Best Practices

Holly GreenEducation Advisors, LLCholly.green@comcast.netBest Practices in Developing Legal Policies & Governance Procedures1Getting Started: Your Incorporation ChecklistRequirement of incorporation as a Georgia nonprofit corporation is for start-up charter schools only;Reserve a Name through Secretary of States Databasewww.sos.state.ga.usFile Articles of Incorporation with Secretary of States OfficeContact County Clerks Office to find out how to publish Intent to IncorporateApply for FEINwww.irs.govPrepare bylawsContact City Clerks Office for Business LicenseThe contents of this presentation are for informative purposes only and should in no way be construed as legal advice. Attendees are advised to consult an attorney regarding these matters.2Getting Started: Your Incorporation ChecklistOrganizations with less than $25,000 in annual gross revenue are exempt from registration3Board Structure and Strategies for Successful GoverningEffective Governance4From a Founding Board to a Governing BoardGOAL: Transition to a board who governs and leaves day to day management of the school to school personnel and is more concerned with ongoing planning and policy developmentFounding board usually composed of individuals who are friends or close personal associates who plan and design the school in a very hands-on fashion;Different sets of skills and different level of time commitment;Level of objectivity;Possible conflicts of interest;Transition plan for any founding board members who will sit on governing board;

5Importance of Strong Organizational FoundationThe board provides the vision, mission and strategic plan of the school;Provides oversight and objective decision making;Promote the charter schools mission;Is ultimately responsible for schools financial health; Fundraising efforts;Hire and manage school leader;Assures compliance with state and federal laws and rules;Most importantly, boards role is to focus on the academic success of students and sustainability of the organizationBoards responsibility to ensure the school is successful and operates in compliance with applicable state/federal law and charter agreement.

The ability for the board to remain objective is critical to its effectiveness in guiding the charter school.Advocating for the charter school and its educational philosophy is an important function of the board Ideally, the board can build an active group of financial supporters who regularly donate money to the charter school

6Boards Oversight ResponsibilitiesSet the schools general policies and curriculum;Ensuring proper financial management by implementing an annual budget, developing financial procedures and internal controls;Hiring and evaluation of schools principal and teaching staff, sets salary and compensation levels;Approving personnel policies and oversees their implementation in the school;Assuring that the school fulfills its charter agreement

When considering who should be on governing board, should consider the broad oversight responsibilities of the governing board7Best Practices: Governing BoardProvide knowledgeable and dedicated leadership.Identifies priority needs and sets short term and long-term goals;Establishes a procedure for the selection of new board members and for their orientation and training;Recruit board members who are not just figureheads but truly understand the time commitment and level of expertise required to serve on the board;Selects the best person available as the school leader and supports him or her as they perform the day to day business of running the school, but provides oversight, training and feedback

Adapted from The Volunteer Board Member in Philanthropy, National Charities Information BureauThe best governing board includes individuals who are not only supportive of the schools mission and vision but who also bring a wide array of skills and knowledge in such areas as finance, real estate, education and curriculum and the community which it will serve.8Governing Board Recruiting EffortsRecruitment process is critically important to compose a board with the necessary level of expertise;Transition plan for which founding board members will remain on governing board and orientation and training of new board members;All governing board members must clearly understand the expectations within the charter, are willing to implement the schools vision and have a clear plan for conducting effective oversight of the academic program;Nine to eleven members in early process of opening school and should achieve a size of eleven to fifteen members at the end of schools first or second year in operation

9Governing Board Recruiting Efforts10Legal Responsibilities of Board DirectorsDuty of CareMust exercise reasonable care when making a decision as a steward of the charter schoolActive participation in board meetings;Oversight of committee structure to make sure all board members can rely upon committees work and decision making process;Review meeting minutes prior to voting;Maintain general knowledge of books and records;Investigate and take action when necessary to deal with officer or employee theft or mismanagement

