According to the report, “Due to the lack of transparency in accounting for the funds, intentional avoidance of disclosure of information by a private entity, and lack of cooperation; the investigation is unable to be completed at this time.”
The concerns from the Audit Report and the subsequent investigation by the Multicounty Grand Jury can be summarized as:
- Lack of oversight
- Lack of transparency in operations
- Lack of accountability by for-profit company Epic Youth Services
By failing to provide appropriate oversight, the entities responsible have allowed significant public funds to be diverted into private accounts without transparency. The public has not been served by the incestuous relationship between the for-profit vendor, Epic Youth Services, and the governing board Community Strategies. The system has failed to provide accountability and allowed a 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 effects on our students’ education and wellbeing.
This interim report focuses on the for-profit vender, Epic Youth Services LLC (EYS).
“The incestuous relationship between the board and a private vendor has resulted in a lack of independent oversight,” the report states. “As designed, this system is ripe for fraud.”
From 2015 to 2020, Epic Charter Schools received more than $458 million in state and federal funds as a public school.
According to the State Auditor and jury findings, EYS, the for-profit branch of Epic Charter Schools that previously oversaw the school’s day-to-day operations, receives a 10% ‘management fee’ to help run the schools.
That fee has generated almost $46 million since 2015, going straight to the owners of Epic Youth Services.
“The overriding policy is that all public funds for the benefit of the student should be open to inspection, easily transparent into how they are spent, and accountable in their use. Funds allocated to Epic Charter Schools should be treated in the same manner as other funds allocated to any other public school system in the state.”
“These are funds paid by Oklahoma taxpayers for the education of its citizens, they have a right to know how these funds are being spent,” the report states. “Funds allocated to Epic Charter Schools should be treated in the same manner as other funds allocated to any other public school system in the state.”
The Multicounty Jury recommends the following:
- The Legislative Office of Fiscal Transparency (LOFT) should conduct an evaluation of Epic
Charter Schools, as the state’s largest public school district; and report their findings to the
- 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.
- Epic Charter Schools governing board, Community Strategies, should immediately change its method of operating to provide for greater accountability and transparency.
- Better oversight by Charter Sponsors by making them liable for returning to the state the (3-5%) administrative fee if the public funds are found to be spent inappropriately.
- Increased accountability of Educational Management Organizations who operate public charter schools.
- The Oklahoma Legislature should publish all operating contracts for Charter Management Organizations operating schools and publish a comparison of management fees paid.
- Require that in-depth and independent financial audits be conducted during the midpoint of the charter school contract prior to renewal and any audits conducted for public charter schools be conducted by the State Auditor or selected from a list of approved auditors maintained by the state auditor.
- The Oklahoma State Department of Education through contract or the Oklahoma Legislature through statute, should provide claw back provisions for the return of funds not accounted for or inappropriately spent.
- The Oklahoma State Department of Education should provide better oversight of entities receiving funds.
- The Oklahoma Legislature should consider additional accountability and transparency provisions if a for-profit entity is to manage a public charter school.
We are hopeful that this Interim Report will sound the alarm before additional pubic funds are diverted behind the cloak of secrecy by a private for-profit company… The citizens of Oklahoma demand more. The students in Oklahoma deserve better.
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Read the interim report below:
Epic Charter Schools responded to today’s interim report with the following:
“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.”
Shelly Hickman, Assistant Superintendent, Epic Charter Schools
The grand jury will recess until its next session on June 1-3, 2021, to permit the summoning of additional witnesses and the gathering of additional physical evidence by the investigators assisting the grand jury, at which time the grand jury will resume its investigations.