ARIZONA STATE LEGISLATURE
Fifty-first Legislature – Second Regular Session
SENATE EDUCATION AND HOUSE OF REPRESENTATIVES EDUCATION COMMITTEE OF REFERENCE FOR THE SCHOOL DISTRICT PERFORMANCE AUDITS OF:
ASH CREEK ELEMENTARY SCHOOL DISTRICT
BICENTENNIAL UNION HIGH SCHOOL DISTRICT
CHINO VALLEY UNIFIED SCHOOL DISTRICT
COLORADO RIVER UNION HIGH SCHOOL DISTRICT
FORT THOMAS UNIFIED SCHOOL DISTRICT
Minutes of Interim Meeting
House Hearing Room 5 -- 9:00 a.m.
Acting Co-Chairman Coleman called the meeting to order at 9:03 a.m. and attendance was noted by the secretary.
Senator Kimberly Yee, Co-Chairman Representative Doris Goodale, Co-Chairman
Senator David Bradley Representative Paul Boyer
Senator Chester Crandell Representative Doug Coleman
Senator Al Melvin
Members Absent
Senator Leah Landrum Taylor Representative Eric Meyer
Representative Catherine Miranda
Acting Co-Chairman Coleman announced that the performance audit for Ash Creek Elementary School District will be moved to the end of the agenda as the superintendent is unable to attend today's meeting. He said that Members with questions will need to let staff know and staff will get a response from the superintendent after the meeting.
Ross Ehrick, Director, Division of School Audits, Auditor General's Office, distributed a copy of the slideshow presentation on school district performance audits (Attachment 1). He related that A.R.S. §41-1279.03 requires the Office of the Auditor General to monitor and report on school district spending and to conduct performance audits on randomly selected school districts. The audits are designed to improve the effectiveness and efficiency of school district operations. Mr. Ehrick advised that 97 percent of recommendations are implemented by school districts succeeding an audit (Attachment 1, Pages 1-2). In response to Senator Crandell's inquiries, Mr. Ehrick related that the Auditor General's Office follows up with audited school districts every six months for up to two years and that larger school districts generally have lower operational costs in comparison to smaller school districts.
Senator Crandell opined that penalties should be in place for school districts in noncompliance of recommendations.
Bicentennial Union High School District
Vicki Hanson, Manager, Division of School Audits, Auditor General's Office, continued the slideshow presentation (Attachment 1, Pages 3-5) and provided report highlights on the performance audit for the Bicentennial Union High School District (Attachment 2). She gave an overview of the audit findings with regard to student achievement, operational efficiencies, business controls, computer controls, transportation and food service. Ms. Hanson related that 11 out of the 25 recommendations made by the Auditor General's Office have been implemented by the district. She answered computer control, student achievement, transportation, and food service questions posed by the Committee.
Byron Maynes, Superintendent, Bicentennial Union High School District, stated the benefits of the performance audit and provided background on the District. He reiterated that the District implemented 11 of the recommendations and is in the process of implementing several more. Mr. Maynes offered to answer Members' questions.
Senator Crandell questioned if the practice of only using 10th grade test scores for assessing student achievement puts the high school district at a disadvantage compared to a unified school district which has control over elementary school curriculum. Mr. Maynes agreed, but stated that the primary focus remains on advancing all students academically regardless of the elementary school the student originated from.
Co-Chairman Yee inquired if the recommended changes for food policy and fuel inventory were implemented. Mr. Maynes answered in the affirmative.
Acting Co-Chairman Coleman questioned the reason certain employee wages exceeded the salary schedule. Mr. Maynes responded that the employees earning the higher wages were employed prior to his tenure. He explained the difficulty rural schools have employing and retaining teachers in comparison to metropolitan areas.
In response to a question, Ms. Hanson returned to the podium and clarified the Auditor General's Office procedures for monitoring audited school districts and certifying that the recommendations are implemented.
Discussion ensued on school district compliance and employee turnover.
