The TPS audit by State Auditor Cindy Byrd was released last week.  The report had been requested by Gov. Kevin Stitt. He was concerned about COVID funds spending, vendor contracts and complaints about the district violating the banned teaching of critical race theory in schools.

The audit covered the span of time under Superintendent Deborah Gist’s leadership.  Gist resigned in August 2023.  The audit covers 2015-2023 and is 59 pages long. The report includes the problems encountered and examples. The full report has not be printed but is available on the agency’s website (www.sai.ok.gov) and in the Oklahoma Department of Libraries Publications Clearinghouse Digital Prairie Collection.

After the release of this audit Governor Stitt commented, “I requested this audit in 2022, and today Auditor Byrd finally confirmed what myself and many other Oklahomans believed to be true— where there’s smoke, there’s fire. And it’s deeply troubling to see Tulsa Public Schools having engaged in such gross financial misconduct,” The release of the audit is only the first step in holding wrongdoers accountable. The Attorney General needs to take immediate action and bring charges wherever possible. This can never be allowed to happen in Oklahoma again.”

Dr. Ebony Johnson, current TPS superintendent said in an interview on NewsOn6 “You know, when we received the audit information, we were not incredibly surprised at some of the areas that we knew we needed to tighten up and correct and put in fiscal transparency and so it wasn’t extremely shocking to see some of the areas, but other areas, we were taken aback by some of the information that we had learned.

“One of the things that I’m appreciative about, as we heard from auditor Byrd, is that we have been in collaboration and communication with the State Auditor’s Office, and we’ve already put things in place for quite some time in order to sure up and to do things better when it comes to fiscal transparency and just ensuring that we are on top of the things that we need to do in the area of finances.”

The two TPS School Board Members who originally requested this audit, Jenettie Marshal and E’lena Ashley are now calling for a more thorough full forensic audit to find the exact scope of the problems.

These are the key findings of the reported areas in the state auditor’s report in its own words.

The State Auditor & Inspector (SA&I) conducted a review of over $37.7 million in expenditures from 2015 to 2023. The assessment included an evaluation of TPS’ internal controls, oversight of public funds, and adherence to Board policies and statutory requirements. It involved examining more than 90 vendors and 900 transactions, uncovering over 1,400 discrepancies. TPS issued payments where invoices were paid without proper support or proof of services, and invoices lacked sufficient itemized details. These transactions included numerous instances where TPS failed to create Request for Proposals (RFP), documents inviting vendors to bid on services and/or projects. Vendors were paid without submitting bids in response to proper RFP’s. Board Policy 5202 requires RFP’s to be utilized for purchases exceeding $50,000. In addition, 19 vendors were identified where purchases were made just below the $50,000 RFP threshold, raising concerns about potential attempts to bypass Policy. Although Policy 5202 allowed specific exemptions, no evidence was located indicating that exemption protocol was followed.

Expenditures and audit control:

TPS had a systemic lack of internal controls and administration over their purchasing process. Both the administration and the Board failed to provide adequate oversight of the process. Audit results, identifying over 1,400 discrepancies, were concerning. These issues spanned almost eight years, documenting a long-term lack of management oversight.

Fraud:

TPS and the Foundation were defrauded $824,503 through various transactions and schemes instigated by the Chief Talent and Learning Officer, Devin Fletcher.

Fletcher disbursed $4,000 in gift cards to 22 TPS employees purchased with funds received from Snickelbox, LLC. An additional $42,000 in cash payments were paid directly from Snickelbox to five TPS employees.

S. Monee Kemp, in conjunction with Devin Fletcher, created false invoices, totaling $448,125, that were paid by TPS and the Foundation. There was no evidence of any work performed for these payments.

Fletcher created false invoices to inflate payments to KAG Capital resulting in the embezzlement of $21,000.

Fletcher created false invoices and inflated payments to Isaac Domingue resulting in the embezzlement of $17,100.

Fletcher created false invoices to inflate payments to Lindsay Wilkes-Smith resulting in the embezzlement of $9,000.

FOUNDATION:

TPS staff utilized the Foundation to pay for transactions that were not in compliance with law or policy.

Bonus payments, totaling $504,000, were obtained by TPS for employees through the Foundation without the required contracts.

TULSA TEACHER CORPS:

The Tulsa Teacher Corps program, launched in the summer of 2018, was operated for two years prior to receiving official authorization through legislation and the State Board of Education. During this period, Teacher Corps trainees provided instruction in summer classrooms without meeting the necessary statutory requirements.

TPS compensated Teacher Corps trainees through vendor paid stipends.

