Soquel Union Elementary School District Soquel June 20, 2016 The Honorable Judge John Gallagher District Santa Cruz*

The Grand Jury finds that the Board has violated the Brown Act on at least two occasions. These violations were due to the lack of open session discussion regarding the superintendent's contract and incomplete reporting of closed session decisions. <b>AGREE</b> PARTIALLY DISAGREE – explain the disputed portion <b>DISAGREE</b> – explain why X Response explanation (required for a response other than Agree):

The Board chose to add the superintendent's expenses to his annual salary. While this is contrary to the spirit of the California Public Employees' Pension Reform Act adopted in 2012, the practice is commonplace for superintendents hired before 2013. <b>AGREE</b> PARTIALLY DISAGREE – explain the disputed portion x DISAGREE – explain why <b>Response explanation</b> (required for a response other than <b>Agree</b>): The Board respectfully disagrees with the Grand Jury's assertion that restructuring the Superintendent's contract was "contrary to the spirit of the California Public Employees' Pension Reform Act adopted in 2012." (Gov. Code § 7522 et seq. ("PEPRA").) Instead, as explained below, an opportunity to restructure an administrator's contract, under certain conditions, was explicitly provided for in the regulations adopted by CalSTRS. The Board also notes that in its Report, the Grand Jury mischaracterizes both the Board's intent and the nature of the Board's action during the June 17, 2015 meeting. (Report, pp. 9-10.) Effective January 1, 2015, regulations adopted by the California State Teachers' Retirement System ("CalSTRS") governing creditable compensation for "classic" members (i.e., members who entered CalSTRS prior to January 1, 2013) made significant changes to the way that compensation is treated by CalSTRS. (Cal. Code Regs., tit. 5 ("5 CCR") § 27200 et seq.)¹ Prior to adoption of the new regulations, allowances, such as for cars or travel, were creditable for retirement benefit purposes for classic members if the allowance was properly structured. However, under the new CalSTRS creditable compensation regulations, auto/travel and other allowances were no longer creditable compensation for retirement benefit purposes for classic members after January 1, 2015. (5 CCR § 27201.) In order to avoid the inequity of denying credit for compensation after years of contributions have been paid, the new regulations explicitly provided a short window of time, prior to January 1, 2016, during which an administrator's compensation package could, under certain conditions, be restructured to convert non-creditable forms of compensation into base salary without the change in compensation automatically being considered "inconsistent" under the new regulations. (5 CCR §§ 27400(c), 27600(a)(1).) Contrary to the Grand Jury's analysis, the restructuring of the Superintendent's contract during the June 17, 2105 meeting was not a "raise" and was not done "to improve the pension of the soon-to-retire Superintendent." (Report, p. 9.) In fact, there was no change to the amount of the Superintendent's overall compensation, as the ¹ Please note that the "pensionable compensation" limits for new members cited by the Grand Jury in its Report (Report, p.10) do not apply to this situation. "Classic" members are covered by Education Code section 22119.2, and the recently adopted regulations at 5 CCR § 27200 et seq. Respond by July 25, 2016 Superintendent was already earning the allowances converted to base salary during the June 17, 2015 meeting. Moreover, the Board took action to restructure his contract in order to prevent an unintended decrease in the Superintendent's "creditable compensation" that would have resulted under the newly adopted CalSTRS regulations. The Board's open session discussion and possible action with regard to the restructuring of the Superintendent's contract is identified on the June 17, 2015 agenda at Item 7H. (Exhibit C.) In this case, the Board's restructuring of the Superintendent's contract during a regular Board meeting on June 17, 2015, was done within the regulatory window adopted by CalSTRS and complied with both the spirit and the intent of the law. Respond by July 25, 2016

