State officials are downplaying the result of an internal State Board of Education review, which pinpointed up to $180,000 in ineligible, taxpayer-funded purchases through the Empowering Parents education microgrant program.

The purchases represent less than 1% of the money parceled out through the $50 million program, which uses federal coronavirus aid to cover out-of-pocket education expenses such as laptops, learning materials and tutoring and counseling.

“The overwhelming majority of program purchases were eligible and approved,” the State Board said in a three-page report on the program, released Friday afternoon. “In total, the Empowering Parents Grant Program has helped 49,429 children across the state of Idaho purchase needed educational items and services, and we look forward to continuing the great work of the program in the months and years ahead.”

The state’s Empowering Parents contractor  — New York-based Primary Class Inc., known also as Odyssey — has agreed to reimburse the state for the ineligible purchases. And in a separate development, Odyssey has also indicated it will reimburse the state for nearly $500,000 it collected in interest from the Empowering Parents fund.

The State Board report

Friday’s report comes two months after the State Board announced the internal review of the program — after months of warning signs. Board staffers began actively flagging questionable purchases in February, saying taxpayer dollars went towards TV sets, smart watches, clothes and household supplies.

The report provides no specifics on the $180,000 in improper purchases.

But according to the report, thousands of other Empowering Parents purchases fall into a couple of gray areas.

About 6% of the purchases — or roughly 3,000 transactions — involve items that might eventually fall under the Empowering Parents program. These purchases involve items such as school camps and classes, computer cases and other educational equipment, physical education equipment, and uniforms.

Meanwhile, an additional 8% of purchases remain under review. “(The State Board) and Odyssey will continue to review and gather information … and expect to report back in the coming weeks.”

The tenor of the report stands in contrast to internal State Board documents, obtained by Idaho Education News through a public records request. Problems with purchases surfaced almost immediately after the Empowering Parents online marketplace went live last fall. Records indicate that Odyssey waited four months before providing vendors a detailed list of eligible and ineligible items for purchase.

On Friday, the State Board and Odyssey struck a harmonious tone.

“The state and Odyssey share a goal of working together closely to continue administering this program with integrity and transparency, and we appreciate their partnership,” State Board President Linda Clark said in a news release.

“Odyssey is committed to working in strong collaboration with all of the partners we serve, especially the state of Idaho,” Odyssey founder and CEO Joe Connor said in the State Board’s news release. “We will always work hard to quickly resolve any questions and issues.”

The Empowering Parents interest issue

In another development Friday, the state’s Department of Administration said Odyssey earned $478,656.22 in interest from the Empowering Parents account.

On June 23, the Administration Department sent Odyssey a letter demanding return of the interest within 14 days. Diverting the interest represented a breach of Odyssey’s $1.5 million contract with the state, according to the letter, provided to EdNews Friday.

The department also provided a response it received from Connor, dated Friday. Connor indicated his company is ready to return the interest — but also noted that Odyssey now stands to owe federal taxes on the interest earned.

“We are hopeful we can reach a swift resolution to this issue and continue our shared focus of delivering important educational resources for the students and families of Idaho,” Connor wrote.

The interest issue first emerged during a State Board meeting on June 14.

In a written response to EdNews, the Administration Department said it had no evidence that Odyssey delayed or withheld payments to parents in order to maximize interest. And the department said the dispute was a first. “There is not a precedent for contractors to earn interest income from state funds.”

What happens next?

The State Board review isn’t the final word.

In June, Gov. Brad Little called for an independent “full financial audit” of Empowering Parents. That audit will continue.

“The (State Board) review that took place over the past several weeks led to improved procedures that minimize the potential for misuse and add greater accountability of these public funds,” Little said in a news release Friday. “I look forward to the results of the outside audit to ensure the greatest level of transparency within the program,”

Meanwhile, a parents’ advisory committee is spending the summer reviewing the program, and the state’s menu of eligible purchases. The committee is expected to make recommendations on expanding the list of eligible purchase items — to include items such as camps, uniforms and computer cases. The committee is expected to present recommendations to the State Board in October.

The committee, chaired by state superintendent Debbie Critchfield, will next meet July 10 in Twin Falls.

“I appreciate the work that went into the audit and am glad to now see the results,” Critchfield said in a statement. “I’m confident the panel will use the results of the audit to inform the recommendations it will be making later this year.”