Arizona Republicans Call For Investigation Into Financial Crisis At Isaac School District

Arizona Republicans Call For Investigation Into Financial Crisis At Isaac School District

By Daniel Stefanski |

Arizona Republicans are reacting to a financial crisis involving a local school district and calling for serious investigations into the developing matter.

This week, a number of Republicans in both the Arizona House of Representatives and Senate released statements about the situation surrounding Isaac Elementary School District being placed in receivership by the Arizona State Board of Education. Some legislators are even looking to the Maricopa County Attorney to investigate the school district if the state’s attorney general does not spring into action.

House Speaker Steve Montenegro said, “Our sympathies begin and end with the students, faculty, and parents of Isaac. At the heart of this crisis are more than 4,800 students and hundreds of employees who have been abandoned by failed district leadership. The falsification of financial records and the mismanagement of public funds are a betrayal of trust and must be investigated immediately. The people of Arizona deserve to know how this happened, and those responsible must be held accountable.”

Senator David Farnsworth, the Chair of the Education Committee, added, “I’m incredibly concerned by what’s transpired within the Isaac Elementary School District. My colleagues in both the Senate and House are investigating what led to the tremendous overspending and what legislative reforms we need to adopt to make certain a similar situation doesn’t happen in the future. What the State of Arizona won’t do is provide this school district a financial bailout without implementing any corrective policies. Doing so would only be a Band Aid on the wound and most certainly do more harm than good.”

Senator Carine Werner, a first-term legislator and the Vice Chair of the Education Committee, wrote, “My heart goes out to the teachers and staff of Isaac Elementary School District, many of whom are already living paycheck to paycheck and are now fearing the money isn’t going to hit their bank accounts come pay day because of the gross financial mismanagement by administrators within this district. We are working on solutions to ensure the children of these schools are not disrupted in their learning environments and those responsible are held accountable.”

Arizona House Majority Leader Michael Carbone stated, “Since taking office, Mayes has shown zero interest in tackling corruption in school districts. Instead, she has used her office to attack parents who use Empowerment Scholarship Accounts to seek better opportunities for their children. This is the same Attorney General who dropped all felony charges against a former Scottsdale Unified Superintendent engaged in a laundry list of fraudulent schemes at multiple school districts. Amazingly, Mayes only required the former administrator to pay income taxes on illegal kickbacks the administrator received – a sweetheart settlement for the ages. The students in Isaac deserve better.”

In their letter sent to Maricopa County Attorney Rachel Mitchell, Arizona House Republican leadership wrote, “In late December, the Arizona Auditor General sounded the alarm over the possibility of a receivership and noted that the Isaac Elementary School District has been identified as one of Arizona’s highest-risk districts since December 2020. The Auditor General has also reported that ‘[t]hroughout FY 2024, the District failed to report expenditures in the appropriate funds throughout the year and submitted a misleading and inaccurate FY 2024 annual financial report’ to the Arizona Department of Education. And in another report documenting multiple deficiencies in Fiscal Year 2023, the Auditor General noted potential conflict of interest issues, miscoded financial transactions, incomplete financial records and documentation, failures to deposit cash in a timely manner, and failures to provide training and guidance related to restrictions on accepting gifts or benefits.”

The House Republicans asked Mitchell to confirm an investigation into the Isaac Elementary School District matter because they lack confidence that Mayes would “fully and fairly investigate the school district’s leadership over these serious issues.”

Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.

Phoenix-Area School District Placed Into Receivership Over $12 Million Budget Shortfall

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. 

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