House of Representatives

Dills Studies Charter School Management Organizations, Sponsors

10/5/2021 2:17:00 PM

OKLAHOMA CITY – Rep. Sheila Dills, R-Tulsa, on Monday held interim studies on charter school education management organizations (EMOs) and sponsors before the House Common Education Committee.


“Over the past few years, a significant amount of attention has been given to the structure of Oklahoma’s public charter schools and the amount of taxpayer money they expend to education management organizations and sponsors that help them provide oversight and accountability,” Dills said. “We need to better understand the transparency under which these entities operate as well as ensure taxpayers are paying a fair market value for the services received.”


Public charter schools operate with greater flexibility than traditional schools under state law in exchange for greater accountability requirements. It’s those requirements that Dills said she and other lawmakers must ensure are being upheld. She said the information received during Monday's studies is invaluable as she works to draft legislation going forward.


Charter school reform, particularly involving for-profit EMOs, is something Dills has been interested in since taking office. She's run several pieces of legislation to increase transparency and accountability of how public charter schools expend taxpayer dollars. She said she's in favor of school choice options for students and families, but its important to be good stewards of public funding.


Brad Clark from the Oklahoma State Department of Education (OSDE) spoke during the morning study on Monday. He explained how Dills’ legislation, House Bill 1395, passed and signed into law in 2019, has created greater oversight and increased transparency.


Prior to 2019, the state did not have a way to capture the amount of taxpayer funding going to an EMO, he explained. The law change required the amounts being paid as well as a breakdown of all expenditures through the Oklahoma Cost Accounting System (OCAS). The owners of EMOs also now must make certain disclosures in public meetings.


For the morning study, Dills invited representatives from Oklahoma Virtual Charter Academy, Oklahoma Connections Academy, Insight School of Oklahoma, E-School Virtual Charter Academy and Epic Charter Schools to explain the structure of their schools and their relationships with their EMOs.


Presenters said EMOs often function similar to central administrative offices in traditional districts,  handling legal, financial and academic reporting services, and sometimes providing curriculum or learning materials for students. Each presenter also gave information on the types of students served, student performance and graduation rates.


Dills asked each presenter questions including what percentage of funds appropriated to the school are paid to the EMO, their position on the competitive bidding process, how often students meet with teachers in person, and others.


Most of the schools said they were against competitive bidding for their management companies. State Auditor Cindy Byrd, however, cautioned that without competitive bidding, the schools cannot ensure they are receiving fair-market value for the goods and services received. She also said nonprofit charter schools must be very careful in this area to ensure they meet IRS requirements, otherwise board members could be held personally responsible.


The presenter that perhaps received the most attention during the morning study was Paul Campbell, the new chairman of Epic Charter Schools. He spoke about Epic’s break in May with their EMO, Epic Youth Services (EYS), characterizing the group as the bad guys who conned taxpayers out of millions and gaslit legislators.


A scathing state audit last year faulted the school for its lack of transparency, infrequency of the board meetings and its intertwined relationship with its EMO.


Campbell said the school now has new board members who are meeting regularly in public and have had better training than the previous board. They are no longer using EMOs.


Byrd told lawmakers that EMOs can be very helpful to charter schools as they get established, but the best scenario would be for charters to hire their own staff to manage daily administrative tasks once they're up and running.


In the afternoon study, which focused on charter school sponsors, Byrd challenged lawmakers to ask themselves what they wanted – a robust sponsor that provides oversight and service in all areas of need such as financial and academic performance, or services that are scattered across different entities. She said the state expends a large amount of money on sponsors and it could perhaps be put to better use.


Rose State College is the sponsor of Epic Blended Charter Schools and has brought in about $1 million in management fees over the past three to four years. The college faced great scrutiny after the audit of Epic.


Travis Hurst with Rose State explained the steps the college has taken to ensure they have better communication and transparency of financial and academic information going forward and spelled out the school’s duties as a sponsor.


Dills said, “I’m delighted to hear you are making some positive changes, but the dormancy Rose State exhibited after the audit results of one of your charter schools is very alarming.”


Rebecca Wilkinson, Executive Director of Statewide Virtual Charter School Board, showed the exponential growth of virtual charter schools – going from 7,000 enrolled in 2015 to 40,000 in 2021 with funding going from $34 million to almost $228 million in the same time period. She said virtual charter schools do need to improve performance, but this is true for all schools.


She too spoke about working as a sponsor for Epic and the difficulty in trying to track records tied to the school’s much-questioned Learning Fund.


Rebecca Budd, Chief of High-Performance Systems & Operation at OSDE and a former board member for Oklahoma City Public Schools, said good sponsors earn their fees by providing financial guidance to comply with audits or curriculum advisement to comply with state standards, for example. Passive sponsors, however, can hurt students, and there are bad authorizers.


Officials from Oklahoma City and Tulsa Public Schools also spoke in the afternoon study explaining their processes for how they sponsor charter schools and answering questions about student performance.