There is history of poor communication and mistrust of the Board and District administration by the public they serve. AGREE x PARTIALLY DISAGREE – explain the disputed portion <b>DISAGREE</b> – explain why Response explanation (required for a response other than Agree): The Board respectfully disagrees with the Grand Jury's blanket assertion that the District and Board have experienced a "history of poor communication and mistrust" on the part of the public. While the Board acknowledges recent public dissatisfaction, it notes that prior to 2014-2015, the Board was not aware of any significant amount of public discord in excess of that typically experienced by public school governing boards. As discussed in the Grand Jury's Report (Report, pp.1-2), much of this recent dissatisfaction stemmed from disagreements between District administration and parent representatives over the management and control of the Home and School Clubs ("HSC") at some District schools. As discussed in greater detail later in this Response, District administrators, the Board, and HSC representatives have been working diligently to address and remedy those concerns. The Board also notes that other areas of concern described by the Grand Jury as contributing to public discord, such as salary negotiations, residency issues, and changes in District and Board leadership (Report, pp.1-2) are "part and parcel" of the daily business within the purview of a public school district governing board, for which concerns about the public's perception of the Board must be secondary to the Board's primary responsibilities to the District and its students. With regard to labor negotiations, for example, the Board has a fiduciary responsibility to the students of the District and the District's taxpayers and difficult negotiations may result when the Board has to balance employee salary demands with other district needs, such as facilities and programs for students. Respond by July 25, 2016

The lack of an adequate, posted complaint procedure and problem resolution process contributes to the mistrust of the District and Board. <b>AGREE</b> <b>PARTIALLY DISAGREE</b> – explain the disputed portion x DISAGREE - explain why <b>Response explanation</b> (required for a response other than <b>Agree</b>): The Board respectfully disagrees with the Grand Jury's finding that the complaint resolution procedures posted on the District's website are inadequate and contribute to any mistrust of the District and the Board. A review of the District's website finds a link to Uniform Complaint Procedures under the Parents & Students menu tab. (Exhibit D.) Clicking on that link leads directly to a listing of Board Policies ("BP") and their corresponding Administrative Regulations (AR") and related Exhibits ("E") relevant to the requirements and process for filing: (1) uniform complaints alleging violations of federal or state laws or regulations governing specific educational programs, the prohibition against requiring students to pay fees, deposits, or other charges for participating in educational activities, and unlawful discrimination, harassment, intimidation, or bullying (BP, AR and E 1312.3); (2) complaints concerning District employees (BP, AR and E 1312.1); (3) complaints concerning the adoption of instructional materials (BP, AR and E 1312.2); and (4) "Williams" uniform complaints concerning textbooks and instructional materials, teacher vacancies or misassignments, and school facilities (AR and E 1312.4.) Contrary to the Grand Jury's Report, these policies, regulations and exhibits identify the District's responsible Compliance Officer and include "guidance for where and how to file a complaint." (Report, p. 9.) (Exhibit D.) Information regarding the District's uniform complaint procedures is posted on the District's website and the Annual Notice to Parents is distributed to all students and parents at the beginning of each school year (Exhibit D.) Respond by July 25, 2016

The Board has failed to adequately develop and report performance standards for the superintendent. <b>AGREE</b> PARTIALLY DISAGREE – explain the disputed portion x DISAGREE - explain why Response explanation (required for a response other than Agree): The Board respectfully disagrees with the Grand Jury's finding that the Board has failed to develop and report performance standards for the Superintendent. In addition, the Board believes that the Grand Jury's Report misstates the obligations of the Board with regard to the development of performance goals and the Superintendent's evaluation. Specifically, Board Policy ("BP") 2140 (Evaluation of the Superintendent) does not require that the Board discuss or report the Superintendent's progress towards meeting performance standards in open session (Report, p.10.) (Exhibit E.) Instead, BP 2140 provides that "at a minimum, the Board shall annually conduct a formal evaluation of the Superintendent's performance to assess his/her effectiveness in leading the district towards established goals." It further provides: The evaluation shall be in accordance with the provisions of the Superintendent's contract and any applicable Board policy." In accordance with Government Code section 54957 (the personnel exception set forth in the Brown Act), BP 2140 also states: "The Board shall meet in closed session with the Superintendent to discuss the evaluation." (Emphasis added.) (Exhibit E.) With regard to the development of performance goals, BP 2140 requires as follows: "At the open session after the Superintendent's evaluation or at a subsequent meeting, the Board and Superintendent shall jointly identify performance goals for the next year." During open session at a March 7, 2012 meeting, the Board reviewed and discussed a copy of a Blueprint for Student Success for the school years 2012-13 through 2015-16 as well as a draft of the 2012-2015 Operational Plan, which is an addendum to the Blueprint for Student Success. Pursuant to their discussion, the Board requested additional revisions to both documents. The revised documents were reviewed and approved during the Board's March 21, 2012 meeting. (Exhibits F, G.) The 2012-2015 Operational Plan identifies the following broad "target areas": Curriculum, Instruction and Student Achievement; Budget and Spending Priorities; and Communication/Community Building. Each Target Area includes a number of subsidiary "District Goals" and assigns responsibility for implementing each goal to the Superintendent and/or other District personnel, department heads, or committees. The Superintendent's progress towards meeting these District Goals is directly linked to his evaluation. Respond by July 25, 2016