Chino Valley Unified School District
Ann Orrico, Manager, Division of School Audits, Auditor General's Office, further reviewed the slideshow presentation (Attachment 1, Pages 5-6) and provided report highlights on the performance audit for the Chino Valley Unified School District (CVUSD) (Attachment 3). She pointed out that the District's administrative costs per pupil were 9 percent higher than peer districts, computer controls lacked sufficient protection of sensitive information and that controls over fuel purchases were lacking. Ms. Orrico advised that the district has implemented 8 out of the 12 recommendations since the audit.
John Scholl, Director of Support Services, Chino Valley Unified School District, sent regrets for the absence of Superintendent Wayne Joseph and thanked the Auditor General's Office for the recommendations. He stated that the District agreed with all of the recommendations and is in the process of correcting the remaining issues before the next review. Mr. Scholl related that the District has been a good steward of taxpayer monies by implementing the following changes:
Mr. Scholl advised that CVUSD has reduced administrative costs to levels comparable to 2001. In response to Senator Melvin's question, he explained how the consolidated schools were restructured to meet District needs.
Senator Crandell asked if the audit was beneficial to the District. Mr. Scholl answered in the affirmative. Senator Crandell questioned if the recommendations have been included in the CVUSD policy handbook to prevent future administrations from repeating the same mistakes. Mr. Scholl responded that the changes were not included in the policy handbook but are written into school procedures. Senator Crandell inquired if the District requires periodic school reviews to ensure that the changes remain in place over time. Mr. Scholl responded answered in the negative.
Colorado River Union High School District
Vicki Hanson, Manager, Division of School Audits, Auditor General's Office, referred to the slideshow presentation (Attachment 1, Pages 7-8) and distributed the performance audit results for Colorado River Union High School District (CRUHSD) (Attachment 4). She outlined the District's need to improve student achievement, operational efficiencies, computer system controls and procedures for fuel purchases and cash handling. Ms. Hanson advised that 2 of the 9 recommendations have been implemented: the removal of former employees' computer access and the requirement for fuel vendors to include detailed information on billing statements.
Riley Frei, Superintendent, Colorado River Union High School District, stated appreciation for the Auditor General's Office and the performance audit. He pointed out that the District's low administrative costs are viewed as strengths; however, he opined that the lower administrative costs have added to every weakness identified in the audit report. Mr. Frei stated that he believes that unqualified and inadequately compensated people contribute to poor results.
He said that since the audit, CRUHSD has replaced both high school principals and is progressing towards becoming a "B" rated school district. He explained that the consolidation with Bullhead City Elementary School District (BCESD) resolved the computer system controls, cash handling and fuel purchases issues. In response to questions, Mr. Frei advised that he is the Superintendent for both the CRUHSD and the BCESD. He went on to further outline the school consolidation process and said that the District's main mission is to work together as one team to achieve maximum academic results.
Fort Thomas Unified School District
Ann Orrico, Manager, Division of School Audits, Auditor General's Office, continued the slideshow presentation (Attachment 1, Pages 8-10) and provided report highlights on the performance audit for the Fort Thomas Unified School District (Attachment 5). She reviewed the following findings:
Ms. Orrico stated that the new school will further add to the high operational costs and related that the District has implemented 11 out of the 25 recommendations made by the Auditor General.
Senator Crandell stated disbelief that a District can ignore audit recommendations. He said that continued plans to construct a new school despite having excess space is a waste of taxpayer funds.
Derrick Bryce, Business Manager, Fort Thomas Unified School District, sent regrets for the absence of Superintendent Gerae Peten and offered to answer any questions.
Senator Crandell inquired the funding source for the construction of the new school. Mr. Bryce related that federal Impact Aid monies and grants are funding the school. He explained that the project derives from an agreement between the federal government and the San Carlos Apache Reservation following the closure of reservation schools.
