The Roles of Trustees and Heads in Managing Risk
By Laura A. Kumin, Esq.
“To be alive at all involves some risk”
– Harold Macmillan (English Prime Minister)
The total elimination of risk is neither possible, nor even desirable. Risk brings opportunity as
well as the potential for harm to a school and the members of its community. The challenge for
trustees and heads is how to manage risk, maximizing opportunities and minimizing harm. If the
events of the past year have highlighted risks and uncertainties, they have also demonstrated the
value of well-organized response and resiliency. A strong risk management program empowers a
school, creating a proactive means to deal with future events, instead of simply reacting to them
when they occur.
This publication describes how trustees and the head can together establish an effective risk
management program, and it provides several tools that help get the program underway. While
the board and the head each have their own responsibilities, the strength of a risk management
program will hinge on their ability to work as a team to integrate risk management into all
aspects of the school. By understanding risk management and all its facets, as well as utilizing
the tools found in the appendix, trustees and school heads will be able to better organize and plan
for current and future risk.
This publication and the tools provided are designed to give schools a roadmap and help along
the way to better risk management. Risk management can be an all-encompassing project, but
one best advanced incrementally as appropriate for the school. While some schools may be well
along the way to a healthy risk management plan, others may find themselves approaching this
task for the first time. This publication should be helpful to both types of readers.
Defining Risk
Before school leaders embark on creating a program to manage risk, they must decide what they
are attempting to manage. Define risk quite narrowly, and the risk management program will
center on insurance and claims handling. Define risk broadly, and the program will be aimed at
evaluating and improving school operations enterprise-wide.
Traditionally, risk has been viewed negatively bad things that happen such as lawsuits following
accidents on the rock climbing wall, fires resulting from chemistry classes, and adverse publicity
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resulting from school policy decisions. There is no doubt that those unfortunate events arise from
risks. But risk is much more than a synonym for hazards. Risk also means the part of opportunity
that is the flip side of reward, as in “nothing ventured, nothing gained.” Moreover, risk describes
the continuum (ranging from best to worst possible) of uncertain outcomes. Defined broadly,
risk includes the downside potential of hazards, the upside potential of opportunity, and the
uncertainty of how actions or events will turn out.1
Even prior to September 11, many in our society, including school leaders, had a heightened
sense of hazard and uncertainty due to the perception of increased violence in schools
nationwide. And hazards that seemed inconceivable just months ago are now all too real. For
some schools, recent events led to immediate, personal experiences with danger, tragic loss, and
a lingering sense of dread. For other schools, there may be more literal and psychological
distance from new risks. However, it is unlikely that any school or community remains totally
untouched. Without diminishing the importance of these hazards and uncertainties, school
leaders should not lose sight of the full spectrum of risk, including the opportunities that risk
presents and the benefits of accepting certain risks in a well managed program. Accepting risk
brings about the benefits of hosting alumni reunions on campus, creating a working farm on a
boarding school campus, and installing an indoor pool for a fledgling swimming team.
What is Risk Management?
Risk management is a discipline that should be practiced at all levels of institutional planning
and operations. In K-12 education, the broad definition of risk includes the upside of the creative
use of technology and new directions for academic programs, as well as the downside of
increased legal liabilities and the uncertainty of external threats. Risk is an inescapable part of a
school’s operations. The goal is not to eliminate risk, but to understand the school’s risks, to
judge the school’s tolerance for those risks, and to manage the school’s operations in order to
keep those risks within tolerable limits.
At the strategic level, the school’s leadership sets expectations for how risk fits into the school’s
mission and goals. For example, while the school’s mission and goals may include providing
students with opportunities to participate in games coordinated by the local athletic association,
the risk of transporting students in standard 15 passenger vans to such events may be
unacceptable. In approaching this balance, the leadership also puts into place the structures,
systems, policies, and processes that will be the framework to be followed in assessing and
analyzing risks in all areas. Then, at each level of the school, those responsible for the school’s
operations and activities use appropriate tools and techniques to manage the risks within their
area of responsibility. As they encourage staff, students, and parents to understand the risk
management process and how they can help, the board and the head incorporate risk
management into their school’s culture and mission.
