Edkey Set to Fully Collaborate in Response to Today’s A.G. Complaint from Watchdog

A leading charter school watchdog announced plans to file another complaint with the Attorney General against Edkey, a significant and troubled charter school system in Arizona, primarily serving Maricopa.

Jim Hall, a researcher at Arizonans for Charter School Accountability, intends to submit the complaint to Attorney General Kris Mayes in Phoenix today. His findings suggest discrepancies in enrollment numbers reported by Edkey to bondholders and state oversight groups.

According to a January 23 securities filing, Edkey claimed an enrollment of 6,042 students across its 31 schools. In contrast, the Arizona Department of Education’s figures showed 404 fewer students. This inconsistency raises concerns about potential financial misconduct.

With state aid at $8,500 per student, the apparent inflation in numbers could represent an excess of $3.4 million in funding. Edkey currently operates three schools in Maricopa, educating 687 students.

Hall’s complaint highlights a troubling pattern, stating, “This is not the first time Edkey has submitted false enrollment data to bondholders.” He alleges that last year, Edkey overstated its enrollment figures by a staggering 8,797 students.

“They are in violation of their contract with the Arizona State Board of Charter Schools by providing false information,” Hall asserts. The discrepancy in average daily membership has contributed to significant financial strain on Edkey, hindering its ability to manage $8 million in bond interest payments.

Edkey’s COO, Yovhane Metcalfe, indicated that she had not reviewed the complaint but assured cooperation with the Attorney General’s office if required.

This complaint is not the first scrutiny Edkey has faced. In April 2021, the Arizona Attorney General’s Office began an investigation into Edkey and its connection to Prenda, a “microschool” company based in Mesa.

Edkey was ultimately cleared in that investigation, with both the Arizona Charter Board and the Attorney General’s office giving Prenda a clean bill of health. However, following the passage of the Universal Empowerment Scholarship Account, which allows direct state funding to microschool parents, Edkey’s enrollment has significantly dropped.

September 2023 saw a 42% enrollment decline, losing 3,200 online students who had been enrolled in Prenda. On August 14, 2023, Edkey reported an enrollment of 4,057, but only 1,084 students showed up for classes.

Critics alleged that Edkey profited $12 million from its partnership with Prenda without providing educational services, subsequently engaging in extensive financial commitments that backfired. “Edkey’s ability to make its bond payments and even to stay in business is in serious question,” Hall added, citing the reliance on questionable practices.

Hall, who has closely monitored Edkey’s issues, remarked on the visibility of mismanagement during a recent investors’ conference call. “The entire corporate board is responsible for their financial disaster,” he concluded, emphasizing the need for bondholders to be aware of the ongoing challenges.