Special study, desegregation expenditures

              SPECIAL STUDY
DESEGREGATION EXPENDITURES
Report to the Arizona Legislature
By the Auditor General
December 1990
90- 11
SPECIAL STUDY
DESEGREGATION EXPENDITURES
OF ARIZONA SCHOOL DISTRICTS
DOLJGLAS R NORTON. CPA
ALJDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
LINDA J BLESSING. CPA
DEPUTY AUDITOR GENERAL
December 14, 1990
Members of the Legislature
State of Arizona
The Honorable Rose Mofford
Governor of the State of Arizona
Transmitted herewith is a report of the Auditor General, A Special Study
of Desegregation Expenditures. This report covers desegregation
expenditures of Arizona school d i s t r i c t s and i s i n response to the
requirements of Chapter 399, Sections 20 and 21 of the 1990 Session Laws.
We found that expenditures budgeted outside of the revenue limits for
desegregation programs are growing. We also found that some costs
categorized as desegregation expenditures do not appear to be related to
desegregation orders and agreements. Because of time limitations,
however, we were unable to project the extent to which a l l desegregation
expenditures are related to court orders or agreements with the Office
for C i v i l Rights of the U. S. Department of Education.
As part of our statutory charge, we reviewed the legal framework for
desegregation and contacted other states to determine how they meet
desegregation requirements. We use this information and the results of
our budget and expenditure reviews to develop a series of options for
funding and controlling desegregation costs in Arizona.
Throughout our review we worked with an advisory comnittee mandated by
Chapter 399. The committee provided a wide range of assistance and also
reviewed the final report. Committee comments are presented following
Chapter 5.
This report w i l l be released to the public on Monday, December 17, 1990.
My staff and I w i l l be pleased to discuss or c l a r i f y items in the report.
Sincerely,
D O U ~ SR. Nor ton
Auditor General
DRN : l mn
2700 NORTH CENTRAL AVE. SUITE 700 PHOENIX, ARIZONA 85004 ( 602) 255- 4385
SUMMARY
The Office of the Auditor General has conducted a special study of
desegregation finance in Arizona school d i s t r i c t s . This study was
conducted in conjunction with the Superintendent of Public Instruction in
response to Chapter 399, Sections 20 and 21 of the 1990 Session Laws. The
purpose of this report is to present information on the scope and use of
funds budgeted and spent by Arizona school d i s t r i c t s in implementing
court ordered desegregat ion and programs requi red by agreement w i th the
U. S. Department of Education, Office for C i v i l Rights ( OCR).
A. R. S. $ 15- 910. H allows Arizona school d i s t r i c t s to budget expenditures
for desegregation programs outside of the revenue control l i m i t and the
capital outlay revenue l i m i t . During fiscal year 1990- 91, ten of 33
e l i g i b l e d i s t r i c t s budgeted $ 47.3 mi l lion under this provision.
This study was severely limited by the time available to conduct it.
Lack of time was particularly significant in limiting our review of
d i s t r i c t expenditures in that we could not review a s t a t i s t i c a l sample of
a l l desegregation expenditures. Because of this, our results and
information cannot be used to draw conclusions about the total population
of desegregation expenditures.
Leqal Basis For Deseareaation, Desesresation Remedies,
And The Fundincj Of Deseare~ ation Efforts
In Arizona ( see pages 5 through 13)
The legal framework established by the courts nationally provides the
basis for desegregation actions against Arizona school d i s t r i c t s . The
U. S. Supreme Court has ruled that the Fourteenth Amendment prohibits
racial segregation in public schools, as well as discrimination based on
national origin. In addition, the Supreme Court has held that states can
be ordered to fund school desegregation programs and that federal courts
can order school d i s t r i c t s to levy taxes adequate to support
desegregation programs even i f such tax levels exceed state mandated
taxing and spending limits.
Persons who feel a school district is discriminating on the basis of race
or national origin can either f i le a complaint with the U. S. Department
of Education, Office for Civi I Rights ( OCR) or initiate a suit in federal
court. In Arizona most cases have involved complaints filed with OCR,
and have typically resulted in a negotiated agreement in which the
district agrees to take corrective action. Lawsuits are handled in much
the same manner, particularly if the parties agree that discrimination
has occurred.
Deseareclation Expenditures Are Growinq
Steadilv In Arizona ( see pages 15 through 25)
Both the number of districts budgeting outside of the revenue control
limit ( RCL) and capital outlay revenue limit ( CORL), and the amounts
budgeted are growing. Expenditures more than doubled between fiscal
years 1987- 88 and 1989- 90, increasing from $ 15.9 million to $ 33.8
mil lion. Ten districts used this provision to budget $ 47.3 million for
desegregation in fiscal year 1990- 91.
