Epic Charter Schools’ recently overhauled governing board just inked a new agreement that will send $2.5 million in taxpayer dollars to a technology firm owned by the brother of the board’s immediate past chairman.
According to school officials, Futuristic Education has worked on Epic’s school management and student information system for the last seven years under contract with Epic Youth Services, the for-profit school management company that made Epic school founders David Chaney and Ben Harris millionaires.
When approached by the Tulsa World on Friday about the possible conflict of interest, newly appointed Epic board member and chair Paul Campbell conceded that he had known for a couple of weeks that Futuristic Education is owned and operated by family members of his predecessor, Doug Scott, who resigned May 26.
But the familial ties were never made public during discussions of the new $2.5 million software licensing deal approved by the quorum of the Epic board present at a Tuesday evening meeting.
“This is super frustrating,” Campbell told the World, in response to questions about the agreement. “We’ve done a tremendous amount of work — there’s a lot of details behind this. But reporters continue to look for negative stories and sensational things on Epic and I’m just not going to be part of it.”
The largely online school system split from EYS at the same May 26 board meeting where Doug Scott resigned after serving as chair for the better part of a decade, and where four new board members including Campbell were seated.
The dramatic shifts came seven months after Oklahoma’s State Auditor and Inspector issued a scathing report about the accounting practices of the operators of the state’s largest school system and lax oversight by their hand-picked governing board members.
The state’s investigative audit revealed Epic Youth Services was collecting tens of millions of dollars in school management fees annually while relying almost solely on Oklahoma public school employees to do the administrative work for both Epic’s Oklahoma and California charter schools.
EYS was collecting additional, lump sum payments of tens of millions more in taxpayer dollars for Oklahoma students’ learning needs, and the auditor is still working through the courts to try to gain access to those spending records.
In early May, Oklahoma’s multicounty grand jury issued a rare interim report amid an ongoing criminal inquiry, saying it had already seen evidence that new safeguards and greater transparency requirements needed to be instituted by the Legislature before even more taxpayer dollars are allocated to Epic when the new fiscal year begins July 1.
Epic’s board now wants independence from the founders and their management company’s technology, called EpiCenter. So school officials say they had no choice but to cut a software licensing deal with Futuristic Education and to contract for professional services from a second technology firm called Resource Data, which also was previously employed by EYS, to help during the transition.
“Epic Youth Services did not include school staff or the Board of Education in reviewing contracts, terms, etc. with vendors of Epic Youth Services. Rather, they were very protective of that information. FE owns the intellectual property that the school had to have to transition to (the school’s new technology vendor) PowerSchool,” said Roger Kimball, Epic’s deputy superintendent of technology, in a written statement. “Our technology is going to be drastically improved and the code and integrations we have licensed from FE are absolutely critical to us transitioning to PowerSchool.”
Epic parents would recognize EpiCenter as the name of the online portal where they can access their child’s confidential data, including grades, test scores, schedules, and learning the fund account.
Public records show Futuristic Education was incorporated as a limited liability company in March 2018 and is based in a one-bedroom residence owned by Greg Scott in the small, Kay County town of Newkirk.
That’s where his brother Doug Scott, a Tulsa attorney, is on record as having told state auditors that he grew up along with Epic founders Chaney and Harris.
On two social media platforms, another family member named Bethany (Scott) Stewart lists her current employment at Futuristic Education, alternately as computer programmer and software engineer.
Neither Greg nor Doug Scott responded to requests for comment.
Campbell declined to answer any more questions about the $2.5 million licensing deal with Futuristic Education over the phone but agreed to respond to other questions if they were emailed to an Epic school spokeswoman.
In written responses, Campbell said later: “In retrospect, given we are trying to be the most transparent organization in the state, that tie could have been disclosed. However, it would not have changed the need to contract with FE. The code and integrations were critical to forever severing ties with EYS and transitioning our data to a superior platform with superior functionality for our students, families and staff.
He added, “Epic’s technology costs are going down, its technology is being vastly improved and EYS is gone.”
Epic said Futuristic Education and its attorneys drew up the licensing agreement but Epic staffers negotiated the company’s requested fee down from $5 million to $2.5 million and the term up from 5 to 10 years.
State Rep. Sheila Dills, R-Tulsa, has been the architect of two previously enacted pieces of legislation to try to ramp up fiscal transparency and accountability requirements for charter schools.
After the multicounty grand jury’s urgent call for legislative action, some components of a new bill of hers that had fallen dormant were revived alongside some of the grand jury’s specific recommendations to quickly form House Bill 2966.
The bill sailed through the Oklahoma House of Representatives by a vote of 81-17 in late May, but died after not receiving a hearing in the state Senate before the Legislature adjourned.
Asked to comment on the revelation that school management fees had apparently been used to employ family members of Epic’s longtime board chair, Dills said “It certainly creates a red flag when it is a constant fight against the status quo to require competitive bidding and robust conflict-of-interest policies.”
She added that “The concept of flexibility in charter schools was intended for the educational model – not the fiscal transparency and accountability. National organizations constantly emphasize this, such as the National Association for Charter Schools and the National Association of Charter School Authorizers.”
Dills said she believes an interim study is needed to explore the possibility of requiring competitive bidding for charter schools, as a means to guard against self-dealing or the appearance thereof and to assure taxpayers that all public school dollars are used on goods and services of fair market value.
Epic is now bound by added oversight terms as part of a new consent agreement with one of its two school authorizers, the Statewide Virtual Charter School Board, which had been seeking to terminate its sponsorship contract over the state auditor’s findings.
Robert Franklin, an associate superintendent at Tulsa Tech who serves as chair of the statewide virtual board, said while he was not aware of this specific case, news of another possible conflict of interest didn’t come as a surprise.
“There have been many questions about family members and what I would consider to be `friend connections’ that entangles things and makes it complicated,” he said of Epic. “I’m not going to say it was the wrong decision — if familiarity is the goal and the price is good, that’s one thing. But it merits further introspection by the board because transparency about the familial connection in the situation would be critical.”
He added: “Let’s not stumble on first blush … It’s eyes-wide-open and I think transparency is critically important moving forward into what I hope will be a bright future.”