By Attorney Jenna Sabroske
Senate File 283, "Relating to Conflicts of Interest in Certain Government Public Contracts," was signed into law by Governor Reynolds on May 3, 2019 and will go into effect on July 1, 2019.
Senate File 283 increases the amount of "benefit" that school board directors, county employees and officers, and city employees and officers may receive under a contract for the purchase of goods or services, without that benefit constituting a conflict of interest that would void the contract.
School districts, counties, and cities are prohibited from entering purchase contracts for goods or services that would provide a certain level of "benefit" to a director of the school district, or an officer or employee of the county or city (unless an exception applies to the contract) under Section 279.7A (school board directors), Section 331.342(2)(j) (county officers and employees), and Section 362.5(3)(j) (city officers and employees), Code of Iowa, respectively. Previously, the amount of prohibited benefit under such contracts was $2,500 for directors of school districts and $1,500 for county or city officers and employees. After July 1, 2019, the threshold for the amount of benefit under a contract that constitutes a conflict of interest will be increased to $6,000 per fiscal year under all three Code of Iowa sections.
The practical impact of Senate File 283 is that school districts, counties, and cities should be able to purchase goods and services more easily, because fewer contracts for goods and services will be excluded due to conflicts created by a director, officer, or employee's benefit under the contract. For example, there would no longer be a conflict of interest that would void the contract in the following situations:
- A school board director wants to coach a basketball team for the high school, under a coaching contract with the school district that pays $3,000.
- A county wants to purchase a riding lawn mower that costs $1,600 from a local dealer's store, and the dealer's spouse is the county auditor.
- A city needs around $2,000 of plumbing repair work completed and wants to contract with the local plumbing company, though one of the owners of the plumbing company is also a city council member.
If you have questions about this client alert, please contact one of the attorneys in our Board Governance Practice Group.
About Ahlers & Cooney's Client Alerts
Our Client Alerts are intended to provide occasional general comments on new developments in Federal and State law and regulations which we believe might be of interest to our clients. The Client Alerts should not be considered opinions of Ahlers & Cooney, P.C., and are not intended to provide legal advice as a substitute for seeking professional counsel. Readers should not under any circumstance act upon the information in this publication without seeking specific professional counsel. Ahlers & Cooney will be pleased to provide additional details regarding any article upon request. Additional copies of this Client Alert may be obtained by contacting any attorney in the Firm or by visiting the Firm's website at www.ahlerslaw.com. ©2018 Ahlers & Cooney, P.C. All Rights Reserved.
NOTICE TO THE PUBLIC
The determination of the need for legal services and the choice of a lawyer are extremely important decisions and should not be based solely upon advertisements or self-proclaimed expertise. This disclosure is required by rule of the Supreme Court of Iowa. Memberships and offices in legal fraternities and legal societies, technical and professional licenses, and memberships in scientific, technical and professional associations and societies of law or field of practice does not mean that a lawyer is a specialist or expert in a field of law, nor does it mean that such lawyer is necessarily any more expert or competent than any other lawyer. All potential clients are urged to make their own independent investigation and evaluation of any lawyer being considered. This notice is required by rule of the Supreme Court of Iowa.