$10 Million Tutoring Fund Transfer Questioned By Lawmakers

Schools Chief Says Move Well Within Law
Arizona Capitol Times
Tuesday, March 22, 2005
Bill Coates

The AIMS test has been a cold shower on the body politic of Arizona. More than half the 65,000 students in the class of 2006 might not receive high school diplomas because they failed at least one component of the test. Now, an effort to fund a tutoring program for those students has raised some eyebrows at the Capitol.

Some lawmakers want to gut the test, undo it as a requirement for graduation, but not state Superintendent of Public Instruction Tom Horne. He stands by AIMS and has scrambled to set up a crash-course tutoring program to help the 37,000 students in jeopardy pass the test. The estimated cost is $10 million. Mr. Horne, the superintendent of public instruction, found the money in a what is known as additional state aid to education.

While many legislators regard Mr. Horne’s effort as well intentioned, some are troubled by what they see as creative financing. The Legislature did not specifically provide money for an AIMS tutoring program. Instead, Mr. Horne used a statute that permits agency heads to transfer money from one existing program to another.

One lobbyist for a tax watchdog group, however, suggests Mr. Horne did not so much use the law (ARS 35-173) as abuse it.

“Horne is the first superintendent to ever come up with the idea or have the nerve, I guess, to step out and say, ‘I’m going to redirect it [$10 million] based on this transfer authority,’” says Kevin McCarthy, president of the Arizona Tax Research Association, which often sides with business interests.

Mr. Horne dismisses Mr. McCarthy’s complaint.

“This is not a matter of the personal preference of the tax research association,” Mr. Horne says. “It’s a matter of law.”

Some lawmakers, however, say the law failed to foresee such a big transfer from additional state aid to education, one of several large state appropriations for public schools. Additional state aid is distinct from basic state aid to education, an annual appropriation based on student count.

Additional State Aid

Additional state aid is a way to lighten the load on homeowners. With it, the state chips in 35 per cent of a homeowner’s local school property tax, up to $500 per parcel. But state budgets are passed in spring, while actual property tax calculations are not available until October. So the Legislature makes something of an educated guess in its appropriation.

If the guess is too low, the Legislature will make up the difference to schools.

For fiscal 2005, which began last July 1, lawmakers guessed high – by some $18 million. Ordinarily, that “extra” money reverts to the general fund.

Mr. Horne credits Ruth Solomon, his associate superintendent for education, for suggesting that a statute would allow the agency to transfer a portion of the state aid to provide for AIMS tutoring.

“I was in the Legislature when we enacted this particular law,” says Ms. Solomon, who served in the House in from 1989 to 1994 and the Senate in from 1995 to 2005.

The law allows for the budget transfers with the approval of the Department of Administration director, who answers to the governor.

In a Dec. 22 letter to Mr. Horne, Governor Napolitano approved the $10 million transfer, contingent on approval by the state Board of Education and progress reports from schools. The money was transferred from additional state aid into a category set up to pay for administering the AIMS test, according to a legislative analyst.

About 21,400 students have signed up for AIMS tutoring, targeted for juniors retaking the writing and reading portions in February and the math portion in April. “Exceptionally qualified” teachers or outside contractors each receive $30 an hour for nine hours of one-on-one tutoring.

The actual cost is expected to add up to nearly $5.8 million.

When Ms. Solomon brought the transfer authority to Mr. Horne’s attention, he says he had his doubts.

“When I first heard about it, I was skeptical,” he says. “I checked with the attorney general and I discovered Ruth was right. We had these powers.”

Mr. Horne supplied a copy of a Feb. 18 letter from the Attorney General’s Office. The letter from Assistant Attorney General Susan Plimpton Segal concludes: “So long as the requirements of the statute are met, the transfer is allowed.”

In addition, the two-page memo points out that staff at the Joint Legislative Budget Committee earlier agreed that the transfer was allowed by law.

Lawmakers’ Reactions

Reaction from lawmakers who control the purse strings was mixed.