Desegregation expenditures budgeted outside of the RCL and CORL appear to
be related to district wealth. Our analysis shows a direct, high
correlation between assessed valuation per pupil and the amounts budgeted
outside the revenue limits. However, the impact of these expenditures on
the equalization of school finance statewide appears limited to date
because they account for a very small proportion of all education
expendi tures ( less than one percent in fiscal year 1989- 90).
Some Ex~ enditures Are Not Directlv Related To Court
Orders And Aareement~ ( see pages 27 through 35)
A limited review of expenditures in five districts budgeting
desegregation expenditures pursuant to A. R. S. $ 15- 910. H found that while
many expenditures were related in some way to the districts' court orders
and OCR agreements, some expenditures were not clearly related. In the
absence of a specific statutory definition, audit staff defined an
unre lated expend i ture as a " . . . necessary and ordinary maintenance and
operation or capital outlay expenditure ... [ not] ... made to support an
activity specifically dedicated to the desegregation program." Using
this definition, we found several unrelated expenditures in all five
districts.
However, we were unable to determine i f supplanting has occurred when
d i s t r i c t s shifted expenditures for desegregation outside of the revenue
limits. Supplanting is not defined within the context of A. R. S. 515- 910
and, because of this, the law may allow d i s t r i c t s to s h i f t desegregation
costs previously funded through other sections of the maintenance and
operation and capital outlay budgets to the desegregation sections of the
budget.
States Fund Deseqregation Prwrarns
In A Variety Of Wavq ( see pages 37 through 43)
A survey of states in which school d i s t r i c t s are implementing
desegregation programs shows that the states vary in their financial
participation. Two states, Ohio and Missouri, have been ordered by
federal courts to assist school d i s t r i c t s in meeting the costs of court
ordered desegregation programs. California and Massachusetts aid
d i s t r i c t s implementing either court ordered or voluntary desegregation
programs. Minnesota and Wisconsin share costs with d i s t r i c t s voluntarily
carrying out desegregation programs. Other states, such as New Jersey,
Connecticut, Washington and I l l i n o i s provide no specific a i d t o d i s t r i c t s
implementing desegregation programs.
Our survey suggests that states with court ordered desegregation, such as
Missouri and Ohio, appear to have the least control over programs and
funding, most of which is determined by the courts. In contrast,
state- mandated and voluntary desegregation programs -- coupled with
state financial support -- appear to offer significant opportunity for
states to control d i s t r i c t desegregation a c t i v i t i e s and, in some cases,
avoid court actions that would otherwise l i m i t state control.
O Dio~ ns For Fundinq For Control li na Deswrwati on
Prwrarns In Arizona ( see pages 45 through 50)
The Legislature has several options for funding desegregation programs.
However, the Legislature should consider strengthening accountability for
desegregation expenditures, whether i t takes any other action on
funding. A t a minimum, the Legislature should consider: 1) clearly
defining what constitutes supplanting and the extent to which i t is
permitted, 2) requiring school d i s t r i c t s to obtain a compliance review of
expenditures budgeted pursuant to A. R. S. 515- 910. H as a separate part of
their regular financial audits, and 3) requiring al l d i s t r i c t s budgeting
pursuant to A. R. S. 515- 910. H to budget and report a l l expenditures by
program.
Other opt ions the Legislature may consider include requi ring d i s t r i c t s
budgeting pursuant to A. R. S. 515- 910. H to submit proposed programs to the
Arizona Department of Education ( ADE) for review and approval, and to
conduct periodic evaluations of their programs. The Legislature might
also consider authorizing ADE to participate in legal actions involving
desegregation issues so that the state could have input into the
development of court orders and OCR agreements. Finally, the Legislature
might consider creating a special funding source to assist d i s t r i c t s
implementing desegregation programs. Such funds could be distributed on
the basis of ADE's approval of a program or by providing additional
weighting in the funding formula for students participating in the
programs.
State assumption of a greater role in desegregation may increase i t s
legal responsibility in this area. The State may be vulnerable to legal
action i f i t s actions are viewed as preventing d i s t r i c t s from
desegregating. However, the current system may also leave the State open
to a chal lenge on the grounds that l i m i ted tax bases prevent some
d i s t r i c t s from raising funds needed to desegregate.
TABLE OF CONTENTS
INTRODUCTION AND BACKGROUM). . . . . . . . . . . . . . . . .
CHAPTER I: LEGAL BASIS H) R DESEGREGATION,
DDEESSEEGGRREEGGAATTIIOONN REFEFMOERDTIES S, I NA NADR IZMONEA FW. I. N. G. OF. . . . . . . .
Court Cases Have Shaped Desegregation . . . . . . . . . . . . . . . . . .
