Oklahoma Multicounty Grand Jury Report of Investigation on GEER Funds (Bridge the Gap and Stay in School), October 10, 2024

Summary

The Report of Investigation Findings of the Twentieth Multicounty Grand Jury regarding Oklahoma's implementation of the Governor's Emergency Education Relief (GEER) Funds through the Bridge the Gap (BTG) and Stay in School (SIS) initiatives, dated October 10, 2024, Case No. SCAD-2023-44 and D.C. Case No. GJ-2023-1. The report states that of Oklahoma's $39.9 million GEER Fund award, the Governor allocated $8 million and $10 million to BTG and SIS. The grand jury states that it finds insufficient evidence to establish, beyond a reasonable doubt, that a crime was committed, and does not find willful or corrupt misconduct or willful malfeasance. It describes the handling of the grant money as grossly negligent, and the report ends with numbered recommendations.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

    IN THE SUPREME COURT OF THE STATE OF OKLAHOMA
       IN THE DISTRICT COURT OF OKLAHOMA COUNTY

IN RE: MULTICOUNTY GRAND      )        Case No. SCAD-2023-44
JURY, STATE OF OKLAHOMA       )        D.C. Case No. GJ-2023-1




               REPORT OF INVESTIGATION

  FINDINGS OF THE TWENTIETH MULTICOUNTY GRAND JURY
     REGARDING OKLAHOMA’S IMPLEMENTATION OF THE
GOVERNOR’S EMERGENCY EDUCATION RELIEF FUNDS THROUGH
   THE BRIDGE THE GAP AND STAY IN SCHOOL INITIATIVES



                    October 10, 2024
CONTENTS

II. Introduction..........................................................................................................1
III.     Background .......................................................................................................2
  A. COVID-19 and the Disruption of Education....................................................2
  B. GEER Fund.......................................................................................................3
IV.      Oklahoma’s Implementation of the GEER Fund .............................................5
  A. The Governor’s Application for and Distribution of GEER Fund Award .......5
  B. Rejection of State Department of Education as Fiscal Manager......................6
  C. State Engagement of Non-State Entities and Individuals ................................7
  D. Conceptualization of Bridge the Gap and Stay in School ................................9
  E. Delegating the Distribution of Public Funds to Private Vendors ...................10
  F. Selection of OEQA as the Pass-Through Agency ..........................................12
  G. The Contract ...................................................................................................14
  H. The Subcontract ..............................................................................................16
  I. Development, Launch, and Mismanagement of BTG and SIS by Private
  Actors ....................................................................................................................17
       1. The Application ...........................................................................................17
       2. Inequitable Treatment through Selective Early Access ..............................18
       3. Specific Failures of SIS ...............................................................................20
       4. Specific Failures of BTG.............................................................................21
       5. Absence of Accountability and Questionable Practices .............................24
  J. A Successful Implementation of Allocated GEER Funds .............................26
V. Conclusions and Recommendations ..................................................................28




                                                                                                                              i
 I.   INTRODUCTION

       In the years following the onset of the Novel Coronavirus Disease 2019
(COVID-19) global pandemic, audit reports by both federal and state authorities first
alerted the public to the State of Oklahoma’s mismanagement and misspending of
federal grant money, known as the Governor’s Emergency Educational Relief
(GEER) Fund. The GEER funds were awarded by the United States Department of
Education (USDOE) to assist the State in addressing its emergency educational
needs resulting from COVID-19. More specifically, the audit reports brought to light
that two of Oklahoma’s five GEER-funded initiatives in particular—Bridge the Gap
(BTG) and Stay in School (SIS)—resulted in millions of dollars in questionable and
unauthorized expenditures, which thereby exposed Oklahoma taxpayers to liability
for repayment to the federal government.

       The GEER funds awarded to the Governor were to be allocated, at the
Governor’s discretion, to educational entities within the State most significantly
impacted by COVID-19 or deemed essential for carrying out emergency educational
services. Of Oklahoma’s $39.9 million GEER Fund award, the Governor allocated
$8 million and $10 million, respectively, to the BTG and SIS initiatives. Both
programs were conceptualized to provide financial assistance directly to low-income
families. BTG, also known as Digital Wallet, was designed to provide microgrants
to eligible families for the purchase of technology, materials, and supplies essential
for facilitating virtual learning and homeschooling during the pandemic. SIS was
intended to provide scholarships to eligible families with children already attending
a nonprofit private school to subsidize tuition costs so that no child would be forced
to leave their school due to financial hardship resulting from the pandemic.
Unfortunately, as a result of the State’s irresponsible administration of the grant
monies, both initiatives encountered substantial failures.

      Over the past two months, the Twentieth Multicounty Grand Jury of
Oklahoma received evidence, including witness testimony, documentary and video
evidence, email correspondence, and the aforementioned federal and state audit
reports, relating to the State’s mismanagement of the BTG and SIS initiatives. We
heard testimony not only from personnel with the Oklahoma State Auditor and
Inspector’s Office but also from current and former state officials and other key
players who had personal knowledge and involvement in the decision-making
surrounding implementation of the two initiatives. We found most, but not all,
witnesses to be honest and candid. Overall, the credible evidence we received was
wholly consistent with the findings set forth in the audit reports previously released
                                                                                    1
to the public. Delving beyond the audit reports’ revelations detailing what happened,
this Grand Jury set out to investigate how and why the State failed to properly
manage its federal grant money. The evidence shows state officials, though perhaps
well-intentioned, disregarded available administrative safeguards in favor of
advancing a political and philosophical agenda.

       Although our investigation uncovered deeply troubling practices and actions
(and inactions) by the state offices, non-state entities, and private individuals tasked
with establishing and administering the BTG and SIS initiatives, we ultimately find
insufficient evidence exists to establish, beyond a reasonable doubt, that a crime was
committed. Nor do we find willful or corrupt misconduct or willful malfeasance.
Nevertheless, we find the grossly negligent handling of federal grant money and
utter lack of internal controls and oversight over the grant-funded initiatives to be
irresponsible, disappointing, and indefensible. What’s more, the waste and
misspending of millions of dollars in emergency aid was easily preventable. This
mismanagement prevented the most vulnerable Oklahomans from getting help they
desperately needed during a global pandemic. Citizens deserve more from their
government. This report is intended to shine a light on the systemic program failures
we identified and to make recommendations to protect against such failures in the
future.

      After careful consideration of all the evidence, the Multicounty Grand Jury
hereby submits to this Honorable Court the following report of its findings and
recommendations. 1

II.      BACKGROUND

      A. COVID-19 and the Disruption of Education

      In March 2020, the State of Oklahoma, like the rest of the country and the
world, found itself facing an unprecedented public health emergency created by the

1
    This report is submitted pursuant to 22 O.S.2011, 346, which provides:
      In addition to any indictments or accusations that may be returned, the grand jury, in their
      discretion, may make formal written reports as to the condition and operation of any public
      office or public institution investigated by them. No such report shall charge any public
      officer, or other person with willful misconduct or malfeasance, nor reflect on the
      management of any public office as being willful and corrupt misconduct. It being the
      intent of this section to preserve to every person the right to meet his accusers in a court of
      competent jurisdiction and be heard, in open court, in his defense.
                                                                                                        2
arrival of COVID-19. It was unquestionably a chaotic time for state leaders. With
little warning and many unknowns, state officials were forced to make judgment
calls aimed at protecting the health and welfare of all Oklahomans while at the same
time maintaining continuity of essential public services. The pandemic disrupted
most every aspect of Oklahomans’ everyday lives as non-essential businesses were
shut down and people were asked to stay home. For families, perhaps one of the
most acutely felt impacts of the pandemic came early on when state officials made
the difficult decision to close all public schools statewide.

       With schoolchildren across the State abruptly homebound, state officials
scrambled to implement workable distance-learning solutions. Time was of the
essence as the threat of learning loss loomed. Although almost taken for granted in
today’s post-pandemic world, it must be remembered that in the spring of 2020 most
schools had few or no mechanisms in place to provide universal virtual instruction
to students. Additionally, while not a new phenomenon, the pandemic highlighted
and deepened the “digital divide” experienced by Oklahoma students and families,
that is, the gap created by unequal access to digital technology and information.
Many families, particularly in rural and economically suppressed areas, lacked the
technological resources—such as personal computers, tablets, and reliable, high-
speed internet—necessary to participate in a virtual learning environment. It is
against this backdrop that several emergency educational initiatives, including BTG
and SIS, were conceptualized.

