Hatchet Job of An Audit: Chapter 5 Student Learning Fund

 

 

Hatchet Job of an Audit

Torn Apart One Section at a Time

The political hatchet job of an “audit” done by Oklahoma State Auditor Cindy Byrd is an eye watering mess of opinion and fact designed to punish Epic Charter School and drive them out of business. It is 116 pages of complaints about the structure of Epic, bitching about Epic making a profit, and using state law that applies to normal schools to second guess Epic's normal procedures, all of which were set up under the auspices of Graham Public Schools, the original school down near Henryetta that sponsored Epic, the State Department of Education (SDE), the Statewide Virtual Charter School Board (SVCSB), Rose State College, and the school board for Epic One on One, Community Strategies.

 

The Epic One on One school started around 2010 with Graham Public School as the original sponsor then once the SVCSB was set up they transferred to the statewide charter board (SVCSB). Then there is a second school sponsored by Rose State College, Epic Blended Charter School that was started in the summer of 2017. Both Rose State College and the SVCSB are primarily responsible for auditing the two Epic blended schools and are paid around 3% of the incoming revenue for that purpose.

 

The Byrd “audit” has eight chapters filled with a variety of wishes and bitches, plenty of hair splitting, plenty of outright outrage that a private company won't open up its private books to government auditors.

 

Chapter 1 Accountability and Oversight

Chapter 2 Oklahoma Cost Accounting System

Chapter 3 Payroll

Chapter 4 Allocated Dues and Fees

Chapter 5 Student Learning Fund

Chapter 6 Community Strategies-CA, LLC

Chapter 7 Audits and Reviews

Chapter 8 Other Issues

 

 

The Chapter 5 Student Learning Fund Issue

 

The hatchet job of an “audit” covers the Learning Fund starting on page 64 through 70. What is the learning fund? Epic Youth Services, EYS or simply Epic, is paid 10% of all funding for their profit for managing the charter schools and the contract between the Epic School Board and Epic calls for a learning fund, currently $800 per year per student, handed over to Epic for purchasing technology and services needed for a kid to be educated at home.

 

Think money for a laptop, internet service if the home has none, curriculum for the students, and anything left over can be used for extra curriculum activities like music lessons, sports, drivers education classes, anything that a student would have available in a regular teacher union ran school. Small things like supplies for chemistry sets for lesson plans, copy paper, even musical instruments, with the hard assets like instruments and science kits being school property managed by Epic and consumables such as paper or mouth pieces for wind instruments considered consumables.

 

Many times a home will already have internet access. Many times one lap top is needed for one kid, other times several kids can share a laptop as they can stagger the online part with desk work, the result is that the parents have some say in what the money is spent on. The money never touches the parent's or student's hands, they pick from pre approved vendors like dance teachers, amateur rodeo or sports programs, all pre-approved by the charter school, or the parent or teacher can go on Amazon, send a link to the teacher or program manager and the needed item or supplies are drop shipped to the home.

 

The parents have a portal on the Epic site where they can get an accounting of their learning fund, complain if they got something they didn't order, or pick out programs or curriculum if needed.

 

Traditional schools provide computers, have wi fi for the school, buy copy paper, chemistry set supplies, and fund extra-curriculum activities as well. The school board in both charter and teacher union ran schools are in charge of watching over things and auditing. In Epic's case they merely approve the requested tech or software or supplies and the parents make sure they spend the money wisely.

 

Epic is the only charter school that allows so much of the state education money to be controlled by the parents and teacher of the student. Epic might get $4500 per kid per year, they turn over control of $800 of that money while other charter schools decide what laptop, what curriculum, what extra activities are available. Think about that, 18% of the money is used flexibly, Epic cannot cut corners and pinch pennies with that 18% to increase their profits like other charter schools or public schools can do. That gives a huge marketing advantage to Epic; the parents and students and individual teachers have a bit of control.

 

The school board, Communities Strategies, the non profit board that runs Epic, did an audit on July 28^th of this year and found no issues. Yet the “audit” whines that no outside agency has ever audited the Learning Fund. Except the school board and the parents.... but we cannot trust them I suppose Byrd would have us think.

 

There is one kink in the contract that the teacher unions and now Cindy Byrd have used to punish Epic; students that sign up after October 1^st do not get the set aside learning fund. Instead Epic provides curriculum and technology such as a laptop and wireless service on their own dime. Epic also doesn't get paid the $4500 per kid prorated out for that semester, the costs come out of their own pockets if they want to enroll the student but they willingly do just that and thousands of parents are grateful for it.

 

So just around the middle of September every single year you will hear of an investigation or scandal about Epic. Why? To make the parents and kids put their enrollment on pause, just to deprive Epic of about one third of the money for that kid if they enroll late. Never any truth to the charges, every single time Epic is audited and cleared.

 

But much was made of this learning fund in the “audit”. Shrill cries of “18% of the state money isn't audited”, but it is, by the school board and by the parents and teachers. Epic doesn't hold on to a dime of the money except one scenario; when a student graduates, moves, or quits Epic the remainder of their learning fund is kept to provide laptops, supplies, and curriculum for those kids that enroll late, after October 1^st. What else can be done with the money? Epic cannot take it, the kids have their own money for their needs, what better use than to supply technology to late students. This is all by contract between Epic and Community Strategies school board. Parents have told me that Epic is very strict with the use of the funds and somethings like wind instruments mouth pieces and other consumables are getting more difficult to get approved as Epic is constantly under attack from the teacher unions and the whore politicians that make accusations against Epic.

