Former Attorney General John O’Connor filed the lawsuit in August, alleging Florida-based Kleo, the parent company of ClassWallet, failed to properly monitor the funds. 

Gentner Drummond, who defeated O’Connor in the GOP primary and took office Jan. 9, said he will now focus on whether any individuals or state officials should be held accountable for the role in what he called an “egregious misuse of tax dollars.”

“It is clear that a number of state actors and other individuals are ultimately responsible for millions in misspent federal relief dollars,” Drummond said in a written statement announcing the dismissal. 

The dismissal marks a change of course in the state’s investigation into misspending under the federal COVID-19 relief program. More than half a million in aid dollars meant for children’s education was spent on TVs, grills, furniture, Christmas trees and hundreds of other non-educational items, an investigation by Oklahoma Watch and The Frontier revealed. 

State officials hired ClassWallet in 2020 to distribute $17.3 million in federal Governor’s Emergency Educational Relief funds, a program also known as GEER. ClassWallet provided services for two programs: Stay in School, which offered up to $6,500 in tuition assistance to private school families, and Bridge the Gap Digital Wallet, which provided $1,500 grants to low-income families to buy educational materials. 

Oklahoma paid ClassWallet $650,000 from its GEER allotment. 

After misspent funds came to light, the state blamed ClassWallet for allowing parents to use their platform to buy items “not directly tied to education.” Records show the state could have limited what parents could buy, and instead gave “blanket approval” to all items from approved vendors, such as Office Depot and Staples.

Oklahoma’s attorneys never served ClassWallet, which means the company didn’t have an opportunity to respond in court — leading some critics to question whether the lawsuit was an honest attempt to recoup the funds. 

A spokeswoman for Gov. Kevin Stitt responded to the lawsuit’s dismissal with this emailed statement: 

“The governor’s office strongly disagrees with the decision to dismiss the state’s legitimate effort to recover federal taxpayer dollars from a bad out-of-state vendor,” said Kate Vesper, a spokeswoman for Stitt. 

ClassWallet, through a spokesman, said it was gratified the state dismissed the lawsuit.

Before he was elected state superintendent of public instruction, Ryan Walters helped ClassWallet secure the contract and made key decisions about the programs as secretary of education and as executive director of Every Kid Counts Oklahoma, according to an investigation by Oklahoma Watch and The Frontier published in May. Every Kid Counts Oklahoma was the public face of the Bridge the Gap program.

Former secretary of education Michael Rogers and Brent Bushey, executive director of the Oklahoma Public School Resource Center, an Oklahoma City not for profit, were also key to setting up the programs.  

A watchdog agency in July recommended the U.S. Department of Education claw back at least $650,000 in misspent funds and require the state to review an additional $5.5 million in purchases, according to a federal audit. 

Oklahoma returned $2.9 million in unspent GEER dollars to the federal government, at least some of which was reallocated to the state Education Department. 

The U.S. Department of Education is working with Oklahoma officials to resolve the findings from the audit and strengthen its oversight of federal grants, said Roy Loewenstein, press secretary for oversight at the U.S. Department of Education. Few details have been provided, but Oklahoma Watch has learned the state followed up with GEER recipients.  

Last week, the Office of Management and Enterprise Services emailed families about purchases they made with GEER funding. The email, provided to Oklahoma Watch, asks: “What was the particular purpose surrounding your purchases during the pandemic?” And “were you homeschooling your children, or were they still in school?”

Additional detail about the state’s handling of GEER funds is expected in an annual review of all federal funds by the state auditor and inspector. That report is expected to be released between March and July.

The post Oklahoma Watch: Oklahoma Attorney General says vendor not to blame for misspent education relief funds appeared first on The Frontier.

Nearly $18 million in federal coronavirus relief dollars for education has been in Gov. Kevin Stitt’s hands since January 2021 but has yet to be spent to help Oklahoma students recover from the pandemic. 

An effort to select projects has stalled while state officials work with federal agencies to stay in compliance. The state’s handling of an earlier allocation drew scrutiny from federal watchdogs. 

Even if projects are announced soon, the deadline for awardees to spend all funds is Sept. 30, 2023.

The U.S. Department of Education placed conditions on how Oklahoma could dole out its second allocation worth $17.7 million due to state officials’ lack of communication with federal monitors and inability to account for the nearly $40 million received under the Governor’s Emergency Education Relief (GEER) Fund in 2020. The department has not provided Oklahoma Watch and The Frontier details on those conditions. 

State officials in December solicited ideas to spend the money through an email addressed to “education stakeholders.” 

Organizations that submitted ideas have waited months for a response. It’s already too late to start the projects for the fall semester. One project to give teachers classroom grants was completed anyway by the state Education Department, without the governor’s funds. 

