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Audit: Oklahoma may have mishandled millions in federal funds

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Kim Jarrett

(The Center Square) - An audit released Tuesday found Oklahoma mishandled millions in federal funds, including $8.3 million administered through the Governor's Emergency Education Relief Fund.

The report identified two problems with GEER funding. One is the $10 million "Stay in School" program, also known as the SIS, according to a press release from State Auditor Cindy Byrd. The audit showed the program gave preferential treatment to private schools and individuals by granting them early access to the applications. This resulted in 1,073 families who did not show they endured hardship during the pandemic receiving funding.

"Sixty-five percent of the total budget, $6.5 million worth of grant funds, were identified as questionable because the grant objectives were disregarded," the audit said. "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 $8 million Bridge The Gap program, also paid for with GEER funds, gave $1,500 to 5,000 families to purchase school-related items. The program was overseen by a private company that was given an $18 million contract that did not go through a competitive bidding process, according to the audit.

"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 said. "We found that $1.7 million was spent on various non-educational items such as kitchen appliances, power tools, furniture, and entertainment."

The federal government asked the state to return $650,000 last year because the money spent did not meet federal guidelines.

"This was a tangled web of government agencies, non-profit organizations, and nongovernment individuals representing special interest groups managing millions of tax dollars with no contracts and no written agreements," Byrd said of the GEER program. "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 questioned $12.2 million in Coronavirus Aid, Relief, and Economic Security Act of 2020 spending. The state used $1.1 billion in fiscal year 2021 to purchase personal protective equipment and assist with other pandemic-related expenses.

"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," the audit said.

The state received $376 million for the Emergency Rental Assistance Program to help individuals with housing costs. An Oklahoma City foundation was given $1.6 million to oversee the program.

"In September of 2022, SAI alerted the State that these management fees were unallowable costs, but the State failed to stop the overcharge of administrative fees to the ERA grant, which has resulted in an additional $8.6 million in unallowable costs as of June 30, 2022," the audit said. "If these processes continue, the total State of Oklahoma ERA program unallowable costs may increase to $15 million by the end of SFY 2023."

Byrd said the state "dropped the ball on compliance and oversight."

"When federal grant money is spent incorrectly, the federal government has the authority to demand repayment from the people of Oklahoma," Byrd said. "If the federal government decides the State must pay back these questioned costs, you and I will end up paying the bill. If that happens, gross mismanagement and lack of compliance and oversight will be to blame."

Attorney General Gentner Drummond called the audit "troubling," and it shows the need for an investigative audit into the handling of GEER funds.

"A number of concerning items from the audit will require further investigation," Gentner said. "I refuse to tolerate what amounts to a pervasive culture of waste, mismanagement and apparent fraud."