As Its Schools Fail, Buckeye Elementary School District May Have Grossly Overpaid Superintendent

As Its Schools Fail, Buckeye Elementary School District May Have Grossly Overpaid Superintendent

By Terri Jo Neff |

The governing board of the Buckeye Elementary School District is coming under fire after the Arizona Auditor General discovered the superintendent of the 5,100-student district received about 100 percent more in compensation than the superintendents of Arizona’s three largest districts made on average.

Kristi Wilson became superintendent of the Buckeye District’s seven elementary schools in 2013. From July 2016 to December 2021, she received total compensation of more than $3.2 million under the terms of three employment agreements, according to a report released April 12 by Arizona Auditor General Lindsey Perry.

Of that, roughly $1.7 million is categorized as “additional compensation,” including nearly $570,000 which  Perry’s auditors believe was not owed to Wilson.  

The report also contends the District “omitted critical information” and records associated with two of the three employment agreements. The auditors expressed concern that there was a lack of transparency which “did not enable the public to monitor the District and superintendent’s performance.”

Any overpayment could constitute a violation of the Gift Clause in the Arizona Constitution, while violations of Arizona’s public records law can be prosecuted in some instances. As a result, the Auditor General’s findings have been referred to the Arizona Attorney General’s Office for investigation.

Data provided by the Auditor General shows 16 percent of the Buckeye District’s  students come from families at or below the poverty rate. And nearly 70 percent of all students qualify for free or reduced lunches.

Furthermore, four of the seven schools had a D or F grade in Fiscal Year 2019. This has resulted in the Arizona Department of Education working with District officials to create an integrated action plan to improve student achievement.

Equally concerning, according to the audit report, is that District students performed below their peer group and students statewide on State assessments in the four fiscal years ending in Fiscal Year 2019. Yet at the same time, the salary and benefits package for Wilson worked out to 54 percent more in per pupil spending for executive administration than the statewide average.

In addition, the average teacher salary in the District was $44,536, about 15 percent below the average in Arizona.

Jane Hunt, the president of the District’s governing board, responded earlier this month to Perry. Hunt did not agree with several of the audit’s findings, but Perry’s staff contends the District’s response contains “certain inaccurate or misleading statements” about the situation.

In one instance, the District contended it had agreed to pay Wilson “a retirement credit” sufficient to cover all tax liability associated it with. Such an arrangement was expressly authorized by the Arizona State Retirement System through the use of post-tax pay, Hunt responded.

But that is not what happened, according to the audit report.

“The District’s assertion that the superintendent’s retirement credits were purchased using post-tax pay is wrong,” the report notes. “ Rather, per the superintendent’s election, the District deducted and sent to the ASRS the superintendent’s retirement credit payments through pre-tax deductions.”

This is an important distinction, Perry’s staff noted, because the District’s failure to correctly apply pre-tax status when calculating Wilson’s additional compensation  led to a significant overpayment “to and on behalf of the superintendent.” And that could lead to legal problems for Wilson and the District Board.

The audit report notes that four of the District’s five current governing board members held such positions in April 2016 when the first of the employment agreements was approved to provide the superintendent with additional compensation.  

Six Of Arizona’s 207 School Districts At Highest Financial Risk

Six Of Arizona’s 207 School Districts At Highest Financial Risk

By Terri Jo Neff |

Earlier this month Arizona Auditor General Lindsey Perry published a financial risk analysis of the state’s 207 public school districts, which showed dozens of districts rank at high-risk in one or more of 10 areas of review.

But only six districts finished the review with a designation of “highest risk,” according to Perry’s office. Those districts are Double Adobe Elementary, Elfrida Elementary School District, Flagstaff Unified, Isaac Elementary, Safford Unified, and Wenden Elementary.

Elfrida Elementary is a one-school district in Cochise County which ranked high-risk in 8 of the 10 categories. The district, which had 101 students in Fiscal Year 2020 but only 84 in FY2021, was also on the highest-risk list last year, according to the inspector general.

In response, district officials noted several aspects of the financial risk areas have improved in recent months, albeit not enough to get removed from high-risk status.

“There was a limited possibility that the school was going to be able to get out of all the high risk areas during the year,” the district’s response stated. “However, the COVID relief monies have made quite an impact in the school both budgetary wise and infrastructure wise.”

