PHOENIX — Saying an outside review is necessary, a House panel refused late Wednesday to require a "forensic audit" of the $64 million a year Tucson Unified School District is spending on desegregation expenses.
After more than an hour of testimony, Rep. Justin Olson, R-Mesa, who chairs the Appropriations Committee, said he would not call for a vote on the proposal by Rep. Mark Finchem, R-Oro Valley. Instead Olson said those who testified for and against SB 1120 provided "valuable information" about desegregation programs that will help lawmakers decide what action, if any, is appropriate.
But Olson's decision essentially means the legislation is dead.
Finchem, who left the committee after his own testimony — and before the panel heard from foes — was not available to react late Wednesday night.
But TUSD Superintendent H.T. Sanchez, who argued the special audit Finchem wanted, clearly was pleased. Sanchez said, though, that the committee's decision not to take a closer look will not mean any change in how the district operates.
Sen. Steve Farley, D-Tucson, who also testified in opposition to the audit, was more blunt, taking a swat at Finchem for sponsoring the legislation in the first place.
Farley, who has a child in the district, said Finchem represents no part of the Tucson Unified School District. And he said that Finchem never took the time to discuss the issue first with Sanchez, meet with district officials or review audits already done.
SB 1120 was more of a demand than a request.
Finchem's legislation was crafted so that if the district did not comply, the state would cut off its ability to levy a special tax that raises $64 million a year for the programs. And that, in turn, would have put the district at odds with a federal court monitoring its efforts.
The first-term lawmaker told the committee there is evidence the district has been misspending the money it is supposed to be using to comply with federal requirements to end a decades-old discrimination complaint.
As proof he cited the fact that the district, told to find a larger meeting space to accommodate more people, opted to remodel a school five miles away at a cost of $480,000. And those dollars, Finchem said, were paid for out of desegregation funds.
Finchem also he quoted from a statement by Gloria Copeland, an education activist who has been monitoring the desegregation program, questioning the expenditure of $3 million in desegregation dollars for a practice gymnasium.
Sanchez did not specifically ask lawmakers to kill the legislation. Instead he detailed for committee members all the oversight of how the funds are used that already exists, including a court-appointed special master, two sets of plaintiffs who sued the district and the U.S. Department of Justice.
"And a federal judge approves a final budget," Sanchez said.
The superintendent did not dispute the cost of the new board room. But he told lawmakers there's more to the story than what Finchem said.
He said while the district was implementing its Mexican American studies program there were people who wanted to go to board meetings but could not get in to the hearing room. And that site also did not provide translation services.
"So these folks filed a complaint with the (federal) Office of Civil Rights," Sanchez explained. He said that agency told the district they can build a larger board room voluntarily.
"Or you could fight us on it and if we win you have to pay those legal costs and you still have to build a bigger governing board room," Sanchez quoted OCR officials as saying. The superintendent said that information was relayed to the federal judge overseeing the desegregation case who gave the district permission to use the funds "to keep us out of more legal trouble with the federal government."
Asked after the meeting about Finchem's claim of $3 million for a practice gym, Sanchez said, "I don't know what he's talking about."
Wednesday's debate went beyond whether an audit is appropriate to exactly how it would be funded.
Finchem's legislation required the cash to come from the money the district now collects from taxpayers specifically for desegregation costs. That led House Minority Leader Eric Meyer to question whether that's even legal given that the district is limited on how it can use the extra funds.
"I am not an attorney," Finchem responded. But he said the cost, whatever it is, this kind of review is appropriate as the district has spent $1.5 billion since the desegregation efforts began.
But Ross Ehrick of the state Auditor General's Office, which would be tasked with conducting the review, said he's not sure it would be legal to divert those dollars.
The legislation did not target just Tucson Unified School District.
To keep it from being special legislation, Finchem crafted it to require an audit of any district that spends at least $15 million a year on desegregation funds. That also draws in Phoenix Union High School District.
The entire proposal angered Rep. Lela Alston, D-Phoenix, who sits on the PUHSD governing board, who said there is no evidence of misspending.
"Are we just here on a witch hunt?" she asked.
But Rep. John Allen, R-Scottsdale, said he saw nothing inappropriate in the review.
He said this is not just to find criminal conduct or malfeasance. Allen said it also is "to see if the money went where it was properly supposed to" or might have been misdirected.
Anyway, Allen said, this kind of audit actually might turn up good practices that the more than one dozen other school districts in the state with similar desegregation orders could mirror.
Meyer, however, questioned whether what Finchem wants would be a waste of money, whoever pays for it. He cited Sanchez' testimony that the district already is set to have its standard audit, a regular desegregation audit and a performance audit already scheduled by the state Auditor General's Office.
What Finchem's legislation sought, however, would be a bit difference.
Melanie Chesney of the Auditor General's Office told lawmakers the "forensic audit" demanded in SB 1120 required examination of each and every transaction. By contrast, she said, standard audits look at a random sample of transactions.
Aside from questions of duplication of existing reviews, Sanchez also questioned how quickly a separate audit could be done.
Sanchez pointed out the legislation would prevent any desegregation funds from being collected and spent for the 2016-2017 school year until not only the audit is complete but until it is reviewed by a legislative panel. The superintendent said if that process dragged on he could be forced to lay off staff, cut class size — and then find the district in violation of federal court orders.
Follow Howard Fischer on Twitter at @azcapmedia.