CASBO. Fraud Prevention: The New Realities of Fraud Prevention in Schools. Presented By: Megan Macy Manuel F. Martinez Lozano Smith

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1 APRIL 13-16, 2016 THESE MATERIALS HAVE BEEN PREPARED BY LOZANO SMITH THEY HAVE NOT BEEN REVIEWED BY STATE CASBO FOR APPROVAL, SO THEREFORE ARE NOT AN OFFICIAL STATEMENT OF CASBO

2 CASBO Fraud Prevention: The New Realities of Fraud Prevention in Schools Presented By: Megan Macy Manuel F. Martinez Lozano Smith

3 Agenda Student Use of District Property Employee Use of District Property School Connected Organizations

4 SCHOOL DISTRICTS HAVE AN OBLIGATION TO PROTECT STUDENTS IN LOCO PARENTIS (IN PLACE OF THE PARENT)

5 STUDENT PRIVACY Family Education Rights and Privacy Act ( FERPA ) California Education Code et seq. Other Federal and State Laws

6 Protection of Pupil Rights Amendment (PPRA) Children s Online Privacy Protection Act Constitutional Right to Privacy

7 SOFTWARE CONTRACTS NEW LAWS AB 1854: Contracting Requirements SB 1177: Protecting Student Information Online

8 WHAT SHOULD BE IN THE CONTRACT 9 Required Contract Terms

9 PROTECTING ONLINE PRIVACY & BUS. & PROF. CODE, Vendors of services to K-12 students must not: Advertise to students Use, sell or disclose information Maintain reasonable security measures Delete data on request

10 INTERNET ACCESS AT SCHOOL Policy Acceptable Use Agreement Discipline

11 HYPOTHETICAL

12 Employee Use of District Property

13 School Site Computers/Tech Equipment BYOD District Devices

14 EMPLOYEE USE OF TECHNOLOGY/EQUIPMENT BRING YOUR OWN DEVICE BYOD Use Policy Pitfalls: Security breach issues Lost devices

15 EMPLOYEE USE OF TECHNOLOGY/EQUIPMENT - TIPS Don t leave devices in vehicle! Provide employees with appropriate levels of access to confidential information. Safeguard remote access. Limit use of District devices to employees. Limit network/school district devices from making online purchases or sales.

16 WHAT TO DO IF A SECURITY BREACH OCCURS Document the incident, including a report, preserving evidence Contact law enforcement and insurance carriers Contact legal counsel

17 EMPLOYEE DISCIPLINE FOR MISUSE OF TECHNOLOGY/EQUIPMENT Criminal Liability Civil Liability Loss of access to district owned device/network Dismissal for unprofessional conduct, dishonesty, and refusal to obey district board policies.

18 ROGUE TEACHERS

19 DISTRICT CREDIT CARD USE Credit Card Use Policy Designate which positions/persons are authorized to use a district credit card. Designate Spending Limits Security and Record Keeping Cardholder Procedures and Responsibilities Proper and Improper Uses

20 DISTRICT CREDIT CARD USE Example: District superintendent had access to district credit card Made over $14,000 in personal charges Superintendent claimed that she was unaware of policy against personal use of card Informal policy for personal use in place for 26 years Superintendent fired

21 DISTRICT CREDIT CARD USE Example: 48 principals and administrators spent more than $700,000 on district issued credit cards Charges included $2,400 for zip lining in Yosemite, $330 to Beachbody fitness etc. Administrators claim all charges involve students/school related events

22 ZIP LINING

23 SCHOOL CONNECTED ORGANIZATIONS

24 WHEN CAN YOU FUNDRAISE? Education Code, School connected organizations cannot fundraise on school grounds within one hour before the time of opening and within one hour after the time of closing of school. Education Code, Prohibits individuals without the approval of the governing board from making solicitations on behalf of the school district.

25 BOOSTER CLUBS/PARENT ORGANIZATIONS BEST PRACTICES Implement Board Policy No commingling of District Funds with ASB accounts!!!

26 BOOSTER CLUBS/PARENT ORGANIZATIONS - AUDITS Should be performed by school connected organization not school district. Build into the relevant Board Policy a requirement that the district has right to review and/or audit booster clubs financial statements to ensure the clubs financial integrity.

27 BOOSTER CLUBS/PARENT ORGANIZATIONS

28 ASSOCIATED STUDENT BODY ( ASB ) Education Code, Any group of students may organize a student body with the approval of the governing board of the school district. Organized activities on behalf of the students are approved by the school authorities. ASB may be granted use of school premises and properties without charge subject to such regulations as may be established by the governing board of the school district.

29 ASSOCIATED STUDENT BODY FUNDS Education Code, Details the manner in which ASB funds must be deposited and invested. Education Code, How funds may be used for K-6 schools.

30 ASB - SUPERVISION Education Code, The governing board shall provide for the supervision of the following: Funds raised by ASB using the name of the school. Cost of supervision may constitute a proper charge against the funds of the district. A continuing audit of student body funds with school district personnel.

31 ASB - FUNDRAISING All fundraising events must be approved by the governing board of the school district.

32 ASB BEST PRACTICES Establish internal controls for cash management at fundraising events. ASB bookkeeper should always count cash in the presence of another person. Create written receipts. Immediately notify ASB advisor of any discrepancies.

33 Questions

34 Take Aways. Be proactive Establish policies Keep Up-to-date with changes in the law If it feels weird look into it

35 Megan Macy Partner Megan Macy is a Partner in Lozano Smith's Sacramento office and co-chair of the firm's Facilities and Business Practice Group. Ms. Macy provides general counsel to school districts, routinely advising clients on the Brown Act, Public Records Act, conflict of interest issues and development of governing board policies. Ms. Macy utilizes her litigation background to counsel clients on effective risk management strategies in the facilities and business arena, including public bidding issues, real property transactions and negotiation of school facilities agreements related to new residential development. Ms. Macy is an expert in charter school law, having advised school districts on the full array of charter school issues, including petition review, denial and appeal, Prop. 39 requests and other facilities use issues, charter school formation and revocation. mmacy@lozanosmith.com

36 Manuel F. Martinez Senior Counsel Manuel F. Martinez is a Senior Counsel in Lozano Smith's Walnut Creek Office and co-chair of the Technology and Innovation Practice Group. His practice focuses on charter schools, student issues, and facilities and business. Mr. Martinez is experienced in all aspects of charter schools, including drafting and negotiating MOUs, charter reviews, assisting clients with Prop. 39 facility requests, charter oversight, facility issues, petition review and revocation. He has advised clients on cutting edge issues such as cloud computing, electronic records, and public private partnerships regarding web-based applications. He is skilled in facilities and business law, including construction finance negotiations, zoning and landuse issues, lease agreements, CEQA. He also advised clients regarding the Brown Act, Public Records Act, Child Abuse and Neglect Reporting Act and elections. mmartinez@lozanosmith.com

37 Disclaimer: These materials and all discussions of these materials are for instructional purposes only and do not constitute legal advice. If you need legal advice, you should contact your local counsel or an attorney at Lozano Smith. If you are interested in having other in-service programs presented, please contact or call (559) Copyright 2016 Lozano Smith All rights reserved. No portion of this work may be copied, or sold or used for any commercial advantage or private gain, nor any derivative work prepared there from, without the express prior written permission of Lozano Smith through its Managing Partner. The Managing Partner of Lozano Smith hereby grants permission to any client of Lozano Smith to whom Lozano Smith provides a copy to use such copy intact and solely for the internal 36 purposes of such client.