    B. GEER Fund

       In March 2020, Congress established the Governor’s Emergency Education
Relief (GEER) Fund as part of the Coronavirus Aid, Relief, and Economic Security
Act (CARES) Act. 2 The USDOE awarded GEER Fund grants directly to State
Governors for the purpose of supporting educational entities, including local school
districts, institutions of higher learning, and other education-related entities (e.g.,
nonprofit organizations and private schools), to address educational disruptions
caused by the COVID-19 pandemic. Acceptable uses of GEER Fund money
included purchasing educational supplies, technology, and services to enhance
remote learning, address learning loss, and provide mental health services.

2
  References to GEER Funds in this report refer solely to funds awarded as part of the CARES
Act, commonly known as “GEER I.” Aside from a few passing references during witness
testimony, this Grand Jury did not receive evidence related to separate GEER funds later awarded
under the Coronavirus Response and Relief Supplemental Appropriations Act, commonly known
as “GEER II.”
                                                                                               3
       Extensive regulatory requirements were placed on GEER Fund grants to
ensure funds were used effectively to address the pandemic’s impact on education.
Recipients had to adhere to federal guidelines regarding the use of funds, ensuring
that expenditures were reasonable, necessary, and properly documented. For
instance, States were required to distribute funds promptly to address urgent needs
arising from the pandemic and to ensure that funds were distributed equitably among
various educational institutions, prioritizing those most in need. States further had
to provide regular reports on fund usage to the USDOE, demonstrating how the
money was spent and its impact on educational outcomes. There were also specific
mandates for transparency in the allocation process, including public disclosure of
how funds were distributed. These regulatory requirements aimed to ensure that
GEER funds were effectively used to support educational institutions in mitigating
the impacts of COVID-19 while maintaining accountability and oversight.

       Distribution of the nearly $3 billion dollar GEER Fund was determined by a
fixed formula, by which $39,919,354 was allocated to the Governor of Oklahoma.
The Governor’s use of GEER funds was limited to providing subgrants to local
school districts and institutions of higher learning within the State that had been
“most significantly impacted” by COVID-19 in order to support their on-going
functionality and ability to continue providing educational services to students.
Additionally, the Governor could use GEER funds to provide support, either through
a subgrant or contract, to other local school districts, institutions of higher learning,
or education-related entities that the Governor deemed “essential” for carrying out
emergency educational services. While use of the GEER funds was narrowly
limited, the Governor was afforded broad discretion in determining which entities
within the State would receive GEER subgrants.

       Time was also of the essence. Once received, the Governor was under a one-
year deadline to award the allocated GEER funds to eligible entities. Any funds
remaining by the one-year mark had to be returned to the USDOE for reallocation
to other states. The State was also required to submit a report to the USDOE within
forty-five days of receiving GEER funds detailing the process the State used in
awarding those funds. The initial report also had to explain what criteria the State
used to determine which entities were either most significantly impacted by COVID-
19 or essential for carrying out emergency educational services, as well as the
process and deliberations involved in formulating those criteria.

       Of critical importance, the Governor was further required to designate a fiscal
agent, which could be his own Office or another appropriate State agency, to
                                                                                       4
administer the GEER Fund and monitor all GEER-funded activities in the State. Due
to the onerous compliance requirements, the USDOE “recommended that the
Governor designate an agency with appropriate experience in administering Federal
grants and an understanding of the types of activities that may be supported by the
GEER Fund.” Unfortunately, as discussed below, this federal guidance went totally
unheeded in the administration of the BTG and SIS initiatives.

III.   OKLAHOMA’S IMPLEMENTATION OF THE GEER FUND

   A. The Governor’s Application for and Distribution of GEER Fund Award

       To receive Oklahoma’s GEER Fund allocation, the Governor submitted an
application, formally titled a “Certification and Agreement for Funding,” to the
USDOE that described in very general terms the State’s objectives and plans for the
grant award. As part of its application, the State certified that the federal funds would
only be used as authorized by Congress, i.e., to provide emergency support to
schools most significantly impacted by COVID-19 or to schools or other education-
related entities essential for carrying out emergency educational services. The State
further certified it would comply with all other federal laws and regulations,
including monitoring and reporting requirements, and ensure every subrecipient of
GEER fund monies would cooperate with the examination of records by federal
authorities. The Governor signed the application on April 30, 2020, and designated
his Secretary of Education (SOE), who also served as his Secretary of State (SOS)
as the State’s Program Representative. The State later received its Notification of
Award from the USDOE.

       From the outset, the State did not manage its GEER Fund award in a manner
the public would ordinarily expect millions of dollars in federal grant funding to be
handled. We recognize, of course, these were no ordinary times. Even so, in a State
that finds itself all too often in a state of emergency—whether by acts of God or
man—citizens depend on their government to steward emergency aid responsibly.

      The Office of the Governor never solicited proposals for use of Oklahoma’s
$39.9 million GEER Fund award. Even so, as word of the impending award spread,
the Governor’s Office did receive some unsolicited proposals from various
education-related entities. Ultimately, the Governor’s Office chose to distribute the
GEER Fund among five different initiatives, including $8 million to BTG and $10


                                                                                       5
million to SIS.3 On July 2, 2020, the Governor’s Office drew down Oklahoma’s
entire $39.9 million GEER Fund allocation from the USDOE’s grant management
system. At that time, no immediate cash need for the grant monies existed. Witnesses
knowledgeable in federal grant management universally agreed this was highly
unusual. In fact, Oklahoma’s immediate 100% drawdown is what initially drew the
federal government’s scrutiny and triggered targeted monitoring by USDOE.
Oklahoma’s unnecessary drawing down of all $39.9 million at once is also
emblematic of the pervasive problem we found throughout the implementation of
the BTG and SIS initiatives, namely that decision makers were ignorant of their own
ignorance.

    B. Rejection of State Department of Education as Fiscal Manager

        As noted above, the USDOE encouraged Governors to designate a state
agency with knowledge and experience in administering federal grant programs to
serve as the fiscal manager over the State’s GEER Fund allocation. In Oklahoma,
the most obvious state agency that fit the bill was the State Department of Education
(SDE), which already had in place an experienced staff and grant management
system dedicated to administering and monitoring hundreds of millions of dollars in
federal funding for education on a daily basis. 4 Quite reasonably, then, SDE
proactively submitted a proposal to the Governor and his SOS/SOE on April 20,
2020, giving notice of SDE’s readiness and ability to implement a GEER-funded
initiative to get funding to the students and communities with the greatest need in
short order.

3
  Additionally, $1 million was allocated to the Skills to Rebuild initiative, which provided
accelerated, tuition-free job training programs for adults through Tri-County Tech; $12 million
was allocated to the Learn Anywhere Oklahoma initiative, administered by the State Virtual
Charter School Board, to provide schools and families access to online curriculum for K-12
students; and $8 million dollars was allocated to the State Department of Education to award
competitive incentive grants to local school districts most significantly impacted by COVID-19.
This report does not assess these initiatives, but we note that federal auditors determined that the
risk of an unallowable use of funds for these programs was low due to the how the funds were
used.
4
  SDE is the agency that oversees the State’s public school system. The agency is headed by the
State Superintendent of Public Instruction, a constitutional position elected by the people. In
contrast, the SOE is a cabinet position appointed by the Governor, with consent of the Senate. The
SOE acts as the Governor’s chief advisor on public education policies. The SOE’s primary
responsibilities are to serve as chair of the Commission for Educational Quality and Accountability
and approve education-related state expenditures above a certain threshold.
                                                                                                  6
       The program proposed by SDE was designed to bridge the digital divide by
providing all students access to distance learning. Consistent with the federal
statutory requirements, SDE’s proposal laid out a comprehensive methodology,
backed by empirical data already collected by SDE, for identifying school districts
most significantly impacted by COVID-19. Under its proposal, SDE would establish
a sub-granting process to direct funding to the hardest-hit school districts within the
State. The plan included an application and scoring process that could be run through
SDE’s grant management system, allowing the grant money to be deployed to
targeted districts both expeditiously and in compliance with federal statutory and
regulatory requirements.

