Transcript Best Practices - Georgia Charter Schools Association

Best Practices in Developing Legal
Policies & Governance Procedures
Holly Green
Education Advisors, LLC
[email protected]
Getting Started: Your Incorporation
Checklist
 Requirement of incorporation as a Georgia nonprofit corporation
is for start-up charter schools only;
Reserve a Name
through Secretary of
State’s Database
www.sos.state.ga.us
Apply for FEIN
www.irs.gov
File Articles of
Incorporation
with Secretary of
State’s Office
Contact County
Clerk’s Office to
find out how to
publish Intent to
Incorporate
Prepare bylaws
Contact City
Clerk’s Office for
Business License
The 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.
Getting Started: Your Incorporation
Checklist
Apply for Federal Tax Exempt Status
• www.irs.gov/charities
Apply for Georgia Tax Exempt Status & State
ID Number
• www2.state.ga.us/departments/dor
Register as a Charitable Organization
• Check Secretary of State’s website (www.sos.state.ga.us) as
some organizations are exempt
Effective Governance
Board Structure and Strategies for Successful
Governing
From a Founding Board to a Governing
Board
 GOAL: 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 development
Founding 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;
Importance of Strong Organizational
Foundation
 The board provides the vision, mission and strategic plan of







the school;
Provides oversight and objective decision making;
Promote the charter school’s mission;
Is ultimately responsible for school’s financial health;
Fundraising efforts;
Hire and manage school leader;
Assures compliance with state and federal laws and rules;
Most importantly, board’s role is to focus on the academic
success of students and sustainability of the organization
Board’s Oversight Responsibilities
 Set the school’s general policies and curriculum;
 Ensuring proper financial management by implementing an
annual budget, developing financial procedures and internal
controls;
 Hiring and evaluation of school’s 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
Best Practices: Governing Board
 Provide 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 Bureau
Governing Board Recruiting Efforts
 Recruitment 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
school’s 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
school’s first or second year in operation
Governing Board Recruiting Efforts
Financial Management Expertise
• Fundraising Expertise
Academic Expertise
-Curriculum & Instruction, Assessment
• Human Resources Expertise
• Governance & Management
Real Estate Expertise
• Legal Expertise
Legal Responsibilities of Board
Directors
 Duty of Care
 Must exercise reasonable care when making a decision as a
steward of the charter school
 Active participation in board meetings;
 Oversight of committee structure to make sure all board
members can rely upon committee’s 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
Self Assessment for Duty of Care
 Do 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?
Duty of Loyalty
 Standard of faithfulness to the best interests of the school;
 Board members must not use their position, or the charter
school’s 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 school’s governing documents in
operation of school
Duty of Faithfulness
 Compliance with state and federal statutes;
 Open Meetings Act and Open Records Act
 Corporate filing requirements;
 Comply with charter and work with authorizer;
 Ensure financial health of organization;
 Use of outside consultants when necessary
Best Practices: Governing Board
 Fulfill 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 board’s 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 necessary
Governance Best Practices: Bylaws
Board Members
Officers
Meetings
• Number;
• Qualifications;
• Selection
Process;
• Process for filing
vacancies
• Removal of
board members;
• Term Limits;
• General Powers;
• Fees and
Compensation
• Titles and job
descriptions of
officers;
• Selection
Process;
• Procedures for
Filling Vacancies;
• Term Limits;
• Rotation Process
• Location and
number of
meetings per
year;
• Policy on
specially called
meetings;
• Compliance with
Open Meetings
Act;
• Quorum and
voting rules
Adapted from NACSA's Issue Brief: "Good to Govern: Evaluating the Capacity of Charter School Founding Boards”
Governance Best Practices: Bylaws
Staff
• Who reports to the
board;
• Is the school leader
considered a voting
or non-voting board
member?
Committees
• Procedure for
creating a
committee or
special task force;
• Number and
purpose of board
committees;
• Job descriptions for
each committee;
Miscellaneous
• Beginning and end
dates of fiscal year;
• Following Robert’s
Rules of Order;
• Amendments;
• Assessment of
board performance
Adapted from NACSA's Issue Brief: "Good to Govern: Evaluating the Capacity of Charter School Founding Boards"
Governance Best Practices: Effective
Board Meetings
 Committee 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
Selecting the Right School Leader
 May 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 principal
Pre-Operations Planning
Policy Development and Other Key Documents
Service Contracts
 Provide 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 school’s operations to a management
company
Protecting Tax-Exempt Status
 Is 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 responsibility
Protecting Tax-Exempt Status
Was the agreement an arm’s 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 company’s interest in a
long-term contract with the school’s 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;
Protecting Tax-Exempt Status
 Was the agreement an arm’s 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;
Protecting Tax-Exempt Status
 Other Issues:
 Name branding
 While not necessarily bad, it does make terminating the relationship
more difficult and might be an indicator of private benefit depending
upon the level of branding
 Ancillary Agreements and Services must also be negotiated at an
arm’s length and not result in contracts of adhesion
Best Practices for Contracting with
Service Providers
 Encouragement of Competition;
Open and competitive bidding process;
Negotiated bids should have documentation as to why the
school’s interests are best served by the manner proposed
• Contract 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 Snell
Contracts with Parents and Students
 Introduces 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 violations
Hiring of Teachers
 Define 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
Risk Management
Good Risk Management Practices are
Key to Charter School’s Survival
 Board’s 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
Importance of Good Board Structure
and Policies
 Importance of recruiting quality board members with the
necessary expertise;
 Board training
 Strong conflict of interest policy;
 Documentation and thorough board minutes;
 Research insurance options;
 Conversions need to see if district’s umbrella policy will cover them
 Indemnification provisions in bylaws;
 Strong financial controls;
 Self audits to identify problems on the front end
Risk Management Self Assessment
1.
2.
3.
4.
5.
6.
The 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 Center
Risk Management Self Assessment
 Contracts 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 Center