Process For Developing Agreements
Between School D i s t r i c t s And The Office For
C i v i l Rights, And Those Arising From
C i v i l Rights Lawsuits. . . . . . . . . . . . . . . . . .
State Law Provision Authorizing
Desegregation Funding By School Districts. . . . . . . .
CHAPTER II: DESEGREGATION EXPENDITURES ARE GROWING STEADILY IN ARIZONA. . . . . . . . . . . . . . .
Expenditures Budgeted Pursuant To
A. R. S. $ 15- 910. H Are Increasing. . . . . . . . . . . . .
Impact On Equalization . . . . . . . . . . . . . . . . .
Some School D i s t r i c t s Fund Desegregation Programs Without Using A. R. S. $ 15- 910. H. . . . . . . . .
Conclusion . . . . . . . . . . . . . . . . . . . . . . .
CHAPTER Ill: SOME EXPENDITURES ARE NOT DIRECTLY
RELATED TO CWRT UWRS AND
AGREEUENTS . . . . . . . . . . . . . . . . . . . . . . .
Scope Of Expenditure Review. . . . . . . . . . . . . . .
A Variety Of Desegregation Programs
Exist In Arizona School Districts. . . . . . . . . . . .
Analysis Revealed Unrelated Expenditures
But Could Not Determine I f
Supplanting Has Occurred . . . . . . . . . . . . . . . .
Review Of Tucson Unified
School D i s t r i c t Incomplete . . . . . . . . . . . . . . .
TABLE OF CONTENTS ( Con ' t )
CHAPTPREOR GRIVA: Y S SINTA TAEVSA RFUIEMT) Y DOEFS EWGRAYESG. AT. ION. . . . . . . . . . . .
Purpose, Scope And Methodology . . . . . . . . . . . . .
Mechanisms For Funding Desegregation Programs . . . . . . . . . . . . . . . . .
Some States Provide No Direct Aid For Desegregation . . . . . . . . . . . . . .
Conclusion . . . . . . . . . . . . . . . . . . . . . . .
CHAPTER V: OPTIONS FOR FUNDING AND CONTROLLING DESEGREGATION P R O M IN ARIZONA. . . . . . . . . . . .
Strengthening Accountability . . . . . . . . . . . . . .
Increasing State Role In Formulating Desegregation Plans . . . . . . . . . . .
State Funding For Desegregation Programs . . . . . . . . . . . . . . . . .
Greater State Role In Funding
Desegregation Could Increase StateResponsibility . . . . . . . . . . . . . . . . . .
ADVISORY COWITTEE RESPONSE
APPENDIX I Arizona School D i s t r i c t s Under
Court Orders Or OCR Agreements
APPEM) IX II Selected Financial And Enrollment
Characteristics Of School D i s t r i c t s
Identified In This Report
LIST OF TABLES
TABLE 1 D i s t r i c t s Budgeting For Desegregation Pursuant T0A. R. S. S15- 910. H. . . . . . . . . . . . . .
LIST OF TABLES ( Can't)
Page
TABLE 2 Comparison Of Actual Desegregation Expenditures
To Budgeted Desegregation Expenditures
F( Uisncaauld iYteeda) r. s 1.98.7-. 88. T. hr. ou. gh. 1.98.9-. 90. . . . . . 17
TABLE 3 Desegregation Expenditures As Percent Of
Total Expenditures Selected
School Districts ( Unaudited) . . . . . . . . . 19
TABLE 4 Desegregation Expenditures In
Comparison Districts
Fiscal Year 1989- 90. . . . . . . . . . . . . . 23
INTRODUCTION AND BACKGROUND
The Office of the Auditor General has conducted a special study of
desegregation finance in Arizona school d i s t r i c t s . This study was
conducted in conjunction with the Superintendent of Public Institution in
response to Chapter 399, Sections 20 and 21 of the 1990 Session Laws. The
purpose of this report is to present information on the Arizona school
d i s t r i c t s budgeting and expending funds to implement desegregation
programs required by court orders and agreements with the U. S. Department
of Education, Office for Civil Rights ( OCR).
Deseqre~ aiot n And
School Finance
A. R. S. $ 15- 910. H allows Arizona school d i s t r i c t s to budget expenditures
for desegregation programs outside of the revenue control l i m i t and the
capital outlay revenue l i m i t . Expenditures budgeted pursuant to this
provision must be made in compliance with court orders or agreements with
OCR. School d i s t r i c t s budgeting desegregation expenditures outside of
the revenue limits must raise the needed funds locally; the State
provides no specific aid for this purpose. During fiscal year 1991, ten
d i s t r i c t s budgeted $ 47.3 million under this provision. A total of 33
d i s t r i c t s are e l i g i b l e to budget desegregation expenditures outside of
the revenue limits.