If the $17.7 million for Oklahoma is not spent by next fall, the funds will have to be returned to the U.S. Department of Education. GEER 2 comes from the Coronavirus Response and Relief Supplemental Appropriations Act, Congress’ second round of pandemic relief aid. The fund’s purpose is to provide emergency assistance to students and families through school districts, colleges and universities and other education-related organizations.

Governors had one year from receiving the funds to allocate to K-12 districts or other education organizations or set up grant programs. That deadline came and went without any public announcement.

A federal audit issued last month found Oklahoma failed to follow program rules and properly oversee its first GEER allocation. The $8 million Bridge the Gap Digital Wallet program lacked oversight and safeguards against fraud, allowing parents to purchase miscellaneous items like furniture and televisions when funds were supposed to provide learning materials for students. 

Now, state officials are awaiting feedback from federal agencies to ensure the process of awarding GEER 2 funds remains in compliance with federal regulations, said Caden Cleveland, a spokesman for the Office of Management and Enterprise Services. Oklahoma is still within the expected timeframe parameters set by the federal government for the obligation of GEER 2 dollars, he said.

State Chief Operating Officer Steven Harpe led the committee tasked with evaluating Oklahoma’s proposals and coming up with a plan for the funds, according to the email. Harpe declined an interview for this story. 

Cleveland said Harpe and others in his office are working with federal agencies on an audit of the GEER funds and the results “will largely dictate next steps of GEER 2 for our state.”

Other committee members included Amanda Rodriguez, who was at the time the state chief financial officer, and Ryan Walters, Oklahoma’s secretary of education. 

Walters was instrumental in creating the programs funded by the first round of GEER dollars. Walters is running for state superintendent and will face off against Shawnee Public Schools Superintendent April Grace in the Aug. 23 runoff.

Missed Opportunities

Governors are supposed to award the funds to the entities “most significantly impacted by coronavirus” and make criteria used in those decisions publicly available. 

In an effort to collect ideas for the $17.7 million, state officials sent an email to members of the media and others who have signed up to receive emails from the Office of Management and Enterprise Services. 

It didn’t go out directly to the groups most closely connected to education: the state Department of Education, Oklahoma State School Boards Association, Oklahoma Education Association, Professional Oklahoma Educators or the Cooperative Council for Oklahoma School Administration, according to a list of recipients.

Harpe wrote in the email that submissions were due Dec. 20, 2021 to allow the committee to review the proposals; final approval would be completed “no later than Jan. 31, 2022.”  

Committee members said they would prioritize ideas that provided direct relief to students and families disproportionately impacted by COVID-19 or addressed the teacher shortage, teacher retention, scaling best practices, and learning loss. 

Nineteen project proposals were provided to Oklahoma Watch and The Frontier under an Open Records Act request. 

The state Education Department submitted three total; one project proposed giving classroom teachers grants of $1,000 each through DonorsChoose, an online crowdfunding platform. The department said it would like to use $3 million from the governor’s funds combined with $3 million of its own funds and a possible match from donors for a total of $9 million.

DonorsChoose submitted its own proposal for $5 million in GEER 2 funding.

After the state’s approval deadline passed with no response, the Education Department went forward with a DonorsChoose project on its own in February, awarding more than 7,500 teachers grants of up to $800 each. 

Within hours, one in five Oklahoma teachers had asked for grants from the DonorsChoose project, underscoring the need for classroom funding.

The Education Department distributed $6 million in three days, a national record for DonorsChoose, the organization said.

“Oklahoma teachers submitted almost 8,000 DonorsChoose projects in just the first day. This is an uptake rate we’ve never seen before in the history of DonorsChoose,”  DonorsChoose founder Charles Best said in a press release. 

One teacher used the funds to purchase headphones for her students to use during classroom computer time; another bought math manipulatives for pre-K students. 

A Look at Some Proposals

Programs in other states are underway using these relief dollars, providing grants to career and technical centers, classroom grants for teachers, and providing support services to students with severe cognitive disabilities. 

Oklahoma is one of 11 states that hasn’t reported spending GEER 2 funds as of June 30, according to the U.S. Department of Education’s ESF Transparency Portal. 

Many of the ideas would address critical education needs in the state. 

The Oklahoma Department of Education proposed two other projects, in addition to the classroom grants. One would use $1.7 million to develop a micro credential program for educators and another would expend $2 million on a virtual coaching and mentoring program for new teachers.

Other organizations proposed using the funds to expand broadband to rural students, pay and hire special education teachers at a school for students with autism and purchase online learning products. 

Boys and Girls Clubs of Oklahoma City proposed remodeling a building in Capitol Hill for students to use after school. 

Oklahoma Christian University asked for $2 million to award scholarships to students in its paraprofessional to teacher degree program. 

