Millions in federal relief money meant to help Oklahoma students during the pandemic was misspent at the hand of special interest groups who gave preferential treatment to private schoolers while hundreds of needy children missed out on financial aid, a state audit has found.
The Stay in School program provided tuition assistance of up to $6,500 for private school students whose families were financially affected by the pandemic.
An audit released Tuesday also confirmed flaws in how the state handled the Bridge the Gap Digital Wallet pandemic relief program. A joint investigation by The Frontier and Oklahoma Watch last year revealed how families spent hundreds of thousands of dollars in Bridge the Gap money on video game consoles, Christmas trees and grills.
Both programs were funded through the Governor’s Emergency Education Relief Fund, a pot of flexible federal money intended to give governors the power to fund educational programs during the pandemic.
Gov. Kevin Stitt’s office was awarded $39 million through the federal program.
Stitt’s spokeswoman, Kate Vesper, issued a statement after the audit was released, blaming the company ClassWallet, which ran the digital platform that dispensed Bridge the Gap funds.
“During the COVID pandemic, Governor Stitt had a duty to get federal relief funds to students and families in Oklahoma as quickly as possible and he responsibly accomplished just that,” Vesper said. “The state maintains its position that a negligent out-of-state vendor should be held accountable to recover the federal taxpayer dollars in question, and the auditor’s report further supports this is what ought to happen.”
But the state auditor placed blame for most of the question costs on the “State of Oklahoma’s failure to administer the program,” and not outside vendors.
Before he was elected State Superintendent last year, Ryan Walters oversaw the implementation of the pandemic programs funded with federal relief money while he was executive director of the pro-school reform nonprofit Every Kid Counts Oklahoma and after Stitt appointed him Secretary of Education in September 2020. State auditors were unable to find any contract authorizing Every Kid Counts Oklahoma to oversee the programs.
E-mail records obtained by Oklahoma Watch and The Frontier show Walters issued a “blanket approval” for purchases of all vendor items available on the ClassWallet platform, after the company gave him a chance to restrict which items could be purchased.
Justin Holcomb, a spokesman for Walters, declined to answer The Frontier’s questions about how relief funds were managed and also blamed private contractors for the problems.
State Auditor and Inspector Cindy Byrd’s audit found $1.8 million in questioned costs for the Bridge the Gap Program and $6.5 million for the Stay in School program. The report found programs were overseen by individuals and private organizations who were unqualified, didn’t have contracts with the state authorizing them to perform the work and were granted access to confidential student records.
The audit found that almost 20% of purchases through the Bridge the Gap program were spent on non-educational items, against grant guidelines.
According to Byrd’s report, administrators of the Stay in School program were involved in a “deliberate operation to give selected private schools and individuals preferential treatment by allowing early access for application submission prior to the date this program was offered to the general public.”
Jennifer Carter, a prominent school choice advocate and president of Libertas Consulting LLC was named as an administrator for the Stay in School program administrator without entering into a contract with the state, the audit found.
Carter is a senior advisor for former U.S. Education Secretary Betsy Devos’s education privatization organization Federation for Children, served as chief of staff and campaign manager for former State Superintendent Janet Barresi and has been involved in multiple school-choice efforts in Oklahoma. ClassWallet also listed Carter as a district administrator.
With Carter’s direction, five, unnamed private schools were given preferential treatment for the Stay in School program, the audit found.
Stay in School program administrators allowed the five schools to hold an open house to accept applications before the forms were made available to the general public.
Students from the preferred schools were awarded the maximum $6,500 per-student and received enrollment exceptions for children who had not previously attended, the audit found.
After funds ran dry, 657 students of low-income families who qualified for the Stay in School program did not get the financial assistance. More than $5.3 million went to families who said they did not have a pandemic-related financial hardship. The audit also found private schools received $1.8 million in excess of families’ tuition responsibilities.
In a statement to The Frontier, Carter said the American Federation for Children did not bill the state for its work on the program.
“As the nation’s leading voice for education freedom, AFC was happy to offer advice to the state around the implementation of the Governor’s Stay in School Fund GEER program,” Carter said. “The Stay in School Fund, which was aimed at minimizing students’ education disruption during COVID, served almost 1900 kids with tuition assistance. We gladly provided this service at no expense to taxpayers.
In nearly 87% of cases reviewed by the audit, auditors were unable to confirm that the private schools were charging the state what parents would have been charged for tuition. An unnamed program administrator for the Stay in School program received some inquiries from private schools asking if they could bill for the program’s maximum per-student amount of $6,500, even if it was more than the tuition parents owed.
“The State of Oklahoma dropped the ball on compliance and oversight,” Byrd said in a statement Tuesday accompanying the audit.
“This was a tangled web of government agencies, non-profit organizations, and non-government individuals representing special interest groups managing millions of tax dollars with no contracts and no written agreements,” Byrd said. “Sadly, millions of tax dollars were misspent because certain individuals who were put in charge of managing these programs seemingly ignored federal grant guidelines.”
The audit also found that Oklahoma neglected to monitor and file the proper federal compliance reports for the federal relief money. The state hired a consulting firm only after the federal government issued a warning in June 2021 about Oklahoma’s lack of monitoring and reporting. The state paid the consulting firm $325,000, but the contractor has not fulfilled its duties to monitor and report on the educational relief money, the audit found.
Oklahoma Attorney General Gentner Drummond on Tuesday described the state auditor’s report as “deeply troubling.”
“A number of concerning items from the audit will require further investigation,” Drummond said. “I refuse to tolerate what amounts to a pervasive culture of waste, mismanagement and apparent fraud.”