If I sit on a Tennessee human resource agency board because of my elected office, must I resign that office to apply for the agency's executive director job?

Subject

Opinion No. 12-37, Human Resource Agency Board Member Conflict of Interest, March 19, 2012

Plain-English summary

Tennessee's "human resource agencies" are regional bodies set up under Tenn. Code Ann. §§ 13-26-101 to -111 to coordinate human services within an economic development district. They are run by boards whose members include county mayors, municipal mayors, metropolitan government CEOs, designated local agency representatives, and one state senator and one state representative from the district. The state legislators and elected mayors sit on the board ex officio, by virtue of their elected office.

Representative John Mark Windle asked what happened if one of those elected officials wanted to be hired as the agency's executive director. Could they keep their elected office during the hiring process, and just recuse from the relevant votes? The AG said no. Tennessee's conflict-of-interest statute, Tenn. Code Ann. § 12-4-101, is broader than just voting. It makes it unlawful to be "directly interested" in any contract that the official has a duty to "vote for, let out, overlook, or in any manner to superintend." A board member applying for a contract to become executive director is, by definition, directly interested in a contract they have an oversight duty over.

So once the member decided to pursue the executive director position, they had to resign from the board. And because the board seat was attached to the elected office, the only way to resign the seat was to resign the office. Otherwise the official would remain in the conflicted position regardless of any recusal.

Currency note

This opinion was issued in 2012. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Historical background and statutory framework

Human resource agencies

Tenn. Code Ann. §§ 13-26-101 to -111 authorized human resource agencies, regional bodies created by chief elected public officials of the counties and cities within an economic development district under Tenn. Code Ann. §§ 13-14-101 to -114. Section 13-26-103(a) prescribed the board's composition: county mayors, municipal mayors, metropolitan CEOs, one designated local agency representative per county, and one state senator and one state representative from the district. No proxy voting. Section 13-26-103(d) required the board to appoint a policy council with the power to "appoint persons to senior staff positions" under § 13-26-104, subject to ratification by the full board.

The conflict-of-interest statute

Tenn. Code Ann. § 12-4-101(a)(1) made it "unlawful for any officer, committee member, director, or other person whose duty it is to vote for, let out, overlook, or in any manner to superintend any work or any contract in which any municipal corporation, county, state, development district, utility district, human resource agency, or other political subdivision created by statute shall or may be interested, to be directly interested in such contract."

The penalty under Tenn. Code Ann. § 12-4-102 was severe: forfeiture of all pay or compensation associated with the contract, mandatory dismissal from board membership, and ineligibility to serve in the same or similar position for ten years. The Tennessee Supreme Court in Savage v. Mynatt, 156 Tenn. 119, 123 (1927), had described this as a "drastic and far-reaching" measure to meet a "serious menace to public funds."

The statute's reach is intentionally broad. The Tennessee Court of Civil Appeals in State ex rel. Abernathy v. Robertson, 5 Tenn. Civ. App. 438, 454-55 (1914), said the statute "should be liberally construed so as to effectuate the objects sought." See also Madison County v. Alexander, 116 Tenn. 685 (1906); Hope v. Hamilton County, 101 Tenn. 325 (1898).

The AG's earlier opinion on industrial development authorities

The AG had decided a closely analogous question in Op. Tenn. Att'y Gen. 10-55 (April 23, 2010), holding that § 12-4-101(a)(1) prohibits a board member of an industrial development authority from serving as an employee of the authority. The 2012 opinion applied the same logic to human resource agencies.

The chain of resignations

The AG broke down the logic in steps:

1. A board member of a human resource agency has a duty under § 12-4-101 to "vote for, let out, overlook, or in any manner to superintend" the agency's contracts, including the executive director employment contract.

2. If that board member becomes "directly interested" in that employment contract (by applying for the position), the statute is violated.

3. Recusal from a particular vote does not solve the problem, because "overlook" and "superintend" reach much further than voting. A board member could be found illegally "overlooking" or "superintending" a contract even if never called upon to vote on it.

4. So the board member must resign the board seat before pursuing the position.

5. If the board seat is held by virtue of the elected office (and is a nondelegable duty), the only way to vacate the seat is to resign the office.

The result was harsh but predictable: an elected official who wanted to apply for the agency's top staff job had to give up their elected office to do so.

The policy council wrinkle

The questioner had noted that the policy council, not the full board, has the power to appoint senior staff. Could a board member skip the council and avoid the conflict that way? The AG said no. Even if the policy council, not the full board, conducted the actual appointment vote, the board still had to ratify, and the board member retained the broad oversight role over agency contracts. The conflict survived whether or not the board member sat on the policy council.

Common questions

Why couldn't a board member just abstain from the executive director vote?

The conflict-of-interest statute is not just about voting. It covers any official whose duty is to "vote for, let out, overlook, or in any manner to superintend" the contract. Abstention from one vote doesn't change the broader oversight role. The AG noted the statute "covers much broader territory than voting." A board member retains the oversight power even when not casting a particular vote.