       At least one member of the Governor’s cabinet, his SOS/SOE, urged him to
award the GEER money to SDE because it made sense both logistically and
politically. But the Governor was adamant he did not want SDE to have control of
all the GEER funds. Witnesses universally acknowledged that by this point in time,
the relationship between the Governor’s Office and SDE was strained, owing in
large part to continuing policy disagreements over school closures and mask
mandates. More than that, witnesses privy to the decision-making process all agreed
the decision to bypass SDE was driven by another perceived policy difference over
so-called “school choice.” 5 The Governor, a widely known school-choice
proponent, wanted to direct GEER money to benefit low-income families attending
private schools. Without consulting the agency, the Governor’s Office assumed SDE
would be unwilling to support such initiatives instead of supporting public schools.
Evidence received by this Grand Jury shows this assumption was unfounded.
Regardless, with SDE out of consideration, the need to devise an alternative plan
was urgent as the start of the new academic year was quickly approaching and the
clock on awarding or obligating the GEER Fund money was ticking.

    C. State Engagement of Non-State Entities and Individuals

       SDE was not alone in proposing uses for the GEER Fund money. Sometime
during the summer of 2020, the Governor’s Office began strategizing with two
private citizens who headed up nonprofit organizations aimed at advancing school-

5
 The term “school choice” generally refers to policies or programs that give public education
dollars, i.e., taxpayer money, directly to families (as opposed to public schools) to choose how a
child receives academic instruction. Common examples of school choice programs include school
vouchers, Education Savings Accounts (ESAs), and individual tax credits, such as the Oklahoma
Parental Choice Tax Credit the Governor signed into law in 2023. See 70 O.S.Supp.2023, §§28-
100–28-103.
                                                                                                 7
choice policies. One was the executive director of a local nonprofit that had recently
restructured under the name Every Kid Counts Oklahoma (EKCO). EKCO’s mission
at that time was to advocate school-choice policies to Oklahoma lawmakers on
behalf of low-income families. The other was the executive director of the Oklahoma
branch of the American Federation for Children (AFC-Oklahoma), a national special
interest group that advocates for school-choice legislation across the country.
Neither EKCO nor AFC-Oklahoma had a pre-existing relationship with state
government and neither of their Directors were, at that time, employed by the State.
The Grand Jury received conflicting testimony as to whether it was the Governor’s
Office or the nonprofit Directors who first approached the other about the two
initiatives that would ultimately become the BTG and SIS programs. In any event,
it is clear their visions were aligned.

       This Grand Jury is deeply troubled by the manner in which the State offloaded
its responsibility to oversee public funds onto private, non-State entities. To begin
with, there is no indication the Governor’s Office made any effort to vet EKCO,
AFC-Oklahoma, or their respective Directors. Nevertheless, by late June or early
July 2020, both organizations had been engaged to develop and implement the BTG
and SIS initiatives on behalf of the State. Evidence was presented that this selection
was attributable, in part, to representations made by the EKCO Director that EKCO
had the staffing and expertise necessary to administer a federal grant program.
However, at that time, the EKCO Director was the sole employee of EKCO and had
no federal grant experience. Basic due diligence by the State would have uncovered
this glaring lack of qualifications. It is of further great concern to this Grand Jury
that although EKCO and AFC-Oklahoma were authorized by the Governor’s Office
to administer millions of dollars in federal grant money, no contract or other
documentation exists holding these private individuals or their organizations
accountable to the State. Instead, the Oklahoma government entered this undefined
arrangement based on nothing more than conversations and informal agreements.

       On July 17, 2020, the Governor issued a press release announcing his
education allocation plan for Oklahoma’s GEER Fund, which included BTG and
SIS. The press release gave notice to the public that “Every Kid Counts Oklahoma
(EKCO) will be awarding grants to families on a first come, first serve basis.”
Regarding SIS, the press release announced that another non-state entity, Oklahoma
Private School Accrediting Commission (OPSAC), “had been requested to oversee
the distribution of emergency educational relief funding to [low-income] families.”
There is no indication the State had any formal contract or agreement with OPSAC
relating to its involvement in the SIS program either. On August 12, 2020, days after
                                                                                    8
the public launch of BTG and SIS, the Governor issued another press release stating,
“Bridge the Gap is administered by Every Kid Counts Oklahoma (EKCO), a new
education-focused organization, and EKCO will be awarding the grants to up to
5,000 Oklahoma families on a first come, first serve basis.” The only option to access
the application for BTG provided by the press release was a link to EKCO’s website
where access to the application was exclusively available. 6 The press release further
directed the public to EKCO’s homepage and provided an EKCO email address for
any questions about the program.

    D. Conceptualization of Bridge the Gap and Stay in School

       Though some testimony conflicted, the evidence we received, particularly
contemporaneous documentation and correspondence, suggests that the EKCO
Director was the primary architect of the BTG program. BTG, which received $8
million in GEER funding, was designed to provide $1,500 microgrants to 5,000
families with children in grades K-12 who fell at or below 185% of the federal
poverty guidelines. A family could only receive one microgrant, irrespective of the
number of school-aged children at home. BTG microgrants were available to
students attending both private and public schools. They were supposed to be used
to purchase “curriculum content, technology and school supplies” for the 2020-2021
school year and were to be awarded on a first come, first served basis until the fund
was depleted.

        SIS, in contrast, was designed as a need-based scholarship program intended
to provide financial assistance to low-income families with children in grades K-12
already attending nonprofit private schools. The plan was for SIS scholarship awards
to be limited in the first week to students whose family income fell at or below 185%
of the federal poverty guidelines and, after that, open up to those who fell at or below
350% of the federal poverty guidelines. Eligible families could apply to receive up
to $6,500 per child to subsidize the family’s out-of-pocket tuition costs. With a $10
million allocation, the SIS program was projected to benefit approximately 1,500
private-school students. Like BTG, SIS scholarships were to be awarded on a first
come, first served basis. The AFC-Oklahoma Director is the individual consistently
identified by witnesses as spearheading the SIS program, in conjunction with the
EKCO Director.

6
 The EKCO website that the Governor’s Office directed Oklahoma families must visit if they
wished to apply for BTG grant funds prominently displayed an image and video of the EKCO
Director.
                                                                                         9
       Despite the federal restrictions mandating GEER Fund monies be allocated to
schools deemed “most significantly impacted” by COVID-19 or to schools and other
education-related entities deemed “essential” to providing emergency educational
services, there is no indication that those involved in the development of the BTG
and SIS initiatives ever undertook any analysis to reach these necessary
determinations. From everything this Grand Jury has reviewed, it appears no
meaningful process or deliberation was involved in formulating the criteria for
awarding funds through either program. Indeed, as there is no documentation nor
witness who could explain how the poverty guideline percentages for eligibility were
even reached, it appears these figures were selected arbitrarily. Though BTG and
SIS did not meet the programmatic requirements for GEER Fund monies, their
general frameworks were clearly consistent with meeting a different objective:
establishing a school voucher program. To be sure, witnesses involved in the
implementation of these programs—from both inside and outside state government,
from senior state officials down—uniformly acknowledged that the Governor’s
Office intended SIS to serve as a “test case” or “pilot program” for establishing an
Oklahoma school voucher program. This understanding is corroborated by public
statements made in December 2020 by the EKCO Director, who at that time was
also serving as the Governor’s new Secretary of Education, that the hope was for the
programs to continue even after the pandemic ended.7

    E. Delegating the Distribution of Public Funds to Private Vendors

       A critical component of BTG and SIS was the use of a private vendor—one
vendor in particular (hereinafter, the Digital Platform Company)—to actually
execute the programs. The EKCO Director came to the table with the Digital
Platform Company already in mind. The Digital Platform Company was an out-of-
state business that hosted a digital financial-management platform designed to
streamline the management and distribution of educational funds. It had been
recently recommended to the EKCO Director by another school-choice advocate.
After some inquiries, the EKCO Director learned the company had previously
worked with a couple of other states to set up digital wallet applications for those
states’ publicly-funded, private-education programs. There has been some testimony
that the Digital Platform Company was the only vendor that could provide the
services needed to support the BTG and SIS programs. The Grand Jury is unable to


7
 See How to Launch a Scholarship Program in 4 Weeks with Min Staffing Requirements, at
00:47:33, YouTube (Feb. 29, 2021), https://www.youtube.com/watch?v=kn-tOqJ5DKg.
                                                                                   10
assess the validity of this assertion because the State never sought bids for the
contract.

