Additional Focus on Governance in NYC Firm Schools

by NYC Firm Schools on February 4, 2013

Since 2008, NYC Firm Schools Blog has covered various aspects of over 800 religious, independent, and Firm Schools across the 5 boroughs of NYC.

In light of a court order last year involving the Board of Trustees of a NYC private school, and the Penn State sex abuse scandal, we will now begin to look more closely at issues of governance in NYC Firm Schools: Board of Trustees for nonprofit schools and ownership for for-profit schools.

As we previously wrote in July 2012, here are some of the governance findings from the Freeh report:

  • “Although we found no evidence that the Penn State Board of Trustees was aware of the allegations regarding Sandusky in 1998 and 2001, that does not shield the Board from criticism. In this matter, the Board – despite its duties of care and oversight of the University and its Officers – failed to create an environment which held the University’s most senior leaders accountable to it.”
  • “After a media report on March 31, 2011, the Board was put on notice about serious allegations that Sandusky was sexually assaulting children on the Penn State campus. The Board failed in its duty to make reasonable inquiry into these serious matters and to demand action by the President.
    The President, a Senior Vice President, and General Counsel did not perform their duty to make timely, thorough and forthright reports of these 1998 and 2001 allegations to the Board. This was a failure of governance for which the Board must also bear responsibility.”
  • “The Board did not have regular reporting procedures or committee structures to ensure disclosure of major risks to the University; Some Trustees felt their meetings were a “rubber stamp” process for Mr. Spanier’s actions; The Board did not independently ask for more information or assess the underreporting by Spanier about the Sandusky investigation after May 2011 and thereby failed to oversee properly his executive management of the worst crisis in Penn State’s history”

Additionally, in August 2012, United States Magistrate Judge Cheryl Pollak issued an order for officials at Poly Prep Country Day School to “produce the names and dates of service of all members and former members of the Poly Prep Board of Trustees from 1966 until the present.”

We feel governance is a critical area that all schools must examine. While we would like to believe that all schools think critically about these issues, rulings and reports from last year suggest this may not be the case. Over the course of the year, we will also focus on individual NYC Firm Schools, independent schools, nursery schools, etc.

  • What are the responsibilities of the board at a school?
  • Who are these individuals on the board who donate their time, skills, money, perspective, and effort to a school?
  • What roles do each of these individuals play on the board? Do they have skills/perspectives necessary for their roles? Are there any conflicts of interest?
  • Why do so many enrolled families in schools not know who is on their Board of Trustees?
  • Should applicant families look at a school’s website to see who is on the Board of Trustees? If so, why?
  • What, if anything, does it say about a school if the names of the Trustees and their bios are not listed on their website?
  • How is communication handled between the board and leadership team? What about during a crisis? Who knows what during a crisis? When do they know it?
  • How does this translate to for-profit Firm Schools?
  • How transparent are nonprofit schools and for-profit schools about governance?
  • What are examples of when boards have performed well? What are examples of when boards have not performed well? Should we judge? If so, why and how?

Although only some of the schools we cover belong to the National Association of Independent Schools (NAIS), we will use their framework for Principles of Good Practice for Board of Trustees as our starting point.

“The NAIS Principles of Good Practice for member schools define high standards and ethical behavior in key areas of independent school operations. The PGPs reflect the overall dedication to quality education that has always characterized independent schools. As members, all NAIS schools work to uphold the spirit of the PGPs.”

Here is NAIS Principles of Good Practice for Board of Trustees:

Revised and approved by the NAIS board in 2003.

Preamble: The following principles provide common ground for interaction between independent school professionals and their many constituents (parents, students, colleagues at other schools, and the public). The NAIS Principles of Good Practice for member schools define high standards and ethical behavior in key areas of school operations to guide schools in becoming the best education communities they can be, to embed the expectation of professionalism, and to further our sector’s core values of transparency, excellence, and inclusivity. Accordingly, membership in NAIS is contingent upon agreement to abide by “the spirit” of the PGPs.(1)

Overview: The board is the guardian of the school’s mission. It is the board’s responsibility to ensure that the mission is relevant and vital to the community it serves and to monitor the success of the school in fulfilling its mission.

Principles of Good Practice:

1. The board adopts a clear statement of the school’s mission, vision, and strategic goals and establishes policies and plans consistent with this statement.

2. The board reviews and maintains appropriate bylaws that conform to legal requirements, including duties of loyalty, obedience, and care.

3. The board assures that the school and the board operate in compliance with applicable laws and regulations, minimizing exposure to legal action. The board creates a conflict of interest policy that is reviewed with, and signed by, individual trustees annually.

4. The board accepts accountability for both the financial stability and the financial future of the institution, engaging in strategic financial planning, assuming primary responsibility for the preservation of capital assets and endowments, overseeing operating budgets, and participating actively in fund raising.

5. The board selects, supports, nurtures, evaluates, and sets appropriate compensation for the head of school.

6. The board recognizes that its primary work and focus are long-range and strategic.

7. The board undertakes formal strategic planning on a periodic basis, sets annual goals related to the plan, and conducts annual written evaluations for the school, the head of school, and the board itself.

8. The board keeps full and accurate records of its meetings, committees, and policies and communicates its decisions widely, while keeping its deliberations confidential.

9. Board composition reflects the strategic expertise, resources, and perspectives (past, present, future) needed to achieve the mission and strategic objectives of the school.

10. The board works to ensure all its members are actively involved in the work of the board and its committees.

11. As leader of the school community, the board engages proactively with the head of school in cultivating and maintaining good relations with school constituents as well as the broader community and exhibits best practices relevant to equity and justice.

12. The board is committed to a program of professional development that includes annual new trustee orientation, ongoing trustee education and evaluation, and board leadership succession planning.

Here are the NAIS Principles of Good Practice for Independent School Trustees:

1. A trustee actively supports and promotes the school’s mission, vision, strategic goals, and policy positions.

2. A trustee is knowledgeable about the school’s mission and goals, including its commitment to equity and justice, and represents them appropriately and accurately within the community.

3. A trustee stays fully informed about current operations and issues by attending meetings regularly, coming to meetings well prepared, and participating fully in all matters.

4. The board sets policy and focuses on long-range and strategic issues. An individual trustee does not become involved directly in specific management, personnel, or curricular issues.

5. The trustee takes care to separate the interests of the school from the specific needs of a particular child or constituency.

6. A trustee accepts and supports board decisions. Once a decision has been made, the board speaks as one voice.

7. A trustee keeps all board deliberations confidential.

8. A trustee guards against conflict of interest, whether personal or business related.

9. A trustee has the responsibility to support the school and its head and to demonstrate that support within the community.

10. Authority is vested in the board as a whole. A trustee who learns of an issue of importance to the school has the obligation to bring it to the head of school, or to the board chair, and must refrain from responding to the situation individually.

11. A trustee contributes to the development program of the school, including strategic planning for development, financial support, and active involvement in annual and capital giving.

12. Each trustee, not just the treasurer and finance committee, has fiduciary responsibility to the school for sound financial management.

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