Study Scope
The study encompassed an examination of court orders, administrative
agreements with OCR and financial information from school d i s t r i c t s
budgeting desegregation expenditures pursuant to A. R. S. $ 15- 910. H.
D i s t r i c t s were required to submit annual financial reports for fiscal
years 1986- 87 through 1989- 90 and approved budgets for fiscal year
1990- 91. Auditor General staff reviewed these reports and visited
d i s t r i c t s to examine supporting documentation. Legal aspects of
information presented in this report were reviewed by the Auditor
General's legal counsel. Auditor General staff also contacted other
states to obtain information about desegregation finance. Specific
descriptions of procedures used are presented in each chapter.
While we were able to address a l l areas specified by law, we were
severely limited by the time available to conduct the study. As a
result, we focused our work on certain key information. This usually
meant that we contacted only a few sources or reviewed selected
a c t i v i t i e s . Lack of time was particularly significant in limiting our
review of d i s t r i c t expenditures: we could not use a s t a t i s t i c a l sample of
a l l desegregation expenditures as a basis for our test work. Instead, we
reviewed a sample of expenditures recorded as desegregation costs that
i n i t i a l l y did not appear to be directly related to the d i s t r i c t s ' court
orders or agreements. Because of this, our results and information
cannot be used to draw conclusions about the total population of
desegregation expenditures. They do, however, i l l u s t r a t e the diversity
of desegregation programs in Arizona and other states. Our work also
documents the widely varying interpretations made by school o f f i c i a l s of
what the law requires and allows.
Report Orclanization
Chapter 399, Section 20 of the 1990 Session Laws directs the Auditor
General to address eight areas. This report presents the information
developed in response to the law in five chapters.
Cha~ ter I reviews relevant court cases relating to desegregation
( Section 20. C. 6), describes the process by which agreements with OCR
are developed and approved ( Section 20. C. 4) and provides a history of
A. R. S. $ 15- 910. H.
Cha~ ter il compares expenditures budgeted pursuant to
A. R. S. $ 15- 910. H with actual expenditures ( Sect ion 20. C. 11, presents
information from d i s t r i c t s not using this provision ( Section 20. C. 3)
and examines the impact of these expenditures on the equalization of
school d i s t r i c t expenditures ( Sect ion 20. C. 8).
Chapter I l l presents a review of expenditures to determine i f
expenditures budgeted pursuant to A. R. S. 515- 910. H were related
d i r e c t l y to the court orders or OCR agreements ( Section 20. C. 2)
D a ~ t e rI V summarizes information about financing court- ordered, OCR
mandated and voluntary desegregation in other states ( Section 20. C. 5)
Chapter V presents options for providing funding for desegregation
programs ( Sect ion 20. C. 7)
Advisorv Committee
Chapter 399, Section 20.0 of the 1990 Session Laws directed the Auditor
General to establish an advisory committee of members with expertise in
the area of desegregation policies and expenditures, including one
attorney and a representative of a school d i s t r i c t implementing a court
order or administrative agreement. Members of the committee were:
Dr. Beatriz Arias Director, Bi lingual- Bicultural Education,
ASU College of Education
Dr. Sid Borcher Assistant Superintendent for Administrative
Services, Roosevelt Elementary School
D i s t r i c t
Mr. J. WilliamBramner Attorney, DeConcini, McDonald, B r m e r ,
Yetwin and Lacy
Ms. Susan DeA rmnd Board Member, Tucson Unified School D i s t r i c t
Mr. Robert Lizardi Assistant Superintendent- Business, Tempe
Elementary School D i s t r i c t
Mr. Kevin McCarthv Arizona League of Cities and Towns
Mr. W i l liam Morris Attorney, Southern Arizona Legal Aid, Inc.
Mr. Kenneth Wissinaer Assistant Super i ntendent for Business and
Operations, Phoenix Union High School
D i s t r i c t
The commi t tee's purpose was to provide technical assistance as needed,
review the Auditor General's report and make recommendations for
legislative action. In carrying out i t s responsibilities, the committee
held three meetings with Auditor General staff and staff from the Arizona
Department of Education. A t the f i r s t meeting Auditor General staff
briefed cornittee members on the proposed plan for the review and
solicited their input for incorporation into the work plan. Staff also
reviewed preliminary results with the members at the second meeting and
discussed the draft report with the committee at the third meeting.
The advisory committee held a fourth meeting t o d r a f t a response to the
Auditor General's report. The committee's comments on this report and
committee recommendations are presented following Chapter V.
Acknowledaments
The Auditor General expresses appreciation to the many school d i s t r i c t
o f f i c i a l s and staff and to the staff of the Arizona Department of
Education who assisted in this study. Special thanks are extended to the
members of the advisory committee who gave their time and e f f o r t to this
study.
