Lying Cindy Byrd
Hatchet Job of an Audit
Torn Apart One Section at a Time
Part V
A week ago we published Part IV 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 third 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 fourth 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 categories below are from Lying Cindy's own “audit” and the four 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
Here is a link to the SAI, State Auditor and Inspector “audit”. Scroll down to page 62 through 77 for the discussion of Chapter 6, Community Strategies. Those are the actual page numbers, not the PDF page numbers which start counting at the introduction. The PDF number is 77 at the start and goes through 87.
The Epic management company had applied for a charter school license in California and received one. They then approached the board of Community Strategies and asked them to approve setting up a new LLC that would serve as the new charter school. The benefit for the Oklahoma school was in the sharing of administrative expenses with the expanded school system, generating savings for both Epic One on One, the new school in California, and the Blended Learning Center. Five months later the deal was done with Community Strategies being the sole entity in the new LLC. In effect it owned the California school.
And what was wrong with that? Nothing, no Oklahoma tax dollars were sent to California. However Lying Cindy Byrd spun the narrative, claiming that Epic had “pledged” the assets of the Oklahoma schools in order to get the new charter in California. What actually happened was that California wanted to see a balance sheet showing that Epic was financially secure and stable. A statement is simply a snap shot of a business at a moment in time, it is not a pledge of assets.
A letter from Epic to the California school system provided a bank statement and a statement that the financial capacity would be used to secure a half million dollar loan for the first year operation of the new school. Epic was merely showing that they had plenty of cash on hand, in now way would that have been sufficient to mortgage or pledge Oklahoma school assets.
Now although an Oklahoma LLC owned the California Epic school the school was in fact a California school and not subject to audit from the state auditor or the state idioter as we call it. Epic had invoiced the California charter school around $140,000 in admin costs, money that the California school would pay with money from California taxpayers. The amounts were trifling in the scale of things and Epic didn't press for immediate payment. In fact as this was a subsidy of Epic schools and owned by Epic, the amount was small enough that it took nearly two years to accumulate to $140,000. Epic simply didn't demand payment from it subsidy.
The “audit” focused on the question if a school district in Oklahoma can provide services for another school district in Oklahoma or in another state. Many times schools provide services for visiting sports or academic teams from other schools or other states. Visiting teams are provided with a locker room, visiting fans are provided with seating and concession services. As long as the bill is paid why would it matter? This is no different than school facilities being used for fund raising efforts and the profits being given to the organization that ran the fund raiser. The ads for Blue and Gold Sausage are on the radio right now. Booster clubs use school property and utilities to run concession booths for citizens of the school district and visitors alike.
Then Epic sent $203,000 over three years to the California charter school. The money was said to be part of a promissory note, AKA a loan, between Epic California and Epic Oklahoma. This was a loan from the private money that Epic earned from managing the Oklahoma schools sent to cover a short payroll one week. No different than if any state vendor sent money out of state for any purpose. It is their money after all.
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 the bottom of page 9 where Epic's response on the Community Strategies starts. The section stops at the top of page 12, right above the heading “Findings Related to Other Issues”.
Epic made clear that the only California requirement was to show the capacity of financial ability so it provided bank statements for the parent company that took out the California charter license. The loan was a promissory note, no collateral was pledged, with the money being loaned upon the reputation of the Epic school and its owners/founders. The loan was quickly repaid from earned funds from California, something left out by Lying Cindy Byrd.
Epic then addressed the $140,000 in services billed to California Epic and agreed that the invoices had been missed and not paid. They immediately paid themselves out of California school funds. Shifting money from one pocket to the other basically. The other finding was around $70,000 in other invoices that were still current, keep in mind this is an ongoing relationship. Those invoices were paid as well despite there not actually being a determined due date on any of the transactions between the two entities. Epic created another position to track the accounts receivables to prevent this from ever occurring. Meanwhile both schools were operating and exchanging invoices and payments as expected.
Lying Cindy Byrd also complained about the Panola school having unpaid invoices, around $28,000 that had collected unpaid over two years. Once again there are no set due dates and if an invoice is missed it is paid when it is found. This was another Oklahoma school district, one that Epic had rescued before the State Department of Education shut it down for being insolvent. They ran the management of the school for three years and the school became solvent under their leadership. Ultimately the declining enrollment and population caused the Panola community to shut down the high school and they sent their high school age students to other Epic schools and other public schools.
Epic also pointed out that Lying Cindy Byrd was wrong about the cost allocations, that they were not done based upon time spent but upon student count. Lying Cindy had claimed that the payments were for payroll costs and didn't include benefits. Keep in mind that a former social worker actually did much of the “auditing” on this “audit”, with the woman's main experience being a part time journalist for small town newspapers prior to being hired as an auditor for the State Auditor Office. One would at least expect a degree in accounting or business or government services.
Finally the $203,000 loaned to California Epic, that was as we said before, from a private money account owned by the Epic management firm. Absolutely none of Lying Cindy Byrd's business and she knew that or is incompetent.
In this entire audit the only things of actual concern were around $400,000 in late invoices that were by contract not actually late, just missed and forgotten. The majority of the money was owed by several Oklahoma school districts as well. Compared to the hundreds of millions of dollars that flowed through Epic's management, that is peanuts and Lying Cindy Byrd knows it.
Next week we will cover Chapter 8, Findings on Other Issues.
