KINGMAN -- The Arizona Board of Education accepted a consent agreement on Monday that places the Colorado City Unified School District in receivership under the board's control.
The board voted 8-1 to approve the settlement between the school district and state officials and to immediately place the district's $4.7 million budget under the supervision of an appointed receiver.
"This agreement represents a giant leap forward for taxpayers of Arizona and the children of Colorado City," Attorney General Terry Goddard said in a news release. "It will put an end to the serious mismanagement of the district and the waste of hundreds of thousands of tax dollars. It will place control of the district in competent hands and put it on the road to financial recovery."
The school district, located in the remote Arizona Strip, becomes the proving grounds for a state law that allows the Board of Education to appoint a receiver to manage the affairs of a public school district that is either insolvent or has allegedly engaged in gross mismanagement. The law became effective on Aug. 12, the same day Goddard filed a petition alleging the Colorado City School District misused taxpayer funds.
The state board appointed Phoenix-based Simon Consulting LLC as receiver. The company has 120 days to file a plan with the school board to improve the district's financial affairs.
District Superintendent Alvin Barlow will retire and Business Manager Jeffery Jessop will resign, both effective on Dec. 31, under the agreement.
The settlement also forces the district to reduce operating expenses including the possibility of selling a $200,000 Cessna airplane. The district allegedly diverted funds from educational purposes to purchase the plane along with buildings and equipment.
An Arizona Office of the Auditor General report shows that the district practiced generally poor fiscal procedures that Goddard said led to more than $2 million in debts and kept teachers from being paid for two months in the last school year.
At a legislative hearing in February, Barlow said the financial problems arose since the enrollment plunged five years ago. The district included approximately 1,200 students in 2000 compared to around 344 in 2004. Employment dropped from around 120 to 71 over the same time period.
The sudden drop-off was due to parents pulling their children out of the district schools at the request of Warren Jeffs, the fugitive leader of the Fundamentalist Church of Jesus Christ of Latter Day Saints. Just about all of Colorado City's 10,000 residents are members of the FLDS that broke away from the mainstream church more than 100 years ago.
The district's attorney, Matthew Wright, told reporters after Monday's meeting that district officials dropped their opposition to the receivership to lessen the impact on students and because they felt the new law made receivership unavoidable.
Wright also said administrators said they would invoke their Fifth Amendment rights against self-incrimination and would refuse to testify during a receivership hearing.
School district leaders initially fought the receivership petition, laying at least part of the blame for its problems on the Mohave County Superintendent's Office.
County Superintendent Mike File said his office has continually issued the district's payroll checks as required but received almost zero reciprocity.
File sends payroll checks for the staff and faculty but has yet to see any of their official contracts with the district. The only documentation File has from the district is its annual budget, which it needs to submit to receive its share of state funds.
"I'm happy to see there's finally a resolution to this problem and that the students and teachers of that district are going to be now, hopefully, receiving the proper educational funds going to the educational process," he said.
The district's school board members retain control of educational policy-matters, Goddard said. The five-member board now has two vacancies due to Jeffs allegedly excommunicating them both.