87.13

OPINION NO. 87-13

An opinion has been requested concerning whether Directors or other staff members of local Departments of Social Services may serve on the Board or be an officer of a private local entity that is funded by the Department of Human Resources (DHR or the Department). Based on the information provided to us by the Department and the program regarding its operation and functions, we conclude that this service would be allowable only if the individual were serving as a Departmental representative in connection with his official State duties.

This request is presented by the Kent County Director of Social Services, and involves his service on the Board of Directors of the Mid-Shore Council on Family Violence (Mid-Shore). This is a private non-profit entity that serves five counties on the Eastern Shore (Caroline, Dorchester, Kent, Queen Anne's and Talbot), and is funded by DHR's Community Services Administration. The organization was incorporated in February 1980 to develop and implement a service program responsive to the needs of victims of violence within families. Its direct services currently include emergency shelter and meals, long term shelter (up to 30 days), emergency transportation, counseling, and information, referral and advocacy services for legal assistance, financial assistance, social services, and physical and mental health treatment. The shelter itself was only recently opened (in February 1987), but Mid-Shore has in the past provided counseling, advocacy and other services to residents of the area.

Mid-Shore's DHR funding is through the Women's Services Program in the Community Services Administration. This program offers a variety of community services to women, including programs regarding battered spouses. The Department is charged to supervise any shelters established under the program, and sets standards of care and admissions policies, monitors the shelter's operation and evaluates its effectiveness. It adopts rules and regulations that set fees for services at and govern the operations of each shelter, and is authorized to enter into contracts with public or private non-profit organizations to operate the shelters.

Mid-Shore is a local agency that receives about two-thirds of its total funding from DHR under this program. None of this funding, however, is channeled through the local Department of Social Services. According to the Requestor, the shelter may receive referrals from the local Department, though most of the clients served are self-referred or referred by the police agencies.

The Director of the Women's Services Program confirms this, though with an indication that more referrals and collaboration with the local Departments would be preferred, and the entity's Director says that this low involvement with the Requestor's County was one of the reasons for seeking his service on the Board. The Requestor also indicates that there are some cross referrals from the shelter to the DSS where there is a possibility of child abuse and the need for involvement by the protective services unit. Apparently the primary likely interaction with the local Department of Social Services would be with the income maintenance unit, rather than with any of the service divisions in these agencies.

Section 3-103(a)(1)(i) of the Public Ethics Law (Article 40A, §3-103(a)(1)(i), Annotated Code of Maryland, the Ethics Law) prohibits an official or employee from being employed by an entity that contracts with or is subject to the authority of his agency. We have in the past advised that service on operational Boards of non-profit entities results in an employment relationship even though the service is not compensated. Given the description of the way that the Mid-Shore Board functions, it would appear to be an operational Board even though it is called an advisory board. Mid-Shore is an entity that contracts with the Department of Human Resources, and the local Department is a unit within that Department. This situation, and others comparable to it, therefore comes within the outside employment prohibition of §3-103(a)(1)(i) of the Ethics Law, since it would be employment with an entity that contracts with his agency, and that is also significantly regulated by it. This service would be prohibited unless an exception can be applied under language in the Law permitting exceptions where the employment "does not create a conflict of interest or appearance of conflict."

We have considered this exception provision of §3-103(a)(1), and our implementing regulations (at COMAR 19A.02.01), in several prior Opinions. (See, for example, Opinions No. 87-2, No. 86-22, No. 86-17, and No. 85-10.) Our approach has been to consider the nature of an employee's official duties, as well as how and to what extent the private activity relates to the agency and its functions. In the situation here, there is no interagency agreement between Mid-Shore and the local department, and the contract between Mid-Shore and the Women's Services Program is made and monitored by that DHR headquarters office. It is not within the jurisdiction of the local office. However, in addition to the possibility of referrals from the local Department, it is also possible that some of the clients served by Mid-Shore may appear at the local department, especially in the Income Maintenance Division. The responsibility of the local Director to supervise local personnel that would deal with these clients or make these referrals in our view presents issues under the exception criteria relating to job duties.

Moreover, the Board is the managing and policy making entity for Mid-Shore. It is responsible for developing funding request decisions and documents, and for overseeing the entity's fiscal management. Also, despite the Women's Services Director's indication that she deals mostly with the Executive Director, the Board is the final authority responsible for compliance with the contract and the substantial regulatory provisions relating to this program. We have in the past considered several situations involving employees who wished to be employed by service providers to their agency (see, for example, Opinions No. 85-20, No. 85-10 and No. 82-41), and have generally prohibited these kinds of relationships, even where the provider in question was not connected with their State duties.

We have been concerned about situations where private contractors could potentially compromise an agency's ability to effectively monitor a contract by involving agency employees in its activities. This is especially a problem where the individual involved has a high-level position, such as being being the local Director. Under all of these circumstances, we therefore advise the Requestor and the agency that his service (or that of his counterparts in other counties) would be inconsistent with the provisions of the Ethics Law, to the extent that he would serve in his private capacity, and that an exception to allow the service would not be permissible under the regulations.

We have, however, in several situations advised that individuals could serve on the Boards of private entities where they serve at their agency's direction and in fulfillment of their State duties. We have found that this type of service does not generally result in the type of private employment relationship intended to be addressed by the Law's outside employment prohibitions. (See, for example, Opinions No. 86-32, No. 85-26, No. 82-11 and No. 80-5.) Opinion No. 82-11, in particular, involved a situation similar to the one presented here, where several DECD employees were permitted to fill "DECD seats" on a private economic development company. The agency had expressed the interest in the employee's participating on the private board to ensure the maintenance of a coordinative approach to economic development activities in which the State (through DECD) and the private entity were involved.

This type of service has been allowed only when it is strictly within the constraints on such service as discussed in earlier Opinions. As noted in our Opinion No. 80-5, this includes that the employees' appointment and service should be at the pleasure of their agency; it should be clear that their actions on the Board reflect the officially defined policy of their agency; and it should be clear that no compensation, reimbursement (other than what would be allowable under State regulations) or other remuneration be provided to them in connection with their service with Mid-Shore.

If the Department of Human Resources concludes that its interest in assuring the vigorous development of the services provided by Mid-Shore in these five Eastern Shore counties can best be served by having officials in the local Departments serve as State representatives on the Board, then we believe that the principles followed in these earlier Opinions can be applied here, and this service would therefore be allowed within these limitations. We advise further, however, that this service may not include the person's participation as an officer of the Board. In our view, service as an officer involves more commitment and responsibility to the specific goals of the private entity than would be consistent with service as part of the individual's State employment.

M. Peter Moser, Chairman
   William J. Evans
   Reverend John Wesley Holland
   Betty B. Nelson
   Barbara M. Steckel

Date: August 13, 1987