Arizona lawmakers seek solution to Isaac School District financial crisis, call for criminal probe

PHOENIX – While lawmakers rush to free up funds so the Isaac School District can meet payroll, Republican leaders are calling for a criminal investigation into the district’s financial crisis.

With the west Phoenix school district’s liabilities reportedly as high as $20 million, state Rep. Matt Gress told KTAR News 92.3 FM’s The Mike Broomhead Show on Tuesday the situation is “very dire.”

Isaac School District, which operates 12 elementary schools, has $6 million in funding from the federal government on the way, but it won’t be available before the next scheduled payday.

The state has cash available, but the district owes Maricopa County money, Gress said. The county treasurer apparently is required to use any state funding it receives to cover the district’s debt before it can be used on payroll, which is an obstacle the Legislature is working to address.

“We’re going to suspend that requirement for the next two weeks in legislation today that we’ll be considering so that we can pay the payroll for Isaac Elementary School District,” said Gress, a District 4 Republican. “That will buy us more time to come up with a more comprehensive, longer-term solution.”

Gress added that the district, which is under a third-party receivership, will be required to pay back any short-term funding it receives from the state.

“We are facilitating the process to make payroll while the receiver gets more time to start liquidating property. … That debt will be paid off by the Isaac Elementary School District,” he said.

House Republicans ask state, county to investigate Isaac School District

Meanwhile, GOP House leaders have asked Arizona Attorney General Kris Mayes and Maricopa County Attorney Rachel Mitchell to open a criminal investigation into how things got to this point.

“At the heart of this crisis are more than 4,800 students and hundreds of employees who have been abandoned by failed district leadership,” Speaker Steve Montenegro said in a press release Monday. “The falsification of financial records and the mismanagement of public funds are a betrayal of trust and must be investigated immediately.”

🚨@AZHouseGOP Leaders Demand Accountability for Isaac School District Crisis, Call for Criminal Investigation

STATE CAPITOL, PHOENIX (Monday, January 27, 2025) – The financial collapse of the Isaac School District in West Phoenix has brought devastating consequences for its… pic.twitter.com/dNSSCjP5FL

— Arizona House Republicans (@AZHouseGOP) January 27, 2025

After the State Board of Education placed Isaac under a receivership earlier this month, Superintendent Mario Ventura announced his resignation.

Gress believes the Isaac School District Governing Board needs to be held accountable, too.

“What were they all doing all of this time as they saw their property tax base shrink, their school enrollment shrink, and they didn’t take necessary fiscal actions such as closing schools that were underutilized and consolidating properties?” he said.

In fact, Gress said lawmakers will look into firing the board as part of the legislation to fund the district’s payroll.

How long has Isaac School District been financially troubled?

Gress explained that Isaac has been on the Arizona Auditor General’s financial risk list since 2020 and was found to have negative cash balances starting in 2023.

He believes state authorities need to be more aggressive in dealing with public school districts when they are facing financial difficulties.

“It seems like we wanted to do a light touch and allow the district to find its way out of this financial mess, and that didn’t work. So, we need to be more aggressive, much sooner, and I think we can avoid situations like this,” he said.

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