Epic Investigative Audit is Epic
Tuesday, October 06, 2020
Investigative Audit of Epic Charter Schools Raises Concerns for Every Oklahoma Taxpayer, State Auditor Says
OKLAHOMA CITY - State Auditor & Inspector Cindy Byrd released today Part One of a two-part Investigative Audit of Epic Charter Schools and related entities.
The special audit was ordered by Governor Kevin Stitt in July 2019.
The more than 100-page report, for audit years FY2015-FY2020, found that Epic Charter Schools designed an administrative system inconsistent with the Oklahoma Charter School Act and its charter agreements.
There are 21 findings from the year-long audit, including:
- Epic spent almost $3 million on advertising in three months to recruit new students
- Epic has paid almost $80 million into the Student Learning Fund which is managed by founders Ben Harris and David Chaney
- The Student Learning Fund has never been independently audited and the release of its financial records to the State Auditor is currently in litigation
- The State of California has confirmed Epic Charter Schools' Charter Management Organization, Epic Youth Services (EYS), used $203,000 from the Student Learning Fund - money dedicated for educating Oklahoma children - to help with start-up expenses for Epic-California (Epic-CA)
- Epic's founders used Oklahoma school personnel to operate its California counterpart including $210,000 to develop Epic-CA and these funds were only repaid after the State Auditor discovered the transfer and made inquiries into the expenditure
- Harris and Chaney pledged credit from Epic Charter Schools (Oklahoma) bank accounts as collateral to obtain a half-million dollar loan to run their for-profit venture in California
- Epic Charter Schools underreported administrative costs above the statutory five percent cap last year and was required to repay the state a half-million dollars
- During the audit period, SAI calculates that Epic exceeded the administrative cost cap by $8.9 million
- The audit identified $6 million in fund transfers between Epic school districts without board approval
- One Epic district loaned another Epic district $3.3 million without board approval