Gov. Stitt requests audit of state ED
Focus to be financial oversight of schools
Following an explosive report on Epic Charter Schools last year, Gov. Kevin Stitt has requested an investigative audit of the Oklahoma State Department of Education.
The audit, which the governor announced Thursday, would focus on the state agency’s financial oversight of public schools.
“As we make record investments in our public education system, students and parents deserve to know that their schools are spending our tax dollars appropriately and in accordance with the law,” Stitt said in a statement.
State schools Superintendent Joy Hofmeister said the governor’s call for an audit is “yet another attack on Oklahoma’s public education system.”
“At a time during which there are serious audits we have requested which
potentially involve criminal activity, and while 541 school districts are struggling to find normalcy during a pandemic, the Governor’s attack on public education couldn’t be worse timing for students, families, teachers and taxpayers,” Hofmeister said in a statement.
The Oklahoma State Board of Education, which Hofmeister leads, requested investigative audits of Western Heights Public Schools in July and the nowclosed Justice Alma Wilson Seeworth Academy in 2019.
GOP lawmakers sought financial investigation of agency last year
After an investigative audit of Epic reported widespread financial mismanagement, 22 Republican lawmakers urged the governor in November to request an audit of the state Education Department, fearing a lack of financial oversight “permeates throughout our public education system.”
The Education Department receives the most funding of any state agency in Oklahoma, with more than $3 billion state funds allocated to it this year. This is the first investigative audit of the department in its history, according to Stitt’s announcement.
The agency has undergone more than 20 financial, compliance and programmatic review audits by the state auditor’s office in the past 6 1/2 years, Hofmeister said.
The governor’s secretary of education, Ryan Walters, has approved every agency spending request over $25,000, she said.
Walters said it was “way beyond time” for a deep dive into all the money flowing through the department.
“An investigative audit is going to actually look at every dollar when it enters the agency and follow that dollar to where it ends up,” Walters said. “That’s the only way that you can ensure that dollars are getting where they’re supposed to go.”
The governor’s office took 10 months to make the request because an audit of such scale has never been done in Oklahoma, Walters said. Gubernatorial staff met internally, with lawmakers and with the auditor’s office, in the months beforehand.
“We wanted to ensure that we did this the right way,” Walters said. “We would rather go slow and ensure it was done right than to speed through the process.”
Epic Charter Schools audit prompted call for probe
The department came under scrutiny in October after the Oklahoma State Auditor and Inspector’s Office reported Epic, a virtual charter school system, had chronically overspent on administrative costs, with little accountability from the entities tasked with holding Epic in check.
Epic disputed nearly all of the state auditor’s report and denies any intentional wrongdoing.
“I deeply appreciate Governor Stitt for his confidence in the findings of the Epic Schools audit report released last year,” State Auditor and Inspector Cindy Byrd said in a statement. “It is clear Epic’s founders were able to take millions of dollars by manipulating the schools’ administrative costs reported to (the state Education Department).”
Epic cut all ties in May with its co-founders, Ben Harris and David Chaney. The school system terminated its contract with Harris and Chaney’s company, Epic Youth Services, which managed and profited from the virtual charter school since its inception.
Auditors reported Epic wrongfully altered its annual financial reports to the state Education Department to hide that it had spent more than the state-mandated cap on administrative costs. No public school with more than 1,500 students can spend more than 5% of its funds on administration.
Epic officials frequently entered financial reports at the last minute before critical deadlines and refused to answer follow-up questions, Hofmeister said after the audit released last year.
Byrd noted Epic was similarly uncooperative throughout the auditing process, an allegation the school system denies.
Planned audit has dual purposes, officials say
State education officials raised concerns in 2016 and early 2017 that Epic’s financial records were intentionally inaccurate. Regardless, the state accepted the virtual charter school’s annual reports “at face value” year after year, according to the audit report.
“A process to verify the reported information did not exist,” auditors wrote.
The audit of the Education Department has two primary objectives, Byrd said.
The first is to identify all sources of revenue flowing into the agency, including federal and state funds. It would determine whether revenues were allocated and spent lawfully.
The second objective is to ensure the agency and Oklahoma school districts are complying with financial reporting requirements and that state officials are providing “timely accountability.”
“In the end, the intended purpose of this audit is to ensure per pupil spending and education funding is making it to the classroom,” Byrd said.
Not the first time governor and state superintendent have butted heads
The governor’s audit request comes at a time when Stitt and Hofmeister have been at odds over COVID-19 policies and mask wearing in schools.
Hofmeister has been a vocal supporter of school mask mandates while Stitt signed a law to block such requirements for students and teachers.
When questioned by lawmakers last year, Hofmeister said a small team of employees in the Education Department are responsible for managing millions of data points coming in through the Oklahoma Cost Accounting System, which schools use to report financial transactions.
To discourage districts from making last-minute changes to their reports, the state Education Department now imposes penalties on any that alter their submissions after Sept. 1. Final deadlines to submit financial records arrive closer to the end of the calendar year.
“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 said during a meeting with the House Common Education committee Oct. 21.
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.