The Mount Vernon City School District's Board of Education voted to reassign the superintendent of schools on Monday night.
It comes days after the district revealed it was the target of a federal finance investigation.
The board voted to name Dr. Kim Smith as its acting superintendent of schools, and suspend with pay Waveline Bennett-Conroy.
Dr. Smith was sworn into the position Monday night.
Last Friday, the district revealed the U.S. Attorney's Office is looking into how it used federal grant money. Community activists have long questioned the district's handling of more than $8 million, dating back to 2016.
They have also accused the district of awarding about 50 grants without a bidding process to Wellcore/Just Inspire - which also employs Bennett-Conroy's son.
Save Mount Vernon Founder Jesse Van Lew spoke to News 12 after the meeting.
"There are question marks. It's red flags up. I'm not saying you can't support that but how can you support that? Let the investigation go and let's see where it leads," says Van Lew.