97.07

OPINION NO. 97-07

An advisory opinion has been requested regarding whether the State Treasurer, who also serves on the Board of Public Works, the Maryland Health and Higher Education Facilities Authority, and other State boards, may serve as a member of the Board of Trustees of the Middle States Association of Colleges and Schools, an organization that accredits elementary schools, high schools, and institutions of higher education. We advise, based on the information provided, that this affiliation is allowed, as long as there continue to be no issues in the context of either activity.

The Middle States Association of Schools and Colleges (the Association or MSA) is a voluntary nonprofit nongovernment membership organization open to all public and private schools and colleges that request and agree to periodic self study and evaluation. It is one of six regional accrediting organizations in the United States, and its region includes New York, New Jersey, Pennsylvania, Delaware, Maryland, Washington, D.C., Puerto Rico, and the Virgin Islands. Its purposes as set out in its charter are to accredit institutions of higher education, secondary education and elementary education in its region, to initiate and sustain research, and to provide an aegis under which representatives of these and other educational organizations can meet in discussion of educational problems and pursuit of solutions. The Association's Bylaws provide that it acts through its accrediting commissions, which set criteria and levels of educational excellence and effectiveness for educational institutions. The Association is governed by a Board of Trustees including 4 executive officers and up to 12 others, elected by the membership. In addition to members who are employed by member organizations, the Board of Trustees is to include at least three members who are broadly representative of the public interest and who hold no professional position in an educational institution. Trustees serve for three-year terms to a maximum of two terms, and are not compensated.

According to its Bylaws, the duties of the Association's Board of Trustees are to: approve the budget of the Association Office, appropriate funds for expenses, establish salaries and personnel guidelines for Association staff, provide for an annual audit, approve new staff positions, elect trustees, carry out Association meetings, publish the annual proceedings, perform other appropriate functions, and approve periodic reports. The Bylaws also establish four accrediting commissions and provide by delegation of authority from the Association that these commissions are to carry out the accreditation, evaluation, consultation and all other appropriate activities on behalf of the Association. They are to publish lists of accredited schools, adopt standards for accreditation, and keep confidential records relating to the evaluation and accreditation of any constituent member. The Commissions appoint their own staff, elect their own members from among their constituents, and manage their own finances subject to the Bylaws and guidelines of the Association.

The accreditation process involves a periodic review that occurs on a 5- or 10-year cycle and begins with a year-long self-study review by the institution. After this review a team composed of volunteers recruited by and representing the particular MSA Commission comes on site to the institution to review the self-study and otherwise evaluate the institution. A report is provided to the institution. This report may include negative findings and could include a warning regarding necessary changes, which would be further reviewed in one year. We are advised that the Association Board has no role in this process, or any knowledge of any particular school or college that is being evaluated. Apparently the accreditation review is directed primarily at programmatic and general resource issues, with facilities and capital issues only as a secondary consideration. Though this process of review is characterized as voluntary, as a practical matter, accreditation by MSA or some other comparable reviewing organization is treated as necessary for most educational institutions. Department of Education staff indicate that in fact all Maryland schools participate in the accreditation program.

The State Treasurer was elected by the Legislature to serve as Treasurer in 1995. The Treasurer's Office is established by the Constitution with the responsibility for managing and protecting State funds and property. The Treasurer selects and manages State depository facilities, is the custodian of the State's stock, bonds, etc., and plans, prepares and advertises State of Maryland General Obligation Bond issues. The Treasurer is also responsible for the procurement of financial and insurance services for the State and, apparently in part as a result of federal limitations established in the early 1990's, has recently played an increasing role in the State's capital program. As part of his official position the Treasurer also serves as a member of the Board of Public Works (which includes as a constituent unit the School Construction program) and as a member of the Maryland Health and Higher Education Facilities Authority.

This request involves the Treasurer's continuing service as a public member of the Board of Trustees of the Association. He has served in various ways with MSA for many years, first as a member of a constituent commission and currently as a member of the MSA Board of Trustees. He indicates that his service with the Association is based in part on previous service as a member of a local Board of Education as well as his general public finance experience. He indicates that his specific position as Maryland State Treasurer was not a factor and notes in fact that his affiliation with MSA began years before his becoming State Treasurer. The Treasurer advises that his role on the MSA Board does not involve any direct information or action regarding any particular school or institution's accreditation status, and further that his duties as Treasurer do not directly impact on issues that would relate to the accreditation of the various institutions involved in bond and other financial matters in which he and his Office are involved.

For example, the Treasurer advises that the bonding process in the State involves several layers of review, and that the bonds themselves are general obligation bonds issued after the fact of a construction activity to reimburse the general treasury for funds previously paid out in connection with a particular project. The Treasurer therefore indicates that neither he nor his office have project-by-project control or programmatic involvement in bond projects. Moreover, we are advised by staff in other State entities with which the Treasurer is affiliated that satisfying accreditation requirements has generally not been presented as a justification or argument for funding of any particular project, either as to public school construction funding or higher education loan programs.

We have considered this request under the outside employment and prestige provisions of §§15-502 and 15-506 of the Ethics Law (State Government Article, §§15-502 and 15-506, Annotated Code of Maryland). As to the prestige issue, it primarily arises from the fact that the Treasurer's position is a high level and visible position and there could be concern that service on an important and prestigious private Board that resulted from one's official status could be viewed as improper use of position. Based on the information provided, however, it does not appear that his service on the MSA relates to or grew out of his official position, nor do we believe that there are currently any identified economic interests that would raise concerns under this provision.

The employment provisions of §15-502 prohibit an individual from being employed by an entity that contracts with or is under the authority of his agency (subsection (b)(1)), or from having any other employment relationship that would impair an individual's impartiality or independence of judgment (subsection (b)(2)). We have generally advised that service on the operating Board of a private entity would be viewed as an employment relationship even if not compensated. Though there appear to be no contractual or regulatory relationships here that would bring the strict prohibition of subsection (b)(1) into play, since the Treasurer serves on a managing Board and would therefore be viewed as employed by the Association, the impairment provisions of subsection (b)(2) could be a factor here. This provision has generally been viewed as a complement to the strict employment provision, designed to apply in situations where the relationships are less formal than the contractual and regulatory interactions addressed in subsection (b)(1), but where there are clear interactions and relationships that suggest the serious potential for a conflict of interest or appearance of conflict.

In applying these principles to service on a particular private board, we have considered whether the activity involved interaction with persons or programs likely to involve the individual's agency or agency programs, either by providing services to a common client population, or by involvement in policy or advocacy activities. We have in several situations, for example, advised that service on the board of a variety of human services and provider entities is barred for individuals in the Department of Human Resources and other agencies that are involved in program development and provision of services to individuals also serviced by the providers. (See for example, Opinion No. 90-16.) In considering the Treasurer's situation, however, it does not appear, based on the information provided, that this involvement with a private agency that accredits educational institutions necessarily presents concerns as to his official role in bonding and other funding programs relating to these institutions in the State. We believe that as the facts are presented here, particularly considering that his MSA affiliation pre-dated his selection as Treasurer, the relationships seem to be remote and the likelihood of any population overlap is limited. We therefore advise that continuance of this affiliation is allowable, assuming of course, that there continue in the future to be no interactions or issues arising from any potential overlap between the authority and functions of the Association and the Treasurer's State duties.

Michael L. May, Chairman,
   Mark C. Medairy, Jr.,
   Charles O. Monk, II,
   Robert J. Romadka,
   April E. Sepulveda

Date: July 15, 1997