District officials have used their COVID relief monies in a variety of ways, including spending more than $290,000 for salaries, technology purchases to improve 1:1 computer ratios, and repairs to HVAC systems. Monies were also spent for public health items such as plexiglass, masks, and cleaning supplies. Additional expenditures included an outside cleaning company and a staff aide to help with health scanning of students riding the bus.

Another improvement, according to public records, was addressing the district’s loss of its credit line. As a result, Elfrida Elementary District is now on registered warrant status. In February 2021, the amount was $164,031, but by early November 2021 there were no registered warrants.

“We are striving to not have a registered warrant status at the end of FY2022 by ensuring that the district calls down grant monies monthly and that we do not spend more money than our revenues allow,” the district told the auditor general.

District officials also entered into a food service agreement with the local high school, and a superintendent sharing agreement with another elementary school district.  A full-time teacher position with benefits was not filled; instead, a long-term substitute without benefits has been utilized at a savings of nearly $20,000.  

The audit report further noted Elfrida Elementary District’s primary property tax rate has been frozen since FY 2014, although district officials had not adjusted its budget to stay within the revenue it would generate based on its frozen tax rate. And the report pointed out that COVID-19 funding is short termed.

“As these are one-time monies, to avoid future financial risk and to ensure it will be able to spend within its available cash resources and budget capacity when these relief monies are no longer available to spend after September 30, 2024, the District should plan how it will adjust its spending in areas where its remaining monies are used,” the report noted.

While Elfrida Elementary ranked at high-risk in 8 categories, Antelope Union High School District in Yuma County hit that designation in only 4 of the 10 categories. Which is one reason the district fell off the highest-risk list from last year, according to the auditor general.  

But Perry’s office warns Antelope Union’s data indicates “it could move back in to the highest-risk group in the future” if it does not continue to make progress.

Among the improvements made by Antelope Union officials was a tax levy and a General Fund spending reduction. The district was also aided by COVID-19 federal relief monies, more than $160,000 of which went toward operational experiences through June 30, 2021.

District officials have told auditors they plan to use its remaining relief money for non-operational purposes. In the meantime, the auditor general is recommending Antelope Union begin formulating a spending plan sooner than later, as COVID-19 funds dry up in 2024.  

However, another problem is facing Antelope Union High School District’s finances.

Last June, Perry’s office notified the State Board of Education about accounting and bookkeeping problems with Antelope Union. As a  result, the Board deemed Antelope Union in noncompliance with the Uniform System of Financial Records for Arizona School Districts (USFR) due to deficiencies dating back to June 2018.  

This means the district is not receiving certain state monies. Which once lost, stay lost.

“The District will remain in noncompliance until cleared by the State Board of Education,” Cristan Cable, Director of the Auditor General’s accountability services division, told AZ Free News.

Cable explained that Antelope Union cannot be cleared by the Board until auditors determine the cited deficiencies have been resolved. Those deficiencies were first brought to the attention of the Antelope Union governing board back in 2019. At the time, a corrective action place was provided to district officials but there is much work remaining.   

“The State Board of Education will reconsider the District’s noncompliance when we are able to report to the Board that the District has addressed its deficiencies either based on our subsequent review at the request of the State Board of Education or based on our review of the District’s fiscal year 2022 or a later financial and compliance audit performed by the District’s independent auditors,” Cable said.

LEARN MORE ABOUT THE FINANICAL RISK OF ARIZONA’S 207 DISTRICTS https://frisk.azauditor.gov/

Arizona Board Of Regents Agree With Auditor General Finding Of Failure To Provide Adequate Oversight

Arizona Board Of Regents Agree With Auditor General Finding Of Failure To Provide Adequate Oversight

By B. Hamilton |

The Arizona Board of Regents has agreed “with all the findings,” the Auditor General reached in a recent performance audit related to Arizona’s state universities’ failure to consistently follow its guidelines.

The Arizona Board of Regents also agreed that it failed to provide adequate oversight of the universities.

On Thursday, June 3 the Arizona Auditor General released the second in a series of three audit reports on the Arizona Board of Regents (ABOR) as part of the organization’s mandatory sunset review.

The audit looked at whether ABOR’s guidelines governing university-affiliated organizations, such as university foundations and alumni associations, were consistent with recommended practices and the extent to which the universities complied with these guidelines.

