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State Senate, House hear no bills related to Epic Charter Schools audit findings

State Senate, House hear no bills related to Epic Charter Schools audit findings

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The State Auditor and Inspector’s report on Epic Charter Schools last fall included a host of recommendations for policymakers to consider to increase transparency and accountability for the use of tens of millions of taxpayer dollars every year.

So why have leaders in the Oklahoma Senate and House of Representatives not heard any legislation related to the forensic audit findings?

A coalition of 16 grassroots parent organizations for public schools across the state says it sees the Legislature’s inaction as a glaring omission in a session in which numerous education bills have been brought to the forefront.

“While the Capitol is furiously trying to pass laws to expand privatization efforts and divert public funds to private institutions, it is silent on protecting Oklahoma taxpayers and putting a stop to schemes that hurt Oklahomans,” read a recent social media post by the Oklahoma Parent Legislative Action Committee, or OKPLAC.

OKPLAC Legislative Chair Sherri Brown said the lack of response to the forensic audit findings is perplexing because ensuring accountability for public school funding isn’t a partisan issue.

“We really expect our lawmakers to step up to the plate and deal with the issues raised. They spent the money doing the audit and all of a sudden there is just crickets on it?” Brown said. “We don’t care what legislator carries the bills. We think there needs to be some leadership from our legislators to take those issues to heart and protect our revenues from fraudulent use.”

The state’s investigative audit revealed $79.3 million in Epic Charter Schools’ spending on student learning for fiscal years 2015-2020 were unaccounted for after being shifted over to the bank accounts of a private school management company. This is separate from the $45.9 million in fees the company was paid for its management contracts with the governing boards for Epic’s two charter schools.

The practice continues to this day and an Oklahoma attorney general’s lawsuit on behalf of State Auditor Cindy Byrd in pursuit of those spending records is still pending in Oklahoma County District Court.

Asked to explain the lack of legislation resulting from the state audit findings, Aaron Cooper, a spokesman for Senate President Pro Tem Greg Treat, R-Oklahoma City, responded: “Members of the Legislature each session are able to file bills to address a variety of issues they deem important to their constituents and the state. There remains ongoing litigation surrounding the Epic audit and the Pro Tem trusts that if any laws are found to have been broken the legal system will take appropriate steps to address it.”

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.

But State Superintendent Joy Hofmeister said that is not all that needs to be done.

“There are still important needs to be addressed for virtual charter schools, including greater transparency in which funds for public schools are expended and managed, and greater accountability regarding the roles and responsibilities for all charter-governing boards and authorizers,” Hofmeister said.

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

Byrd’s Oct. 1 report was highly critical of Epic’s handling of tens of millions of taxpayer dollars. In all, $125.2 million of the $458 million allocated to Epic Charter 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 Ben Harris and David Chaney.

The report also raised 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.

Epic has denied criminal wrongdoing and branded the state’s investigative audit report as an attack on school choice.

A spokesman for House Speaker Charles McCall, R-Atoka, declined to comment and directed questions to Rep. Mark McBride, R-Moore, chairman of the House education subcommittee on appropriations and budget.

In the fall, McBride told the Tulsa World: “There has been understanding ever since the audit began that its findings would likely inform future bills, and members will definitely have bills on this topic when filing begins later this year.”

But last week, McBride acknowledged putting off hearing related bills in his committee over concerns about the auditor’s pending lawsuit against Epic and about the ongoing law enforcement investigations.

“My approach has been, let’s take a breath. My job is to do the job right, and not for this to come back and bite us,” McBride said. “I’ve talked to the Speaker about this, legal staff. I just want to make sure we don’t get eggs on our face … I assure you something is going to be done to fix these problems at some point.”

He added: “Everything with for-profit education needs to be looked at 100 percent. There’s too many loopholes. We went from a brick-and-mortar model and all of a sudden we’re doing for-profit education. There could be things we haven’t even looked at that are problems.”

Rep. Sheila Dills, R-Tulsa, has been the architect of two previously enacted pieces of legislation to try to crack down on administrative cost reporting and spending transparency at virtual charter schools.

This year, Dills found herself no longer a member of the House education committee and a bill she introduced to ensure full spending transparency for schools that contract with outside educational management organizations didn’t even receive a hearing on the education appropriations subcommittee chaired by McBride.

“There is a lot of education legislation out there right now that is being prioritized. There are people above me and it was a decision not to hear this legislation,” Dills said. “I’m just greatly disappointed. It’s hard for me to find a justification for a delay when there have been significant findings from three state agencies. I came here to take care of problems and we have a serious problem in our law. There was never, ever the intention of allowing these private, for-profit companies to take public money into private accounts and hide it.”

Dills said an oft-repeated contention she hears at the Capitol is that student learning spending by Epic’s private management company is no different than traditional public school money paid to outside vendors for goods or services. But she thinks that is false and misleading.

“With third-party vendor contracts at all other schools, it’s all out there for us to see,” Dills said. “Next on my list of priorities is why should the for-profit management companies be exempt from competitive bidding? Regardless of what type of public school they are, they are being funded with taxpayer dollars. They should all be held to standards of competitive bidding laws.”

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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