Rep. Tom Boone, R-4, heads the House Appropriations Committee that oversees education spending. While the transfer might have met the letter of the law, he suggests it failed to live up to the spirit.

He says he knows of no other instance where a state agency has transferred such a large amount money from one line item to another – without an appropriation.

“I don’t know of anything that has happened of that magnitude. I think there have been some feathers ruffled over that,” Mr. Boone says.

Mr. Horne responds that he informed the House speaker and Senate president before making the transfer. And, again, he refers to the attorney general’s memo on the transfer’s legality.

Lawmaker: Emergency Appropriation Was Possible

The Legislature, however, should have been more involved, Mr. Boone says. Mr. Horne could have come to lawmakers for an emergency appropriation.

“I think we’ve been very receptive to dealing with critical issues when they come up,” Mr. Boone says.

For example, he says, his committee recently approved a fast-track expenditure of $22 million to bring the Arizona State Hospital into compliance with federal standards.

But that wouldn’t have been fast enough for AIMS tutoring, according to Mr. Horne. It wasn’t until October that he realized the need for special tutoring. That was just after scores from the previous tests became available, signaling trouble for the class of 2006.

“The students needed help before they retook the test in February, so time was very short,” Mr. Horne says.

In the Senate, appropriations chairman Bob Burns, R-9, echoes Mr. Boone. Whatever the merits of the tutoring program, Mr. Burns says, “it’s sort of pushing the envelope.” Speaking of Mr. Horne, he adds: “He went forward with this transfer on his own, and I find this problematic. That money ought to come back to the General Fund.”

Another appropriations chairman hesitates to give Mr. Horne any benefit of the doubt – even on a technicality.

Rep. Russell Pearce, R-18, contends Mr. Horne – an elected executive officer – took on a power accorded the Legislature. That is, the power to appropriate money. As a former director of the state Motor Vehicle Division, Mr. Pearce says he moved some funds around, but that he did so on a much smaller scale. The money was transferred to established programs, he says. AIMS tutoring was something new, he says.

“When you decide to take money that was not dedicated for that purpose, and fund something, that’s an appropriation,” Mr. Pearce says.

While he chairs a separate House Appropriations Committee, Mr. Pearce also sits on Mr. Boone’s committee. In a Jan. 25 meeting, Mr. Horne answered questions about the tutoring expenditure. According to committee minutes, he told Mr. Pearce the $10 million transfer was a “one-time event.” Mr. Horne said he wanted to continue AIMS tutoring with a formal appropriation.

Mr. Pearce says later he didn’t like what he heard.

“I told Mr. Horne that I was very concerned about the process and I thought what they did was not proper and perhaps not even legal,” Mr. Pearce says.

Mr. Horne replies: “I told him I wouldn’t have done it if it had not been approved by the attorney general.”

In theory, Mr. Pearce could, as a legislator, seek relief in the courts – but he won’t.

“You’ve got to pick your battles carefully,” Mr. Pearce says. Referring to education officials, he adds: “We’ve been candid about telling them this better never happen again.”

Rep. Pearce: Budget Transfer Restrictions On Horizon

To that end, Mr. Pearce says lawmakers likely will introduce budget-transfer restrictions, when lawmakers take up next year’s budget later in the session.

Mr. Boone adds: “For the Department of Education, there will be a tightening up in the budget process now, I’m sure, this year.”

Whether AIMS tutoring proves successful won’t be known until June, when scores are released. Tutors whose students fare poorly will likely not be rehired, Mr. Horne says. He plans to continue the program next year.

In her 2006 budget message, Governor Napolitano has asked the Legislature to kick in an additional $5 million for AIMS tutoring. With that and five cracks at the tests, Mr. Horne predicts 90 per cent of the 2006 class will pass all three AIMS sections before graduation.

As for the $10 million transfer, the House appears to have thrown in the towel. By a 55-0 vote, it approved a strike-all bill (H2033) that would retroactively appropriate the money already being spent.

“We’re just trying to create the best situation we can out of that transfer,” Mr. Boone says.