AG Drummond dismisses ClassWallet lawsuit, vows accountability for responsible parties

Back in 2020, Oklahoma officials hired ClassWallet to distribute $17.3M in a federal COVID-19 relief program, intending for these funds to be used for private school tuition and materials. This could be considered one of Gov. Stitt's and now-State Superintendent Ryan Walters' first "school choice" programs.

It ended in abject failure and scandal, with a lot of taxpayer money being misspent. After a lot of frankly pathetic passing-the-buck by several individuals, Walters among them, former Attorney General John O'Connor filed a lawsuit on behalf of the state against ClassWallet for mishandling the funds. I felt that was oddly misplaced at the time, as emails later showed that blanket approval was given by Walters and others in government.

Now, Attorney General Gentner Drummond has dropped that particular suit and intends to go after individuals who are more directly responsible for the lack of oversight. 

First, some additional background, then Drummond's press release. Here's some detail from TheFrontier and OklahomaWatch:

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

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

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

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

NonDoc also has a good article on the situation, here. 

Drummond's press release:

Drummond dismisses ClassWallet lawsuit, vows accountability for responsible parties

OKLAHOMA CITY (Jan. 31, 2023) – Oklahoma Attorney General Gentner Drummond dismissed a lawsuit today that was filed by his predecessor in the wake of an audit that questioned the handling of millions in federal COVID relief dollars.

Former Attorney General John O’Connor filed the suit last August after a scathing audit by the U.S. Department of Education’s Office of Inspector General (OIG) found questionable expenditures and processes surrounding $31 million in GEER (Governor’s Education Emergency Relief) funds. The OIG report identified that funds intended to help families with education expenses were instead spent on video game consoles, home appliances, furniture, smartphones and Christmas trees, among other disallowed items.

Drummond previously expressed skepticism over the lawsuit, which accuses a Florida-based vendor of wrongdoing instead of holding accountable those responsible for causing the funds to be misspent. 

“After a thorough review of this matter, I have concluded that the lawsuit filed by the previous Attorney General is almost wholly without merit,” Drummond said. “It is clear that a number of state actors and other individuals are ultimately responsible for millions in misspent federal relief dollars.”

Drummond said the dismissal of the civil action against the vendor, ClassWallet, means his office will now focus on which individuals should be held accountable based on their role in causing relief dollars to be misspent. 

“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.”

In addition to the OIG report, Oklahoma’s handling of GEER funds is expected to be addressed by State Auditor and Inspector Cindy Byrd in the State of Oklahoma Single Audit. The Single Audit is an annual review of all federal funds expended for the fiscal year and generally is submitted between March and July.