When risk management is treated as a continual process, it becomes imbedded in the school’s
management and methods of operation. Although it certainly includes crisis response and claims
1
Pushaver and Eccles, “In Pursuit of the Upside: The New Opportunity in Risk Management” at
www.pwcglobal.com .
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© 2002 National Association of Independent Schools and Laura Kumin, Esq.
handling, true risk management is proactive, not simply a series of reactions to incidents or
crises. Moreover, risk management is not limited to the purchase of insurance, the adoption of
safety rules, or the tracking of claims. Those activities are important parts of the risk
management process, but they do not constitute an adequate program to manage the multitude of
risks that every independent school faces.
The four strategies used to respond to risk are often described as follows: avoidance of risk;
control of the risk through policies, procedures, training or other measures that reduce risk;
transfer of the consequences of risk through financial and insurance mechanisms; and acceptance
of the risk. An effective risk management program is one that covers the wide array of risks that
a school faces, using these strategies (separately or in combination) to creatively manage each
risk.
Why Institute a Risk Management Program?
When the school’s leadership makes risk management part of the overall strategic planning
process, thereby incorporating risk management practices in every aspect of operations, the
school benefits on many levels. From a self-interested point of view, trustees have an incentive
to promote risk management. They have legal and fiduciary responsibilities to protect the school,
and potential personal liability if they fail to protect the school against harm that they should
have foreseen and worked to prevent. The best protection for the school and the trustees is to
have a system in place to anticipate risks, evaluate them, and rationally address them through
appropriate strategies. The implementation of a risk management program also improves
decision-making on many levels and provides a framework for planning how the school will
adapt to new challenges. Moreover, a comprehensive program makes the school community
safer and prevents or lessens the risk of liability and loss.
What Risks Do Independent Schools Face?
The risks faced by independent schools can be grouped into five categories: strategic,
operational, legal, financial, and political/reputational. Each category includes hazard,
uncertainty, and opportunity risks. Strategic risk affects the school’s ability to fulfill its mission
or meet its goals and often involves the risks from the other four categories. For instance, a
school’s strategic plan may include expansion of enrollment and new facilities to accommodate
the increased school population. The risk that a severe downturn in the local economy, coupled
with increasing competition from public charter and magnet schools will derail those plans is a
strategic risk, but also has financial and operational risk components.
The other four risks are components of the first, but they are also individually important.
Traditional operational risk, which affects safety of the community and use of the campus,
includes weather, fire, and crimes such as vandalism or hostage-taking. Legal risks are those
posed by lawsuits and regulatory processes. These risks include discrimination and breach of
contract claims by employees and students, as well as cases in which someone suffers an injury
that he or she claims is a result of the school’s negligence or failure to fulfill a legal duty.
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Financial risk centers on matters such as tuition, financial aid, investment matters, and
fundraising that affect the amount of money the school has to spend or invest.
Political/reputational risks are those that could cause the school to suffer a loss of standing in the
eyes of the public generally or in the eyes of a discrete group, such as prospective applicant
families or campus neighbors. Although political/reputational risk may result in a specific
sanction, such as loss of accreditation, typically it yields a less quantifiable adverse impact, such
as public disapproval and negative “buzz” after a scandal.
As you design and implement your risk management program, consider the real life examples of
each type of risk provided in the appendix of this publication. Are there mechanisms in your risk
management program to help avoid these situations, mitigate the losses suffered, or take
advantage of the opportunities presented?
The Board’s Role
The board sets policy and strategic direction, establishing specific policies and plans that are
consistent with the school’s mission.2 When the board places management of risk on the school’s
strategic agenda and establishes the framework for the program to be administered by the head,
the board fulfills an important part of its fiduciary duty to safeguard the school’s well being and
assets. When trustees make risk management part of the board’s agenda, they send a message
throughout the school community that risk management is part of everyone’s responsibilities,
which in turn makes risk management a school-wide priority.
