Arizona Democrats want explanation from Tom Horne on withheld poverty funds

Educators in the House Democratic Caucus sent a letter to Superintendent of Public Instruction Tom Horne on Monday requesting he explain his department's decision to withhold funding for low-income students.

On March 7, the Arizona Department of Education notified school leaders that it would reduce preliminary federal aid payments designated for low-income students by 20%, though department officials said they had warned of impending cuts for months. Final funding amounts are subject to how the federal government divides these dollars among the states, but preliminary payments allow schools to start hiring personnel and making other plans.

School leaders said the decision put them in a precarious position at a time of year when spending decisions must be made. Some have had to cut positions and scrap programs such as summer school.

"As teachers, we require students to show their work," reads the letter, signed by Nancy Gutierrez, D-Tucson; Jennifer Pawlik, D-Chandler; Judy Schwiebert, D-Phoenix; and Laura Terech, D-Phoenix. "Please share the formula that was used to calculate the 20-percent reduction, the process for distributing these funds, the timeline for making adjustments once the official federal data is released, and any other information and data that was used in arriving at this decision."

A separate letter signed by Senate Democratic Leader Mitzi Epstein, D-Tempe, and House Democratic Leader Lupe Contreras, D-Avondale, also requested more information on withheld funds.

In a statement to The Arizona Republic, Horne said the department has "just received" a final award amount from the federal government and is now working to adjust its allocations. Schools will have updated numbers this week.

"Unfortunately, like some districts and charters, these legislators do not understand this process at all," Horne said.

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Horne: Poverty changes will impact funding

In an email to school leaders on April 3, Horne said there "has been a tremendous amount of misinformation" about the allocations. The department is only a pass-through agency that dispenses funds awarded by the U.S. Department of Education.

The Arizona Department of Education "has no control over the amount," and when the U.S. Department of Education calculates the final figures, the state's Education Department "will allocate every dollar schools are entitled to," Horne's email stated.

In a typical year, the state Education Department withholds 10% until the federal budget is finalized. That percentage doubled this year, but the department has stood by its conservative estimates.

U.S. Census Bureau data shows Arizona's share of the nation's people living in poverty is down by about 6.9% this year. A state's relative poverty is a primary indicator of how federal education funds are distributed across the country, though the federal government also considers other factors in its formula.

This year, the department withheld the usual 10% as a baseline, then subtracted another 7% to adjust for the decrease in relative poverty. The department withheld an additional 3% to provide extra cushion, according to department officials.

"We sent smaller preliminary amounts because the department knew the federal allocation would be smaller than previous years and it was important not to overpay schools now and be forced to call back money later when the final federal amount was known," Horne's email states.

Democrats unsatisfied with Horne's explanation

The letter co-signed by the House and Senate Democratic leaders acknowledged the decline in relative poverty but said that decline is not steep enough to justify a 20% cut. School finance experts still don't understand how the department landed on such a large number, the letter said.

School districts are already making cuts. Cartwright Elementary School has canceled its summer program after losing $2 million in preliminary funds, and Washington Elementary School District will no longer hire an additional staff member after losing $2.2 million in preliminary funds.

"A cut of this magnitude — especially if it's based on speculation and not facts — will needlessly and irresponsibly cause immediate fiscal distress for lower-income schools and their students," the House Democratic Caucus letter states. "We are concerned about the effects, both direct and indirect, that this cut will have on staffing, programming, and resources at schools that have the highest level of need."

The letters appear to have struck a nerve, House minority whip Gutierrez told The Republic after Horne characterized her letter as "completely inaccurate" for asserting that he planned to withhold federal funding.

"We simply asked to see his work on why he's holding back on this money," Gutierrez said. "School districts know that if numbers change, they don't get to keep money that wasn't owed to them. This is a standard practice, but just to hold this arbitrary amount of money? I'm wondering if the U.S. Department of Education advised him to make these adjustments, or did he just make this decision?"

Gutierrez said she does not believe Horne's logic has been adequately explained to school leaders. Districts have been reaching out to legislators for help to understand why this is happening, she said. She wished the department had made individual calculations for schools based on their unique student populations rather than a blanket decision to withhold 20%, she said.

Horne responded with a statement of his own on Tuesday, saying the department would furnish "all the information" requested by the House Democrats.

Reach the reporter at nicholas.sullivan@gannett.com.

This article originally appeared on Arizona Republic: Democrats want explanation from Tom Horne on withheld poverty funds