Arizona Wrongly Distributed $62 Million In Federal Aid For Poor Students Over 4 Years

By Jim Small and Evan Wyloge

The Arizona Department of Education was alerted in March 2015 that it was improperly distributing federal funds intended to help low-income students, but the department didn’t undertake serious efforts to identify and fix the problem until early 2017.

As a result, the amount given to every school district and charter school that qualifies for the funding, known as Title I, received the wrong amount of funding for four school years. In all, the department misallocated $62.2 million, according to AZCIR’s analysis of data provided by the department.

The lion’s share of those errors resulted in school districts being given too much money during those four years: $46.8 million was over-allocated to local education agencies (LEAs), the federal term used for school districts and individual charter schools, while $14.9 million was under-allocated.

Four years affected

For example, Legacy Traditional Charter School in Maricopa, was given $298,046 in 2014, but should have gotten $503,412. That same year, Tempe Preparatory Junior Academy got $185,586, but should have gotten only $3,164.

Some schools got too much money for the four years, other schools got too little over the four years, and some schools got too much in some years and too little in other years. Acclaim Charter School, for example, was given $32,091 too little in 2014, and $16,453 too much in 2015.

Although the Department of Education hasn’t yet negotiated a final plan with the U.S. Department of Education to rectify the situation, public records provided to AZCIR show that the agency is considering requiring school districts who received too much money between 2014 and 2017 to repay it over several years beginning in 2019.

Likewise, LEAs that didn’t receive enough Title I funding during those years – almost exclusively charter schools – would see their funding bumped for several years beginning in 2019, according to Department of Education documents.

Talking points

Erik Francis, an education consultant who works with Title I schools and used to work in the Department of Education as a Title I specialist, said students will pay the price if ADE claws back money from school districts who were erroneously given too much funding.

“Why do schools need to suffer, to experience cuts, because of an error the Department of Education made?” he said.

Because the department over-allocated more than it under-allocated, leaving a net deficit for the program, the agency reduced the total amount of funding for the 2017-2018 school year, and ensured that no LEA saw a reduction of more than 15 percent.

2017-18 changes to allocations

ADE spokesman Stefan Swiat said federal education officials asked for a range of possible remedies. Cutting payments to schools to recoup the $46.8 million that was over-allocated remains an option, he said.

“That is a worst case – not an agreed upon plan of action,” he said.

A more optimistic prediction, Swiat said, would be that the federal Title I program provides a forgiveness to the state over the current deficit.

Records show that the Title I problem initially came to light in March 2015 after a routine examination of the program by the State Auditor General. The audit was for July 2013 through June 2014, when the agency was led led by Superintendent of Public Instruction John Huppenthal.

Huppenthal lost re-election in 2014 and was replaced in January 2015 by Diane Douglas.

Swiat blamed his agency’s failure to fix the problem sooner on employees that Douglas inherited from Huppenthal, whom he said were replaced in late 2016. Shortly after that, he said the department’s leadership realized the problem had not been fixed. After contracting in June with consulting firm Afton Partners, Swiat said ADE realized the problem was much worse than initially believed.

Afton was hired to determine the scope of the problem, devise a correct allocation formula and develop a remediation plan to present to the U.S. Education Department.
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The Arizona Center for Investigative Reporting is an independent, nonprofit media organization dedicated to statewide accountability journalism in Arizona. AZCIR’s mission is to produce, foster and promote investigative journalism through original and collaborative reporting, public events and trainings, for the betterment of our communities.