Was the AG saying you cannot ever hire someone from your board?

No. The AG was saying that someone wishing to be hired had to resign first. Once they were no longer on the board, they were no longer in the conflicted position. The 10-year disqualification under § 12-4-102 only applied if the conflict-of-interest provision was actually violated. A clean resignation before applying avoided that.

Did the AG explain how this interacts with normal recusal practices?

Recusal works for ordinary conflicts (a contract with a relative, a contract with a business in which a board member has an interest). But the conflict of being a direct party to the contract is qualitatively different. There is no level of recusal that can cure being on both sides of the deal. You either are or aren't on the board.

What if the board member only sat on the board because of an elected office: could they just resign from the board and keep the office?

The opinion said no, if the board seat was a nondelegable duty of the office. The mayor or legislator sat by virtue of the office. The only way to relinquish the seat was to relinquish the office. If the office had the power to delegate the seat to a designee, that might be different, but in this scheme the duty attached to the officeholder.

Did the AG impose this rule retroactively?

The opinion is forward-looking advice. It addresses what must happen "once a board member decides to pursue the executive director position." It is not a retrospective evaluation of past hires.

What if the elected official's term was almost over anyway?

The AG didn't address timing. The duty to resign attached as soon as the official decided to pursue the position. Even a short remaining term wouldn't excuse the conflict during that period.

Citations

• Tenn. Code Ann. § 12-4-101 (general conflict-of-interest statute)
• Tenn. Code Ann. § 12-4-102 (penalties: forfeiture, dismissal, 10-year ineligibility)
• Tenn. Code Ann. §§ 13-26-101 to -111 (human resource agency statute)
• Tenn. Code Ann. § 13-26-103 (board composition, no proxy voting)
• Tenn. Code Ann. § 13-26-104 (policy council powers)
• Tenn. Code Ann. §§ 13-14-101 to -114 (economic development districts)
• Savage v. Mynatt, 156 Tenn. 119, 299 S.W. 1043 (1927)
• State ex rel. Abernathy v. Robertson, 5 Tenn. Civ. App. 438 (1914)
• Madison County v. Alexander, 116 Tenn. 685 (1906)
• Hope v. Hamilton County, 101 Tenn. 325 (1898)
• Op. Tenn. Att'y Gen. 04-016 (Feb. 5, 2004)
• Op. Tenn. Att'y Gen. 10-55 (April 23, 2010)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2012/op12-037.pdf

Original opinion text

March 19, 2012
Opinion No. 12-37
Human Resource Agency Board Member Conflict of Interest

QUESTION

A member of the board of a human resource agency is applying to be employed as the agency's executive director. This member serves on the board by virtue of his or her elected office. Under the statutes creating human resource agencies, the agency board must create a policy council, which need not consist of board members. Tenn. Code Ann. § 13-26-104 authorizes the policy council to "appoint persons to senior staff positions." The policy council's decision is then subject to ratification by the board. Tenn. Code Ann. § 13-26-103(a) allows the board to appoint an executive committee.

Based on these facts, is the member required to resign from the board and, therefore, his or her elective office since the member serves on the board only by virtue of his or her elective office: a) before the policy council votes on whether to employ that member as the executive director; b) before the executive committee if necessary votes to employ that member as the executive director; and c) before the board votes on whether to ratify the policy council's decision to hire the member?

OPINION

Once a board member of a human resource agency decides to pursue appointment as the executive director of the agency, the member must not only resign from the board but also must resign from his or her elected office, given that one of the elected official's nondelegable statutory responsibilities is to serve on the board.

ANALYSIS

This opinion concerns a member of the board of a human resource agency operating under Tenn. Code Ann. §§ 13-26-101 to -111. A human resource agency is created by the chief elected public officials of the counties and cities of an economic development district established under Tenn. Code Ann. §§ 13-14-101 to -114. The agency is governed by a board including the county mayor of each county within the district, the mayor of each municipality within the district, the chief executive officer of any metropolitan government within the district, one representative from a local agency in each county appointed by the county mayor or chair, and one state senator and one state representative whose districts lie within the development district. Tenn. Code Ann. § 13-26-103(a). No votes may be cast by proxy. Tenn. Code Ann. § 13-26-103(b). The board may appoint an executive committee to act for it and determine the authority of such committee. Tenn. Code Ann. § 13-26-103(a).

The board also is required to appoint a policy council. Tenn. Code Ann. § 13-26-103(d). Membership of the council "shall be broadly based and equitably distributed between providers and consumers of human resource services and/or established by public law." Id. Thus, the policy council may or may not include members of the agency's board. The powers of the council include

the power to adopt bylaws, to appoint persons to senior staff positions, to determine major personnel, fiscal, and program policies, to approve overall program plans and priorities, and to assure compliance with conditions of and approve proposals for financial assistance under this chapter, subject to ratification by the governing board.

