To improve its board oversight, the state’s largest online school has turned to a businessman who founded the state’s first rural charter school.
Paul Campbell was named chairman of Community Strategies, Epic Charter Schools’ governing board, May 26 as part of the school’s response to a critical investigative audit and a report from the multicounty grand jury urging the public to demand more accountability.
Campbell, chief executive officer of Spartan Energy Services, also chairs The Academy of Seminole’s board, giving him the unusual position of simultaneous oversight of two school systems at once. The Academy of Seminole is an early college school with 300 students. Epic Charter enrolled about 55,000 students last year and received more state funding than any other school.
Campbell replaced Doug Scott, a Tulsa attorney who has known Epic cofounders David Chaney and Ben Harris since he was a child. Scott served on the board since the school’s first year in 2011.
That completes a full board turnover. None of the members serving during the years examined by the state Auditor and Inspector remain.
New board members join during a time of heightened scrutiny. Auditors were highly critical of Epic board’s lax oversight of Epic Youth Services, the company which managed the school and collected millions of dollars for the school’s co-founders, Chaney and Harris. The grand jury report called the entities’ relationship “incestuous” and “ripe for fraud.”
In his first action as board chair, Campbell and the board cut all ties with the company.
In a termination agreement, Epic Youth Services agreed to hand over control of the school by June 30 — including the learning fund, a separate account used to pay for extracurricular activities and educational items chosen by each family. The school agreed to pay the company for remaining learning fund orders minus about $10.9 million in penalties the school owes the state Department of Education.
“It’s a big day for Epic Charter Schools and a big shift in our strategy,” Campbell said, noting the change will save the school tens of millions of dollars and improve its technology.
In tapping Campbell, Epic is drawing on his experience in Seminole. The Academy of Seminole just finished its third school year and celebrated its first graduating class; 17 received diplomas, and more than half have earned or are on track to complete their associates degree this year, school superintendent Wren Hawthorn said.
But the school’s financial picture has not lived up to expectations set in 2017 when it became the first charter school sponsored by the state Board of Education after its proposal was twice rejected by the Seminole Public Schools board.
Like a typical charter school proposal, the plan was to marry public and private funds to operate the school. The Academy of Seminole received $600,000 in federal start-up money and $325,000 from the Walton Family Foundation, according to a story in The Hechinger Report.
Additional funding was supposed to come from Advance Rural Education, a nonprofit Campbell formed in 2016, to supplement the school’s state aid. At the time, Campbell was CEO of Enviro Systems, a Seminole-based aerospace company.
The school’s proposal to the state Board of Education included $1 million across 3 years from Advance Rural Education, but the nonprofit only raised a total of $145,000 between 2016 and 2019. Nearly all was in 2017, with $100,000 from a single contributor, records show.
“Finances got so bad last year,” Sheldon McCoy, who was on the Academy of Seminole board when the school took out a $400,000 “nonpayable warrant,” which is similar to a loan, said.
“When I left the school board I was in deep fear I was going to have to do that again and I just didn’t not want to put my name on that,” McCoy said.
The school also had shifted money from activity funds to cover general expenses several times, records show. It’s not unusual for schools to cover expenses with fund transfers or nonpayable warrants, particularly when they expect funds through a property tax payment or reimbursement from the federal government, according to Shawn Hime, executive director of the Oklahoma State School Boards Association.
Last year, the Academy qualified for $226,900 through the Paycheck Protection Program, a federal COVID-19 relief effort to help companies cover payroll during the pandemic. The funds start as loans but are forgiven in most instances.
Campbell said once the Paycheck Protection Program loan is forgiven, the school will be debt-free. “That’s pretty incredible for a school only in its third year,” he said, adding that he views the school’s finances as “a success story.”
McCoy, though, blames some of the financial issues on the school’s attempts to grow too fast.
Student growth is another area where the school strayed from its original proposal. Like most new charter schools, the Academy of Seminole was expected to add grades gradually.
It proposed serving just juniors and seniors in its first year and adding a few grades each year until reaching pre-K through 12 grades in its fourth year.
The school did open in 2017-18 as planned, enrolling 29 juniors and seniors, state Education Department data shows. For year two, the school opened up all grades and enrolled 283 students — 10 times as many students as the year before.
“It was almost frightening to think how big we were getting,” Dillon Robinson, an Academy of Seminole board member, said. He said the school was responding to demand from the community in opening up more quickly, and with that came an added expense.
Robinson didn’t worry about the bank loan or the fund transfers. “We knew we were going to see the light at the end of the tunnel,” he said.
School founders proposed locating the high school on the Seminole State College campus as part of its emphasis on having those students earn college credit. That arrangement only lasted one year. The school is now located in a former National Guard building. But the emphasis on concurrent enrollment continues.
Campbell explained that the school’s growth necessitated the loan, which was paid in full once its state aid was adjusted midyear.
“This was all done transparently and with approval from our board, our school accountant and in an open meeting,” he said.
Campbell said he will push for more transparency at Epic in his new role.
“It feels like a daunting task and I definitely feel up for it,” he said after being named chair.
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