Colorado City district faces bankruptcy
 
By Pat Kossan
The Arizona Republic
 
Under a sweeping new law that takes effect today, the state attorney general will ask education officials to force a northern Arizona school district into bankruptcy after it buried itself in $1.8 million debt while it purchased a plane and cars for its administrators.

"We found a very serious story of mismanagement," Attorney General Terry Goddard said Thursday.

Goddard released a copy of the 11-page petition detailing a litany of allegations against Colorado City Unified District, which sits on the Utah boarder and has about 250 to 300 students and 18 administrators. Goddard will officially file the petition under the new law today.

Goddard said that the state is carefully heading into new legal territory because the law is broadly written and has few details. Legislators approved the new law after Colorado City Unified began bouncing teacher paychecks in October and Goddard found himself powerless to do anything about it. The law allows the state to push any Arizona school district into bankruptcy if it "grossly mismanages" its money.

The fate of Colorado City Unified ultimately rests with the Arizona State Board of Education, which has the power to decide if the district did indeed "grossly mismanaged" its money, as Goddard has alleged in the petition.

If they agree with Goddard's findings, the board would then appoint a receiver, who could take charge of the district's budget, fire or suspend a district's superintendent, and override the district's governing board's decisions and contracts.

Attorney Matthew Wright, who will defend Colorado City Unified before the state education board, said he received Goddard's petition late Thursday and hasn't had time to evaluate the document.

"It needs to be examined and researched to determine the merits of the allegations," Wright said. "I would caution people not to accept allegations on their face as truth without having the facts available."

The new law protects the jobs of licensed teachers working at the district and Goddard said he wants to keep the school operating for community families. But Goddard wants to stop what he called ongoing "systematic and egregious mismanagement" of funds by administrators and district board members. Among the allegations listed in Goddard's petition:
  • The district not only bought a $200,000 airplane and spent $20,000 on maintenance; it paid the son of the district board's president $50-an-hour to pilot it.

  • The district's administrative costs per pupil are twice as high as districts of similar size. It bought administrators vehicles they used for personal business ventures and other non-school activities and multiple cellphones, at the same time it forced teachers to take a 15 percent pay cut.

  • The district's board and administrators "negligently or willfully" benefited a private school operated by the Fundamentalist Church of Jesus Christ of Latter Day Saints, a breakaway sect, which, unlike the mainstream Mormon Church, practices plural marriages. Its president Warren Jeffs was indicted in June on child-sex charges, but remains in hiding despite a $10,000 reward for help finding him. The district pre-paid multiyear leases on buildings owned by the sect, returned the school buildings before the lease was over, and allowed the owners to keep an over payment of nearly $200,000. The sect then used the buildings, and the equipment inside, to open a private school.
Attorneys for Colorado City Unified officials have 15 days to respond to the petition and the State Board of Education must give 20 days notice before hearing from both parties. If the board decides to appoint a receiver, that agency would have 120 days to create a proposed plan to put the district back in financial order and get the State Board of Education's approval for the plan.

Arizona Superintendent of Public Instruction Tom Horne said Thursday he would recommend Phoenix-based Simon Consulting to act as receiver, an accounting firm that specializes in investigating school fraud. But Horne, who sits on the Board of Education, said he would not participate in the hearings or vote because of his harsh and public criticism of Colorado City Unified district for more than a year.
 
azcentral.com
Originally published August 12, 2005
 
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