OKLAHOMA CITY — An audit that examined how the state spent more than $14 billion in federal grant funds, says the state misspent millions of dollars that were earmarked to help children learn at home during the pandemic.
Released last Tuesday by State Auditor and Inspector Cindy Byrd, the Federal Single Audit covers the 2021 fiscal year. Byrd said the annual audit is federally required.
She said her review of how the state spent federal money showed several problems including millions misspent in the Governor’s Emergency Education Relief Fund – a fund that was designed to give state governors money to fund educational programs during the COVID-19 pandemic.
Oklahoma received $39 million in federal funds through the program.
Shortly after the audit’s release, Oklahoma Attorney General Gentner Drummond issued a media statement which said he was deeply troubled by the audit’s findings.
“The audit report is deeply troubling and illustrates the need for an investigative audit of GEER funds, which I requested shortly after taking office,” Drummond said. “A number of concerning items from the audit will require further investigation. I refuse to tolerate what amounts to a pervasive culture of waste, mismanagement and apparent fraud.”
Byrd’s audit raised questions about how the state spent $1.8 million for the Bridge the Gap program and how it spent $6.5 million for the State in School program.
The Bridge the Gap program had a budget of $8 million, Byrd said, which was earmarked to help low-income families purchase education supplies, online curriculum, technology, and tutoring. About 5,000 state families received $1,500 each to spend.
But the state, she said, did not place any restrictions or parameters on which items families could purchase.
“Proper system controls were offered by the digital wallet vendor to limit the families’ purchases to education-related items, but those controls were declined by the individual placed in charge of the BTG program,” Byrd wrote in a media statement accompanying the audit. “We found that $1.7 million was spent on various non-educational items such as kitchen appliances, power tools, furniture, and entertainment.”
Almost 20% of the program’s total purchases were for items not related to educational learning as specified by the grant’s guidelines, she said. The cause for those errors, Byrd said, was the state’s failure to administer the program.
She audit pointed to the State School Superintendent Ryan Walters, though Walters was not named in the document. Prior to his election as state school chief, Walters served as executive director for Every Kid Counts Oklahoma, a nonprofit that advocates for school choice. Though Walters served as Gov. Kevin Stitt’s education secretary, Byrd’s office was unable to document a contract that authorized Every Kid Counts Oklahoma to oversee the federal program.
“The State was also responsible for ensuring third parties complied with all grant regulations and objectives. The State was not allowed to relinquish those duties to any other entity yet that is what occurred,” Byrd said. “The State of Oklahoma also neglected to monitor and file the proper federal compliance reports for the GEER funds.”
A story published by the online media outlet Oklahoma Watch, reported that “Walters had issued a ‘blanket approval’ for purchases of all items available on the ClassWallet (the vendor for Bridge the Gap) after the company gave him a chance to restrict which items could be purchased.”
A third program, State in School, had a budget of $10 million to assist low-income families cover their portion of tuition for private schools. The program was designed to assist about 1,500 students, allowing their families to quality for up to $6,500 per student.
Byrd said her audit “uncovered 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.”
“It was also determined that awards were provided to 1,073 students whose family attested that they had not suffered an economic hardship due to the pandemic. Sixty-five percent of the total budget, $6.5 million worth of grant funds, were identified as questionable because the grant objectives were disregarded. As a result, 657 students of low-income families who qualified for the SIS program did not get the financial assistance they requested because the funds were exhausted,” the audit reported.
Of the $6.5 million in question, $1.8 million was paid to private schools in excess of the families’ tuition responsibility. SAI has reported $6.5 million dollars in questioned costs.
Along with concerns about federal education grants, the audit also criticized the way the state spent funds for coronavirus aid and the state’s Emergency Rental Assistance program.
“State agencies, counties and cities were required to submit reimbursements of expenditures to the State of Oklahoma; however, the State did not obtain sufficient documentation to ensure the payments were made for COVID-related expenditures and did not ensure that the goods and/or services were received prior to payment,” Byrd’s statement said. “Because of this, SAI has reported $12.2 million dollars in questioned costs.”
The rental assistance program received more than $376 million to help households unable to pay for rent or utilities during the pandemic. And though the average household award was about $2,000, the state failed to “properly oversee expenditures of this programs and allowed an OKC foundation that was administrating the program to charge a management fee in addition to the actual ERA program administrative expenditures – effectively doubled the amount charged for administrative costs,” Byrd said.
Legislative leaders responded tersely to the report.
“As elected officials, our first duty is to represent our constituents and be good stewards of their hard-earned money. The findings in the report show a pattern of irresponsible spending and questionable decision making that was not in the best interest of the Oklahoma taxpayer,” House Speaker Charles McCall (R-Atoka) said in a media statement. “The Legislature was excluded from the appropriation process for these funds. The decisions on how and where to spend them was made unilaterally by the Executive Branch, resulting in little oversight and the documented misuses of taxpayer money.”
Oklahoma Senate Minority Leader Kay Floyd (D-Oklahoma City) said the corruption, fraud and abuse revealed in the auditor’s report betrays public trust. “It is especially alarming the funds in question were intended to provide pandemic relief. Oklahomans desperately needed help to navigate the upheaval of COVID-19, and those state leaders failed them. Oklahomans deserve better,” Floyd said.