Hatchet Job of an Audit
Torn Apart One Section at a Time
Part VI
Is Lying Cindy Stupid, Gullible, or Just Dishonest?
One Must be Picked to Explain this Audit Chapter
A week ago we published Part V of the expose on Lying Cindy Byrd and her “audit” of the Epic Charter School. First we will go over the previous sections we covered in depth, which can be found at the Archive link at the top of each newsletter.
The first huge lie was about the teacher retirement system payments and we included the actual emails proving exactly how Epic was instructed to report retirement pay to the system and exactly how to calculate the money owed to the retirement fund.
The second huge lie was Chapter 5 on the learning fund and how it was calculated. Again, we provided the actual contract pages and LEA forms where Epic had actually circled the numbers that were REQUIRED to be used by charter schools by the SDE and the State Charter School Board.
The third huge lie was over the Accountability and Oversight section of her “audit”, where it was shown that the State Department of Education, the State Virtual Charter School Board, Rose State College, Epic itself, and the Communities Strategies school board were all doing audits, SDE had done over 60 reviews in the past three years alone.
The fourth lie was over the Oklahoma Cost Accounting System and how Byrd's office ignored existing law and focused on criticizing how the State Department of Education (SDE) asked Epic to handle the bookkeeping.
The fifth lie was in Chapter 4 , the Allocated Dues and Fees. Consisting only of Lying Cindy Byrd's opinions on how things should be instead of how the contract between the school, the management company, and the State Department of Education actually was.
The sixth lie we covered two weeks ago, the Community Strategies, LLC. That was an attack on the independent school board that overseas EYS that runs the school. The worst they found in that chapter were some unpaid invoices and a repaid loan that came from the private money that EYS earned. In other words, the EYS earnings paid to the owners and investors, which is not the state's business or concern.
The seventh lie was covered last week, Chapter 7 Audits and Reviews. There we discussed the numerous lies told by the State Auditor “audit” and listed all the numerous entities that audited Epic dozens and dozens of times.
The categories below are from Lying Cindy's own “audit” and the seven already addressed are in green type. The one we will cover in this issue is in blue type.
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
Lying Cindy's Accusations
Here is a link to the SAI, State Auditor and Inspector “audit”. Scroll down to page 83 through 91 for the discussion of Chapter 8, Other Issues. Those are the actual page numbers, not the PDF page numbers which start counting at the introduction. The PDF number is 94 at the start and goes through 101.
Lying Cindy's first complaint is that EYS, the private company that runs the Epic schools, takes 10% of the money allocated to the benefit of the Epic schools. Lying Cindy figures, actually that part time reporter turned auditor with no accounting degree, that the 5% sponsorship money that Epic pays Rose State Colleges and the SVCSB should be excluded before EYS takes its 10% cut. The sponsorship money is paid to the sponsors so that they can audit Epic without cost to their own schools or organization, no different that the CWEB school auditing firm that Epic employs to ensure their books are right and the regulations are followed. Of course both the sponsors, the ODE, and the Epic school boards have not found fault either for this long standing practice. Once again this is nitpicking designed to harm a charter school, it is Lying Cindy's opinion against those that have ran and supervised both EYS and the school for eight years.
Lying Cindy's next complaint is that EYS and the two school boards that run Epic One on One and Epic Blended Learning Center Charter School are too close. Lying Cindy complains that David Chaney, one of the founders and co owners of EYS, served as the superintendent of Epic One on One and Blended Learning Center. And that Ben Harris, the other co founder and co owner of EYS is intimately involved in both schools at the board meetings and in Lying Cindy's words or her minion's words, has “too much influence” over school decisions. Lying Cindy believes that both Harris and Chaney shouldn't be involved. Lying Cindy also complains that one Josh Brock, the CFO of both schools, is paid by EYS instead of being paid by the two schools.
Once again these are policies that both save taxpayer money and are agreed upon by the schools, the management company, the sponsoring schools or school boards, the ODE, and the myriad of agencies that oversee the charter schools. These are charter schools, doing different ways of managing education organizations and doing so at a fraction of what the public schools get. Does Lying Cindy complain about the school superintendent attending school board meetings or organizing the teachers to walk out and strike for more money for schools? If EYS is willing to pay Brock and save that much money for the taxpayers why is Lying Cindy complaining?
Lying Cindy's third complaint was that last year the director of the SVCSB, one Rebecca Wilkinson, decided on her own to call for an audit of Epic and placed the item on an upcoming agenda. She then called on Ben Harris to “warn” him, AKA threaten him. A few hours later the president of the SVCSB, Mathew Hamrick called Wilkinson and bluntly told her to remove the agenda item as she didn't have the votes. This is basic board politics, only brash and stupid people step out on their own on a move that would have embarrassed both the SVCSB and Epic without first discussing the idea at a board meeting. Wilkinson basically got too big for her britches and was slapped down like the fool she was and she made sure that Lying Cindy heard about her perceived humiliation.
