(UPDATED, 11:36 a.m. Thursday, with clarification on the State Board of Education’s 2023 review of Empowering Parents, and the state’s demands for interest from Odyssey.)

Two years in, state officials have made a big change in its Empowering Parents program.

Idaho has hired Hollywood, Fla.-based ClassWallet to manage the $30 million microgrant program — which is designed to help families cover out-of-pocket education costs.

ClassWallet replaces Odyssey, a New York-based vendor which had a spotty two-year track record in Idaho. In 2023, the state conducted two separate reviews of Odyssey, amid reports of improper, taxpayer-funded purchases made through Empowering Parents. The state also ordered Odyssey to pay back nearly $479,000 in interest.

The contracting change, announced Wednesday, comes as the Empowering Parents program heads into its third year. The State Board of Education expects to begin taking new grant applications in late October.

The Empowering Parents contractor serves as the conduit between thousands of grant applicants and the marketplace. The contractor sets up an online portal, where families can spend their state-funded grants on a variety of eligible purchases — from laptops and internet access to therapy to athletic uniforms and pay-to-play fees.

“ClassWallet will bring a new level of dedication and support to this program to help ensure the state’s funds are distributed efficiently to students across the state and have the maximum intended impact,” company CEO Jamie Rosenberg said in a Wednesday news release announcing the contract.

ClassWallet could receive up to $600,000 to oversee the Empowering Parents program this year, the State Board said Wednesday, in response to written questions from Idaho Education News. The vendor will receive a 2% service fee for purchases on its online portal.

Odyssey received $890,000 to implement the program in 2023. Its original state contract, signed in 2022, was worth nearly $1.5 million.

ClassWallet and Odyssey were among three bidders for the new contract. A fourth bidder submitted an initial bid, but did not submit a final proposal.

ClassWallet’s Idaho history

ClassWallet managed the predecessor to Empowering Parents: the 2020 Strong Families, Strong Students microgrant program. ClassWallet received a no-bid contract to administer the pandemic-era program, funded with $50 million of federal coronavirus aid.

ClassWallet ultimately received about $2.6 million for this contract, the Idaho Capital Sun reported in 2022.

In 2022, ClassWallet bid for the Empowering Parents contract, and said it could run this program for about $750,000. The state rejected ClassWallet’s bid, saying the vendor had failed to meet the deadline to submit cost estimates.

Odyssey’s Idaho history

Odyssey received the 2022 contract, despite a lack of state-level operating experience.

Placed in charge of a $50 million grant program — again bankrolled with federal COVID aid — Odyssey almost immediately ran into turbulence.

The State Board quickly began receiving reports that families were using taxpayer money for a host of improper purchases — such as clothes, TVs, smart watches and household cleaning items. An EdNews public records review uncovered other improper purchases, including a gun holster, a pickleball set, gaming equipment and a drone equipped with a camera. (On Wednesday, Odyssey said these purchases were denied.)

In April 2023, the State Board launched an internal review. In June 2023, a frustrated Gov. Brad Little ordered an external audit of one of his top education priorities.

The State Board review determined that about 1% of purchases were ineligible for state grants, totaling $180,000, the board said it would seek reimbursement from Odyssey. The state also ordered Odyssey to pay back $478,656.22 in interest it had collected from Empowering Parents’ federal funding.

The external audit was released in December 2023, with Little giving the program a clean bill of health, finding only .1% of purchases ineligible for state grants. By that time, Odyssey had begun its second year on the Empowering Parents program, this time overseeing the disbursement of $30 million of state money.

Odyssey’s track record — and ClassWallet’s previous track record on Strong Families, Strong Students — played no role in the state’s contract decision.

“The (request for proposal) process … is limited to the scope of the RFP and submitted bids,” the State Board said Wednesday.

Odyssey issued EdNews a statement Wednesday, in response to the ClassWallet announcement.

“Over the last several years, we’ve helped tens of thousands of students throughout the state receive the resources and opportunities necessary to improve their learning in conjunction with hundreds of local vendors,” Odyssey said. “We look forward to continuing this important work with families across the country and partnering with the state in the future.”