Reason to question state audit of Epic

[Guest post by Jonathan Small]

I’m a CPA with many years’ experience in government finances and I have had the opportunity to review the recent state audit of Epic Charter Schools as well as separate responses from Epic. An objective review reveals the performance of the audit has glaring flaws.

According to state law, the office of the State Auditor and Inspector (SAI) is required to review all audits of public schools. When deficiencies are found by the SAI, the office is required to notify the school board of statements of deficiencies. There’s no indication that the SAI’s previous reviews ever found any deficiencies at Epic, so the SAI’s new claims of improper financial accounting at Epic are tantamount to an admission of neglect or incompetence by SAI—if those claims are true. But it appears many claims of financial abuse are unfounded.

The audit’s problems include a de facto recommendation that Epic violate state regulations on calculation of retirement contributions of teachers, even though Epic has provided documents from the Oklahoma Teachers Retirement System that showed the school made the calculations correctly.

The audit went way beyond its scope to call for a ban on for-profit operation of charter schools, echoing the platforms of socialist U.S. Bernie Sanders, former Vice President Joe Biden, and the Democratic Party platform.

One SAI staffer significantly involved in the audit has previously admitted to lacking basic accounting knowledge, such as understanding the principle of “assets = liabilities plus equity.”

When Epic expanded its model into California, that state’s regulators asked for documentation that demonstrated Epic’s financial soundness. That documentation included a bank statement showing millions of dollars of cash on hand. SAI declared that providing such information was the equivalent of using state funds as collateral—yet Epic entered into no such agreements. The funds shown on that bank statement never secured any loan whatsoever. They only provided financial documentation at the request of California officials.

Neglecting best practices, the SAI didn’t include Epic’s full responses to the allegations in its report, nor thoroughly review calculations with Epic before releasing the allegations. The failure to abide by such standard auditing procedures is another red flag.

The SAI has since taken more than seven weeks to produce workpapers from the “special audit” and provide full support for some of the audit’s most salacious claims, including that Epic and the State Department of Education misclassified millions in administrative salaries.

Put simply, the audit omits much relevant information and ignores documents that undermine its most headline-grabbing claims, and SAI officials appear to be dragging their feet in facilitating a thorough review of their work product.

That pattern of behavior gives Oklahomans reasons to doubt the audit’s veracity.

An honest review of the state audit of Epic Charter Schools raises many questions. But those questions are centered around the validity and seriousness of the audit process, not on Epic.

Why is Epic popular?

[Guest post by Jonathan Small]

Ask the average citizen what they know about Epic Charter Schools, an online public K-12 school, and you’ll typically hear two responses. First, the school’s critics are vocal, fierce, and determined to shut down Epic, and second, the school is increasingly popular among parents.

Some will consider those two facts incompatible. Why would parents flock to a school that is constantly under fire from bureaucrats and teacher unions who regularly remind us they know better than the rest of us? The answer is simple. Because parents believe that Epic provides a better educational product than many local brick-and-mortar schools, particularly in the state’s urban centers. If Epic’s back-end business functions have been questioned by a flawed state audit that encouraged Epic to make inaccurate calculations, that’s of little concern to parents focused on the welfare of their child.

One parent of an Epic student, addressing members of the Oklahoma Statewide Virtual Charter School Board, put it bluntly: “A lot of the parents that are inside Epic think that brick-and-mortar schools are mad because they’ve had too many kids pulled from them and they’re losing too much money and they’re trying to get Epic shut down.”

Due in part to COVID-19 and the continued closure of many physical school sites, along with the bad-to-terrible online alternatives provided by local districts, families have flocked to Epic this year. The district now serves more than 61,000 students—all of whom proactively chose the school—making Epic Oklahoma’s largest school by enrollment.

The demand for Epic’s services shows parents desire parental school choice. Those who feel Epic has gained an outsized role are often people who oppose parental school choice. But if we truly care about parents and families having access to the school they believe best meets their student’s needs, we need to increase the length of the school-choice menu.

Lawmakers should provide families the ability to use their tax funding at any school of their choice. If a local district won’t provide in-person instruction, allow families to transfer to other districts or private schools without restriction or penalty. When a local district is failing to educate children, let families use tax dollars for private-school enrollment. When a district refuses to stop bullying, let a child choose from a wide range of online, charter, public, and private school options.

Consumer choice and competition generate improvement in all other fields. They can do the same thing in education. But right now many families have only two choices: the local traditional school or a statewide online charter school.

