Enid News & Eagle
STATE Q NATION
Mar
08 Battle between Epic, state centers on ‘learning fund’
By Jennifer Palmer
2020 Oklahoma Watch
The state is drawing a hard
Page line: Public education funds that
flow to a private company are
A002 public.
Founders of the state’s largest
online charter school are fighting
Clip to shield those funds. Their com-
pany has refused to comply with
resized subpoenas from the State Auditor
32% and Inspector’s Office.
The showdown is headed to
court and could have major rami-
fications for Epic Charter Schools
and its for-profit management
company, Epic Youth Services,
both of which have drawn con-
troversy since inception a decade
ago.
At the heart of the issue is
something Epic calls the “learning
fund.” It’s a major draw for stu-
dents and families and has helped
propel Epic’s stunning enrollment
growth.
Here’s how it works: Epic
makes at least $1,000 available
to each student annually in the
student’s learning fund. Dollars
are deducted for their choice of
curriculum and for a plethora of
other items of their choice, such as
laptops and iPads, science kits and
craft supplies, soccer club fees,
horseback riding lessons, gymnas-
tics and summer camps.
Parents don’t receive the
money directly but instead request
a purchase from Epic. Epic trans-
fers the money to Epic Youth
Services, according to the court
filing, which then pays the ven-
dors directly. There are more than
1,400 private learning-fund ven-
dors.
The school makes period-
ic transfers of state funding into
a checking account specifically
for learning fund purchases. The
school transfers into a separate
checking account 10% of its total
revenue to Epic Youth Services for
a management fee.
Epic was founded by David
Chaney and Ben Harris; the two
men also own Epic Youth Services
LLC. Chaney and Harris have split
at least $10 million in profits from
Epic Youth Services between 2013
and 2018, according to Oklahoma
State Bureau of Investigation,
which is investigating Chaney and
Harris on allegations of embezzle-
ment and racketeering.
Chaney and Harris have denied
wrongdoing, and no charges have
been filed. Through an attorney,
they responded to the auditor’s
court motion with a written state-
ment.
“The state Auditor’s legal posi-
tion — that private businesses are
subject to state audit — should
concern every business owner in
Oklahoma. Epic Youth Services
has offered to voluntarily allow
the auditor to review records
appropriate to their request, but
we have received no response
prior to this court filing. We will
Property of OPS News Tracker and members of the Oklahoma Press Association.
Epic Charter School co-founder Ben Harris is seen at a board meeting in Oklahoma City on Oct. 16, 2019. (Whitney Bryen /
Oklahoma Watch)
vigorously fight for the protection
that has historically been provid-
ed to private businesses like Epic
Youth Services.”
They added they have provided
documents, some of which were
not public records, and explana-
tions to assist the auditor “vol-
untarily” and to be “helpful and
transparent.”
In its court filing, the audi-
tor says it worked with Epic
Youth Services for five months in
attempts to come to a compromise
to obtain the records associated
with public dollars while main-
taining the company’s privacy and
proprietary information.
“EYS was unwilling to dis-
close the records in the manner
necessary for the State Auditor to
accurately reconcile the revenue
and expenditures associated with
the Learning Fund accounts,” the
filing states.
Requests and subpoenas
Epic Charter Schools has
experienced rapid, jaw-dropping
growth, from just over 1,700 stu-
dents its first year, 2011, to nearly
30,000 this year. Only Oklahoma
City and Tulsa Public Schools
enroll more students.
Virtual schools in Oklahoma
are funded like traditional schools,
through a weighted per student for-
mula. As Epic’s student numbers
have grown, so has the amount of
public state funding allocated to
its schools — a combined $118
million last school year.
As Epic’s share of students
and funding swelled, the agencies
and boards responsible for over-
sight remained fairly hands off.
Legislative attempts to improve
oversight have been incremen-
tal. But last summer, a criminal
inquiry by OSBI picked up steam,
with two search warrants filed five
weeks apart. Then Gov. Kevin
Stitt requested an investigative
audit of the school and its related
companies.
As auditors began diving in,
they hit a brick wall. That wall is
Epic Youth Services.
Auditors first attempted to
obtain financial and other records
through public records requests. In
September, they issued a subpoena
for an organizational chart of Epic
Youth Services, a list of employ-
ees and contact information, learn-
ing fund revenue received and
spent since July 2015, and a ven-
dor list.
