Holly Green Education Advisors, LLC [email protected]
Best Practices in Developing Legal Policies & Governance
Procedures
Slide 2
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 States
Database www.sos.state.ga.us File Articles of Incorporation with
Secretary of States Office Contact County Clerks Office to find out
how to publish Intent to Incorporate Apply for FEIN www.irs.gov
Prepare bylaws Contact City Clerks 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.
Slide 3
Getting Started: Your Incorporation Checklist
www.irs.gov/charities Apply for Federal Tax Exempt Status
www2.state.ga.us/departments/dor Apply for Georgia Tax Exempt
Status & State ID Number Check Secretary of States website
(www.sos.state.ga.us) as some organizations are
exemptwww.sos.state.ga.us Register as a Charitable
Organization
Slide 4
Board Structure and Strategies for Successful Governing
Effective Governance
Slide 5
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;
Slide 6
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 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 organization
Slide 7
Boards Oversight Responsibilities Set 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
Slide 8
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
Slide 9
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
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
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
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
Slide 12
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?
Slide 13
Duty of Loyalty Standard 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 school
Slide 14
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
Slide 15
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 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 necessary
Slide 16
Governance Best Practices: Bylaws Board Members Number;
Qualifications; Selection Process; Process for filing vacancies
Removal of board members; Term Limits; General Powers; Fees and
Compensation Officers Titles and job descriptions of officers;
Selection Process; Procedures for Filling Vacancies; Term Limits;
Rotation Process Meetings 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
Slide 17
Governance Best Practices: Bylaws Adapted from NACSA's Issue
Brief: "Good to Govern: Evaluating the Capacity of Charter School
Founding Boards" 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 Roberts Rules of Order; Amendments; Assessment of board
performance
Slide 18
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
Slide 19
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
Slide 20
Policy Development and Other Key Documents Pre-Operations
Planning
Slide 21
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 schools operations to a
management company
Slide 22
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
Slide 23
Protecting Tax-Exempt Status Was 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;
Slide 24
Protecting Tax-Exempt Status Was 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;
Slide 25
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 arms length and not result in contracts of
adhesion
Slide 26
Best Practices for Contracting with Service Providers
Encouragement of Competition; Open and competitive bidding process;
Negotiated bids should have documentation as to why the schools
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
Slide 27
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
Slide 28
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;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
Slide 29
Risk Management
Slide 30
Good Risk Management Practices are Key to Charter Schools
Survival Boards 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
Slide 31
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 districts umbrella policy will cover them
Indemnification provisions in bylaws; Strong financial controls;
Self audits to identify problems on the front end
Slide 32
Risk Management Self Assessment 1. The school has written
employee policies that have been reviewed by an attorney and are up
to date; 2. The school has a job application reviewed by an
attorney and trains staff members who conduct job interviews on
proper techniques; 3. The school recruits widely for open
positions; 4. The school has procedures in place for handling the
discipline and termination of employees; 5. The school uniformly
follows its policy for discipline and terminating employees; 6. The
school has written job descriptions and performance expectations;
Adapted from "Helping you Keep Your Nonprofit Legal" by The
Nonprofit Law Center
Slide 33
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