The great challenge in education today is not whether Epic used the proper accounting codes for administrative expenses (the main allegation contained in the flawed state audit), but the fact that tens of thousands of families have demonstrated a strong desire for a greater array of parental school choice options for their children.

Most say EPIC's safety, academic quality better than their prior school

"An independent survey conducted by TPMA of Indianapolis for the Oklahoma Statewide Virtual Charter School Board found parents come to EPIC because of negative experiences in their prior schools and the unique opportunities online education provides," EPIC superintendent Bart Banfield writes today. The study found that nearly 40% of respondents came to EPIC because of bullying. Moreover,

Approximately 94% of TPMA’s survey respondents believe EPIC provides a safe educational environment, and nearly 60% say EPIC’s academic quality is “significantly better” than their prior school. Fewer than 1% said EPIC’s academic quality is “significantly worse.” About 80% of parents said they intend to keep their children in EPIC through graduation.

Bernie Sanders reveals teacher union goals for Oklahoma

An email from the Sanders campaign, April 2018

[Guest post by Jonathan Small]

In a recent column published by The Oklahoman, U.S. Sen. Bernie Sanders, a self-described socialist, declared himself connected at the hip with Oklahoma teacher unions. There’s good reason to take that claim seriously—the Oklahoma Education Association’s national parent, the National Education Association, has given Sanders an “A” rating for years—so one should take seriously Sanders’ agenda as one shared by his teacher union comrades.

It’s an agenda that means more money for the government and less money for working Oklahoma families—even though Sanders tries to pretend otherwise. And it’s an agenda that would limit educational opportunity for Oklahoma children.

Over two years, Oklahoma lawmakers have increased K-12 school appropriations by 20 percent, funneling $638 million more into the system for teacher pay raises and classroom funding. Much of that funding came from more than $1 billion in tax increases and other revenue measures passed since 2015.

Sanders says those tax increases have “not been nearly enough” and calls for even more taxes. But Sanders decries Oklahoma’s recent tax increases—explicitly demanded by Oklahoma teacher unions—as falling “heavily on working families.” And he argues Oklahoma school problems were caused by state “tax cuts favoring the wealthy and large profitable corporations.” Since 2005, Oklahoma’s income tax was cut from 6.65 percent to 5 percent. That tax cut kicks in at $8,700 of taxable income for single filers. Who knew that earning $8,700 made one “wealthy”?

So Sanders is in the odd position of praising unions for forcing Oklahoma tax increases on working families, even as he decries those tax increases, and then argues that tax cuts that benefitted those working families were a mistake. Make of that what you will.

And Sanders says he now wants additional tax increases—on the “wealthy,” of course.

Sanders also took aim at EPIC charter schools, an online provider, saying that school is “draining” $112 million from public schools, and declared as president he would put “a moratorium on the expansion of charter schools.”

Never mind that every dollar spent on a student at EPIC—which is a public school—would have been spent on those same students in other public brick-and-mortar schools, so there’s no diversion of funding from education at all. And never mind that charter schools disproportionately serve low-income and minority students who would otherwise not get a quality education. Sanders and his teacher union allies are willing to sacrifice those children simply out of ideological pique.

In 2019, Gov. Kevin Stitt and legislative leaders chose a different path than the 2018 teacher-walkout model that Sanders praises. Instead of raising taxes, they increased state savings—something the OEA opposed, even though those savings will protect schools from budget cuts in future downturns.

Let’s hope saner heads continue to prevail in 2020, because if Sanders and his teacher-union allies prevail, the tax-increase drubbing Oklahomans took in 2018 will become the rule, not the exception.

Oklahoma charter school success hiding in plain sight

"Oklahomans, in recent weeks, have been buffeted by report after report, including results from the National Assessment of Educational Progress, the ACT college readiness exam, and the state’s own A-F assessment of the public education system, demonstrating the abysmal state of student achievement in Oklahoma’s public schools," OCPA distinguished fellow Andrew Spiropoulos writes. "But hiding in plain sight in the A-F report was one vital, and possibly saving, fact—the extraordinary performance of many of the state's charter schools."

Academic results show why families voting with their feet

[Guest post by Jonathan Small]

Government officials often refer to government spending as an “investment” to suggest a business approach is being applied to public policy. But if spending equals investment, then Oklahomans must ask, “What are the results?”

When it comes to our school system, results are now worse than they were before the “investment” of the past two years.