A second subpoena on Nov. 6
called for credit card statements
and QuickBooks data on learn-
ing fund purchases, and bank
statements, for a five-year period
beginning July 2014, as well as an
explanation of Epic’s $250 tech-
nology fee.
In a third subpoena, delivered
Feb. 25, Epic was given 24 hours
to comply. Auditors specified
again some records previously
sought and added that they wanted
access to all Epic Charter Schools
email accounts, vendor contracts,
documents and software used to
administer the learning fund. In
addition, the subpoena seeks docu-
ments related to an $85 service fee
charged to student learning fund
accounts and records of learning
fund expenditures.
When that was rebuffed, the
Attorney General’s Office filed
a court motion on the auditor’s
behalf, asking a judge to force the
release of the records.
State Auditor Cindy Byrd said
her office needs a complete picture
of an entity’s finances to do their
job, and they haven’t received it
from Epic. She also said what they
are asking for is typical for this
type of audit.
“We don’t want anything to
be withheld from the taxpayers,”
Byrd said.
Learning fund was early issue
Questions about the legality of
the learning fund arose in Epic’s
second year when its original
sponsor — Graham-Dustin school
district — brought concerns to its
attorney, Laura Holmes, of The
Center for Education Law.
Holmes and Graham-Dustin’s
superintendent, Dusty Chancey, in
2012 met with Epic co-founders
Harris and Chaney (then super-
intendent); Bobby Stem, former
Epic school board member and
now a lobbyist for Epic Youth
Services; Josh Brock, chief finan-
cial officer; and Brad Clark, then a
private attorney representing Epic
and now lead attorney for the state
Education Department.
Holmes told Epic their learn-
ing fund arrangement violated the
state Constitution and were con-
sidered “gifts” to private individ-
uals, according to an OSBI search
warrant affidavit. She cited an
attorney general’s opinion.
When it was suggested the pri-
vate management company, Epic
Youth Services, pay the extracur-
ricular activities from its man-
agement fee, Holmes agreed, the
affidavit says.
But that’s not what happened.
Three months later, Chaney
opened a checking account for
the learning fund, titled “EYS
Learning Fund,” making him-
self and Brock authorized sign-
ers, according to a second writ-
ten affidavit by the OSBI agent.
Brock transferred $1.2 million to
the account in the 2012-13 school
year, increasing the amount each
year. That account was used to pay
the hundreds of private vendors.
Meanwhile, revenue from the
10% management fee that the
school paid Epic Youth Services
went to a separate account, “EYS
General Fund,” at the same bank.
Approximately $42 million in
state funds was deposited into the
learning-fund account between
2011 and 2019, according to the
state auditor’s motion, which cited
a Tulsa World story.
The money flowing from Epic
to Epic Youth Services’ learn-
ing fund account was coded by
Brock as “instructional services”
in the state cost accounting sys-
tem — even though instructional
services are limited to expenses by
a teacher, for a recorded grade and
included on a student’s transcript,
the affidavit says.
Many of the learning-fund ven-
dors are not certified teachers,
which, according to the OSBI
agent, made the transactions
fraudulent.
Epic and its supporters say the
learning fund is a unique way to
allow parents to choose how some
of their allocated dollars are spent,
and pays for students’ supplemen-
tal supplies, art, music, athletics
and physical education they would
have access to in a traditional
school.
OSBI seized a laptop and bank
statements from one vendor, OKC
Storm, in August. OKC Storm
offered basketball, swimming,
tennis and track and field and
invoiced Epic for players’ fees,
uniforms and training.
OSBI has raised concerns with
the lack of oversight of Epic’s
vendors and found at least two
vendors with felony convictions.
Epic does not perform crim-
inal background checks on ven-
dors, but does require them to pro-
vide a signed affidavit that states
employees are not registered sex
offenders and have not had a felo-
ny conviction in the last 10 years.
Oklahoma’s four other virtual
charter schools in operation do not
offer learning funds.
The state auditor’s motion is
scheduled to be heard in Oklahoma
County court March 26.
Oklahoma Watch is a nonprofit, tax-exempt,
501(c)(3) corporation whose mission is to
produce in-depth and investigative journalism
on public-policy and quality-of-life issues facing
the state.
