State accounting errors leave school districts in holding pattern

Misallocation of Title I funds means some overpaid, others underpaid

Accounting errors in the allocation of Title I funds at the state education department might put Yuma-area schools on the hook for an estimated $650,000. Other Yuma schools and districts were shorted about $430,000.

Paying the piper depends on the federal government, said the Arizona Department of Education.

The Title I accounting error, which dates to fiscal year 2014 and affected up through the 2017 fiscal year, amounts to about a $33 million to $34 million net misallocation and is being investigated; the Arizona Department of Education hired fiscal consulting firm Afton Partners, Inc. to handle the task, said ADE spokesman Stefan Swiat in a news release dated Oct. 13.

ADE is preparing a formal request to the federal education department proposing to “hold harmless” schools that were overpaid. Schools that were underpaid would be “made whole,” Swiat said in an interview Wednesday with the Yuma Sun. The error affected both district and charter schools.

“That is our recommendation and that is going to be our plan,” he said. “So if it goes in a different direction somehow then it’s because the U.S. Department of Education decided to not go along with our plan.”

The misallocated funding data, which was posted online by the Arizona Center for Investigative Reporting, is in flux, Swiat said, as the financial consulting firm continues its corrective work.

Swiat said that the U.S. Department of Education has to sign off on the corrected data before it can be released. The AZCIR received the data spreadsheet through an open records request. The numbers were accurate at that time, Swiat said, but may have been updated within the past few weeks.

Swiat said that state education leadership feels “very optimistic” because “other government misallocations have not had to pay back money in the past.”

“What typically occurs is that the federal government wants to ensure that we just have our policies, procedures and processes in place so that it doesn’t

happen again,” he said.

Swiat said that fiscal year 2018 Title I allocations were not affected, and that their accuracy was checked several times both at the state and federal levels.

“They have already vetted those processes and that’s why our FY18 allocations went out and were already completely vetted by U.S. Department of Education.”

But districts and charters have not been officially informed of where they stand on fiscal years 2014, 2015, 2016 and 2017.

“We have not yet been informed as to whether or not we were misallocated,” said District One Superintendent Jamie Sheldahl.

Crane School District Chief of Finance and Operations Dale Ponder said the district was overpaid a little bit more than $11,000.

“If we were asked to address this, we feel that we would be able to offset the impact with the use of carryforward from the previous year to ensure that our district programs and schools were not adversely affected,” he said in an email to the Yuma Sun.

Swiat said Title I is the “largest distribution of funds from the federal government that we have here in Arizona.” Last year’s amount was $316 million.

“We’re talking about a very small percentage of funds that were misallocated when you look at the grand scope of it. That’s not to say that we’re taking this lightly here at the Department of Education, but it does sort of put it in perspective,” he said. “This is an enormous program.”

While schools and charters may be without funds, the state also shorted its own “school improvement fund,” Swiat said.

The school improvement fund helps schools that are in the bottom 5 percent of scores on the AZMerit test and the new A-F Accountability measures. Funds pay for schools needing assistance to increase their scores, Swiat said.

“We shorted ourselves that by over allocating that money to other schools . ... What we are going to the U.S.ED and saying is that we really have like a $9 million problem, because yes there was an over allocation of $33 million,” he explained.

The Title I error was made public on Oct. 13, and a few weeks later, on Oct. 31, local education agencies (as schools are called at ADE) were notified of another error — this one with funds allocated for the Individuals with Disabilities Education Act.

According to an article by The Associated Press, the department underallocated $15.2 million in IDEA grant funding, citing a letter sent Oct. 31 to school districts and charter schools. IDEA grant funds were over-allocated as well — to the tune of $14.3 million.

Crane’s Ponder, citing Superintendent of Schools Diane Douglas, noted no LEAs that had gotten overpaid would be asked to return the grant funds to ADE.

Ponder noted ADE plans to use existing reserves and have the Exceptional Students Services identify priorities to stay within its budgetary capacity.

District One’s Sheldahl said its federal grants were reduced by about $400,000 for the current year, and its IDEA increased slightly by about $30,000.

He noted that the ADE has “implemented an additional bureaucratic level for approval of all grant applications.”

The Sun reached out to other superintendents for this article, but not all responded by press time.