New York State
Ethics Commission


Advisory Opinion No. 91-4: Application of Public Officers Law §74, to employees of the NYS Department of Social Services who wish to participate as members of the Board of Directors for an on-site day care center, those who anticipate placing children in day care at the center, and employees charged with carrying out DSS day care functions in view of the DSS statutory and regulatory obligations to certify for operation and inspect day care centers of this nature.

Introduction

The following advisory opinion is issued in response to an inquiry from the Deputy Commissioner and Counsel to the New York State Department of Social Services ("DSS"), with additional information received in January 1991. DSS has agreed to provide space to a not-for-profit on-site day care at the DSS central office in Albany. The Deputy Commissioner asks for guidance concerning the application of the Code of Ethics and Standards contained in Public Officers Law §74 to employees of DSS who wish to serve on the board of directors of the day care center, to those employees who wish to place children at the center and to those employees who will have direct professional contact with the center in the course of their job duties.

Pursuant to the authority vested in the New York State Ethics Commission ("Commission") by Executive Law §94(15), the Commission hereby renders its opinion that

(1) a) It is a violation of Public Officers Law §74 for a DSS employee who is a policymaker or whose job duties directly or indirectly concern day care centers to serve as a member of the board of directors for a day care center.

b) It is not a violation of Public Officers Law §74 for a DSS employee who has no direct or indirect job responsibilities concerning day care and who has not been designated as a policy-maker to serve as a member of the board of directors for a day care center.

(2) a) DSS employees who have direct job responsibilities relating to day care centers and who place their own child(ren) in any day care center must recuse themselves in any matter with respect to the particular day care center in which their own child(ren) is enrolled.

b) The enrollment of a child in a day care center by a DSS employee who has no job responsibilities relating to day care does not constitute a conflict of interest.

(3) In order to avoid a conflict of interest or conduct which will raise suspicion among the public that an employee is likely to be engaged in acts that are in violation of his trust, the Commission recommends that all licensing, regulation, inspection and oversight of DSS Day Care, INC. ("DSSDCI") be undertaken by DSS employees who do not have children enrolled at the DSSDCI day care center and, if possible, who do not work at the location in which the day care center is located. In addition, DSS should undertake any other reasonable efforts to reduce the possibility of conflict or the appearance of a conflict in the regulation, inspection and licensing of day care centers at all other locations under its jurisdiction.

Background

In 1981, the Worksite Child Care Initiative began with negotiations with New York State's public employee unions. The collectively negotiated agreements provided funding through legislative appropriations and an organizational structure for the establishment of day care centers throughout the State at State worksites. To date, State agencies have established 44 on-site day care centers, serving approximately 3,000 children. Another four centers are scheduled to open in New York City, which will serve almost 10,000 State employees.

The Committee.

The staff of the NYS Labor-Management Child Care Committee ("Committee") administers the day care provisions contained in the collective agreements between the public employee unions and the State. The Committee is comprised of representatives of five public employee unions which represent State employees and is chaired by a representative of the Governor's Office of Employee Relations. The Committee assists State employees who wish to establish on-site day care centers by helping with the incorporation(1) and certification process and by providing other technical support. The staff of the Committee is comprised of paid State employees who work exclusively on day care administration.

As part of the negotiated agreements, the Committee provides funding to the proposed centers in the form of a start-up grant. In addition to this funding, the "sponsoring" State agency will often donate free space, utilities and cleaning services to the center located on-site.

After the groundwork for a new center is completed with the direct intervention and assistance of the Committee, the administration and operation of the center, a not-for-profit corporation, is turned over to a board of directors, members of which serve without compensation. The majority of the board members are State employees from the State agency which has provided the space for the center.(2)

DSS Day Care, Inc.

DSSDCI is the day care center/not-for-profit corporation which is currently being established at the DSS central offices. The process of obtaining space for the center began in 1984. With the assistance of the Committee, the center is ready to begin operation in 1991. Space was allocated by DSS for the center, the center was incorporated and other obstacles to establishing the center have largely been overcome. Some of the remaining questions, however, relate to the application of Public Officers Law §74 to the composition of the board of directors for DSSDCI, to the regulation of DSSDCI by DSS and to the use of DSSDCI by DSS employees.

