By Attorney Jenna Bishop
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.
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