Conflicts of Interest and Adopting Budgets
One of the most common times public officials are faced with a conflict of interest is during the budget review and adoption process. In 2025, Oregon Government Ethics Law changed because the Oregon School Board Association and the Ethics Commission worked together propose legislation to address a longstanding and common problem: how can a school board member meaningfully fulfill their responsibility to approve a budget if they are prohibited from discussing, debating or voting on the budget because they have a relative who is employed by the school district, like a teacher?
This problem was not unique to school board members. This problem existed for any public official who served on a governing body that approved a local budget. If the budget contained compensation for themselves or their relatives, they were met with an actual conflict of interest. Generally speaking, that meant that the public official was required to declare an actual conflict of interest, abstain from any discussion or debate on the matter, and were prohibited from voting on the matter.
The change in the law addresses that issue head-on. What follows is a discussion of conflicts of interest, the newest exception to conflicts of interest, as well as frequently asked questions about how this change impacts public officials across the state.
Conflicts of Interest
A public official is met with a conflict of interest, actual or potential, whenever they participate, in their official capacity, in making a decision or recommendation, or taking action, the result of which would be (actual conflict of interest) or could be (potential conflict of interest) to the financial benefit or detriment of the public official, their relative, or any business with which they or their relative is associated. [ORS 244.020(1) and (13)].
Elected public officials, and those appointed to serve on boards or commissions, are subject to the disclosure requirements in ORS 244.120(2). When met with a conflict of interest, such officials must make a public announcement describing the nature of their conflict of interest. If it is a potential conflict of interest, after making the public announcement, the official may participate in the matter, including making a decision or voting. If it is an actual conflict of interest, after making the public announcement, the official must refrain from any participation in the matter and may not vote unless their vote is needed to satisfy a minimum vote requirement, in which case after making the public conflict of interest announcement, they may vote, but not participate in any discussion or debate.
For more information on what should be included in an actual conflict of interest declaration, please refer to the Commission’s Government Ethics Law Guide, which includes sample conflict of interest statements.
Senate Bill (SB) 983
SB 983 was passed by the Oregon Legislature and became law on June 26, 2025. SB 983 permits local public officials to participate in discussion, debate and to vote on the adoption of a local budget that includes compensation for the public official or a relative of the public official after announcing an actual conflict of interest.
ORS 244.120(2)(b)(C)
As a result of SB 983, ORS 244.120(2)(b)(C) was added to ORS Chapter 244. This provision states that when elected public officials and those serving on boards or commissions are met with actual conflicts of interest, they must publicly announce the nature of their conflict of interest and:
If the official action is the adoption of a local budget under ORS 294.305 to 294.565 that includes providing compensation or benefits to the public official or a relative of the public official, be eligible to participate in any discussion or debate on the budget and to vote. [ORS 244.120(2)(b)(C)].
Frequently Asked Questions:
- A City Charter provides that all City Council members receive a stipend of $100 per month. How do City Council members pass a budget that includes a line item for their Councilor stipends?
- A Board of County Commissioners is scheduled to consider and adopt the annual County budget which includes their own salaries. The budget is organized by department, and the Commissioners will review the budget for each department individually over the course of several meetings. Are the Commissioners required to make conflict of interest disclosures prior to discussing sections of the budget that do not include their own compensation?
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A City Budget Committee member’s spouse serves on City Council. The budget being considered includes a fund to reimburse City Council members for personal expenses incurred during annual training events. If the Budget Committee member declares their conflict of interest, could they still participate in budget discussions?
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Can school board members use the exception in ORS 244.120(2)(b)(C) to adopt and implement a stipend?
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Can the school board members use the exception in ORS 244.120(2)(b)(C) to adopt and implement a stipend by adding it to the budget?
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A water district is scheduled to review and adopt their annual budget. The board president’s son works as the office manager for the water district. There is a line item in the budget for staff salaries and benefits. Can the board president participate in the review and vote on the budget?
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A water district is scheduled to review and adopt their annual budget. The board president’s roommate works as the office manager for the water district. There is a line item in the budget for staff salaries and benefits. Can the board president participate in the review and vote on the budget?
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The board president’s spouse has a contract with the fire district to provide them with payroll service. The board president’s spouse is not an employee of the fire district. The fire district board is meeting to review and adopt their annual budget. Money to pay for the payroll services is included in the budget. Can the board president use the new local budget exception to participate in the review and vote of the local budget?
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What qualifies as a “local budget” as described in ORS 244.120(2)(b)(C)?
You can review these questions, and find the answers, by clicking the button below.
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