State Auditor Cindy Byrd announced the report’s findings at a press conference Wednesday.
The auditor’s office was asked to investigate whether revenue sources were allocated properly and done lawfully, as well as if the department was enforcing financial reporting requirements from school districts.
The request came amid tensions between Hofmeister and Stitt shortly before she began her failed gubernatorial bid against him. It also came after a scathing audit of Epic Charter Schools earlier that year.
Byrd said of the $7.6 billion spent annually on Oklahoma education, only 0.21% is available for discretionary spending at the state department. The audit’s scope was limited to that amount.
“The vast majority of the money is controlled by local school districts, which is where any significant fraud, waste and abuse would likely occur,” Byrd said. “SDE primarily functions as a clearinghouse for distributing funds.”
While no departmental mismanagement was found, Byrd said there are systemic problems. For instance, several vendors are line-itemed by the legislature for appropriations. That means they do not have to engage in a competitive bidding process.
According to the audit report, the math instruction platform Imagine Math received $1 million, Teach for America received $2 million, and the nonprofit alternative education program, Street School, received $100,000.
Byrd said these allocations take the executive power away from the state department to administer policy related to education, “about which SDE is the most knowledgeable.”
The legislature appropriated money to Imagine Math during FY 21 for services to fifth- and eighth-grade students. Districts also had the option to expand student access for third, fourth, sixth and seventh graders, and could receive professional development and technical assistance at a discounted rate.
According to the report, 103 districts and 243 schools decided to purchase the additional programs, totaling over $13 million.
“It is unclear whether schools would have freely chosen to purchase Imagine Learning products if SDE hadn’t been mandated to provide part of the services,” the audit said. “Schools received products for two grades and therefore may have felt obligated to choose the same product for other grade levels for consistency.”
The report also pointed to issues with the Office of Educational Quality and Accountability (OEQA). The office’s School Finance Review Commission is required by law to review district finances, and the secretary of education — who was former State Superintendent Ryan Walters — was in charge of overseeing its meetings.
According to the report, OEQA did not meet regularly and comply with statutory requirements. It failed to review school district expenditures in 23 districts that exceeded cost limits.
Byrd also called attention to the Oklahoma Cost Accounting System (OCAS), which districts use to categorize expenditures and report them to the state department. Because OCAS is a self-reporting system, submitted through the “honor system,” she said it is not an effective mechanism for oversight of spending.
As lawmakers look to update or overhaul the Strong Readers Act — which used to be named the Reading Sufficiency Act in 2021 — Byrd also pointed out $11 million allocated to districts under the law. The funds were awarded on a per-pupil basis, which left some schools receiving less than $100 each.
“Did taxpayers get an appropriate return-on-investment for their $11 million? Did more kids learn how to read? No one knows — and that’s the problem,” Byrd said.
StateImpact Oklahoma is a partnership of Oklahoma’s public radio stations which relies on contributions from readers and listeners to fulfill its mission of public service to Oklahoma and beyond. Donate online.