Attending meetings, reviewing documents prior to board meeting, asking probing questions, relying upon the wisdom of others in decision-making;11Self Assessment for Duty of CareDo board members regularly attend board meetings?Do board members actively participate in meetings?Are accurate minutes recorded?Is good business judgment used in all decision making?12Duty of LoyaltyStandard of faithfulness to the best interests of the school;Board members must not use their position, or the charter schools assets or information obtained as a member for personal gain;Conflicts of interest policy and annual questionnaire;No loans of charter school assets to board members;Strict adherence to charter schools governing documents in operation of school13Duty of FaithfulnessCompliance with state and federal statutes;Open Meetings Act and Open Records ActCorporate filing requirements;Comply with charter and work with authorizer;Ensure financial health of organization;Use of outside consultants when necessaryFaithfully execute charter schools mission by fulfilling all legal and regulatory requirements.14Best Practices: Governing BoardFulfill fiduciary duty by having a clear conflict of interest policy and board ethics policy which addresses the following:Not accepting money or items of value because of any purchase, sale, investment or loan nor shall any board member or school management have any pecuniary interest in the purchase, sale, investment or loan;No relationship or interest in a vendor that would present a conflict to the boards best interests;Should not serve on boards or be employed by a competing organization;Should not accept gifts from vendors;Abstaining from voting or consideration where necessary15Governance Best Practices: BylawsAdapted from NACSA's Issue Brief: "Good to Govern: Evaluating the Capacity of Charter School Founding Boards16Governance Best Practices: BylawsAdapted from NACSA's Issue Brief: "Good to Govern: Evaluating the Capacity of Charter School Founding Boards"17Governance Best Practices: Effective Board MeetingsCommittee process is critical to an effective board;Include committee structure in bylaws with descriptions and process for how committee work is treated by the full board;Recommended Committees-Academic Excellence Committee;Finance Committee;Governance Committee

Academic excellence committee should focus on data gathering and analysis in order to evaluate student performance, finance on establishing segregation of duties, payroll system, authorization and processing of disbursement; and governance should focus on nominating new board members, new member orientation and training and education for the whole board.18Selecting the Right School LeaderMay be the most important job for the governing board;Positive and close working relationship between the school leader and the board is critical;Charter school leaders do not have the infrastructure in place as in a traditional school;As a result, duties everything from finding facilities, hiring staff, recruiting and orienting families, developing budgets as well as working with the governing board, local community and authorizing board;Traditional school leadership training programs are not designed to prepare charter school leaders for the responsibilities that go beyond those of a district school principalTraditional public schools-usually principal has day to day responsibilities in the school but the superintendent is the primary conduit to the school board, but a charter school leader is expected to do both.GCSA-Charter Start, Charter Leader, board governance training.

19Policy Development and Other Key DocumentsPre-Operations Planning20Service ContractsProvide valuable services and necessary expertise but oversight and involvement with outsourced services is not only a good practice, but necessary to preserving tax exempt status;Tax Exempt Status dependent upon the school being organized and operated for the benefit of the public and not for the benefit of the service provider;Board may not delegate its responsibility and ultimate accountability for the schools operations to a management companyManagement organizations do not necessarily deserve a bad name, they perform critical functions to charter school operators who may not have the necessary expertise to perform some of the management functions required. However, these relationships are viewed with a critical eye due to the fact that education is a public function and contracting with for-profit service providers diverts resources from educating students to profits for corporations. Concern that these for profit firms will manage schools at the lowest possible cost in order to maximize profits and that students will suffer as a result.21Protecting Tax-Exempt StatusIs the board still ultimately in control and continuing to exercise its fiduciary responsibility to the school?Is the board truly independent?Comprised of community leaders and education professionals vs. management organization appointed board;Does the board hold regular meetings; Conflict of interest policy requiring board members to disclose all financial interests they have in any service provider; Oversee the management company and retain the ultimate responsibility for meeting the terms of the charter;Maintain fiscal responsibility22Protecting Tax-Exempt StatusWas the agreement an arms length transaction which includes terms for the benefit of the school rather than the service provider?Contract Terms:Length of contract-must balance the management companys interest in a long-term contract with the schools need for flexibility in changing companies;Cannot contract away the operation and management of the school to a management company;Clear expectations on who is performing the day to day operations of the school;Beware of anti-compete clauses;