Scissortail Community Development Corporation proposed using the entire $17.7 million to give private school scholarships to low-income and minority students and students with disabilities — similar to the governor’s Stay in School program funded with $10 million from the first GEER award.

Federal Auditors’ Findings

The fallout from Stitt’s handling of the first round of funding under GEER has continued.

On Tuesday, a state lawmaker filed a lawsuit against OMES, alleging the state has refused to provide him details on the GEER expenditures. Rep. Logan Phillips, R-Mounds, states in the lawsuit, filed in Oklahoma County District Court, that he submitted a request for the information under the Oklahoma Open Records Act in May to Stitt and Walters and “no response was ever received.”

According to an email provided by the governor’s office, Stitt’s legal department replied to Phillips a week later, stating “our office does not possess responsive records” and referred him to Harpe. OMES says its staff tried to set up a meeting with Phillips but he didn’t show up.

In a federal audit issued in July, auditors recommended clawing back $650,000 and requiring Oklahoma to review another $5.5 million in purchases in the Digital Wallet program to determine if additional funds were misspent. 

Digital Wallet provided $1,500 grants to low-income families for educational supplies, but a lack of controls and oversight allowed purchases of TVs, home appliances, gaming consoles, and many other items not for student learning, as first revealed in an investigation by Oklahoma Watch and The Frontier. 

ClassWallet, a Florida company, managed Digital Wallet and the Stay in School fund. The state on Aug. 5 filed a lawsuit against the company, alleging they breached their contract. But the auditors found it was the state’s responsibility to monitor the funds, and state officials had access to ClassWallet’s platform and spending information but no one from Oklahoma checked it until the program was nearly over. 

State officials have agreed to make several changes in its processes of awarding grants in response to the audit, including using a rubric to award funds in line with the intended purpose, and better monitoring and oversight of grant recipients, as well as improved management of funds. 

Kate Vesper, Stitt’s press secretary, said the state is working diligently to follow the federal agencies’ recommendations and should be able to award projects in time. “We are in compliance with the timeframe parameters set by the federal government,” she said.

The post Why Governor Stitt’s second round of education relief funding remains unspent appeared first on The Frontier.

The state of Oklahoma filed a lawsuit Friday seeking to recoup money from a contractor it hired to distribute emergency federal education funds during the COVID-19 pandemic.

The lawsuit names the state’s Office of Management and Enterprise Services as well as the state’s Office of Educational Quality and Accountability as plaintiffs against the former vendor, Florida-based Kleo Inc., the parent company of ClassWallet.

Oklahoma officials hired ClassWallet in August 2020 to distribute $17.3 million in federal Governor’s Emergency Educational Relief funds.

ClassWallet managed two aid programs for Oklahoma: The Stay in School grant, which provided up to $6,500 in tuition assistance to parents of private school students affected by the pandemic, and Bridge the Gap Digital Wallet, which provided $1,500 grants to low-income families to buy educational materials.

For its services, Oklahoma paid ClassWallet a $650,000 cut of the federal educational relief money.

A joint investigation by Oklahoma Watch and The Frontier in May found that hundreds of thousands of dollars from the Bridge the Gap program went toward non-educational items such as smartphones, televisions, video game consoles, Christmas trees and barbeque grills, among other items.

As the program kicked off, parents had questions about whether there were restrictions on what they could buy. Secretary of Education Ryan Walters, a Republican candidate for state superintendent of public instruction, gave a representative from ClassWallet blanket approval for any items on ClassWallet’s online platform, emails obtained by the news outlets revealed.

A watchdog agency recommended the U.S. Department of Education claw back at least $650,000 in misspent funds and require Oklahoma to review an additional $5.5 million in purchases, according to a federal audit report released July 18. Auditors also found the state failed to follow federal guidelines for four of Gov. Kevin Stitt’s five educational relief programs.  

Records obtained by The Frontier and Oklahoma Watch show that state officials, including the governor’s office, Office of Management and Enterprise Services and the state Attorney General’s Office were aware of problems with the programs and that federal investigators had been examining how they were administered since early 2021.

The records also show that Walters, executive director of the nonprofit organization Every Kid Counts Oklahoma, was instrumental in helping ClassWallet secure a no-bid contract with the state even before he was appointed as Secretary of Education in September 2020. ClassWallet operates similar programs in other states.

The state claimed in the lawsuit that ClassWallet failed to preserve records verifying student eligibility for the Stay in School grant program and did not follow guidelines for allowed purchases in the Bridge the Gap program or submit required monitoring reports to the U.S. Department of Education.

The state is seeking more than $150,000 on claims of breach of contract and fraud, and is asking the court to rule that the company was legally responsible to monitor and submit reports on how the money was spent.