      The Digital Platform Company’s platform was designed to operate as an
online marketplace, similar to Amazon. The concept was fairly streamlined. Once a
family’s application for the BTG and/or SIS programs was approved, awarded funds
would be loaded onto the family’s digital wallet. A family awarded BTG
microgrants could then log into their online account on the Digital Platform
Company’s platform and purchase educational supplies and services through various
approved vendors using those funds. Similarly, a family awarded an SIS scholarship
could use their digital wallet to direct tuition payments to their child’s private school.

      An issue that arose early in the development phase of BTG and SIS was
uncertainty as to how a family’s eligibility for the programs could be determined.
The Governor’s Office was intent on minimizing administrative costs. To that end,
attempts were made to obtain lists of families already determined to be eligible to
receive Title I funds or other government assistance. But this approach was
ultimately abandoned as unworkable and imprudent. The only viable alternative for
timely assessing eligibility was to have the families themselves submit applications,
with supporting documentation, to establish they fell within the requisite income
threshold and were experiencing financial hardship due to the pandemic. However,
the Digital Platform Company lacked the capability to process families’
applications. Thus, if the State was unable to identify eligible families, another
vendor would need to be brought in to manage the application and approval process.

      The Digital Platform Company suggested another out-of-state, private vendor
(hereinafter, the Information Management Company) it had previously worked with
that could process applications and issue BTG and SIS awards to families. The
Information Management Company was a financial services provider that
specialized in managing tuition payments and other education-related expenditures,
as well as financial aid applications and awards. The EKCO Director asked if the
Digital Platform Company could subcontract with the Information Management
Company to “avoid[ ] the Governor seeming to pay two groups for one process.”
The Digital Platform Company’s CEO agreed the State could contract with the
Digital Platform Company alone, and the Digital Platform Company in turn would
subcontract with the Information Management Company.

     After consulting with the Secretary of Education, the EKCO Director
exchanged a number of emails with the Digital Platform Company’s CEO conveying
                                                                                       11
the State’s hesitation to employ two separate vendors. On July 10, 2020, the EKCO
Director advised the Digital Platform Company’s CEO:

      I’m trying to convince [the Governor and Secretary of Education] to eat
      the cost and just have you use [the Information Management
      Company]. . . . Im [sic] just trying to make them more comfortable with
      the option of giving you the money and allowing you to subcontract
      with [the Information Management Company].

      The Digital Platform Company’s CEO offered to draft something for the
EKCO Director to use as a “conversation tool” with the Governor’s Office and asked
the EKCO Director to give him more information about certain program
requirements. The EKCO Director responded by providing a copy of what he called
“our original proposal” that he, along with the Executive Director of another
educational nonprofit organization, had devised. The proposal approximated the
BTG and SIS programs. The Digital Platform Company’s CEO then provided the
EKCO Director informational materials to guide his conversations with the
Governor’s Office.

       Evidently, the pitch was effective, because the scenario described in the July
10 email is precisely what happened in the end. On or about July 21, 2020, the
Secretary of Education, the EKCO Director, the Digital Platform Company’s CEO,
and the Information Management Company’s CEO participated in a virtual meeting
to introduce the Secretary of Education to those companies and to discuss how the
BTG and SIS programs would be administered using the Information Management
Company as a subcontractor of the Digital Platform Company.

   F. Selection of OEQA as the Pass-Through Agency

       Since the Governor’s Office had neither the experience nor the capability to
manage a federal grant program itself, the question then became which state agency
could serve as a pass-through for GEER money. As discussed above, the Governor’s
Office did not consider SDE to be a desirable agency for the GEER initiatives due
to political and philosophical differences between the two. But alternative options
for administering and overseeing large-scale educational grant programs, if any,
were scant.

      Initially, it was thought funding for BTG and SIS could flow through the
Office of the Secretary of State (SOS), who at that time also happened to be the
                                                                                  12
SOE. 8 On July 28, 2020, the SOS/SOE requested the Chief Financial Officer (CFO)
for the SOS’s Office assist with drafting a contract between the SOS and the Digital
Platform Company for administration of the BTG and SIS programs. The request
included a description of both programs, and the scope of work expected of the
Digital Platform Company. The CFO responded with some follow-up questions,
including whether the funding source was from federal grants. On this point, the
CFO advised, “If they are federal grants there are probably complicated
grant/contract requirements that would need to be determined.” The CFO also raised
concerns about using a sole source contract, as opposed to a competitively bid one,
and recommended any contract draft be reviewed by legal counsel and procurement
specialists with the Office of Management and Enterprise Services (OMES). 9

       OMES was brought into assist with drafting a procurement contract. The
SOS/SOE advised an OMES deputy general counsel that the SOS/SOE was the point
of contact for questions regarding the scope and pricing of the contract. In a follow-
up email sent on August 4, 2020, the SOS/SOE was notified that the OMES
Executive Director had requested that “SDE, or another agency is [sic] more
appropriate, take ownership” of the contract. That afternoon, the SOS’s Chief
Financial Officer (CFO) sent an email to the SOS/SOE detailing the “serious
concerns” he had for the SOS’s Office being used as a pass-through for the BTG and
SIS programs. He explained, “Dealing with federal funds, especially as a pass-
through to subrecipients, will seriously complicate our agency’s financial reporting
and accounting beyond simply serving as a conduit of the funds.” The CFO
identified numerous concerns, including legal implications, budgetary issues,
additional auditing requirements, complicated reporting requirements, drawdown
requirements, and detailed monitoring and compliance requirements. He further
cautioned that “[f]ederal grant reporting is a specialized area of governmental
accounting, even within state government, and there’s a lot that goes into it.” He
concluded that for the agency to try to establish and be ready to administer a federal
grant program with no experience and a lead time of only one week “seem[ed]
impossible.”

      With SDE and the SOS’s Office out of the running, the SOS/SOE turned to
another more obscure state agency which fell under his purview as the SOE—the
Office of Educational Quality and Accountability (OEQA). Staffed by a dozen or

8
    The SOE did not have a separate state office.
9
  OMES is a state agency that provides financial, property, purchasing, human resources, and
information technology services to other state agencies.
                                                                                               13
fewer state employees, OEQA monitors educational programs statewide to ensure
local school districts are performing in accordance with State standards. The
agency’s primary functions include accrediting teacher education programs and
implementing statewide standardized testing. The agency has no direct interaction
with students or families.

       Like the SOS’s Office, OEQA lacked any training or experience for
administering a federally funded program. The agency received no federal funding
whatsoever; it operated on a budget of around $1.5 million appropriated by the
Legislature. It was therefore just as unqualified to oversee the BTG and SIS
programs as the SOS’s Office. Nevertheless, on August 4, 2020, the SOS/SOE
notified OEQA’s Executive Director that OEQA would be serving as a pass-through
agency for GEER Fund money. It is undisputed that the OEQA Director was
instructed that the only action needed on his part was to sign the contract with the
Digital Platform Company and nothing more would be required of OEQA. That
same day, an OMES deputy general counsel advised the Digital Platform Company’s
CEO via email that OEQA would “own” the contract.

     G. The Contract

      OMES hastily prepared the non-competitive procurement contract between
the State, via OEQA, and the Digital Platform Company. The contract was signed
by the Digital Platform Company’s CEO on August 6, 2020, and by the OEQA
Director and the State’s Chief Information Officer on August 7, 2020. By its terms,
the contract was effective immediately and extended through December 30, 2020,
unless extended by written agreement of the parties.

