Opinion 96 - 14

This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

COMMUNITY COLLEGES -- Conflicts of Interest (purchases from hardware store owned by college trustee)

CONFLICTS OF INTEREST -- Approval of Contracts (post-audit of disbursements from petty cash fund) -- Exceptions (consideration $100 or less) -- Purchases and Sales (community college purchasing from hardware store owned by college trustee)

EDUCATION LAW, §6304(6); GENERAL MUNICIPAL LAW, §§801, 802(2)(e): A member of the board of trustees of a community college would have a conflict of interest prohibited by article 18 of the General Municipal Law if, in any fiscal year, the college purchases supplies from a hardware store owned by the trustee and the sum of the purchases plus the consideration under other contracts with the college in which the trustee has an interest exceeds $100.

You ask whether a member of the board of trustees of a community college would have a conflict of interest if the college purchases supplies from a hardware store "owned" by the trustee. You state that the purchases would be made from the college's petty cash fund. The amount of each individual purchase would not exceed $200, but the aggregate amount of such purchases would equal approximately $2,000 per year. You also state that it is unclear whether the hardware store is operated as a sole proprietorship, partnership or corporation, but that if the hardware store is operated as a corporation, we may assume that the trustee owns more than five percent of the corporation's stock.

Article 18 of the General Municipal Law (§800 et seq.) contains the provisions of law which relate to conflicts of interest of municipal officers and employees, including the officers and employees of a county (see General Municipal Law, §800[4], [5]). For this purpose, officers and employees of a county community college are considered to be county officers and employees (see, e.g., 1988 Opns St Comp No. 88-52, p 105; 1987 Opns St Comp No. 87-75, p 111).

Pursuant to General Municipal Law, §800(3), a municipal officer or employee has an "interest" in any contract with his or her municipality if he or she receives a direct or indirect pecuniary or material benefit as a result of that contract. In addition, a municipal officer or employee is deemed to have an "interest" in the contracts of a firm, partnership or association of which he or she is a member or employee, and in the contracts of a corporation of which he or she is an officer, director, employee or stockholder (General Municipal Law, §800[3][b]-[d]). For this purpose, a "contract" includes any express or implied claim, account or demand against or agreement with a municipality (General Municipal Law, §800[2]). Unless a statutory exception applies (see General Municipal Law, §802), that interest is prohibited if the officer or employee, individually or as a member of a board, has the power or duty to: (a) negotiate, prepare, authorize or approve the contract or approve payments thereunder; (b) audit bills or claims under the contract; or (c) appoint an officer or employee who has any such powers or duties (General Municipal Law, §801).

Education Law, §6304(6) provides, inter alia, that the board of trustees of a community college shall authorize the treasurer of the college to establish and maintain petty cash funds, not in excess of $200 each, for specified college purposes and undertakings. These petty cash funds are available to pay, in advance of audit, properly itemized and verified or certified bills for materials, supplies or services furnished to the college upon terms calling for the payment of cash upon the delivery or rendering thereof. Lists of all expenditures from the petty cash funds must be presented to the board of trustees at each of its regular meetings, together with the bills supporting the expenditures, for audit and the board must direct reimbursement of the petty cash funds from the appropriate budgetary item or items in an amount equal to the total of such bills which it audits and allows. The college treasurer is personally liable for any bills or portions thereof disallowed upon audit.

Thus, based on the foregoing, a purchase of materials or supplies by the community college from the trustee's hardware store would constitute a "contract" because it is an "agreement" by parties for the sale of specified goods at a certain price (see Opns St Comp No. 91-63, p 167). The fact that the purchase price would be paid at the time of sale with moneys from the college's petty cash fund means that the "agreement" would be fully performed at the time of sale, but would not negate the existence of the "agreement". Depending on whether the hardware store is operated as a sole proprietorship, partnership or corporation, the trustee either would have an "interest" in such a contract because he or she would receive a pecuniary benefit as a result of the contract or would be deemed to have an "interest" in the contract because his or her firm, partnership or corporation would be a party to the contract. Unless one of the exceptions in General Municipal Law, §802 is applicable, the trustee's interest would be prohibited because as a member of the board of trustees he or she has the power to audit the hardware store's bill (cf. Education Law, §6306[7], pertaining to the powers of the board of trustees to enter into contracts).

Based on the facts presented, it appears that only one of the exceptions in General Municipal Law, §802 is pertinent in this instance. General Municipal Law, §802(2)(e) provides an exception for contracts in which a municipal officer or employee has an interest if the total consideration payable under the contract, when added to the aggregate amount of all consideration payable under contracts in which the individual had an interest during the fiscal year, does not exceed $1001. Thus, in a given fiscal year, the trustee would not have a prohibited interest in any contract between the college and the hardware store so long as the consideration under that contract, plus the consideration under other contracts with the college in which the trustee has an interest, does not exceed $100. The trustee, however, would have a prohibited interest in any contract which would cause the $100 limit to be exceeded.

With respect to purchases that are within the $100 limit, we also note that the courts of this State have held public officials to a high standard of conduct and, on occasion, have negated certain actions which, although not violating the literal provisions of article 18, violate the spirit and intent of the statute, are inconsistent with public policy, or suggest self-interest, partiality or economic impropriety (see, e.g., Zagoreosv Conklin, 109 AD2d 281, 491 NYS2d 358; Matter of Tuxedo Conservation and Taxpayers Ass'n v Town Board of the Town of Tuxedo, 69 AD2d 320, 418 NYS2d 638; Conrad v Hinman, 122 Misc 2d 531, 471 NYS2d 521). Therefore, we believe that the trustee should not participate in the discussion or vote in connection with the audit of any bills resulting from purchases within the $100 limit (see also General Municipal Law, §806).

Accordingly, it is our opinion that a member of the board of trustees of a community college would have a conflict of interest prohibited by article 18 of the General Municipal Law if, in any fiscal year, the college purchases supplies from a hardware store owned by the trustee and the sum of the purchases plus the consideration under other contracts with the college in which the trustee has an interest exceeds $100.

June 21, 1996
Arthur Carl Spring, Esq., County Attorney
County of Fulton


1 Senate bill number S. 3377A, which has been passed by both houses of the Legislature, but has not yet been acted on by the Governor, would increase the $100 limit to $750.