 Seminole Producer
Mar Ms. Billie Dann, the
08 former Chief Executive
Officer of the Seminole
Nation Gaming Enterprise
(SNGE) who oversaw all
three (3) of the Nation’s
2020 casinos, resigned January
27, 2020 the day before
the Seminole Nation
Gaming Agency (SNGA)
Page suspended Chief Chil-
coat’s Gaming License.
0004 Before she left, she
informed SNGA during
their recent inquiry that
Clip Chief Chilcoat approved
the Christmas bonuses
resized totaling $204,904.39 that
26% we all have been hear-
ing about. It seems that
the bonuses were paid
from the salary/payroll
line item in the current
SNGE Fiscal Year 2020
Budget that the Finance
Committee approved
and recommended for
approval by the General
Council. From this total,
eight (8) upper manage-
ment SNGE employees
were paid bonuses total-
ing $118,783.73, which is
approximately 58% of the
total bonuses distributed.
Now, how did this get by
the Finance Committee,
the Budget Officer or Chief
Chilcoat during the prepa-
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ration and review process
of the FY 2020 Compre-
hensive Budget? If their
bonuses were included in
the salary/payroll line item
of their budget, why didn’t
the Committee notice the
inflated salaries in their
review and evaluation
of the proposed SNGE’s
2020 budget? For trans-
parency’s sake why isn’t
there a separate line item
for bonuses instead of
entering it in the salary/
payroll line item.
Fellow tribal mem-
bers this is your money,
not SNGE’s discretion-
ary funds for their use. I
ask, “Is this an approved
use of net Gaming reve-
nues? Why did Ms. Dann
suddenly leave her posi-
tion the day before the
SNGA Meeting of January
28, 2020 that suspended
Chief Chilcoat’s Gaming
License? Why did Chief
Chilcoat refuse to produce
the requested documents
by SNGA? Did Ms. Dann
suspect that her Gaming
License would be sus-
pended too? If he had
nothing to hide, why did he
deny SNGA’s request and
have his Gaming License
suspended? Where is the
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and has not been resched-
uled. Seminole tribal mem-
bers, this is your money
that we are talking about
that is being spent, without
considering you, your chil-
dren and grandchildren,
for bonuses and attorney
transparency?” Although
and court fees without
approval. Who does this
without General Council’s
Ms. Dann informed SNGA
during the inquiry that knowledge or approval?
Chief Chilcoat approved How much longer are
the bonuses, no documen- you going to excuse his
tation was provided. How- unauthorized actions? He
ever, during the FY 2020
Comprehensive Budget
is constantly telling his
audience of supporters
preparation, review and at out of town meetings
submission process, the that some of the General
Finance Committee, Chief
Chilcoat and Budget Offi-
Council members won’t
allow him to move forward.
cer would have/should
have known about it before
He has been moving in all
directions for himself, but
SNGE’s FY 2020 Budget not forward for the Nation.
was presented to the Gen- Dave Jones
eral Council for approval. Nurcup Harjo
After the suspension of
-O-
his Gaming License, Chief
Chilcoat contracts with Dear Parents and Fam-
Rosette, LLC, without Gen- ilies,
eral Council’s knowledge g
and approval
pp as the Attor- You have likely seen a
ney General for the Semi- lot of recent media atten-
nole Nation. This unautho- tion on the coronavirus.
rized “Attorney General” The following information
files an Emergency Peti- is provided to help pre-
tion in Tribal Court against vent the transmission and
the Gaming Regulator and spread of coronavirus.
SNGA under Seminole The virus, like many
Nation of Oklahoma as other illnesses including
the Plaintiff without Gen- the flu, is spread between
eral Council’s knowledge g people who are in close
or approval
pp just to get his contact with one another
Gaming License back. The (within about six feet) via
Tribal Court Hearing for coughing or sneezing. The
this case was scheduled same good health habits
for February 27, 2020; that prevent other viruses
however, it was cancelled like the flu, also prevent
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the spread of coronavirus
and decrease the risk of
getting sick:
Wash your hands often
with soap and water for at
least 20 seconds. Use an
alcohol-based hand sani-
tizer, with 60 percent alco-
hol, if soap and water are
not available.
Cough into a tissue or
your elbow (not your hand),
then throw tissue away
and wash your hands.
Avoid touching your
eyes, nose, or mouth with
unwashed hands.
Avoid contact with
people who are sick and
stay home when you are
sick.
Keep students home
if they are running a tem-
perature or they report
not feeling well or appear
weak or ill.
