Proposition 100 doesn’t ensure fiscal responsibility

By Linda Bentley | May 12, 2010

| More

School audits identify poor record keeping, improper reporting, fraud and abuse
PHOENIX – The May 18 special election is just days away, early ballots have already been mailed and school districts throughout Arizona are cheerleading for the passage of Proposition 100 to raise sales tax by 18 percent for the next three years.

Taxpayers expect accountability for their money but only a handful of audits are performed each year on the state’s 229 public school districts and 602 charter schools.

And, of that small percentage audited each year, poor record keeping, improper reporting, fraud and abuse, result in overpayments and waste of taxpayer dollars.

For example, the Arizona Department of Education (ADE) Audit Unit conducted an audit of the Ajo Unified School District’s (AUSD) Average Daily Membership (ADM) for fiscal years 2007 through 2010 to address whether the district properly reported student enrollment and attendance, offered statutorily mandated sufficient instruction hours and determined if it received the correct amount of state aid funding.

Back in 2005, ADE Superintendent Tom Horne made Ajo aware of students crossing the Mexico/Arizona border into Lukeville, boarding a county school bus and being transported to attend school in Ajo.

Because students are not residents of the state of Arizona, it is improper for taxpayers to provide free education to students residing in Mexico.

To provide “proof” of residency, several of the students used trailer park addresses that were either vacant or contained an uninhabitable unit with broken windows, no water, sewer or utilities.

The audit found the district was improperly overfunded for non-resident students for FY 2007, FY 2008 and FY 2009, and needed to correct and resubmit its FY 2010 student data to ADE so that it will not be overfunded for FY 2011.

Despite being made aware of these residency issues concerning its students in 2005, the audit found Ajo has not adequately addressed them.

The audit also found the district did not provide sufficient instructional hours for its seventh and eighth grade students for fiscal years 2007 through 2009 nor did it accurately report attendance and enrollment to ADE.

While Ajo could continue to provide education to out-of-state students, it would be required, by statute, to charge tuition.

Auditors determined 105 of the 120 open-enrollment students for FY 2010 were not residents of the state of Arizona. Students claimed vacant trailer spaces, uninhabitable trailers, a house that burned down years before, and a closed motel as permanent residences.

The audit report revealed many students “are not residents of Arizona and are crossing the international border to attend school in the district as resident students.”

Auditors also found legal guardians were appointed in some situations in an attempt to establish residency for the purpose of bypassing the statutory requirement to pay nonresident tuition.

For the three years covered by the audit, Ajo was overfunded by a total of $1.2 million in Basic State Aid for students who were not Arizona residents.

Additionally the audit found the district did not provide the minimum number of instruction hours required by statute to its seventh and eighth grade students for the same three years resulting in an overpayment to the district of $79,017 in Basic State Aid.

Inaccurate reporting of student attendance data also resulted in an overpayment of $1,497 for the three fiscal years.

ADE is seeking reimbursement from AUSD of $1,259,341 and a revised report for FY 2010 so the district will not be overpaid by an estimated $536,386 for FY 2011.

Roosevelt Elementary School District (RESD) was audited for fiscal years 2006, 2007 and 2008.

The report indicated many seventh and eighth grade students did not receive the minimum number of instructional hours, which resulted in an overpayment of $832,520 to Roosevelt in Basic State Aid.

Auditors found many students were ineligible for the English Language Learners program because the students’ home language was reported as English, resulting in an overpayment of $75,432 in state funding.

Auditors also identified numerous examples of inappropriate cell phone use by district staff, including international and long distance calls to Mexico and Canada, excessive text messaging, excessive calls for directory assistance and excessive additional minutes not included in the price plan, resulting in inappropriate costs of nearly $30,000.

According to auditors, since FY 2005, the district has had ongoing problems maintaining and safeguarding its fixed assets.

In reviewing a sample of 125 fixed assets, auditors found 70 valued at over $630,000 that were lost, not properly tagged or not listed appropriately. Additionally, auditors found over 100 items that were not accounted for on any district inventory list.

Auditors were unable to locate many of the district’s fixed assets. After reviewing 226 fixed assets worth approximately $773,000, auditors were unable to locate a food mixer that cost the district $6339; 16 items, including computers, monitors and printers, totaling $21,688; and 59 of the district’s computers purchased with federal funds, ranging in cost from $950 to $2,103.

The auditors cited continued lack of oversight, poor procedures and practices that left the district’s fixed assets vulnerable to theft or misuse.

Auditors also noted RESD’s poor oversight over several critical administrative functions, including over 100 employees that lacked required documentation to prove work eligibility.

Roosevelt exhibited inadequate oversight of its procurement process with purchases circumventing established policies. Auditors identified several examples, including one purchase where the amount paid was $5,017.30 over the purchase order amount of $4,999.
Auditors found travel funds misused, vehicle use not monitored or controlled, and fuel pumps not secure.

For the three years audited, Roosevelt’s overstated ADM and funding adjustments totaled $907,952.

In addition to the $2.2 million it is seeking to recover from Ajo and Roosevelt, ADE is also requesting reimbursement of $1.7 million in overpayments made to the following districts, as a result of audits:
Phoenix Elementary School District $752,000
East Valley Institute of Technology $573,000
Pima Partnership High School – Day and Night School $190,000
Dysart Unified School District $162,000
Omega Charter School $43,000
Maya Public Charter School $12,000
Friendly House $11,000

According to Dr. Byron Schlomach, economist and director of the Center for Economic Prosperity at the Goldwater Institute, “Increasing taxes ‘temporarily’ now just assures that we will have this debate again in three years. The only way to permanently stop an overspending problem is to stop overspending. That means we must take on the challenge of weeding out ineffective programs and waste and stop asking families to sacrifice so the government doesn’t have to.”