TPS overpaid Teacher Corps trainees a total of $35,640.

COMMUNITY PARTNERS:

TPS paid Growing Together, a community partner, $1.2 million between SY2020 and SY2023. The invoices were not itemized and failed to provide sufficient detail to verify that all funds were utilized in accordance with statute and that contracted services were provided.

TPS paid Growing Together $108,652 for outreach services without obtaining proper invoice support as required by 70 O.S. § 5-135. The payments included $42,089 in administrative costs.

TPS overpaid The Opportunity Project $14,400.

FEDERAL:

TPS submitted ESSER claim reimbursements using invoices that provided little to no information about the services provided resulting in federal funds being used to reimburse questioned costs totaling $4.9 million.

Vendor Paid Travel:

Outside vendors paid for travel and training costs for TPS employees in violation of Board Policy 4409.

TPS purchased $32.4 million in computer equipment from one vendor and was refunded $227,020 in “training credits.” These funds were not paid to TPS directly but were paid to TPS employees and vendors for TPS travel and expenses. Of these funds, the use of $165,977 was unaccounted for.

Conflicts of Interest:

Two TPS executive administrators operated businesses outside their TPS. employment in violation of Board Policy.  Board Policy 4409, Employee Conflict of Interest, requires that no employee should have any outside business interests that might, in fact or appearance, interfere with the employee’s loyalty to the District or impair the independent exercise of the employee’s judgment in the best interests of the District. This policy applies to all employees of the District.

Chris Hudgins, Executive Director of Bond & Energy Management, conducted business through his personal company with a school vendor. There is also evidence that Hudgins engaged in personal business activities during work hours utilizing school resources.

Board Conflict:  Board member Jania Rivera-Wester appeared to have a conflict of interest pertaining to her employer and a contract paid by the District, a violation of Board Policy 1102.34

Record Retention:

TPS did not retain all public records, limiting the District’s ability to fully comply with SA&I record requests and with the Open Records Act.

Teacher Retirement:

TPS failed to meet statutory requirements requiring the enrollment of employees in the Oklahoma Teacher’s Retirement System (OTRS) and failed to correctly remit required contributions. Due to this failure, the District will be liable for unpaid contributions, including interest. (In follow-up communications with OTRS, an exact total of TPS’ outstanding liability38 has not been determined. As of the release of this report, a minimum of $1.2 million is due, but a significant amount of additional liability is undetermined.)

State Board of Education Order 2023-SR-02

TPS did not correctly report all DEI related expenditures incurred during SY2023 to the State Board of Education, as required by Board Order 2023-SR-02.

After reviewing contracts and documents from consultants and vendors for SY2023, there was clear evidence that the concepts of diversity, equity, and inclusion were integral components of the work provided by  four vendors. As a result, certain costs paid to these vendors should have been classified as DEI expenditures. However, it was not possible to determine the exact amount, as the purchase orders and invoices lacked sufficient details to break down the specific deliverables of the contracted services. (Total cost of these four vendors for the year –  $1,712,279).

Compliance with House Bill 1775

HB1775 and the related Administrative Rules44 (Rules) adopted in response to legislation banning the use of critical race theory (CRT) became effective July 2021. The law addressed use of CRT concepts in curriculum, but the Rules added specifications prohibiting a public school from executing contracts or agreements that include or incorporate CRT.

As part of this review, $55.4 million in transactions occurring between SY2015 to SY2023 were analyzed. Of this amount, $35.5 million was spent on services, software or materials related to equity, with $5.3 million incurring after HB1775 took effect. Neither HB1775 nor administrative rules ban equity or DEI, however, the administrative code does forbid the adoption of DEI plans that promote certain elements of CRT. Given the subjective nature of these concepts and the limited documentation of their application the full extent of TPS’s compliance with HB1775 was undeterminable.

Final Thoughts

This audit report provides a thorough assessment of the District’s internal controls and oversight mechanisms, revealing significant deficiencies in both policy adherence and legal compliance. Our investigation, which included detailed and extensive audit test work, identified systemic failures across multiple areas, demonstrating a breakdown in both accountability and governance. The findings point to a failure by both the Board and the administration to effectively implement and enforce established policies, leading to serious lapses in oversight.

The audit highlights widespread concerns and reflects a need for comprehensive corrective action to restore compliance, transparency, and effective management. While these findings are concerning, they are presented to help enable the administration and Board to take the necessary steps toward addressing these critical issues and ensuring future operational integrity.

However, it is important to acknowledge that the administration has already taken proactive steps to address some of these weaknesses. Over the course of the audit, the administration has been actively working to improve internal controls and strengthen oversight mechanisms.