An Administrator's Guide to California Private School Law Compendium

 Examine all consideration and benefits exchanged between the disqualified person and the school. Consideration and benefits to a disqualified person include, but are not limited to:  Salary  Bonuses  Deferred compensation  Commissions  Royalties  Fringe benefits  Severance payments  Retirement and pension benefits  Expense allowance  Insurance benefits  Payments by a 509(a)(3) supporting organization. The following other transactions could constitute excess benefit transactions if not done at fair market value:  Rental or sale of real or personal property or facilities  Loans to the disqualified person  Assets sold or exchanged between the school and the disqualified person  In order to determine whether compensation is fair and reasonable, gather comparable data regarding what similarly situated individuals running similar schools are paid. The disqualified person’s compensation must be an approximately equal exchange of benefits between the school and the disqualified person. Several factors can help determine if compensation paid to a disqualified person is fair and reasonable, including the following:  The compensation paid by similar schools in the area,  The school should fully and accurately describe all aspects of a compensation package and how it determined the package,  The school should have adequate documentation, such as comparable salaries paid by similar schools and fair market value of property or goods exchanged, that show the reasonableness of the compensation package,  The school should have documentation showing that the total reportable compensation agrees with the amount on the disqualified person’s W-2,

An Administrator’s Guide to California Private School Law - Compendium ©2019 Liebert Cassidy Whitmore 13