Disclosures Required by House Bill 1925 and House Bill 23

Transcription

1 Disclosures Required by House Bill 1925 and House Bill 23 Amy Magee, Senior Attorney for Community Colleges TASB Legal and Policy Services for Community Colleges This information is provided for educational purposes only to facilitate a general understanding of the law or other regulatory matter. This information is neither an exhaustive treatment on the subject nor is this intended to substitute for the advice of an attorney or other professional advisor. Consult with your attorney or professional advisor to apply these principles to specific fact situations.

2 Disclosure of Interested Parties House Bill 1295

3 Disclosure of Interested Parties Required to be filed by a business entity entering into a qualifying contract with a college district.

4 Disclosure of Interested Parties Applies to a contract that: (1) requires an action or vote by the governing body before the contract may be signed; or (2) has a value of at least $1 million.

5 Exceptions Contracts for sponsored research Interagency contracts of a state agency or institution of higher education

6 Interested Party 1. Has a controlling interest in the contracting business entity or 2. Is an intermediary

7 Interested Party Controlling Interest 1. Ownership or participating interest exceeding 10%; 2. Membership on business entity s governing board if the board has no more than 10 members; or 3. For privately held entities, service as an officer of an entity with four or less officers or one of the four most highly compensated officers

8 Interested Party Intermediary Actively participates in facilitating the contract or negotiating the terms of the contract, including a broker, intermediary, adviser, or attorney for the business entity.

9 Filing Process Business entity submits the disclosure to the college district at the time of the signed contract submission. The college district may not enter into the contract without the submission.

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11 Form 1295

12 Form 1295

13 Filing Process Business entity submits the disclosure to the district at the time of the signed contract submission. The district may not enter into the contract without the submission. Not later than 30 days after receipt of the disclosure, the district submits a copy to the Texas Ethics Commission, which will adopt the form and rules by December 1, 2015.

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16 Chapter 176 Disclosures House Bill 23

17 Local Government Code Chapter 176 Added in 2005 to require officers of local government entities and those who contract with local government entities or are considering doing business with a local government entity to make certain financial and business disclosures.

18 House Bill 23 Select interim committee reviewing statutes and regulations related to ethics (including personal financial disclosure laws) determined existing law was insufficient.

19 Local Government Three Key Areas of Expansion: Officer Gifts Family Relationship

20 Applicability Chapter 176 applies to a person who is: 1. A vendor; or 2. A local government officer of a local governmental entity.

21 Vendor

22 Local Government Entity A county, municipality, school district, charter school, junior college district, water district created under Subchapter B, Chapter 49, Water Code, or other political subdivision of this state

23 Local Government Entity A local government corporation, board, commission, district, or authority to which a member is appointed by the commissioners court of a county, the mayor of a municipality, or the governing body of a municipality.

24 Local Government Entity The term does not include an association, corporation, or organization of governmental entities organized to provide to its members education, assistance, products, or services or to represent its members before the legislative, administrative, or judicial branches of the state or federal government.

25 Basic Rule (before HB 23) Local government officers (LGOs) and vendors must file conflicts disclosure statements if: 1. A business relationship between an LGO or LGO s family member and vendor results in taxable income >$2,500; or 2. Vendor has given LGO or LGO s family member gift(s) with an aggregate value >$250.

26 Local Government Officer HB23 replaces the category of an employee to whom the entity has extended disclosure requirements with a category consisting of an agent who exercises discretion in the planning, recommending, selecting, or contracting of a vendor.

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28 Agent

29 Vendor

30 Section A records administrator shall maintain a list of local government officers of the local governmental entity and shall make that list available to the public and any vendor who may be required to file a conflict of interest questionnaire.

31 Family Member A person related to another person within the first degree by consanguinity or affinity. See Tex. Gov t Code ch. 573, subch. B

32 Family Member Consanguinity The vendor is the LGO s: First Degree Parent Child

33 Family Member Affinity The vendor is the LGO s spouse -or- The vendor is the LGO s spouse s: -or- The vendor is the spouse of the LGO s:

34 Gifts

35 Gifts An LGO shall file a conflicts disclosure statement if a vendor has given to the LGO or an LGO s family member gift(s) that have an aggregate value of more than $100 [$250] in the 12-month period preceding the date the LGO becomes aware that a contract has been executed; or is being considered.

36 Gifts An LGO is not required to file a conflicts disclosure statement in relation to a gift accepted by the officer or a family member if the gift is: 1. A political contribution as defined by Title 15, Election Code; or 2. Food[, lodging, transportation, or entertainment] accepted as a guest.

37 Family Relationship An LGO shall file a conflicts disclosure statement if a vendor has a family relationship with the LGO.

38 Family Relationship

39 Family Member v. Family Relationship Family member (first degree by consanguinity or affinity) applies to income and gift disclosures. *Family member definition removes reference to ending affinity by death or divorce of spouse. Family relationship (third degree by consanguinity or second degree by affinity) is a new category of disclosures.

40 Family Relationship Consanguinity The vendor is the LGO s: First Degree Parent Child Second Degree Grandparent Grandchild Sister Brother Third Degree Great Grandparent Great Grandchild Aunt/ Uncle Niece/ Nephew

41 Family Member Affinity The vendor is the LGO s spouse -or- The vendor is the LGO s spouse s: -or- The vendor is the spouse of the LGO s: First Degree Parent Child Second Degree Grandparent Grandchild Sister Brother

42 Example: Family Relationship LGO Disclosure The vendor enters into a contract with a college district, or the college district is considering entering into a contract with the vendor. The district s purchasing director is an LGO as he exercises discretion in the planning for the vendor selection. The purchasing director s sister-in-law is employed by the vendor (related in the second degree by affinity). As an LGO, the purchasing director must file a disclosure (CIS) as to the family relationship. The vendor will also file a CIQ.

43 Example: Family Relationship Vendor Disclosure A vendor has a business relationship with a college district and enters or seeks to enter into a contract. The district s lawyer is an LGO as she exercises discretion in the contracting with the vendor. The lawyer s step-grandchild is employed by the vendor (related in the second degree by affinity). The vendor must file a disclosure (CIQ) as to a family relationship. The lawyer as an LGO will also file a CIS.

44 Enforcement An LGO commits an offense if (s)he knowingly fails to file a required conflicts disclosure statement not later than 5 p.m. on the seventh business day after the date on which the officer becomes aware of the facts that require the filing of the statement.

45 Enforcement A vendor commits an offense if (s)he knowingly fails to file a required conflicts disclosure statement not later than 5 p.m. on the seventh business day after the later of the date on which the vendor: Begins contract negotiations or discussions Submits a bid, proposal, or other writing related to the potential contract Becomes aware of an interest to disclose

46 Enforcement 1. Contract < $1 million = Class C misdemeanor 2. Contract at least $1 million but less than $5 million = Class B misdemeanor 3. Contract at least $5 million = Class A misdemeanor

47 Enforcement A local governmental entity may reprimand, suspend, or terminate the employment of an employee who knowingly fails to comply with a requirement under Chapter 176.

48 Enforcement The governing body of a local governmental entity may, at its discretion, declare a contract void if the governing body determines that a vendor failed to file a required conflict of interest questionnaire.

49 Form CIS

50 Form CIS

51 Form CIQ

52 Form CIQ

53 Records Retention The records administrator shall maintain the CIS and CIQ forms in accordance with the college district s retention schedule and post them on college district s website.

54 Disclosures Required by House Bill 1925 and House Bill 23 Amy Magee, Senior Attorney for Community Colleges TASB Legal and Policy Services for Community Colleges