A compromise between Epic Charter Schools and one of its authorizers is likely to be finalized next week, avoiding closure of the state’s largest online school system. 

Epic’s governing board on Wednesday approved a settlement deal passed the day before by the Statewide Virtual Charter School Board in a contract dispute over Epic One on One, its statewide online school. It still needs final approval by the statewide board, which is planning to meet Monday. 

The deal avoids two items proposed by the Statewide Virtual Charter School Board’s legal counsel, Marie Schuble, who is advising on the termination proceedings. Both items involve the learning fund, a separate bank account where school dollars totalling $144 million have been managed outside the public purview. 

One item stricken in the compromise would have required the remaining balance in the learning fund account to be returned to Community Strategies, Inc., the nonprofit governing board over Epic Charter Schools, and then transferred to the appropriate school account. It also would have given the Statewide Virtual Charter School Board’s compliance auditor oversight of that process.

By contract, Epic is required to comply fully with any audit by the State Auditor and Inspector’s Office. An investigative audit requested by Gov. Kevin Stitt in 2019 has only partially been completed because Epic’s management company will not provide certain records related to the learning fund. 

The company claims once the funds are transferred to the private company, they are no longer public funds, though they are allocated to purchase learning materials and activities for public school students. 

Schuble’s proposal included a clause that Community Strategies “demand its management company, Epic Youth Services, fully comply with the State Auditor and Inspector’s subpoena and cease withholding information as to the Learning Fund.” 

That phrase is not in the agreement approved Wednesday by Epic One on One’s board.

Instead, Epic has agreed to make the learning fund public and operated by the school starting  July 1. 

For its learning fund, Epic gives each student enrolling before Oct. 1 a $1,000 credit to spend on items including curriculum, laptops or iPad, educational kits or books, and extracurricular activities, like ballet lessons or horseback riding. It’s one of Epic’s most effective recruitment tools. 

Questions have also been raised whether Epic Youth Services could be retaining unspent funds as profit. Epic refutes this and points to a separate audit by a national firm the school hired, which determined Epic Youth Services was underfunded by more than $2.6 million. 

Auditors found instances where money in the learning fund account was being spent for other purposes. At one time, Epic transferred $203,000 from the learning fund account to its Epic school in California. 

An investigation by Oklahoma Watch found at Epic’s California school, more than 70% of learning fund dollars over two years went to homeschool cooperatives, including one offering religious classes. 

In a lawsuit filed in March 2020, the state Auditor and Inspector’s Office asked a judge to force Epic Youth Services to comply with its subpoenas and provide the records. The case hasn’t been resolved. 

Epic’s attorney, Bill Hickman, says in his presentation to the Statewide Virtual Charter School Board that the court will not rule on whether the funds are public or private. 

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