On the National Assessment of Educational Progress, often called the nation’s report card, Oklahoma student scores declined in fourth and eighth-grade reading, were stagnant in fourth-grade math, and improved slightly in eight grade math (by a margin considered statistically insignificant). Oklahoma students remain below the national average in all NAEP subjects.

On the ACT exam, Oklahoma students’ scores declined in every subject this year. In fact, 46 percent of students failed to meet ACT college-readiness benchmarks in any of the subjects tested.

When Oklahoma state test results were released months ago, they showed academic achievement was lower in 2019 than in 2017. In every subject and grade tested, a majority performed below grade level.

Those declining results have occurred even though lawmakers increased K-12 school appropriations by 20 percent over the last two sessions.

Some will object it’s unrealistic to expect a dramatic turnaround in just over a year. I don’t disagree. But is it unrealistic to think academic results should at least stop declining after such huge spending increases?

If “investment” alone is failing to stem the bleeding, let alone generate improvement, then more is needed. Policy changes must also be adopted. And parents in one of the state’s worst school systems have highlighted one solution.

Tulsa Public Schools faces a $20 million shortfall. The district’s leadership blames its financial problems on state funding cuts. But, as noted, the state has not been tightfisted over the last two years. Instead, Tulsa’s true problem is that students are leaving the district in droves and state funding is following them out the exits.

Where are those students going? According to the Tulsa World, 3,700 students left TPS for Epic Charter Schools, an online provider, from summer 2013 to June 2019, while another 3,300 students left for brick-and-mortar charter schools.

Parents are taking stock of the results of state “investment” in districts like Tulsa, and are responding by voting with their feet and moving children to schools that produce better outcomes. The greatest challenge for those families is not a lack of state “investment” in schools; it’s a limited array of school choices when their geographically assigned school fails to deliver results.

Combining school choice with greater education funding is policymakers’ best path to improving Oklahoma’s education system and student outcomes. Otherwise, next year may end the same as this year—with policymakers baffled that schools not only failed to improve after tax-and-spending increases, but actually got worse.

Could school funding reform increase integration, test scores?

"If you actually want to best serve low-income urban kids," says Matthew Ladner of the Arizona Chamber Foundation, "yes you want to give them access to charter schools, yes you want to give them access to private schools, but you also want to give them access to suburban district schools." 

I'm sure our pallid pals in the suburbs will be all for it, right? Because we know they care about all children.

My assigned district school? Some say no thanks

School choice is further along in some other places than it is in Oklahoma.

For example, the Raleigh News & Observer reports today ("1 in 5 NC students don’t attend traditional public schools, new figures show") that "the percentage of North Carolina’s 1.8 million K-12 students attending traditional public schools dropped to 79.9% this year."

Last week in the Tallahassee Democrat, former OCPA research assistant Patrick Gibbons pointed out that "in the span of a generation, Florida has gone from 10 percent of students attending something other than assigned public schools to 47 percent." Education researcher Matt Ladner has noted that in greater Phoenix "fewer than 50% of students attend their assigned district school."

Oklahoma is not there yet, but we're moving in that direction. One hopes that over time our political leaders will align public policy more and more with their constituents' preferences. 

As public charter schools come under attack, Oklahoma parents and school officials tout success

Ray Carter has the story.

Study finds school choice improves mental health

Staci Elder Hensley has the story.

Epic mom: 'The anxiety is gone, the stress is gone, the meltdowns are gone'

Bethany Cowan's 12-year-old son, Jacob, attends Epic Charter School. She told the News on 6:

“There was a lot of anxiety, every day we had tears getting ready for school. ... Jacob needed something different. ... I really, really am happy with who he is becoming as a person at Epic. The anxiety is gone, the stress is gone, the meltdowns are gone."

Bullied Oklahoma student finds relief in online charter

"When he was in seventh grade, my son was the victim of extreme bullying," Christie Britton of Amber writes today in The Oklahoman.

Now that he is enrolled in an online school, I know he will not encounter such a hostile classroom again. My son was just trying to make friends, yet in a place where he was supposed to be safe, his peers made him feel worthless and alone. Fortunately, this all changed when I enrolled him in Oklahoma Virtual Charter Academy. Thanks to online school, he is in a safe and welcoming environment. In just the two years he has been with OVCA he is excelling in his studies and has taken a greater interest in his classes, such as math and science, which he now finds exciting. I am so thankful for everything the online classroom has done for my son. Without it, he would not have returned to being the fun-loving young man he is today.

