State Departments, Institutions and Agencies; Conflicts of Interest

Subject:

N.C.G.S. 14-234.

Requested By: Robert H. Ward, Director Division of Social Services Department of Human Resources William W. Ivey, County Attorney for Randolph County

Questions: 1. Does a conflict of interest arise if a county director of social services serves as a member of the board of directors of a non-profit corporation organized for the purpose of administering federal funds under the Comprehensive Employment and Training Act (29 U.S.C. Ch. 17; Pub. L. 93203 (1973); Pub. L. 95-524 (1978)), when:

a.

The non-profit corporation will administer federal funds through community programs to which the county department of social services may refer social service clients;

b.

The county department of social services is a potential recipient, through the non-profit corporation, of federal funds, or services by employees of the non-profit corporation and of training of social service employees;

c.

The director, as a member of the board of the non-profit corporation, will approve, or establish policy for entering into, contracts, including contracts with the county department of social services; and

d.

Neither the county director of social services nor any member of his immediate family will realize any direct or indirect benefits by reason of any contractual or other relationship between the county department of social services and the non-profit corporation?

2. Does a conflict of interest arise if an individual, who is not a public official, serves as a member of the board of directors of a non-profit corporation organized for the purpose of administering federal funds under CETA and at the same time serves as a member of the board of directors of another non-profit corporation organized for the purpose of administering programs for the aging (Ch. 143B, Art. 3, Part 14, N.C.G.S.; 42 U.S.C. Ch. 35, Pub. L. 89-73, as amended), when the circumstances and relationships between the corporations will be similar to those described in Question 1 above?

Conclusions: No.

 

1.  
2. No.

    

The questions to which this opinion responds were couched in terms of whether it would be "proper" for persons to serve in the capacities described. It must be noted at the outset that this opinion is not addressed to questions of propriety — which are primarily questions of ethics, public mores or politics — but is addressed solely to questions of legality.

The first question for resolution is whether, under the laws of this State, the duties and responsibilities of a director of a county department of social services, on the other hand, and the duties and responsibilities of a member of the board of directors of a non-profit corporation administering CETA programs in that county, on the other hand, are such that a person serving in both capacities would be unable, per se, to fulfill his legal responsibilities to both organizations. The same question applies to a person simultaneously serving as a director of a non-profit corporation administering CETA programs and of a non-profit corporation administering programs for the aging.

In 1965, the Congress enacted Public Law 89-73, providing programs for older Americans to be administered by the U.S. Department of Health, Education and Welfare. The congress defined a number of worthy objectives of the law and stated: ". . . it is the joint and several duty and responsibility of the governments of the United States and of the several States and their political subdivisions to assist our older people to secure opportunity to the full and free enjoyment . . ." of the objectives defined by Congress. (42 U.S.C. 3001). In 1973, the Congress added a declaration of additional objectives, which states, inter alia: "It is therefore the purpose of this Act, in support of the objectives of this chapter, to . . . (4) insure that the planning and operation of such programs will be undertaken as a partnership of older citizens, community agencies, and State and local governments, with appropriate assistance from the Federal Government." (42 U.S.C. 3003).

The Comprehensive Employment and Training Act was enacted in 1973 with passage of Public Law 93-203. Among the purposes of the Act, as declared by Congress, are ". . . to provide job training and employment opportunities for economically disadvantaged, unemployed, or underemployed persons . . .", enhance self-sufficiency" and ". . . provide for the maximum feasible coordination of plans, programs, and activities under this chapter with economic development, community development, and related activities, such as vocational education, vocational rehabilitation, public assistance, self-employment training, and social service programs." (29

U.S.C. 801) Administration of the Act is placed in the U.S. Department of Labor.

The scheme of implementation is similar for each act: States qualifying under appropriate federal regulations receive grants of federal funds, which are then allocated by the States, together with State shares, to local agencies or organizations for grass roots administration.

The General Assembly subsequently acted to secure for this State the benefits of the federal programs. G.S. 143B-276 imposed upon the Department of Natural Resources and Community Development the duty: "To provide job training and promote employment for economically disadvantaged persons." G.S. 143B-277 provides that the DNRCD shall include all executive functions of the State in the relation to ". . . the job training of economically disadvantaged persons and the promotion of employment for economically disadvantaged persons . . ."

A division of Aging was created in the Department of Human Resources by G.S. 143B-181.1, with the duty, among many others ". . . (3) To stimulate, inform, educate and assist local organizations, the community at large, and older people themselves about aging, including needs, resources and opportunities for the aging, and about the role they can play in improving conditions for the aging; . . . (5) To provide advice, information and technical assistance to . . . non-governmental organizations which may be considering the inauguration of services, programs, or facilities for aging, or which can be stimulated to take such action . . ."

The basic goal of the programs of the Department of Human Resources is stated by G.S. 143B137 to be ". . . to assist all citizens — as individuals, families, and communities — to achieve and maintain an adequate level of health, social and economic well-being, and dignity."

County directors of social services are directed by G.S. 108-19: ". . . (3) To administer the programs of public assistance established by this Chapter." Programs of public assistance established by Chapter 108 include aid to families with dependent children, special assistance for adults and medical assistance to the needy.

The objectives of the federal and state laws are totally consistent and harmonious — to provide assistance to those in need, whether the need rises from age, ill health or economic circumstances. The laws require not only that needs be met, but that opportunities be provided to the indigent, the jobless, the aged. All contemplate cooperative efforts, with CETA specifically stating that plans and programs under that act shall be coordinated with "social service programs." (29 U.S.C. 801).

There is no conflict in the means or ends of the respective programs. To a great extent they may be and are, both practically and legislatively, mutually dependent. This Office is informed that county directors of social services have been encouraged to become involved in CETA programs, because they are in a unique position to discern job opportunities in social services programs. Thus, through interaction of the directors diverse responsibilities, the unemployed receive training and employment and social service recipients received needed services. There is no reason that the same will not be true of a person simultaneously serving an organization administering CETA programs and an organization administering programs for the aged.

It is concluded, therefore, that no intrinsic legal conflict exists between the official duties of a county director of social services and his duties as a director of a non-profit corporation administering CETA programs, which will prevent him from discharging his legal responsibilities to both. The same conclusion applies to an individual serving simultaneously as a director of two separate non-profit corporations, one of which administers CETA programs and the other of which administer programs for the aging.

The second question for consideration is whether the activities in question would be in violation of G.S. 14-234. That statute provides, in pertinent part: "If any person, appointed or elected a commissioner or director to discharge any trust wherein the State or any county, city, or town may be in any manner interested, shall become an undertaker, or make any contract for his own benefit, under such authority, or be in any manner concerned or interested in making such contract, or in the profits thereof, either privately or openly, singly or jointly with another, he shall be guilty of a misdemeanor."

The request for opinion indicates that there are or may be contractual relationships between the corporation administering the CETA programs and the county department of social services, as well as contracts between the corporations administering CETA programs and programs for the aged. The request for opinion also states that the corporate directors receive no remuneration or other thing of value for their services as such, and, further, that neither the directors nor any member of their immediate families will realize any direct or indirect personal benefit by reason of the contractual or other relationships between the non-profit corporations or between the nonprofit corporation and the county department of social services. Upon these facts, there is no violation of G.S. 14-234.

While this opinion is limited to a determination under the laws of this State, investigation and inquiry have not disclosed any federal statute or regulation applicable to the subject of the inquiry.

Rufus L. Edmisten Attorney General

Henry T. Rosser Assistant Attorney General