November 15, 2010 - Statement on behalf of CSBA Board of Directors

The California School Boards Association today released the findings and recommendations resulting from the Governance and Fiscal Accountability Review conducted by Kenneth Hall, the founder of School Services of California, Inc. and Joel Montero, the Chief Executive Officer of the Fiscal Crisis & Management Assistance Team (FCMAT). The review was requested by the CSBA Board of Directors at their meeting on July 23, and represents a comprehensive examination of all the association’s financial functions.

“This report encompasses the guidance needed for CSBA to move forward in the most accountable manner possible,” stated CSBA President Frank Pugh. “CSBA is indebted to Mr. Hall and Mr. Montero for their exhaustive work, the results of which provide the association with a clear roadmap to becoming the remarkable organization that everyone associated with CSBA wants it to be.”

The report is the result of the study and analysis of hundreds of documents, a thorough critique of staff and governance structures, and interviews with numerous directors and key employees. The findings and recommendations are intended to move CSBA forward by establishing a governance and operational environment that is focused, has clarity of purpose, is efficient and assists the board and staff in meeting their goals and objectives.

Recommendation such as the following are provided in the report:

• Include, within the Association’s bylaws, a code of ethics that is applicable to all members of the Board of Directors, all senior staff and selected critical staff positions, including CSBA or auxiliary corporation consultants.
  
• Ensure that the bylaws require annual Conflict of Interest statements from all officers, members of the Board of Directors, senior staff and other critical staff positions, including consultants.
  • Provide training regarding conflict of interest statements for all persons involved.
  • Require that the Audit Committee review all disclosure statements.
  • Establish a process for retaining and maintaining disclosure statements.
    
• Provide that the Audit Committee shall design a written process for confidential communication from others to the Audit Committee regarding fiscal, management or whistle-blower issues by any members of the CSBA Delegate Assembly, Board of Directors, staff or outside parties. In addition, establish a process for independent investigation and correction of any issues the Audit Committee deems significant.
  
  
• Create a process of evaluating and determining the compensation of the CSBA executive director with a series of goals outlined in the report, such as:
  • Provide the Compensation Committee the ability to develop compensation recommendations in an independent and self-directed manner;
  • Provide the committee an ability to present their compensation findings and recommendations to the Board of Directors independent of any other governing entities;
  • Provide the Board of Directors the ability to determine compensation based on a full understanding and knowledge of the entire employee contract; and
  • Provide a separation of duties by giving the Compensation Committee a confidential role in collecting board and other information for the evaluation of the executive director.

Click here to see the complete governance and fiscal report.

The Board of Directors heard a presentation from Mr. Hall and Mr. Montero at their meeting on November 13, and will further discuss the report at their board meeting on November 30. The board has already taken steps to address some of the issues addressed in the recommendations, including the hiring of a Chief Financial Officer and the performance of a comprehensive classification and compensation study. The latter study is being performed by Koff & Associates, Inc., and the firm’s work on it began on November 5.

Many of the report’s recommendations will require further discussion and work by the CSBA Bylaws Committee and other committees, but on Saturday, November 13, the Board approved the following actions in response to the report:

• Agreed to initiate a comprehensive review of CSBA’s Bylaws for the purposes of implementing the report’s recommendation to make those Bylaws more inclusive of CSBA governance issues.  The process shall be open, inclusive of the CSBA Delegate Assembly, with status reports provided to the membership on a regular basis;
  
  
• Directed CSBA counsel to work with external counsel to develop a code of ethics for the Association;
  
  
• Agreed to develop a policy to require annual conflict of interest statements from all officers, directors, senior staff, consultants and other critical staff positions, and directed that the policy be included in the CSBA Bylaws;
  
  
• Directed staff to integrate the Association’s salary and fiscal services and functions, reporting to the recently appointed Interim Chief Financial Officer, and directed staff to initiate a formal search process for a permanent CFO;
  
  
• Agreed to enhance the role of the Audit Committee and establish the committee as an independent fiscal agent;
  
  
• Directed staff to review all consultant contracts, and where appropriate, initiate a process to renegotiate those contracts;
  
  
• Agreed to develop a policy to preclude members of the Board of Directors, members of the Executive Committee, and officers of the Association from being employed by CSBA for three years following their service as an elected member of the Association; and
  
  
• Requested the Association’s external counsel to prepare for the CSBA Audit Committee a written process for confidential communication from others to the Audit Committee regarding fiscal, management or whistleblower issues by any member of the CSBA Delegate Assembly, Board of Directors, staff or outside parties, and a process for independent investigation and correction of any issues the Audit Committee deems significant.

CSBA’s Governance and Fiscal Accountability review is only one of a number of efforts that are occurring simultaneously to positively develop and strengthen the association. CSBA’s financial audit was reviewed and approved by the Board of Directors in October, resulting in an unqualified (clean) audit; a comprehensive study of classification and compensation within the association is underway; an interim chief financial officer has been retained; several staff moves have been initiated to better serve the functions of the organization; and the Board of Directors and Executive Committee members have continued to work tirelessly with the support of the interim Executive Director to address any and all real or perceived vulnerabilities within CSBA.

The fiscal accountability report is a beginning element to guide future work of the CSBA’s Board of Directors and staff, ensuring that the association moves forward using best practices and with the appropriate checks and balances put into place.