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Plan in place to fix millions in misallocated school funds

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)
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)

Nine months after the Arizona Department of Education notified schools it had misallocated millions in funding for special education programs, the federal government has approved a plan to correct the error.

A plan to remedy similar issues with Title I allocations has also been drafted but will not be finalized until at least next week during a phone call with state representatives.

In October, the department sent a letter to school districts and charter schools stating $15.2 million in Individuals with Disabilities Education Act, or IDEA, funding had been under-allocated. A 2015 audit by the federal Office of Special Education Programs, or OSEP, also found that $14.3 million was over-allocated, and about 400 charter and district schools were affected.

Now, according to a response from OSEP sent to the state on July 3, the state Department of Education can use set aside funds to make those schools whole.

Set aside funds are carried over from year to year. For example, if a charter school closes in fiscal year 2015, the dollars that would have gone to that school would have instead been set side to make up for unexpected costs, like misallocations.

The department is expected to have fully resolved the issue by fiscal year 2022.

Since October, the department’s position has been that it intended to hold schools “harmless” for the error, meaning districts and charters that received too much funding would not be asked to return the over-allocated funds, and that schools that were shorted would be made whole.

But according to the federal response, representatives from ADE indicated the state did not have the money to repay the schools and asked for the requirement to be waived.

ADE spokesman Stefan Swiat described that request as a “ploy” to extend the timeframe in which the department would repay the schools.

Swiat said ADE was initially given just two to three years to make the shorted schools whole, so the department suggested waiving that requirement knowing that wouldn’t be an option.

Instead, the feds adjusted the timeline, allowing five years by which the state had to repay schools.

That solution may minimize harm for schools impacted by the IDEA error, but Swiat conceded it could also make the state more vulnerable to unforeseen challenges in the future.

“It is a hardship because… this money didn’t come out of thin air,” he said. “We had to strip ourselves of the money that we normally put toward technical assistance, monitoring and professional development. That money would be for us at the state to use, and we’re just passing that along.”

Douglas told the Arizona Capitol Times she doesn’t like to play the “what-if game” and speculate about what the department may lose out on in the years to come.

“We just have to fix this,” she said.

Story continues after document. (The IDEA allocation error is addressed on pages 9-13.)



ARIZONA IDEA Resolution (Text)

Title I solution in the works

The U.S. Department of Education has also drafted a proposal for how to correct a similar error that led to tens of millions in misallocated Title I dollars.

That money is distributed to schools serving the state’s most economically disadvantaged children.

Beginning in fiscal year 2014 under former Superintendent of Public Instruction John Huppenthal and carrying over into fiscal years 2015, 2016 and 2017, more than 400 district and charter schools received inaccurate Title I allocations.

And while ADE is working with the federal government toward a solution that would not cause further harm, some uncertainty remains.

A draft proposal from the U.S. Department of Education suggested there may be “downward adjustments” in Title I grants to schools that previously received over-allocations.

However, Swiat said that is not the case.

The letter goes on to say the state may determine it has unneeded school improvement funds and choose to re-allocate those dollars to schools that would otherwise see a decline in their allocations.

In other words, it’s a shell game. The feds understand the state will determine those school improvement funds are unneeded and distribute them to schools.

School improvement funds are Title I dollars set aside for the lowest performing schools, the bottom 5 percent.

In addition to misallocating Title I funds to the schools between fiscal years 2014 and 2017, ADE essentially shorted its School Improvement Fund more than $20 million. Rather than first going through that fund, Swiat explained last year, the money went directly to the schools.

According to the current plan, the Title I issue must be rectified by the 2021-2022 school year.

If the problem is not “fully corrected” by then or if the state department fails to comply with the agreement as currently laid out, the state may face some serious consequences.

According to the draft plan, U.S. Department of Education may revoke the state department’s authority to use Title I funds to resolve the issue and may even go on to take additional actions, like recovering non-federal funds in the amount of the misallocations.

Swiat said state representatives will have a call with federal representatives on August 7 to finalize the plan for Title I.



Arizona MOA 07 23 18 (Text)

Annette Reichman: School leader relearns to listen

Annette Reichman smiles next to a piece of art created by an Arizona State Schools for the Deaf and Blind student in Tucson. The piece features the American Sign Language sign for "I love you." PHOTO BY KATIE CAMPBELL/ARIZONA CAPITOL TIMES
Annette Reichman smiles next to a piece of art created by an Arizona State Schools for the Deaf and Blind student in Tucson. The piece features the American Sign Language sign for “I love you.” PHOTO BY KATIE CAMPBELL/ARIZONA CAPITOL TIMES

Annette Reichman seriously considered dropping out of high school.

