A Look Back: TUSD Use Of Prop 301 Monies

This year, as so many others has been a turbulent one for the Tucson Unified School District. Perhaps nothing has caused as much controversy as the issue of the amount and use of Proposition 301 monies.

The release by TUSD’s administration last week of financial statements prepared by the Certified Public Accounting firm of Heinfeld, Meech for the year ended June 30, 2016 raised more questions. Most significantly, according to retired TUSD teacher Lillian Fox, is the practice of the Sanchez administrative team practice of borrowing funds from the 301 Fund. Heinfeld, Meech’s report shows in 2015-16, TUSD “borrowed” $6 million in 301 money to cover shortfalls in other funds. There’s no explanation for why TUSD has to keep borrowing the teachers’ money to cover problems in other funds.

According to the Arizona Auditor General: “In November 2000, voters approved Proposition 301, which increased the State’s sales tax from 5 percent to 5.6 percent to provide additional monies for educational programs. The money is distributed to school districts, charter schools, and state schools. The Joint Legislative Budget Committee establishes the fiscal year allocation. Monthly, the Arizona Department of Education distributes the schools’ share of actual sales tax revenues based on student counts.”

The enabling legislation for Proposition 301 requires that the monies be dedicated to three main purposes: teacher base pay increases, teacher performance pay, and maintenance and operations including intervention, class size reduction, dropout prevention, teacher compensation, teacher development, and teacher liability insurance. The 301 funds should have been available to reward teachers for performance.

Fox says there “should be plenty of questions about why the external auditors never pointed out the increasing size of the loan of 301 performance money. They should also shed some light on why TUSD has needed bigger and bigger loans to cover shortages AND exactly which funds had shortfalls.”

Fox notes that Superintendent Sanchez “has claimed he could only pay 38% of the 123 money to employees because he needed the other 62% to fund the pay raises he had already committed to for 2016-17. It would be interesting to hear what Heinfeld, Meech would say about that.”

Questions in need of answers, situations in need of explanation:

● TUSD in the last few years has sometimes failed to spend all the Deseg money. In some cases, that has meant the loss of those funds. As external auditors, shouldn’t Heinfeld, Meech be suggesting improvements TUSD should make to avoid that kind of thing happening again?

● Page 78 of the 2015-16 Comprehensive Annual Financial Report ,Tucson Unified School District recently released the C AFR report shows TUSD borrowed $22.5 million from other funds to cover negative cash balances. That is $10.5 million more than in 2014-15, when TUSD borrowed $12.2 million. This is a continuation of TUSD’s increased borrowing to cover deficits in other funds. Is this acceptable?

● In 2014-15 the entire $12.2 million was borrowed from 301 funds, nearly all of it from 301 teacher performance money. For 2015-16, $6 million was borrowed from 301 fund. $6 million is still close to a year’s worth of 301 performance money. How is this acceptable?

● The CAFR does not break the 301 money down into the three 301 funds. According to the CAFR, TUSD carried over a balance of $15.4 million in unspent 301 money from 2014-15. At the end of 2015-16 per page 89 of the 2015-16 CAFR, the unspent 301 money carried over into 2016-17 had increased by $5.4 million to an even higher total of $20.8 million of unspent 301 money.

● According to TUSD’s 2015-16 AFR, the unspent 301 money carried over into 2016-17 consisted of: $15 million teacher performance money, $2.9 million base salary money, and $3 million in 301 menu money. That includes the $6 million in 301 money TUSD borrowed in 2015-16 to cover its deficits in other funds.

● Furthermore, according to the statistics on page 193 of the 2015-16 CAFR, TUSD had only 2,364 teachers in 2015-16. The number of teachers has declined every year for the last 8 years. With so few teachers, even if every teacher were able to max out on performance pay, TUSD will continue to carry unspent 301 money into next year. Somehow, TUSD’s numbers seldom seem to add up.

Education activist and TUSD parent, Betts Putnam Hidalgo stated, “Let’s hope that eroding the airtight majority bloc at the District level will add to its honesty in its financial, personnel and discipline issues. Each of these has a crucial effect on students who are, after all, the point of the whole thing. When TUSD filches poorly paid teachers’ performance pay, it suffers a self-created teacher shortage. When TUSD reduces the pay or “benefits” of its substitutes, it does the same thing. Every time a parent has no one to find out about his or her child’s achievement from because there has been a parade of short term subs in the room, it’s one more family pushed out of the district reducing TUSD enrollment. Despite all the finger pointing and name calling, insinuations about “bad numbers” and other fake news stories, responsibility rests with the past Board majority and the Superintendent they completely failed to supervise.”

“Let’s hope we see a Board that can actually appreciate the work of a completely volunteer “auditor” of sorts, instead of illegitimately challenging her numbers and her character. Let’s hope that all the empty talk about critical thinking for our 21st Century students can translate to an appreciation for the critical thinking taking place by community members around TUSD budget and transparency issues. Let’s hope that the future looks far more constructive than the past, that the Kool-Aid curdles, and TUSD moves in the direction of validating students, teachers, subs and other site personnel,” concluded Putnam Hidalgo.

Rich Kronberg, a retired teacher and education activist stated, “The Arizona Auditor General provides an annual report where all of each school district’s funding…federal, state and local…are available for public viewing online. By the same token all of each district’s spending is broken into broad general pieces, i.e. instruction (which is primarily teacher compensation,) administration, support services, building maintenance, etc… The two numbers that jump out at readers looking at TUSD’s section of the Auditor General’s most recent annual report…issued in 2016 and showing audited figures for 2015… are the percentage of funding that goes into the classroom and the percentage of funding that goes into administration. Despite all its economies of scale that the state’s second largest district enjoys, TUSD spent less than half…48.7% of its revenues…on instruction. This is far lower than the average for the state’s very large districts. It reflects the low priority the leadership of TUSD in 2015 (Sanchez, Grijalva, Foster and Juarez) had for student learning. On the other hand, TUSD spent almost 11% of its budget on administration. This is far more than the average for its peer group of very large districts and far more than the average for the state. In fact, if TUSD spent the same per pupil dollar amount on administration as other districts in its size category there would be another $12 million available to spend on student learning. The disparity between the dollars spent on instruction…well below average…and the dollar amounts spent on administration…far above average is maintained by the improper borrowing of 301 monies to pay administrative costs. Hopefully, the newly elected Governing Board majority will not be so willing to rubber stamp the failed priorities of TUSD’s former Governing Board majority. It is not at all hyperbolic to state that the learning of TUSD’s students depends upon a sea change in TUSD’s practices and priorities.”

Fox asks, “When will the board schedule an agenda item that the CAFR be presented to the Board by Heinfeld, Meech, CPA’s and that they be prepared to answer questions by the board?” Good question. Another good question: will a new Governing Board demand answers and explanations?