Statement by Department of Education on Release of Department Audit Findings

OKLAHOMA CITY (March 7, 2011) — Damon Gardenhire, communications director for the Oklahoma State Dept. of Education, issued the following statement after the release of an investigative report by State Auditor Gary Jones, which found that past agency employees over a period of ten years had operated unauthorized accounts that appeared to have been slush funds:

“We are troubled and concerned by the State Auditor’s findings about past practices under the previous administration. These things can’t be condoned or tolerated. Last year, we brought our concerns about irregular travel claims by an employee to the State Auditor, which ultimately led to the findings in today’s report. While the issues raised by the State Auditor in today’s report are not within our purview, we urge the appropriate authorities to take action to address any possible wrongdoing from past years.” ~Damon Gardenhire

Audit of Education Department Finds Secret Accounts and More

Gary Jones
State Auditor and Inspector

A Supplemental Investigative Report of the Oklahoma Department of Education was released by the State Auditor and Inspector this afternoon.

The State Auditor performed the investigation at the request of current State Superintendent Janet Barresi. The audit covers the period of time from July 1, 2008 through June 30, 2011. An initial report was released on January 4, 2012.

The report released today is a supplemental report addressing additional concerns identified during the first investigation. 

Executive Summary of the Audit:

We performed a special audit/investigation, pursuant to a request by the Department of Education (OSDE), in accordance with the requirements of 74 O.S. 2001, § 227.8. The concerns we investigated included concerns related to travel claims filed by a now former OSDE official. We have previously issued a report related to those concerns.

During our investigation of the circumstances surrounding the official’s travel claims, we obtained records from a hotel which included a check on an account that, although not an authorized account of the State of Oklahoma, listed an address of 2500 N. Lincoln Blvd, Oklahoma City, the address of the Oliver Hodge State Office Building where OSDE is located.

We began an inquiry to determine who or what entity was using a bank account listing the address of a State Office building. Through our inquiry we identified three accounts being managed by OSDE employees that were not official accounts for the State of Oklahoma.

Over a period of years OSDE employees have been soliciting and receiving donations and/or receiving funds for booth space rental at various conferences then depositing those funds in accounts purporting to be accounts belonging to a private nonprofit organization.

The Oklahoma Curriculum Improvement Commission (OCIC), is a non-profit organization whose board members were aware that OSDE officials were managing one account, an operating account, but were not aware OSDE officials had opened and were operating two other accounts under the OCIC name. From interviews with OSDE officials and employees, as well as records we obtained, it appeared not only were the OCIC board members unaware of the accounts, but some of the OSDE officials may have deliberately concealed those accounts from the OCIC board of directors.

These off-book and unauthorized accounts allowed OSDE officials to pay, at a single event, $2,600 for 85 bottles of wine and 3 kegs of beer and $5,700 for food items including a “chocolate fountain,” “Maryland crab cakes,” “mini beef wellingtons,” and “smoked salmon mousse in a puff pastry,” without following any of the requirements normally associated with government expenditures.

Later, as the accounts were being separated, OSDE employees orchestrated the movement of $14,899 from one “OCIC” account to another “OCIC” account. Then arranged for another third party entity, the Oklahoma Director’s of Special Services, to create another third party account and moved the money to that newly created account.

The Oklahoma State Auditor and Inspector (OSAI) is the independent financial oversight body responsible for auditing the books and financial records of OSDE. These accounts were not audited by the OSAI because the existence of the accounts had never been disclosed to OSAI.
The accounts were not official accounts for the State of Oklahoma and would not have appeared on any official listing of the OSDE accounts.

A “slush fund” is typically regarded as an unregulated fund that has little if any oversight and which can be used with little or no accountability. The accounts we identified appear to have been operated as slush fund accounts allowing OSDE officials to issue payments shielded from governmental oversight as well as public scrutiny.

Over a period of 10 years, in excess of $2.3 million has been expended from these accounts.

The Oklahoma State Auditor is responsible for investigating irregularities in governmental agencies and routinely performs financial investigations into questionable matters concerning the operations of state and local governments. However, the Oklahoma State Auditor lacks the authority to perform special or investigative audits unless requested to do so by other statutorily defined offices.

We have reported the results of our limited inquiry into these accounts, identified additional concerns related to the accounts, as well as the actions and activities of the state employees involved with the accounts.

Link to full audit: http://www.sai.state.ok.us/Search%20Reports/database/OSDE%20Supplemental%20Investigative%20Report%20030712%20Final.pdf

Media Advisory: State Board of Ed to Consider Special Needs Scholarship Issue

Parents, Advocates Seek Action Against Schools Breaking OK Law

WHO: State Rep. Jason Nelson (R-Oklahoma City), advocates for children with special needs, and parents of children with special needs
WHAT: State Board of Education Meeting
WHERE: State Board Room, Suite 1-20, Hodge Education Building at the Capitol complex, 2500 North Lincoln Blvd.
WHEN: 9:30 a.m., Thursday, October 21

THE STORY AT A GLANCE: During Thursday’s meeting, the State Board of Education is scheduled to consider possible action against schools that are violating state law governing the treatment of Oklahoma children with special needs.

State Rep. Jason Nelson, who authored the law providing scholarships to children with special needs (such as autism), will be in attendance, as will at least one affected parent of a special needs child. Other parents and advocates may also attend.

Under the scholarship program created through House Bill 3393, children with disabilities who have an individualized education program (IEP) qualify for a scholarship to attend any private school that meets the accreditation requirements of the State Board of Education. The amount of the scholarship is the amount the state would have spent on the child, so it requires no new spending.

