Stitt, 22 lawmakers call for ed department audit

Gov. Kevin Stitt and nearly two dozen state lawmakers said they support an investigative audit of t he Oklahoma State Department of Education.

Citing failed oversight of Epic Charter Schools, 22 Republican legislators called on Stitt to initiate a forensic audit of the agency. They said on Wednesday an audit would determine whether other school districts are misusing funds undetected.

The Oklahoma State Auditor and Inspector's Office cannot conduct an investigative audit unless asked to do so by highranking state officials, such as the governor.

Stitt applauded the group of lawmakers and said he would work with them to formally request an investigative audit of the state Department of Education, which receives the most Oklahoma taxpayer funds of any state agency.

“As we continue to work with the Legislature to invest in public education at the highest levels in our state's history, it is imperative that these funds are being carefully managed and in compliance with the law,” Stitt said in a statement to The Oklahoman.

A Department of Education spokeswoman said these concerns might stem from a “misunderstanding of what has occurred.”

"We would be happy to visit with any legislator who would want to better understand the audit findings and Epic's tactics,” said Carrie Burkhart, executive director of communications. “We are always open to improvement."

State Auditor and Inspector Cindy Byrd reported widespread fiscal mismanagement at Epic and poor oversight from entities meant to keep the virtual charter school system in check.

Byrd said the findings were “deeply concerning” when she released an investigative audit of Epic on Oct. 2. Epic, the largest school district in Oklahoma, has denied wrongdoing and said it intends to debunk auditors' calculations.

Education Department officials said Epic frequently altered financial reports right before critical deadlines and refused to answer followup questions. State auditors similarly said Epic was uncooperative and set up roadblocks to completing inquiries — a report Epic denies.

The group of Republican state lawmakers, 11 from the House and 11 from the Senate, said in a joint statement the Epic audit shows a non-existent process for confirming whether financial reports from school districts are accurate.

Six of the 22 lawmakers are members of the House and Senate committees on K- 12 education. Neither the chair of the Senate nor House committee signed the joint statement. The highest-ranking official to sign is Sen. Joe Newhouse, the vice-chairman of the Senate Education Committee.

For years, the state Department of Education took Epic's financial reports at face value with little follow-up for underlying documentation, auditors said. This occurred even after department staff raised concerns in 2016 about the legitimacy of Epic's reports as submitted to the Oklahoma Cost Accounting System, or OCAS.

Ultimately, auditors said Epic skirted heavy penalties by falsely classifying millions in administrative payments, a move that reportedly led to Epic's top brass and cofounders being over paid. The Oklahoma State Board of Education demanded Epic repay $11.2 million that auditors said was incorrectly reported or misused.

Epic said it relied on the expertise of the state Education Department and was never told it reported finances incorrectly, according to the school's 134- page response to the state audit. Epic denies reports that it misclassified administrative costs.

Lawmakers said t hey are concerned the same lack of oversight might allow other schools to misuse “hundreds of millions of dollars.”

“If the state auditor is correct in her assessment that the State Department of Education repeatedly neglected its responsibility to ensure compliance with OCAS and other required reports, one must ask if this dereliction of duty was confined solely to EPIC Charter Schools or if it permeates throughout our public education system,” the 22 legislators wrote.

Auditors reported poor oversight not only from the state department, but also Epic's own school board, Rose State College and, to an extent, the Oklahoma Statewide Virtual Charter School Board.

Members of the House Common Education Committee grilled state schools Superintendent Joy Hofmeister during a meeting Oct. 21.

Hofmeister, who heads the Education Department, said the agency is committed to improving its process of reviewing school financial statements. But, she said the agency has a small team responsible for millions of data points coming through OCAS reports.

“For that review process, yes, that should be greater, but it is going to take resources and people to be able to do that,” Hofmeister told lawmakers. She pointed out local school boards are supposed to review and verify financial statements before those reports are submitted to the state.

To discourage last- minute changes, like what Epic is accused of doing, the Department of Education has started imposing penalties on any district that alters its annual financial reports after Sept. 1.

One lawmaker has already promised to file legislation to overhaul public school oversight. Rep. Sheila Dills said the Epic audit uncovered an “alarming breakdown” of checks and balances.

Dills, R-Tulsa, was one of the 22 legislators who requested an investigative audit of the Education Department.

“We must reorganize the system to ensure all schools are held accountable, not just virtual charter schools,” Dills said in a statement last month.