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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suddenly flush with cash because of a law that required the state to continue to fund the school district as if the 900 withdrawn students were still attending district schools.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:

• District employees and school board members used school district credit cards for personal expenses. The district credit card balance ballooned to more than $20,000 despite a state law that forbids school districts from incurring credit card interest.

• The district purchased expensive vehicles including a new Ford Excursion for Alvin Barlow and a $38,000 Ford F350 truck for Jeffrey Jessop. The district paid for oil, gas and maintenance of more than a dozen vehicles given to district employees to use for personal as well as district business.

• District employees traveled excessively, often taking family members along on trips that were paid for by district funds. The district purchased the Cessna airplane to facilitate travel and entered into a contract with the school board president's son to fly the plane.

• The district had more than 100 employees for 300 students, far more employees than any other school district its size. The unusually high number of employees was a way to transfer public school funds to FLDS members, who were then required to make significant contributions to the church.

• The district paid FLDS members hired to drive buses and work as custodians far more money than certified schoolteachers who were members of the despised Centennial Park polygamous sect.

• The district transferred three public school buildings to an FLDS-controlled entity at a loss to the district of more than $330,000. The former public school buildings were converted into FLDS schools.

Three months after the New Times April 2003 exposé, state Superintendent of Public Instruction Horne asked the state Auditor General to conduct a special audit of the Colorado City school district to review its finances. The state audit would drag on for more than two years, but its release late last month would prove to be a major blow to the school district.

Excessive spending by the Colorado City school district came to a head when teachers' paychecks started bouncing in October 2004. The district had maxed out a $1 million line of credit with Wells Fargo Bank and was issuing bad checks. Teachers were outraged, but continued to show up for work despite the lack of pay.



State education officials were powerless to intervene as the district plunged ever deeper into debt. There was no law allowing the state Department of Education to forcibly remove a corrupt and/or incompetent public school administration and school board from power -- even if they effectively bankrupt a school district.

"Nothing can be done until I get authority to do something," Horne said in November 2004. "I should already have that authority, but I don't."

Horne and Attorney General Goddard each introduced legislation in January 2005 to address the situation. After several months of contentious hearings, the Legislature passed a bill last April allowing the AG to petition the state education board to take over financially failing school districts. Governor Janet Napolitano signed the bill on May 9.

Ten days later, Mohave County school superintendent Mike File and two state legislators conducted a surprise visit to the Colorado City school district. File met with teachers and staff and warned that significant changes were about to take place at the school district, including the dismissal of unnecessary and corrupt employees.

The unscheduled visit infuriated Colorado City school officials.

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John Dougherty
Contact: John Dougherty