The board of directors is currently comprised of 11 DSS employees and 7 others not so employed. The DSS board members are employed in various divisions of DSS including the Office of Human Resources Management, the Office of Minority Program, the Division of Family and Children Services, the Office of Support Services and the Division of Income Maintenance.

The board has duties which are enumerated in the bylaws. Among the duties so enumerated is the power and duty to apply to federal, state and local governmental agencies for all permits and authorizations mandated by law. The board may enter into contracts on behalf of the center and may obtain financing for the center. The board has responsibility to hire an executive director and staff for the center and set the level of compensation.

DSSDCI plans to enroll 48 children in the center. Of that number, approximately 75% of the available places have been allocated for children of DSS employees. Fifteen percent of the remaining slots have been allocated for children of State employees employed by other departments and 10% have been allocated for non-State workers. Thus, approximately 36 spaces in the proposed center have been allocated to children of DSS employees. Approximately 3,000 of 5,000 DSS employees are located in the main office where the center will be located. Approximately 1% of the DSS employees at the main office location will have children in the center at any given time.

Statutory and Regulatory Role of DSS Regarding DSSDCI.

DSS has statutory and regulatory responsibilities regarding day care centers. Specifically, Social Services Law §390(1)(a) provides that:

[N]o place, person, association, corporation, institution or agency shall provide day care for three or more children without a permit therefor issued by the department, or otherwise than in accordance with the terms of said permit and with the regulations of the department for the protection and care, including the health, safety, treatment and training of children.

Social Services Law §390(12) also addresses day care as follows:

The department and authorized agencies responsible for licensing day care centers or group family day care homes or certifying family day care homes shall make unannounced visits of such centers or homes if the department or such authorized agencies receive a complaint that, if true, would indicate that children in such centers or homes are not receiving adequate or appropriate care. In addition, such department and such authorized agencies shall, whenever possible, make at least one unannounced visit to every center, group family day care home or family day care home annually.

DSS has, in addition to the statutory obligations cited above, regulatory responsibilities set forth in Part 418 of Title 18 NYCRR, entitled, "Day Care Centers: Operation and Licensing."

According to DSS, the agency employs approximately 5,000 individuals, 520 of whom are employed in the Division of Family and Children Services, the division which regulates day care centers. Approximately 80 of the 520 individuals in that division work in the Bureau of Child Care, which is directly responsible for approving the incorporation of day care centers and establishing and enforcing standards for day care. The Bureau of Child Welfare Services Law, a part of the Office of Counsel, is extensively involved in the approval of day care centers and the oversight of those centers. The General Counsel and the Associate Commissioner for Legal Affairs directly supervise this unit. Approximately ten individuals in the DSS Office of Audit and Quality Control have regular and frequent contact with day care regulators. The Special Hearings Unit, consisting of approximately 30 hearing officers and support staff, holds hearings on day care licensing.

In addition to the direct involvement of DSS employees cited above, according to DSS, approximately 50% of all DSS staff are indirectly involved in some aspect of the public funding of day care. Because of the large numbers of fiscal, audit and legal staff required to develop and implement DSS (State) policy on day care funding, at least half of the agency is so engaged.(3)

Relevant Statutory Provisions

This inquiry concerns the application of the Code of Ethics to the facts discussed above. The Code of Ethics, found in Public Officers Law §74, provides minimum standards against which State officers and employees are expected to gauge their behavior. The Code is directed at addressing the conflict between the obligation of public service and private interest.

The rule with respect to conflicts of interest is provided in Public Officers Law §74(2):

No officer or employee of a state agency, member of the legislature or legislative employee should have any interest, financial or otherwise, direct or indirect, or engage in any business or transaction or professional activity or incur any obligation of any nature, which is in substantial conflict with the proper discharge of his duties in the public interest.

