April 21, 2021

John Thompson: More Oklahoma Charter School Scandals

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John Thompson keeps a close eye on Oklahoma education shenanigans, which means he has a lot to do these days.

As the Oklahoma charter school scandals keep expanding, they provide a case study in the political dangers traditional public schools face as extreme charter advocates attack schools struggling with the COVID pandemic. Each week brings new headlines about some Market-driven charter activists, and their devotion to the law of the jungle. Others are propelled by self-righteousness, denigrating the sincerity of anyone who disagrees with them. But these attacks also show that the choice zealots’ tactics could backfire, putting their competition-driven reform experiment in jeopardy.

It is hard to tell these intertwined stories without a frustrating amount of detail, but a cartoonby Mike Allen in NonDoc.com seems to illustrate a crucial dynamic. The Oklahoma City Public Schools (OKCPS) is portrayed as a coach holding a ball which is labeled “audit.” Three players are identified as charter schools; one being Epic, the biggest target which has been accused of the greatest malfeasance, and another charter, Seeworth, which was closed due to a financial scandal, and the third being Santa Fe South, which had previously seemed to be above the political fray. The portrayal of Santa Fe South as a part of the same team, which has played fast and loose with the rules, and is threatened by an audit, foreshadows the following narrative.

In Oklahoma, the latest twist in the state’s biggest, most drawn-out scheme by Epic Charter Schools is that the State issued a new $10.5 million fine. This follows an $11.2 million fine that Epic has not paid.

The Statewide Virtual Charter School Board has scheduled a contract termination hearing for Epic One-on-One for May12-13 but now it looks like both sides could come to an agreement first. This follows years of  investigations by the Oklahoma State Bureau of Investigative, the once-feeble state education accountability agencies, and an investigative audit of Epic  which documented the school’s failure to “meet standards of fiscal management and violating state law, including by blending public funds between the two distinct school districts and failure by Epic’s board to review and approve transactions.”

As NonDoc’s Megan Pratherreported, Epic has not allowed state auditors access to records of the for-profit charter’s learning fund, which provides “a credit of at least $1,000 the school gives each student to spend on technology, curriculum and extracurricular activities, like dance or horseback riding lessons,” but that is likely to change. After receiving “more than $79 million in state appropriations between 2015 and 2020,” the Epic Board now proposes a settlement which would make all future learning fund records public – starting July 1. It also offers to abide by some other common sense regulations.

Before moving on the next set of headlines, two points should be remembered. First, Epic’s assistant superintendent of finance said of the offer, “This will also require that all revenue and expenditure records for the public bank account be maintained by the district according to the rules and regulations for public school district funds as stated by the Oklahoma State Department of Education.” (That’s already the norm for traditional public schools.)

Second, as State Impact’s Robby Korth reported, “In a video presentation to the Oklahoma State School Boards Association, [State auditor] Byrd said a second part to the audit was coming.”

As these blockbuster developments sink in, the State Department of Education (SDE) moved forward in hearings on Sovereign Community School. Despite the recommendation by SDE attorney Brad Clark to terminate its charter authorization, the State Board of Education (SBE) voted to keep the charter school open under probation; Sovereign’s charter authorization will be revisited in June.

The state authorized Sovereign Community School in 2018 after the Oklahoma City Public Schools twice rejected it. Although the OKCPS had long been committed to positive relationships with charters, the board rejected the application because it lacked details on its proposed facility and other plans, was missing budget information, and lacked sufficient standards for its leadership. It had a goal of 500 students, but its current enrollment is just over 100 students.

In 2020, the Sovereign received a $700,000 loan from Santa Fe South Development Inc. (SFS Dev.), an Oklahoma City-based property acquisition entity. As State Impact reported, “if Sovereign can’t repay its debts, the property in the school will be turned over to Santa Fe South, but it remains unclear whether the contract is executable because it wasn’t signed. Sovereign representatives say they plan to repay it.”

It has been reported that the state also has questions about a recent $300,000 loan and over $400,000 in management fees. Questions by the SDE and the SBE often were not answered in a timely or complete and (apparently) accurate manner. The SDE’s Clark also noted Santa Fe South “spends less than half of its annual state funds on instruction.”

