UPDATE: This story has been updated to include a statement from Edkey regarding the student headcount, or average daily membership.

A prominent charter school watchdog tells us he will file another complaint with the Attorney General against one of the largest and most embattled charter school systems in the state, Edkey, which serves Maricopa.  

Jim Hall, researcher for Arizonans for Charter School Accountability, shared the complaint with InMaricopa. He said he will file it with Attorney General Kris Mayes, Democrat of Arizona, in Phoenix today. 

In the complaint, Hall analyzed the figures presented to bondholders and state oversight groups and found a discrepancy between the numbers. In a Jan. 23 securities filing, Edkey reported enrolling 6,042 students across its 31 schools. To the Arizona Department of Education, Edkey reported 404 fewer students enrolled during the same time.  

State aid for each student is $8,500. The allegedly inflated numbers would amount to an extra $3.4 million.  

In Maricopa, Edkey manages Sequoia Pathway, Sequoia Pathway Secondary and Pathway Academy. Six-hundred-eighty-seven Maricopa students are currently being educated in Edkey schools.  

“This is not the first time EdKey has submitted false enrollment data to bond holders,” said Hall in the complaint. He alleges Edkey inflated its enrollment numbers by a total of 8,797 students last year.  

“EdKey is in violation of their contract with [Arizona State Board of Charter Schools] by providing false information to the SEC and bondholders. The reduction in ADM [average daily membership, a.k.a. enrollment] created a financial crisis at EdKey, as they were significantly overextended and unable to sustain $8 million bond interest payments. 

“Like all public schools in Arizona, student funding at EdKey is based on Average Daily Membership, or ADM, which is calculated by the AZ Department of Education,” said Lorna Romero Ferguson, a public relations representative for Edkey. “One enrolled student could equal 0.5 ADM if that student was enrolled for only half of the year. Also, the calculation for an online student is different from those attending a brick and mortar school. Because of these various calculations depending on the unique situation of each student, it is not uncommon for ADM to differ from headcount.”

“All cash flow statements filed have been accurate, transparent, and have shown the State Equalization payments based on ADM numbers in addition to requested information about enrollment,” said Ferguson.

Hall disagrees.

“EdKey provided false information to coverup their weak financial position, in violation of their charter contract and SEC regulations,” said Hall in the complaint.  

Edkey COO Yovhane Metcalfe said she had not seen the complaint late this afternoon. “We will fully cooperate with the Attorney General’s office if that time comes,” she told InMaricopa. 

Hall’s complaint would not mark the first time the Attorney General investigated Edkey.  

In April 2021, the Arizona Attorney General’s Office launched an investigation into Edkey and its relationship to the Mesa-based “microschool” company Prenda. Under the agreement, Prenda and Edkey would split the then-$8,000-per-student taxpayer fee and filter students to a less-regulated microschool curriculum with “guides” instead of teachers.  

Edkey was cleared in the investigation. 

“Our partnership with regulated, licensed education institutions was recently reviewed by the Arizona Charter Board and the Arizona Attorney General’s office,” Prenda said in a statement to InMaricopa. “We were happy to cooperate with these inquiries, as they represented an opportunity for Prenda to demonstrate how seriously we take our responsibilities to the communities in which we live, learn and work. We are likewise happy to report that both the Charter Board and the Attorney General gave us a clean bill of health and we look forward to continuing our working relationships with both.”  

The following year, however, Arizona passed the Universal Empowerment Scholarship Account, allowing microschool parents to collect $7,000 from the state directly. In September 2023, Edkey’s enrollment had dropped 42% compared to that month in 2022, losing 3,200 online students who had been enrolled at Prenda.  

On Aug. 14, 2023, Edkey reported enrollment was 4,057, but only 1,084 students actually showed up.  

At the time, the AZCSA alleged Edkey earned $12 million from the Prenda partnership “while Edkey provided no curriculum or instruction to the students.” Then, the corporation “went on a $136 million shopping spree,” anticipating the Prenda money would keep flowing as it built a new school in Buckeye and bought Caurus Academy in Anthem.  

It did not.  

“Edkey’s ability to make its bond payments and even to stay in business is in serious question after relying on fraudulence practices that put millions into their pockets while providing no educational services to thousands of homeschooled students,” Hall said.  

Hall has followed the issues surrounding Edkey, including this most recent string of lawsuits filed by creditors.  

“After sitting in on [the Jan. 23] investors conference call, I think it is important for bondholders to know the scale of mismanagement at Edkey,” Hall reacted last month. “We have followed EdKey’s mismanagement for years and the entire corporate board, not just the CEO and CFO, are responsible for their financial disaster.”