I.                    Preamble

It is our intent to form a new organization, based on the attached mission statement, to dramatically increase the number of high-quality, accountable charter schools in California. This organization will be a policy leader, politically strong enough to go toe-to-toe with other major state-level education organizations, the driving force to create and expand high quality charter schools, and a major source of support and technical assistance.

An exceptionally effective organization must include an exceptional board, high quality staff, and a broad and extensive grassroots membership. The board must include all the major players on which the charter school movement depends, including charter school operators, business leaders, education reformers, and philanthropists.

II.                  New Organization

CANEC and CSDC are exploring combining our resources into a single, new, strong organization, here called NewCo.

EdVoice intends to work closely with NewCo on policy matters.

The major philanthropic funders listed below have a strong interest in supporting NewCo, so long as major indicators of effectiveness, outlined below, are present.

All of the signing organizations agree that the issues listed are essential to NewCo’s effectiveness.

III.                Corporate structure of NewCo

Corporate form: NewCo will be a newly-formed 501 c 3 organization.  A simple, generic set of incorporation documents will be filed with the California Secretary of State within two weeks after the LOI is signed. By June 1, the parties will agree on more detailed bylaws tailored to the specific needs of NewCo, and will consider and agree on any other changes advisable in the corporate form.

Name: The name of NewCo will be determined by the board.

Board: The board will be small enough (initially 9 members) to work effectively, and to deeply involve all board members. The full board will meet at least quarterly.

Board members will serve three-year terms. Initially, all board terms will begin in 2003 and expire in 2006. By the end of 2005, the board will create a plan for staggering the terms of board seats, assuring continuity and fair representation in the long term. This plan will be implemented when board seats expire in 2006.

Board members will make every effort to attend board meetings, in person or by phone. If a board member is not able to attend in person or by phone, attendance at board meetings by substitutes or proxy votes will not be accepted.

In general, NewCo board membership will be self-perpetuating: as board terms end, the board will name a nominating committee, and will elect board members. Exceptions to this general rule are noted below.

Initially, the seats will be filled as follows, with vacancies to be filled as specified below:

• 3 seats will be filled by John Walton, Steve Poizner, and Scott Hamilton, representing the business and philanthropic communities. If any of these seats become vacant before 2006, the NewCo board will select new board members.
• 2 charter school technical specialist seats will be filled by Eric Premack & Laurie Gardner. If either of these seats becomes vacant before 2006, Eric and Laurie shall name a replacement to that seat.
• 3 seats will permanently represent the NewCo charter school membership. As any of these seats become vacant (before or after 2006), a replacement will be elected by the NewCo membership council (see below).
• 2 seats will initially be filled by Marta Reyes and Jonathan Williams. Marta will serve until NewCo is operational, at which time she will step down and Peter Thorp will fill that board seat for the remainder of the 3-year term.
• 1 seat will be filled by a charter school operator, to be named by April 30. That individual will be nominated by a committee made up of Eric Premack, Laurie Gardner, Marta Reyes, and Jonathan Williams, and subject to approval by the full NewCo board.
• The 9^th seat will be filled by the CEO of NewCo on September 1.

Mentors: To promote close working relations, sharing of expertise, and professional growth, the NewCo board may establish formal mentoring relationships between board & staff, as appropriate.

IV.               Charter School Membership

Charter School Membership: Charter schools will be eligible to join as members soon after NewCo is funded. Membership will initially be open to all California charter schools, and will include a dues requirement.

Within one year, with the advice of the charter school membership, NewCo’s board will implement quality assurance requirements for charter school members. Those membership requirements will constitute a “seal of approval” expressing NewCo’s confidence that member charter schools have sufficient financial controls, reserve funds, and competent educational programs to merit public support. After the first year, only schools meeting those requirements may be members of NewCo.

NewCo will support, develop, and advocate for all types of charters, including those that are not facilities-based. Once NewCo establishes financial and academic standards, those will be applied equally to all prospective NewCo charter school members.

Membership council: The membership council will be elected by the charter school members of NewCo. The membership council will elect three of the NewCo board members, and will advise the NewCo board on matters of policy.

Included services and fees for service: NewCo will provide services to charter school members. A schedule will be developed detailing which services are included in membership, and which may be purchased for an additional fee. 

V.                 NewCo Staff

NewCo Staff: The signers agree that it is essential to recruit a top-quality staff, for maximum effectiveness in policy development and service delivery. An outstanding CEO will be recruited through a formal search process.

CEO search process: The NewCo board will select a professional search firm, establish hiring criteria, and form a committee to work with the search firm. Search committee members will follow standard professional search practices, including confidentiality, consensus building, and arms length negotiations. CEO hiring criteria is likely to include a successful track record in the following areas: management experience in public education (charter schools in particular); fundraising or sales; financial management; personnel management; policy and/or advocacy work; public relations and marketing; membership affairs; and technical assistance in business management to nonprofit or public organizations.