If school staff is being hired directly by management company, beware of a non-compete clause as this could impede the schools ability to hire those staff after the contract term has ended.23Protecting Tax-Exempt StatusWas the agreement an arms length transaction which includes terms for the benefit of the school rather than the service provider?Contract Terms:Fees must be reasonable and commensurate with services provided;Fee structure should not be based on total income but rather the market rate for such services;Termination provisions that do not unreasonably restrict the options of the school;

24Protecting Tax-Exempt StatusOther Issues:Name brandingWhile not necessarily bad, it does make terminating the relationship more difficult and might be an indicator of private benefit depending upon the level of brandingAncillary Agreements and Services must also be negotiated at an arms length and not result in contracts of adhesion25Best Practices for Contracting with Service ProvidersEncouragement of Competition;Open and competitive bidding process;Negotiated bids should have documentation as to why the schools interests are best served by the manner proposedContract terms must set clear performance standards and expectations;Open and full disclosure of contracts and ancillary documents;Performance Expectations and Penalties;Effective contract monitoring; milestones for performance expectations

Adapted from "Trends and Best Practices for Education Management Organizations" by Guilbert C. Hentschke, Scot Oschman & Lisa SnellPublic has a right to know how contractors are spending public dollars26Contracts with Parents and StudentsIntroduces concept of innovation and academic accountability to parents;Clear performance expectations for school and students;Parent involvement expectations;Uniform requirements;Rules for conduct and consequences for rule violationsBe specific in parent volunteer expectations while still allowing flexibiliy for working parents (examplepoint system where parents can volunteer so many hours in the classroom or during the weekend on a school improvement project or other civic project, attend school sponsored sessions with guest speakers etc.)27Hiring of TeachersDefine employer in charter petition;Governing board or management organization for start-ups, usually district for conversions;May use state salary schedule structure Form on www.doe.k12.ga.us;Contracts should address:Term;Salary structure;Benefits;Certification requirements, if any;Termination provisions;Public school employment oath of allegiance;Clear performance expectations

Conversion schools-employer remains the school districtEncouraged to attend session on employment

28Risk Management29Good Risk Management Practices are Key to Charter Schools SurvivalBoards legal duty to conserve and protect the assets of the charter school;Much more than just purchasing insurance;Must identify risks and uncertainties and develop sound plan to minimize these risks;Good policies and board and management structure are key to a sound risk-management plan

30Importance of Good Board Structure and PoliciesImportance of recruiting quality board members with the necessary expertise;Board trainingStrong conflict of interest policy;Documentation and thorough board minutes;Research insurance options;Conversions need to see if districts umbrella policy will cover themIndemnification provisions in bylaws;Strong financial controls;Self audits to identify problems on the front end

Showing good faithE&O covers professional errors and omissions..good for leader; directors and officers coverage for governing boardCovers cost of defense31Risk Management Self AssessmentThe school has written employee policies that have been reviewed by an attorney and are up to date;The school has a job application reviewed by an attorney and trains staff members who conduct job interviews on proper techniques;The school recruits widely for open positions;The school has procedures in place for handling the discipline and termination of employees;The school uniformly follows its policy for discipline and terminating employees;The school has written job descriptions and performance expectations;

Adapted from "Helping you Keep Your Nonprofit Legal" by The Nonprofit Law Center32Risk Management Self AssessmentContracts with employees, in consultation with an attorney, include termination at will provisions;Human resources staff review employee benefit plans regularly;All personnel records are kept confidential;Board members know and understand their fiduciary and other responsibilities;All board members understand the importance of not engaging in self dealing or other conflicts of interest

Adapted from "Helping you Keep Your Nonprofit Legal" by The Nonprofit Law Center33