A school district facing a fiscal crisis may be able to pay teachers and staff, but only if the Legislature can pass a bill directing the county treasurer to disburse the funds first. 

Educators at Isaac School District are due a paycheck tomorrow. But with a cumulative $28.5 million in unpaid debt to Maricopa county, Treasurer John Allen refuses to disburse any more funds and claims doing so would run afoul of state law.

The district, the receiver, the governor, the county, the State Board of Education, the Department of Education, and lawmakers have continued to convene and call for a legislative fix to ensure teachers are paid and school continues Wednesday. 

Rep. Matt Gress, R-Scottsdale, introduced a bill to allow county treasurers to register $2.5 million in warrants, if approved by the receiver, regardless of whether the district has enough money in its bank account. The provision comes in an amendment to a bill requiring the removal of the superintendent and school board if a district is placed under receivership. 

Gress said the bill is a temporary fix, with $2.5 million to cover two weeks, or one pay period. He said he hopes it gives the Legislature time to come up with a more permanent, comprehensive solution. 

“There’s an immediate term challenge, which is keeping the lights on and keeping classes in session right now. Then there’s the longer term issue of how to resolve the $28.5 million dollar debt that Isaac owes and keeping the lights on for the rest of the school year,” Gress said. “The legislature is not very good at moving quickly. So we had to tailor the first bill that could buy us some more time as we iron out details for a larger bill to follow in two weeks.” 

Democrats are still pushing for a more concrete fix. 

“While I appreciate Gress’ work on this bill, we need a permanent fix, at least a bill that gets us to the end of the school year,” Rep. Quantá Crews, D-Phoenix, said. 

The State Board of Education placed Isaac School District under receivership in a meeting Jan. 14 after finding the district had overspent its budget by about $12 million. 

But with the district far in the red, Maricopa County Treasurer John Allen said he planned to halt payments, throwing staff paychecks and essential school expenditures in limbo.

The district is seeing some reprieve, as the federal government returned $6 million in Elementary and Secondary Emergency Relief, or ESSER, funds and Superintendent Tom Horne floated the possibility of the Dept. of Education advancing about $4 million, in state aid. 

But the funding would have to go through the county treasurer, and the treasurer’s office contends state law does not allow it to keep digging a deeper debt. 

“The district must demonstrate the ability to offset its existing fund deficits and registered warrants before subsequent expenses can be honored. $6 million in ESSER money would reduce the amount that needs to be repaid to Maricopa County, but the district’s finances are still negative overall,” Jordan Dale, chief of Staff for Allen, said in a statement. “We are waiting to hear the proposed solutions for offsetting the remaining amount that needs to be repaid.” 

In a letter on Jan. 24, Allen and Maricopa County Board of Supervisors Chair Thomas Galvin outlined the current financial situation to the district’s receiver, Keith Kenny. Allen and Thomas said any incoming funds should first be obligated to an existing $3.9 million debt. 

Allen and Galvin wrote that the “district faces a far larger fiscal challenge than was initially understood,” and noted research showed Isaac School District has received approximately $28.5 million in financial support from the county “which the district has no clear plan to repay.” 

The breakdown notes $16.6 million in fund deficits currently carried by the Treasurer’s Office, $8 million in Tax Anticipation Notes due for repayment in July 2025 and $3.9 million in registered warrants, which they note is the first obligation to be paid off from any incoming monies. 

“As you can see, Maricopa County has extended every resource possible to the school district and is now at its statutory limit,” Allen and Galvin wrote in the letter. “As education is a state responsibility under the Arizona constitution, we encourage you to seek appropriate solutions from the state.” 

Gress introduced the possible solution as an amendment to House Bill 2610, which requires receivers assigned to financially unsound school districts to terminate school superintendents without  a severance package and remove every sitting school board member. 

The accountability piece is key to Republican support. 

In a press release, majority leadership asked Mayes and Maricopa County Attorney Rachel Mitchell to launch a criminal investigation into the district. 

“Our sympathies begin and end with the students, faculty, and parents of Isaac,” House Speaker Steve Montenegro said in a statement. “At the heart of this crisis are more than 4,800 students and hundreds of employees who have been abandoned by failed district leadership. The falsification of financial records and the mismanagement of public funds are a betrayal of trust and must be investigated immediately. The people of Arizona deserve to know how this happened, and those responsible must be held accountable.” 

As for Democrats, Rep. Cesar Aguilar, D-Phoenix, noted the Isaac school board has been “more than willing to help with this situation,” and again emphasized they were given false information. 

“Our caucus has told the Republicans, we want a clean and simple bill. Let’s not politicize this. There’s 5,000 kids that need to be in school,” Aguilar said. 

As for the educators and students at Isaac, Marisol Garcia, president of the Arizona Education Association, again pressured the county treasurer to disburse payments and called for an immediate solution from the Legislature, though she expressed little confidence lawmakers could get it done in time for payday. 

“Those of us who have worked with the Legislature know that it doesn’t happen overnight. Nothing is that easy down here,” Garcia said.

She said at this time, teachers and staff do not know whether they will show up for work Wednesday but plan to discuss it at a meeting Tuesday. 

“The immediacy of these children who are anywhere from four to 14 years old, and people who have worked in this district and for the state for over 30 years, who live everywhere in this county, they’re the ones who are going to suffer the consequences,” Garcia said. “Our priority is the kids and the educators. The debt needs to be dealt with, but this has to be first.”

The House is set to take up Gress’ bill in a special meeting of the Education committee at 2 p.m. Tuesday.