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Epic Charter Schools' board amends contract with for-profit management company, directs accounting practice changes
Epic audit

Epic Charter Schools' board amends contract with for-profit management company, directs accounting practice changes

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Epic governing board meets

Epic Charter Schools' governing board members meet in a special meeting in Oklahoma City on Monday. 

In a meeting that went late into the night, the governing board at Epic Charter Schools passed yet another resolution directing a host of accounting and oversight changes and amending its contract with a for-profit school management company.

Board members and their attorney said the actions on behalf of Epic One-on-One, Oklahoma’s largest virtual school, were in response to various concerns and deficiencies identified recently by the Oklahoma State Department of Education, the State Auditor and Inspector’s Office and the Statewide Virtual Charter School Board.

After unanimous votes on both items, board chairman Doug Scott of Tulsa said, “This has not been an easy process, going through, trying to address concerns that have been raised by state agencies — some that possibly have some validity or merit and some of which we believe do not.”

And to her fellow Epic Charter Schools parents, board secretary Betsy Brown said, “We are trying to make changes, but we may need to make more.”

In early October, a report on the state’s investigative audit of Epic revealed lax school board oversight and 1 of every 4 taxpayer dollars Epic receives going to its co-founders’ for-profit school management company, Epic Youth Services.

The state auditor found that 63% of those monies — nearly $80 million budgeted for students’ learning needs — has been shielded from all public or auditor scrutiny. The auditor is still battling in court to get access to those spending records.

Epic Charter Schools’ spokespersons initially branded the investigative audit report an attack not only on Epic parents’ choice in schools but on school choice in general — a charge State Auditor Cindy Byrd has denied.

But Monday night’s resolution passed by Epic’s governing board appeared to acknowledge the validity of many exceptions Byrd’s report took with Epic’s accounting practices.

For example, Epic’s governing board explicitly forbid the “transfer, pledging, or otherwise dedicating funds” of its Oklahoma schools for support of Epic’s out-of-state school operations. The state audit report found that Epic Youth Services “improperly transferred” $203,000 in Oklahoma taxpayer dollars to help cover payroll shortages at Epic’s California charter school.

And the auditor questioned how EYS could be paid $46 million in taxpayer dollars for management services over the last six years while having no employees for much of that time and instead relying on publicly funded administrative employees of Epic Charter Schools to provide services for multiple school districts, both in and out-of-state.

The board’s new resolution also directs the school to cease all services provided by public school employees to a subsidiary of Epic Youth Services effective June 30, 2021.

Epic’s attorney Bill Hickman explained Monday night’s amendments to the school’s contract with Epic Youth Services, the for-profit management company that has reportedly made millionaires of Epic co-founders Ben Harris and David Chaney.

“These changes … are going to be responsive and important in our response that I am in the process of preparing to the state Department of Education,” Hickman said. “And we are hopeful these changes will help to address some of the concerns they have presented to us.”

The newly approved operating agreement calls for Epic Youth Services to fund and provide written reports from annual audits by a national accounting firm of Epic’s controversial Learning Fund, as well as EYS’ compliance with its management contract.

“We believe that the cooperative agreement of the management company to begin to provide an audit from a major auditing and accounting firm, as they’ve agreed to do, will provide transparency and accountability both with the Learning Fund expenditures and also with contract compliance with this board, and we appreciate them agreeing to provide that kind of backup documentation,” Hickman said Monday night.

The updated school management contract now specifies exactly how payments to EYS for Epic’s Learning Fund are to be calculated, based on student counts, which Hickman said needed clarifying based on the state auditor’s questions.

But the new contract includes the new statement that “all payments received by EYS have been and remain private funds to be used at the sole discretion of EYS subject only to compliance with the terms of this agreement,” a provision that appears to be related to the state auditor’s ongoing lawsuit for access to Epic’s Learning Fund spending records.

Brad Clark, general counsel at the state Department of Education, recently reported to the State Board of Education new deficiencies he said had been discovered in reviews of Epic’s federally funded programs for special education and homeless students and English learners.

He also outlined a years-long history of Epic’s “nonresponsiveness and noncompliance” with state Department of Education requests for information about its use of taxpayer dollars, but the state board ultimately put off the advice of its attorney to take punitive action against the state accreditation status of Epic’s two public schools.

The state board has already demanded back from Epic $11.2 million in taxpayer funding for chronically excessive administrative overhead costs and inaccurate cost accounting.

Epic Charter Schools: A Tulsa World investigation.

Video: State auditor releases Epic Charter Schools investigation.

Improper transfers, chronic misreporting found. MATT BARNARD/Tulsa World


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Staff Writer

I'm a projects reporter, examining key education topics and other local issues. Since joining the Tulsa World in 1999, I have been a three-time winner of Oklahoma’s top award for investigative reporting by an individual. Phone: 918-581-8470

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