The question of who was responsible for tracking the money has been a point of contention between ClassWallet and the state. Federal auditors and ClassWallet claim the company was only a contractor or vendor, while the Office of Educational Quality and Accountability was a subrecipient for the relief money. The Stitt administration sent the money to the Office of Educational Quality and Accountability, which then cut ClassWallet a check.

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United States Department of Education auditors recommended clawing back more than $650,000 in misspent federal coronavirus relief funds from Gov. Kevin Stitt and reviewing an additional $5.5 million in purchases, according to a federal audit released Tuesday.

The questioned spending came from Stitt’s Bridge the Gap Digital Wallet program, which gave $1,500 grants to low-income families for educational purchases like computers and school supplies during the pandemic. 

Auditors pinpointed questionable expenditures like arcade games, Christmas trees, smart watches, sofas, televisions and refrigerators totaling $652,720. The extraneous items made up more than 10% of all purchases. The $5.5 million is the total of purchases the auditors did not analyze and could contain unauthorized items.

The tally of noneducational items families purchased with program funds was higher than previously reported in a joint investigation The Frontier and Oklahoma Watch published in May.

Auditors also found Oklahoma failed to follow federal guidelines for four of Stitt’s five educational relief programs, the report shows. 

State officials gave the Florida-based company ClassWallet a no-bid contract to administer the Bridge the Gap Digital Wallet program and distribute grants to families.

The auditors also found poor record keeping for another relief program managed by ClassWallet called Stay in School. The program distributed tuition grants for up to $6,500 to students already attending private schools during the pandemic. 

Oklahoma could not provide supporting documentation that students who received grants were actually enrolled and registered at private schools, according to the audit.

Kate Vesper, a spokeswoman for the governor, said Tuesday that the state started an internal audit of Oklahoma’s educational relief funds several months ago. 

“Governor Stitt has called for more audits than any other governor in our state’s history and is proactive in monitoring and ensuring appropriate use of Oklahoma taxpayer dollars,” she said. “His commitment to transparency and accountability is no different here.”   

But the state has refused to release a review of the program by a private contractor. 

Oklahoma responded by placing blame on ClassWallet, saying the company assured there would be no fraud. But the state said it would take steps to improve its monitoring of federal grants.

According to the audit, Oklahoma said that it was working in a ”high-pressure environment” due to the effects of COVID and that it acted in good faith to “ensure funds associated with Bridge the Gap initiative were properly expended when it contracted with ClassWallet.”

But the auditors say the state cannot just pass blame to ClassWallet.

Oklahoma did not say it would return the funds or review for any other unallowable Bridge the Gap expenditures, auditors wrote.

“As the recipient of the GEER grant funds, Oklahoma was responsible for ensuring that its grant funds were used properly,” auditors said.

The Frontier and Oklahoma Watch reported in May the state had returned $2.9 million in unused educational relief funds to the U.S. Department of Education. The audit revealed the funds were returned to the U.S. Department of Education and reallocated in May 2021 to the Oklahoma Department of Education to be distributed to public schools for summer school programs. 

Oklahoma did not utilize ClassWallet’s monitoring capabilities

State officials claim it was ClassWallet’s responsibility to oversee the relief money and have threatened to sue the company. 

Secretary of Education Ryan Walters, who is now a candidate for state superintendent, claimed during a debate in June that he discovered that ClassWallet hadn’t upheld its end of the contract and that he’s working to hold the company accountable. But emails show that Walters worked to secure ClassWallet the state contract even before Stitt named him Secretary of Education in September of 2020.

Under the contract, ClassWallet gave the state access to a system to view reports and summaries of purchases, but it wasn’t until February 2021 — a month after the program ended  — that the former director of statewide operations for Oklahoma accessed the information, and they only did so once, the audit said. 

The auditors found that “​​Oklahoma did not use all available controls in ClassWallet’s digital wallet system” to monitor how grant money was spent. 

Walters granted “blanket approval” to purchases made from pre-approved vendors on the ClassWallet platform, which included Office Depot and, for a short time, Home Depot. Walters was executive director of the nonprofit organization Every Kid Counts Oklahoma and not a state official when he approved the purchases. 

Oklahoma’s ‘Stay in School’ program also lacked proper oversight 

For the Stay in School program, auditors were unable to verify eligibility for eight of 10 randomly selected students.

Students who attended eligible private schools could receive tuition assistance through the program. But ClassWallet subcontracted the eligibility verification to a separate company that automatically deletes emails after 90 days.  

Auditors recommend Oklahoma review the eligibility of all participants, or at least a larger sample. 

In December 2020, Stitt issued a report about the Stay in School program, citing it as evidence that private schools aren’t just for the wealthy.

