Cost to fix millions in misallocations to schools $105,000 – so far

In this Nov. 16, 2017, photo, Superintendent of Public Instruction Diane Douglas addresses about 50 school district and charter school representatives at her department’s annual MEGA Conference on programs and services for low-income students. In October, the Arizona Department of Education revealed it had misallocated millions in Title I funding, federal dollars for the state’s most economically disadvantaged kids. (Photo by Katie Campbell/Arizona Capitol Times)

The Arizona Department of Education has spent more than $100,000 to correct problems that led to the misallocation of millions in federal funds, and those costs could continue to rise.

In October, the department revealed that hundreds of charter schools and school districts had received more Title I funding for low-income students than they were entitled to while others were shorted between fiscal years 2014 and 2017.

The misallocations were due to numerous errors identified in the department’s allocation process, which began under former Superintendent of Public Instruction John Huppenthal but compounded in the years that followed.

Two weeks after the department announced the Title I error, it also alerted schools to similar issues with federal funding for special education programs.

Dan Godzich, the department’s director of communications, said the initial contract with Washington D.C.-based Afton Partners cost $105,000 for the auditor to identify errors in the Title I allocations process.

Afton assisted the department in preparing the fiscal year 2018 allocations, which were released in October after being verified by the U.S. Department of Education. Afton has also recalculated the funds the firm believes each district and charter should have received in the last four fiscal years. Those estimates have not yet been verified.

Godzich said the department has been discussing the potential for retaining a third-party – be that Afton or another firm – to continue to review allocations. He anticipated that cost would be significantly lower because the initial work by Afton required a deep dive into years of data.

The funding for Afton’s contract and any future partnership, he added, would come out of the 1 percent of federal Title I funding intended for administrative costs, such as Title I staff.

Superintendent of Public Instruction Diane Douglas said it was “a cost of doing business” to ensure funds are properly distributed in the future.

On November 15, Douglas spoke to about 500 district and charter representatives at the department’s annual Title I conference to address ongoing concerns.

She said the department sent its proposed plan to correct the problem to the feds on November 14, but she does not know when they will approve or reject the proposal.

If the state has its way, districts and charters that received too much funding will not be asked to return the over-allocated dollars, nor will their future Title I allocations be reduced. And the department has proposed making the under-funded schools whole by allotting the additional funds owed to them over the next two to five years.

The same plan will be submitted later this week regarding the inaccurate federal special education disbursements.

Given the federal department’s strictly verbal response thus far, Douglas is confident the proposal will be approved.

“I don’t expect any hiccups,” she said, “but they are the federal government. They do get to decide.”

Douglas also noted the misallocated funds were still used to support Title I programs.

“No one embezzled money. No money disappeared and we don’t know where it went. We know that it went to the students it was intended to serve,” she said.

According to calculations Afton presented at the Title I conference this week, about $43.6 million was over-allocated to nearly 300 charter and district schools, and nearly 200 additional district and charter schools were shorted an estimated $9.7 million.

“I’m hoping and I’m optimistic that this is it,” Douglas said. “We’ve worked out these problems, but can I promise you that? No, I can’t. We will keep looking at things as long as I hold this office.”