Interim Planning Committee: from NewCo’s inception until the CEO is hired, NewCo will establish an Interim Planning Committee, consisting of Eric Premack, Peter Thorp, and Steve Poizner.

The Interim Planning Committee will develop a short term transition budget, subject to approval by the NewCo board, for the purpose of forming NewCo, completing a 5 year business plan, applying for funding to major foundations, and recruiting a senior team. As approved by the board, these funds may also be used as needed for short term transition issues for CSDC and CANEC. At this time, we estimate that the short term budget will require approximately $300,000 in philanthropy.

The total amount requested from the three signing foundations (and others) will be determined by the 5 year plan. All parties understand that at least 5 years of philanthropic support will be required if NewCo is to build the much larger structure and staff required to achieve the ambitious goal of enrolling a critical mass of California public school students in charters in the next decade. Multi-year funding commitments will be contingent upon yearly reviews of NewCo’s progress toward goals stated in the 5 year plan.

Once the permanent CEO of NewCo is hired, he or she will create an internal policy development committee, including all NewCo senior staff, plus selected outsiders as appropriate. The committee will recommend policy initiatives to the NewCo board.

VI.               Relationships with other key education reform organizations

Coordinating Policy, Implementation, and Support Activities : The NewCo CEO will be responsible for coordinating efforts with EdVoice, New Schools Venture Fund, and other major organizations promoting the charter school agenda. The primary concern in these cooperative efforts should be to support the growth of a wide variety of high-quality, accountable charter schools in California.

To support NewCo, EdVoice will:

• Direct the EdVoice CEO to work closely with the NewCo CEO on policy initiatives that impact charter schools.
• Consult with NewCo on all policy initiatives of significant interest to charter schools, including both charter school-specific policy matters and general education policy matters that affect charter schools. This consultation may take the form of regularly scheduled and ad hoc meetings of staff and board members of both organizations.

To support NewCo, the undersigned Foundations will:

• Pending approval of a formal funding request, jointly contribute to a startup grant of approximately $300,000 to NewCo.
• Reach decisions about major 5 year funding commitments to NewCo by September 1. 

The following attachments are a part of this nonbinding agreement:

• NewCo Mission Statement
• NewCo Timeline for Implementation

 

Signed:

  

___________________________
California Network of Educational Charters

___________________________
Charter Schools Development Center

___________________________
EdVoice

___________________________
Walton Family Foundation

__________________________
Pisces Foundation

___________________________
Broad Foundation

  Mission Statement

Current situation: California schools need help. Since 1990, California has scored significantly below the national average on every single NAEP reading, math, and science test, at every grade level. The state faces a budget crisis of unprecedented size. One quarter of all the nation’s students with limited English proficiency live in California. Students from families with low income and limited parental education remain clustered in the worst schools. Some of the most powerful state-level education advocacy groups were created to represent the interests of adults employed by the schools, rather than the students enrolled in the schools.

Charter schools, a potentially powerful change agent, have been so marginalized that they are not even mentioned among the over 100 recommendations in the Legislature’s 2002 Master Plan for Education.

Over 400 charter schools are in operation in California, but their quality is mixed, and the finances of many are shaky. The charter movement badly needs more high-quality schools, a transparent and predictable accountability system, greater stability, and more capacity to grow.

Charter schools in California rely on one statewide membership organization (CANEC) and one major provider of technical assistance (CSDC). Both organizations, and EdVoice, represent the charter school community before the state legislature, yet the three organizations have not worked together effectively. Also, no single organization is responsible for the overall charter agenda in California, with the result that important and needed services are not provided. These organizations share common goals & objectives, and much commitment and passion. Nevertheless, given current circumstances, the odds are low that the charter movement will grow significantly.

Recommendations: 

1. Merge CANEC and CSDC into a single organization, called NewCo here, which will represent and provide services to California charter schools.
2. Adopt the mission statement that follows these recommendations.
3. Recruit an exceptionally strong board for NewCo, including philanthropists and members of the business community, charter school specialists, and charter school constitutents.
4. Recruit an exceptionally strong staff , headed by a new CEO.
5. Build in NewCo an exceptionally strong policy and advocacy capacity, which fully utilizes strong professional staff, a well connected board, and energized grassroots supporters (employees, parents).
6. Scale up NewCo’s capacity to provide technical assistance to charters, and to help charters and authorizers to address issues of accountability.
7. Scale up NewCo’s funding level, commensurate with the size of California’s challenge. NewCo needs to be a full service organization, able to address the massive complexity and size of California. (Business plan with financial forecasts forthcoming.)
8. NewCo should have a membership council of charter schools. To ensure that charter operators are well represented on the board, the bylaws should state that (after the initial board seats expire) the membership council will elect 3 NewCo board members.
9. Within one year, implement quality assurance requirements for charter school members. Member charter schools must have sufficient financial controls, effective governance and operations, and competent educational programs to merit public support.
10. Require the CEO of NewCo to closely coordinate policy and implementation efforts with EdVoice, New Schools Venture Fund, and other major organizations promoting the charter school agenda.
11. Build up stronger regional presence, similar to the San Diego Business Roundtable model, keeping in close contact with local charters, bringing in support and resources from the business community, and establishing stronger ties between grassroots charter supporters and local legislators.
12. Strengthen public relations, including media relations.