Frame the Program
In its broad policy-making role, the board develops the school’s approach to risk. Board
guidance is crucial in establishing how much risk the school will be comfortable accepting in
particular areas. The school’s “appetite” or tolerance for risk may be large in some areas and
small in others; the board will find that just examining this topic deepens board members’
understanding of how the school functions and what risks it already faces. Is a K-8 school
comfortable with the risks of sending 8th grade students to foreign countries? If the school has
traditionally sponsored an 8th grade language trip to France or Spain, maybe no one at the school
has recently examined the risk of foreign travel for middle school students. Would a comparison
of this risk to others the school finds acceptable put this risk outside the parameters set by the
board?
Once the board sets risk appetite or tolerance parameters, it establishes the framework of the
program to keep risk within acceptable limits. The board should encourage development of a
program that is comprehensive but realistic. A program designed to make measured, steady
progress will be more effective in the long run than a concentrated burst of activity that exhausts
people and lessens their enthusiasm for the risk management process. Every school can design
an effective program regardless of its size and structure. The key is to establish expectations as
2
DeKuyper, Mary Hundley, Trustee Handbook: A Guide to Effective Governance for Independent School Boards.
National Association of Independent Schools, Washington, DC, 1998.
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to which risks will be addressed as priorities and realistic timetables for development of
responses to those risks.
Establish Risk Priorities
Trustees will need information on the frequency of risks and the likely severity of risk
repercussions in order to decide which risks are the most pressing for the school to address. For
example, in terms of reducing legal liabilities, the trustees will want to consider both the
frequency and severity of the various types of claims that the school faces from potential
litigants. “Slip and fall” accidents are typically a frequent, but not severe type of claim. On the
other hand, employment claims are usually less frequent, but more costly to the school. (The
considerable expense of employment litigation includes defense costs and reputational damage
regardless of the outcome, and the damages awarded if the plaintiff prevails.)
Information on the frequency and severity of hazard risks is often available through the school’s
insurance broker or company. Also, a number of government agencies provide data on particular
types of claims or accidents within their area of responsibility. For example, the Equal
Employment Opportunity Commission (EEOC) tracks employment discrimination claims and
the National Safety Council publishes statistics on accidents. There is no formula for how to
balance those risk factors, but simply considering them as part of the risk assessment process
helps refine the school’s approach to risk management.
The human element also requires that a risk assessment take into consideration perceptions that
certain risks are consequential, even if school leaders would not otherwise rank them as high
priority. If staff, students, or parents at a Midwestern school become upset at the possibility that
the school’s mail may be contaminated with anthrax, then the school may find it prudent to
institute precautionary measures for mail handling, at least temporarily, even though local health
officials have publicly declared that there is no medical basis for concern.
Approaching Risk: Cost/Benefit Analysis
As fiduciaries, trustees must decide how to use the school’s finite resources to the best advantage
in a risk management program. Cost/benefit analysis is a useful tool to determine the relative
costs of managing different risks and the cost of achieving an acceptable level of risk in a given
area. Comparing the relative merits of different risk control strategies reveals that certain
measures are “no brainers” because they involve minimal expense and obvious benefits, others
are not worth the time, expense, or effort, and still others are worth the investment because the
return is greater than the cost.
For example, a cost/benefit analysis can help determine which security measures make the most
sense for the school. Adding locks and limiting the doors through which people may enter a
building are relatively simple and inexpensive measures to prevent intruders from entering.
Installing a building-wide alarm system and hiring a security company to guard exits are
expensive measures to achieve the same end. A third approach is hiring a security expert to
survey building security needs. That survey may indicate that increasing security compliance
(i.e., reminding people not to prop doors open or allow strangers to enter when they leave) would
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be more effective than any of the hardware or guard options. In that case, the cost of the security
review might be “middle ground” expenditure and well worth the investment.
