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Epic co-founder's audit recommendations make it into legislation

Epic co-founder's audit recommendations make it into legislation

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Epic co-founder Ben Harris audio from Jan. 14, 2021

OKLAHOMA CITY — An Epic Charter Schools co-founder’s recommendations for how State Auditor and Inspector Cindy Byrd’s office operates found their way into a bill that passed the Senate floor on Tuesday evening.

On Oct. 1, Byrd’s office issued an audit highly critical of Epic’s handling of tens of millions of taxpayer dollars, but Epic has denied criminal wrongdoing and branded the state’s investigative audit report as an attack on school choice.

The next day, on Oct. 2, Epic co-founder Ben Harris and his wife Elizabeth VanAcker each gave maximum campaign donations of $2,800 allowed per election cycle to state Sen. Paul Rosino, R-Oklahoma City, according to public records from the Oklahoma Ethics Commission.

On Jan. 21, Rosino introduced Senate Bill 895, which he authored. It passed off the Senate floor late Tuesday by a vote of 36-9 and next heads to the House for consideration.

The measure significantly changes how the state auditor and inspector operates. It would allow state agencies that need an audit of financial statements to go outside the State Auditor and Inspector’s Office and contract with a private entity.

Byrd said that Rosino never consulted her about the legislation and said such a change in law would allow agencies to fire their auditor if they don’t like their findings.

“I refer to SB 895 as the Transparency Elimination Act,” the state auditor said in a statement provided to the Tulsa World. “This bill would allow state agencies to circumvent our oversight by giving the agencies the power to pick and choose their own auditing process. If an audit makes an agency look bad then that agency would have the power to simply find a different auditor the next year. In fact, SB 895 creates an incentive for agencies to do exactly that.”

The bill would also allow those who are subject of an investigative audit to have their response included in the audit at a length equal to the audit report.

During public speaking engagements earlier in January, Harris, the Epic co-founder, said he wanted to see reform for all state audits and he called for a financial statement audit to follow federal government auditing standards.

A source who heard Harris’ comments supplied audio recordings of his Jan. 5 and Jan. 14 public remarks to the Tulsa World.

“Audits that follow government accounting standards have a management letter, and what that is whoever is the subject of the audit is gets to respond to the findings of the audit,” Harris said on Jan. 14.

As for the government auditing standards produced in the United States by the Government Accountability Office, Byrd told the Tulsa World that “When it comes to investigative audits, federal auditing mandates don’t apply to state law. No other state requires this. It will make it more expensive for citizens to request investigative audits for towns and school districts.”

Asked whether Harris asked for the measure, Rosino responded: “Absolutely not.”

He said some state agencies have complained about the cost of the audits. And Byrd would be allowed to bid on the work, Rosino said.

Asked about the donations from Harris and his wife, Rosino said he took money from a “whole lot of people.” He volunteered the fact that his own grandson currently attends Epic, which he said he thought should be stated in the interest of transparency.

Rosino did not respond to an inquiry about how Harris’ ideas for changes to the State Auditor and Inspector’s Office made it into his bill.

Harris denied having any input or influence on SB 895.

“I didn’t even know about this bill until two weeks ago,” Harris said in a written statement requested by the Tulsa World. “Any innuendo there is a connection between a contribution I made the month before an election and a bill introduced is a complete fantasy. “It’s no secret I believe the state auditor should have to follow national auditing standards and allow those they audit to include a management letter responding to the audit, as do most people with common sense. Lawmakers can decide without any input from me whether this bill has merit or not.”

Rosino’s bill says special or investigative audits “shall be conducted in accordance with applicable Government Auditing Standards and shall include a management response that is limited in length to the same number of pages as the special or investigative audit report.”

Gov. Kevin Stitt requested that Byrd conduct a forensic audit of Epic Charter Schools and all of its related entities in 2019.

Byrd’s report found in all, $125.2 million of the $458 million allocated to Epic Charter Schools, the operator of two public schools, for educating students the previous six years was found to have ended up in the coffers of Epic Youth Services, a for-profit charter school management company that reportedly has made millionaires of school co-founders Harris and David Chaney.

The report raises questions that are now in the hands of the Oklahoma State Bureau of Investigation and a special state prosecutor to respond to about the legality of transferring hundreds of thousands of Oklahoma tax dollars to Epic’s California charter school, commingling funds for Epic’s two separate Oklahoma schools and chronically misreporting administrative costs.

Former state Sen. Ron Sharp, a Republican from Shawnee, began raising questions about Epic’s student attendance and financial accounting practices several years ago.

He said lawmakers must guard against even the appearance of a “quid pro quo” in accepting campaign donations.

“The implications of this are very serious. The audit comes out and they (Epic) have criticized the audit and said that Cindy Byrd was all wrong and then he (Rosino) took money from Ben Harris and his wife — the absolute maximum limit of what they can give, the next day — and then he runs this legislation,” Sharp said. “I would not have accepted that money the day after the audit. You have to be so careful particularly in this situation when there is a criminal investigation happening.”

Sharp was sued by Epic but fended off the lawsuit. He was defeated in 2020 in a re-election bid and attributes the loss to campaign spending by Epic founders and their supporters.

The Oklahoma State Board of Education has demanded $11.2 million in taxpayer money back from Epic based on the investigative audit’s findings of chronically excessive administrative overhead costs and inaccurate cost accounting to the state.

And the local governing board at Epic Charter Schools has voted in a host of accounting and oversight changes and amended its contract with the for-profit school management company in response to concerns and deficiencies identified by the State Auditor and Inspector’s Office as well as the Oklahoma State Department of Education and the Statewide Virtual Charter School Board.

Video: State auditor release Epic Charter Schools investigation.

Epic Charter Schools: A Tulsa World investigation.

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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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