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Installment #3:  
Finding the Site, Raising Money,
and Establishing a Governance System

This third installment in the on-line case study of Leadership High School focuses on the strategies used by the school to find a facility for the school, develop a budget, and establish a board of directors.

: Introduction
: Finding and Securing the Site
: Reaching an Ambitious Budget
: Establishing a Governance System


Introduction

As noted in the previous installment, LHS encountered a number of initial challenges to designing and passing their charter. Once the charter was passed in December of 1996 (technically they did not get final approval until April of 1997 when it was approved by the State Board of Education), the school's development team had a number of new challenges to meet. These included:
Some of the successful strategies the school employed included:

Finding and Securing the Site

Finding appropriate facilities is a key issue for California charter schools, particularly start-up charter schools. Not only was locating and securing a site for the school a vital component of the charter negotiation stage, it was also a vital part of opening the school on time. Going into the facilities search process, Mark Kushner, the school's founder, knew that obtaining a building from the San Francisco school district was a near impossibility given the district's lack of surplus classroom space. Consequently, Kushner canvassed the city for alternative sites.


Leadership High School
After negotiations fell through for a lease on a building that was being vacated by the extension of a local university, Kushner was fortunate to meet the planning director for another local higher education institution, Golden Gate University (GGU). With professional schools in both law and business that met mostly at night, the GGU had many empty classrooms during the day. Soon, Kushner negotiated an arrangement to use an office and five classrooms (approximately 5,000 square feet) for LHS during school hours for an annual fee of $25,000, including access to computer labs, a library, and an auditorium for schoolwide meetings and dances.

The arrangement is a mutually beneficial one. For GGU, it can maximize the use of their facilities and bring local good will to the university. In addition, GGU was particularly interested in in partnering because they were considering starting a school of education and opening a charter school as a lab school for the teachers-in-training.

For LHS, it now had access to a modern facility with the resources of a higher education institution, such as a computer lab and library. With famous modern artwork on the walls, carpeted hallways, elevators, and cleaned bathrooms, the facility provided a much more attractive learning environment than many public high schools are able to offer. Soon, this alternative, downtown facility became one of strongest selling points for recruiting new students and their families.

But the space had certain hidden challenges as well. For instance, student artwork couldn't be posted on walls overnight because of evening graduate student classes, and students had to be on their best behavior even during breaks because of the neighboring university students trying to study during the day. Public relations with the university students also became an issue. Once it became widely known throughout the university that an alternative high school was to be housed in the building, misinformation about LHS began to circulate and a number of law students began to protest the decision. An article about the controversy was even published in the local city newspaper. Although an agreement was quickly reached with the law students to address some of their concerns, these discussions and meetings took valuable time away from the core planning and preparation of the school during its crucial few months before its opening.

Now that LHS is in its second year, the downtown location has continued to be one of the most attractive aspects of LHS. It enables students from all over the city to travel to the school easily and efficiently by way of downtown commuter buses. Students also come from other locations outside the city through the Bay Area Rapid Transit (BART) and CalTrans systems.

In order to deal with noise issues, this year LHS decided to build a mini portable-classroom campus on an empty lot owned by GGU and adjacent to the main building. The new campus contains an outside bench area, a mural wall, and new larger classroom spaces with such features as sinks for science classes. For the future, GGU and LHS have partnered together to raise money for a brand new building and have so far raised several million dollars for a new state-of-the-art facility with 17 classrooms, 28,000 square feet of space, an office, and other accomodations such as a specially designed cafeteria managed by an outside vendor. Construction is expected to begin in the Spring.


Reaching an Ambitious Budget

Kushner made his first hire for the school in January of 1996, a year and a half after he started drafting the charter, and that hire was a development director. In order to raise enough money to keep the school's development efforts alive, Kushner and the new development director adopted a unique strategy to approaching foundations.


Front view with mural wall under construction.
Rather than submitting applications "cold," LHS representatives and Advisory Board members first researched the membership of the board of directors of each prospective local foundation they were interested in applying to, and whether any of those members were already familiar with the LHS proposal. If not, Advisory Board members would use their contacts to familiarize members with LHS's ideas before submitting any type of application for funds. If the foundation's goals were not aligned with those of LHS's, or board members seemed unresponsive to communications, they would find another foundation.

This highly selective strategy in approaching foundations enabled a high success rate among those applications submitted and helped save the school precious time during the school's pre-opening stages. LHS successfully won enough grants to support some of the school's goals during its development stages and into its first year. These grants eventually allowed the school to hire extra staff, run the school's Citylab program (weekly academic enrichment field trips to local destinations), as well as to host a three-day retreat for all the students before school opened in September. Some of the grants it won from private foundations were as large as $100,000 to $150,000.

LHS also solicited help from business experts to draft a long-term financial plan for the school, on 1, 5, and 10 year horizons. Having this type of detailed financial plan attached to applications also helped foundations "buy-in" to the school's efforts even though the school had not even opened its doors yet.

Raising these extra funds was critical to the school's success, not only because the school had an ambitious set of services it wished to deliver, but also because the school - as a charter school - received less monies than other schools. As Kushner explains, "We do not get local taxes or local 49ers (the local professional football franchise) sports surcharge tax money or federal consent decree money, so we actually get less money than other SF public schools. We also have to pay our per rata share of special education charges not covered by federal funds, which is significant."

Kushner continues, "The fundraising allowed us to have our leadership program - especially the retreats - pay rent, do Citylabs, hire sufficient staff, pay for sports programs at the YMCA, and hire a part-time counselor and tutoring coordinator. ADA funding alone is not enough to cover these expenses. Roughly 30% of our first year budget came from our fundraising efforts. This amount will go down in the future, but last year we received about $4000 from the state and federal government per student, and about $2500 more per student from private sources." The long range plan, as the student body grows, is to maintain a level of $1000 extra per student.


