Scottsdale increases classroom spending amid scrutiny

The Scottsdale Unified School District’s new budget will increase money going to the classroom by a bit next year after the district’s spending has come under scrutiny.

A state auditor’s report said the district “falsely increased” what it spent in the classroom over several years.

Scottsdale will spend 55 percent of the 2015-16 budget on “instructional” spending, which includes teachers and academic programs as defined by the Arizona Office of the Auditor General. That compares with 53.2 percent of the current year’s budget, and a statewide average of 54.5 percent for 2013-14.

Classroom spending became a focus this year when Gov. Doug Ducey highlighted the auditor’s statistics in his inaugural speech. He wanted to require districts to spend more on instruction and less on administration. The Legislature later backed off making that a law but did require districts to publicly describe their spending breakdown.

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After outcry from teachers and school staff, the classroom-spending category in the governor’s budget plan was changed to include student and instructional support, such as librarians, counselors, aides and other people who work with students.

However, the auditor will continue to keep those categories separate.

Including the categories of student and instructional support, Scottsdale will spend 69.3 percent of next year’s $170 million budget in the classroom, compared with 67.5 percent this year.

Scottsdale will spend 8.5 percent on administration next year, compared with 8.9 percent this year.

The district got a break when the Scottsdale City Council agreed to spend $300,000 to help fund police officers in schools. If the council had rejected the deal, the district would have eliminated some school-resource officer positions.

The budget, infused with money from a voter-approved override, will reduce class sizes and restore art, music and physical education classes that were cut last year. The governing board approved the budget Tuesday.

Apart from the new requirement to publicly reveal the classroom-spending breakdown, Scottsdale is also under scrutiny for past spending. A report released in May by the auditor general found that the district had improperly classified millions of dollars in spending over several years.

The auditor found the improper classifications totaled $8.2 million and made it appear as through Scottsdale spent a higher percentage in the classroom than it actually did in 2012. The 2012 report showed the district spent 58.7 percent of its budget on instruction when the actual percentage was 55.7.

The audit found that from 2004 to 2009, the district counted spending on electricity as “instruction” rather than “plant operations.”

In 2012 and 2013, the district counted employees in “student support,” such as speech therapists, as instruction. And in 2014, Scottsdale counted its liability insurance payment as instructional spending rather than plant operations.

The other audit findings were:

— Scottsdale spent more on administrative costs than peer districts of comparable size and income levels in 2012. That year, the district spent $628 per pupil on administration compared with peer districts’ average of $550.

— Scottsdale had more excess space than peer districts and spent more on plant operations than peer districts in 2012.

— Scottsdale had inefficient bus routes in 2012, and costs per rider were higher than peer districts.

There are no consequences for the misreporting. The auditor made recommendations for improvement in the report, and in its response, Scottsdale agreed to all of them.

Superintendent David Peterson addressed the report at a special governing board meeting in June.

He said that classifying the insurance payments as classroom spending was a mistake but said categorizing support staff under classroom spending was believed to be correct at the time.

He also said that after he joined the district as the business manager in 2005, he reviewed the coding of the electricity spending, realized it was incorrect and changed the practice.

“It took me awhile to get my arms around it. Once I got my arms around it, I said ‘yes, it’s wrong.’

“Miscoding did take place in 2014. If I have to own it, I’ll own it. As superintendent, I’ll take it,” he said at the special board meeting.

“The insurance was a screw-up. The others were intentionally coded that way because it was an interpretation.”

He said since 2012, Scottsdale has reduced the number of administrative employees, closed a campus and classroom buildings at several schools and eliminated dozens of bus routes.

Mike Quinlan, schools audit manager at the Auditor General’s Office, said his office is unable to enforce its recommendations, but the public nature of the reports is usually enough to get districts to comply. He believes Scottsdale is already doing so. His office will follow up in six months.

He told The Republic that such miscoding is uncommon.

“In this case, it’s a large amount of money that was miscoded, and Scottsdale is a large district that’s pretty sophisticated and should know how to code,” he said.

He said he hoped administrators seriously consider reducing the district’s buildings. The report said Scottsdale was using just two-thirds of its building capacity in 2012, with eight schools at less than 60 percent capacity.

“I get how emotional it can be for a district to close a neighborhood school, but I want to make sure the district understands there is a huge cost to keeping these schools open,” Quinlan said.

Peterson said the district is working on a master plan to determine the best use of the elementary schools. That plan will likely lead to asking voters to approve a construction bond to rebuild the aging schools — smaller, in most cases.

Board member Pam Kirby said she was troubled by the report’s finding, especially the auditor’s characterization of “falsely” reporting spending.

“If you want to talk about a bond in 2016, or a capital override, we need complete trust from our community, and this damages that.”

Article source: http://www.azcentral.com/story/news/local/scottsdale/2015/06/25/scottsdale-increases-classroom-spending-amid-scrutiny/29241155/