drummond classwallet
Oklahoma Attorney General Gentner Drummond dismissed the state's lawsuit against Florida-based company ClassWallet on Tuesday, Jan. 31, 2023. (Provided)

Oklahoma Attorney General Gentner Drummond dismissed a lawsuit today that his predecessor filed in August against a Florida company over its disbursement of pandemic-era education funds to low-income families.

In a press release, Drummond said he intends to hold state officials, rather than ClassWallet, responsible for the alleged misuse of Governor’s Emergency Education Relief Fund (GEER) money. Gov. Kevin Stitt, former Attorney General John O’Connor and State Superintendent of Public Instruction Ryan Walters have all said the blame lies with the company, which they claim breached its contract.

A federal audit said otherwise in July. It noted that the state failed to exercise controls built into the ClassWallet system to allow it to better regulate how families spent the money.

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

In August, former Attorney General John O’Connor announced the suit against ClassWallet, a Florida-based company, after the federal audit revealed families spent at least $650,000 of GEER funds on expenses that were not related to education.

That amount could get even higher, as the audit also recommended reviewing an additional $5.5 million for unauthorized purchases. Earlier this month, it was reported that about $18 million of GEER funds remain unspent.

‘This matter is far from concluded’

The audit reviewed items bought using Oklahoma’s share of the GEER money that the federal government provided during the COVID-19 pandemic. To distribute the nearly $8 million Stitt dedicated to families, the state Office of Educational Quality and Accountability gave a no-bid contract to ClassWallet to administer a program called Bridge the Gap Digital Wallet, which provided grant of up to $1,500 to low-income families for educational purchases.

According to the audit, Walters helped the Florida company win the contract before Stitt appointed him secretary of education, the position Walters held even before he was elected state superintendent. At the time, Walters was executive director of the newly-formed Every Kid Counts Oklahoma, an education nonprofit.

“In (Walters’) capacity as the executive director of Every Kid Counts Oklahoma, he participated in the contracting process between Oklahoma and ClassWallet,” auditors wrote in July.

Stitt also said that EKCO would manage the Bridge the Gap program and award the grants to families, though the nonprofit later said no GEER money actually passed through it.

Oklahoma households used at least $650,000 of the funds to purchase non-educational items such as TVs and gaming consoles. While the state has tried to blame ClassWallet, the U.S. Department of Education placed much of the blame with the state for not properly monitoring the disbursement through the Digital Wallet program.

With his dismissal of the suit against ClassWallet, Drummond said his office will now focus on holding state officials accountable for the matter. A number of people involved with the matter have retained legal counsel related to the ongoing investigation, NonDoc has learned.

Asked if Walters has hired legal representation, a spokesperson for Walters said he would “look into it.”

“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.”