      In contrast to the typical payment structure found in State procurement
contracts, which provides for incremental reimbursements upon receipt of
deliverables, the contract here required the State to make advance lump-sum
payments to Digital Platform Company. From the Governor’s $18 million allocation
to BTG and SIS, the State agreed to pay a flat fee of $650,000—half to be paid
following the August 10, 2020 “go-live” date and the remainder to be paid following
an August 30, 2020, de-briefing meeting. The remaining $17,350,000 would be
invoiced to OEQA upon execution of the contract and then distributed as BTG and
SIS awards until the funds ran out or the contract expired.10 In the event that all BTG

10
  In practice, the State did not even adhere to the contract’s payment structure. The evidence
shows that on August 18, 2020, at the direction of the SOS/SOE, the OEQA Director picked up a
                                                                                            14
and SIS funds were not awarded by 5:00 p.m. on December 30, 2020, then the
contract required the Digital Platform Company to refund the entire amount of the
remaining grants to OEQA no later than January 30, 2021. 11

       Perhaps the most notable feature about the contract is what it did not include.
For starters, it did not delineate whether the Digital Platform Company was a
subrecipient of the federal grant award, in which case it would be responsible for
adhering to the GEER Fund program requirements, or whether it was merely a
contractor, in which case it would not be subject to heightened compliance
requirements. The distinction is pivotal. Yet given the absence of any express
declaration and other ambiguities in the Digital Platform Company’s involvement in
the grant programs’ administration, even state and federal auditors disagreed on its
status as a contractor or a subrecipient.

      In addition to that glaring oversight, the contract also conspicuously omitted
any provision detailing or referencing what mandatory regulations and requirements
were applicable to the Digital Platform Company, or to any other party with whom
the Digital Platform Company might subcontract, upon receipt of the federal funds.
The contract did authorize the Digital Platform Company to utilize a subcontractor
upon written approval of the State. 12 But curiously, even though it was clearly
understood by all parties that the Digital Platform Company would be subcontracting
with the Information Management Company to process BTG and SIS applications
and determine award eligibility, the contract made no mention of the Information
Management Company or its indispensable role in the programs’ administration.

      The contract also failed to require the Digital Platform Company or any
subcontractor to protect the personally identifiable information which families were
required to provide in the application for both programs. We learned that during a
subsequent state audit of the BTG and SIS programs, the State Auditor’s Office
received an Excel spreadsheet that had been obtained from the AFC-Oklahoma
Director. The spreadsheet contained the personal information families provided in

check made out for the entire $18 million from the State Secretary of Budget and mailed it to the
Digital Platform Company.
11
   As will be discussed below, neither party abided by this term either as BTG awards continued
to be dispersed through March 2021.
12
  This Grand Jury received copies of email correspondence that established that the State
authorized the Digital Platform Company to subcontract with the Information Management
Company.
                                                                                              15
their BTG/SIS applications that they submitted to the Information Management
Company. The spreadsheet included parent and student names, addresses, phone
numbers, email addresses, and schools. The fact that the director of a special interest
group obtained this personally identifiable information is itself concerning. More
disturbing is the fact that the spreadsheet contained information that families did not
provide in their applications, such as political party registration and voting district.
This indicates that, unbeknownst to families, their information was being collected
and processed for purposes other than that for which it was disclosed.

       Another omission that proved particularly detrimental to the State was a
failure to incorporate any safeguards to protect against unauthorized expenditures of
BTG microgrant awards. While the contract generally stated the BTG program was
created for eligible families “to purchase educational supplies, materials and
technology,” those terms were undefined. The contract also placed no limit on the
types of vendors from which purchases could be made through the Digital Platform
Company’s platform. Nor did it provide any remedy to the State in the event BTG
funds were misspent or overspent. In fact, despite being drafted by the State’s own
procurement agency, the contract lacked the provisions typically found in state
contracts to limit the State’s liability.

      The inadequacies in the contract between the State and the Digital Platform
Company are further representative of the State’s systematic failure to include
individuals knowledgeable with federal grant regulations in the implementation and
administration of the BTG and SIS programs.

   H. The Subcontract

      As previously noted, the Digital Platform Company, at the request of the State,
subcontracted with the Information Management Company to process BTG and SIS
applications. The contract between the two companies provided that the Information
Management Company would create and supply user-friendly online portals that
included a combined application for families to apply for the BTG and/or SIS
programs and an application for nonprofit private schools seeking inclusion as
providers for the SIS program. The applications were required to be completed by
the “go-live” date of August 10, 2020, with BTG awards ready for distribution to
families by August 25 and private school enrollment and attendance verification
processes implemented by August 28. For its services, the Digital Platform
Company agreed to pay the Information Management Company a flat fee of
$370,000.
                                                                                     16
       Essentially, the Information Management Company was the entity responsible
for making BTG and SIS award determinations. Despite playing this critical role in
the distribution of the State’s GEER Fund monies, the State had no contractual
relationship with the Information Management Company. Nor was the Information
Management Company under any contractual obligation to comply with GEER
Fund’s mandatory monitoring, reporting, and records retention requirements.

     I. Development, Launch, and Mismanagement of BTG and SIS by Private
        Actors

     1. The Application

       BTG and SIS were both scheduled to “go-live” on August 10, 2020. That is,
applications for the programs were not supposed to be accessible until that date.
Although the two programs served entirely different functions—BTG to provide
funding to all qualified families, irrespective of whether their children attended
public or private schools, for educational materials and SIS to provide tuition
assistance for qualified private school students—there was only one application for
families to submit for either or both programs.

       The BTG/SIS application gathered basic personal information, e.g., the
applicant’s name, address, date of birth, marital status, and employment status. The
applicant would then select which program(s) they were applying for. Applicants
were also required to provide the personal information for each student applying,
including which school the student would be attending for the 2020-2021 school
year, whether that student attended the same school the previous year, and the
student’s grade level. Inexplicably, the application also asked whether the student
had an Individualized Education Program (IEP) in place, 13 a consideration irrelevant
to either program’s stated eligibility requirements. Applicants were then asked to
provide information regarding their household taxable and non-taxable income and
to upload supporting documentation, such as a 2019 tax return.

       Because GEER Fund awards were required to be provided to those “most
substantially impacted” by COVID-19, the application also included a section
addressing whether the applicant had experienced or anticipated a change in income
that year. This was determined by asking (1) if the applicant anticipated a decrease
13
   An IEP is a legally binding document developed for students with disabilities that outlines
specific educational goals, services, and accommodations tailored to meet the unique needs of the
student.
                                                                                               17
in annual income for 2020; (2) what the applicant anticipated the annual income in
2020 to be; and (3) whether “the household income [has] decreased due to events
surrounding Covid-19?”

      Applications could only be submitted electronically. However, the application
was not available through any State agency’s website, including OEQA or the
Governor’s Office. Instead, press releases issued by the Governor’s Office directed
families to the EKCO and OPSAC websites to access links to the application.
Information about BTG was exclusively available on EKCO’s website, while
information about SIS was exclusively available through OPSAC’s website. Once
submitted, the applications would then be processed by the Information
Management Company, which would then notify families whether their application
had been approved or denied. If a family was approved, their BTG and/or SIS award
was loaded onto their digital wallet for use.

   2. Inequitable Treatment through Selective Early Access

        The evidence received by this Grand Jury irrefutably establishes that BTG and
SIS awards were not bestowed in a fair or equitable manner. As previously
mentioned, both BTG and SIS funds were awarded from finite grant allocations on
a first come, first served basis. All publicly facing information about the programs—
including press releases and the informational materials available on the EKCO and
OPSAC websites—stated BTG and SIS applications would not be accepted until
August 10, 2020. However, it turns out this was not true for everybody.

       For approximately six hours on August 8, 2020, the application portal was
opened to allow early access, a so-called “Open House,” to families with students
attending a select few nonprofit private schools (hereinafter, Exception Schools).
These Exception Schools, of which there were five, met one or more of the following
criteria: (1) all students attended the school tuition free, (2) the school was an
accredited addiction recovery school, or (3) the school either subsidized at least 90%
of the tuition costs or tuition was below $1,000 per child. However, there is no record
of how or why these Exception Schools were actually chosen. It could not have been
based on those criteria alone because at least three other non-Exception Schools
participating in the SIS program also would have qualified. Further, there is no
record of what methodology, if any, was used to determine how these Exception
Schools were identified as essential for carrying out emergency educational services,
as the GEER Fund required.

                                                                                    18
       The evidence indicates no public employee was involved in the decision to
hold this Open House. In fact, one former senior state official frankly described the
process as “unfair.” Nor were any public employees involved in the selection of the
five Exception Schools that would be granted advance access to the application
portal. The list of Exception Schools was instead provided by the AFC-Oklahoma
Director, who was the administrator of the SIS program. But how the schools were
chosen remains a mystery. The Grand Jury finds the lack of transparency over the
administration of this publicly-funded program to be utterly unacceptable. 14

       Although it appears the five Exception Schools were the only private schools
officially notified of the Open House, the portal was open to anyone who attempted
to access the application during those six hours. As such, a large number of
applications were also submitted by non-Exception School applicants prior to the
public opening of the portal, although it is unclear how individuals outside of the
Exception Schools learned of the Open House. Notably, no early application was
submitted for a non-Exception School that nevertheless met one of the three
exception categories. This further highlights the disparity in this process.

