Oakland Unified is asking for more time to resolve the state's findings of noncompliance, said spokesman Troy Flint.
"Normally, you would have had a longer time frame ... to make sure you have all your ducks in a row," Flint said. "We didn’t have that. Working in a more compressed time frame was a challenge for us."
School board member Noel Gallo, who has pushed for more oversight of the funding, said he will work to "address publicly the corrections that we have made and be able to monitor that on an ongoing basis."
School districts are allowed to use the federal money to pay private school teachers to provide services like additional tutoring, but the teachers must be independent of the private schools.
The education department's review stated that Oakland Unified inappropriately paid $21,000 to a St. Andrew teacher who was not independent of the family-run school and that the district must "recover" those funds.
If the district is at fault for the problem, Flint said, it will have to compensate the federal program with other district money.
The report also cited the district for hiring the administrator of a Nation of Islam-affiliated K-12 school, Muhammad University of Islam, to provide services at her own school.
Flint said the district has "philosophical differences" with the California Department of Education over its interpretation of the law.
"We had a differing interpretation, but obviously, we’re compelled to follow the judgment of the CDE and we’ll do that," he said. "But we just want to make sure that we have clarity on what the parameters are."
Some private schools have objected to the requirements now being enforced by state officials, he said.
"Because there’s been more scrutiny as a result of the investigation related to St. Andrew, I guess they feel that some autonomy has been compromised," he said. "The district, the state and the private schools need to reach a common understanding so that everyone can be satisfied that the law's being upheld."
The state review also singled out $3,600 in inappropriate payments to Robert Lacy Jr., a St. Andrew teacher whose father runs the school and church. The district had paid Lacy $100 per hour to repair computers for student use in October 2011 and again in March of this year. The Department of Education's report directed the district to reimburse the federal program from another funding source.
In earlier interviews with California Watch, several former students said Lacy would hit, kick and throw things at students and rarely let them use the computers. School officials have denied all allegations of abuse.
Earlier this year, Oakland Unified decided to cut off federal funds to St. Andrew. After California Watch's investigation, the district determined that the school did inflate enrollment figures, which are used to allocate the funding.
The district also added two staff members to oversee the funds and required more visits to private schools to better monitor the use of the money.