She went to a school with 200 students from kindergarten through high school, and she was different.

And in that small farming community, she said, being different was not a good thing.

She was identified with a hearing loss at 6, which she said was late in the game, and was given cochlear implants. She also had vision limitations, all at a time when children begin to notice their differences and form cliques.

She said she didn’t have friends and was frequently bullied.

But that changed when she first found peers at a state school for students who were visually impaired and later attended Gallaudet College for the deaf and hard of hearing – now Gallaudet University – in Washington D.C., where she would later work for the United States Department of Education.

Now, Reichman serves as the superintendent for the Arizona State Schools for the Deaf and the Blind.

“I really believe our children can be doing a lot better academically, socially and emotionally,” she said. “That was a challenge that I decided I wanted to take on.”

Cap Times Q&ATell me about your own experience with hearing impairment.

IDEA (Individuals with Disabilities Education Act) did not come into being until 1975. I was 15 years old at that point, so all of those things we take for granted today were not in place back then. … By the time I got into high school, I knew pretty quickly I was going to become deaf. I decided I needed to learn sign language, and that’s when I learned about Gallaudet College. And I went from a western Nebraska farming community to Washington D.C., which was a tremendous change for a 19-year-old. And I stayed at Gallaudet. Most freshmen, if you don’t have adequate support, it’s really hard to get past the first year, especially for students who are first-generation college students. My parents had not gone to college, didn’t know how to support me. But at Gallaudet, I learned sign language, stuck it out for four years, got my bachelor’s degree and then came to the University of Arizona for my graduate degree.

I did become deaf at the age of 21, and for the next 30 years, I used sign language interpreters for most of my meetings. If I would be in a meeting with three, four or five people, I would have an interpreter to access professional meetings and different activities. And then, in 2011, I decided it’s time to try cochlear implants and became hard of hearing again essentially.

Do you prefer the implant?

I love it. I’ve found myself listening to music that I’d not listened to in 30, 35 years, which means I’m listening to the 70s, early 80s, relearning what I used to hear back then. It’s kind of like riding a bicycle. If you don’t do it for a long time, you never forget, but it gets rusty. You have to practice. It took six months with the first implant for me to relearn how to listen to the spoken language. It doesn’t happen overnight.

Can you describe that experience?

It was about a month after my first cochlear implant. I went into work. I was in the kitchen, putting my lunch away in the refrigerator, and a co-worker came in. She said something to me, and I responded. But I was looking at her, lip-reading her as I’ve been doing all my life. And then I turned my back to her, and I heard her say, “You have a good day, Annette.” I understood that without having to look at her and lip-read. So, it was that sense of – I heard that! … I was literally relearning how to listen.

What’s one thing you think people who haven’t had that experience misunderstand about people who are deaf?

That we are unique like everyone else, and we’re not homogenous. There are a lot of differences between us, but the most common assumption is, “I’ve met this one deaf person, and I know what everyone else is like.” And that’s not true.

There’s a positive and a negative to that. The positive piece is that once an individual feels comfortable with me, they’re more likely to feel comfortable with other individuals. … Then there’s sort of the halo effect. When that halo effect occurs, it means either I’m heroic or I’m a token. And neither one is positive. It really just perpetuates stereotypes and discriminatory behavior. And that to me – I’m not frustrated by it so much as I’ve become a little bit sad that I still, after 40, 50 years, have to address certain stereotypes.

Your own experiences seem to highlight the importance of reaching students early. Tell me about the Early Childhood and Family Education program.

The program really is about working with the parents or the grandparents or whomever is taking care of that child and teaching the parents to create a home environment that is accessible. … A simple example of that is if you have a child who is blind, they hear the vacuum cleaner running. But if they don’t see it, that sound has no meaning to that child. The parent has to learn how to explicitly teach the child who is blind to come over to the vacuum cleaner, to touch it, to feel it, have it running back and forth and explain what the vacuum cleaner is doing. … For a child who is deaf and hard of hearing, it really is all about access to language.

Have you had an experience with a family that really stuck with you?

