'Trust has been bruised': 6 concerns Arizona schools have about federal poverty funds

Superintendents, financial officers and other school leaders packed a State Board of Education meeting to address multiple concerns about how the Arizona Department of Education is managing federal poverty funds.

School leaders said earlier this week they don’t trust the department’s calculations for Title I funds, which are federal dollars that support schools with high percentages of low-income families.

The issue launched into the spotlight last month after the department announced it would withhold 20% of next school year's Title funding on a preliminary basis because of expected federal cuts. The U.S. Department of Education disburses set amounts to each state based in large part on census poverty data, then states distribute those dollars to districts and charter schools.

Now that numbers are in from the federal government, the department has updated schools' Title funding estimates, and schools aren’t happy with what they’re seeing. Here are six concerns school leaders highlighted Monday.

Lack of communication, transparency

Speakers accused the department of failing to explain itself or give proper notice about funding changes.

School leaders said they were caught by surprise this spring when the department withheld 20% of preliminary Title funds for next year.

They were surprised once more when they noticed large changes to their Title funding for the current 2023-24 school year. Department officials initially denied those claims, saying small school districts and charters lost nothing. Then they reversed course and acknowledged they had made the adjustments schools claimed.

“These recent issues regarding our Title I funding have shaken our faith in the department’s support of our work in serving some of our most academically vulnerable students,” said Sherri Rosalik, superintendent of Palominas Elementary School District on Arizona's southern border.

“ADE’s values statement includes honesty and integrity. These values were not evident when our Title I funds were cut in March with no explanation. These values were further eroded when we all experienced what felt like gaslighting by the department, being told that there were errors potentially on our part when the department later admitted to taking those funds.”

The Education Department pushed back against such claims, blaming the schools.

During questioning directed at Chris Brown, the department’s business officer of educational programs, Brown told the state board that the department had sent more than 200 emails about Title allocations this year. At least eight or nine emails went to every charter school and school district on their distribution list, he said.

"And you’re being accused of a lack of transparency,” said Tom Horne, the superintendent of public instruction and a state board member. “If someone said they were confused and they didn’t know what was happening, it meant that they didn’t read their email, is that right?”

“There is the potential for that,” Brown answered.

Stakeholders not consulted

The Committee of Practitioners is a Title I stakeholder advisory group of experts who, per statute, must review “all major proposed or final rules or regulations issued by the state” related to federal Title funds, according to the department’s website.

However multiple school leaders said the committee was not consulted before the department made changes this year.

That’s a huge concern for Jacqui Clay, a State Board of Education member and Cochise County superintendent of schools.

“It appears that decisions were made without the stakeholders,” Clay said. “If we would’ve done what we’re supposed to do as far as talking and getting with (the Committee of Practitioners), we wouldn’t be here now. I wouldn’t be asking these questions now.”

Brown initially said he was not sure if he presented to the committee, then corrected himself, saying he did speak to them on the topic.

Calculations unclear

When the Education Department published its allocation spreadsheets online, school leaders were quick to point out that those files were shared as static PDFs, not as Excel sheets. That means the department's formulas are hidden, and school leaders have been unsuccessful at recreating them.

Most state agencies do not share Excel spreadsheets because those files can be manipulated, department spokesperson Doug Nick said. PDFs also protect student-level personal data, he said.

School funding and finance experts — many of whom previously worked in the department — were unable to produce the same numbers as the department using figures in its PDF, said Rebecca Beebe, a lobbyist with Educational Finance Reform Group, which works with dozens of school superintendents and chief financial officers.

Many members of the Arizona School Boards Association, which helps set policies and train school board members, voiced similar concerns and were “unable to determine the reasoning for their numbers changing,” said Chris Kotterman, the organization's director of governmental relations.

“Unfortunately, over the past year and a half, the field’s trust has been bruised by the department,” said Alicia Williams, the former executive director of the state board who now works with Arizona School Administrators, a nonprofit that supports school superintendents.

Williams called for the department to release "workable Excel sheets" and communications to and from the federal government to help educators understand the issue and double-check the department's work.

New and expanding schools receive $0

In a letter to the state board, Paul Tighe, the executive director of Arizona School Administrators, said 28 charter schools and two school districts received $0 in preliminary Title I allocations. The entirety of those schools’ funds were swept into a shared school improvement set-aside fund.

The school improvement fund provides support and programming for schools that require federal assistance for underperforming populations. The state must contribute up to 7% of its Title I funding to school improvement. That money comes out of schools’ and districts’ allocations.

Parameters exist to ensure schools don’t experience large drops in funding from one year to the next, however. Depending on a given charter school or district’s poverty population, they cannot fall below 85%, 90% or 95% of the prior year’s funding amount.

For new and expanding schools that previously received $0 in funding, no such protection exists, according to the department. Their entire allocation could be taken for school improvement.

This year’s 30 new and expanding schools and districts lost out on a combined total of more than $1.2 million, “contrary to federal guidelines,” Tighe said.

But according to Brown, the department operated within federal guidelines. In fact, he said, the U.S. Department of Education confirmed his understanding that schools that received $0 last year could lose their entire allocation to school improvement this year.

No more third-party oversight

The department is no longer contracting with forensic accounting firm Afton Partners, which had provided outside oversight since 2017 to ensure compliance with federal requirements.

Tighe encouraged the board to seek information on why the contract was terminated because Afton Partners “could have prevented some of the recent issues.”

Nick said it was not the department’s decision to terminate the contract. Afton Partners chose not to renew the contract in 2023, he said.

Afton Partners did not respond to a request for comment.

“The Arizona Department of Education awards schools every dollar of federal funds allocated,” Nick shared in a statement to The Arizona Republic. “That allocation is determined by a mathematical formula that is reviewed and approved by the U.S. Department of Education. This process has been essentially the same for decades.”

The department began working with Afton Partners after an audit of the 2013-14 school year found Arizona was out of compliance with both the U.S. Department of Education and the Arizona Auditor General’s Office “due to errors in its calculations of district/charter allocations,” Tighe’s letter states.

The audit found 23 schools and districts had errors in their school improvement fund set-aside calculations, resulting in more than $435,000 being misallocated.

Subsequent reviews found that between the 2013-14 and 2016-17 school years, the following was true:

• School improvement set-aside was underfunded by $24.5 million.

• More than 180 schools and districts were underfunded by $9.67 million.

• Even more schools and districts were overfunded, resulting in a net total of $34 million in overallocations.

Horne’s administration points to the Kathy Hoffman administration for allocation errors that resulted in some of the late-year revisions this spring. Hoffman, the previous school superintendent, was contracting with Afton Partners for oversight during all her time in office. Horne’s administration has not had that same third-party oversight.

County superintendents could lose fiscal authority

The department this year attempted to change funding procedures for county accommodation schools that serve high-risk students through alternative programming, Yavapai County Superintendent Tim Carter said. Accommodation schools are not included within school district boundaries. Instead, county superintendents manage their instruction, academics and, historically, finances.

The proposed change instead would have given fiscal authority to the school district within whose boundaries accommodation schools were located.

“It flies in the face of logic that you’re going to give money to an entity that can't spend it,” Carter said.

Accommodation schools serve students from across the county, which, depending on the day, might not include any students from the local school district. Districts have no jurisdiction over accommodation schools and cannot make spending decisions for them, Carter said.

Those plans were ultimately postponed while the department makes “the necessary changes to ensure everything comports to the law,” Nick said.

Prior administrations had been awarding accommodation school funding incorrectly for years, Nick said. The Horne administration “is well aware” of federal requirements.

“ADE is initiating the appropriate process for where the funds go and the relationships the districts have with the accommodation entities. This means that these funds go to districts as the fiscal agent. As such, they enter into an agreement with accommodation schools to provide the service to students,” Nick said.

Such an action would be contrary to law as Carter understands it, he said.

“There are staff at ADE that have misinterpreted what has historically been done and what we believe the language still requires to be done,” Carter said. “Most of the people that are there now, really, they may be very good people, but I’m not sure they have a real good understanding of the way these programs work.”

If the department makes such a change, Carter said Yavapai County would file a complaint, which, if not acted upon in a “reasonable and appropriate way,” could lead to a lawsuit.

This article originally appeared on Arizona Republic: 6 concerns Arizona schools have with Tom Horne, federal poverty funds