The bottom line, according to the Auditor General: “The universities have not consistently followed ABOR’s guidelines governing university relationships with affiliated organizations, limiting full transparency and accountability for some university resources provided to and the benefits received from these organizations, nor did ABOR regularly receive information on affiliated organization activities.”
The Auditor General’s report includes the following findings:

• ABOR defines affiliated organizations as legally separate nonprofit corporations that hold economic resources and carry out activities primarily in support of the universities; and the State’s 3 universities have established relationships with 19 affiliated organizations, including fundraising foundations, real estate organizations, and alumni associations.

• In fiscal year 2019, the universities’ affiliated organizations made $253.5 million in payments to benefit the universities for various purposes, including donations and scholarships, and the universities paid $102.8 million to their affiliated organizations for various purposes, including service fees, real estate debt service, and expense reimbursements.

• Universities lacked current agreements and complete documentation and disclosure of some transactions with some of their affiliated organizations, limiting their ability to demonstrate the public purpose of university resources provided to these organizations and hold them accountable for providing expected benefits and agreed-upon services.

• ABOR’s affiliated organization guidelines lack some requirements to ensure full transparency and accountability and ABOR has not explicitly overseen universities’ compliance with its guidelines.

• ABOR has not required universities to report information it needs to identify, monitor, and mitigate risks associated with affiliated organization activities such as mismanagement, investment losses, and fraud.

The issues of ABOR have been ongoing. In July of 2019, the Arizona Attorney General filed a lawsuit against ABOR and Arizona State University (ASU) alleging violations of Arizona’s constitutional gift clause, and in October of 2019, the Arizona Auditor General released an audit that describes similar issues.

The Arizona Attorney General alleged that ABOR and ASU violated Arizona’s constitutional gift clause when they gifted Omni Hotel almost 37 million dollars upfront in discounted property valuations, paying for a parking garage, and paying an additional $19.5 million to build a conference center where ASU was only contracted to use 7 days per year.

The Arizona Attorney General’s records also indicated that ASU valued the property, located at the corner of Mill and University, at $85 per square foot, yet across the street, the Hilton Canopy paid $212 per square feet.

The courts, though, rejected the Attorney Generals’ arguments on the matter.

In the most recent audit, the Arizona Auditor General states that still “Universities have not consistently documented and disclosed some affiliated organization transactions, limiting full transparency and accountability, and ABOR has not explicitly overseen university compliance with its guidelines.”

This is after a response from ABOR in October of 2019, stating that due to the policies being revised in December 2018, they had not had the chance to implement the new policies effectively. Now, with the new audit, ABOR has agreed to implement the recommendations by the Auditor General.

According to the 2019 audit, the Campus Research Corporation (CRC) spent an estimated $38.1 million without written approval due to the UA not being able to demonstrate written approval from the UA president for the CRC’s budget and, instead, relied on the CRC’s Board of Directors to approve its own budget. The CRC also, contrary to the master lease agreements, inappropriately advanced $3.9 million generated at one property to another property, including approximately $1 million that the CRC advanced to the other property in fiscal years 2017 and 2018 instead of paying rent to the UA.

In 2019, ABOR had entered into 3 master lease agreements with the CRC, a nonprofit, nongovernmental organization affiliated with UA to operate, manage, and sublease ABOR properties.

The UA also failed to retain records of its public activities related to overseeing ABOR’s master lease agreements with CRC, contrary to public records laws.

ABOR continues to lack comprehensive property information to independently oversee and manage the use of its properties. As of May 2019, ABOR did not maintain a complete list of all property that it owns, although its policy requires the universities to maintain some information on ABOR properties they use. A review of the Arizona county assessors’ and treasurers’ records identified 1,127 parcels in Arizona potentially owned by ABOR and compared this information to property listings the universities provided.

Findings indicate that NAU’s listing did not include a 23-acre parcel listed on the county assessor records as ABOR-owned and included 8 acres of property for which it could not demonstrate ABOR’s ownership; UA’s listing included 255 acres of property ABOR never owned and nearly 83 acres that ABOR had sold; and ASU’s listing was limited to its commercial properties, which is only a portion of ABOR properties ASU uses.

The Auditor General found that “Although the universities have developed processes for mitigating the risk of inaccurate property ownership information, ABOR’s lack of comprehensive property information limits its ability to oversee and manage the use of its properties.”