OKC charter school drawing families downtown

"Located in the heart of the city's downtown, [John Rex charter] school is viewed as a catalyst for convincing families to move into the growing number of apartments and condos being built in the area," The Oklahoman reports. "Last year, 28 percent of John Rex students came from the downtown attendance boundary. This year, John Rex will serve more than 600 students with another 500 on a waiting list, according to school officials. Students living inside the school's downtown attendance boundary are offered automatic enrollment, and while that includes some low-income neighborhoods beyond downtown, it also includes residential developments that can cost as much as half a million dollars."

An uncomfortable truth

Some public schools allow Black student-athletes to play for their majority-white high schools even though they can't read or write at grade-level, writes Nehemiah D. Frank, founder and executive editor of The Black Wall Street Times in Tulsa. 

Heavy-handed rules keep minority operators from opening charter schools

Informative post by Greg Forster here.

David Holt, school choice, and diversity

State Sen. David Holt (R-Oklahoma City) discusses charter school legislation at a meeting of the Oklahoma School Choice Coalition on September 3, 2015.

State Sen. David Holt has been elected mayor of Oklahoma City and will be sworn in on April 10. "I want to be part of creating a strategic vision for the future of public education in our city," he says. "And then I’m going to be working every day to incorporate the diversity of our city into decision-making."

Though he's an enthusiastic public-school booster, Holt has also been good on many school choice issues. He mainly supports some forms of public-school choice (charter schools and parent trigger, for example), though he also voted last year to expand Oklahoma's private-school voucher program and tax-credit scholarship program.

On the other hand, he was not at all helpful when it came to trying to provide education savings accounts (ESAs) to low-income students in some of our state's worst schools. During last year's legislative session, Mary Mélon, president of the Foundation for Oklahoma City Public Schools, sent an email to several public school supporters, including Sen. Holt, warning that an ESA bill which was being heard the next morning would have "dire consequences for OKCPS." (How's that for confidence in one's own product? Any sane person would flee if given the opportunity!)

Less than an hour later, Holt replied with the assurance that he planned to introduce two amendments in committee which would, shall we say, markedly dampen the bill's prospects.

Disappointingly, the bill's author had to pull the ESA bill when it became clear that, for a variety of reasons, he wasn't going to have the necessary votes for passage.

"In shelving a modest school choice bill because some Republicans capitulated to education establishment lobbyists, the Republican majority undermined their campaign vows to advance conservative policy and ignored the needs of some of Oklahoma's neediest children," The Oklahoman rightly noted. "Sadly, too many legislative Republicans preferred the 'absence of tension' with status-quo forces to aiding poor families and creating a better future for all Oklahomans."

One hopes that, as mayor, Holt's views will evolve and he'll come to see the importance of casting a strategic vision for the future of education—not just government-operated schools—in Oklahoma City. After all, he knows better than most that many young families will never even consider living in the Oklahoma City school district, at least not while the charter school waiting lists are so long. But give them, say, a $5,000-per-child voucher or ESA and suddenly the calculus changes considerably. As real estate professor Bart Danielsen and former Oklahoma City mayor Kirk Humphreys pointed out in The Oklahoman and in remarks at a meeting of the Oklahoma School Choice Coalition, educational choice policies can alter family-relocation patterns, revitalize cities, increase property values, and more.

Speaking of Kirk Humphreys, you're doubtless familiar with the cultural left's recent defenestration of Humphreys from the University of Oklahoma board of regents. Happily, however, despite the intolerance and discrimination shown by some citizens, Humphreys was able to retain his position on the board of the John Rex Charter Elementary School—even though Sen. Holt doesn't think the former mayor is fit to serve. Holt said:

I do not agree with Kirk Humphreys’ views on this matter and after making his views public, I don’t believe he can credibly serve in a public education leadership role.

Hmmm. The former mayor of Oklahoma City, "an evangelical Christian who simply articulated the view that has been traditionally embraced for 2,000 years by Christians of virtually all branches," cannot credibly serve on the board of a charter school? Really?

