For 2024, the OSBA legal division has decided to bring back a popular blog feature: question of the month. We will be focusing on questions that apply to many school board members and come up frequently in phone calls and presentations.  

2024's first question of the month is: Can a school board member sell anything to the district? There are a couple of laws that apply to this question.  

First, there is a criminal statute, Ohio Revised Code (RC) 2921.42, which prohibits a school board member from having an interest in the profits or benefits of a school district contract or using the influence of their public position to secure the contract. If convicted of a violation of RC 2921.42(A)(4), a public official can face criminal penalties including jail time and fines. RC 2921.42 has several exceptions. More information about the restrictions and the applicable exceptions is available in this Ohio Ethics Commission information sheet. 

However, even if a board member can meet the exceptions to RC 2921.42 and avoid violating the criminal law, there is another statute that applies, RC 3313.33, which has fewer exceptions. RC 3313.33 provides that no school board member “shall have, directly or indirectly, any pecuniary interest in any contract of the board.” RC 3313.33 prohibits a board member from selling goods or services to the board, even if the board member does not participate in the board’s decisions on the contract, unless the board member can meet one of the narrow exceptions in the statute.   

The Ohio Attorney General’s (AG) office has issued several opinions over the course of many years interpreting RC 3313.33 (and a similar earlier statute) in a variety of situations. The AG has concluded that a board member would have prohibited direct or indirect pecuniary interests in a district contract in these situations:  

Although the AG has concluded that the exceptions to RC 2921.42 do not apply to RC 3313.33, there are a few exceptions in RC 3313.33. If a school board member is an employee of another public agency, or of a private institution of higher education, the board member can have a pecuniary interest in a contract between the board and their employer. However, the board member is prohibited from participating in any discussion or debate on the contract and from voting on the contract. Further, the board member must file an affidavit with the district’s treasurer stating their exact employment status with the public agency or institution of higher education. RC 3313.33 also doesn’t prohibit a board member from holding five percent or less of the stock of a corporation that is doing business with the board, provided that the board member is not an officer or director of the corporation and files an affidavit with the treasurer stating their exact status and connection with the corporation.  

There are also exceptions to RC 3313.33 in other statutes in the Ohio Revised Code. For example, RC 135.11 provides an exception to “any law … prohibiting an officer ... of any subdivision [of the state] from being interested in any contract ... of the subdivision” for certain kinds of contracts. It states that a public official who is an officer, director, stockholder, employee, or owner of any interest in a public depository (such as a bank) “shall not be deemed to be interested, either directly or indirectly, as a result of such relationship” in the deposit of public money with the depository.  

The answer to this question of the month is: 

  • Unless there is an applicable exception, a school board member cannot sell anything to the board and cannot be an employee of a company selling anything to the board.  

  • A school board member can be an employee of a public agency or a private institution of higher education that is selling goods or services to the board provided that: (1) they do not participate in discussion, debate or vote on the contract; and (2) they file the required affidavit with the treasurer.  

  • A board member can own five percent or less of the stock in a corporation that is selling items to the district provided that the board member is not also an officer or director of the corporation and files the required affidavit with the treasurer.  

A board member who is an owner or employee of a company, public agency, or nonprofit organization that would like to do business with the district they serve should consult with the board’s legal counsel about the prohibition in RC 3313.33 and whether there are any exceptions that apply. 

Board members with general questions about these restrictions are encouraged to call the legal division at (855) OSBA-LAW.

Posted by Jennifer A. Hardin on 2/5/2024

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