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Carolina Re: Florida fact-finding trip March 14-15, 2012 Purpose: This memo is drafted to outline the impact of the North Carolina ethics and lobbying laws on the proposed fact-finding trip in Florida on March 14-15, 2012. Though Parents for Educational Freedom in North Carolina (“PEFNC”) sponsored a similar factfinding trip in 2008, our analysis considers specific facts regarding our proposed trip in March to answer the relevant questions. Issue: This memo addresses whether it is permissible for PEFNC, a lobbyist principal under the State Lobbying Law (G.S. Chap. 120C), to provide transportation, lodging, and meals in connection with meetings and a tour of schools in Florida. Conclusion: The transportation, lodging, and meals provided in connection with the tour and meetings would be gifts subject to the Lobbying Law (G.S. 120C-303(a)(1)). However, pursuant to the educational meeting exception in the Lobbying Law, PEFNC may provide those items to State legislators, legislative employees, and public servants. Facts: PEFNC is a non-profit corporation that qualifies for tax-exempt status under Section 501(c)(3) of the Internal Revenue Code (“IRC”) and a North Carolina-registered lobbyist principal. PEFNC will help facilitate a tour of various schools served through Florida’s Opportunity Tax Credit Program. The educational goal of the tour and meetings is to enhance the participants’ understanding of various schools in Florida that participate in Florida’s Opportunity Tax Scholarship Program. In addition to touring schools, the lobbyist principal and legislators will be meeting with key leaders and state groups that made the program possible. PEFNC will pay for transportation, lodging, and meals in connection with the tour and meetings. Applicable Statutory Provisions: G.S. Chapter 120C prohibits, among other things, a lobbyist, a lobbyist principal, or legislative liaison personnel from giving gifts to a designated individual unless an exception to the gift ban listed in G.S. 138A-32(e) applies. G.S. 138A-32(e)(3)(i) permits a lobbyist principal to pay for the “reasonable actual expenditures” of a public servant, legislator, or legislative employee incurred in connection with the individual’s attendance at an educational meeting “for purposes primarily relating to the public duties and responsibilities of the covered person……”
In order to meet the educational meeting requirement, any food, beverages, transportation, or entertainment must be provided to all attendees or defined groups of 10 or more attendees and the meeting must: (a) be attended by at least 10 or more participants; (b) have a formal agenda; and (c) be noticed at least 10 days in advance. Any entertainment provided at the meeting “must be incidental to the principal agenda of the meeting.” Application of Educational Meeting Criteria The North Carolina Ethics Commission adopted several non-exclusive factors that are considered when determining what an “educational meeting” is under G.S. 138A32(e)(3)(i) (“Criteria”). These Criteria are for guidance only, and no one factor is controlling. 1. Is the educational content of the meeting related to a public duty or responsibility of the covered person? The public duties of legislators include making policy decisions that involve school systems. They are responsible for being informed about best education practices in North Carolina and other states across the country. Therefore, studying and visiting schools involved in a statewide Opportunity Tax Credit Scholarship program clearly relates to their responsibilities as a legislator. 2. What is the meeting’s primary purpose? Is it to influence a public servant, legislator, or legislative employee with respect to executive action or to curry favor concretely? Or is the meeting primarily intended to present information to enhance a person’s understanding of a subject matter or for the purpose of selfimprovement? The educational meeting includes visiting participating schools in Florida’s Opportunity Tax Credit Scholarship Program. Their program has shown significant achievement gains for thousands of low-income students. Therefore, the primary purpose of the meeting and trip is educational. 3. What is the nature of the entity holding the meeting? The hosting lobbyist principal is a North Carolina entity with IRC § 501(c)(3) status. 4. Is the lobbyist principal paying for the person’s attendance at the meeting also sponsoring the meeting? The hosting lobbyist principal is paying all related travel costs, including airfare and other necessary transportation, lodging, meals, and other incidental items of nominal value connected to the study trip for the participants who have been designated by nonsponsors as “policymakers.”
5. What is the agenda of the meeting? What portions of the events scheduled include a tour, roundtable discussion, or other educational content? Would the meeting take place regardless of whether the invited designated individuals attend? Who are the speakers? Are they independent experts in their field? What portion of the sessions is held in absence of a meal or entertainment? The meeting is a two-day study trip consisting of educational, meal, and travel time to and from school locations. All activities deemed to be entertainment are both incidental to the principal agenda and purpose of the study trip. The educational time includes acquiring specific information about successful schools in Florida’s scholarship program and what they are doing to meet individual student’s needs. In addition, the educational content will include meeting with key Republican and Democratic leaders and state groups that made the program possible. Many of the speakers on this trip are deemed experts in their fields, whether that is in governmental, public policy, or education issues. In addition, one of the purposes of the meeting is to have legislators participate in this trip, which is why the lobbyist principal pays for their trip-related costs and expenses. Furthermore, a significant portion of the trip is held in the absence of a meal or entertainment. 6. Is the location of the meeting directly related to meeting educational content? Is there a reason for holding the meeting in a location other than where the attendees live or work? Is it necessary to the educational purpose that an individual travel in connection with the meeting? Is the location of the meeting otherwise integral to the educational content of the meeting? Would an individual be capable of obtaining a comparable degree of educational information through means that would not require travel? The trip is being held in another state (Florida). The state was selected for several reasons, one of which is related to the state’s opportunity tax credit scholarship program. There is emphasis on examining how the state has made educational progress through the development of their tax credit program that serves over 37,000 low-income children. Holding the trip in Florida is necessary to meet the educational goals set for the trip. For example, the trip involves visits and tours of the various scholarship program participating schools, and meetings with various leaders relating to the program. An individual would not be capable of obtaining a comparable degree of educational information from other means. 7. Is the length of the educational meeting reasonably necessary to fulfill the educational purpose of the trip? The trip, including travel time to and from Florida, will begin on Wednesday and end on Thursday. The amount of time related to education is reasonably necessary to fulfill the educational requirements.
8. What degree of personal benefit does the individual gain from attendance at the meeting? Does the personal benefit outweigh the public benefit gained by the educational value of the meeting? The “meeting” involves an out-of-state trip to another state that many people may wish to visit, and may be considered a vacation destination for some. However, based on the planned agenda, this will not be a vacation trip for participants. A significant majority of the hours of every day of the trip is being held in educational settings and locations with educational presentations, tours, and discussions. It has significant educational value. Therefore, the personal benefit in attending this trip to Florida would not outweigh the public benefit gained by the educational value. Conclusion Based on the facts presented and the following analysis, the trip to Florida meets the educational meeting criteria. The facts presented establish that: (a) any food, beverages, transportation, or entertainment that is being provided as part of this trip is being provided to all trip participants; (b) the trip has established formal agenda; and (c) notice of the trip will be provided to interested individuals, including all policymaker participants more than 10 days in advance. In addition, entertainment provided will be “incidental to the principal agenda of the meeting.” Therefore, this trip meets the educational meeting exception of G.S. 138A-32(e)(3)(i). The lobbyist principal may pay for the “reasonable actual expenditures” of the invited legislators and public servants for food, beverages, registration, travel, lodging, other incidental items of nominal value, and incidental entertainment incurred in connection with participation in the Florida trip. The lobbyist principal will need to report the “reasonable actual expenditures” made in connection with the legislators and public servants’ participating in the trip as gifts, and name each receiving legislator and public servant on its principal report filed with the Secretary of State’s Office. G.S. 120C-401 and 120C-403(a) and (c).