The Stitt administration has made good on its threat to sue a Florida company it hired to administer a federal education program that the U.S. Department of Education says was mismanaged.
On Friday, the state filed suit in Oklahoma County District Court against Kleo Inc., which does business under the name Classwallet, charging breach of contract and negligence and/or fraudulent misrepresentation. It also asks that Classwallet be found responsible for producing documentation demanded by federal investigators.
Classwallet had no immediate response to the suit.
The administration claims that Classwallet is to blame for an unflattering federal audit of Oklahoma’s handling of the Governor’s Emergency Education Relief Fund, known as GEER. The state received nearly $40 million through GEER, which was a component of the COVID-related federal CARES Act.
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That audit, released in July, said the money administered through the Oklahoma State Department of Education was properly managed but that $31 million under the control of Gov. Kevin Stitt’s office lacked sufficient documentation and in some cases seemed to be spent improperly.
Several million dollars of the state’s GEER allocation were not spent at all.
The audit recommended that the U.S. Department of Education pursue the return of more than $6 million from the state. It is particularly critical of two programs, Bridge the Gap and Stay in School.
Bridge the Gap provided grants to parents for education-related expenses, and Stay in School was supposed to help low-income students make private school tuition payments.
The audit found that some Bridge the Gap grants were used for such things as household appliances, security cameras, televisions and stereos and that the eligibility of Stay in School recipients was not sufficiently verified.
Stitt and Oklahoma Secretary of Education Ryan Walters maintain that Classwallet, which they hired to oversee the programs, is to blame.
The federal audit directs its attention to Walters, who was involved in choosing Classwallet while still a private citizen and not yet a member of the Stitt administration. Emails cited in the audit indicate that Walters declined to use a security setting that would have prevented Bridge the Gap funds from being spent with multi-line retailers such as Walmart and Home Depot. Walters said he did not want to limit recipients’ retailer options.
Walters is now a Republican candidate for state superintendent of public instruction.
The lawsuit was randomly assigned to Oklahoma County District Judge Sheila Stinson, who was originally appointed to the bench by Stitt and is the wife of state Rep. Preston Stinson, R-Edmond.