Although HSC contributions are a significant part of the discretionary budget for schools in the District, they are not well managed and they do not receive adequate public recognition. AGREE X PARTIALLY DISAGREE – explain the disputed portion <b>DISAGREE</b> – explain why <b>Response explanation</b> (required for a response other than <b>Agree</b>): As discussed in the Grand Jury's Report, during the 2014-2015 school year, parent representatives of HSCs at certain District schools raised objections to proposed revisions to the District's policy concerning School-Connected Organizations and also expressed dissatisfaction with District accounting procedures with regard to HSC donations. In particular, as noted in the Report, HSCs were concerned that unspent HSC funds that had been transferred to District funds for the purpose of supporting a teacher, program or capital expenses were transferred into the District's general fund rather being returned to the HSC that donated the funds. (Report, pp.7-8.) In addition, as discussed below in the District's Response to Finding 8, HSCs raised concerns regarding the tracking of donations to teacher supply accounts. In response to complaints regarding accounting and tracking of HSC funds, the District implemented new accounting procedures, effective February 1, 2016, for tracking donations from HSCs and to provide HSCs with updated and regular accounting reports regarding those donations. (Exhibit H.) Feedback received from the HSCs has reflected support for these new accounting procedures. Each HSC was given the opportunity to receive public recognition and formally report to the Board regarding donations and other activities and support provided by the HSCs. (Exhibit I.) In addition, going forward, in alignment with the new accounting procedures for HSC's donations over five-hundred dollars ($500.00), these donations will be disclosed and recognized at regular scheduled board meetings throughout the year. Respond by July 25, 2016

There is no policy in place to reconcile HSC donations with District expenditures. The proposed contract policy between the District and contributors of donations in excess of $500 is intended to address this issue. x AGREE PARTIALLY DISAGREE – explain the disputed portion <b>DISAGREE</b> – explain why Response explanation (required for a response other than Agree): The Board agrees that there were no procedures in place to reconcile and track HSC donations with District expenditures at the time of the Grand Jury's investigation. However, as discussed in the District's response to Finding 6, as of February 1, 2016, the District has implemented new accounting procedures that provide for accounting and reconciliation of funds from HSCs and foundations. Pursuant to the new accounting procedures, the District will refund donations to the donor organization in the event funds earmarked for specified personnel costs are less than originally estimated. HSCs and foundations will also receive annual account summaries of all unused funds from the previous fiscal year and full prior year accounting of expenditures. The new procedures also require donor organizations to provide written instructions to Business Services regarding placement of unused funds. (Exhibit H.) Respond by July 25, 2016

Because HSC contributions for teacher supplies are combined with contributions from other sources, accounting to individual donors for each teacher's expenses is impractical. x AGREE PARTIALLY DISAGREE – explain the disputed portion <b>DISAGREE</b> - explain why Response explanation (required for a response other than Agree): HSCs raised concerns regarding unexpended funds in teacher supply accounts, which, at the end of the school year were "swept" into a single carryover account for the next school year. Tracking HSC contributions to these accounts is complicated by the fact that several sources often contribute to teacher supply funding. (Report, p.8.) However, as the Grand Jury has recognized, "the labor required to accurately track small dollar amounts by source outweighs the amount being tracked." (Report, p.8.) Respond by July 25, 2016