The state Department of Education will withhold $9.1 million from Epic Charter Schools’ state funding to cover misspending discovered in a 2020 audit.

Board of Education members voted 5-0 to approve the clawback of state funds in its meeting Thursday afternoon. Board member Carlisha Bradley was absent and William Flanagan, who resigned in October, has not yet been replaced.

The funds will be withheld from Epic over the next 12 months and will be distributed to other public schools through the state funding formula.

Last year, the board had ordered Epic, the state’s largest online charter school system, to repay more than $11 million. But the amount owed was reduced after an investigation by the department.

The penalties are for exceeding the state’s 5% cap on administrative expenses, failing to properly classify administrative costs, and for transferring $203,000 to an Epic school in California. State law caps school administrative expenses at 5% to ensure maximum funds go into the classroom.

The penalties were incurred while the school was managed by Epic Youth Services, a for-profit company owned by the school’s co-founders, David Chaney and Ben Harris. Epic’s board severed ties with the company in May.

Epic administrators recently agreed to the amount owed, said Brad Clark, an attorney for the department.

In a Facebook post Thursday, Epic said its former management company is responsible for the penalty, and the school will pursue reimbursement on behalf of the school. “It is our responsibility to right the wrongs that occurred during the tenure of EYS (Epic Youth Services),” the statement reads.

Epic Charter Schools’ budget for its One-on-One and Blended schools combined is about $335.7 million this year, with $252.9 million coming from state coffers. It reported 38,556 students, down from nearly 61,000 last year.

Epic’s governing board is scheduled to meet at 10 a.m. Friday.

Jennifer Palmer has been a reporter with Oklahoma Watch since 2016 and covers education. Contact her at (405) 761-0093 or jpalmer@oklahomawatch.org. Follow her on Twitter @jpalmerOKC

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