organizational structure are substantially controlled by Policy Memoranda issued by DHMH).
The Employee's outside employment and financial interests are with the two wholesale businesses that are vendors selling jewelry and giftware to the Auxiliary. We have in earlier Opinions evaluated situations similar to this and concluded that being a vendor or contractor to an entity does not in itself give rise to an interest in the entity. (See our Opinion No. 80-13). Based on this view and the facts as presented to us in this request, we therefore do not believe that the employee has either a financial interest in the Auxiliary or is employed by it as contemplated by §3-103(a)(1)(i). She is an employee or owner of another entity that is a vendor of the Auxiliary, and is thus not reached by the provisions of §3-103(a). Moreover, we do not believe that the fact that the Employee's relationship with the two selling entities is an employment relationship (see our Opinion No. 81-45), would result under these facts in a violation of the §3-103(a)(1)(ii) prohibition against inconsistent employment. Since there appears to be little connection between these entities and her current MRDDA duties, an impairment of her impartiality or independence of judgment would be unlikely.
We note, however, in advising the Employee that these relationships would not violate the employment prohibitions of §3-103(a), that she should be aware of the provisions of §§3-104 and 3-107 of the Public Ethics Law, and must take great care to avoid using her position in the office of the Director of MRDDA, or information acquired thereby, in connection with her outside sales activities. The Employee also should be aware that this Opinion is limited to the facts presented to us in our review of this request, and reflects only our conclusion that none of the provisions of the Ethics Law appear to justify an absolute prohibition against the sales as proposed. We recognize that there may be appearance problems, especially as to competitors of the Employee's businesses, given her employment with MRDDA. We believe, however, that this is a personnel policy matter that DHMH may address if it finds it necessary, and note that the Ethics Law specifically contemplates that State agencies may apply regulations more stringent than the Ethics Law. (See §1-103).
Herbert J. Belgrad, Chairman
Jervis S. Finney
Reverend John Wesley Holland
Betty B. Nelson
Barbara M. Steckel
Date: November 16, 1982