Support the Head
Board support for the head’s efforts to manage risk is critical, particularly in areas that affect
reputation and relationships within the campus community such as measures to avoid
employment liability. In some cases, active support is appropriate. For example, if the head
decides to ask all parent volunteers who serve at school functions to undergo CPR and accident
response training, then having a board member who is a parent volunteer sign up for the training
demonstrates board support. In other cases, the support will be passive, but just as effective. For
example, when an irate parent asks a board member to intervene to prevent the head from
making student peer harassment prevention training mandatory, the board member supports the
head’s effort to manage the peer harassment issue by diplomatically, but firmly, refusing to take
any action that undercuts the head’s decision.
Fulfill the Leadership Role
Board members can also help in their individual capacities by making their professional
expertise available to the head and others who implement the risk management program.
Trustees who have experience in business or government are in a good position to alert the
school to new risks or to developing situations that may change the school’s evaluation of the
seriousness of a particular risk. For example, trustees who deal with Internet and
telecommunications issues in their professional careers may have valuable insights that would
help the school assess how to respond to new Internet filtering requirements.
Generally the board does not become involved in decisions as to which risk management
strategy (avoidance, control, transfer, or acceptance) or combination of strategies will be used for
particular risks. However, the board can support good strategy development by recognizing those
in the community who do an especially good job of managing risk or who develop a new
approach to managing a risk. For example, the board could recognize the athletic director’s
increased emphasis on safety in the athletic program, or the admissions director’s new training
program on legal compliance in admissions, or the technology coordinator’s new
computer/Internet use policy. In providing recognition and support to those activities, the board
sends a message that risk management is valued at the highest levels of the school
administration.
The Head’s Role
The head is in charge of collecting the information for risk assessment and assuring that the
appropriate measures are taken in response to identified risks. The management structure used
for dealing with risk varies depending on the organization. In large corporations that recognize
that risk is more than liability or the purchase of insurance, there is a new trend toward the
appointment of a senior management “Chief Risk Officer.” That individual has access to the
highest levels of the company, a full-time commitment to risk management and a mandate to
coordinate risk management efforts across divisions or departments.
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Promote the Cause
Risk management is a long-term process. Frequently, the press of daily business or a string of
brushfires make it difficult to find time for the risk analysis and prevention measures that are the
core of successful risk management. It is up to the head to keep promoting risk management,
reminding the school community that planning for risk is much more effective in the long run
than reacting to injuries, damages, and other losses. To regularly promote risk management it
might be easiest to set in place monthly reports or reminders that encourage both the head and
staff members to routinely revisit risk issues in their activities.
Delegate Responsibilities
In an independent school, the head is likely to take an active role in coordination, working with a
small staff group or committee and reporting to the board through a standing board committee,
such as the audit committee or a special task force. The head delegates operational
responsibilities to carry out program goals, keeps program activities on the front burner,
encourages collaborations within the community and with other schools to help manage risk, and
establishes a reporting framework.
The business officer is a key player in the risk assessment, implementation, and management
process. On both financial risk and insurance matters, the business officer is typically the
administrator most familiar with the school’s situation. He or she may also be responsible for
decisions in those areas, such as which types of insurance to purchase and in what amounts. The
business officer’s role in the process extends to providing crucial input on the financial
implications of a risk or risk management strategies developed by others. However, this
invaluable input should not be confused with the obligations of the head and the board to
develop and guide the school’s risk management approach. For example, if an athletic director
determines that it would be a prudent strategy to provide cell phones for athletic coaches to use
in emergencies, the business officer will determine the costs involved.
The delegation of responsibilities by the head goes far beyond the business officer.
Virtually every staff member will have responsibility for some aspect of risk management:
faculty administrators are responsible for policies and training on employment and student
academic issues, the athletic director oversees athletic safety, the admission and development
offices each have policies and procedures that they must implement to minimize risk in their
areas, building maintenance and security supervisors implement safety procedures and teachers
are responsible for direct supervision of classroom, club and other student activities.
The more connected each individual feels to helping manage risk and the more each understands
how his or her actions contribute to the school’s ability to accomplish its mission, the more
effective the program will be.