“Gov. Kevin Stitt’s Stay in School Fund program proves the strong desire of Oklahoma parents from all income levels and all locations for school choice, proves the state can provide needy families a quality education for an average of as little as $5,132 per child, and proves that private schools across Oklahoma will gladly accept children from the lower rungs of the economic ladder.”

Parents who received grants said they were grateful for the financial assistance during the pandemic. One parent said that without the grant money, her daughter would have had to leave her parochial school in Oklahoma City for her last year of junior high.

“Her mental health suffered a lot during the pandemic. That has been the case for so many kids and the comeback has been slow. She missed out on … many cherished events. I cannot imagine what she would have gone through had she had to leave her school, too,” the parent wrote. She asked not to be named out of concern for her daughter’s privacy. 

For Stay in School, Bridge the Gap Digital Wallet, and two other educational relief programs, called Learn Anywhere Oklahoma and Skills to Rebuild, the state couldn’t show auditors evidence that relief money went to organizations “most significantly impacted by the coronavirus or deemed essential for carrying out emergency educational services,” as required by the program. 

The one program that did meet federal guidelines was an incentive grant program managed by the state Department of Education. Stitt used $8 million to match the department’s $8 million, for a total of $16 million distributed for internet connectivity, mental health support, and other initiatives.

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House Democrats on Wednesday called on the governor to ask for Secretary of Education Ryan Walters’ resignation after an investigation by Oklahoma Watch and The Frontier found misspent federal relief funds intended to help students during the coronavirus pandemic. 

The $8-million Bridge the Gap Digital Wallet program used federal coronavirus relief funds to distribute $1,500-grants to families. The grants were supposed to be used to purchase school supplies and laptops, but hundreds bought TVs, gaming consoles, home appliances and other items, Oklahoma Watch and The Frontier found. 

“We’re not here today to ask for Ryan Walters’ resignation. We’re here today to ask why the governor has not,” Rep. Andy Fugate, D-Del City, said at a press conference Wednesday. 

Gov. Kevin Stitt named Walters as Secretary of Education in September 2020. Walters is also executive director of the nonprofit Every Kid Counts Oklahoma and is running for state superintendent. 

Another Stitt appointee, Jerry Winchester, resigned as executive director of the Oklahoma Department of Tourism and Recreation in April after allegations of inappropriate spending on a contract with Swadley’s Foggy Bottom Kitchen restaurants at state parks. 

Fugate said corruption and a lack of transparency has been a recurring theme with Stitt’s administration. “This week, it’s the governor’s school voucher pilot program. Before that, it was Swadley’s. Unaccountable and misspent CARES funding. The laundry list is long,” he said. 

Reps. Jacob Rosecrants, D-Norman; Trish Ranson, D-Stillwater; and John Waldron, D-Tulsa also attended the press conference.

Stitt has no plans to ask for Walters’ resignation, Carly Atchison, a spokeswoman for the governor’s office, said in an email. 

“Secretary Walters is doing a great job fighting for parents’ right to be in charge of their child’s education and advocating for funding students, not government-controlled systems,” she wrote. 

Walters could not be reached for comment. 

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Oklahoma is keeping secret a review of a pandemic relief program where some families spent money intended for school supplies on video game consoles and barbecue smokers.

State officials have repeatedly denied Oklahoma Watch and The Frontier’s requests over the past month to release a state monitor’s report on how Oklahoma used federal relief funds, claiming the document is not a public record.  

Kathryn Gardner, an attorney for the Reporters Committee for Freedom of the Press, who is advising the news organizations, said the state has not provided a legitimate reason to keep the report a secret or delay its release. 

“Oklahomans foot the bill for the preparation of this report,” Gardner said, “They should know what it says, especially since it concerns the expenditure of millions of taxpayers dollars meant to support the public education system during the COVID-19 pandemic.”

An investigation by Oklahoma Watch and The Frontier found the Stitt administration’s Bridge the Gap Digital Wallet program lacked adequate oversight, resulting in nearly half a million dollars in questionable purchases including TVs, smartwatches, home appliances and exercise equipment. The program, funded with $8 million from the Governor’s Emergency Education Relief fund, was intended to give low-income families money for educational expenses as many students moved to remote learning during the pandemic. 

The U.S. Department of Education’s Office of the Inspector General has also opened its own inquiry into how the state used federal funds for those programs. 

Read more: Stitt gave families $8 Million for school supplies in the pandemic; They bought Christmas trees, gaming consoles and hundreds of TVs

In April 2020, Oklahoma hired a firm owned by former state budget director Jill Geiger to monitor the state’s spending of federal pandemic relief funds. The Office of Management and Enterprise Services gave Jill Geiger Consulting LLC a $325,000 no-bid contract to examine whether the state had adequate internal controls and to ensure relief funds were used appropriately.

