By JANET McCONNAUGHEY
NEW ORLEANS (AP) - Auditors say the Federal Emergency Management Agency should take back nearly all of $3.5 million in grants approved for a church-run school in coastal Mississippi after Hurricane Katrina, though a school official says it actually received $2.8 million.
FEMA lacked adequate policies to prevent an "unaccredited and unlicensed non-public school" from getting federal money, the Department of Homeland Security inspector general's office said in the report posted on its website.
The agency has provided additional information showing that Hope Academy met state requirements, and the OIG is no longer questioning its eligibility, FEMA spokeswoman Alexa Lopez said Thursday.
The report also said FEMA ignored a conflict of interest when Hope Academy agreed to pay a company run by the board's chairman nearly $1.5 million for land.
Board chairman Martin Goldin is founder and CEO of the Florence Gardens planned community in Gulfport, where the school moved after the 2005 storm wrecked its original building in D'Iberville.
He said he became involved in Hope Academy about four years ago, after founder Donna Rodriguez asked whether he'd agree to sell the land but essentially lend the money for it, waiting to be paid until the FEMA grant arrived. She had lost thousands of dollars in option payments because attempts to buy other sites fell through, Goldin said.
"There was nobody else who would loan the money to the academy," he said. "If Donna could have borrowed money and bought a site elsewhere, she would have."
Goldin said FEMA knew about the land's ownership from the start and a federal civilian review board that considered the land purchase did not find any conflict of interest.
Lopez noted that Goldin joined the school board after the purchase talks were over.
The review board found the land worth about $500,000, and that's what the school received, FEMA said in a response included with the inspector general's report. It said inspector general's office staffers agreed after a review with FEMA workers that another $331,400 in disputed costs was reasonable.
FEMA said it has revised "guidance" on documentation and eligibility requirements, and is refining its process for getting such documentation. It expects to complete other reviews recommended in the report by Jan. 31, it said.
Goldin said the school was accredited and licensed when it applied to FEMA after the 2005 hurricane and it still is.
Hope Academy was located on about two-thirds of an acre in D'Iberville before Katrina and has more than doubled the size of its building in Gulfport, the report said.
Goldin said the amount of land and the size of the building were increased to meet state standards not in effect when the school opened in an old building in 1995, and the move brought the school into an area safer from flooding.
Photo: Federal Emergency Management Agency (FEMA) Administrator Craig Fugate speaks at FEMA headquarters in Washington, Thursday, Feb. 26, 2015. (AP Photo/Zach Gibson)