Isaac School District: Receivership's lawyer details 'reckless spending'
PHOENIX - For the last four months, the Isaac School District in Phoenix has been under state control, known as a receivership.
What we know:
A 26-page report was recently released detailing the financial collapse of the district and what led to the $20 million negative cash balance.
It was nearly 10 years of financial red flags that led to this point.
The attorney of the receiver called it "reckless spending and horrific mismanagement of funds."
This report is only the beginning as they continue to learn more.
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What they're saying:
"I've fortunately represented every receiver for every school district that's been in receivership since the law was passed in 2005. This is by far the worst," attorney Ryan W. Anderson said.
The detailed report states the district spent $22 million that it didn’t have.
"The amount of financial mismanagement and the amount of debt is astronomical," Anderson said.
Going forward, the receivership has proposed closing two schools and selling property owned by the district, while reevaluating administrative spending, like food service and landscaping.
The plan also proposes financial training courses for board members going forward.
The receiver promised these decisions would not have negative implications.
"At the same time, doing these cost-cutting measures, we're going to maintain the same amount of education to the students of the Isaac School District," he said.
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'This is a case of reckless spending'
The report states the district misspent COVID funds and was improperly moving money between accounts, and inaccurately reporting spending.
"Administrators knew that there was a serious financial problem," Anderson said.
It's something they estimate will take 5 to 10 years to correct.
"This is a case of reckless spending, coupled with some horrific mismanagement. You know, the student population is declining while the expenses to run the district are not also declining in concert with declining enrollments," he explained.
Anderson says school administrators immediately resigned back in January and are not cooperating.
"The former superintendent. The former CFO. Nothing. They refused to be interviewed by the receiver for this report," Anderson said.
This is just what they know so far.
Dig deeper:
The 120-day report was presented to the Arizona State Board of Education.
The President of the Arizona Education Association, Marisol Garcia, also a middle school teacher within the district, sent a letter to the state board of education saying, in part, "the report appears to include only the bare minimum input from those most affected by this crisis," going on to say, "we remain deeply concerned about our members and the families who will be most impacted by decisions made without their input."
What's next:
Anderson said they are still combing through financial records and continue to find more problems.
The good news is there is no concern with the day-to-day operations as the receivership is now in control of the district and its finances.