A four-year-running error by the Arizona Department of Education could end up costing Tucson-area school districts millions of dollars they’ve already spent, but should have never received, if the federal government doesn’t forgive the department’s mistake.
The Arizona Center for Investigative Reporting, a nonprofit newsroom, revealed this week that a previously identified but unaddressed error in the methodology the Department used to calculate districts and charter schools’ federal Title I funding snowballed over the years, resulting in a $62 million miscalculation.
And local school districts say while the Department of Education has been investigating the error, they’ve essentially paused the application process for this year’s Title I funds, resulting in payment delays that have forced them to juggle different funds to stay afloat.
Title I funds are intended to benefit low-income students, and are used to fund counselors, academic and reading interventionists and tutors, and programs aimed at homeless students, summer academics and family and community engagement.
Making matters worse, districts say the Department of Education hasn’t kept them in the loop about the nature of the error, or the fact that they could be on the hook for those overpayments.
Ricky Hernandez, Chief Financial Officer of the Pima County School Superintendent’s Office and president of the Arizona Association of School Board Officials, called the Department’s handling of the issue “a screwup on so many levels.”
“There are more questions than answers here. This Title I money is two months late, and that’s a lot of money,” he said.
According to data obtained by the Arizona Center for Investigative Reporting, some schools — mostly charter holders — were not awarded all the funds they deserve, and may actually see an increase when the Arizona Department of Education resolves the error.
But all of Pima County’s nine major public school districts were awarded Title I funds they weren’t entitled to because of the department’s error. As a result, the Arizona Department of Education is considering forcing the schools to repay the funds, though Department officials say they hope it doesn’t come to that.
Tucson’s two largest school districts were some of the hardest hit by the error.
Tucson Unified School District, which received a wrongful overallocation of $2.5 million over four years, was the second most overpaid district in the state. Sunnyside Unified School District received an additional $1.7 million in Title I funds, making it the fourth most overpaid district in the state due to the error.
Title I funds come from the federal government through the U.S. Department of Education, and the Arizona Department of Education is working with its federal counterpart to attempt to remedy the error without forcing schools to repay the money they were wrongfully awarded, according to Stefan Swiat, an ADE spokesman.
“We think we’re going to work something out with (the federal department) that creates as little disruption as possible. There is a possibility that (repayments) occur, but that is just one scenario,” Swiat said, noting that he doesn’t expect the federal department to OK any plan until next spring.
But if schools do end up on the hook for their overpayments, the result would be disastrous, according to Ed Dawson, Executive Director of Federal Programs and Research at Sunnyside Unified School District.
“Those cuts would come on the backs of our kids,” Dawson said.
He noted that even with the overpayments, Sunnyside’s Title I funds have been in decline in recent years, and this year, they’re expecting a 10 percent cut, bringing the district’s total Title I allocation to about $7.4 million.
Swiat said that those cuts are the result of correcting the formula and changing demographics at schools, and that the Department has not begun to recoup overpayments yet.
If the district were on the hook for the $1.7 million it wrongly received over the years, that would equate to almost a quarter of its annual Title I funding.
TUSD could be on the hook for $2.5 million, or more than 10 percent of the roughly $24 million the district receives in Title I funds per year, according to Renee Weatherless, executive finance officer at TUSD.
But even if the federal department doesn’t try to recoup funding from schools, the debacle has already delayed this year’s Title I checks, which usually would be arriving now, by about two months.
That means Sunnyside has had to juggle other funds to pay for items that Title I usually covers, Dawson said.
“We’re spending money that we don’t have right now,” he said. “It will probably be the first of the year before that money starts to flow.”
Swiat said Superintendent of Public Instruction Diane Douglas shares the frustration that this year’s funds will be late due to the error, but they had to ensure that the checks cut this year were accurate, and vetted by the U.S. Department of Education.
“That was some heavy lifting, but unfortunately it also caused (the checks) to go out later,” Swiat said.
He said next year, the Department is aiming to get checks out earlier than ever, hopefully by the beginning of the fiscal year on July 1.
Adding insult to injury, school districts say the state Department of Education never told schools that they could be on the hook for millions of dollars, or that they were seeking a pardon from the federal government for the error.
Denise Linsalada, Marana Unified School District’s director of state and federal programs, said she wasn’t aware of the problem until the Department of Education mentioned the error in an Oct. 19 email to schools. Even then, the fact that schools may be on the hook for past overpayments, and the exact amount of those payments, was never mentioned.
She only found out that Marana Unified could be on the hook for $475,000 in overpayments, or about 30 percent of the district’s annual $1.6 million in Title I money, when she was contacted by a reporter.
TUSD’s Weatherless concurred, saying the district hadn’t received any documentation about the possible ramifications from, or solutions to, the problem.
Swiat said the department has been trying to communicate with schools about the problem without alarming them, but acknowledged they never explicitly explained to schools that they could be on the hook for millions of dollars.
He called it “unfortunate” the Arizona Center for Investigative Reporting got hold of the information before the department had answers for schools and solutions to the problem because it hurt the Department’s ability to “manage the situation.”
“The silver lining to this is we’re really examining our internal processes and create a system of checks and balances to ensure this kind of misstep doesn’t occur again,” Swiat said.