Following the rule with respect to conflicts of interest, Public Officers Law §74(3), provides standards of conduct which address not only actual but apparent conflicts of interest. The standards which are relevant to this inquiry are found in subsections (e), (f), (g) and (h). Those subsections provide, in relevant part, the following:

  1. No officer or employee of a state agency . . . should engage in any transaction as a representative or agent of the state with any business entity in which he has a direct or indirect financial interest that might reasonably tend to conflict with the proper discharge of his official duties.

  2. An officer or employee of a state agency . . . should not by his conduct give reasonable basis for the impression that any person can improperly influence him or unduly enjoy his favor in the performance of his official duties, or that he is affected by the kinship, rank, position or influence of any party or person.

  3. An officer or employee of a state agency should abstain from making personal investments in enterprises which he has reason to believe may be directly involved in decisions to be made by him or which will otherwise create substantial conflict between his duty in the public interest and his private interest.

  4. An officer or employee of a state agency . . . should endeavor to pursue a course of conduct which will not raise suspicion among the public that he is likely to be engaged in acts that are in violation of his trust.

Discussion

The Commission has reviewed the facts presented and addresses the application of §74 to three groups of employees: DSS employees who wish to serve as members of the board of directors of a day care center; DSS employees who wish to place children in DSSDCI or other day care centers; and DSS employees who are responsible for statutory or regulatory enforcement of licensing, certification and inspection of day care centers with respect to licensing, certification and inspection of the DSSDCI day care center.

Section 74 and the Board of Directors.

The Commission recently considered the application of Public Officers Law §74, to determine whether a State employee, who had been designated as a policymaker by his State agency, could serve as a member of the board of directors of a not-for-profit agency licensed by the employee's State agency.(4)

The Commission determined that a State employee who has been designated as a policymaker by the agency may not serve on the board of directors of a not-for-profit agency licensed by the agency because of the appearance of a conflict of interest in violation of Public Officers Law §74. The Commission stated the following concerning the service on the board of directors:

Finally, because it is public information that the individual is employed by [the Agency] in the position [designated as policy-making], his presence on the [not-for-profit] board could raise the suspicion among the public that [the not-for-profit] receives preferential treatment or some other competitive advantage over similar not-for-profit organizations because of this individual's relationship with [the Agency] central administration. Every time [the not-for-profit] receives a "benefit" or favorable decision from [the Agency], other providers, as well as the public in general, may conclude such benefit or decision was provided as a result of this individual's influence with and relationship to the [Agency] central administration. And, even if no other provider can assist with placements for the [local facility], his placement of [individuals] with the not-for-profit, as opposed to any other [not-for-profit] may be questioned under §74 of the Public Officers Law.

This question goes beyond simply the appearance of a conflict of interest faced by this policymaker, because of the relationship of his agency with the private entity with which he is affiliated. It strikes at all similar situations, where a policy-making employee desires to serve or is serving on the board of an organization which is regulated or licensed by the State agency with which that individual is employed. We conclude that a question of an appearance of a conflict of interest will always be raised in such circumstances. A policymaker, by definition, has influence in the execution of policy or assists one who does. Even if that policymaker is not in the line of authority to regulate or oversee the private organization on whose board he or she serves, the appearance that he or she can influence other policymakers, with whom he or she works or who have appointed him or her, clearly exists whenever favorable action is taken by the agency towards such organization.

For the foregoing reasons, the Commission concludes that State officers and employees, who have been designated as serving in policy-making positions by their appointing authorities, may not serve as directors or members of the boards of organizations regulated, overseen or licensed by their employing State agency.(5)

Following our reasoning in Advisory Opinion No. 90-25, the Commission finds that policymakers from DSS may not serve on the board of directors for DSSDCI. For a DSS policymaker to serve on the board of directors for the center which is certified, licensed or inspected by DSS represents a violation of Public Officers Law §74.

This conclusion is consistent with the precedent set by an opinion of the Attorney General, which held that a DSS Deputy Commissioner of the Division of Adult Residential Care may not accept a position on the advisory board of a foundation affiliated with an association of operators of adult homes without creating a conflict of interest and violating the code of ethics of Public Officers Law §74.(6)

The question, then, is raised whether the remaining non-policymaking DSS employees are precluded by §74 from serving on the board. There are three categories of employees to consider: employees with direct job responsibilities regarding day care centers; employees with "indirect" job responsibilities regarding day care centers;(7) and employees whose jobs have no responsibilities regarding day care centers.

