In the back-and-forth over alleged contract violations, the Statewide Virtual Charter School Board on Tuesday voted to give Epic Charter Schools one last opportunity to come to an agreement that would halt termination proceedings.
The board heard a presentation on a proposed consent agreement by Epic’s attorney Bill Hickman and then Oklahoma Assistant Attorney General Marie Schuble’s recommendation that the board not approve it.
Last week, Epic Charter Schools’ governing board voted to offer up an eleventh-hour settlement to the Statewide Virtual Charter School Board in an effort to halt termination proceedings that call into question the future of one of Epic’s two schools.
But Schuble, serving in the capacity of prosecutor in the statewide virtual board’s termination proceedings, called Epic’s proposal “woefully insufficient” in terms of actual requirements for Epic and a “sparse outline that will only ensure continued disagreement with one of the state’s largest school districts.”
She also pointed out that all of the changes Hickman offered up as examples of Epic’s recent attempts at self-reform were done by Epic governing board resolutions, meaning they could be altered at any time.
Ultimately, Statewide Virtual Charter School Board Chair Robert Franklin said they decided to draw on common ground between their aims and Epic’s proposal, as well as many of the specifics and new requirements in Schuble’s counterproposal to draft new agreement language, which was approved 3-0 Tuesday.
That document now goes to Epic’s governing board, which has already set a special meeting for Wednesday evening.
Only a few weeks ago, the attorney for Epic’s board stood before the Statewide Virtual Charter School Board trying to make a case for dismissing altogether the termination proceedings against Epic over its handling of public monies to date.
But the effort failed, and the board, which sponsors all six statewide online public schools, voted to move ahead and schedule a two-day trial for May 12-13.
At issue is whether Epic has violated the terms of its sponsorship contract and should therefore lose the statewide board’s sponsorship for Epic One-on-One, Oklahoma’s largest online public school.
Epic also operates a second school model, called Epic Blended Learning Centers, which enroll the vast majority of Epic students in Tulsa and Oklahoma counties under the sponsorship of Rose State College.
On Tuesday, the statewide board seemed to heed Schuble’s advice to include in its final demands that Epic make its Learning Fund records available to the State Auditor and Inspector’s Office both now and in the future.
A state forensic audit revealed that $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 Epic Youth Services, a private school management company that reportedly has made millionaires of Epic co-founders Ben Harris and David Chaney.
The practice continues to this day, and the release of previous Learning Fund spending records to Oklahoma State Auditor and Inspector Cindy Byrd is still being fought by Epic attorneys in Oklahoma County District Court.
Schuble said cooperating with state audits is a “contractual requirement that is rooted in statute and the board is duty-bound to uphold this requirement.”
“Failure by this board to require across-the-board compliance with all terms of your charter contract calls into question the importance of the contract itself. Allowing Epic to continue to disregard requirements to comply with the state auditor allows further violation of the charter contract,” Schuble said.
She also recommended that the virtual board appoint a “special master” to ensure Epic’s total compliance with its contract and proper accounting procedures for public schools moving forward, as well as with any settlement terms that might be agreed upon.
Hickman objected to both, saying such terms were a last-minute attempt at a “moving of the goalposts” by Schuble.
He accused her of trying to “extract” Learning Fund records from Epic to benefit her boss, Vice Deputy Attorney General Niki Batt, who is representing the state auditor in the lawsuit seeking public records to account for previous years of Epic’s Learning Fund spending.
Hickman called it “completely inappropriate and a violation of her ethical duties.”
He pointed to the fact that Epic governing board members voted last week to make a change to end one of the school’s most controversial accounting practices, which has been used to shield from public scrutiny the use of tens of millions of taxpayer dollars over the last decade.
Because of that vote, Epic’s Learning Fund dollars for student needs are to be placed in new bank accounts solely under school personnel control beginning July 1.
But Schuble said the current Learning Fund account must be reviewed by an auditor “to ensure all monies go to students when monies are transferred to new accounts.”
Hickman told the virtual board the records matter should be avoided because of the pending litigation. Then he indicated that lawsuit is unlikely to settle the matter of whether Epic’s past Learning Fund expenditures should ever see the light of day.
“The court has advised those parties it will not rule on whether those records are public or private funds, and the court has advised those records may be provided (to the state auditor only) under protective order,” Hickman said during Tuesday’s public meeting.
Termination proceedings against Epic One-on-One began in October, shortly after Schuble recommended the move based on the state’s newly released investigative audit findings that found Epic’s operators might have violated various state laws and their contract terms for fiscal management, as well as for “good cause.”
An Oct. 1 forensic audit report from the Oklahoma State Auditor and Inspector’s Office found chronically inaccurate cost accounting by Epic and the improper transfer of Oklahoma taxpayer dollars from Epic’s student Learning Fund account over several years to help cover payroll shortages at Epic’s California charter school.
The audit report also included the finding that Epic had improperly comingled, or mixed, public dollars allocated for its two separate charter schools in Oklahoma, despite terms in both of its sponsorship contracts prohibiting the comingling of funds or requiring separate accounts.