Policy 1900: Contracts and Board Member Disclosure Information

The Board shall not approve a contract in which a Board member, the family member of a Board member (Family Member), or a member of the Board member's household (Household Member) is a payee or has a financial interest unless the following disclosure, voting, and recording requirements are met. 

Definitions

1. Family Member: Family Member means a person's spouse or spouse's sibling or child; a person's sibling or sibling's spouse or child; a person's child or child's spouse; a person's parent or parent's spouse, and includes these relationships created by adoption or marriage. 
2. Household Member: Household Member means anyone living in the Board member's household at the time the contract will be voted on by the Board.
3. Financial Interest:Financial interest means any contract, bid, or financial transaction with the District in which any of the following apply:
   • The Board member, Family Member, or Household Member is a direct party to the contract, bid, or financial transaction;
   • The contract, bid, or financial transaction is with any firm, partnership or other unincorporated association, in which the Board member, Family Member, or Household Member, is a partner, member, or employee;
   • The contract, bid, or financial transaction is with a professional limited liability company organized pursuant to the Michigan Limited Liability Company Act, if the Board member, Family Member, or Household Member, is a member (not merely an employee) of the company;
   • The contract, bid, or financial transaction is with any corporation in which the Board member, Family Member, or Household Member is a stockholder owning more than 1 % of the total stock outstanding in any class if the stock is not listed on a stock exchange, or owns stock that has a present market value in excess of$25,000.00 if the stock is listed on a stock exchange;
   • The contract, bid, or financial transaction is with a corporation in which the Board Member, Family Member, or Household Member is a director, officer, or employee; 
   • The contract, bid, or financial transaction is with a corporation in which a trust, if the board member, Family Member or Household Member, is a beneficiary, owns more than 1 % of total stock outstanding in any class if the stock is not listed on a stock exchange, or owns stock with a present market value in excess of $25,000 if the stock is listed on a stock exchange; or
   • Any trust of which the Board member, Family Member or Household Member is a beneficiary or trustee.

Disclosure Requirements 

A Board member shall promptly disclose any financial interest in the contract, bid, or financial transaction to the Board of Education, which disclosure shall be a matter of record in its official proceedings. This disclosure shall be made in the following ways: 

1. If the contract, bid, or financial transaction is for emergency repairs or services, the Board member must promptly disclose any financial interest in the contract or financial transaction by filing a sworn affidavit with the Secretary of the Board. The disclosure shall be made a matter of record in the Board's official meeting minutes as outlined inc. below.
2. If the Board member, Family Member, or Household Member will directly benefit from a contract, bid, or financial transaction in an amount less than $250.00 and less than 5% of the public cost of the contract or financial transaction, the Board member must disclose the financial interest in the contract or financial transaction by filing a sworn affidavit with the Secretary of the Board. The disclosure shall be made a matter of record in the Board's official meeting minutes as outlined in c. below.
3. If the Board member, Family Member, or Household Member will benefit by $250.00 or more, or 5% or more of the public cost of the contract, bid, or financial transaction the financial interest must be disclosed in one of two ways:
   • By notifying, in writing, the President of the Board of the financial interest at least seven (7) calendar days before the meeting at which a decision regarding the contract will be made. If the President of the Board is the individual with the conflict of interest, disclosure must be made to the Secretary of the Board. The disclosure shall be made public in the same manner as in public meeting notice; or
   • By disclosing the financial interest in the contract, bid, or financial transaction at a Board meeting. Under this option, the Board may not vote on the relevant contract or financial transaction until a subsequent Board meeting convened not sooner than seven (7) calendar days after the meeting at which the disclosure was made. 
4. If the Board member, Family Member, or Household Member's financial interest in the contract, bid, or financial transaction exceeds $5,000.00, the Board member must disclose the financial interest in the contract, bid, or financial transaction at a Board meeting, and the Board may not vote on the contract or financial transaction until a subsequent Board meeting convened not sooner than seven (7) calendar days after the meeting at which the disclosure was made. Amendments or renegotiations of a contract, bid, or financial transaction or additional payments under a contract or financial transaction, which were not authorized by the contract, bid, or financial transaction at the time initially approved or awarded are also subject to the disclosure and recording requirements of this policy. 
5. The Board of Education must disclose the following summary information in its official minutes:
   • The name of each party involved in the contract, bid, or financial transaction;
   • The terms of the contract, bid, or financial transaction, including duration, financial consideration between parties, facilities or services of the school District included in the contract, and the nature and degree of assignment of employee of the District for fulfillment of the contract; and
   • The nature of the financial interest.
6. The Board member making the disclosure shall recuse themselves from any deliberation regarding a contract, bid, or financial transaction in which they have a financial interest. 
7. Voting Requirements. The contract or financial transaction must be approved by a vote of not less than 2/3rds of the full membership of the Board in open session without the vote of the Board member making the disclosure. However, that if 2/3rds of a majority of the members of the Board are required to abstain from voting based on this policy, then for purposes of that contract or financial transaction, the Board members who are not required to abstain constitute a quorum of the board and are eligible to vote. This does not apply where the contract or financial transaction is between the District and a trust in which the Board member is a beneficiary or a trustee. In that case, a 2/3 vote of the full Board is required.
8. This policy shall not apply to:
   • Contracts between the school District and another public entity.
   • Contracts for public utility services where the rates are regulated by the state or federal government. 

See also Policy 3610-Purchasing Goods and Services.