There was a mother with an eight-year-old son and a two-year-old daughter. This mother had just separated from her husband, had just moved into this apartment. The apartment was in disarray. The son had just woken up. He had missed the bus to go to school, and the daughter was crawling around on the floor. She had cochlear implants, but the external piece had broken and had been broken for a couple of months. … And what really impressed me with this particular teacher was that despite the obvious frustration of that girl not getting access to any language in the way she needed, the teacher did not show any negative emotions. She praised what little was being done and really tried to support the mother.

New school funding error found, no solution in place

The Arizona Department of Education has revealed a second error in federal funding allocations, resulting in millions of misallocated dollars intended for special education programs.

According to a letter sent to school districts and charter schools on Tuesday, the department under-allocated $15.2 million in Individuals with Disabilities Education Act, or IDEA, funding. Department spokesman Stefan Swiat said a 2015 audit by the Office of Special Education Programs also found that $14.3 million was over-allocated, affecting about 400 charters and districts.

Diane Douglas
Diane Douglas

The letter, signed by Superintendent of Public Instruction Diane Douglas, went on to blame “an incorrect funding formula that became less accurate” for the mistake.

Swiat said the error compounded over time because the department’s “antiquated formula” did not account for new and expanding charter schools, causing misallocations.

Though the error was initially identified in 2015, Swiat said the full scope of the problem was not clear until last week.

The revelation also follows reports that hundreds of district and charter schools have been receiving more federal funding for low-income students than they were entitled to while others received far less. The misallocation of Title I dollars dates back at least to fiscal year 2014.

At the time of that report, the department’s plan to recover from the error was still unclear, but Tuesday’s letter addressed ongoing questions about how both Title I and IDEA allocations may be impacted in the years to come.

In negotiating with the U.S. Department of Education, the department will propose to hold schools “harmless,” according to the letter, meaning districts and charters that received too much funding will not be asked to return the over-allocated funds, nor will their future allocations be reduced to make up for the lost dollars.

Additionally, the department will propose making the underfunded districts and charters whole over the next three to fives years by allotting the funds they had been shorted.

According to the letter, the department will accomplish that by “completely emptying our coffers from set aside funds.”

The state has carry-over from year to year. For example, Swiat said if 50 charter schools closed in fiscal years 2015 and 2016, the dollars that would have gone to those schools would have instead been set aside to make up for misallocations or “tremendous,” unexpected growth in charter operations that qualified for federal assistance.

Swiat said the department hopes to repay shorted Title I and IDEA dollars out of that fund.

But the department’s plan must still be submitted to the feds for approval, and there’s no guarantee they’ll sign off.

“If I had a crystal ball, I’d be able to tell you,” Swiat said. “I can’t speculate other than to say our conversations with U.S. Ed has been nothing but positive.”

Swiat said the feds have heard the plan only in verbal communications with the department and encouraged state representatives to submit it for official review.

Chuck Essigs
Chuck Essigs

Chuck Essigs, director of government relations for the Arizona Association of School Business Officials, said there have been occasions where the federal government has decided not to penalize schools for something that wasn’t their fault.

“Now, I don’t know how likely they are of doing that,” he added. “But I would support any efforts that the Department of Education would make to try to get the federal government to understand that this was not something that the schools did wrong. … They did everything that they thought was right.”

In the meantime, as was the case with Title I funding, affected schools have not yet been told how much they were over- or underfunded.

“Leadership wants to manage the situation, understand the scope of the problem, detail the outlined plan that they’re submitting to U.S. Ed to let (districts and charter schools) know this is what we want to have happen,” Swiat said. “If it doesn’t happen, it’s because the U.S. Department of Ed decided to go in a different direction.”

For now, district and charter representatives will have to do their best to budget for an uncertain future.

Ricardo Hernandez, Pima County’s deputy school superintendent and chief financial officer, said districts saw drastic reductions in IDEA funding for fiscal year 2018, leaving him to wonder whether errors in the allocation process have yet been resolved.

He said the Pima Accommodation District went from receiving more than $200,000 in IDEA funding last year to less than $29,000 this year. That’s especially problematic for the small district that serves students in the juvenile detention system, about a third of whom are identified as having special needs.

Other, more traditional districts may not have been hit as hard, he added. But even losing $35,000, as was the case for Flowing Wells Unified School District, may have serious consequences.

He said those dollars are used to provide services to “some of the neediest kids.”

Now, districts and charters will have to prioritize their needs, Hernandez said – and that could open districts up to legal trouble if parents find gaps in federally mandated services that must be provided even if the funds aren’t there to support them.

“To us, it’s a blindside,” he said. “Districts are having to figure out what to do and crossing their fingers that their allocations will be approved.”

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