CHAPTER I
LEGAL BASIS FOR DESEGREGATION. DESEGREGATION REMEDIES.
AND THE FUNDING OF DESEGREGATION EFFORTS IN ARIZONA
The legal and financial aspects of desegregation efforts have broadened
over time, both nationally and within Arizona. Many court cases have
dealt with desegregation issues, outlining the need for desegregation,
remedies, and funding. These cases have formed the basis for the
development of desegregation agreements between school d i s t r i c t s and the
United States Department of Education, Office for C i v i l Rights ( OCR), and
for court orders resulting from c i v i l rights lawsuits. Arizona provides
school d i s t r i c t s a statutory exemption for funding desegregation costs,
but over the years, use of this exemption may have grown beyond the
intent of i t s original, limited application.
Court Cases Have
Sha~ ed Deseareqat ion
Much of the legal framework for desegregation has been defined by federal
court cases.(') While the Fourteenth Amendment guaranteed equal
protection, the nation did l i t t l e about desegregation u n t i l a 1954 case
which provided the i n i t i a l authority and basis for desegregation.
Several subsequent cases have helped c l a r i f y how desegregation applies to
discrimination on the basis of race or national- origin, and the states'
responsibility to fund desegregation programs.
( 1) The following i s a l i s t of court cases referred to i n t h i s section of the report:
- Brown I i s Brown v. Board of Education of To~ eka, 347 U. S. 343, 74 S. Ct. 686, 98 L. Ed.
873 ( 1954)
- Brown I1 i s Brown v. Board of Education of To~ eka, Kansas, 349 U. S. 294, 75 S. Ct. 753,
99 L. Ed. 1083 ( 1955)
- Jenkins i s Missouri v. Jenkins, 110 S. Ct. 1651, 1663 ( 1990) - i s Keves v. School D i s t r i c t No. 1, Denver. Colorado, 521 F. 2d 465, 480 ( 1975) - & i s Lau v. Nichols, 414 U. S. 563, 94 S. Ct. 786, 39 L. Ed. 2d 1 ( 1974) - M i l l i k e n I i s M i l l i k e n v. Bradley, 418 U. S. 717, 94 S. Ct. 312, 41 L. Ed. 2d 1069 ( 1974)
- M i l l i k e n I I i s M i l l i k e n v . B r a d l e y . 4 3 3 U . S . 2 6 7 , 9 7 S . C t . 2 7 4 9 5 3 L . E d . 2 d 7 4 5 ( 1 9 7 7 )
- U. S. v. Texag i s United States v. State of Tex., 506 F. Supp. 405, 435 ( 1981)
Court cases providina basis for deseareaation - It was almost 40 years
ago that the U. S. Supreme Court, in the landmark decision Brown I, found
that where the State has undertaken to provide an opportunity of an
education, i t is a right which must be made available to a l l on equal
terms. The Court held that:
... in the f i e l d of public education the doctrine of " separate but
equal" has no place. Separate educational f a c i l i t i e s are inherently
unequal. Therefore, we hold that the p l a i n t i f f s and other similarly
situated for whom the actions have been brought, are, by reason of
the segregation complained of, deprived of the equal protection of
the laws guaranteed by the Fourteenth Amendment.
The Supreme Court amplified i t s decision the following year. In Brown
u, the High Court held that school authorities have the primary
responsibility for illucidating, assessing, and solving the problems of
desegregation; they have the responsibility of making a prompt and
reasonable start towards f u l l compliance; and that the local d i s t r i c t
court w i l l retain jurisdiction of the cases. To assure that the
desegregation of a school d i s t r i c t was complete and that the d i s t r i c t
court had broad authority to consider the desegregation plan, the Court
held that:
... the courts may consider problems related to administration,
arising from the physical condition of the school plant, the school
transportation system, personnel, revision of school d i s t r i c t s and
attendance areas into compact units to achieve a system of
determining admission to the public schools on a nonracial basis,
and revision of local laws and regulations which may be necessary in
solving the foregoing problems. They w i l l also consider the
adequacy of any plans the defendants may propose to meet these
problems and to effectuate a transition to a racially
nondiscriminatory school system.
In Milliken II, the Court reviewed the factors that w i l l be used to
fashion desegregation decrees. These include determining the nature and
scope of the constitutional violation, restoring the victims of
discriminatory conduct to the position they would have occupied in the
absence of such conduct, and taking into account the interests of state
and local authorities in managing their own a f f a i r s consistent with the
Constitution.
Cases regardina seareaation based on race or national oriain - The U. S.