The Commission concludes that service on the board of directors of the DSSDCI by any DSS employee with direct or indirect job responsibilities regarding inspection, certification, licensing, regulation or fiscal oversight of day care centers, because of the regulatory and statutory obligations of DSS toward all day care centers, is a violation of Public Officers Law §74, because it creates the appearance of impropriety under §74(3)(h). It is not unreasonable to conclude that Department employees with responsibilities relating to day care centers could be perceived as influenced in the execution of their duties by the fact that they are sitting on the board of the day care center provided largely for DSS employees' children. This rule limiting participation by policymakers and employees with direct or indirect responsibility regarding day care centers applies to membership on any day care corporation board, not just to DSSDCI.

The perception that an individual may be motivated in the performance of his or her job duties by a private interest concerning that day care center, rather than the public interest involving the enforcement of the statutes and regulations relating to day care centers in an unbiased and professional manner, leads to a violation of Public Officers Law §74. The conflict between private interest and public service, whether real or perceived, supports the finding of such a violation.

Finally, the Commission concludes that DSS employees who have no direct or indirect job responsibilities regarding day care centers and who have not been designated policymakers may sit on the board of director for DSSDCI or any other day care center board without violating Public Officers Law §74.

Application of §74 to DSS Employees Placing Children in Day Care at DSSDCI.

The second inquiry by DSS concerns application of Public Officers Law §74, to DSS employees who wish to place children in DSSDCI. The conflict of interest provisions in §74 generally address the conflict between private interests and public trust. This conflict is clearly present when an employee charged with implementing or enforcing day care standards is charged with reviewing or inspecting the day care center in which his or her own child is enrolled.(8) Such an employee must recuse himself or herself from such inspection or review of the DSSDCI in order to avoid the appearance of impropriety. Thus, DSS employees with job responsibilities which directly involve DSSDCI day care center inspection, regulation, review, funding or other matters relating to the center in which their own child(ren) is enrolled must recuse themselves from consideration or review of any matter involving that day care center.

However, if a DSS employee has no direct contact with DSSDCI except the enrollment of a child, e.g., there is no direct connection between the employee's job responsibilities and DSSDCI, there is no appearance of a conflict of interest resulting from mere enrollment. There is no conflict of interest created when a DSS employees with no day care responsibility enrolls a child(ren) in a day care center and still performs all of his or her DSS job responsibilities. Thus, there is no conflict of interest when a DSS employee enrolls a child(ren) in the DSSDCI day care center.

Application of §74 to DSS Employees Having Direct Professional Contact with DSSDCI.

DSSDCI must meet all statutory and regulatory standards for a day care centers. DSS is one of the agencies responsible for enforcing these statutory and regulatory standards.

An ethical dilemma arises when recognizing that DSSDCI serves employees of the regulator and is funded in part by the regulating agency, DSS. Any action taken by an employee of DSS in enforcing statutes or regulations of DSS with regard to DSSDCI may be interpreted by the public as being motivated by personal relationships with the center employees, the parents of DSS children placed in the center, relationships with DSS employees/members of the Board of Directors and other factors which would constitute a violation of Public Officers Law §74.(9) The question is how to avoid the appearance of such a conflict while permitting DSS to perform its statutory and regulatory duties, and balancing the importance of supporting on-site day care centers for State employees.

To balance all of these interests, the Commission recommends that all licensing and regulation, including inspection, of DSSDCI be undertaken by DSS employees not having children enrolled in DSSDCI day care center, and, if possible, by employees not assigned to work at the location in which the day care center is located. In addition, DSS should undertake any other reasonable efforts to reduce the possibility of a conflict of interest in the performance of its statutory and regulatory functions with regard to day care centers.