Officials at the Bixby, Broken Arrow, Jenks, Owasso, Union and Tulsa school districts have voted to break that law, leaving special-needs children without access to appropriate educational services.

Nelson and affected families will be available to comment on the issue.

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Garrett says schools boards impeding Lindsey’s Law are 'in violation of their oaths'

by Patrick B. McGuigan, CapitolBeatOK.com

Oklahoma state Superintendent of Public Instruction Sandy Garrett believes members of four public school boards are “in violation of their oaths of office” since moving to oppose implementation of the new Henry Scholarships designed to benefit special-needs students.

Boards of education in Bixby, Broken Arrow, Jenks and (Tulsa) Union school districts have voted in recent weeks not to comply with House Bill 3393, which Gov. Brad Henry signed into law this year.

Passed in the 2010 legislative session, House Bill 3393, by state Rep. Jason Nelson, created the Lindsey Nicole Henry Scholarships for Students with Disabilities Program Act. The law was named to honor the memory of the Gov. and Mrs. Kim Henry’s infant daughter, who died of a rare neuromuscular disease as an infant. It is also known as “Lindsey’s Law.”

In an interview today (Friday, October 15) with CapitolBeatOK, Schools Superintendent Garrett said:

“When I took office as Superintendent of Public Instruction, I swore an oath to obey federal and state laws. I have sought every day to uphold that promise. Whether or not I like a particular law is not material. It is my job to obey the law and to implement it.

“The way I look at it, the local officials on these boards of education who have acted not to comply, or to prevent implementation of this program in their districts, are not fulfilling their duties.

“I believe they are in violation of their oaths of office. This law was passed, and implemented in a timely manner by the state.

“To be clear, in my work every day there are laws I don’t necessarily agree with but which I am required to carry out.”

Garrett concluded, “I think these school board members have been ill-advised.”

Garrett’s comments echo recent reflections from a bipartisan group of legislators, including incoming House Speaker Kris Steele, a Shawnee Republican, state Rep. Jabar Shumate, a Tulsa Democrat, and Rep. Nelson.

State Department of Education: Lindsey Nicole Henry Scholarships Page

The Oklahoma State Department of Education has created a new page on its website that provides important information about House Bill 3393, the Lindsey Nicole Henry Scholarships for Students with Disabilities Program passed during the 2010 legislative session.

The new page includes a letter to superintendents as well as a list of participating private schools. Superintendent Sandy Garrett and her staff have worked hard and done a great job in implementing this new program.

State Board of Ed Passes Rules to Implement HB 3393, The Lindsey Nicole Henry Scholarships

At the monthly Oklahoma State Board of Education meeting yesterday the Board voted to approve Emergency Administrative Rules consistent with House Bill 3393 passed during the 2010 legislative session. The rules are disigned to answer questions and provide guidance to public and private schools as well as parents as the Lindsey Nicole Henry Scholarships Program is implemented. This new law becomes effective today.

"I've worked closely with the State Department of Education and State Superintendent Sandy Garrett during the drafting of the rules by the agency," said Rep. Jason Nelson, author of HB 3393. "They have done a great job fielding questions about the program and addressing those question in the new rules."

Here are the new emergency rules which still must be approved by Governor Brad Henry. It is anticipated that he will approve the rules.

SUBCHAPTER 13. SPECIAL EDUCATION


210:15-13-7. Lindsey Nicole Henry Scholarship for Students with Disabilities Program
 (a) Scholarship Requests. When a parent of an eligible student requests a scholarship, they must notify the district of residence. The district of residence is defined as the legal district of residence, unless the child is a child with an IEP who has been on a transfer of any kind for three consecutive years, in which case the district is then defined as the receiving district, as required by 70 O.S. 13-103(d). If a child is on a transfer of any kind, that does not meet the three-year rule, and accepts the scholarship, the transfer is effectively terminated.
 (b) Payments. Payments will be made to the private school on a quarterly basis upon verification of continued enrollment and attendance at the private school. Payments will be made in arrears, following the completion of each quarter. The payments will be made after the private school provides the public school with a quarterly attendance record for each child receiving the scholarship.
 (c) Private School Eligibility. In order to be eligible to accept students on the scholarship, private schools must be accredited by the State Board of Education or another accrediting association approved by the State Board of Education. Only school districts within the state of Oklahoma can be accredited by the State Board of Education. No out of state schools are eligible to participate in the scholarship program.
 (d) Amount of Scholarship. Within ten business days of receipt by the public school district of the parental request the State Department of Education must receive from the public school a request form for a determination of the calculation of the maximum scholarship amount. The State Department of Education must provide the calculation of the maximum amount of the scholarship to the public school in writing within fifteen business days of the receipt of the request. The parent shall be notified of the maximum amount of the scholarship in writing in a timely manner, not to exceed thirty business days from the request. Scholarship amounts will be calculated at the time of the parental request and will not change during the course of the school year regardless of a school district’s mid-year adjustments. The amount of the scholarship will be calculated annually as required by 70 O.S. 13-101.1, Section 2(F)(1).
 (e) Tracking. School districts providing scholarships shall annually report for child-count and funding purposes, all students who are attending a private school under the scholarship program to the State Department of Education. Students must be reported as Lindsey Nicole Henry Scholarship Students on both the Special Education Child Count and the First Quarter Statistical Report (FQSR) and the Annual Statistical Report (ASR). These scholarship students will also be tracked through the WAVE.