Supreme Court has also decided that special ized instruct ion in Engl ish is
a necessary component in school d i s t r i c t s with students who are not
proficient in English. In b, the High Court considered an action by
students of Chinese ancestry who did not speak English who alleged that
they did not receive equal educational opportunities in that they did not
receive courses in the English language so that they could understand
courses taught in English. The San Francisco School D i s t r i c t received
federal financial assistance which required i t to comply with the C i v i l
Rights Act of 1964 and, specifically, the Department of Health,
Education, and Welfare regulations prohibiting discrimination in
federally assisted school systems. The Court held that the school system
violated the C i v i l Rights Act by i t s failure to provide English language
instruction to students of Chinese ancestry who did not speak English.
It was determined that not providing specialized English instruction
denied the students meaningful opportunity to participate in the
educational program, and that providing the same f a c i l i t i e s , text books,
teachers and curriculum was not adequate because of the student's
i n a b i l i t y to speak and understand the English language. Since nearly a l l
Arizona school d i s t r i c t s receive federal financial aid, & and the C i v i l
Rights Act apply to the State's school d i s t r i c t s .
In a similar case, a U. S. D i s t r i c t Court for the Eastern D i s t r i c t of
Texas ordered the State of Texas to significantly expand i t s bilingual
education programs. In Y. S. v. Texas, the court determined that the
Texas bilingual program was wholly inadequate to eradicate the disabling
effects of pervasive historical discrimination suffered by
Mexican- Americans in the f i e l d of education. Because of the
discrimination, the D i s t r i c t Court ordered that bilingual instruction
must be provided to a Mexican- American children of limited English
proficiency in the Texas public schools.
However, bilingual education is not a substitute for desegregation. The
10th Circuit Court of Appeals considered a case remanded from the U. S.
Supreme Court involving the desegregation of the Denver School D i s t r i c t
( Keves). The lower court had ordered, inter m, busing and
bicultural- bilingual education for Hispanic children. The Court of
Appeals held that although bilingual instruction may be required to
prevent the isolation of minority students in a predominantly Anglo
school system, such instruction must be subordinate to a plan of school
desegregation.
Financina of deseareaation a c t i v i t i e s - The Supreme Court has also
considered a state's responsibility to pay for the desegregation of a
school d i s t r i c t . Milliken II is a case where the Supreme Court
considered whether the State of Michigan could be ordered to pay the
Detroit School Board $ 5.8 mi l l ion do1 lars for desegregation. The court
had determined earlier ( M i l l iken I) that the State of Michigan and i t s
agencies had acted d i r e c t l y t o control and maintain the pattern of
segregation in the Detroit Schools and, when the Detroit School Board
attempted to voluntari ly i n i t i a t e an intra- district remedy to ameliorate
the effect of the past segregation practices, the Michigan legislature
enacted a law forbidding the carrying out of this remedy. The State was
ordered to develop, and agreed to pay part of, a plan which included five
vocational centers, two new technical high schools, a new curriculum for
vocational education courses, multi- ethnic studies, a uniform code of
conduct, co- curricular a c t i v i t i e s with other a r t i s t i c and educational
institutions, and a community relations program. The State refused to
pay for, and therefore appealed, the portion of the D i s t r i c t Court's
order requiring the State to pay one- half of the remainder of the Detroit
Board's plan which included the essential and necessary components of
reading, in- service training, testing, and counsel ing and career guidance.
The Court in Milliken II held that the desegregation remedy requiring the
State to pay one- half of the additional costs did not violate the
E l even th Amendment because the payments were not re t roact i ve for accrued
monetary l i a b i l i t y but the D i s t r i c t Court order was prospective and was
des i gned to wipe out con t i nu i ng cond i t ions of i nequa l i ty produced by the
inherently unequal dual system maintained by Detroit. The Court also
held that the order did not violate the Tenth Amendment and general
principles of federalism reserving nondelegated powers to the states
because the federal court was enforcing the express prohibitions of
unlawful state conduct enacted by the Fourteenth Amendment.
The latest pronouncement by the U. S. Supreme Court on financing a
desegregation decree was in April 1990. In Jenkins, the Court held that
the D i s t r i c t Court could not order an increase in property taxes levied
by a school d i s t r i c t to fund desegregation without f i r s t assuring that
there were no permissible alternatives. But the High Court concluded
that the D i s t r i c t Court could have authorized or required the school
d i s t r i c t to levy property taxes at a rate adequate to fund the
desegregation remedy and could have enjoined the operation of state laws
that would have prevented the school d i s t r i c t from exercising this
power. ( Missouri has a state constitutional amendment which limits the
local property taxes that may be levied.) The Supreme Court also held
that a local government with taxing authority may be ordered to levy
taxes in excess of the l i m i t set by state statute where a Constitutional
reason exists for not observing the statutory limitation.
