Phoenix School District Faces State Takeover Amid $12 Million Budget Crisis

By Staff Reporter |

The Arizona State Board of Education (AZSBE) has placed the Isaac Elementary School District (IESD) into receivership due to severe financial mismanagement. The district is facing a staggering budget shortfall of $12.3 million, which comprises more than $9.3 million in unrestricted capital and nearly $3 million in maintenance and operations.

In a recent special meeting, AZSBE unanimously voted for the receivership, following a critical report from the auditor general’s office. This report highlighted that IESD had been classified as a high-risk district since December 2020, struggling with fluctuating student counts and budgetary restraints.

Despite multiple attempts over the past five years to assist IESD in recovering its financial standing, the auditor’s office acknowledged a lack of progress. They noted that IESD had continually failed to comply with internal financial controls. Last month, an audit revealed that the district’s annual financial report for the 2024 fiscal year was deemed “unreliable and inaccurate,” complicating efforts to assess overexpenditures.

Superintendent Mario Ventura expressed disbelief over the auditor general’s findings, claiming that the district had never overspent before. He attributed the shortfall to the departure of key personnel, including a grant specialist and two business managers, and the frantic spending of federal relief funds that compromised financial controls.

During the meeting, IESD argued that a proposed bond on the November ballot could be a lifeline, potentially providing funds to alleviate the dire situation. In tandem, the Arizona Department of Education (ADE) had previously referred the district to AZSBE due to the mismanagement of funds.

Further complicating matters, ADE reported that IESD missed deadlines for submitting completion reports for federal COVID-19 relief funds. This oversight has led to the forfeiture of nearly $8.9 million, placing additional strain on the district’s finances. Tim McCain, ADE’s Chief Financial Officer, noted that without reimbursement, IESD would need to find alternative funding sources to cover expenses, risking salary payments to educators.

Maricopa County Treasurer John Allen raised alarms regarding the financial viability of IESD, urging staff members to cash their paychecks as uncertainty looms over the district’s ability to operate beyond the coming week.

Under receivership, a designated receiver will have 120 days to investigate the district’s finances and provide recommendations to AZSBE on restoring solvency. Nonetheless, IESD officials have indicated that day-to-day operations will proceed as usual during this transitional period.