Ask Matt - March 2011 – Gift Law

Ask Matt - March 2011 – Gift Law Matt Carver, J.D., Director of Legal Services tel - 515.267.1115 fax - 515.267.1066

Gift Law • Governing body to review and provide opinions on issues of gift law: • Iowa Ethics & Campaign Disclosure Board (“Ethics Board”) • 510 E 12th, Suite 1A,  Des Moines, IA 50319  (515) 281-4028 phone  (515) 281-4073 fax • http://www.iowa.gov/ethics/

Gift Law • Key portions of Iowa’s gift law are found in Iowa Code Chapter 68B. • §68B.2 goes over definitions • §68B.21 gives the “Legislative intent” • §68B.22 covers “Gifts accepted or received” • §68B.23 concerns “Honoraria”

Gift Law • Iowa Code §68B.21. Legislative intent - It is the goal of the general assembly that public officials and public employees of the state be extremely cautious and circumspect about accepting a gratuity or favor, especially from persons that have a substantial interest in the legislative, administrative, or political actions of the official or employee. Even where there is a genuine personal friendship, the acceptance of personal benefits from those who could gain advantage by influencing official actions raises suspicions that tend to undermine the public trust. It is therefore the intent of the general assembly that the provisions of this subchapter be construed to discourage all gratuities, but to prohibit only those that create unacceptable conflicts of interest or appearances of impropriety.

Gift Law • As stated by the Ethics Board: “The intent of the donor and the potential impact on the behavior of the recipient are irrelevant for the law to be violated. Rather, the issue is whether or not the person giving the gift is a "restricted donor." (IECDB AO 2007-09)

Gift Law • Iowa Code §68B.2 • (24) “Restricted donor” means a person who is in any of the following categories: • a. Is or is seeking to be a party to any one or any combination of sales, purchases, leases, or contracts to, from, or with the agency in which the donee holds office or is employed. • b. Will personally be, or is the agent of a person who will be, directly and substantially affected financially by the performance or nonperformance of the donee's official duty in a way that is greater than the effect on the public generally or on a substantial class of persons to which the person belongs as a member of a profession, occupation, industry, or region.

Gift Law • Iowa Code §68B.2 • (24) “Restricted donor” means a person who is in any of the following categories: (cont.) • c. Is personally, or is the agent of a person who is, the subject of or party to a matter which is pending before a subunit of a regulatory agency and over which the donee has discretionary authority as part of the donee's official duties or employment within the regulatory agency subunit.

Gift Law • Below are the gift law exceptions most pertinent to school employees, found in Iowa Code §68B.22: • . . . • b. Informational material relevant to a public official's or public employee's official functions, such as books, pamphlets, reports, documents, periodicals, or other information that is recorded in a written, audio, or visual format. • c. Anything received from anyone related within the fourth degree by kinship or marriage, unless the donor is acting as an agent or intermediary for another person not so related.

Gift Law • The term "degree of kinship" is computed by counting upward from the person in question to the nearest common ancestor and then downward to the relative in question. Each person counts as one degree. The resulting degree of kinship is the sum of these two counts. • For example: father = 1 degree, grandfather = 2 degrees, uncle = 3 degrees, first cousin = 4 degrees.

Gift Law • Below are the gift law exceptions most pertinent to school employees, found in Iowa Code §68B.22: (cont.) • d. An inheritance. • e. Anything available or distributed free of charge to members of the general public without regard to the official status of the recipient. [this does not apply to functions at the general assembly, subsection (s)] • f. Items received from a bona fide charitable, professional, educational, or business organization to which the donee belongs as a dues-paying member, if the items are given to all members of the organization without regard to individual members' status or positions held outside of the organization and if the dues paid are not inconsequential when compared to the items received. (e.g., SAI)

Gift Law • Below are the gift law exceptions most pertinent to school employees, found in Iowa Code §68B.22: (cont.) • g. Actual expenses of a donee for food, beverages, registration, travel, and lodging for a meeting, which is given in return for participation in a panel or speaking engagement at the meeting when the expenses relate directly to the day or days on which the donee has participation or presentation responsibilities. • h. Plaques or items of negligible resale value which are given as recognition for the public services of the recipient. (Is the plaque on your wall really valuable to anyone else?) • i. Food and beverages provided at a meal that is part of a bona fide event or program at which the recipient is being honored for public service. (e.g., educator appreciation lunch)

