An Administrator's Guide to California Private School Law

Chapter 1 - Introduction

C HAPTER 1 - I NTRODUCTION The laws governing California private and independent schools are frequently changing and often counter intuitive. Best practices are constantly evolving as schools come under increased scrutiny and standards of care advance. Knowing the risks and rules can greatly minimize a school’s exposure to liability. In this environment, it is essential for schools to establish a practice of auditing their contracts, handbooks, and policies to ensure that they will provide the necessary legal and sensible protections. Schools need to have fair and consistent approaches to decision making, especially in areas that present significant risks. This Guide is meant to provide concise and constructive information for schools when navigating the variety of challenges they face today. It highlights areas of risk and provides a framework for addressing issues both inside and outside the school community. Schools should adapt these guidelines to fit their individual needs while being careful not to run afoul of California’s unique laws. Policies, contracts, and handbooks should always be reviewed by legal counsel. If you have questions or comments regarding information in this Guide, or suggestions as to how it could be improved, please email them to info@lcwlegal.com

C HAPTER 2 - G OVERNANCE Section 1 F ORMING A P RIVATE S CHOOL

A. I NTRODUCTION The specific purpose and structure of a private school is as unique as the school itself. The first step in forming a private school is to evaluate the options that exist as to the corporate form and governing documents. This section highlights choices faced by those creating a new private school and those reconsidering its corporate structure, and provides recommendations regarding governance. B. C ORPORATE F ORM Private schools may take various corporate forms. Private schools, like other organizations, may be incorporated as either for-profit or nonprofit corporations. Aside from the tax consequences, the major distinction between a for-profit and a nonprofit corporation is that in a nonprofit corporation, no distribution of corporate assets can ever be provided to shareholders or “members,” even upon dissolution. Thus, while a for-profit corporation may distribute profits to its shareholders in the form of dividends, nonprofit corporations are prohibited from doing so.

An Administrator’s Guide to California Private School Law ©2019 Liebert Cassidy Whitmore 25