Three Justices and the Chief Justice concurred in part with the majority
opinion in this case but did not agree that the D i s t r i c t Court could
order the school d i s t r i c t to impose a tax not authorized by state law.
They concluded that an order to tax was an attempt to exercise a power
the court did not have, that was legislative in nature, and was a blatant
denial of due process.
Process For Develo~ ina Aareernents Between
School Districts And The Office For Civil Riahts,
And Those Arisina From Civil Riahts Lawsuits
The legal framework established by the courts nationally, provides the
basis for desegregation actions against Arizona school d i s t r i c t s . These
actions may occur in two ways -- through complaints submitted to OCR, and
through c i v i l rights lawsuits. The most comnon vehicle used in this
State for ensuring compliance with c i v i l rights violations i s an OCR
agreement. This type of agreement between school d i s t r i c t s and OCR
usually results from negotiations between the d i s t r i c t s and OCR.
Overall, this process is similar to that used in developing court orders
resulting from c i v i l rights lawsuits.
Most Arizona school d i s t r i c t s are under OCR national origin related
aareemente - The vast majority of school d i s t r i c t s in this State which
are required to remedy c i v i l rights violations of T i t l e V I are under
agreement with OCR only ( 31 d i s t r i c t s ) . Two other d i s t r i c t s , Phoenix
Union and Tucson Unified, are under both OCR agreements and court
orders. Of the 31 d i s t r i c t s solely under OCR agreements, almost a l l
relate only to national origin discrimination.( l) National origin
agreements typically require the d i s t r i c t s to provide language programs
to non- English speaking students. These agreements are derived largely
from a negotiation e f f o r t between the d i s t r i c t s and OCR, and include, for
example, special English as a Second Language Programs, tutoring, and
overall improvements in educational opportunities for students,
Two of the larger school d i s t r i c t s , Phoenix Union and Tucson Unified, are
under court orders which arose over racial discrimination ( and for Tucson
Unified, national origin discrimination as well). Court orders tend to
out l ine more specific remedies to al leviate the practices ident i f ied as
causing segregation than do agreements. Furthermore, because of the
number of students, and the nature of the remedies involved with these
two d i s t r i c t s , such as the implementation of magnet schools and providing
transportation, their court orders tend to be more costly than programs
u t i l i z e d by d i s t r i c t s under national origin agreements only. For
example, of those d i s t r i c t s budgeting for desegregation under
A. R. S. 915- 910. H during fiscal year 1989- 90, Phoenix Union and Tucson
Unified spent $ 26.4 m i l lion, whi le the six d i s t r i c t s under agreement with
OCR spent a total of $ 7.4 m i l lion.
Process for developina an OCR aareement - OCR usually becomes involved
with a school d i s t r i c t following a complaint alleging that the d i s t r i c t
has discriminated against an individual or group of individuals in one of
several classes of persons protected by federal c i v i l rights laws. Those
who be1 ieve that they or others have been discriminated against by a
school d i s t r i c t that receives federal funds may f i l e a complaint with
OCR. OCR may also i n i t i a t e i t s own investigations, called compliance
reviews.
( 1) See Appendix I for a l i s t of Arizona school d i s t r i c t s under court orders and OCR
agreements.
10
Complaints involving a possible violation of the federal laws or
regulations are investigated by OCR. If OCR anticipates that a violation
of law will be found, it informally notifies the school district and
seeks voluntary corrective action. In most cases, voluntary remedies are
secured. If not, OCR issues formal findings and offers the district
additional opportunities for settlement. If attempts at voluntary
resolution fail, the U. S. Department of Education may commence
proceedings for an administrative hearing or refer the case to the
Department of Justice for the initiation of litigation. These actions
may result in the termination of federal funding and injunctive orders.
Districts which choose to enter into an agreement with OCR must submit a
plan containing the acts or steps the district will take to correct the
violat ion, a timetable for implementat ion, and a description of the
documentation the district will submit to OCR periodically as the remedy
is implemented. Districts have substantial flexibility in developing
these plans, since neither federal taw nor OCR have prescribed specific
remedies for discrimination. Instead, OCR generally accepts programs
that have been shown to be successful in other districts, or, programs
that a district can show will have a reasonable likelihood of success.
Once the district submits an acceptable plan in writing to OCR, no
further legal action is taken as long as the district implements the plan
in good faith. However, based on its monitoring of the plan, OCR can
require the district to take further action or can request modifications
to the district's plan.
In our review, we found that OCR agreements are not simply lists of
specific actions to be taken but were more general in content. The
agreements appear to provide guidance to the districts about what needs
to be done. One attorney who has been involved in OCR complaint act ions
in Arizona also shares this opinion and commented that the agreements
cannot be precise because schools are not controlled environments;
circumstances may create legitimate needs for changing a plan to ensure
non- discr iminat ion.
