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Okla. audit questions secret Education Dept. fund

Associated Press

OKLAHOMA CITY (AP) — Some former officials of the Oklahoma's Department of Education used secret bank accounts to spend more than $2 million on such things as beer, wine, food and entertainment for a decade, according to an investigative audit released Wednesday by Oklahoma Auditor & Inspector Gary Jones.

The 39-page audit, requested by Superintendent of Schools Janet Barresi, alleges the department operated a "slush fund" that allowed former Education Department officials to spend money over a 10-year period from unknown accounts that were shielded from government oversight and public scrutiny.

"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," the audit states.

According to the audit, more than $2.3 million was spent by former education officials from the secret bank accounts. Barresi, sworn in as state superintendent last year to replace long-time Superintendent Sandy Garrett, is troubled by the audit's findings and the practices of the previous administration, spokesman Damon Gardenhire said.

"These things can't be condoned or tolerated," Gardenhire said. The audit states that more investigation may be warranted, and Gardenhire urged authorities to pursue any possible wrongdoing uncovered by the audit.

Jones said a copy of the report was turned over Wednesday to Attorney General Scott Pruitt's office. A spokeswoman for Pruitt, Diane Clay, said members of Pruitt's staff are reviewing it to determine whether state law was violated.

The audit states Garrett has not responded to requests for an interview. Attempts to contact Garrett on Wednesday were not successful.

The audit says Education Department workers solicited and received donations or rental payments for booth space at various conferences for many years and deposited the funds in accounts that supposedly belonged to a private, nonprofit organization, the Oklahoma Curriculum Improvement Commission.

It says OCIC board members knew that Education Department officials were managing one account but were not aware they had opened two other accounts under the OCIC name.

Some donations were received from companies that provide education services, it says. Education vendors that have contracts with the state "may feel compelled or obligated to make those donations in order to maintain their contracts," according to the audit.

Jones said money raised by state employees on state time is the state's money under state law.

"I characterize it as a slush fund," he said. Jones said the audit shows money supposedly raised for government purposes was diverted to a fund that has no government scrutiny.

Although the money was maintained as OCIC's private funds, it somehow became Education Department funds in the year before Garrett left office, giving her the authority to transfer it, according to the audit. A total of $92,108 was transferred by Garrett to the Oklahoma State School Boards Association and, the audit says, investigators have not reviewed records indicating how the money was used.

The secret accounts were discovered after Barresi and the state Board of Education asked for a special audit last June regarding suspicious travel claims by a former employee. The employee's 2008 travel claim included per diem for an overnight stay but did not include a reimbursement amount for a hotel room.

Auditors received a check provided by the hotel in the amount of $12,233 in the name of the Oklahoma Administrator's Annual Conference. Education Department officials said the account belonged to the OCIC.

Auditors obtained documentation indicating solicitations were made in the name of the "State Superintendent's Annual Leadership Conference" with instructions to "send donation and information" to the "OCIC/Leadership Conference."

Auditors also found that donations were being made and deposited into the leadership account although the checks were payable to the Oklahoma State Department of Education.

"You can't take a gift as a state agency," Jones said. All gifts to state agencies must be routed through the governor's office, he said.

The audit lists numerous examples of lavish spending from the accounts, including a July 2007 check to the Bricktown Brewery in Oklahoma City for $6,875 with the notation "Leadership Reception." Included in the receipt were $2,800 for beer and wine, $2,725 for appetizers, $500 for a band, $800 for gratuity, and a $1,300 "service charge."

A similar invoice from 2006 to Bricktown Brewery is in the amount of $7,350 and includes $3,200 for 1,600 "draft beers, well drinks or house wine" as well as $1,000 for "band with sound and lights."

"Since the funds collected by the OSDE officials were not deposited into an official state account, there was no governmental oversight and little transparency outside of other OSDE officials in how the funds were expended," the audit states.

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