As published in the fall 2006 edition of Alabama School Board (magazine), published by the Alabama Association of Schools. For more information, visit their web site.

Contracting with Chief School Financial Officers

By J. R. Brooks, Attorney, Lanier, Ford, Shaver & Payne

The new School Fiscal Accountability Act requires school boards to put a chief school financial officer. The CSFO works under the direct supervision of the superintendent (even though he is neither appointed nor removed by the superintendent) and has a fiduciary responsibility to the board.

The CSFO must:

Verify the receipt of all funds to which the board is entitled;
Verify the payment of funds upon the written order of the superintendent;
Keep an accurate record of receipts and expenditures and provide such information to the superintendent and board;
Make reports required by law by the local board and by the state board;
Personally notify in writing each board member and the local superintendent of any transaction of the local board which the CSFO deems to be non-routine, unusual, without legal authorization or not in compliance with the fiscal management policies of the board. The president of the board must see that this notification is recorded in the minutes.
Be bonded in the amount determined by the state Board of Education.

Chief school financial officers who must meet minimum job qualifications established by the local and state boards of education are appointed by the local board of education in consultation with the local superintendent. If the CSFO position remains vacant for 30 days and the local board is not actively seeking to fill the position, the state superintendent of education designates the CSFO. Unless the CSFO has been put in place by the state superintendent under provisions of the law, a majority vote of the school board could remove the CSFO without superintendent recommendation.

While the statute makes no reference to contracts between the board and CSFOs, it will be very difficult to obtain qualified CSFOs if the CSFO remains solely an employee-at-will of the board with no job protection. Further legislation is needed to clarify contracting issues, but here are some possible thoughts for a contract:

The board enters into a contract with CSFO setting a probationary period of approximately one year and during this time the CSFO is an at-will employee of the board, giving the board the authority to unilaterally remove the CSFO upon payment of minimal compensation (perhaps one month).
After the probationary period, the CSFO and board enters into a contract with a set term (perhaps three years) requiring the board to pay a lump sum of salary to the CSFO upon termination earlier than the contract period if the board exercises its statutory authority to unilaterally remove the CSFO for any reason other than cause. (The lump sum payment could be, for example, the lesser of one year's salary or the compensation due for the remainder of the term of the contract).
CSFOs who have already earned non-probationary status should not be offered contracts unless the CSFO voluntarily wishes to relinquish his or her non-probationary status in return for a contract for a set term that provides for lump sum compensation, should the board, for reason other than cause, exercise it unilateral authority to remove the CSFO. Still, whether such a contract is lawful, remains a serious issue.
The contract with the CSFO could provide that the CSFO voluntarily relinquishes any non-probationary status which may be earned for duties outside the statutorily defined duties of a CSFO in return for the right, upon premature termination of the contract by unilateral action of the board for reason other than cause, a payment of a lump sum payment. This raises questions, however, regarding the ability of an employee to waive substantive rights under the Fair Dismissal Act. There is longstanding authority in Alabama that substantive tenure rights may not be waived.

Issues Raised by the New Act

1. The status of CSFO's who became non-probationary prior to June 1, 2006:

Possible answers:

CSFOs retain non-probationary status. But, the school board now may unilaterally relieve the CSFO of the statutory duties of a CSFO. If removed of these duties, the former CSFO may very well retain the same level of pay for whatever remaining duties he or she had beyond the duties of a CSFO unless the board initiates partial termination proceedings to reduce a CSFO's pay or transfers the CSFO. The CSFO would have the right to contest both the partial termination and the transfer under the Fair Dismissal Act.
CSFOs hired after June 1, 2006 and CSFOs who did not earn non-probationary status before June 1, 2006 cannot earn non-probationary status as a CSFO. However, many CSFOs have additional duties beyond those outlined in the statute and a CSFO probably can earn non-probationary status in regard to those duties which are beyond the scope of the statutorily defined duties of a CSFO.

2. Whether the Act requires local school boards to take additional action to appoint a CSFO if the board already has designated or appointed a CSFO prior to June 1, 2006.

Probable Answers:

The Act does not require additional action as long as the earlier appointment is reflected in school board minutes.
As soon as possible, local superintendents should recommend to the board and the board should act to change the CSFO title of any employee performing the duties of a CSFO and the CSFO's job description should be changed so it accords with the Act.

Items on this web page are general in nature. They cannot—and should not—replace consultation with a competent legal professional. Nothing on this web page should be considered rendering legal advice.

For more information about Alabama school law, contact—

J. R. Brooks