Geiger said in a brief interview with Oklahoma Watch and The Frontier in March that she completed the reports, including one on the Bridge the Gap Digital Wallet program, and turned them over to the state in late December or early January. 

In response to an open records request, the Office of Management and Enterprise Services provided Oklahoma Watch and The Frontier with three monitoring reports by Geiger on other Governor’s Emergency Educational Relief fund programs but refused to release one on Bridge the Gap Digital Wallet. 

The monitoring reports Geiger conducted are a requirement for the federal grants, and those reports include information about entities that received and distributed relief money and how those funds were spent to ensure they were used appropriately under federal law. 

But Stitt spokeswoman Carly Atchison claimed Thursday in a statement to Oklahoma Watch and The Frontier that the state had instead prepared the Bridge the Gap report for a potential lawsuit against the for-profit company that oversaw the relief program, making it exempt from the Oklahoma Open Records Act. The governor’s office also claims Geiger submitted the document in “draft” form “to determine if further work is necessary” and that the report is not yet complete.

“This information is unequivocally exempted from disclosure under the Open Records Act,” Atchison said. “Because the report you have requested here is covered under these exceptions (and likely others), the draft report will not be—and should not be—released.”

Gardner said the report is a public record, even in draft form. 

State officials have provided Oklahoma Watch and The Frontier with different reasons for  refusing to release the report over the past month.

The Office of Management and Enterprise Services, in its denial, cited an Open Records Act exemption that allows public officials to keep confidential “personal notes and personally created material.” Caden Cleveland, a spokesman for the agency, also said in a May 2 email that the Bridge the Gap report was not finalized but would be “released without delay” once it was complete. 

Before Stitt named him Secretary of Education in September 2020, Ryan Walters helped the Florida company ClassWallet secure a no-bid state contract to administer the Bridge the Gap Digital Wallet program. As first reported by Oklahoma Watch and The Frontier, parents were able to purchase many items of questionable educational value with federal relief money through the ClassWallet platform. Emails show that Walters granted parents “blanket approval” to purchase items from ClassWallet vendors. 

“I am proud of Governor Stitt’s efforts to distribute emergency relief funds as quickly as possible directly to parents who need it most for their child’s education,” Walters said in a statement released Wednesday. “I firmly stand behind the Governor’s actions to hold ClassWallet accountable for failing to fulfill its contractual and legal obligations to the state.”

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Just get the money to families. That was the driving force behind Gov. Kevin Stitt’s plan for $18 million in U.S. Department of Education relief dollars intended to help students during the coronavirus pandemic.

Other states used federal money to train new teachers or support programs for deaf and blind students. But in Oklahoma, a history teacher with political ambitions helped a Florida tech company win a no-bid state contract to rapidly distribute $8 million to families with little government oversight. Another $10 million went to private school vouchers. 

With few guardrails, some families used Oklahoma’s share of federal Governor’s Emergency Education Relief Funds to buy Christmas trees, gaming consoles, electric fireplaces and outdoor grills, an investigation by Oklahoma Watch and The Frontier has found. 

Months later the teacher, Ryan Walters, was on a national stage as Stitt’s new Secretary of Education, calling the effort a success. 

Oklahoma’s contract with the Florida-based software company ClassWallet allowed families to quickly purchase educational supplies online through grants funded with federal relief money through the Bridge the Gap Digital Wallet program. At a virtual conference for a national school reform group in 2020, Walters touted the Bridge the Gap program as a model for how to start a school voucher program with “minimum staffing requirements and maximum quality control.”

“We didn’t have the government agency personnel with the background experience to do this and, quite frankly, we felt like there could be a more efficient way to do this outside our government agencies,” Walters said. 

From the start, the strategy led to a lack of oversight on purchases, possibly violating the terms of the federal grant and state purchasing requirements, according to federal regulators.

While most parents spent the money on educational supplies, Oklahoma Watch and The Frontier found nearly half a million dollars in questionable purchases. The news organizations found at least 548 TVs purchased through ClassWallet worth $191,000. 

Families also bought pressure washers, car stereo equipment, coffee makers, exercise gear and smart watches. 

ClassWallet blamed the state for the lack of scrutiny over purchases. 

“As a software contractor, ClassWallet had neither responsibility for, nor authority to exercise programmatic decision making with respect to the program or its associated federal funds and did not have responsibility for grant compliance,” company spokesman Henry Feintuch said in a statement. 

Oklahoma ultimately returned $2.9 million in unspent relief money to the federal government intended to support students and teachers. ClassWallet ended the Bridge the Gap program one day early after federal investigators and attorneys for the state discovered the company was operating on an expired contract with almost no government supervision.  

Federal auditors are now investigating how the Stitt administration awarded the ClassWallet contract and distributed relief money, but the report has yet to be released.

