PHOENIX — As the Arizona State Board of Education met Monday, a big part of the discussion was a new receiver’s report on the financial crisis at the Isaac School District.
In January, the Isaac School District found itself insolvent and in $25 million of debt.
Keith Kenny gave an update to the State Board of Education Monday on what went wrong, where the district stands now, and the plan for tackling that debt, presenting a 26-page report on what he’s learned about the financial situation in the past 120 days.
Kenny is the court-appointed receiver, put in charge of managing the school district’s operations while it pays down now more than $22 million in debt.
“How did this all happen? I guess, basically, and the answer is, the district lacked process, procedures and controls to keep this from happening,” Kenny said.
His 120-day update says the red flags were waving years ago: state auditors raised concerns back in 2015.
The report points to overspending on staff, no cuts after enrollment dropped, and misused COVID-19 relief funds.
“You have a unique situation of, you know, essentially a district that has rampant overspending of their COVID relief funds, their ESSER funds,” Ryan W. Anderson, the receiver’s lawyer, said.
As the report suggests, Anderson reiterates it will likely take the Isaac School District five to ten years to climb out of debt.
“It’s sort of a six- or seven-point plan,” he said.
The recovery plan includes closing two schools and an online academy, cutting staff, and revamping a Pre-K program.
Anderson reassures families that they expect the district to operate in the next fiscal year and do not foresee adverse impacts on education.
“I think that they should expect, you know, the same level of education that they’ve had in prior years,” Anderson said. “The receivership should work in the background. It should be an administrative thing. It shouldn’t have anything to do with the classroom.”
Isaac District leaders referred ABC15 to Anderson for all requests for comment.
However, not everyone is sold on the new plan.
The Arizona Education Association President sent a letter urging the State Board to include educators and families in the conversation.
“Isaac students, families, and educators should have been the first consulted in the Receiver’s evaluation. Instead, the report appears to include only the bare minimum input from those most affected by this crisis,” Marisol Garcia writes in part. “We remain deeply concerned about our members and the families who will be most impacted by decisions made without their input.”