       It should be noted that it was not just SIS applicants that benefited from
submitting early applications. Since a single application was used for both the BTG
and SIS programs, families could apply early to both programs. Once an application
was started, it could be submitted at any time. Thus, even after the portal was re-
closed on August 8, applications that were already underway could be submitted at
any time before the portal went live to the public at 7:09 a.m. on August 10. Because
applications were processed in the order in which they were received, those allowed
to submit early applications received clear preferential treatment over everyone else.
All told, program administrators allowed 486 applicants to submit BTG and SIS
applications before the application should even have been publicly accessible. Of
the early applications, 346 applicants were awarded SIS scholarships and 169
applicants received BTG microgrants. In total, nearly $2 million in SIS scholarships
(20% of SIS funds) and over $167,000 in BTG microgrants (2% of BTG funds) were
awarded to applicants who were unfairly granted early access to the application.



14
  It should be noted that the Grand Jury’s ability to investigate the decision-making processes
behind the SIS program was significantly hampered by the fact that neither the AFC-Oklahoma
Director, who was chiefly responsible for administering the SIS program, nor the Information
Management Company were contractually obligated to retain written communications about the
program, notwithstanding federal records-retention mandates.
                                                                                             19
     3. Specific Failures of SIS

       Preferential treatment to the five Exception Schools extended beyond
premature access to the applications during the Open House. Although the
Governor’s press releases and the SIS program’s FAQs posted on the OPSAC
website all stated SIS Scholarships would be awarded to low-income families to
subsidize their out-of-pocket tuition costs, participating private schools were the
actual recipients of the funds. SIS payments made to Exception Schools were,
moreover, wholly unrelated to a family’s financial need. Indeed, at three of the
Exception Schools, students paid no tuition whatsoever to attend, while the other
two Exception Schools had significantly discounted tuition rates, each less than
$1,000 per student. Yet four of these Exception Schools received maximum $6,500
SIS awards per student and one received $6,000 per student. The State Auditor
determined that all five Exception Schools appeared to be adequately funded through
other funding sources, such as private donors and other federal grant programs.15
Nevertheless, altogether, the Exception Schools were awarded over $1.8 million in
SIS funds.

       It was not just Exception Schools that received excessive SIS payments. In
assessing the amount of SIS funds to award to approved private schools, the
Information Management Company did not require schools to submit detailed
statements reflecting their tuition rates or to list all scholarships, financial aid, work
study, or tuition reductions a family was already entitled to receive, e.g., employee
discounts, multiple-child discounts, or military discounts. Instead, private schools
were allowed to merely submit an invoice reflecting their full tuition rates. When
those additional considerations are factored into the calculation, however, almost all
SIS awards exceeded actual financial responsibility. A major contributor to such
discrepancies is likely the fact that the guidance listed in the SIS FAQs was vague
and conflicting. Further, a sampling of email correspondence reflects that private
schools were receiving inaccurate, incomplete, and inconsistent information
regarding tuition invoicing from the Information Management Company and the
AFC-Oklahoma Director, who was administering the program.

      Not only were excessive SIS payments allowed to be disbursed to private
schools, but the evidence also shows that a majority of SIS funds were awarded to
families who attested they were experiencing no pandemic-related financial
hardship. 56% of SIS awards (1,073 awards) were provided to families whose
15
  At least one Exception School was actually able to increase enrollment for the 2020-2021 school
year.
                                                                                               20
applications plainly indicated that they did not anticipate any decrease in their annual
income in 2020 and that their household income had not decreased due to events
surrounding COVID-19. This accounts for over $5.3 million of the SIS awards.
Additionally, more than $11,000 SIS funds were awarded to families whose
household income did not fall below the required federal poverty guidelines.

       In total, more than $6.5 million in SIS funds were expended between
excessive tuition payments and awards to families who either were not facing
pandemic-related economic hardship or did not fall within the threshold poverty
level. These errors had real consequences. By August 11, 2020—the day after the
public go-live date—program administrators issued a notice that the SIS funds were
nearly depleted. Had the State adequately administered and monitored the SIS
program, hundreds more Oklahoma families in need could have received emergency
tuition assistance. In fact, the State Auditor estimated 657 students of eligible
families who were actually experiencing financial hardship due to COVID-19 were
denied SIS awards simply because the funds had been drained.

   4. Specific Failures of BTG

       Like the SIS program, the BTG program was plagued by administrative
mismanagement that resulted in extensive waste of GEER Fund monies. Simply
stated, a total lack of internal controls and monitoring over the program allowed
families to use BTG funds to purchase hundreds of thousands of dollars in items
with no education-related purpose. Regrettably, the situation was easily preventable.
But the State’s failure to involve any person or entity with even a basic
understanding of federal grant management in the implementation and
administration of the program ultimately led to further unchecked spending of
federal dollars on items that satisfied neither the State’s stated program objectives
nor the federal government’s GEER Fund requirements.

      Although the Grand Jury received conflicting accounts, the evidence
overwhelmingly demonstrates the BTG program was chiefly designed and
administered by one individual, the EKCO Director, who during most relevant time
periods had no contractual or employment relationship with the State. Even before
OEQA’s contract with the Digital Platform Company was in place or the Governor
publicly announced that EKCO would be administering BTG, the EKCO Director
maintained regular communication with the Digital Platform Company’s CEO to
discuss BTG’s anticipated parameters and requirements. Significantly, on July 22,
2020, the Company’s CEO provided the EKCO Director with a list of all integrated
                                                                                     21
vendors (thirty-five in total) available on the Company’s platform along with a brief
description of each vendor’s products or services. Without question, many of the
listed vendors exclusively supplied education-related materials, such as Scholastic
and other school supply merchants. But some vendors, like Staples and Office
Depot, although certainly school supply retailers, were commonly known to sell
many non-education-related items as well. Still others on the list of vendors had no
obvious tie to educational needs at all, most notably Home Depot.

       As addressed above, in order to satisfy federal GEER Fund criteria, items
purchased with BTG funds must have had an educational purpose that was
applicable to a K-12 student and essential due to the COVID-19 emergency. To this
end, the BTG program’s stated intent was for families to use awarded funds to pay
for “school supplies, tutoring and/or technology needs.” The Digital Platform
Company offered two optional safeguards that allowed program administrators to
ensure purchases by families fell within program limits. First, administrators had the
option on the front end to select or restrict which vendors families could buy from.
The second option, known as marketplace approval, would allow program
administrators on the back end to review all purchases and give final approval before
transactions were processed. There was no additional cost to implement either
option.

       On August 25, 2020, as the Digital Platform Company was preparing to
release BTG funds to families, the Company’s Account Manager assigned to
configure the BTG/SIS digital platforms asked the EKCO Director to identify the
individual who would serve as the program administrator to be “provided[d] access
to all reports and activities around the [families’] accounts.” The EKCO Director
never answered the question. Instead, he responded by inquiring about adding a new
vendor to the platform. It was not until February 2021—after the State’s GEER Fund
was already under a federal audit—that any individual on behalf of the State
requested administrative access to the account reports.

       On August 31, 2020, the Account Manager sent an email to the AFC-
Oklahoma Director, and copied to the EKCO Director, posing questions the Digital
Platform Company had received from families regarding (1) allowable purchases
through the BTG program, and (2) whom families with inquiries should contact
regarding pending applications. Specifically, as to the first question, the Account
Manager asked:



                                                                                   22
         For the BTG funds, we’re getting a few questions about eligible items
        (i.e. printer for kids class work). It’s my understanding that all
        purchases through any of our vendors is allowed, but parents want
        to make sure as the website does not provide a list of allowable
        items[ 16 ] – should we direct these inquiries to [the AFC-Oklahoma
        Director] or [the EKCO Director]?

