Itamar Marcus and Barbara Crook have the documentation at Palestinian Media Watch (thanks to all who sent this in):
An integral component of the United States” war on terror is cutting off funding to terrorists and the infrastructures that promote terror. This report documents the undermining of this US policy and the apparent violation of US law by the United States Agency for International Development (USAID) in the Palestinian Authority (PA) areas through the funding of Al Quds Open University. Al Quds is a Palestinian university that hosts branches of the Hamas and Islamic Jihad terror organizations throughout Gaza and the West Bank.
Read it all.