Conclusion

The Commission, therefore, concludes that it is a conflict of interest for a DSS employee who is a policymaker, or whose job duties directly or indirectly concern day care centers, to serve as a member of the Board of Directors for the not-for-profit day care center. DSS employees who have not been designated as policymakers and who have no direct or indirect job responsibilities relating to day care may serve on the Board of DSSDCI or any other day care center. The Commission concludes that DSS employees who place a child in a day care center who have direct job responsibilities relating to day care centers must recuse themselves in any matter with respect to the day care center in which their own child(ren) is enrolled. The Commission concludes that enrollment of a child in a day care center by a DSS employee does not, by itself, constitute a conflict of interest. The Commission believes that this appearance of a conflict of interest under Public Officers Law §74, may be diminished by the actions of DSS to permit recusal of employees with children enrolled in the center, or any center, in which they have a child enrolled. The Commission encourages DSS, in order to prevent a conflict of interest from arising, to permit all licensing, inspection and regulatory oversight functions regarding day care centers to be performed by employees who do not have children enrolled at the specific day care center which they are responsible for, and, if possible, who do not work at the location in which the day care center is located.

This opinion, until and unless amended or revoked, is binding on the Commission in any subsequent proceeding concerning the requesting individual who acted in good faith, unless material facts were omitted or misstated by the person in the request for opinion.

All concur:

Joseph M. Bress, Chair

Angelo A. Costanza
Norman Lamm
Donald A. Odell, Members

Dated: February 14, 1991


Endnotes

1. All day care centers established under the collective agreements are required to be not-for-profit organizations, must have proof of registration as a charity and must have a federal tax identification number in order to receive a start-up grant from the Committee.

2. The information above was provided by the NYS Labor-Management Child Care Advisory Committee in their booklet on Worksite Child Care Center Initiative.

3. The foregoing information was provided by DSS in a letter dated January 11, 1991.

4. Advisory Opinion No. 90-25.

5. The Commission also concluded that those employees, who are under the direct control and supervision of an individual serving in a policy-making position, may not serve as a director or member of the board of an organization regulated or licensed by their employing State agency. This prohibition would preclude a policymaker from designating his or her subordinate to provide services to an organization from which the policymaker is barred by this opinion. See Advisory Opinion No. 90-25.

6. In 1979 Op. Atty. Gen. 66, the Attorney General said:

[a] public official must not only be innocent of any wrongdoing, but he must be alert at all times so that his acts and conduct give the public no cause for suspicion. He must give no appearance of a potential conflict between his official duties and personal activities even though an actual conflict is not present.

The Division of Adult Residential Care has comprehensive responsibility for approval and supervision of the establishment and operation of all adult homes, be they not for profit or privately owned. The Deputy Commissioner, who is the subject of this opinion, direct the activities of the Division. No matter how well intentioned he may be, if any official act of his should be a subject of fair disagreement in a industry, some suspicion might be raised as to whether he was influenced by his relationship to the Foundation For Long Term Care Inc.

Therefore, I conclude that the Deputy Commissioner may not accept a position on the Advisory Board of the Foundation nor may he participate in its activities in a non-voting capacity, since to do so would create a conflict of interest and a violation of the Code of Ethics.

7. The distinction between "direct" and "indirect" job responsibilities is one made by DSS in their letters to the Commission. These individuals with indirect responsibility include those who have responsibility for public funding of child care, including fiscal, audit and legal staff involved in developing and implementing State policy on the amount of public funds to be spent on child care.

8. The Commission notes that it is a conflict of interest under §74 of the Public Officers Law for any employee with direct job responsibilities related to day care to have professional contact with the particular day care center in which his or her own child is enrolled. This is the case regardless of the employing State agency and without regard to the status of the operators of the day care center, e.g., as a not-for-profit or for-profit corporation.

9. The Commission notes that the Department of Health has regulatory responsibilities toward day care centers, and that Department of Health employees directly involved in enforcement of regulations of day care centers who have children enrolled in a particular center are required to avoid violations of §74 of the Public Officers Law by following the guidelines set forth in this opinion for similarly situated DSS employees.



URL: http://www.nysl.nysed.gov/edocs/ethics/91-04.htm