Prop C settlement means repayment to Confluence Charter Schools

In June, the St. Louis Post-Dispatch published a story about a lawsuit involving Confluence Academy.

It’s important to make clear that this was legal action taken by Confluence against the Missouri Department of Elementary and Secondary Education and the State Board of Education. Confluence filed a lawsuit to receive funds from the Proposition C state sales tax that should have been paid years ago.

Confluence filed a claim for nearly $2.8 million with DESE for Prop C funds for school years 2004-2005, 2005-2006 and 2006-2007 in January 2016.

In April, DESE reached a settlement with Confluence Academy for $4.8 million (includes interest on the original amount). This month, Confluence received $3.6 million after attorney’s fees. The payment could be saved in reserves pending the outcome of the St. Louis Public Schools lawsuit with DESE related to the desegregation sales tax and payments to public charter schools in St. Louis.

It must also be made clear that this situation is not the same as the current legal action by SLPS and the Special Administrative Board. SLPS and the SAB filed a motion alleging that the state overpaid more than $42 million to public charter schools in St. Louis with money from a local desegregation sales tax going back to 2006, with an additional amount of $8.8 million for the 2015-2016 school year.

What is Proposition C?
Proposition C, the Missouri School and Highway Tax Proposition, was on the ballot in November 1982. It passed by 53.18 percent of the voters.

It’s a $.01 statewide general sales tax for education with a corresponding property tax reduction for school districts. Prop C sales tax revenue is collected locally, sent to the state and then passed on to school districts based on the amount of the prior year’s Weighted Average Daily Attendance. The state funding formula is part of the calculation.

How does Prop C affect Confluence?
When public charter schools became a reality in St. Louis in the early 2000s, they were not classified as local education agencies. An LEA is defined as a school district, or an entity that operates local public primary and secondary schools in the United States.

At the time, SLPS was the LEA under which public charter schools operated. That meant the charter schools didn’t get funding directly from the state. St. Louis Public Schools was responsible for distributing the money it received from the state to the public charter schools, and part of the funds included Prop C state sales taxes.

A Brief History
Confluence opened its first school in 2003 at the Old North campus.

In 2006, a law passed that allowed charter schools to be classified as their own LEA. Charter schools could now receive funds directly from the state. Confluence became an LEA in 2007-2008. There are four schools in the Confluence LEA – Confluence Academy-Old North, Confluence Academy-South City, Aspire Academy and Confluence Preparatory Academy. Grand Center Arts Academy is a separate LEA that opened in 2010-2011. GCAA is not part of the lawsuit.

In October 2007, Confluence Academy received a letter from DESE that said the network might have been underpaid by SLPS. Other public charter schools received notice, too. Confluence responded to DESE’s request for documents within days.

While Confluence waited to hear from DESE, St. Louis Charter School, now called Premier Charter School, filed a suit to receive Prop C funds because SLPS did not distribute the full amount to the school.

In February 2009, Confluence filed a claim with DESE for Prop C funds for nearly $2.8 million that should have been paid over a three-year period. DESE replied that it was “unable to make the correction in payment as requested.”

In December 2009, Confluence filed a second claim with DESE for Prop C funds with no response from the state. Confluence attempted to seek a resolution with SLPS for a “reasonable sum,” but negotiations were unsuccessful, leading to the decision to take legal action. Once DESE reached a settlement, the lawsuit was withdrawn.

Confluence Academy is now the third charter school in St. Louis to receive a payment for past due Prop C funds. The settlement is significant; it should result in additional benefits for our students.