This understandably provoked some questions. Local pastor (and Humphreys' son-in-law) Jonathan Middlebrooks engaged Sen. Holt on Twitter:

• Your quote is being used by the group opposing Kirk Humphreys' position on the John Rex board. You say "do not agree with Kirk Humphreys’ views on this matter." Does this mean the views he clarified in his apology and press release?
• Do you agree that according to the group petitioning for his removal that “his fundamental beliefs disqualify him from public leadership”? Those beliefs being Christian beliefs?
• Do you believe that citizens with deeply held religious beliefs like Muslims, Orthodox Jews, or Christians cannot serve public offices or should be blocked from doing so due to those beliefs?
• Are Christians and other religious groups right to expect a Mayoral candidate to protect their freedoms alongside all other citizens? To say someone “cannot credibly serve in a public education role” due to his religious beliefs seems dangerous.
• As a citizen in OKC, a local pastor, and community leader I believe these are important questions that we deserve to have answered. I appreciate any response here or would love to meet in person.

Sen. Holt replied:

• My comment speaks for itself and I don’t see it having any relation to your follow-up questions. I am a Christian. All people are welcome in my OKC. You are welcome to send me an email if you’d like to visit further. Davidholt@gmail.com
• Also, I am not involved in this issue in any way. I responded to a question and stated my personal opinion, and I suppose people are free to quote me, but if you are passionate about this issue I would encourage you to lobby those involved in it. I am not.

Sen. Holt says he's "not involved in this issue in any way," but that's incorrect. He's a public official who said publicly that he doesn't believe Humphreys can credibly serve—and his words are being used by those who wanted to oust Humphreys. So, he's involved.

Sen. Holt says that “all people are welcome in my OKC.” That’s disingenuous to the point of being insulting. Humphreys is not saying—indeed, no reasonable person is saying—that those who practice homosexuality are not welcome in the city.

Moreover, Sen. Holt's comment does not “speak for itself.” On the contrary, his vaguely worded comment—regarding Humphreys’ views “on this matter”—veritably cries out for the sorts of astute, respectful follow-up questions which were asked and which deserve an answer.

John Rex is a successful charter school, and with any luck OKCPS will convert to a charter district early in Holt's tenure as mayor. But as the new mayor seeks "to incorporate the diversity of our city into decision-making," citizens need to know if that diversity includes Muslims, Orthodox Jews, Christians, and others who hold traditional religious views on sexual morality. Because if the mayor or other leaders evince an intolerance that deems certain citizens unfit to serve, that's a problem far more serious than any disagreement over education policy.

UPDATES:

• Regrettably, Mr. Holt has gone steadily downhill, declaring the city's first-ever LGBTQ "Pride Week."
• The executive committee of the U.S. Conference of Mayors recently passed a resolution supporting the establishment of a federal commission "to study and consider a national apology and proposal for reparations for the institution of slavery." Holt is a member of that committee. A reporter has asked him repeatedly if he favors the proposal, but Holt won't answer.

Why do Oklahoma families choose virtual charter schools?

The Oklahoma Statewide Virtual Charter School Board (OSVCSB) recently commissioned a study on "why families choose to enroll in virtual charter schools, as well as the benefits and challenges associated with virtual charter school attendance." Read the whole thing here. One nugget:

Parents and guardians are drawn to virtual charter schools due partly to negative experiences in prior educational settings and partly to the unique opportunities available via virtual education. Related to negative experiences, the top selections by survey respondents included “Bullying or threats from classmates at other schools” (41% of respondents).

Pastor asks OKC school board to embrace tolerance

"All that we are asking," Pastor Sam Storms recently told the Oklahoma City school board, "all that Mr. Humphreys desires, is that he be granted the same right and freedom to embrace his views on human sexuality that is granted to the LGBTQ community."

He is more than willing to affirm their right to believe and live in accordance with their convictions concerning homosexuality. He simply is asking that he be shown the same dignity and granted the same constitutional freedom when it comes to his beliefs about what the Bible says concerning homosexual behavior.

I’m not asking that you agree with his or my moral convictions concerning homosexual practice but only that you extend to him the same respect and intellectual freedom that you so tenaciously protect on behalf of all others.

Were Mr. Humphreys to be removed from the Board of John Rex School it would tell me and others that anyone can serve on this Board except evangelical Christians. It tells me that every view is permissible and should be granted freedom of expression and protection from discrimination except the view embraced by orthodox, Bible-believing Christians.

Surely our emphasis on “inclusion” and “tolerance” and the importance of showing respect for all views should be extended to all persons, including Mr. Humphreys.

Oklahoma charter school teacher earned $106K last year

EPIC Charter Schools' highest-paid teacher made $106,324 in 2016-17, the Tulsa World reports.

Trump favors educational choice