Phoenix-Area School District Placed Into Receivership Over $12 Million Budget Shortfall
By Staff Reporter |
The Arizona State Board of Education (AZSBE) placed a Phoenix-area school district into receivership over mismanagement of funds.
Isaac Elementary School District (IESD) had a budget shortfall amounting to over $12.3 million, which included over $9.3 million in unrestricted capital and nearly $3 million in maintenance and operations.
In a special meeting held earlier this week, AZSBE voted unanimously to place IESD into receivership.
The auditor general’s office reported during the special meeting that IESD remained among the highest risk districts since December 2020. IESD was also determined to present consistently high risks in change in weighted student count, budget limit reserve, and their financial position.
Despite five years of meetings with IESD to assist with improvements on its deficit general fund balance and loss in student-count-generated revenues, the auditor general’s office reported that their efforts failed to yield improvements.
In a letter to AZSBE last month, the auditor general reported that Maricopa County School Superintendent’s Office and ADE were unable to determine IESD overexpenditure amounts due to IESD submitting an annual financial report for the 2024 fiscal year that was “unreliable and inaccurate.” The auditor general further reported that IESD improperly moved millions of dollars in expenditures into certain funds lacking sufficient cash to support spending, causing those funds to report millions in deficits.
IESD Superintendent Mario Ventura said the auditor general’s findings were “shocking” to him and the school board. Ventura claimed that the 2024 fiscal year was the first time that their district had overspent. Ventura said that the loss of key personnel resulted in their overspending: the district’s grant specialist and two business managers. Ventura also claimed that the rush to spend federal relief funds caused the district to become lax on spending controls.
IESD argued in the special meeting that the outcome of November elections, specifically a proposed bond, could provide an alternative remedy to receivership.
The Arizona Department of Education (ADE) referred IESD to AZSBE for the funds mismanagement.
ADE submitted a letter to the Office of Elementary and Secondary Education last week advising that IESD failed to submit its completion report for federal COVID-19 relief funds by the end of December 2023. This resulted in IESD forfeiting nearly $8.9 million which they had spent but not requested reimbursement. Therefore, ADE petitioned the Department of Education to open the Coronavirus Response and Relief Supplemental Appropriations Elementary and Secondary School Emergency Relief funds to reimburse IESD.
“Because these expenditures were not reimbursed before the end of the liquidation period, the Isaac Elementary School District was required to find other sources of funds to cover these expenditures,” stated ADE Chief Financial Officer Tim McCain. “The overall result of this has been that the Isaac School District is in deep financial hardship that may result in teachers not being paid their salaries to instruct students in the school district.”
Maricopa County Treasurer John Allen warned that IESD staff and educators should deposit or cash any existing paychecks, expressing insecurity over the county’s ability to keep IESD schools open. Allen said that payments would stop in a week’s time.
“I don’t have the money,” said Allen. “It’s not a county responsibility to keep schools open, it’s a state responsibility. I wish I had better news from my office to the constituents of that district.”
Once appointed, a receiver will have 120 days to investigate and submit a report to AZSBE on how to improve IESD finances and a timeline for solvency.
IESD says its day-to-day operations will continue as usual under the receivership.
AZ Free News is your #1 source for Arizona news and politics. You can send us news tips using this link.