Gift Law • Below are the gift law exceptions most pertinent to school employees, found in Iowa Code §68B.22: (cont.) • j. Nonmonetary items with a value of three dollars or less that are received from any one donor during one calendar day. • . . . • m. Funeral flowers or memorials to a church or nonprofit organization. • n. Gifts which are given to a public official or public employee for the public official's or public employee's wedding or twenty-fifth or fiftieth wedding anniversary. (I would still consider the reasonableness of the gift.)

Gift Law • Below are the gift law exceptions most pertinent to school employees, found in Iowa Code §68B.22: (cont.) • q. Gifts other than food, beverages, travel, and lodging received by a public official or public employee which are received from a person who is a citizen of a country other than the United States and are given during a ceremonial presentation or as a result of a custom of the other country and are of personal value only to the donee. (e.g., sister cities program)

Gift Law • Below are the gift law exceptions most pertinent to school employees, found in Iowa Code §68B.22: (cont.) • r. Actual registration costs for informational meetings or sessions which assist a public official or public employee in the performance of the person's official functions. The costs of food, drink, lodging, and travel are not “registration costs” under this paragraph. Meetings or sessions which a public official or public employee attends for personal or professional licensing purposes are not “informational meetings or sessions which assist a public official or public employee in the performance of the person's official functions” under this paragraph. • (e.g., may get in free to a computer hardware company’s conference, but must pay for other costs) • . . .

Gift Law - Scenarios • Your district is located in Crabapple Cove, Iowa. Dr. Pierce is a retired medical doctor in your community, who currently owns a successful business, Rubber Chickens R Us, that produces gag gifts. Dr. Pierce’s business, in appreciation for the hard work of all of your school administrators, would like to give each a gift card for $50. Rubber Chickens R Us does no business with the school district, and does not wish to do business with the school district in the future. Dr. Pierce is just a philanthropist. Neither he nor his business is a “restricted donor” and your administrators may receive his gift, short of a school district policy stating otherwise.

Gift Law - Scenarios • For the next example, imagine you are back in Crabapple Cove, but Dr. Pierce’s business is a sporting goods store, Pierce Sports, Inc.. Dr. Pierce is offering to give free warm-up suits to each of your coaches, athletic director, and administrators, so you may “try them out”, and see if his products are of the quality that the school desires. Pierce Sports is wishing to do business with your school district in the future, with the hope of providing jerseys for all of your athletic teams. In this case, Pierce Sports would be a restricted donor, and the gifts would be illegal. • Also, remember that the gift law applies to immediate family members as well, so Pierce’s operation may not get around the law by offering warm-ups to the spouses of employees.

Gift Law - Scenarios • For our last trip to Crabapple Cove, imagine that Pierce Sports has donated 15 windbreakers to the school district, and the district is going to give them out as raffle prizes at its teacher appreciation day. In this scenario, even though Pierce Sports may be a restricted donor, the gift of Pierce Sports is to the public body itself, and not to specified employees. As such, the school may give the windbreakers away during the appreciation day raffle. The Ethics Board has previously opined that truly randomly drawn door prizes are not subject to gift restrictions.

Gift Law - Scenarios • School ABC has a House Construction class, and the teacher makes all arrangements for construction materials. One item that he has to buy is windows. • This year, the company whose product he chose is based in Minnesota. The company offered to fly our students and instructor from Minneapolis to a town in Minnesota (the school would get the students and instructor to Minneapolis) in their corporate plane, give them a tour of their manufacturing facility, feed them, house them overnight, complete the tour the next day, and fly them back to Minneapolis. May the company cover the teacher’s expenses on the trip, due to his obligation to supervise students, or does the school have to pay for his expenses?

