Millions of dollars in special education and low-income education misallocated

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An audit of the Arizona Department of Education revealed that the department misallocated millions of federal dollars from special-education and low-income funds over the past three years.

State Superintendent of Public Instruction Diane Douglas says the sliver lining is that although the funding did not go to the right schools, all Title 1 and Individuals with Disabilities Education Act (IDEA) funds went to the right students.

“There was no malfeasance involved,” Douglas says. “All the Title 1 money went to Title 1 students… and all the IDEA money went to special-ed students.”

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Coming up next on "Arizona Horizon," how did million of dollars in education funds go to the wrong schools? We'll ask superintendent of public instruction Diane Douglas. Also tonight: We'll hear about a new state policy that helps people with criminal records get jobs. And a discussion with astronaut Scott Kelly about his year in space. Those stories next, on "Arizona Horizon." ¶ ¶

"Arizona Horizon" is made possible by contributions by the friends of Arizona PBS. Members of your PBS station.

Ted Simons: Good evening and welcome to "Arizona Horizon." I'm Ted Simons. Did you see the fireball last night? It raced across the sky at about 8:30. A camera mounted on top of city hall caught what experts say was a meteor, about 5-feet across, falling through the sky and then exploding in a bright flash. No word on any remnants of the meteor hitting the ground or causing damage. The event is not considered to be part of the Leonidas meteor shower, which hits it peak late Friday night. Millions of dollars of federal education funds have been misallocated to Arizona schools over the past few year. The money includes funds for special education and low-income students. Some schools have been getting more than entitled, others have been getting less. State superintendent of public instruction Diane Douglas is here to try to explain all this. Good to see you again. Thank you for joining us.

Diane Douglas: Thank you very much.

Ted Simons: Explain what is going on here? What is happening?

Diane Douglas: Prior to my taking office, from an audit, a miscalculation was made in the formula to allocate the funds. We have been working on it since then to make sure they are correct. We have been working with a third party auditing group, with u.s. Department of ed to make sure the allocations are done accurately.

Ted Simons: Title one to low income students, misallocated back to 2014?

Diane Douglas: I believe the number is a bit high. What one of the groups did that reported it, there were overall kateed, some under allocated, but they added the numbers together. I believe title one is $30 million we are talking about. The important thing for me to stress is that people understand that this is not money missing. It's not -- there was no malfeasance involved. All of the title one money went to title one students, maybe not the right schools or districts, and all of the idea money went to special ed students. That's important.

Ted Simons: The fund was the disabilities act. The idea is $15 million under allocated, $14 million over allocated. It's like a double negative. It usually equals a positive. This doesn't make a positive. The formula was bad 2014, 2015. Why weren't these discovered then or in the intervening years?

Diane Douglas: We have two issues going on. When it comes to idea, the audit was 2015. We have been working with the feds to straighten that out. You wouldn't believe how slowly the wheels of government grind at times. We look at things. They come back to us until we work out the numbers. What we found in title one, low-income children, is that there was an audit finding, and the previous leadership of title one put in a correction plan and never implemented the correction plan. It wasn't until that staff had turned over and i brought in new leadership for that area that we were able to fully address that.

Ted Simons: How many schools got more than they should have received? How many schools didn't get their fair share?

Diane Douglas: I don't think I know the numbers off the top of my head. In title one, more schools were over allocated. What was shorted was called the school improvement fund. It's a fund that's run out of aide. The schools got the money for what school improvement would do for them. Normally, it's run through aide and aide would run the program. They got to do the same work. They got the money directly. In some ways, they had more latitude about how they use it for the title one children.

Ted Simons: It's great. It's more than they should have received. Will they pay the money back?

Diane Douglas: We submitted the plan yesterday for title one. Our recommendation to them is that the schools were overfunded be left, and the schools underfunded be made whole.

Ted Simons: How do you think that will go over?

Diane Douglas: I'm very optimistic. We have been working with them from the time we found this.

Ted Simons: As far as the disabilities act, i.d.e.a., 2015 comes around, audit shows problems here. Does this mean there were problems in 2012, 2011, 2010, with both of these funds?

Diane Douglas: That could be a possibility. The clock starts from when the audit finding is found. May these problems have been long standing in whomever calculated the funds? In title one we are talking about worksheets to do the allocations that are literally dozens and dozens of sheets with a hundred columns on them. It's not just like we have this much money divide by these many schools and this many children. They are complicated formulas of you have to do this before you do this and this before you do that. We have been working on it since we found it to be sure. We have been assured by the third party auditing group and working with department of ed that we are confident that the formulas are correct moving forward. Another piece of it is this year based on last year based on last year. In order to resolve this, we literally had to go back and back and back from the finding to fix and fix.

Ted Simons: If the feds basically say, it's nice to say they don't have to pay it back, but we can't make the underfunded ones whole, what is plan b?

Diane Douglas: There is no doubt that the underfunded ones will be made whole. It's a matter of claw back money from those underfunded. That, I’ll fight tooth and nail to be sure that doesn't happen.

Ted Simons: Do district charter schools know if they are underfunded? I would think they need to know for budgeting processes.

Diane Douglas: We have released the information and tried all along since this came to light in my administration to keep them up-to-date with what we knew. One of the things i wanted to be careful about is not give them guesstimates or misinformation. As we have things substantiated, we get it out to them. Right now, any school out there can go on our title one page. Everything we have, full plan submit today the federal government is available for them to review.

Ted Simons: They know it. They have the chance to budget accordingly. We move on from here.

Diane Douglas: Another good thing that happened from this, there needs to be a silver lining in everything, ted, we have revamped our grant management process. Now when a grant is done -- it used to be done in the program, the title one area or i.d.e.a. Area. They work on the problematic pieces. That comes to the grant management piece. A check, cross check, third party check on it. What it means for our districts is where in the past they used to not get this year's funding until October or November of the school year they were in, they can now get their money starting next year, July 1st. When their school year starts, they'll have their money.

Ted Simons: Superintendent Diane Douglas, good to see you again.

Diane Douglas: Good to be here.

Diane Douglas: State Superintendent of Public Instruction

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