A U.S. Department of Education review of Bridge the Gap and the private school voucher program, Stay in School, found that Oklahoma implemented few safeguards to prevent fraud or abuse. Records obtained by Oklahoma Watch and The Frontier show the state placed no limits on what items families could purchase from vendors.

Stitt’s spokeswoman, Carly Atchison, declined to schedule an interview with the governor and refused to answer written questions from Oklahoma Watch and The Frontier about how his administration handled the relief money.  

“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 accomplished just that,” Atchison said in a written statement. 

Opportunity in crisis

Federal money from the Governor’s Emergency Education Relief Fund was intended to support students from kindergarten through college as schools transitioned to distance learning during the pandemic. Congress gave state governors the power to send the relief dollars to public or private schools and other education-related entities as part of the Coronavirus Aid, Relief and Economic Security Act in 2020. The law gave states broad discretion over how to spend the money.

For Stitt, the relief funds offered a chance to lay the foundation for a larger-scale effort to get state education money directly to parents in the form of school vouchers.

Walters saw the money as a way to create a successful model.

“That’s what we’re looking at. That’s what we’re trying to do,” Walters said during the ClassWallet-sponsored panel. “We really hope that is in the cards.”

Several states already use ClassWallet to administer school voucher programs. The company saw revenue triple during the pandemic.

Even before Stitt named Walters Secretary of Education in September 2020, Walters had worked to secure the contract with ClassWallet, according to emails obtained by Oklahoma Watch and The Frontier.

Walters advised then-secretary of State and Education Mike Rogers on how to spend the governor’s pandemic funds and arranged a July 2020 meeting with the CEO Of ClassWallet.

Walters declined multiple interview requests for this story. Rogers declined an interview and did not respond to written questions.

Some states solicited proposals and public feedback on how to spend relief funds. But in Oklahoma, only a “small group of people” decided how to spend the money and award sole-source contracts, federal regulators would later write.

As schools were set to reopen In August 2020, Stitt’s Chief Information Officer Jerry Moore waived state competitive bidding requirements to award ClassWallet a contract to distribute $18 million in federal relief money through grants to families for educational supplies and vouchers for private schools. ClassWallet received a $650,000 cut of the relief money to run the programs.

State law allowed Moore to waive competitive bidding requirements “in the best interest of the State to respond quickly to the effect Covid-19 was having on the state’s education system,” Caden Cleveland, a spokesman for the Office of Management and Enterprise Services said in a statement to Oklahoma Watch and The Frontier. 

A federal rule prohibited states from giving money directly to parents or students. 

But states could get around the ban by awarding the funds to an eligible entity “that provides services to students,” which could then distribute money to parents and students.

Publicly, the Stitt administration said the educational nonprofit Every Kid Counts Oklahoma would manage the Bridge the Gap program. The organization was less than six months old at the time. Walters served as its executive director.

Yet none of the federal relief money passed through Every Kid Counts before it was parsed out to parents in small grants to spend through the ClassWallet platform, the nonprofit said in a statement. 

Instead, the Oklahoma Office of Educational Quality and Accountability, a state agency that oversees teacher certification, sent ClassWallet a paper check for $17.35 million (the program amount, minus ClassWallet’s fee) via certified mail in August 2020.

A unilateral decision

The Office of Educational Quality and Accountability had no experience handling federal grants before the Stitt administration tasked it with distributing millions in relief money. 

Dan Craig, who was the agency’s executive director at the time, said Rogers asked him to sign the contract with ClassWallet. He said in an interview with Oklahoma Watch and The Frontier that he thought the money was simply supposed to pass through his agency to ClassWallet and the company would oversee the rest.

Craig, who left the office in 2021 to be superintendent of Kingfisher Public Schools, was soon fielding questions from federal monitors about how the state was tracking family purchases.

By fall 2020, ClassWallet still had about 1,000 Bridge the Gap grants to distribute and the end of the company’s contract with the state was looming. More time was needed to get all of the money out.

Stitt raised the income cap and extended the deadline so more families could apply. ClassWallet continued to distribute federal relief money to families even after its contract with the state expired on Dec. 30, 2020, records show. 

The Oklahoma Public School Resource Center, a charter school advocate, had a contract to provide help desk services for the Bridge the Gap program. The nonprofit made $2,137 from the arragment. Emails and other records show Oklahoma Public School Resource Center Executive Director Brent Bushey, who was not a state employee and did not have authority to negotiate on behalf of the state, was also involved in talks about extending ClassWallet’s contract.

In November 2020, Walters told Rosenberg over the phone to extend the contract to March 31, 2021. Bushey, who was also on the call, followed up with an email confirming that spending deadlines were extended for the Bridge the Gap and the Stay in School programs, email records show.