Build the School Team
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By its nature an independent school is a collaborative environment. When the head encourages
collaborations to further the school’s risk management goals, the process takes advantage of the
school’s strengths. As individuals with diverse responsibilities and perspectives in the school
community work together on a risk management project, the effort builds support for the risk
management process and makes it part of the school’s culture. For example, if the head appoints
a cross-functional team of administrators, faculty, and staff to review and revise the school’s
policy manual, that team can build support for the changes they recommend among their peers.
Collaborations that bring in outside resources also inspire the community and may spark new
ideas that may ultimately take the school’s risk management program to a higher level. Those
resources may include experts in a substantive field, or colleagues from other schools or local
organizations who have successfully dealt with the issues under consideration.
Monitor the Program
Once a school has established a risk management program, the head should make sure that
monitoring is in place and that the board is kept apprised of how the risk management plan is
being implemented. Regular, rotating reviews of specific areas of risk will help the school assure
that established policies and procedures are adequate, that they are being followed, and that any
claims or other risk situations that have developed are being handled well and monitored.
An annual risk management report to the board is an effective tool for advising the board of the
school’s risk experience, the efficacy of it risk management efforts, and progress in formulating
risk management strategies for the future. While creating such a report, it is important not to
build a record for a litigant to use against the school. The school’s legal counsel should be
consulted for advice on both the report format and contents.
The Bottom Line: Keep the Program Dynamic
School leaders should remain alert to developing risks and adapt the school’s risk management
plan accordingly. Our risk environment is ever-changing and the convergence of risks can bring
results that would not have been anticipated in either substance or scope if each risk had been
separately evaluated. A risk management program and those who oversee it must be flexible if
they are going to keep pace with the environment they seek to manage. Schools should routinely
tap the resources available to them — including their insurance carriers and brokers — to stay
apprised of the risk environment. We may not be able to anticipate all risks, but we can learn
from them in order to better prepare for the future.
N.B. This article is intended for general educational purposes only. It should not be construed or
relied upon as legal advice.
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Appendix: Tools to Help Develop the Risk Management Program.
Two charts follow: a set of illustrative steps and activities to guide in the establishment of a
program, and a risk management checklist. They are most helpful if modified to suit the school’s
particular circumstances and operations. Not all schools will need to visit all of the areas
provided, and other schools may see potential issues that are not addressed. What may be
appropriate for one school may not be appropriate for another.
After the charts, there are examples of each of the five categories of risk described in the first
part of the article that provide a “reality check” to help gauge whether and how a risk
management program would work in particular circumstances. Would the program under
development cover these situations? In these examples, would the school’s program help to
avoid or control adverse effects or raise the likelihood that an opportunity would lead to a
positive outcome? When new risk situations come to the school’s attention, the trustees and head
can use them as additional vehicles for measuring the effectiveness of a school’s risk
management program.
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© 2002 National Association of Independent Schools and Laura Kumin, Esq.
Establishment of a
Risk Management Program
Illustrative Steps and Activities
Step
Responsible group or
individual(s)
Introduction
Trustees
Activity
•
•
•
•
Risk assessment –
phase 1
Board task force or
committee, in
consultation with head
•
•
Open initiative with introduction to risk management at a
trustees meeting.
Designate a task force or committee with primary
responsibility for board role.
Develop a charge for task force/committee and statement
describing the initiative.
Develop communications strategy to inform various parts of
school community at appropriate times of program and
progress.
Outline the risks that will be assessed. (See risk management
checklist for a preliminary list of risks likely to merit
examination in an independent school.)
Designate an individual or small group led by head and
responsible for examining current status of each risk
outlined.
Risk assessment –
phase 2
Risk assessment group
(designated in phase 1)
•
Create preliminary risk assessments for each risk, citing
areas to be investigated more fully if the risk is determined
to be a priority.
Risk assessment –
phase 2 cont’d.
Board task force or
committee
•
Rank the risks and create schedule for full risk assessment
and development of risk management plan for highest
priority risks.
Risk assessment group
(designated in phase 1)
•
Develop comprehensive risk assessment for each high
priority risk. (Consult with legal counsel on how to
communicate results of assessment with care to protect
school from use of information against the school in a
subsequent lawsuit.)