Clark explained that the charter has failed to adhere to its contract, has issued delayed and inaccurate reports, and failed to comply with the Open Meetings Act. Clark concluded, “The finances the entire time have been based on hopes that have never come to reality. Now we’re trying to run the school based on loans.”

Perhaps the most important part of Clark’s presentation was his analysis of the no-interest loan provided by SFS Dev., and its relationship with Santa Fe South charter schools. He explained that the “same leaders [were] on both sides of the transactions.” As the Oklahoman’s Nuria Martinez-Keel explained, he “described the nonprofit as a ‘pass-through entity’ designed to move school dollars,” which raised questions about the propriety of the loans.  Martinez-Keel reported, “Santa Fe South Development Corp. reported $4.85 million in revenue and $4.6 million in expenses in 2019, public records show. Nearly all of its revenue comes from Santa Fe South schools.”

The Oklahoman further explained that Christopher Brewster “is both the superintendent of Santa Fe South and the president of the nonprofit.” Moreover, he “is also the president of the Oklahoma Public Charter School Association, which reached a landmark lawsuit settlement last month with the Oklahoma State Board of Education.” The agreement, which has prompted more than 100 districts to contact law firms, “would allow charter schools access to local tax revenue, an income stream previously reserved for traditional school districts.”

Given the longstanding concerns about the school’s previous audits, the OKCPS, which sponsors Santa Fe South’s charter, was prompted by the SDE presentation to request “the State Auditor and Inspector to conduct a special audit of Santa Fe South Charter School for fiscal year [2018-2019 and 2019-2020] and any other years deemed necessary for compliance with statutes, rules, policies and internal control procedures.”

So, Brewster’s actions are producing comparisons between his charter’s relationship with its SFS Dev., and Epic charter’s relationships with its learning fund! Moreover, as the SDE explains, they raise concerns regarding “the lending of money by Santa Fe South to an insolvent Sovereign and when loan documents were requested, they were only provided months later.”

And Brewster refuses to try to explain either the statutory or constitutional basis for the claims by his own charter and nonprofit entity about the transfer of state money, or the Oklahoma Public Charter School Association’s attempt to divert funds to charters.

How did Brewster, who is the head of the charter, its nonprofit entity, and the charter association which pushed the dubious “resolution” that would increase state funding of charters, respond to these questions?

On Twitter, when asked for a legal citation in support of the change in the formula without legislative action, Brewster made statements such as, “We believe it is clear that the Oklahoma charter school act directs that we receive these funds for the children we serve,” and “We obviously have legal counsel that sees things differently or we would never have proceeded. We sought relief through the SDE, legislature and finally through the courts. Separate and unequal isn’t acceptable.”

He repeatedly responded with insults, saying that his opponents have “entitled elitism,”  and that the call for an audit by the OKCPS was a “sneak attack” and “a cowardly attempt to undermine the good work of SFS.” When challenged, Brewster would reply that his opponents have “revealed the true character of many folks who say they love kids. I think they love their institutions more,” or “A lot of true colors being revealed today by those who oppose equal funding for all Public School kids. Come on out of the woodwork and just admit that you think only your kids deserve to have their best interests considered by public officials.”

Then, Brewster participated in the Fordham Institute’s Education Gadfly Show podcast which gave him an opportunity to provide a statutory or constitutional rationale for using a resolution by the State Board of Education to change the law and require local funding for charters. He said that their first try in 2017 was defeated by “political intrigue,” implying the OKCPS’ and Tulsa Public Schools’ intervention was to blame. But, Brewster then said that their resolution tactic brought the issue to a head, allowing for a solution by law, or by politics. The panel agreed that lawsuits can help get politics unstuck. Optimism was then voiced in regard to a legislative effort to direct Cannibus tax revenue to charters. Again, no legal argument was made.

My first response is that Oklahoma is part of the Wild West of medical marijuana, but I wonder how the practices of the charter entrepreneurs would compare with the Cannibus industry’s; would marijuana entrepreneurs be better able to obey education laws and regulations? So, maybe Brewster has stumbled across a Market-driven solution. Why not let marijuana dealers take over the school choice process, and let them administer charters?

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