By Amy Silverman
By Olivia LaVecchia
By Monica Alonzo and Stephen Lemons
By Chris Parker
By Michael Lacey
By Weston Phippen
Arizona Attorney General Terry Goddard announced the proposed settlement agreement, called a consent decree, at a December 2 press conference in Phoenix.
"What we have," Goddard said, "is a very important step in terms of making sure that the law is going to be followed, the children are going to be served and that Colorado City joins the rest of the state as a law-abiding community."
Three days after Goddard's press conference, the Arizona Board of Education formally approved the consent decree and appointed Simon Consulting of Phoenix as the receiver to oversee the district's financial affairs.
Simon Consulting will immediately begin an investigation of the district's finances and will submit a plan to return the district to a sound financial footing to the state board within 120 days.
The tiny district operates one K-12 school with about 350 students. Despite its small size, the district has an unusually high number of employees and has made some extraordinary purchases, including a $220,000 Cessna P-210 airplane, acquired in 2002.
No other Arizona public school district owns an airplane.
The receiver will immediately begin to take steps to reduce district operating expenses, including attempting to sell the airplane.
The education board's 9-to-1 vote to approve the consent decree immediately relieved Alvin Barlow and Colorado City school district business manager Jeffrey Jessop of all administrative duties. Barlow will retire and Jessop will resign, effective December 31.
Tom Horne, state superintendent of public instruction, hailed the board's action as a victory for Colorado City students and teachers who have suffered from the school district's financial mismanagement.
"I have been pushing for receivership for over a year now with this school district ever since I learned they bought an airplane with funds intended for students," Horne says.
Matt Wright, an attorney representing the Colorado City school district, says the consent decree allows the school district to continue providing educational services to children in the area.
For the past four months, the school district appeared determined to fight Goddard's effort to have the state education board appoint a receiver. But Barlow and Jessop, along with school board president Ralph M. Johnson, decided in late November to capitulate and sign the consent decree to avoid being called to testify before the state Board of Education.
Barlow and Jessop -- along with assistant business manager Oliver Barlow -- are under criminal investigation by the AG for misuse of school district funds, according to a search warrant served last May.
Wright says he expects the receiver will be able to quickly fix the financial problems at the district.
"I think the district will be out of its critical negative cash flow problem within a year," Wright says.
Goddard says the school district receivership is an important step in his effort to stop the FLDS from abusing public resources. Besides addressing problems with the school district, Goddard has also requested that the U.S. Justice Department conduct an investigation of the Colorado City police department for abusing its power by condoning spiritual marriages of underage girls to polygamist men.
Goddard says Justice Department officials are conducting a preliminary review of the Colorado City police.
"We need to keep making sure that the authorities there are subject to the same state laws everyone else is subject to," Goddard says. "They have to abide by the rule of law."
The Colorado City school district's slide into financial ruin began in July 2000, when FLDS leader Warren Jeffs ordered church faithful to withdraw their students from the public schools and enroll them in church schools or home schools. About 900 students were pulled from the school district overnight, and more than 20 teachers resigned. The district was left with fewer than 300 students.
Jeffs ordered the mass withdrawal of students because he didn't want FLDS members to associate with children and parents from a rival fundamentalist Mormon polygamous sect clustered in the nearby unincorporated community of Centennial Park.
Despite the withdrawal of students, Alvin Barlow and other school district administrators and board members -- whose children had been pulled from the public schools -- remained in their positions in order to keep control of the school district's budget, most of which was allocated to salaries and operating expenses.
The withdrawal of students didn't have an immediate negative impact on the school district's operating budget. In fact, the Colorado City school district was suddenly flush with cash because of a law that required the state to continue to fund the school district as if the 900 withdrawn students were still attending district schools.
Known as the "rapid decline" provision, the law allowed the Colorado City district to receive state aid for 1,200 students the first year after the mass withdrawal even though only 300 students were actually attending school. The number of students used to compute state aid declined by 15 percent a year. The net effect, according to state officials, was that the Colorado City school district received more than $5 million in extra state aid between 2000 and 2004 for phantom students.
But even this massive injection of extra state money was not enough to stave off financial ruin for the school district.
Thousands of pages of school board minutes and financial records reviewed by New Times in late 2002 and early 2003 uncovered a wide array of improper and illegal spending by the school district ("Wages of Sin," April 10, 2003), including: