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Gov. Katie Hobbs and legislative Democrats are calling for a special audit of some of the Arizona Department of Education’s allocations after the department lost $29 million in federal school funding because the money wasn’t spent before the deadline to use it.
“I commend the members of the state legislature who are demanding accountability and transparency,” Hobbs said in a written statement Monday. “It is unconscionable that Superintendent (Tom) Horne has let tens of millions of dollars disappear from our schools — critical federal funding that helps students succeed. I sincerely hope that the Joint Legislative Audit Committee takes up this investigation and finds out what happened to these resources. Our kids deserve better.”
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Superintendent of Public Instruction Tom Horne also announced on Monday that the U.S. Department of Education contacted the state education department last week to offer a waiver to recoup the money that was lost because it was not used before a 2023 deadline.
“I will always fight for more money for schools, so I am happy to submit this waiver request to the federal government,” Horne said in the statement. “The under-utilization of about $29 million in federal funds began in Fiscal Year 2020 under the previous superintendent and the employee who incompetently handed (sic) these allocations no longer works at this department.”
Horne, a Republican, took office in January 2023. His predecessor was Kathy Hoffman, a Democrat.
Horne added that, when the waiver request is approved, ADE will be able to increase funding to “the most underserved” schools.
Hobbs’ request for the audit in part stemmed from an Aug. 5 article by the Arizona Republic , which disclosed that the Department of Education was forced to return the tens of millions in federal school improvement grants that were set to go to district and charter schools with underperforming students.
Returning the money means that between 150-200 schools will be getting less than half of what was expected. The money in those federal grants was budgeted to pay for extra staff, professional development and training.
The federal government required that the grant money be obligated by Sept. 30, 2023, but the Republic reported that ADE didn’t realize that until March, about six months after it had expired.
But the Arizona Department of Education didn’t let school leaders know about the blunder until the summer. In the meantime, ADE searched for other funding sources to make up the difference between the lost money and the amount that districts expected, but failed to find any.
In an Aug. 7 letter , six Democratic state legislators asked Rep. Matt Gress, R-Scottsdale, the chairman of the Joint Legislative Audit Committee, to investigate grant funding reductions to ensure that ADE was exercising “the attention, transparency and clear communication needed to appropriately oversee our state’s educational funding.”
House Minority Whip Nancy Gutierrez, of Tucson, wrote that schools were informed months ago that allocations would be decreased this year due to funding reductions at the federal level, and that some saw cuts so large and so late in the fiscal year — which ends June 30 — that schools had to cut summer programs and staff.
“The Department insists it is against its policy to release the data and formulas used to determine the reduced Title I allocations, meaning the impacted schools cannot review how the funding cuts were calculated,” she wrote. “School finance officers across the state have tried and failed to re-create the reductions generated by the Department, leading to confusion and doubt regarding the accuracy of those calculations.”
She added that the Republic ’s reporting on the failure to use the school improvement funds before they expired only “added fuel to the fire.”
Gutierrez, along with her Democratic colleagues, asked Gress to consider a special audit of specific funds that go to schools that serve low-income and underperforming students, “to determine which Department practices kept federal funding from reaching schools.”
They also called for better communication between ADE and school districts.
After the Republic article was published, Horne claimed that the story “dishonestly withheld important information” that the employee from the Hoffman administration had told schools they’d been awarded smaller grant amounts than were actually available, contributing to the buildup of funds.
He also blamed that employee for failing to inform his administration that the deadline to spend the funds was soon approaching.
ADE called for a retraction of the story, but the Republic did not do so.
Hoffman acknowledged that, during her tenure, schools struggled to spend their grant money, as COVID relief funds poured in from the federal government, but told the Republic that once Horne brought in his own people in January 2023, it was their responsibility to get up to speed.
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