Understanding the Attorney’s Role in Representing a Michigan Charter School
December 8, 2021   /   Education LawMichigan Law   /   Nicholas Kovach

The board of directors for a charter school is empowered with the responsibility of governing the school. With this responsibility comes many legal requirements to follow. Therefore, it’s important that a charter school board has competent legal counsel experienced to respond to issues that may arise.

What types of legal issues do charter schools commonly encounter? What is the function of the Board’s legal counsel? In this article, we explore the role of a charter school board attorney and the most common areas of practice that the attorney will handle in representing a charter school.

1.            Starting a Charter School

Charter schools start with an idea and legal counsel can help take this idea to the next level. Normally, a Phase I charter application is completed with a (or several) school authorizer and, if the project shows promise, a Phase II application will be requested.  In this early stage, it is critical that that the planning team for the charter school have the organizational documentation in place.  Legal counsel helps create the corporate entity (a non-profit), creating basic organization documents such as bylaws and policies, and will assist in all stages of the application process with the charter. Other areas include seeking grants, facility acquisition and lease negotiation, funding, and negotiating contracts with various vendors, especially the educational service provider (ESP) agreement.

2.            Charter Contract Reauthorization

Charter schools usually are given a 3–5-year charter contract term. After that initial term is over, they face a daunting re-authorization process to ensure of a renewal of their contract. This process includes an extensive review of the school’s performance and compliance. Counsel for the board of directors will have undergone this process many times and will know how to respond to the needs of authorizers to ensure a smooth re-authorization. 

3.            Educational Service Provider (“ESP”) Agreements

Most charter schools use educational service providers to manage their day-to-day activities. The ESP agreement (or sometimes referred to as the management agreement) is perhaps the most critical vendor contract a charter school board will enter as it will determine how the educational program will be implemented. Legal counsel plays a crucial role in the review and negotiating of the ESP agreement on behalf of the Board.  It’s important that counsel understand best practices and the common sticking points in negotiation (fees, reimbursements, and scope of services, to name a few).  The structure of the school will also dictate the needs of the school in the negotiation. For instance, self-management, full management, or hybrid approaches all require different agreements.

4.            Capital Improvement Financings

Charter schools often need to rely on financing for capital projects. Here, the school’s bond counsel will assist with the issuance of bonds and other debt instruments utilized to fund various capital projects. It’s important that counsel have deep knowledge of the federal tax law requirements of tax-exempt borrowings.  Common financings for charter schools include school building and site bonds for capital projects and refunding bonds to refinance existing debt at a better interest rate.

4.            Cash Flow Borrowings

Due to the nature of school financing in Michigan, charter schools often face a cash flow problem in the first few months of the school year. It’s common for charter schools to seek out State Aid notes (“SAN”) with the Michigan Finance Authority (“MFA”) or directly with local lenders to secure a bridge loan during these first few months. Counsel for the school will work with management to assess the cash flow needs to the academy and seek appropriate funding sources well in advance of any anticipated cash flow shortages.

5.            Real Estate & Construction

Public School Academies need to have a facility to run a successful program. The school’s attorneys will assist the Board in acquiring property, leasing, or new construction.  Common issues include shared-use agreements with landlords, certificates of occupancy, zoning issues, title and environmental problems, and property tax exemptions. Additionally, when a charter school desires to undergo new construction, they should seek guidance from an attorney who has experience with public bidding requirements under Michigan law as well as negotiating agreements with architects, general contractors, and construction managers.

6.            Freedom of Information Act and Open Meetings Act

Charter schools in Michigan are public bodies subject to the Michigan Open Meetings Act (OMA) and the Freedom of Information Act. Volunteer Board members do not often understand the complexity and implications of these statutes and legal counsel will ensure that the school, the board, and its management company are in compliance. It is critical that proper notices be given to the public and that FOIA requests are timely addressed, otherwise the school could be subject to liability and litigation.

7.            School Board Policies

Policy development and implementation is a core function of a charter school board. The attorney will guide the Board on how to comply with the latest developments and best practices in the charter world. Many schools choose to enroll in a policy development program such as the National Charter School Institute, which assists in policy management, while other schools like to develop their policies from whole cloth. In either case, the Board’s counsel should review these policies for legal compliance. Some examples of important policies include the purchasing policy, student discipline policy, and complaint policy.

8.            Organization and Governance

A charter school board should function like a well-oiled machine. From meetings to bylaws and committees, school board members should be familiar with how their organization should function. The school attorney should assist the Board and its members on how to run effective meetings, interpret bylaws, run elections, draft resolutions, and make recommendations on other important governance matters.

9.            Vendor Agreements

Charter schools rely heavily on contractual relationships to operate their schools.  Typical agreements include educational service providers, bussing services, architects, food service, and leased technology, just to name a few. A charter school attorney should be familiar with these agreements and assist the school’s management in ensuring favorable terms are negotiated on behalf of the school. 

10.          Litigation and Disputes

Legal disputes can and do occur in the education world. When the prospect of litigation is apparent, the school’s legal counsel should advise the school board on the available and recommended courses of action. Litigation can drain the resources of a school. The court system is not fast. The school’s counsel should work towards a fast resolution, if possible. Charter school litigation most often arises with management companies or other vendors that have contracts with the Board.  However, disputes can also arise from parents, employees, or other third parties. A charter school board should feel comfortable that their attorney will be a powerful advocate and will prosecute or defend them in court or other dispute resolution venue.

11.          Public School Legislation and Laws

The laws that affect public school academies are always in flux.  The Michigan legislature, the Michigan Department of Education, and the US Department of Education are always re-examining laws and re-interpreting existing laws.  The school’s attorney should regularly pay attention to these developments so that their client is aware of pending legislative or regulatory changes.  This includes having good working relationships with stakeholders in Lansing and other relevant education industry advocacy groups.

12.          Special Education

Special education is one of the most complex areas of education law.  It is crucial that the school administration and Board be aware of its obligations under the law and relevant regulations, including Section 504, IDEA, and other relevant laws and regulations.  From IEPs to student discipline, the school board will look to its counsel to provide relevant advice on handling special education matters. This often includes attending IEP sessions, providing in-service trainings, or advising and developing special education procedures. 

13.          Student Due Process, Discipline and Suspensions

When faced with the discipline of a student, the school board needs to know that it is respecting the student’s constitutional rights. An education lawyer will guide the Board on all the complexities related to student discipline policies, interactions with law enforcement, mandatory reporting, expulsions and suspensions, codes of conduct, and discipline hearings.  The attorney should be able to guide the administration from inception of student discipline incident all the way to the disciplinary hearing itself. 

14.          Educational Foundations

Charter schools are always seeking to fill gaps in their budget that traditional funding sources cannot fill. Creating foundations to seek donations from the public and other organization is one tool that many schools have used to accomplish this goal.  Schools can use foundations to support their efforts (such as construction campaigns or scholarships) while providing tax benefits to donors. Legal counsel for the school should help develop the proper organizational documents for the foundation and, ultimately, should work to obtain the appropriate tax-exempt status under the IRS Code, such as section 501(c)(3).

15.          Closure of a Public-School Academy

A charter school can close for several reasons, such as poor performance, low enrollment, or financial difficulties. While rare, authorizers and the board must exercise their oversight responsibilities carefully in making the best decisions for students. The wind-down process of a charter school can be complex. Legal counsel for the school board will advise on whether to seek a receiver or keep the board in place to oversee the dissolution. In either event, there are many timelines and reporting requirements that govern student records, disposition of property, long-term recording keeping, creditor payments just to name a few and the school’s attorney must guide the board on how to carry out the dissolution.

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