Marguerite Trussler characterized Dirks' actions as "blatant political opportunism" but said he didn't violate the province's legal definition of conflict of interest.
"This issue was not one of general policy or ongoing work," wrote Trussler.
"It was a specific political issue that he used his office to resolve in his favour."
Dirks was not available for an interview, but said in a statement he will act on Trussler's advice.
"Premier (Jim) Prentice has made it clear he expects everyone in his government to conduct themselves according to the highest ethical standards, and I fully support him in that goal," wrote Dirks.
"I appreciate the ethics commissioner’s observations about perception and politics and I will be mindful of her comments and suggestions in the future."
Opposition politicians asked Trussler to investigate after Dirks ordered two modular units for the William Reid school just days before he narrowly won a byelection in Calgary-Elbow on Oct. 27.
The decision leap-frogged six other city schools ranked higher in terms of needs.
Trussler noted that five days before the election, a letter from Dirks to parents was posted on his campaign website promising two modular classrooms for William Reid school would be in place for the 2015-16 school year.
Trussler noted that Dirks' campaign manager, Alan Hallman, then acknowledged to a reporter that the modulars were approved to combat opposition in the byelection.
Joyce Bowen-Eyre, chair of the Calgary Board of Education, told Trussler that 40 Calgary schools had asked for modulars and that on two occasions before the William Reid announcement, Dirks indicated to her he was getting phone calls to approve the modulars.
But Trussler said Dirks did not violate conflict of interest rules because they focus strictly on whether a politician received a direct or indirect financial benefit for his or her actions, such as gaining insider knowledge, influence, or money.
She said gaining a legislature seat cannot be included in that category.
"I have reluctantly come to the conclusion that running for office is always a political interest and that at no time does it become a private interest," she wrote.
The Conflicts of Interest Act, she added, "does not deal with moral integrity."
Trussler dismissed two other complaints that Dirks abused his position on the campaign trail by, for example, participating in sod turnings for the construction of new schools.
Wildrose house leader Shayne Saskiw said Trussler's ruling mocks Prentice's promise to run an ethical government free of entitled, self-centred decisions that marked the administration of former premier Alison Redford.
"While what Minister Dirks did wasn't technically illegal, it was clearly and certainly unethical," said Saskiw.
"Premier Prentice says (his administration) is new management. This seems a lot like the old management."
NDP Leader Rachel Notley agreed.
"It is not acceptable that this PC government uses the public purse as its own personal campaign fund. This doesn’t pass the smell test and Albertans deserve better,” said Notley in a statement.
Dirks has declined in the past to comment on why he directed the fast tracking of the modulars except to say that he tries to help as many schools as possible.
Even before he had a legislature seat, Dirks was appointed to cabinet after Prentice won the Progressive Conservative party leadership race to become premier in September.
In November, Prentice told reporters that while priority lists for modular classrooms are important, they are not written in stone.
"His (Dirks') ministerial responsibility involves exercising judgment to make those kinds of choices,'' said Prentice at the time.
On Tuesday, in a written statement, Prentice thanked Trussler for her report.
“I appreciate her observations on the situation, and I consider the matter closed," he wrote.
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