Hobbs Demands Special Audit as Horne’s Funding Crisis Hits Needy Schools Hard

Governor Katie Hobbs, alongside legislative Democrats, is urging a special audit of the Arizona Department of Education after a substantial $29 million in federal school funding was lost due to failure to utilize the funds before the cutoff date.

“I commend the members of the state legislature who are demanding accountability and transparency,” Hobbs stated on 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 the Joint Legislative Audit Committee investigates this matter thoroughly.”

Superintendent Tom Horne announced that the U.S. Department of Education contacted Arizona’s education department last week regarding a waiver to recover the lost funds that were not utilized by the 2023 deadline. Horne emphasized, “I will always fight for more money for schools, so I am happy to submit this waiver request to the federal government.” He noted that the underutilization of these funds dates back to Fiscal Year 2020 under the previous administration.

Horne, who assumed office in January 2023, pointed out the necessity of the waiver for increasing funding to the state’s most underserved schools.

Hobbs’ call for an audit was influenced by an August 5 article from the Arizona Republic, which revealed that the Department of Education had to return a significant amount in federal school improvement grants intended for district and charter schools with underperforming students. This miscalculation implies that 150 to 200 schools will receive less than originally anticipated, jeopardizing their budgets for staff and professional development initiatives.

Federal guidelines mandated that the grant money should have been obligated by September 30, 2023. However, it was reported that the Arizona Department of Education (ADE) did not recognize this requirement until March, just six months after it lapsed.

The ADE did not inform school leaders of the situation until summer, while simultaneously seeking alternative funding sources to address the financial shortfall, which proved unsuccessful.

In an August 7 letter, six Democratic state legislators requested an investigation by the Joint Legislative Audit Committee to ensure oversight and transparency in the management of educational funds. House Minority Whip Nancy Gutierrez expressed concern that schools learned about their budget cuts late in the fiscal year, causing some to terminate summer programs and staff positions.

Gutierrez pointed out that ADE’s refusal to disclose the data and formulas used for determining reduced Title I allocations has caused confusion among affected schools. She asserted that such processes seem to lack the necessary transparency.

After the Republic article surfaced, Horne claimed that the findings were misleading, suggesting that the prior administration’s staff miscommunicated grant amounts to schools, further complicating the situation.

The ADE formally requested a retraction from the Republic, which the publication declined to issue. Previous superintendent Kathy Hoffman acknowledged challenges during her tenure, particularly with schools having difficulties spending their grant money, attributing this to the influx of federal COVID relief funds.