Establishing a Governance System

Leadership High School's governance structure is integrally tied to the legal status the school chose to adopt. At the time when Leadership High was being designed, California legislation did not specifically define or set limits on the legal status of charter schools. According to Kushner, legal status as a non-profit corporation was seen as an important way to ensure the school's operational independence from the district: "Non-profit organizations have a long history of law and case law outlining their exact duties, liabilities and governance structure. It is a tried and tested model of governance."


LHS teacher with student.
Having served as legal counsel for several non-profit corporations in the past, as well as a board member for a private school, Kushner was familiar with the standard governance structure for non-profit corporations. Essentially, that structure builds upon a board of trustees who are responsible for setting policy and direction for the organization as a whole, while school management and staff are responsible for day-to-day operations and are accountable to that board. In addition, six standing committees of the board (executive, education, finance, technology, public relations/fundraising, and nominating) collaborate with staff to research different issues, develop plans, and then make formal recommendations to the board for adoption.

By attending the conference of the National Association of Independent Schools, Kushner was able to further research the advantages of a board of trustees model and best strategies for establishing one at Leadership High School. According to Kushner, independent schools have used this model for hundreds of years, and he was able to obtain advice and information from other school directors. Additional training of board members and support on trusteeship and effective boards came from hired consultants.

Doug Gneiser, General Counsel for Leadership High School, as well as a board member, worked with Kushner and a team of volunteer lawyers to set-up articles of incorporation and by-laws. Having an established and reputable law firm working to develop these documents helped smooth the charter approval process and lay the foundation for the governance structure once the school was opened.

In founding the 15 member board, Kushner explains that, "We chose people who proved themselves via volunteering and who had diverse experience, ethnicities and backgrounds. We looked for people who had experience in education, business, technology, law, accounting, banking, public relations, leadership programs, and community organizations. We recruited mostly by word of mouth because most people weren't willing to put in the many hours of work the job required. But it worked out for the best in the end … as the SF Chronicle stated, 'we had enough expertise on our board to run a small nation.'"

In addition to the principal, the board also includes an LHS faculty, an LHS student, a parent, and an LHS alumni representative, each selected by the group they represent and then approved by the board. The board plans to increase its membership in the coming year. According to Gneiser, the primary reason for increasing the size of the board is that "board members have lots of responsibilities and there are many committees to staff". In addition to attending monthly board meetings and serving on committees, board members are also expected to make a financial contribution to the school or help fundraise.


LHS student working hard.

As noted above, the board sets the policy and direction for the school, leaving implementation of policy and day-to-day decision-making to school management. Setting the broad vision and long-range priorities are the primary responsibilities of the board. For example, while the director and his teaching staff plan curriculum, the board looks at curricular issues such as how to continue the success of the mathematics program as the school continues to increase in size. Though the board makes the initial decision about who to hire as principal to direct the corporation (school), the board's acting role is to determine whether the school as a whole is meeting the board's goals - not to hire or fire staff that the principal may hire to help operate the school.

According to Gneiser, electing new members, approving budgets, and adopting plans to proceed with the relationship with Golden Gate University are examples of major decisions the board has made in the past year. For instance, though Kushner was instrumental in getting the relationship between LHS and the university going, the board has to decide whether continuing it is in the best interests of the school.

While this tested model of governance draws a distinction between decisions related to implementation versus policy - one that is not always clear in more traditional public school governing councils - both Kushner and Gneiser agree that separating the board's role in setting policy from day-to-day administration is the most difficult area for new or inexperienced board members to grasp. And as a start-up organization in its first year, it has often been difficult for the board to stay out of the management challenges and other unanticipated issues that have arisen.

A related challenge is clarifying the role of board members, particularly those who represent a specific interest group such as teachers or students. As a whole, the board does not represent specific interest groups; instead, legally and morally, board members should have the interest of the school at the core. One of the most difficult things to teach board members is to see their role on the board as separate from their work at Leadership High. People also need to learn to look at the big picture and consider school issues not just in the present, but for the future.

LHS has employed several strategies to deal with these issues. A key one is training, where board members learn about their roles and responsibilities at day-long retreats and other informational sessions throughout the year. As Kushner explains, "We have had our experienced board members give presentations, we have conducted board retreats, and most recently, we had a nationally renowned nonprofit consultant run a retreat for us on the best practices, duties, responsibilities, and potential pitfalls of running a board." As outlined in by-laws, other strategies include making provisions for excluding board members who are representatives of specific interest groups from certain decisions and conversations. For example, board members who are LHS teachers are not privy to certain deliberations such as those related to disciplining another teacher.

In addition, Kushner notes that maintaining working relationships between the board, the board chair, and principal is critical. At LHS, the board chair and principal meet weekly to review the big picture and proposed policies as well as to act as a sounding board for administrative action. The Executive Committee, comprised of board officers, is another group that the principal works with when trying to deal with sensitive matters in implementing board policy.

In conclusion, it should be noted that LHS's success in establishing a board of trustees and corresponding governance structure does not necessarily guarantee success in the future. LHS's strong financial position has meant that the board has not yet had to deal with many of the tough issues that boards must often face when organizations go through downsizing or other large institutional changes. However, according to Gneiser, the combination of open communication and strong financial support has been key to the effectiveness of LHS' board of trustees. "We've let everyone who wanted to say something speak," said Gneiser. "This is an inclusive group; everyone's opinions are considered."