Grand jury investigation uncovers mismanagement, waste in pandemic education relief funds

OKLAHOMA CITY (KFOR) — The Oklahoma Attorney General's Office says a Multi-County Grand Jury's investigation uncovered "significant mismanagement and misspending" of millions of dollars in the pandemic relief funds for education.

The grand jury's investigation into the Governor's Emergency Educational Relief fund was requested by Attorney General Gentner Drummond soon after Governor Kevin Stitt's lawsuit against Florida-based vendor ClassWallet was dismissed in January 2023.

Drummond says that ClassWallet was not responsible for the mismanagement of funds, and called the lawsuit a "smokescreen for negligent state actors."

The AG's Office adds that while no instances of criminal action nor willful corruption were found, the grand jury described the handling of grant money as “irresponsible, disappointing, and indefensible.”

As part of several initiatives using GEER funds the Governor's office received for pandemic relief, Stitt awarded $8 million to Bridge the Gap to provide grants to low-income families for education materials, and another $10 million to Stay in School with offers tuition assistance for low-income private school students.

BTG was reportedly lead by the executive director of school-choice nonprofit Every Kid Counts Oklahoma, who gave ClassWallet "blanket approval" when asked what items could be purchased by families with the grant funds. The executive director of EKCO at that time was current State Superintendent Ryan Walters.

State auditors estimate about $1.7 million in BTG funds went to more than 39,000 purchases of non-education-related items such as doorbell cameras, smartwatches, refrigerators, Xbox systems and even Christmas trees.

Additionally, the investigation found that SIS paid $1.8 million to private schools that had not charged students tuition or charged significantly discounted rates. SIS also allegedly gave over $5.3 million in grants to families who reported they were not experiencing pandemic-related hardships.

The grand jury concluded that the mismanaged GEER funds were a result of state officials delegating authority to private individuals who were not knowledgeable about managing federal funding.

The grand jury offered several recommendations including the following:

• The State should establish mandatory and ongoing training requirements in federal grant management for any agency receiving at least $10 million annually in federal funding.
• State agencies or offices receiving more than $10 million annually should be required to promulgate written rules or adopt written internal policies establishing appropriate federal grant management guidance.
• The State should establish a training program for elected officials, agency and department heads, and others that encompass procurement and purchasing standards; competitive bidding requirements; identification and resolution of conflicts of interest, recordkeeping and retention requirements; the implementation of internal controls; and recognizing and preventing fraud and mismanagement.
• A state agency receiving federal grant money should ensure that its use is overseen by personnel with sufficient training and experience in federal grant management.

The grand jury's full report can be found here.

The Oklahoma State Department of Education sent News 4 the following statement when asked for Walters' reaction to the grand jury's findings.

Superintendent Walters has prioritized carefully and efficiently using taxpayer funds. Unfortunately in this case, the vendor involved did not adhere to the same standards.

Superintendent Walters's deep commitment to fiscal responsibility and taxpayer accountability has been borne out during his time as Secretary and now as State Superintendent. Under his leadership, OSDE has instituted the highest standards to ensure the most efficient use of taxpayer money possible.

Dan Isett, Communications Director for OSDE

Governor Stitt's office also sent a statement on Tuesday afternoon.

As said at the start of this report, no criminal activity or willful corruption occurred. The state trusted a vendor, that vendor failed to do its job. The AG has weaponized a grand jury to sign off on a press statement his office prepared. Ultimately, this was an inappropriate and unlawful use of a grand jury, all to pursue a headline in the attorney general’s campaign for governor. Oklahomans can see right through this weaponization of the law.

Abegail Cave, Communications Director for the Oklahoma Governor's Office

Several Oklahoma House Democrats reacted to the report later on Tuesday afternoon.

This report highlights what happens when those in power choose not to hold themselves accountable to hard working taxpayers. Knowing there is a severe lack of training on management of public funds and consequences for mismanagement of public funds in state statute, the State Superintendent and Governor were emboldened to misuse money meant to help Oklahoma public schools. Improper management of finances is completely avoidable, and as leaders in our state, it was the responsibility of the State Superintendent and Governor to put mechanisms in place for accuracy, accountability, and transparency when spending public taxpayer money. They continue to fail our teachers, students, and families – and this multi-county grand jury report couldn’t be clearer on that.

House Democratic Leader Cyndi Munson, D-Oklahoma City

After four years of asking for an investigation into the abuse of GEER funds, today we learned that the officials charged with transparent disbursement of these dollars disregarded internal controls designed to prevent corruption. We learned that whether or not Oklahomans got access to GEER dollars may have been based on registered political party and voting district rather than established qualifications. I struggle to understand how indifference to state internal controls and federal guidelines is not willful negligence. Corruption comes in many forms. This doesn't pass the smell test.

Representative Melissa Provenzano, D-Tulsa

“Oklahoma is responsible for these funds regardless of indictment charges,” said Representative Trish Ranson, D-Stillwater. “We must hold those who mishandled these tax dollars accountable.”

“These were taxpayer dollars,” said Representative Suzanne Schreiber, D-Tulsa. “Superintendent Walters' failure to care for and manage them in service to the education of Oklahoma’s kids is harmful to us all. As public servants, we owe the public so much better than this.”

“I was frustrated but not surprised by this news,” said Representative Annie Menz, D-Norman. “State Superintendent Ryan Walters is willfully and gleefully burning through millions in taxpayer dollars because he thinks people aren’t paying attention. We are. And every voter in Oklahoma deserves to know who is holding him accountable before they head to the polls next month.”