Establish risk
management
priorities
Risk assessment –
phase 3
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© 2002 National Association of Independent Schools and Laura Kumin, Esq.
Step
Responsible group or
individual(s)
Risk assessment –
phase 3 cont’d.
Activity
Board task force or
committee
•
For each high priority risk, establish risk tolerance
guidelines, e.g., unwilling to permit use of school facilities
by outside groups that do not carry at least $500,000 of
liability insurance that covers school as well as the outside
group
Head and designated
individuals
•
For each high priority risk, review existing policies and
procedures, insurance coverage (where applicable), and
other risk management measures already in place.
Recommend modifications to existing measures and further
actions
Establishment of
risk tolerance
guidelines
Risk assessment –
phase 3 cont’d.
Develop risk
management
strategies for high
priority risks
Risk assessment –
phase 3 cont’d.
•
Head and board
Program
monitoring and
evaluation
•
•
Risk assessment –
phase 3 cont’d.
Head
•
Define goals for each aspect of program and monitor
progress toward meeting those goals.
Evaluate periodically whether new circumstances warrant
modifications to existing program or priority of risks.
Present annual risk management report
Reporting to board
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© 2002 National Association of Independent Schools and Laura Kumin, Esq.
Risk Management Checklist
Activity
Responsible
Individual(s)
Risk Assessment
Timeline & Results
Student/school relationship
Admissions/recruiting
Standards of behavior
Discipline & dismissal
Student health (drugs, alcohol,
other risk behaviors)
Student safety
Human resource management
Recruitment
Employment conditions
Evaluation/retention
Training
Discipline & termination
Programs
Academic programs
Laboratory safety
Athletics
Off-premises trips, including
out-of-town & foreign travel
Clubs, before- and after-school
care, and other after-school
activities
School-sponsored camps
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Risk Management
Plan & Action Steps
(including timeline)
Activity
Responsible
Individual(s)
Risk Assessment
Timeline & Results
Accreditation
Transportation
School-owned
Parent-owned
Charter
Housing (for boarding schools)
School/Parent-association
relationship
Financial operations
Payroll
Purchasing
Tuition/financial aid
Fundraising
Endowment
Other business relationships and
operations
Contracting with consultants
and other third parties for
services
13
Risk Management
Plan & Action Steps
(including timeline
Activity
Responsible
Individual(s)
Risk Assessment
Timeline & Results
Information technology/
electronic communications
Academic
Other student-based use
Business operations
Buildings and grounds,
playgrounds, and fields
Construction
Maintenance
Personal safety (fire & crime)
Use of buildings/grounds
by school-related groups
Use by non-school groups
Food service
Miscellaneous
Contingency plans
Event planning
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Risk Management
Plan & Action Steps
(incl timeline)
A Reality Check: Would Your School’s Risk Management Program Handle these Issues?
Would your school’s program cover these situations? In these examples would the school’s
program work?
Use these examples as additional vehicles for measuring the effectiveness of a risk management
program. In the future, when you hear about other schools experiencing similar situations, think
about how your school’s program would help identify and manage the risks.
Strategic risk
•
An independent school purchased more than 100 acres to the east and west
of its campus in order to try to have a state highway rerouted around the
campus instead of through it. The school was encouraged in informal
conversations with town officials, selectmen, the planning board, and
others. However, when the school’s plan became publicly known, a
number of citizens objected and the public officials declined to continue to
support the school. The situation left the school holding the newly
purchased land with no immediate prospects for its sale or use.
•
A school engaged in protracted regulatory proceedings to gain permission
to build a new campus. Although the local regulatory body gave the
school permission to proceed with construction, several property owners
near the land on which the campus would be built filed an appeal to the
regulatory action. Since there was no legal prohibition against proceeding,
the school determined that the chance of overturning its permit was small
and the benefits of proceeding were considerable, the school decided to
move ahead with construction during the appeal process.
Operational risk
•
During summer school and just weeks before the opening of a new school
year, a predawn blaze of suspicious origin caused an estimated $1.3
million in damage at a 1,400 student K-12 school. The fire destroyed four
classrooms and caused water damage to three others.
