Star Tribune Response

St. Croix Prep Board Response to Media Articles

St. Croix Prep Board Responds to Media Articles
The Star Tribune continues to publish articles about charter school financing makespecific references to St. Croix Prep. The articles are erroneous, lack context and intentionally presented a distorted view of the School, its affiliated Building company, our leadership, our school community, and charter schools in general. We will take this opportunity to present all of the information relevant to this discussion.

Please click here for a summarized discussion.

Please see the items below for a full discussion.

Please click here for a response from William Cooper, CEO of TCF. He contrasts SCPA's building costs with those of traditional districts.

Please click here for an informative response made by Charter School Partners. Their article is entitled "Star Trib 'Out of Control', not Charter Schools".

Please click here for an informative response and discussion on lease aid, affiliated building companies, and bond financing. The article is authored by David Brauer and is titled "Beyond the 'building boom': charter school financing's tough nut."

Please click here for a response made by Charter School Partners. Their article is entitled "Senate Hearing on Lease Aid Testimony: "Owning Cheaper than Leasing."

In addition, the Tribune article ignores the growth, test scores, and high satisfaction of our parent community. For an overview of this information, click here.

Affiliated Building Companies
The affiliated building company model has been used by non profits for over 20 years. Charter schools have used this model since 1998. This year, the legislature adopted language which officially recognizes this model as an acceptable way (organizationally and financial mechanism) for charter schools to address their facilities needs.

No lease aid is used to build the school. Building companies issue bonds to investors. Investor capital is used to build the school therefore public approval for financing is not necessary. Building companies, however, must receive many levels of public approval prior to building a school (e.g. planning commission, city council, county board, watershed district, etc.)

For a discussion of St. Croix Prep's facility history, use of an affiliated building company, and common misunderstandings, click here.

For a pictorial representation of an affiliated building company, the school, and the financial transaction, click here.

Board Governance, Conflict of Interest and Internal Control Procedures
The article led the reader to believe that the school's operations are used for the personal benefit of some of its leadership. We find it noteworthy that the following information was not included in the article:

St. Croix Prep has always been in compliance with Minnesota state statutes regarding board governance (124D.10 Subd. 4(g)), compliance related to the definition of "Related Party" (124D.10 Subd. 23a (b)) and conflict of interest policy rules (124D.10 Subd. 4a).
Friends of St. Croix Preparatory Academy's board governance model is in compliance with IRS regulations cited under Section 317A and Minnesota state statute 124D.10 Subd. 17a which relates to affiliated building companies. Friends of St. Croix Preparatory Academy is also in compliance with the aforementioned statutes related to board governance, "related party", and conflict of interest.
St. Croix Prep's audited financial statements have indicated a "clean audit" with no weaknesses in internal control procedures.
As a part of Friends of St. Croix Preparatory Academy's bond offering, there was lengthy due diligence period (approximately 90 days). During this time, three teams of attorneys (e.g. bond counsel, issuer counsel and borrower's counsel) reviewed all corporate documents (e.g., articles of incorporation, bylaws, board minutes, agreements, financial statements, audits, etc.). During this due diligence, the attorney teams also reviewed and approved the selection/payment related to the owner's project management services and compensation associated with school leadership. Their review determined there was no conflict of interest. In addition, their review concluded the organizations were in compliance with Minnesota state statute (124D.10) related to charter schools.
For detailed discussion of compensation to C. Davis-Johnson, click here.
For detailed discussion of compensation to J. Gutierrez, click here.
For detailed discussion of compensation to K. Gutierrez, click here.

Senate Hearing on Charter Schools (with affiliated building companies) and their compliance with MDE data request.
On October 9, 2009 a Senate hearing on charter school compliance, the Minnesota Department of Education (MDE) provided testimony that some charter schools that have affiliated building companies have not complied with the law in terms of submitting the required information to the Department about their building company. Per confirmation from MDE, St. Croix Prep is in compliance with the state's requirements.

Specific Misinformation in the Tribune Article.
There was a lot of misinformation in the story. For detailed discussion of these items, click here.

Fiscal Accountability
The article led the reader to believe that the school is irresponsible and negligent in its use of taxpayer dollars. On the contrary, St. Croix Prep's operations reflect the highest level of integrity and fiscal accountability. The following chart showing approximate expenditure comparison between St. Croix Prep and traditional districts will form the basis for our final comments..

	St. Croix Prep	Traditional Districts
Board member pay	$0 except $150 for teachers	$4,000 to $5,000 per member
Cost of school construction	$140/square foot	$250/square foot
Superintendent Pay	$110,000	$145,000
Principal Pay	$80,000	$105,000
CFO Pay	$65,000	$110,000
Avg Project Mgr Salary on 13M Bldg	$100,000	$250,000 - $500,000
Educational Assistants in all K-4 classrooms	Yes	No
Licensed Art instruction in K+	Yes	No
Licensed Spanish instruction in K+	Yes	No
School funding	$6,300 per pupil	$8,500 per pupil

St. Croix Prep is one of the state's highest performing schools and operates on approximately 75% of the funding of traditional districts in its surrounding geographical area. Less funding necessitates innovative solutions that depart from traditional practices. We believe our school models a more efficient use of public funding.