Oklahoma’s multicounty grand jury on Thursday issued a wake-up call to the public, state policymakers and Epic Charter Schools parents themselves about the financial practices of the founders and operators of the state’s largest school system.
In a rare, inside look at an ongoing criminal inquiry, the grand jury filed in Oklahoma County District Court an interim report outlining the need for new safeguards and greater transparency requirements before even more taxpayer dollars are allocated to Epic.
The grand jury report blasted Epic’s own governing board for “failure in fiduciary duty” to its students and in accounting to the state of Oklahoma.
It detailed the shifting of tens of millions of taxpayer dollars for school expenses into the private accounts of Epic Youth Services, the for-profit school management company that has reportedly made millionaires of Epic co-founders David Chaney and Ben Harris, who themselves hand-picked school governing board members.
“As designed this system is ripe for fraud,” the report states.
It also called for potential policy changes to be considered by the Oklahoma Legislature and greater oversight by Epic’s school sponsors and the Oklahoma State Department of Education.
“The public has not been served by the incestuous relationship between the for-profit vendor, EYS, and the governing board Community Strategies,” the grand jury interim report reads. “The system has failed to provide accountability and allow the company to take advantage and generate a substantial personal profit on the backs of Oklahoma students. This is especially offensive at a time when Oklahoma students and parents are struggling with the weight of the pandemic and its affect on our students’ education and well-being.”
Epic had long told its parents and the public that its so-called student Learning Fund was no different than traditional schools’ expenditure of taxpayer dollars on student learning needs and extracurricular activities and that the Learning Fund was audited.
But the shifting of those dollars to the outside company accounts and clarification that Epic’s Learning Fund had never been subject to annual school audits was first detailed in a February 2020 investigation by the Tulsa World.
“The Multicounty Grand Jury believes that parents, students, policy makers, and the public have a need to know about the initial findings of our investigation and thus issues this partial report of its initial findings and recommendations,” Thursday’s report states.
“By failing to provide appropriate oversight, the entities responsible have allowed significant public funds to be diverted into private accounts without transparency.”
The Oklahoma State Auditor and Inspector’s Office is still battling EYS attorneys in court for access to the school’s full Learning Fund spending records, and the grand jury report had something to say about that, as well.
The report called for “immediate disclosure and acknowledgment that any funds provided for the education of students, including the Student Learning Fund, are public funds and easily reviewed and reconciled.”
It added, “To date EYS has failed to disclose these funds to the Auditor, nor to the public and sought to prohibit their disclosure through litigation. As these are public funds, used for the benefit of the student, they should be disclosed and a proper accounting conducted. Any funds which were not expended for the benefit of a student should be returned to the state.”
Additional recommendations issued by the grand jury included:
The Legislative Office of Fiscal Transparency should evaluate Epic Charter Schools and report its findings to the Oklahoma Legislature.
The Legislature should publish all operating contracts for outside school management companies, known commonly as charter management organizations or education management organizations, such as EYS, and publish a comparison of management fees paid.
Increased accountability for school management organization companies, including conflict-of-interest disclosures, competitive bidding requirements, and prohibitions on public employees performing tasks for the benefit of the private company and the use of public funds rather than the for-profit’s own earned fees on advertising or marketing.
Require in-depth and independent financial audits during the midpoint of a charter school contract prior to contract renewal.
The Oklahoma State Department of Education through contract or the Oklahoma Legislature through statute, should provide “claw back provisions” for the return of public funds not accounted for or inappropriately spent.
Epic Charter Schools’ governing board, know as Community Strategies Inc., should immediately change its method of operating “to provide for greater accountability and transparency.”
Shelly Hickman, assistant superintendent of Epic Charter Schools, responded to the grand jury’s report by stating: “Epic’s Board of Education has since October 2020 made significant corrective actions, including Epic Youth Services no longer operationally or financially managing or controlling the school. The school itself has fully cooperated in providing public records. We will continue to fully cooperate in sharing any information we have with the grand jury.”
No indictments were handed down in Thursday’s multicounty grand jury report, but it made clear, its work is ongoing.
“The investigation by the Multicounty Grand Jury continues,” the report states. “We regret that our investigation has not been able to be completed at this time. But the intentional diversion of public funds, obfuscation of public employees, and lack of cooperation with oversight entities has made the investigation difficult to be completed in a timely manner.”
The Multicounty Grand Jury specifically criticized tactics used to date that it said has created a lack of transparency and accountability for how public funds are being spent.
“There should not be such a shadow hanging over the largest public school district in the state. It is unfortunate that such disfunction can impact the confidence parents may have in the education of their students,” the report states. “We are hopeful that this Interim Report will sound the alarm before additional public funds are diverted behind the cloak of secrecy by a private for-profit company and greater accountability, transparency and oversight of public funds are provided.”
The report clarified that the grand jury’s work is not an indictment of charter schools in general, or parent choice or of the teachers serving Epic students, but zeroed in on ensuring public education dollars are used properly to educate students.
“It is hoped changes will allow the parents to have confidence in a public school motivated by a desire to improve education outcomes and not by profit,” the grand jury report states. “The citizens of Oklahoma demand more. The students in Oklahoma deserve better.”