Ben Felder wrote a comprehensive review of the State Auditor’s report about EPIC charter schools. EPIC has previously been fined more than half a million dollars for overspending on administration. The audit proposes that for-profit management of charter schools should be ended. The following is an excerpt. Online charter schools are immensely profitable regardless of the quality of services they provide. Governor Stitt of Oklahoma is a Trump-DeVos ally. The state is fortunate to have a state superintendent, Joy Hofmeister, who is doing her best to improve public schools, which are underfunded. In a state that does not pay for its public schools, it makes no sense to fund an alternative system of charter schools using dollars subtracted from public schools.

Felder writes:

In presenting the findings of her investigation into Epic Charter School’s financial management, State Auditor Cindy Byrd opened her remarks at a Thursday news conference with a clarification that her audit was “not an indictment of charter schools or the charter school model.” 

But in her report, Byrd highlighted the ways in which current state laws, regulations and practices have failed to prevent the type of abuse she was accusing Epic of committing. 

She also recommended a significant change to how charter schools operate, including the end of for-profit organizations managing charter schools.

The Charter School Act has freed charter schools from some of the regulations created for traditional public schools and has provided a statutory shield that allows for some reduced financial accountability and less than full transparency,” the audit stated. 

“The generous privileges granted to charter schools by the legislature are ripe for potential abuse.”

There are around 20 charter school systems in Oklahoma, most located in Oklahoma City or Tulsa, and many with a focus on serving low-income students. 

“Brick and mortar” charter schools, which are managed much like a traditional school with a building and classroom teachers, operate with some anonymity, including the ability to set their own schedules and curriculum. 

Virtual charter schools operate with significantly more flexibility, including with attendance, staffing and disbursement of funding. 

Epic operates separate virtual and “blended” schools.

The state Department of Education oversees many aspects of a charter school’s finances, including compliance with federal programs, expenditure and revenue coding, and accreditation. 

However, the state’s audit of Epic said the school’s financial reports are “accepted at face value by (the state Department of Education) without on-site followup,” even when the reports appeared questionable, such as when hundreds of teachers were listed with the same 60/40 percentage split between Epic’s virtual and blended schools. 

“Again, oversight exists, but true accountability is lacking,” the audit stated.

The state Department of Education has penalized Epic in the past when it has spotted violations of state statute, including this year when the virtual school was penalized more than $530,000 for exceeding the state limit on administrative spending, a limit meant to keep the bulk of state education funding in the classroom. 

But Byrd’s audit claimed state education officials failed to enforce other financial reporting violations, even when they were known. 

In Fiscal Year 2016, the state auditor claims Epic officials intentionally misreported administrative costs in an apparent effort to avoid a possible $2.6 million penalty. State education officials questioned the practice but ultimately accepted Epic’s reporting. 

The audit said the state Department of Education and Epic “share the responsibility for the breakdown of the process, which resulted in no penalty to (Epic) and no accountability for the reclassified administrative costs.”

State Superintendent Joy Hofmeister toured the Central Oklahoma PPE distribution warehouse for schools in Oklahoma City on Aug. 18, 2020. BEN FELDER/The Frontier

State Superintendent Joy Hofmeister said a rule change passed by the state Board of Education earlier this year has remedied some of the problems with the administrative cost reports that the department was forced to accept in 2016.

But she said the department is still limited in many ways when it comes to holding charter schools accountable. 

“The audit findings also point to clear limitations the Oklahoma State Department of Education has had for decades in terms of ensuring the full veracity of millions of data points and school-certified information submitted to the agency,” Hofmeister said in a statement to The Frontier. 

“This is unacceptable and investments in modernization efforts must be a collective priority. We must do better, and we will do better.”

Gov. Kevin Stitt, who ordered the audit of Epic last year, said the “initial findings are concerning,” but also said he did not see it as an indictment on charter schools as a whole. 

Gov. Kevin Stitt speaks during a media conference at the state Capitol on June 30, 2020. BEN FELDER/The Frontier

“I am grateful for Auditor Byrd’s extensive work on this report and agree that her findings are not representative of all public charter schools or alternative forms of education,” Stitt said in a Thursday statement.

Like the traditional school system, Oklahoma’s charter schools are diverse and operate under various agreements and procedures. Many are referred to as “mom and pop charters,” meaning they are locally controlled, rather than operated by a national organization. 

Oklahoma’s charter schools also vary in academic performance with some ranking high on state assessments, while others struggle with low test scores.

Charter schools have been a topic of political debate for decades and Epic has consistently responded to allegations of financial mismanagement with claims they are under political attack. 

In its initial response to the audit, Epic officials did not address its findings but instead accused Byrd of “attacking parents’ rights to choose” the school that is best for them. 

“Once you cut through the theatrics of today’s announcement, the conclusion of the report calls for changes to the law; it does not assert that laws have been broken,” Epic said in a statement. 

Byrd’s audit does call for law changes, including a reference to a California law that prohibits charter schools from being operated by a for-profit organization or entering into a subcontract for management services with a for-profit organization, which is how Epic operates. 

At least one other Oklahoma virtual charter school, E-School Virtual Charter Academy, uses a private company to manage many of its expenses, including paying its superintendent and assistant superintendent. 

“Other states have already determined for-profit charter management organizations do not benefit taxpayers,” Byrd’s audit said. “Oklahoma should consider the same.”