•
A school relied on historical yield data to gauge how many students it
should admit, but found to its surprise one year that almost 20% more
students enrolled than the school had anticipated. The enrollment surge
required the school to increase class sizes and make hasty arrangements
for more dormitory space. The school expected that a number of students
would spend the year in makeshift residence halls.
Legal risk
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•
A male student who attended a dance at an all-girls high school and his
parents sued the school for injuries he suffered when he was stabbed
during a melee at the dance. Although the school had arranged for a
uniformed police presence in addition to several chaperones, the police
did not arrive as promised. The chaperones allowed the dance in the
school gym to proceed anyway and the crowd of approximately 150
teenagers grew unruly. A bottleneck developed as the teenagers began to
exit and the plaintiff student was stabbed as he tried to get through the
bottleneck on his way out of the gym. The jury found that the school was
liable and the finding of liability was confirmed on appeal – seven years
after the injury occurred.
•
A high school senior developed a serious autoimmune disease that made
her susceptible to life-threatening episodes of bleeding. She had been at
the school continuously since first grade, had done well scholastically and
otherwise, but became increasingly agitated during the first semester of
her senior year as her condition worsened and she had episodes of
bleeding at school. The principal of the school was particularly disturbed
by an episode in which the student used two expletives and by a
subsequent meeting when he felt that she did not express remorse for her
earlier behavior. The principal decided to expel her for the second
semester, the final semester of her senior year. He did allow her to
complete the first semester, suspending the general rule preventing
students from receiving credit after being absent more than 15 times in a
semester. The student sued the school one day before the expulsion was to
be effective, charging violations of the Americans with Disabilities Act
and the Rehabilitation Act. She asked the court to prevent her expulsion.
The court ruled in the students’ favor and required the school to readmit
her and accommodate her disability.
Financial risk
•
A wealthy alumnus pledged $1.5 million to a school and became
instrumental in the school’s fund-raising activities. He served on the board
of the school’s fund-raising group for 10 years and was its president and
chair during part of that time. After contributing $800,000 of his promised
$1.5 million gift and having one of the school’s buildings named after
him, the benefactor was sued by the SEC on the grounds that his
investment company hid client losses through a Ponzi-type scheme. The
benefactor was indicted on federal criminal charges arising from his
business dealings, and the receiver brought in to manage the affairs of the
defunct company asked the school to return the $800,000. Although the
school felt that there was at least a plausible argument that the money was
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taken in good faith, it decided to return the funds and to remove the
alumnus’s name from the building.
•
A school district fired two superintendents: one after the district’s high
school lost its accreditation and the other after she was found to have hired
two consultants with whom she had personal relationships. Both
terminated administrators sued. The first one settled with the district for
$625,000 and the district’s insurer set aside $225,000 as a reserve in the
case of the second fired administrator. The district’s educators’ legal
liability insurance carrier dropped the district as a client and the new
carrier that the district found to insure those risks charged a premium over
twice as high as that charged by the previous carrier ($23,052 as compared
to $10,982) and raised the deductible from $2,500 to $25,000.
Political/Reputational risk
•
A pre-teen was left paralyzed and unable to hear or walk after he nearly
drowned during an outing at a school-sponsored camp. The pre-teen’s
parents felt that the school was unresponsive to the questions they raised
about the circumstances surrounding the accident. The parents filed for
bankruptcy as a result of their child’s significant medical expenses. In
addition to suing the school, they launched a web site that urges members
of the public to see the situation from their point of view and to lobby the
school to accede to their requests.
•
A former teacher and coach at a school was convicted of sex offenses that
stemmed from his relationship with a 14-year-old student while he was
both her coach and teacher. During the trial, there was testimony that the
former coach and teacher had had sexual relationships with several minors
during his teaching career. There was also evidence that the teacher had
been fired by a public school system after allegations surfaced that he had
been involved in similar situations during his employment with the school
system, but he had never been prosecuted in connection with those
allegations. There were at least eight articles in the local paper about the
case, all of which prominently featured the name of the school.
Source: www.nais.org •
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