Mission Statement: NewCo works to improve the quality of all public schools in California by building a variety of high-performing and accountable charter schools.

We believe that charter schools will have a positive impact on all public schools by (a) utilizing their flexibility to demonstrate the value of best practices not currently supported by the public education system, and (b) creating positive pressure on the public education system to be receptive to change.

In order for charter schools to have a significant positive impact on the public school system, charters must enroll a critical mass of students. The size of “critical mass” is subject to debate, but we believe that 10% of total enrollment may be a good target. Therefore, NewCo will seek to enroll 10% of California public school children in charter schools within 10 years. Based on population growth, average size of charter schools, and current closure rates of charters, this translates to a goal of opening 1600 new charter schools within the next 10 years. (This is our initial estimated goal, but the final goal number will be decided by NewCo’s board.)

NewCo will provide a full range of advocacy, policy, and direct services to support the growth target, to help charters meet high quality standards, to create accountability systems that are transparent and predictable, and to spread best practices to the general public school community.

Advantages of this proposal:

1. Focus:  NewCo should eliminate overlap and align efforts, solving the current nagging problem of diffusion of accountability within the California charter movement.
2. Political Effectiveness: The combination of a strong board, combined funding from multiple sources, and a strong and self-regulating membership, within a single unified organization, will provide increased momentum for reform efforts.
3. Self Sufficiency: Membership dues and fees for service from charter schools represent a major component of NewCo’s long term financial plan. A stronger, more effective organization with clear value to members will be better able to generate this income.
4. Self-regulation within the charter community: An important goal of NewCo is self-regulation within the charter community. Self-regulation is preferable to no regulation (which tolerates poor quality, and even fraud) or to government regulation (which is likely to be sporadic, unpredictable, at times overbearing, and unaware of the nuances of charter needs and performance). NewCo should establish and enforce measurable standards for educational performance and financial safeguards for all its member charter schools. NewCo’s accountability standards will promote consistently high standards across the state, and will provide accountability beyond the current limited capacity of individual charter authorizers.
5. Recruiting a Top Notch Senior Team: As a combined organization operating on a larger scale, NewCo can hire an outstanding CEO with the functional and managerial expertise needed to handle major growth, along with senior vice presidents with excellent functional, policy, and educational expertise.

 
NewCo Timetable for Implementation

By March 26, 2003 (before CANEC’s annual conference):

§                     All parties will sign the non-binding Letter of Intent.

§                     The parties will select the following seven NewCo board members:

o        John Walton, Steve Poizner, and Scott Hamilton representing the business and philanthropic community.

o        Eric Premack and Laurie Gardner, representing charter school technical specialists.

o        Marta Reyes and Johnathan Williams representing charter operators. When Marta steps down from the board (after NewCo is operational), Peter Thorp will take her place.

§         The NewCo board will create an Interim Planning Committee consisting of Eric Premack, Peter Thorp, and Steve Poizner.

By April 15, 2003:

• A transition plan will be developed by Interim Planning Committee, and approved by the NewCo board.
• The NewCo incorporation documents will be filed with the CA Secretary of State
• Proposals will be submitted to major foundations for bridge funding.

By April 30:

• A nominating committee made up of Eric, Laurie, Marta, and Johnathan will nominate, and the NewCo board will elect, a charter school constitutent to fill the eighth board seat.

• Foundations will provide bridge funding of approximately $300,000 (depending on budget developed).
• The NewCo board will hire an executive search firm.

By June 1:

• NewCo will adopt a detailed 5 year plan. A draft plan has been created by the Poizner Family Foundation, under a grant from the Walton Family Foundation.

By July 1 :

• NewCo will submit funding proposals to the Walton, Pisces, and Broad Foundations, and to other likely funding sources.

On or around September 1:

• Upon approval of all the parties involved, the following actions will happen simultaneously, in a closing escrow.
• The Walton, Pisces, and Broad Foundations (and others) will commit funding to NewCo .
• The CEO of NewCo will be hired.
• The new strategic plan will be launched, including hiring employees from CSDC, CANEC, and elsewhere as specified in the detailed five year plan.
• CSDC and CANEC will transfer assets to NewCo, as specified in the detailed five year plan.
• Membership of CANEC will transfer to NewCo.
• If the parties fail to reach agreement by September 1, the parties will either extend the deadline by mutual consent, or dissolve NewCo.