Participant Poll

Gift Law - Scenarios Answer: • There is no question about the students being able to accept the trip, since they are not public employees. • Megan Tooker, Executive Director and Legal Counsel of the Iowa Ethics Board, replied to the superintendent: • “Because the company is a ‘restricted donor’ and because your instructor is a ‘public employee’ for purposes of our gift statute, your instructor may not accept the proposed trip from the company. Certainly, the school district can pay for his trip. The instructor's role in the trip (i.e. chaperone) is irrelevant.”

Gift Law - Scenarios • The Marine Corps annually flies members of your administration to San Diego, California, so that they may learn more about Marine Corps training and programs. All expenses are covered. • Is this a violation of gift law?

Participant Poll

Gift Law - Scenarios • Answer: • No, because the Marine Corps is not a restricted donor.

Gift Law - Trips • Common gift law, trip issues: • a) a company wanting to fly the athletic director out of state to show off a field turf project at another school; • b) a travel agency wanting to fly music teachers to a vacation hot spot to show off educational programs, with the hope that the music teachers will schedule band trips; • c) a computer company offering to fly the superintendent and technology director to a computer conference, as well as provide rooms and meals, where they may learn more about the company’s computer products and programs. • .

Gift Law - Scenarios • If your district finds particular value in the conference or visit, to check out a program or learn more about product offerings, you may always go ahead and pay for the trip and expenses on the school district’s dime. • It is appropriate for a restricted donor to pay for travel costs, registration, meals and/or lodging if the employee is participating “in a panel or speaking engagement at a meeting when the expenses relate directly to the day or days on which the recipient has participation or presentation responsibilities.” (Iowa Code §68B.23(2)(a) and Iowa Code §68B.22(4)(g)) • So, if the employee is participating in a panel on a Tuesday, and the conference is going through Thursday, the school district or individual employee should pick up the cost for Wednesday and Thursday, but the restricted donor may pick up travel costs and the expenses relating to Tuesday’s panel participation.

Gift Law – Gifts to Staff • In 2007, the Ethics Board clarified that most gifts to teachers by students are authorized under Iowa law, because students are not normally “restricted donors”. (IECDB AO 2007-09) As the Ethics Board shared in that opinion: “While a teacher certainly impacts a student through the grading and discipline process, it is difficult to see how this would rise to the level of a student being ‘directly and substantially affected financially’ as required by the statute.” • However, students may not be used indirectly to pass on a gift. If the student’s parent is a restricted donor, I would encourage teachers to turn down gifts that have monetary value over $3. For example, let’s say that Tanner gives his Spanish teacher a $20 gift card to a bookstore. However, Tanner’s mom isn’t just anyone, but the owner of a travel agency that yearly attempts to get the Spanish teacher to take a group of students on a trip to Spain over summer break.

Gift Law – Gifts to Staff • School districts are authorized to adopt a more restrictive gift policy regarding gifts to staff. Perhaps give some thought to what is reasonable vs. extravagant. • As one school administrator shared with me shortly after my column on this topic went out: “From my readings I came across a great way to solve the ‘material gifts’ to teachers by students, i.e. parents. Schools should encourage students to give the ‘gift of self.’ Over the years the most memorable items from students that I have kept have been those hand written notes, cards, pictures, drawings, and stories. Schools should do more to promote this as a means of saying thank you rather than allowing or sanctioning gift giving.”

Gift Law – Other IECDB Opinions • Working lunches are subject to the gift law. (IECDB AO 2001-10) • Governmental bodies may receive a free gift with a purchase, as long as the business provides that same gift offer to all of its customers. (IECDB AO 2003-11) • 28E entities are not subject to gift law, but government employees participating in such an entity should consider whether the gift may relate back to their other position (IECDB AO 2007-06)

Gift Law – Corrective Actions • Some options if a district employee has perhaps unwittingly accepted an unauthorized gift from a restricted donor: • Returning the gift. • Donating the gift to your school district, another public body, or a bona fide educational or charitable organization within thirty (30) days. • Reimbursing the restricted donor for the value of the gift received. • Failure to perform one of the above tasks may result in criminal prosecution by the county attorney.

Gift Law - Questions ???????

Ask Matt - March 2011 – Gift Law