Did West Ada School Board Member Violate Idaho Code Over “Fiduciary Interest” in a Public Relations Firm?

Last month the Idaho Dispatch wrote a story about a West Ada School Board (WASB) Member, Ed Klopfenstein, who disclosed at a February 9th school board meeting that he had a “fiduciary interest” in a public relations firm called Red Sky. The firm had been hired by the WASB to help with their communications with the public regarding COVID-19.

Idaho Dispatch at the time reached out to both Klopfenstein and Red Sky about their relationship. Red Sky did not respond to our request for clarification.

Klopfenstein referred Idaho Dispatch back to his statement during the school board meeting which only mentioned that he had a fiduciary interest in the company but no other details were given at that time such as what the fiduciary interest was or how long his relationship with Red Sky had existed.

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Idaho Dispatch has obtained new information through a Public Records Request that shows Klopfenstein has had an IT contract with Red Sky for years, knew the board was working with the Red Sky late last year, and he did not disclose his interest until February 9th, after the West Ada School Board had been invoiced for services from Red Sky.

The records request, which contained over 700 pages, had one email in particular that appears to explain Klopfenstein’s interest in Red Sky.

On February 9th, Klopfenstein sent an email to Board Chairman Amy Johnson, Superintendent Dr. Mary Rannels, and Board Clerk Cheri Newbold. He told them that he had received an email from a citizen about his fiduciary interest in Red Sky but he would refuse to answer the citizen’s question.

Klopfenstein goes on to say that he has had a relationship with Red Sky from before he ever became a school board member. Klopfenstein has been a school board member at West Ada since June 7th, 2016.

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In the email, Klopfenstein says that he has a contract to do IT work with Red Sky and that it is a “small” contract but does not disclose what the contract is.

Here is the full email Klopfenstein sent to the board on February 9th:

Evening,

I’m forwarding an email from [redacted] concerning my contract with Red Sky. I’m not going to answer him, but want you to know that my contract was to act as an IT consultant on a project with a national agency. It’s a very small contract. I’ve been working with Red Sky well before my time on the board.

I do not believe there is a conflict of interest that should be a concern for the board, but will continue to abstain from anything that might involve Red Sky.

Please let me know if you have a concern or need to approach legal.

I assumed this would be an issue and just wanted you to be aware.

(Idaho Dispatch redacted the name of the citizen referenced in the email.)

While Klopfenstein says that he will “continue to abstain from anything” regarding Red Sky, emails obtained by Idaho Dispatch in our Public Records Request show that Klopfenstein was having direct contact with the company in November of last year in his role as a member of the WASB.

On November 16th, 2020, then Chairman Philip Neuhoff sent an email to the WASB saying,

Dear fellow board members

As I have mentioned to each of you, we are in the process of beginning a relationship with Red Sky to help with strategic communications. The attached document describes the beginning of this approach, and has some action items for us as individual board members. Ms. Jackson will provide your emails to Red Sky so they can reach out to you.

Regards

Phil

Klopfenstein was sent this email directly and Neuhoff in the email appears to indicate he had spoken with each board member about beginning their “relationship” with Red Sky.

Idaho Dispatch searched and could not find any email within the Public Records Request that indicates Klopfenstein disclosed his relationship with Red Sky at the time the board’s relationship was beginning with the company. We are also unaware of a previous disclosure being made last year during any public meetings that took place.

A number of other emails also indicate that Klopfenstein was having direct contact with Red Sky.

1. November 16th, 2020: An email from Red Sky employee Sean Olson was sent directly to Klopfenstein asking him what day/time he wants to do a one on one interview with the company about his philosophy and approach as a Trustee.
2. November 17th, 2020: Klopfenstein sent an email directly to Red Sky informing them of the time/date he can do his interview with them.
3. November 18th, 2020: Klopfenstein sent an email directly to Red Sky with emails he had received as a board member from citizens. Klopfenstein was forwarding the emails to Red Sky so they could review the type of communication he was receiving as a board member.
4. November 20th, 2020: An email from Neuhoff to several other board members says that “Ed” had already sent his 5-15 emails to Red Sky and that they needed to do the same.

Idaho Dispatch also knows from a previously filed records request that the official “Letter of Agreement” was entered into with Red Sky and the West Ada School District on November 10th, 2020.

Additionally, an invoice for services rendered in the amount of $4,623.75 was sent to Char Jackson (Communications Director for the WASB) from Red Sky with an invoice date of December 31st, 2020.

From the documentation Idaho Dispatch received, nothing indicates Klopfenstein disclosed a financial interest other than the email he sent to the board on February 9th about the citizen’s inquiry. February 9th was the same evening Klopfenstein made the disclosure at the school board meeting.

Idaho Dispatch has reached out to Klopfenstein, Jackson, and Red Sky for a statement on whether or not Klopfenstein not disclosing his financial interest in Red Sky prior to February 9th violated Idaho law.

To date, none of the above-mentioned people/companies have responded to Idaho Dispatch’s request for comment.

Idaho Dispatch also reached out to a number of lawmakers to ask what laws covered disclosure of financial interests between school boards and outside interests. We were sent this one part of the Idaho Code (33-507):

33-507.  LIMITATION UPON AUTHORITY OF TRUSTEES. (1)  It shall be unlawful for any trustee to have pecuniary interest, directly or indirectly, in any contract or other transaction pertaining to the maintenance or conduct of the school district or to accept any reward or compensation for services rendered as a trustee except as may be otherwise provided in this section.

You can review all of 33-507 here.

Idaho Dispatch was also given Idaho Code 74-404 which deals with conflicts of interest and public officials:

74-404.  REQUIRED ACTION IN CONFLICTS. A public official shall not take any official action or make a formal decision or formal recommendation concerning any matter where he has a conflict of interest and has failed to disclose such conflict as provided in this section. Disclosure of a conflict does not affect an elected public official’s authority to be counted for purposes of determining a quorum and to debate and to vote on the matter, unless the public official requests to be excused from debate and voting at his or her discretion. In order to determine whether a conflict of interest exists relative to any matter within the scope of the official functions of a public official, a public official may seek legal advice from the attorney representing that governmental entity or from the attorney general or from independent counsel. If the legal advice is that no real or potential conflict of interest exists, the public official may proceed and shall not be subject to the prohibitions of this chapter. If the legal advice is that a real or potential conflict may exist, the public official:

Idaho Dispatch also found item number “15” on the Idaho State School Board Code of Ethics which states that as a Trustee they will:

Refuse to use my board position for personal or family gain or prestige. I will announce any conflicts of interest before board action is taken; and

No official board action was taken publicly in the decision to use Red Sky’s services. Red Sky does have a contract with the Idaho State Board of Education.

Because there are many laws, rules, and regulations that govern school boards, Idaho Dispatch wants to make it clear that we are not claiming Klopfenstein violated the law. Our goal is to provide any information given to us in regard to the law that might pertain to this particular situation but we are not making any legal claims in this article for or against Mr. Klopfenstein.

Do you believe Klopfenstein had a legal obligation to disclose his fiduciary interest with Red Sky prior to February 9th?

Let us know what you think in the comments below.