The state Education Department used two undisclosed bank accounts as slush funds for drinks, food, entertainment, travel and more to host state education conferences, spending $2.3 million over the past 10 years, according to an investigative state audit released Wednesday.
The hidden accounts first appear on records in 1997 — seven years after former state schools Superintendent Sandy Garrett took office — and they were transferred to new accounts maintained by the Oklahoma State School Boards Association months before she left office in 2010.
“These off-book and unauthorized accounts allowed (Education Department) 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 crabcakes,' ‘mini beef wellingtons,' and ‘smoked salmon mousse in a puff pastry,' without following any of the requirements normally associated with government expenditures,” the report from the state Auditor and Inspector's Office says.
The slush funds allowed Education Department officials to pay for alcohol, food and lodging “shielded from governmental oversight as well as public scrutiny.”
Garrett, who held office for 20 years, said the whole thing is a misunderstanding and that the creation and use of the funds was vetted by the attorney general at the time and the Education Department's legal counsel.
“I've been in public office for a long time and the last thing I would condone or approve is any type of illegal activity,” Garrett told The Oklahoman on Wednesday. “I think everything is worth a look, but I think everyone deserves to try to tell the story and the real story is I believe this is a service to education in the state of Oklahoma.”
The audit notes that attempts to reach Garrett were unsuccessful. Garrett said she only received one voice message on Tuesday night requesting an interview.
Several assistant state superintendents are named in the audit and participated in soliciting funds and writing checks.
Ramona Paul, former assistant state superintendent, said she had no knowledge of the funds, until it came time to transfer them out of the department. She said she signed checks only to verify they were correct.
“That money to the best of our knowledge absolutely would not be state funds of any sort,” Paul said. “Sandy Garrett had a very strict rule of following state rules that we could not expend any state money on food or drinks.”
Cindy Koss, another former state superintendent, said she was told the attorney general had authorized the accounts.
“Taxpayer funds cannot be used to pay for food or beverages under any circumstances,” Koss said. “If a state agency puts on a meeting to serve its constituents, it cannot serve lunch or even coffee unless private donations are solicited and used.”
Koss said she volunteered her time on the board to help raise the substantial funds necessary to host a two-day conference and meet the needs of attendees.
The accounts were set up in the name of the nonprofit Oklahoma Curriculum Improvement Commission, which had a separate board of directors whose members were completely unaware of the funds.
“Not only were the (nonprofit's) board members unaware of the accounts, but some of the (Education Department) officials may have deliberately concealed those accounts from the ... board of directors,” the audit states.
According to the audit, Education Department officials acted on behalf of the OCIC when they solicited payments from vendors or companies attending education conferences hosted by the department. They deposited those payments into separate accounts.
“Anytime you gather funds as a state employee, on state time, those funds should be deposited into a state account. Obviously, that didn't happen,” state Auditor and Inspector Gary Jones said. “When you start looking at how the money was spent, I think there were obviously ways the money was spent that were not legal, like alcohol.”
Jones said where the investigation goes from here is up to law enforcement, the attorney general and elected officials.
The attorney general's office received a copy of the audit and will review it, said Diane Clay, director of communications.
Donations in question
Some of the companies that made donations to the funds had multimillion contracts with the Education Department for various education services, the audit says.
The audit notes that because state employees solicited donations from vendors “they may feel compelled or obligated to make those donations in order to maintain their contracts.”
The donations were used to pay for various expenses at two annual conferences hosted by the Education Department:
• The Superintendent's Annual Leadership Conference brought together educators from across the state for two days filled with legislative updates and professional development.
• Encyclo-Media was an annual conference for librarians and teachers.
“Whatever the reception committee decided to serve — that was paid for by private sponsors, just like the governors conference,” Garrett said.
The funds were hidden not only from the state auditor's office but also from members of the nonprofit, according to the audit.
Garrett said the funds were not hidden and that they were included in the full audit reports given to board members.
Board meetings of OCIC never included discussion about parties, bands or booze, said Debbie Arato, the retired superintendent of Moore Schools and a board member for about a year.
“As a taxpayer, I don't want to pay for it,” Arato said. “As a board member, I would have never approved it.”
Joe Siano, former president and current board member of OCIC, said he didn't realize the nonprofit was involved with the leadership conference or Encyclo-Media until 2009 when they were told the state department would no longer handle the group's finances.
The accounts were disclosed to the board in April 2009, the report says.
“That was the first time there was ever any indication that there was any overlapping,” Siano said.
He said the board did serve its purpose of providing cost-effective professional development to teachers and administrators, but he said due to a drop in membership and dwindling finances, OCIC board members voted to dissolve. This will be the last year the nonprofit holds professional development.
State schools Superintendent Janet Barresi is listed as a board member in 2010. However, she was not aware she had been placed on the board upon taking office, nor has she attended meetings, said Damon Gardenhire, spokesman for the Education Department.
Jones said the remaining balance in the accounts, roughly $90,000, has been transferred to the Oklahoma State School Boards Association, but that they have not followed up to determine what has become of the funds.