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Epic Charter Schools now wants in on spending records State Auditor just won in court
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Epic Charter Schools now wants in on spending records State Auditor just won in court

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Epic Charter Schools wants to intervene in state auditor's public records lawsuit

Epic Charter Schools went to court Friday seeking the same access to student Learning Fund spending records controlled by its now former management company that was just granted to Oklahoma’s State Auditor.

Epic Youth Services, the for-profit school management company owned by school co-founders David Chaney and Ben Harris, was ordered last week to turn over all records of purchases and bank statements related to the school’s Learning Fund for student needs.

Chaney and Harris had been fighting in Oklahoma County District Court for more than a year to block the Oklahoma state auditor and inspector from reviewing their associated bank and credit card statements as part of a forensic audit requested by Gov. Kevin Stitt.

The school founders just last week lost their hold on the school system that made them millionaires, as Epic’s governing board voted to sever all ties with Epic Youth Services.

An attorney for the school filed a motion to intervene in the state auditor’s court case on Friday, seeking access to the same student Learning Fund spending records in EYS’ possession.

The motion states that the school is seeking to protect its interests “if it is determined that EYS has expended monies from the Learning Fund on unauthorized items,” as it has reserved its ability to sue over such a finding in its termination agreement with EYS.

The new motion also seeks to clarify for the court that emails to which the judge in the case just granted access to the auditor are now in the possession of EYS because of the recent termination agreement between the school and EYS.

The school is asking the court to take into consideration its desire to not be in the middle of the auditor’s lawsuit against EYS and to “avoid the needless expenditure of time and money” by the school to obtain the emails sought by the auditor.

The court’s move to give the state auditor access to know how Epic’s student Learning Fund monies have been spent, however, does not make the records directly accessible to the public. Oklahoma County District Judge Natalie Mai directed that the records disclosed “will remain confidential pursuant to the gag order previously issued by this Court” and “are to be used only for the purpose of and during the course and scope of the audit and investigation.”

Epic Charter Schools’ Friday motion to intervene in the case states that it wishes to obtain the Learning Fund records from EYS “with the same limitations.”

It is unknown what legal stance Oklahoma State Auditor & Inspector Cindy Byrd or EYS will take on the school’s motion to intervene, but Byrd on Friday applauded Epic’s recently overhauled governing board for wanting to scrutinize the handling of the school system’s finances by EYS.

“Oversight and accountability can only exist with transparency so I applaud the new board for taking the initiative to obtain financial records related to the millions of taxpayer dollars held in private accounts by a contractor. Oklahoma’s taxpayers deserve to know how the government spends their money and this is a big step in the right direction,” Byrd said in a written statement to the Tulsa World. “I have been an advocate for school choice and, with this new board in place, I am optimistic about the future success of Epic Charter Schools. The General Counsel for the State Auditor’s Office is aware of the motion filed and will take any needed action.”

In a February 2020 report, the Tulsa World was first to publicly document how Epic was shifting tens of millions of public school dollars in lump sum payments to EYS for school expenditures that are never audited and which Epic attorneys claim are shielded from the Oklahoma Open Records Act.

Shortly thereafter, Byrd, who was in the midst of an investigative audit of Epic, took EYS to court for those spending records, as well as a host of other school documents she said she had been unsuccessful in gaining access to, even by subpoenas.

Byrd’s October audit report revealed $79.3 million in Epic Charter Schools’ spending on student learning for fiscal years 2015-20 was unaccounted for after being shifted to the bank accounts of EYS.

That was separate from the $45.9 million in fees — a 10% cut of every dollar of revenue received — the company was paid for its management contracts for Epic’s two charter schools during that same time period. State education officials have since assessed millions in financial penalties against Epic for exceeding Oklahoma’s cap on public school administrative spending.

And despite paying EYS for school management, the audit found EYS was relying almost solely on Oklahoma public school employees to do the administrative work for both Epic’s Oklahoma and California schools.

Investigators documented how the company “improperly transferred” $203,000 in Oklahoma taxpayer dollars from the Oklahoma schools’ student Learning Fund account to help cover payroll shortages at Epic’s California charter school.

The contract termination deal struck by Epic’s governing board and EYS last week lays out a complicated calculation of how much of the school’s Learning Fund dollars could still change hands between Epic Charter Schools and EYS in the coming weeks.

In addition to its 10% cut of every revenue dollar through the end of the fiscal year, the terms of the deal indicate the school might still be on the hook to send Learning Fund dollars to EYS so EYS can ensure that all student expenses and liabilities through July 1 are paid.

But Epic Charter Schools will be deducting nearly $11 million in various administrative penalties assessed by the Oklahoma State Department of Education.

Featured video:

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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