       The AFC-Oklahoma Director responded first, stating that any inquiries
regarding the status of pending applications should be directed to the Information
Management Company and that the Account Manager’s question regarding
allowable BTG purchases would need to be answered by the EKCO Director. The
Grand Jury received testimony that based on communications with the Oklahoma
BTG/SIS points of contact, the Account Manager was given to understand that the
AFC-Oklahoma Director’s decision-making authority was subordinate to that of the
EKCO Director’s. Therefore, in situations like this, it was not unusual for inquiries
about BTG or SIS programs to be “escalated” to the EKCO Director. After receiving
the AFC-Oklahoma Director’s email, the Account Manager advised she would
“await [the EKCO Director]’s confirmation and update our support team regarding
those funds at that time.” At 6:21 p.m. on August 31, 2020, without consulting with
any state official or employee, the EKCO Director sent the following fateful reply:

        1 Blanket approval with vendors on your platform
        2 I agree with [the AFC-Oklahoma Director]

       Having already ignored the Digital Platform Company’s request to designate
a program administrator to oversee account activity, the EKCO Director’s
authorization of all integrated vendors on the platform effectively disregarded all
internal control options offered by the Company. In other words, no limit was placed
on the items families could purchase with BTG funds in the first instance, and

16
   The only guidance provided to the public regarding allowable uses of BTG funds was the
following statement in the FAQ page found on EKCO’s website, which was drafted by the EKCO
Director with the director of another nonprofit organization with close ties to EKCO:
     What exactly can I buy with the funds?
     Integrated with [the Digital Platform Company] are over 30 education materials, supplies,
     technology and book e-commerce vendors. Some popular ones include Office Depot,
     Staples, Scholastic, School Specialty, Really Good Stuff and many more. Parents will be
     able to log into [the Digital Platform Company] and purchase what they need for their
     children using funds in their [the Digital Platform Company] digital wallet account.
                                                                                                 23
nobody was monitoring purchases to ensure they complied with program
requirements on the back end. It should come as no surprise then that a massive
portion of BTG awards—over $1.7 million by the State Auditor’s assessment—went
to the purchase of items that could not reasonably be deemed to serve an emergency
educational purpose. 17

       An audit report later issued by the USDOE Office of Inspector General (OIG)
identified over 3,100 BTG purchases that were unauthorized under GEER Fund
requirements. 18 Such unallowable purchases included but were not limited to: 817
televisions, 385 watches or smartwatches, 179 doorbell cameras, 174 cell phones
and related accessories, 71 refrigerators, 27 Xbox systems, and 3 Christmas trees.
Not only did the use of these funds to purchase non-education items breach the
State’s duty to ensure GEER Fund money was only used for pandemic-related
emergency educational assistance, but that money could have been directed to
provide intended pandemic relief where it was actually needed. What’s more,
because the unallowable purchases did not meet GEER Fund criteria, the federal
government demanded the $650,000 be returned by the State—a cost that can now
only be borne by Oklahoma taxpayers.

     5. Absence of Accountability and Questionable Practices

       More concerns surrounding the BTG and SIS programs came to light after the
federal government began investigating the State’s noncompliance with drawdown
and reporting regulations related to its GEER Fund allocation. For one, the ability to
readily identify which entity or individual was overseeing the programs or who could
provide an accounting of program funds proved inexcusably difficult.

17
  Ironically, the BTG FAQs hosted on EKCO’s website, in response to the inquiry “What is being
done to prevent fraud?” stated:
        All vendors integrated into the . . . digital wallet platform have been approved.
        Parents will only be able to use grant funds to acquire materials from the approved
        vendors. This ensures compliance and transparency, as well as streamlines the
        processing time for students' requests. The [Digital Platform Company] platform
        automates the tracking and reconciliation of all the purchases, so there will be no
        work required by the parents to submit receipts or expense reports.
18
   The non-education items were identified by the OIG using only a simple keyword search and
did not include purchases of $25 or less. The State Auditor later performed a more thorough, line-
item inspection of every BTG expenditure and identified a total of 39,634 unallowable items
families were allowed to purchase, including those items previously identified by the OIG.
                                                                                               24
       With no documentation from which to start, inquiries were initially addressed
to SDE, the most logical agency to possess knowledge about federally funded
education initiatives. But, of course, SDE could provide no information on the
programs since it had been excluded from involvement with them. Questioning of
the former SOS/SOE 19 revealed he had only a superficial understanding of the BTG
and SIS programs and could provide no meaningful insight into their administration.
Moreover, even though OEQA was the designated pass-through agency for the
BTG/SIS funds and its Executive Director was the State’s signatory on the contract
with the Digital Platform Company, the agency had been given explicit instructions
that no further participation in the programs was required on its part.

       Sometime around late August 2020, the Office of the State’s Chief Operating
Officer (COO) was brought in to help get to the bottom of things. 20 But even the
COO’s Office struggled to obtain answers. The absurd result was that government
officials ultimately had to resort to asking private individuals from various special
interest groups, who had no official relationship with the State, where the State’s
federal dollars had gone. Even then, satisfactory answers were not forthcoming.

       Investigators attempted to ascertain information about the administration of
BTG and SIS from the EKCO Director, who had by that time also been appointed
as the new Secretary of Education. However, despite making prior public statements
boasting of his partnership with the Digital Platform Company’s CEO and their
collaboration on developing the BTG and SIS programs, the EKCO Director/SOE
disclaimed any particularized knowledge or involvement in the programs aside from
basic public promotion. 21 Any such claim by the EKCO Director/SOE is fully belied
by all other evidence and testimony received by this Grand Jury.

       Case in point, in September 2020, when OEQA staff attempted to ask the
Digital Platform Company if accountability measures had been put in place to ensure
funds were being used for allowable purposes, the Company responded that it would
need authorization from the EKCO Director before it could share data with OEQA,
19
  The SOS/SOE who was initially involved in implementing the BTG and SIS programs resigned
as Secretary of Education on August 12, 2020. Approximately two months later, he also resigned
as Secretary of State. The Governor appointed the EKCO Director as his new Secretary of State
on September 10, 2020. The new SOE retained his position with EKCO until he later took office
as the State Superintendent of Public Instruction in 2023.
20
  The COO’s Office was created to oversee the Governor’s cabinet and coordinate among all state
agencies to improve government operations.
21
     See fn. 7, supra.
                                                                                            25
despite OEQA being the state agency with which it had a contract. On January 28,
2021, the Company finally provided requested data to OEQA and the COO’s Office
indicating families were still being awarded BTG funds, even though the contract
with OEQA required any funds that had not been awarded by December 30, 2020,
to be refunded to OEQA by January 30, 2021. The data also indicated that $6,000
SIS funds had been distributed in excess of that provided for in the contract.

        On February 15, 2021, the EKCO Director/SOE sent an email to the COO’s
Office stating: “I spoke with [the Digital Platform Company] over the weekend. This
Fall, the timeline for them to return extra money was extended to March 30th to give
the families extra time for the money to be spent. I don't know that it was ever
communicated to [OEQA’s Director].” Since the OEQA Director—the signatory to
the contract—was neither involved in nor informed of any contract extension, this
was quite alarming. The evidence shows that in November 2020, the Digital
Platform Company’s CEO and the EKCO Director/ SOE made an oral “gentleman’s
agreement” to extend the contract through March 2021. The agreement was
memorialized in an email sent to the Digital Platform Company’s CEO and Account
Manager, and copied to the EKCO Director/SOE, by the director of a nonprofit
organization with ties to EKCO who had also been involved in the conversation but
had no accountability to the State.

       The opaque processes and loose dealings with federal funds seen throughout
this investigation is simply unacceptable. The State’s failure to ensure competent
management and oversight of BTG and SIS funds justifiably drew the federal
government’s scrutiny over all the State’s GEER funds and jeopardized the State’s
eligibility to receive federal funding in the future.

   J. A Successful Implementation of Allocated GEER Funds

       It is not lost on this Grand Jury that decisions regarding the use of Oklahoma’s
GEER Fund allocation had to be made swiftly under chaotic circumstances to
address the ongoing emergency posed by the pandemic. However, it is precisely
because of these circumstances that the State should have relied on its established
institutions to administer federally funded emergency aid initiatives. Instead, the
State opportunistically chose to capitalize on the sudden influx of federal aid money
to launch publicly funded, private education initiatives. What’s worse, the State
relied on unvetted, unqualified private individuals and entities with virtually no
accountability to the State to carry out these political objectives.