Co-Chairman Yee questioned if property taxes were raised to fund the new school. Mr. Bryce replied that FTUSD does not levy a tax and that the District completely operates on federal Impact Aid monies and state funding. Co-Chairman Yee pointed out that funding ultimately originates from taxpayers. She said that building an additional school when there is excess space in two other schools is not mindful spending of taxpayer dollars. Mr. Bryce responded that the District's educational philosophy is to keep classroom sizes small, which translates on paper as excess space. He advised the Committee FTUSD is approaching becoming a "B" rated school district and has its first senior accepted at Yale University.
Senator Crandell commented that the District should concentrate on figuring out a way to get additional money into the classroom. Mr. Bryce concurred, stating that many of the administration costs are associated with mandatory community service programs.
Pomerene Elementary School District
Mike Quinlan, Manager, Division of School Audits, Audit General's Office, reviewed the slideshow presentation (Attachment 1, Pages 10-11) and distributed the performance audit results for Pomerene Elementary School District (PESD) (Attachment 6). He related that, overall, the District operated efficiently and student test scores were higher than peer districts. Mr. Quinlan said that the subsequent management decisions have kept costs much lower than peer districts:
Mr. Quinlan stated the need to strengthen accounting and computer controls to improve documentation of employment terms, ensure all purchases are properly approved and review access to the accounting system. He said that 3 out of the 5 recommendations made by the Auditor General's Office have been implemented by the District.
Co-Chairman Yee assumed the Chair.
Shad Housley, Superintendent, Pomerene Elementary School District, gave background on PESD and advised that the school board intentionally elected to remain under 125 students. He explained that the District's small boundaries only include approximately 250 properties and has a minimal tax base. Mr. Housley said that service agreements with neighboring school districts have reduced operational, transportation and information technology costs. He related that the Auditor General's Office recommended obtaining a written agreement with the Cochise County Superintendent's Office for services; however, the Cochise County Superintendent's Office believes that the services provided to PESD are statutorily required and is currently investigating if an intergovernmental agreement is necessary.
Senator Crandell praised PESD for their accomplishments. He asked if students are ever turned away from the school in an effort to remain under 125 students. Mr. Housley answered in the negative and stated that 40 percent of the student population lives outside of District boundaries.
Senator Melvin inquired the means used to achieve positive test results. Mr. Housley responded that an intense focus on the student is required.
Co-Chairman Yee commended Mr. Housley for his leadership as Superintendent, student performance results and being a good steward of taxpayer monies.
Ash Creek Elementary School District
Mike Quinlan, Manager, Division of School Audits, Audit General's Office, concluded the slideshow presentation (Attachment 1, Pages 2-3) and provided report highlights on the performance audit for the Ash Creek Unified School District (ACESD) (Attachment 7). He stated that the district operated reasonably efficient overall but with high costs due to the small size of the district. Mr. Quinlan said that the audit follow-up showed that 3 of the 11 recommendations have been implemented so far. ACESD improved management of the food service program, maintained documentation supporting riders and miles, and documented bus preventative maintenance. The Auditor General's Office continues to work with ACESD to establish and strengthen procedures for accounting and computer controls.
Co-Chairman Goodale commented on the challenges small school districts have to fully fund a self-paid lunch program.
Senator Melvin inquired why bus and food services are not contracted out to private companies to take the burden off of the districts. He said that the school districts could concentrate on educating students instead of providing these services.
Mr. Ehrick returned to the podium and related that vender use is not always cost effective due to issues of vendors not living up to the contracts, school districts being overbilled, lack of monitoring, etc.
Co-Chairman Yee thanked the Auditor General's Office for providing the Committee an overview of the six school district performance audits.
Without objection, the meeting adjourned at 11:08 a.m.
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Abby Selvey, Committee Secretary
August 11, 2014
(Original minutes, attachments and audio on file in the Office of the Chief Clerk; video archives available at http://www.azleg.gov)
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COR – SENATE ED AND HOUSE ED
July 29, 2014
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