Tenn. Code Ann. § 13-26-104. (emphasis added).

The question posed is whether a board member who sits on the board by virtue of his or her elected office must resign from the board, which can only be accomplished by resigning his or her elected office, before the policy council, the board's executive committee, or the board votes on whether to employ that member as the executive director.

Statutes governing human resource agencies contain no specific conflict of interest provisions. Thus, Tenn. Code Ann. § 12-4-101, the general conflict of interest statute, governs this issue. Subsection (a) addresses prohibited conflicts of interest as follows:

It is unlawful for any officer, committee member, director, or other person whose duty it is to vote for, let out, overlook, or in any manner to superintend any work or any contract in which any municipal corporation, county, state, development district, utility district, human resource agency, or other political subdivision created by statute shall or may be interested, to be directly interested in such contract. "Directly interested" means any contract with the official personally or with any business in which the official is the sole proprietor, a partner, or the person having the controlling interest. "Controlling interest" includes the individual with the ownership or control of the largest number of outstanding shares owned by any single individual or corporation. This subdivision (a)(1) shall not be construed to prohibit any officer, committeeperson, director, or any person, other than a member of a local governing body of a county or municipality, from voting on the budget, appropriation resolution, or tax rate resolution, or amendments thereto, unless the vote is on a specific amendment to the budget or a specific appropriation or resolution in which such person is directly interested.

Tenn. Code Ann. § 12-4-101(a)(1) (emphasis added). Under this provision, a board member may not be a direct party to a contract that he or she has a duty as a board member to vote for, let out, overlook, or in any manner superintend.

Any person who violates the provisions of Tenn. Code Ann. § 12-4-101(a)(1) must forfeit all pay or compensation associated with the contract at issue, and shall be dismissed from the membership on the Board and is ineligible to serve in the same or a similar position for ten years. Tenn. Code Ann. § 12-4-102. See also Tenn. Att'y Gen. Op. 04-016 (Feb. 5, 2004). The Tennessee Supreme Court has observed that the severity of these penalties evidence an "intent of the lawmakers to meet a serious menace to public funds by drastic and far-reaching provisions." Savage v. Mynatt, 156 Tenn. 119, 123, 299 S.W. 1043, 1044 (1927).

There can be no question that Tenn. Code Ann. § 12-4-101(a)(1) prohibits a board member of a human resource agency to "vote for, let out, overlook, or in any manner to superintend" a contract whereby the board member would become the executive director of the agency. See Tenn. Att'y Gen. Op. 10-55 (April 23, 2010). (§ 12-4-101(a)(1) prohibits a board member of an industrial development authority from serving as employee of authority). This statutory language is extremely broad, and is to be liberally construed. See State ex rel. Abernathy v. Robertson, 5 Tenn. Civ. App. 438, 454-55 (1914) (finding this statute was enacted "to protect the public from official corruption and oppression; and, though it is drastic in some of its provisions, it should be liberally construed so as to effectuate the objects sought"). See also Madison County v. Alexander, 116 Tenn. 685, 686-89 (1906); Hope v. Hamilton County, 101 Tenn. 325, 327-33 (1898).

Accordingly, given the broad language as well as the severe sanctions imposed for a violation of this statute, once a board member decides to pursue the executive director position then the member must immediately resign from the board, given at that point the member has a direct interest in a contract of employment that the member has a duty to "overlook" and "in any manner to superintend." The member then is placed in the position forbidden by the statute, required to oversee and appoint the executive director position yet now personally interested in obtaining the position. Admittedly, a board member's application to be hired as executive director might not come before the full board if the policy council, which has the power to appoint persons to senior staff positions subject to ratification by the full board, does not recommend that the board member be hired. In that situation, if the board member is not also a member of the policy council (or if the board member resigns from the policy council), then the board member would never "vote for" his or her own employment contract. But the language of § 12-4-101 covers much broader territory than voting, and in keeping with the courts' construction to interpret the statutes' prohibitions broadly, the board member could be found to be illegally "overlooking" or "superintending" such a contract even if he or she is never called upon to vote on it. A similar analysis would apply if, in addition to policy council approval, the contract required executive committee approval. In both cases the Board member could conceivably influence the selection process, even though not directly voting on the contract itself, and such possible influence is what the prohibition against "overlooking" or "superintending" a contract is intended to avoid.

Furthermore, given in this case the member holds his or her position on the board solely by virtue of an elected office and it is one of the statutory duties of the office that cannot be delegated, then by necessity the board member would have to resign the elected office to allow his or her successor to assume the board position that the member must vacate. Again, this conclusion is in conformity with the statute's longstanding overarching purpose to avoid conflicts between public officials and their private interests.

ROBERT E. COOPER, JR.
Attorney General and Reporter

WILLIAM E. YOUNG
Solicitor General

ANN LOUISE VIX
Senior Counsel

Requested by:
The Honorable John Mark Windle
State Representative
23 Legislative Plaza
Nashville, Tennessee 37243-0141