Lying Cindy brought up a small campaign contribution that one of the Epic founders made to Hamrick on a 2017 run for public office. Hamrick already had a job with the Department of Mental Health, these board jobs are part time positions.
Lying Cindy's last complaint is that Epic spent two million dollars on advertising in order to recruit new teachers and make students aware of the option of attending Epic. All state agencies and most schools do spend money on ads including Lying Cindy's own sand box, the State Auditors Office. And how about TSET? Millions and millions spent lining the pockets of the media companies and newspapers. Then Lying Cindy goes on to admit that there is no state law against advertising and that the ad costs were properly coded in the books. In Lying Cindy's opinion this is “questionable”.
Then Epic was sharp enough to rent spaces in a couple of failing malls, Penn Square Mall in OKC and Woodland Hills in Tulsa, for a playground, educational center, and for some signage promoting the spaces as people walk around the mall. How is it Lying Cindy's business what property is leased for educating students? And this amounts to ….. fourteen cents per student per month for both mall campuses.
Lying Cindy, or her part time reporter/ social worker/ auditor with no accounting degree or education, called out Article 10 Section 26 of the Oklahoma Constitution claiming that school districts are prohibited from taking on multi year responsibilities such as a five year lease. Which is a bald faced lie. What Section 26 states is that political subdivisions and school districts CAN take on multi year debt as long as it is not more than their annual income, less than 5% of the property value of the entire district and we are talking about private property and government owned property . With two thirds permission from the voters that can be upped to 10% of the value of all the property in that district. All they have to do is provide a sinking fund that is capable of paying the INTEREST for at least 25 years if the obligation/lease runs past 25 years. The section also exempts personnel and superintendent contracts.
In our research and speaking with experts we realized another thing. State agencies, Cities, Counties, and other subdivisions of the state can and do take on long term debt by creating a public trust that takes on the debt after being bankrolled by the organization that created the trust. These same public subdivisions of the state also loan their credit to these trusts by agreeing to repay any mortgage or debt owed by the trust. A few weeks back we discussed about Lying Cindy having her panties in a wad about EYS “loaning” the Epic CA charter school “their credit”. It turns out that that is completely legal and is done thousands of times a year all over the state.
State agencies also sign multi year contracts on software and the agency that “owns” most of the government buildings and properties depends upon long term agreements to lease the very buildings they operate out of. Then you have decades long, twenty, thirty years, bond issues.
Now there is another issue that has stacked the deck against Epic and the 61,000 families that depend upon the school. Both Hamrick and and another SVCSB board member named Shepard were recently booted from having any voting power on Epic matters. Because Hamrick knows one of the co founders of Epic and because Shepard was a very distant relative of Ben Harris. That leaves three openly hostile board members to vote upon Epic's future. Stalin said it best, it doesn't matter who votes, it matters who counts the votes.
Epic's Response
You can find Epic's response to the State Auditor during actual “audit” at this link. Look on the left upper corner and find the page number text box to quickly go down to the correct page shown below.
Go down to page 12 where Epic's response on Other Issues starts. The section stops at the bottom of page 13, right above the heading “A Note Regarding Oversight”.
EYS responds to the first issue, the 10% payment from Epic schools. The actual language in the contract that all parties agreed upon was 10% of all revenue received by Epic or paid on their behalf. This contract was audited by a national accounting firm named Grant Thorton which agreed that the EYS payment included monies paid to sponsors on Epic's behalf. Then the very State Auditor approved CBEW auditing and accounting firm had found the same thing when they reviewed the contracts and books of Epic and Blended. The parties to the actual contract are in agreement but Lying Cindy who was never a party to the contract believes that her opinion overrides the contract.
On the mall playgrounds, Epic states what we found, that Article 10 Section 26 prohibits multi year debt, not multi year contracts. EYS devoted three short sentences shooting down Lying Cindy on that issue.
There is no response on the other two issues that Lying Cindy created simply because they are not prohibited by state law nor has any of the parties thought advertising or knowing board members was an issue.
This pretty much concludes the problems in Lying Cindy's “audit”. We might have one more story on some side issues and revisit a couple of issues but after two months of immersion in this audit and Epic's response we find zero credibility in the audit and believe that this was simply an attack by the teacher unions and bureaucrats against a well oiled private charter school whose only sin was to become successful for their students and the state. Lying Cindy's opinion becomes the basis of a witch hunt rather than looking at the contracts and state law.
Now we have a question to ask, one that must be asked. Is Lying Cindy stupid and unable to read a simple section of our Constitution, or is she so gullible to believe a part time reporter/social worker/ auditor without an accounting degree telling her this is the law, or is Lying Cindy just lying her big butt off? It has to be one or the other. You can ask the same question for all eight chapters of the hatchet job she signed off on.