 

The audit complains about this learning fund only because they have rightly been refused access to the books. This isn't state money, it has been paid out under contract to a private company that supplies these services and items to the students. In effect Epic takes only 10% instead of taking 28% like the other charter schools take, leaving nearly two thirds of their income under control of the school board and teachers and parents. Remember, of that $4500 per kid from the state Epic gets only $450.00 for their management.   The learning fund is twice that.

 

Take a janitorial contract with the state as an example. The state would never tell them to account for expenses spent on brooms, cleaning supplies, or even labor. The contract would state the cleaning schedule, some sort of quality assurance monitoring, and if audited they would be concerned that the buildings were properly cleaned at the stated price in the contract. If the contractor was smart he would offer the building manager or the head of the agency in the building some choices on scents used for cleaning or air fresheners or even the brand of toilet paper, maybe even the amount to be spent on the toilet paper with any savings to be spent on some luxury air fresheners or additional cleaning or something of the like.

 

Starting on page 67 the “audit” complains that the contract between Community Strategies and Epic doesn't cover how the kids are counted to compute the Learning Fund payment to Epic. Well damn, are we dealing with fools in the Auditor's agency? It is a pretty simple thing to find out the number of kids enrolled and use a calculator. Where Byrd twisted and omitted facts is how she chose to determine the number of students enrolled. She chose October 1^st to count the kids but in fact while that is a deadline for determining if a kid, their parents, and teacher have control over that money it is NOT the way that Epic and Community Strategies contract is written. Byrd knows this, it was explained to her and her auditors ad nauseum, but Byrd left this part out of the “audit”

 

And here is something very interesting. They complain about the Community Strategies school board not doing their job, so why didn't they lay their imaginary blame on the school board? Because attacking Epic draws in more campaign contributions and campaign volunteers....

 

Epic's response to the Learning Fund attack starts on page 8 and stops about midway on page 9. The first thing they point out is the scare tactic that Byrd used claiming nearly $80 million dollars isn't accounted for properly. In fact, the contract is very simple, for every student enrolled prior to October 1^st in each school year Epic is paid between $800 and $1000 per kid for the learning fund. Epic pulls what is called a LEA/Grade Summary Report on the 45^th day of each school year to count the number of kids enrolled in the first quarter of that year. The LEA acronym is part of a federal program that enforces compliance to federal law, it stands for Local Education Agency. So they are pulling those numbers from the most secure and most regulated source available for student enrollment.

 

There is a report called the First Quarter Statistical Report, FQSR, and in that report is a number called the Entire Period Student Count which is used in Epic's contract to calculate the Learning Fund payments. What Byrd has done is to count students enrolled as of October 1^st of the school year, that only deals with eligibility to have the learning fund flexibility nor is the Average Daily Membership used to calculate the Learning Fund payments or state aid.

 

The auditors were confused by this during the audit and they actually asked the CEO to circle the correct student numbers on the FQSR which was done for them. Starting on page 109 of the Epic response to this “audit” this is all clearly and carefully laid out including the Grant Thornton internal audit of the Learning Fund.

 

Simply put Lying Cindy Byrd knew beyond any doubt the correct manner to count the students and calculate the Learning Fund payments and the State Aid payments to Epic but she chose not to use those figures probably because lying created some scandal to pay off the teachers unions. The State Auditor was sent a letter from Epic's attorneys attesting to this fact, starting the process on August 6^th 2020. That letter is part of Epic's response on page 109 and the actual LEA reports with the correct student numbers circled start on page 112 of the Epic response.

 

Below those LEA reports is the Grant Thornton audit including the reports and summary findings. Yes, Epic hired a national accounting firm named Grant Thornton to audit the annual student calculations and they determined that Epic was UNDERFUNDED by around $2.6 million dollars since 2016. Epic then gave this info to Byrd and allowed her to contact the accounting firm and audit the audit and Byrd said she would include the audit and report into her findings. But Lying Cindy didn't do that, not a single mention of that information.

 

And that is the extent of this Learning Fund controversy. They can prove that each kid had $800 available, the school board has control over the amount of the und per kid and how it can be spent and the teacher and parents and kids audit how it is used. The contract clearly lays out how the kids are counted as well.

 

Why is this a problem?

 

Simply it is a problem because teacher unions and bureaucrats cannot stand the idea that Epic would take nearly two thirds of the money available and allow that much control on how it is spent. Heresy, abomination, a dangerous idea, how dare they education students at one third the cost and allow parental and student choice?

 

We would ask you all to contact both the GOP and the State Auditors office and ask them why this hatchet job is allowed to stand now that we know they have lied on the "audit".  Ask the GOP leaders why they refused to hold this crooked state auditor accountable and why they are supporting the teacher unions instead of those conservative Republicans that are exposing this abuse of state power.

 

Next week we will pull two more of the "issues" the "audit" was claiming and show just how ridiculous Lying Cindy Byrd's claims are.