Consult your healthcare
provider if you or your child
has health conditions that
put you at increased risk.
Additional guidance pro-
vided to districts from the
U.S. Centers for Disease
Control and Prevention
(CDC) on prevention, plan-
ning, and how to respond
to coronavirus can be
found on the CDC website.
We have seen reports
across the country that
some students have been
targeted and discriminated
against because of their
nationality. This is an incor-
rect perception that they
must therefore have a dis-
ability (here, the coronavi-
rus). In Seminole Public
Schools we are commit-
ted to welcoming, safe,
and inclusive schools, and
we do not tolerate such
unlawful discrimination,
including stigmatization,
bullying, harassment, or
intimidation. You can help
us prevent discrimination
by seeking and sharing
information from reliable
sources.
We all have a role to
play in keeping students,
staff, and families healthy
and safe. You can help
by staying informed, prac-
ticing good hygiene, and
staying home or keeping
children home if they have
been running a fever or are
exhibiting signs of a fever.
We are committed to
keeping you informed and
working with you to keep
our school community
safe.
Sincerely,
Dr. Bob Gragg
Superintendent
Seminole Public
Schools
-O-
As the state’s third-larg-
est public school system,
EPIC Charter Schools
draws a lot of media atten-
tion. Recently, this news-
paper published a story by
Oklahoma Watch, which
regularly criticizes EPIC.
The gist of their latest piece
is EPIC students shouldn’t
be allowed accelerated
learning opportunities and
that success is measured
by the percentage of grad-
uates that immediately
enroll in a Oklahoma public
college the fall after they
graduate. We disagree.
Oklahoma Watch’s own
formula didn’t include stu-
dents who attend in-state
private colleges or attend
any out-of-state colleges...
or even students who go
to college a year or more
after graduation. It also
didn’t consider students
who choose Career Tech/
workforce training or the
military.
Approximately 13 per-
cent of EPIC’s Class of
2020 will be graduating
early. Students put in the
extra work to graduate
early for various reasons
– from young, single moth-
ers who need to work to
provide for their child to the
student athlete who wants
to devote more time to his/
her sport or rodeo endeav-
ors.
Locally, EPIC educates
138 and employs seven
in Seminole County. We
educate more than 30,000
students statewide and
employ more than 1,400.
Our teachers carry aver-
age roster sizes of 29 stu-
dents and travel to meet
their students.
The vast majority of
our families are pleased,
despite, like any school,
what a few may tell a
reporter. We know this
because our current re-en-
rollment rate for 2020-
2021 is 52 percent higher
than last year.
An independent survey
conducted by TPMA of
Indianapolis for the Okla-
homa Statewide Virtual
Charter School Board
found parents are drawn
to EPIC because of neg-
ative experiences in their
prior schools and the
unique opportunities avail-
able via online education.
Incidentally, these are the
same opportunities Okla-
homa Watch frequently
criticizes. For example,
the study found 35 per-
cent of respondents came
to EPIC because they
wanted accelerated learn-
ing opportunities or reme-
diation because they were
behind at their prior school.
Nearly 40 percent came to
EPIC because of bullying.
Approximately 94 per-
cent of TPMA’s survey
respondents believe EPIC
provides a safe educa-
tional environment, and
nearly 60 percent say
EPIC’s academic qual-
ity is “significantly better”
than their prior school and
less than 1 percent said
EPIC’s academic quality
is “significantly worse.”
About 80 percent of par-
ents said they intend to
keep their children in EPIC
through graduation, which
indicates overall satisfac-
tion. These are facts that
should not be ignored.
Some throw shade at
EPIC’s high school met-
rics but the truth is we take
students wherever they
are academically from
their previous schools (70
percent come to us below
grade level in at least one
subject) and help them get
across the finish line with a
high school diploma.
EPIC does not exist
to compete with local
schools. We need strong
brick and mortar commu-
nity schools. Yet, there is
no one-size-fits-all school
for every student and the
students we’re educating
locally are proof of that.
Oklahoma needs an array
of public-school options so
all students’ needs can be
met.
EPIC’s learning model
will never be like traditional
brick and mortar schools
so its operations can’t be
the same either. Critics
may attempt to force us
and our students into a
one-size-fits-all box. But
our enrollment and cus-
tomer satisfaction data
indicates that’s not what
Oklahoma parents want.
Sincerely,
Bart Banfield
Superintendent
EPIC Charter Schools
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