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Posted on: June 30, 2022

School District Financial Issues Force Board to Act

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Phoenix – The Maricopa County Board of Supervisors has uncovered financial mismanagement at the Accommodation School District that required the Board to approve millions in taxpayer money to ensure people and creditors get paid. 

While the District’s budget for fiscal year 2022 appears to be balanced on paper, it includes revenues of approximately $2 million for which the District had no source. Despite insufficient resources, the District continued to spend throughout the year, including spending against a line of credit for which they did not have collateral. Today the Board of Supervisors approved up to $2.05 million to repay this line of credit, which expires on June 30th.

“In essence, the Accommodation School District spent money they didn’t have,” said Bill Gates, Chairman of the Board of Supervisors, District 3.  “Even worse, after we confronted them about it, they took out another line of credit for which they had no collateral.”

The Accommodation District is solely under the management oversight of the elected County School Superintendent. By law, he alone may choose to operate an accommodation school district and serve as its single-member governing Board. State statute does not require the Board of Supervisors to fund an accommodation school district.

FINANCIAL ISSUES AT THE OFFICE OF THE SCHOOL SUPERINTENDENT

Unfortunately, the overspending in the Accommodation District is not the only financial issue the Board has uncovered related to the County School Superintendent. State and county audits to date have found:

  • In multiple instances, CSS deposited revenues into special revenue funds but recorded related expenses out of the general and other funds.  This violates the “matching principle” required by County policy and Generally Accepted Accounting Principles (GAAP).
  • For at least six years, and in multiple instances, the CSS budget was not executed as presented to the Board.
  • CSS did not have documentation for how almost $1.7 million in federal grant money was spent and may be required to repay this amount to the federal government.

BOARD’S ROLE

While the Office of the School Superintendent operates independently as a separate elected office, it is funded through the county budget approved by the Board of Supervisors. 

“Board members expect budgets and business plans that deliver results to improve the lives of residents.  While the Accommodation School District is allowed by Arizona law, it is not required, and the cost per student is not supported by any quantitative results shared with the Board,” said Gates.  “We will do everything we can to support quality education for all students in Maricopa County, but we cannot turn a blind eye to clear mismanagement of taxpayer money.”

WHAT HAPPENS NOW

Today, the Board of Supervisors approved the funding to ensure the current year’s line of credit with Chase Bank is repaid.  Moving forward, it will be the County School Superintendent’s responsibility to ensure that the District is financially solvent and able to cover its expenses, including payments to teachers and vendors.

In addition, county leadership informed the County Treasurer that CSS misrepresented its financial situation to secure a new line of credit for the fiscal year beginning July 1.  The Board expects that line of credit to be cancelled.

The state Auditor General will present her findings about CSS finances to the Board of Supervisors in a public presentation next month.

 

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