A Local Government Association Board Member's Possible Conflicts
According to <a href="http://www.seacoastonline.com/apps/pbcs.dll/article?AID=/20101228/NEWS/…; target="”_blank”">an
article yesterday on seacoastonline.com</a>, a committee of the Select
Board of <a href="http://en.wikipedia.org/wiki/North_Hampton,_Nh" target="”_blank”">North
Hampton, NH</a> (pop. 4,500) brought to the Select Board its concern
about the town administrator dealing with health insurance issues when
he was on the board of <a href="http://www.nhlgc.org/">the state's
Local Government Center</a>, a local government association that makes
available to towns in the state a health insurance plan, among other
services. The concern was whether the administrator could be "objective
in his investigation of alternatives to that organization handling the
town's health care benefit program."<br>
<br>
The Select Board decided that there was no conflict. "On the contrary,"
the Board wrote, "we feel fortunate that [the administrator] has
voluntarily decided to spend the extra time and effort to represent the
interests and concerns of the town of North Hampton."<br>
<br>
There is an apparent conflict in this situation. There is also a
potential conflict. But why is it not an actual conflict? And how
should it be handled?<br>
<br>
A local government official's obligation is to get his government
employees the best price for the level of insurance determined by the
government. Does the board member of a local government association
have a conflicting obligation? For example, is it a board member's
obligation to get as many local governments as possible signed up for
its insurance plans, so that the organization can prosper? Not really.
Such a board member should be representing its government on the board,
and the government representatives on the board should be seeking to
create the best-priced insurance plans that would be sustainable. They
are there not to represent the association against their governments,
but to represent their governments to make the association work for
them.<br>
<br>
As long as the board member is representing its government on the
board, and not the association's interests separate from the
governments, there is no actual conflict. If, however, an administrator
were to prevent other insurers from bidding on her town's insurance
plan, that would be evidence that the administrator was favoring the
association's interests over the town's.<br>
<br>
<b>A Built-in Conflict</b><br>
The apparent conflict here is an odd one. An official on the board of a
local government association gets no concrete benefit from this
position. And the local government stands in a different position vis à vis a
local government association than it does with other nonprofits doing
business with the government, because the government is not simply a
purchaser, but a member that helps determine what the services are and
how much they will cost. By its very nature, a local government
association cannot have an arm's-length relationship with a local
government. Generally, conflict laws are intended to prevent relationships that are not arm's-length, but there are such relationships that are beneficial to a government. And this is one. The relationship has a built-in conflict, but it is not
harmful to the local government, at least by its nature.<br>
<br>
By having a board member, a town actually has more control over its
vendor than it otherwise would. So as long as an official is
representing the best interests of her government, as she should be,
since that is her only reason for being on the board, then there is no
conflict that could be harmful to the public or to its trust in its government officials.<br>
<br>
<b>Possible Problems</b><br>
But it's important to be realistic. Anyone who gets involved in an
association of her professional peers can get carried away not only
with the interests of the association, but also with her position in
her professional community. For example, a town administrator might use
her position on the board to be recognized by her peers in larger towns
and cities in the state, so that when a higher-paying position opens
up, she will be more likely to be recommended for it, and chosen. An
elected official might use his position on the board to garner support
from other elected officials in the state to help further his political
career at the state level. And every organization has its own internal
forces that create feelings of loyalty that can conflict with an
official's obligations to her town.<br>
<br>
However, these are not conflicts that should lead to the
administrator's recusal in the North Hampton situation. The local
government association is not an independent organization seeking a
contract with the town, but rather a membership organization in which
the town itself has special influence. One must assume that one's
representative on the board of the organization, whether an appointee
or elected official, is representing the town's interests on the board.<br>
<br>
<b>A Different Angle</b><br>
A different angle on this situation can be seen by what happened in my
own town a few years ago, when
I discovered the opposite problem. Our first selectman, who had
responsibility for bidding out contracts, allowed the specifications of
a non-health insurance bid to exclude the state local government
association's insurance plan, even though he sat on its board (and it
was the least expensive insurance plan available). Even his board
position did not cause him to put the interests of his town first. His
act of favoritism went against what might be perceived as a conflict.
What is important is that this favoritism, which did not benefit
himself personally (although possibly others), harmed the town.<br>
<br>
This would also be the case if the administrator were to favor the
association's health plan in a way that harmed the town. It would not
be due to a conflict, but rather due to favoritism that was harmful to
the town, favoritism that was either due to institutional pressures and
loyalties or to furthering his own career.<br>
<br>
<b>Dealing Responsibly with the Apparent Conflict</b><br>
It's important to distinguish between actual conflicts and situations
that might appear to be conflicts, but are not. Not only is this fair
to officials, but it educates them about what conflicts of interest
are. However, even situations that are not conflicts, but might appear to
be, need to be handled responsibly.<br>
<br>
The best way to deal with this potential, but unlikely problem is to
have someone ensure that the specifications for the health insurance
bid are neutral, and to handle the bid with the utmost transparency. Since the administrator is not likely an insurance
expert, some neutral professional should be involved anyway. It would
be best if the administrator did not select the insurance consultant
who would be looking over his shoulder. That would provide sufficient
protection to the town.<br>
<br>
Robert Wechsler<br>
Director of Research-Retired, City Ethics<br>
<br>
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