Editor’s Note: This story was produced by the Epic News Network, a high school journalism program funded by Epic Charter Schools
OKLAHOMA CITY – The board that oversees Epic Charter Schools released documents Tuesday evening that school officials said show major problems with an investigative audit produced by State Auditor and Inspector Cindy Byrd’s office, voted to change the management and oversight of its Learning Fund – making fund records generated after July 1 open to public scrutiny – and approved a proposed consent agreement that could end Epic’s fight with the Statewide Virtual Charter School Board.
The actions came during the board’s monthly meeting and follow months of wrangling between Epic, the state auditor’s office and SVCSB officials.
Linda Ladd, Epic’s internal auditor, said the investigative audit performed by the state auditor’s office was flawed, adding that her examination of the audit showed Epic didn’t owe the state more than $8.3 million in penalties but, instead about $300,000.
“The SAI has already acknowledged there are errors in the $8.3 million penalty,” Ladd said. Ladd said the auditor’s office used the wrong classifications for Epic employees which initially drove the penalty cost in the millions. She said there was a 36 percent error rate in the audit. “That leads you to question that maybe there are addition errors that exist in this administrative penalty as well as the audit report in its entirety,” she said.
Ladd said working papers released by the auditor’s office showed that many members of Epic’s staff were wrongly classified as administrators. State law requires public schools to cap their administrative cost at 5 percent of their overall budget.
The audit from Byrd’s office said Epic’s administrative cost far exceeded the cap. Ladd countered that her examination of the audit’s work papers shows that Epic owes a penalty of $307,148.
Changes to the Learning Fund
In addition to raising questions about the amount owed by the school, the board voted to change the schools’ Learning Fund, moving its oversight and management to public school officials.
The Learning Fund provides $1,000 for each Epic student for technology, extracurricular activities or to purchase other curriculum. Previously, the fund had been controlled Epic Youth Services, the private management company that operates the school.
For close to a year, officials from Epic have battled the auditor’s office on whether or not records from the Learning Fund were private. Byrd’s office sued Epic last March after the school and EYS refused to make documents from the Learning Fund public.
Byrd’s office said Epic’s Learning Fund was ripe for potential embezzlement and misuse of taxpayer dollars. Officials from Epic Youth Services countered that the funds were used properly but said the funds were paid to the private company managing the school and there were not public records.
Tuesday’s action moves control and oversight of the fund to the public school and makes records from the fund public. The change goes into effect July 1. The fund’s earlier records would remain private.
Kathren Stehno, a member of the Epic school board, said she supported the change. “I think this is definitely a move we need to make,” she said.
Consent Agreement Action
Following a lengthy executive session, Epic’s board voted unanimously to send a proposed consent agreement to the Statewide Virtual Charter School Board. Epic is facing a termination hearing in front of the SVCSB. That hearing is set for May 12-13.
Epic’s proposed agreement includes changes on several fronts, including language that would allow the boards of education of any two more school districts to “enter into an interlocal agreement for the purpose of jointly and comparatively performing any of the services, duties, functions, activities, obligations or responsibilities which are authorized or require by law to be performed by school districts of the state.”
The agreement also includes a provision which states that Epic would agree to implement its contracting purchasing policy to include ensuring that “all contracts under $150,000 that are entered into on behalf of Epic One-on-One shall be approved and signed by the school’s superintendent.”
Contracts over $150,000 would be approved and signed by the chair of the Epic One-on-One’s governing board. Epic’s proposal also acknowledges the creation of a new position, Assistant Superintendent of Finance, and ensures that only public employees have access to school funds.
The consent agreement also includes language that states future records from the school’s Learning Fund “shall be public records.”
Epic also proposed changes to its governance, including a provision stating the schools’ governing board shall have no less than seven members, including two which be either a parent, grandparent or guardian of a student enrolled in the school. The consent agreement would also require any public school employee to be supervised by either a public school employee or the school’s governing board.
Epic’s proposed agreement also states the school would engage a different financial auditor than it has used previously.
Shelly Hickman, a spokesman for the school, said the agreement was an effort by school officials to provide a document for consideration by the SVCSB.
“You might recall, on April 6, the SVCSB had on its agenda for its consideration and possible action a consent document. Dr. Becky Wilkinson indicated in the meeting that although ‘we have made good progress in those (settlement) discussions,’ she did not have a document yet for their consideration,” Hickman said in a statement. “Our board wanted to take the initiative of it having its meeting last night to approve a consent agreement for SVCSB's consideration that it knew to include the consent actions that based on settlement discussions it was aware were important to Dr. Wilkinson.”
Currently, Epic is the largest public school district in the state with a combined enrollment of more than 50,000 students.
NOTE: This story was updated on April 19 at 2:36 p.m.