New report accuses Epic Charter Schools of miscounting attendance, unapproved bonuses

Despite an overhaul at Epic Charter Schools, a new state investigation found the virtual school system still suffers from poor governance, financial weaknesses and questionable attendance protocols.

The Oklahoma State Department of Education launched an investigation last year after a former Epic school board member made a new round of allegations against the embattled virtual school system.

A 76-page report on the allegations was released Tuesday. Epic leaders say they are partnering with the state Education Department to correct concerns.

State schools Superintendent Joy Hofmeister said at a Tuesday press conference she will recommend the state's top school board place Epic on probation, a grave penalty for a public school.

The agency will report its findings to the Oklahoma County district attorney and the Oklahoma State Auditor and Inspector's Office for review, Hofmeister said.

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Many of the issues found in the report were inherited from the previous leadership of Epic's co-founders, who are no longer affiliated with the school system, Epic Superintendent Bart Banfield said at a press conference at school offices Tuesday.

Banfield acknowledged Epic made policy and procedural mistakes but its school board and administrators are "committed to uncovering all and any issues."

"We have been moving very quickly, and let me say, it has not been an easy task to completely deconstruct and then reconstruct our school from the ground up," Banfield said. "Let me be clear, the Oklahoma State Department of Education is our partner in these efforts."

Former Epic school board member Kathren Stehno resigned in December and, in doing so, filed a complaint with the state. She alleged Epic administrators improperly withdrew students for truancy, suppressed key information from board members and handed out “extremely large and unapproved” staff bonuses.

Investigators said they uncovered deep flaws in the way the school system counts attendance — issues that impacted thousands of students and potentially hundreds of thousands of dollars.

Inaccuracies in attendance records are the result of an algorithm that originated from a third-party vendor, Futuristic Education, said Brad Clark, general counsel of the state Education Department.

"It is conceivable that the algorithm was written to allow Epic to continue having students enrolled who, by law, should not have been," state investigators wrote. 

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Clark said Futuristic Education might have a relationship with Epic Youth Services, the company owned by Epic's co-founders that managed the school system for a decade and has been accused of misusing taxpayer funds. The co-founders, Ben Harris and David Chaney, have denied any wrongdoing.

Clark said Epic informed state officials of the connection between the two companies the day the report was released. Banfield said the co-founders' company hired Futuristic Education to work with Epic, and the two businesses had a "vendor relationship."

Epic cut all ties with the co-founders and their company in May 2021, but investigators said irregularities still affect Epic's attendance records.

The Education Department found more than 4,500 students who were counted as Epic students days before they should have been, an error that investigators claim could have wrongly netted Epic $780,000.

Hofmeister said investigators discovered "troubling patterns" in attendance for more than 4,800 students during the 2020-21 school year, when Epic's co-founders still managed the school.

These 4,800 students were counted absent for 14 consecutive days, but on the 15th day, when state law mandates they be withdrawn for truancy, they were marked present, according to the report.

That enabled Epic to count these students toward its school funding, investigators said. The students were then absent for 14 more consecutive days.

This irregular pattern never surfaced in Epic's attendance records until after July 1, 2020, when a new state law took effect requiring virtual charter schools to withdraw students after 15 consecutive absences, investigators wrote.

Epic students are counted in attendance when they complete instructional activities. Banfield said the school system could change to taking attendance daily. 

"That would basically nullify the need for any kind of (algorithm) bot," Banfield said. "We feel like that would be a more transparent way for us to be able to hold our students accountable and to be able to work with our parents."

Correcting the algorithm will take "additional in-depth investigations by programmers," the superintendent said.

The state also found thousands of students with high rates of truancy. About 5% of Epic's students in the 2020-21 school year, or 3,400 schoolchildren, were absent 75% of the time they were enrolled. 

Almost half of these 3,400 students were promoted to the next grade level the following school year, Clark said.

Epic Charter Schools employees report tension between school board and administration, report states

Stehno claimed Epic's board Chairman Paul Campbell intruded in school operational decisions, a role typically reserved for the superintendent and administrative staff.

"He was not only in the governance lane but in the school management lane," Stehno told The Oklahoman in December. "I saw that as not a good idea."

The state Education Department learned Campbell overstepped to the degree that Banfield complained his actions created harmful instability and volatility, the report states.

Epic employees told investigators they were uncertain who truly runs the school system, the superintendent or the chairman, the state report alleged.

"It’s clear there is disharmony in the Epic community, particularly between the board chair and senior leadership," Hofmeister said. 

Campbell said Epic is experiencing "nothing even close to disharmony."

"What I think’s missing quite starkly from this report is that if you go back through our open meetings, we’ve been very upfront that we’re going to have our hands in this, especially in the first 90 days," Campbell said. "Since then, I think Bart (Banfield) and I are really clear about what his role is and what my role is."

The latest allegations are a stark contrast from complaints against Epic's previous school board, which was almost completely overturned in May 2021. A 2020 state audit of Epic found former school board members were friends of the school's co-founders and gave little oversight of administrative decisions.

"In contrast to these differences, one thing appears to remain: actual control and decision-making by only a few," the Education Department report states.

The Education Department couldn't confirm some of Stehno's allegations, including her claim that Epic's superintendent kept results of a truancy audit secret from the school board.

Banfield said he requested the truancy audit to ensure staff is properly trained in attendance protocols.

Emails the state obtained show Stehno agreed the audit results should stay "within the confines of our organization," according to the report.

The state said it could substantiate Stehno's complaint of exorbitant bonuses for administrators.

Administrative staff was paid nearly $8.6 million in bonuses that were unapproved by Epic's school board, investigators found. Bonuses exceeded the administrators' employment agreements by at least $800,000, the state alleged.

This included Epic's superintendent approving a bonus for himself and his spouse, which Hofmeister said could violate state law and create a conflict of interest.

The Education Department determined these bonuses, even if done with good intentions, "appears to have caused financial mismanagement and the mismanagement of funds."

Campbell said the school board did, in fact, approve the bonuses in the same May 2021 meeting in which new members took office and severed ties to Epic's co-founders. 

"There was some sloppiness there potentially in the way we worded it," Campbell said. "There is no ill intention. ... Every single penny we paid out was earned."

Reporter Nuria Martinez-Keel covers K-12 and higher education throughout the state of Oklahoma. Have a story idea for Nuria? She can be reached at nmartinez-keel@oklahoman.com or on Twitter at @NuriaMKeel. Support Nuria’s work and that of other Oklahoman journalists by purchasing a digital subscription today at subscribe.oklahoman.com.