But emails show that while ClassWallet officials thought the company’s contract had been extended, state officials never signed a written extension, nor did Walters inform the people working on the program at Craig’s agency of the contract extension.

In an interview with Oklahoma Watch and The Frontier, Bushey denied any involvement in contractual talks between ClassWallet and the state and claimed the state authorized the extension.

A “tremendous success” 

Representatives from ClassWallet told state officials that the company prevented fraud by limiting purchases to approved vendors.

But even as some parents purchased dishwashers and car stereo amplifiers, ClassWallet CEO Jamie Rosenberg called the Oklahoma program “incredibly successful.”

“They were literally able to deploy $18 million without having to engage any human capital from the government agency, and for it to be almost hands-free and incredibly, incredibly streamlined,” Rosenberg said at the 2020 panel discussion.

Following weeks of inquiries by The Frontier and Oklahoma Watch about the ClassWallet contract, Stitt’s office released a demand letter sent late Friday afternoon stating that it intends to pursue damages the state “has incurred or will incur as a result of ClassWallet’s failure to comply with it’s contractual and related legal obligations.”

“​​Regrettably, ClassWallet failed to fulfill its contractual and legal obligations to the state and some of our most vulnerable citizens,” Atchison, Stitt’s spokeswoman, said. “Governor Stitt is committed to recouping any misused funds and if ClassWallet refuses to take appropriate action, we will have no option but to file suit in court.”

The letter blames ClassWallet for allowing parents to “utilize ClassWallet’s Fiscal Management and Payment System to expend grant funds for purposes not directly tied to education.”

But records show ClassWallet gave Walters the opportunity to limit what parents could buy.

“We’re getting a few questions about eligible items,” a ClassWallet employee wrote to Walters in an email the day the program went live, prior to Walters being named Secretary of Education. “It’s my understanding that all purchases through any of our vendors (are) allowed …  is there a blanket approval for items so long as they are purchased with the vendors on our platform?” 

“Blanket approval with vendors on your platform,” Walters responded.

Walters’ decision allowed families to make thousands of questionable purchases from approved ClassWallet vendors, including Office Depot and Staples. Parents were also able to buy items from Home Depot, although the retailer was not included on a vendor list ClassWallet provided to the state. 

ClassWallet provided limited customer service support. The company’s contract didn’t outline how it would help families return items purchased through the platform or followup on unused grant funds, federal monitors found. 

Parents flooded the Every Kid Counts Facebook page with complaints and questions. 

Some left messages about shipping mix-ups. Others struggled to exchange items that arrived broken.

Wagoner resident Emanuel Holmes, a father of six, purchased a defective 3D printer from Office Depot through ClassWallet. He tried for months to get a refund through the platform so he could exchange the printer, which he wanted for his high school-aged sons to learn some basic engineering concepts.

The clock was ticking down to the cutoff date to spend the funds: March 31, 2021.

Holmes contacted Office Depot, ClassWallet, Every Kid Counts Oklahoma, the governor’s office, Walters and the Office of Educational Quality and Accountability to get the issue resolved. But the deadline came and went. The money was never credited back to Holmes’ account after Office Depot took back the defective printer.

“I kept trying, telling them March is coming up, March is coming up, we’ve got to get something going with this printer,” he said. 

It seemed like a waste of money that could have gone toward helping his kids learn something new, Holmes said.

On March 30, 2021, Every Kid Counts sent an email to grant recipients, telling them the deadline to spend educational grants had arrived. The program ended one day early. 

Not everyone saw the notice in time. Parents who hadn’t spent the money yet were locked out.

More requests for help from parents poured in.

Jessica Eddings, a mother of five in Yukon, used her Bridge the Gap grant to buy cleaning and learning supplies and craft materials. She reached out to ClassWallet for help when she didn’t receive everything she ordered.  

A ClassWallet representative told her the company had no directions for what to do. Two days later, the same customer service agent told her the program had ended. 

“I just thought I was lucky to get it and that I just missed out,” Eddings said.

On April 5, 2021, Walters asked the Office of Educational Quality and Accountability’s director, Craig, if the families who had funds remaining in their accounts could buy educational supplies and provide receipts to his agency for reimbursement, email records show.

Craig told Walters he didn’t think that would be legal, email records show.

Walters told Craig he was worried about negative media attention and was “trying to get out in front of this.”

The revelations of spending irregularities and potentially mismanaged funds were worrisome to Craig. 

About two weeks after the Bridge the Gap program ended, Craig received an email from the Oklahoma Office of Management Enterprise Services stating that his agency was responsible for ensuring the program was “implemented as intended.” 

Craig forwarded the email to the Oklahoma Attorney General’s Office. “I have some concerns,” he wrote. “Won’t this be hard to do since the contract has ended?” 

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