                                                                                    26
       We need not speculate as to how GEER Fund money might have been more
responsibly stewarded had it been allocated to an appropriate state agency, such as
SDE. Notwithstanding the Governor’s reservations about SDE discussed above, $8
million in GEER Fund money was ultimately awarded to SDE after the agency
offered to match the Governor’s contribution with federal funding it had received
separately through a different CARES Act grant program, the Elementary and
Secondary School Emergency Relief (ESSER) Fund. 22 By combining the $8 million
in ESSER Fund money and $8 million in GEER Fund money, SDE created a
competitive Incentive Grant program to provide assistance to local school districts
to address emergency needs related to COVID-19. 23 The program was intended to
help educators bridge the digital divide and strengthen distance learning in the wake
of the pandemic.

       Unlike the BTG and SIS programs, SDE designed and implemented a
comprehensive, formulaic awarding process that ensured its $8 million GEER grant
was actually used to support local school districts that were most significantly
impacted by COVID-19. SDE provided grant packages to school districts that
included an application, instructions on the application, and guidance on allowable
and unallowable expenditures (e.g., establishing Wi-Fi hot spots and online systems
to support distance learning). Federal auditors later determined that the areas of
impact SDE included in its award process did in fact align with the purpose of the
CARES Act. SDE further developed a written monitoring plan and a reimbursement
process to ensure the funds were only used for allowable purposes. After SDE
allocated the GEER Fund subawards to school districts, SDE posted the criteria it
used to determine allocations to its website. It further included the criteria and the
related processes it used to determine subrecipient schools, as well as the amounts
awarded to each, in a 45-Day Report submitted to the USDOE.

      Following audits by both state and federal authorities, it was uniformly
determined that all SDE GEER Fund subawards were allocated consistent with
GEER Fund objectives. In the end, SDE allocated 100% of its $8 million GEER
Fund award with no questioned costs. The success of SDE’s GEER-funded Incentive
Grant program was unquestionably the result of its well-established grant
management system. SDE at that time employed its own trained and experienced

22
  ESSER Fund grants were awarded directly to State Educational Agencies for the purpose of
providing local school districts with emergency relief funds to address the impact of COVID-19.
23
  Although the program used both GEER and ESSER Funds, SDE took steps to segregate the
funds into two different accounts to maintain fidelity to the separate programmatic requirements.
                                                                                               27
grant management staff of between fifty to one hundred state employees accustomed
to administering hundreds of millions of dollars in federal educational grants daily.

       Contrary to the assumptions evidently held by the Governor’s Office at the
time, this Grand Jury received convincing evidence that SDE would have been
willing to implement and administer initiative programs directed at providing
financial aid to address the pandemic-related educational needs faced by private
schools and non-public school students. As a matter of fact, SDE did allocate a
portion of its federal pandemic relief dollars to assist students attending private
schools. We have no reason to doubt SDE would have carried out private-education
focused initiatives with as much success as it did its Incentive Grant initiative.
Further, there is every reason to believe that the systemic mismanagement that
pervaded BTG and SIS would have been avoided had the programmatic monitoring,
reporting, and transparency mechanisms employed by SDE been applied in the
administration of those programs.

IV.   CONCLUSIONS AND RECOMMENDATIONS

       The evidence received by this Grand Jury provided important context that
elucidates how the decisions and inactions of State leaders resulted in the woefully
inadequate management of GEER funds allocated by the Governor to the BTG and
SIS programs. Our investigation revealed significant issues, including a complete
lack of oversight and accountability, that led to the improper distribution and
allocation of federal funds through these programs. We heard the testimony of
multiple individuals from both inside and outside of state government who were best
positioned to witness firsthand—and for some, to participate in—the decision-
making processes surrounding the programs’ development, implementation, and
administration.

       Upon consideration of all the evidence and testimony presented over the
course of our investigation, the Grand Jury concludes that the fundamental problem
from which all other deficiencies in the BTG and SIS programs stem was the State’s
disregard of existing administrative safeguards in the interest of advancing a political
and philosophical agenda. While there is nothing inherently improper with elected
officials pursuing their own policy goals, the politically motivated decisions in this
case were made at the expense of ensuring responsible stewardship of public money.
Contrary to the assurances the State made to the federal government, and despite the
warnings it received at the outset, the State failed to consult or include any person
                                                                                     28
or entity knowledgeable in federal grant management to ensure BTG and SIS
satisfied GEER Fund compliance requirements.

        To compound the problem, the State delegated its administrative and decision-
making authority to private individuals and special interest groups with no
qualifications or experience to competently manage federal grant funds. The State
bestowed these individuals and organizations with control over millions of dollars
in federal funding without any vetting process or formal agreement assuring their
accountability to the State. Similarly, the State contracted with a private vendor
without requiring compliance with grant specific requirements, such as monitoring
and recordkeeping obligations. The systemic deficiencies in the BTG and SIS
programs resulted in the waste and misspending of millions of dollars in emergency
relief funds, subjecting Oklahoma taxpayers to liability for repayment to the federal
government and depriving hundreds, if not thousands, of Oklahoma families and
students from receiving the educational pandemic aid that they needed and were
entitled to receive.

       While many of the issues revealed by our investigation were caused by ill-
advised decisions by private individuals, the State bears the ultimate responsibility
to account for its own misuse of federal funds. It cannot delegate or contract away
this duty. The errors identified in this report could have been and should have been
prevented. To ensure these government missteps are not repeated in the future, the
Multicounty Grand Jury makes the following recommendations:

      1. The State should establish minimum, mandatory, and ongoing training
         requirements in federal grant management for any state agency or office
         receiving federal funding of $10 million or more annually. Training should
         be consistent with the requirements and recommendations of the federal
         agency or agencies issuing the grant(s) and encompass topics including,
         but not limited to: procurement and purchasing standards; competitive
         bidding requirements; identification and resolution of conflicts of interest;
         recordkeeping and retention requirements; implementation of internal
         controls; recognizing and preventing fraud and mismanagement; making
         and monitoring subawards; considerations in selecting subrecipients;
         distinguishing subawards from procurement; and keeping informed of
         changes and updates to federal grant requirements including the Uniform
         Grants Guidance promulgated by the United States Office of Management
         and Budget.

                                                                                   29
2. Every state agency or office receiving federal grant funds in excess of $10
   million annually should be required to promulgate written rules or adopt
   written internal policies establishing appropriate federal grant
   management guidance.

3. The State should establish a training program for elected officials, agency
   and department heads, and the chief deputies and finance officers of
   elected officials and agency and department heads that encompasses
   procurement and purchasing standards, competitive bidding requirements,
   identification and resolution of conflicts of interests; recordkeeping and
   retention requirements; the implementation of internal controls; and
   recognizing and preventing fraud and mismanagement.

4. A state agency or office receiving federal grant money should ensure the
   use and disbursement of funds is overseen by personnel with sufficient
   training and experience in federal grant management to ensure compliance
   with general and grant-specific laws, regulations, and guidelines.

5. The Legislature should enact legislation (1) limiting a state agency or
   office’s authority to delegate decision-making authority over federal
   funding to private entities or individuals, (2) mandating a state agency or
   office undertake appropriate vetting of any private entity or individual with
   which it desires to collaborate on the management of federal funding, (3)
   prohibiting a state agency or office from collaborating with a private entity
   or individual without a written contract defining the scope of the private
   entity or individual’s authority to act on behalf of the state and agency with
   specificity and the compensation afforded to the private entity or
   individual, (4) requiring any such contract to be published for public
   inspection, and (5) voiding any contract or obligation entered into by a
   private entity or individual on behalf of a state agency or office without
   written approval by the appropriate state office or agency.

6. State executive officials must utilize available state resources, experience,
   and processes regardless of political and philosophical differences between
   various segments of state government. Failure to do so risks, if not ensures,
   repeating the mistakes and failures of the BTG and SIS programs. Doing
   so is perhaps most important in times of crisis and urgency, which our State
   will surely face again.

                                                                              30


File and source

File

multicounty-grand-jury-geer-report-2024-10-10.pdf

Size

420,766 bytes

SHA-256

2dc47c5aa4b1dada32853e68d9e6339ceff61868cf36e2ec0276ccb8b62b4d80

Our copy

multicounty-grand-jury-geer-report-2024-10-10.pdf

Original

oklahoma.gov