The Minnesota Department of Education earlier this month turned over to the legislative auditor's office the issue of whether the state is due any reimbursement of the grant used to construct and equip the north Minneapolis quarters of the late Synergy Academy. It turns out that the department and Eric Mahmoud, who served as Synergy's board chair when it signed off on the grant in 1999, have had their differences before. Those differences are laid out in a dispute over the state pulling another grant of about $300,000 in 2005 from Mahmoud's Harvest Prep Academy. Six months later, Mahmoud filed a charge of discrimination with the state Department of Human Rights against the education department. He alleged on behalf of Harvest that the state action represented racial discrimination in providing public services, and reprisal.

Mahmoud laid out a scenario in his complaint in which the state pulled the federally funded Reading First grant without prior warning, and called the state's four reasons for its action as "false, inaccurate, unsubstantiated" or contradictory. He labeled those reasons as a pretext for discrimination against an all-black school. But then-Human Rights Commissioner Velma Korbel in 2007 issued an order of no probable cause of discrimination. A departmental memorandum found no substantiation of the contention that Harvest was treated less favorably than similar schools of other races, and rejected Mahmoud's contention that the grant cancellation was retaliatory. The attorney general's response to Mahmoud's claim, on behalf of the Education Department, said that the state gave Harvest opportunities to meet grant conditions but that the school failed to do so. The state response said the department expressed concerns to the school over whether it was following Reading First requirements. That included doubt that the school hired a fulltime literacy coordinator as required, and observations that paraprofessionals rather than the required licensed teachers were instructing students in the program. The department said a University of Minnesota staffer monitoring the grant's implementation observed the same issues. The department said. that despite Mahmoud's assurances, the department's concerns were not addressed. So it cancelled the grant and upheld that decision after reviewing it twice at Harvest's request. "MDE had ample non-discriminatory reasons for cancelling the grant," the department said. It also said it provided "ongoing, clear, and sufficient warning" to the school about its concerns, in response to Mahmoud's claim of no warning that the grant would be pulled.