Chicago Public Schools agrees to pay feds back $1 million over misallocated grants

Fox News

5 days ago

FIRST ON FOX – The Chicago Public Schools district and the Department of Education (ED) reached an agreement to pay back over $1 million after issues arose when the district reported their Native Indian student population when applying for federal grants.
Documents obtained by Fox News Digital show that the ED's Office of Inspector General found that Chicago Public Schools were counting South Asian students from Myanmar, Pakistan and Nepal as Native Americans to receive additional federal funding.
The repayment of funds is not considered a fine because the amount owed by the school district resulted from an agreement between the school district and the ED.
Chicago Public Schools officials received federal funding from the Indian Education Formula Grant, which provides educational and cultural programming to students of Native American and Alaska Native Ancestry.
The American Indian Education Program, managed by Chicago Public Schools' Office of Language and Cultural Education, received an annual grant from the ED's Office of Indian Education – the program's primary subsidy.
In order to obtain funds, the Office of Indian Education would allocate an amount based on the total number of students enrolled in Chicago Public School's American Indian Education Program.
Students are required to be of Native American ancestry.
The case first opened in 2021, when the ED Office of Inspector General (OIG) reviewed data from Chicago Public School's student database showing over 1,000 students who identified as Native American. The investigation highlighted that several students' surnames indicated that they were of South Asian ancestry, specifically natives of India, Myanmar, Bangladesh, Nepal, and Pakistan.
In 2024, the OIG investigation concluded the program manager and school district "intentionally" submitted and certified false information to the federal government for years.
Chicago Public Schools' reporting of the information resulted in about $140,000 more federal funds than they were entitled to during the 2022-2023 and 2023-2024 school years. The ED investigation discovered further that hundreds of thousands of undeserved federal funding was granted to the district prior to 2022. The investigation estimated a total of more than $1.1 million in misallocated funds over the past decade.
The Chicago Public School District is already facing enrollment struggles, budget woes, and had tensions with the teachers' union during their contract negotiations.
The school district told Fox News Digital that at no point did CPS officials misidentify students by race or ethnicity. Contrary to what the OIG report states, CPS officials claimed there was no misclassification of South Asian students as American Indian. They also said they worked closely and cooperatively with the ED's Office of Indian Education to "review past practices and implement a stronger, more accurate system for collecting voluntary tribal enrollment information."
"This includes clear protocols for verifying tribal membership through federally-recognized documentation from the student, parent, or grandparent through a voluntary process at each school," the spokesperson added. "The District is also enhancing training, data collection, and engagement efforts through the CPS Office of Multilingual-Multicultural Education (OMME), the Office of Family and Community Engagement (FACE), and other departments that work with Native families."
CPS officials told Fox News Digital that ED's Office of Indian Education has commended them for "ongoing cooperation and for proactively addressing these issues."
CPS said they will not apply for the American Indian Education grant for Fiscal Year 2026 to proceed with caution and to ensure full compliance in the future.
"CPS has agreed to repay funds to the federal government because the District could not fully verify historical documentation related to the collection and submission of data confirming the identification of American Indian students as part of the District's application for the American Indian Education grant," the spokesperson said.
However, an ED spokesperson who sent Fox News Digital the documents accused CPS of "knowingly submitting and certifying false information about their student population."
Reacting to the CPS statement, the ED spokesperson doubled down, referring to the OIG investigation which "found that CPS's American Indian Education Program, at the direction of Program Manager (redacted), has continued to submit false program enrollment on federal grant applications in 2022, 2023, and 2024, even after OIG reported in 2021 that (redacted) and the AIEP have been significantly misstating program enrollment data on grant applications for several years."