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Thursday, August 27, 2015
Ethics: Conflict of Interest Between Charter Schools, Profitable Nonprofits
By News Release @ 1:49 AM :: 3794 Views :: Education K-12, Ethics

Commission issues Advisory Opinion No. 2015-2 charter school employees and governing board members working for non-profit organizations


From Hawaii State Ethics Commission, August 26, 2015

The Hawaii State Ethics Commission (“Commission”) has learned that some members of public charter school governing boards and some employees of public charter schools may also be employed by private non-profit organizations that were established to support the charter schools. This situation creates concerns under Hawaii Revised Statutes (“HRS”) chapter 84, the State Ethics Code. Specifically, the conflicts of interests section of the State Ethics Code prohibits a charter school governing board member or employee in this situation from taking official action on behalf of the charter school affecting the non-profit organization. It also prohibits the individual from assisting the non-profit organization in matters before the charter school, and from acting as a representative for the non-profit organization in its interactions with the charter school. Additionally, as discussed below, a provision of the State Ethics Code may be applicable where a member of a governing board or an employee of a charter school is not currently an employee of a supporting non-profit organization but may be contemplating such employment.

Members of Governing Boards and Employees of Charter Schools Serving as Employees of Affiliated Non-Profit Organizations

Charter schools are public schools that operate under a contract with the State Public Charter School Commission (“SPCSC”).1 Each charter school is overseen by a governing board.2 Each charter school hires its own employees. Public charter schools are state agencies for purposes of the State Ethics Code.3 Members of governing boards and employees of public charter schools are considered state employees for purposes of the State Ethics Code and are required to comply with the State Ethics Code.4

The Commission understands that there are non-profit organizations established for the specific purpose of applying to the SPCSC for a charter to establish a school, and/or for the purpose of supporting a charter school. Among other things, the supporting non-profit organization may assist in fundraising for the school, may enter into business agreements on behalf of the school, and may seek grants that benefit the school. The non-profit organization has its own officers and directors. Some non-profit organizations may also employ a staff.

A charter school and its supporting non-profit organization may conduct business transactions with each other. For example, a charter school may contract with the non-profit organization for services or property. In these situations, charter school governing board members or employees may be called upon to take action, on behalf of the school, affecting the non-profit organization. Such actions may include: negotiating or approving contracts with the non-profit organization; authorizing payments to the non-profit organization; and participating in meetings with the non-profit organization in order to determine what actions the non-profit organizations should take on behalf of the charter school.

The Commission has discovered that members of charter school governing boards, as well as charter school employees, may also be paid employees of these supporting non-profit organizations. These dual roles may constitute prohibited conflicts of interests under the State Ethics Code....

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