OKLAHOMA CITY — It’s clear that “state actors” are responsible for millions in misspent education COVID-19 relief funds, not the Florida-based vendor the state had sued, Oklahoma’s new attorney general said Tuesday.

In a news release, Attorney General Gentner Drummond said he has dismissed the lawsuit his predecessor, John O’Connor, filed against ClassWallet after concluding the litigation is “almost wholly without merit.”

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

He said his office will now focus on who should be held accountable based on their role in “causing relief dollars to be misspent” under the Governor’s Emergency Education Relief, or GEER, Fund.

“While the lawsuit has been dismissed, this matter is far from concluded,” Drummond said. “My office will continue engaging with various state and federal agencies to investigate this egregious misuse of tax dollars.”

A July federal audit flagged millions in federal COVID-19 pandemic relief aid expenditures that were reportedly administered outside state Department of Education oversight and earmarked for low-income families to use on education-related purchases.

The federal audit found that the state should return about $653,000 because families were allowed to spend the funds on non-education-related items like televisions, video game consoles, home appliances, Christmas trees and air conditioners.

It found that the state did not use an internal spending control option offered by its vendor, nor did it review expenditures. It also called on Oklahoma to audit another $5.5 million in the fund that may also need to be returned.

“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 Gov. Kevin Stitt.

In an interview with CNHI Oklahoma last year, Stitt said that the state set up the grant program to allocate up to $1,500 per low-income parent to be used on their children’s education.

He said Oklahoma families have said that because their school was closed during the pandemic, they bought a washer or dryer “because normally my kids’ clothes were washed at school, or I bought a refrigerator because I had to feed them at lunchtime because the school was closed down in my ZIP code.”

He pointed to an internal audit that found that the vendor may have erred, and he vowed that it would be held accountable.

Stitt also said “once this all shakes out,” maybe the Legislature “goes and sues those families to get that $1,500 back” or perhaps the vendor would have to pay it back.

In a statement, ClassWallet said it was “gratified” that Drummond dismissed the lawsuit.

“Since its founding in 2014, ClassWallet has dedicated itself to providing school districts and state agencies with its trusted digital wallet technology platform, designed to help leaders deliver on the promise of education,” the company said.

Ryan Walters, who serves as Stitt’s secretary of education, was reviewing the decision Tuesday afternoon, said Matt Langston, his spokesman.

Janelle Stecklein covers the Oklahoma Statehouse for CNHI's newspapers and websites. Reach her at jstecklein@cnhinews.com.

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