An OCR official notes that the Office's primary concern i s fully and
effectively eliminating discrimination. OCR does not normally review
the financing aspects of the plan unless it feels that a d i s t r i c t i s not
providing enough funds to adequately implement the plan. OCR is not
l i k e l y to question d i s t r i c t s because they are spending too much. A t
most, OCR may t e l l a d i s t r i c t what components are needed to address the
problem and may require d i s t r i c t s to explain the basis for the options
they choose.
Process reaardina c i v i l rights lawsuits - The process for establishing
remedies based on c i v i l rights lawsuits is similar to that used in
enacting OCR agreements. A desegregation lawsuit is initiated by a
student, a student's parent/ guardian, or both against the local school
board ( and occasionally includes the State Department of Education). The
complaint w i l l generally allege that the p l a i n t i f f belongs to a class
that is discriminated against, the nature of the segregation, and the
denial of Equal Protect ion under the Constitution or violat ion of c i v i l
rights. The defendant( s) frequently agree with the p l a i n t i f f , in which
case the court w i l l encourage a stipulated plan ( agreement) that is
acceptable to both parties and the court.
In some cases, however, the parties cannot reach an agreement. When this
occurs, the court w i l l issue an order which the school d i s t r i c t must
follow. After an order has been issued, and after any appeals, the local
d i s t r i c t court continues to retain jurisdiction to assure compliance with
the order and to rule on subsequent modifications in the order. Usually
the defendant requests the court to modify the original order, but both
parties are involved in the modification.
State Law Provision Authorizing
Deseareaation Fundina BY School D i s t r i c t s
The cost of meeting requirements of desegregation orders and agreements
in Arizona has led to the creation of an exemption to expenditure
limitations of school d i s t r i c t s . Since 1983, Arizona law ( Laws 1983,
Chapter 267, Section 5) has allowed school d i s t r i c t s under court order to
raise funds locally to meet desegregation costs outside the revenue
control l i m i t ( RCL). A. R. S. 515- 910. H, enacted in 1985, formalized this
exemption and added a similar exemption for budgeting outside the capital
out lay revenue l i m i t ( CORL):
The governing board of a school d i s t r i c t may budget for expenses of
complying with or continuing to implement a c t i v i t i e s which were
required or permitted by a court order of desegregation or
administrative agreement with the United States department of
education office for c i v i l rights directed toward remediating alleged
or proven racial discrimination which are specifically exempt in
whole or in part from the revenue control l i m i t and the capital
outlay revenue l i m i t . This exemption applies only to expenses
incurred for a c t i v i t i e s which are begun before the termination of the
court order or administrative agreement.
The potential for using the exemption has grown, and continues to grow
beyond i t s original, limited application. The original legislation
allowed only school d i s t r i c t s under racial desegregation court orders to
budget outside the revenue control l i m i t in order to comply with the
orders. A t that time ( 1983), only one d i s t r i c t , Tucson Unified, met this
criterion. The following year, the Legislature expanded the exemption to
allow d i s t r i c t s under consent agreements for racial desegregation to
budget outside the revenue limits. Racial discrimination orders were
general ly limited to urban school d i s t r i c t s so the exemption was not
expected to have widespread application. Recently, the Arizona
Department of Education was advised informally by the Attorney General
that discrimination based on national origin should also qualify for the
exemption. Since many rural areas have been investigated or otherwise
cha l I enged on th i s basis , the exempt ion's scope has been expanded
considerably.
Currently in Arizona, 29 d i s t r i c t s are under agreements with OCR
regarding national origin concerns only, while four other d i s t r i c t s are
under agreements and/ or court orders addressing race related violations
and/ or national origin violations.
CHAPTER II
DESEGREGATION EXPENDITURES ARE
GROWING STEADILY IN ARIZONA
School d i s t r i c t expenditures for desegregation programs in Arizona are
growing steadily. The number of d i s t r i c t s budgeting funds for
desegregation under the provisions of A. R. S. $ 15- 910. H and the amounts
spent have more than doubled in recent years. Among d i s t r i c t s budgeting
outside revenue limits, those with higher assessed valuations tend to
budget more funds for desegregation than d i s t r i c t s with lower assessed
valuations. However, some d i s t r i c t s fund desegregation programs without
using the provisions of A. R. S. $ 15- 910. H.
A. R. S. $ 15- 910. H allows school d i s t r i c t s to budget funds for
desegregation programs outside of the revenue control limits ( RCL) and
capital out lay revenue l i m i ts ( CORL) establ ished by A. R. S. $ 15- 947. A and
A. R. S. $ 15- 961, respectively. Funds budgeted pursuant to this provision
must be for programs and f a c i l i t i e s required by court orders or
agreements with the U. S. Department of Education, Office for C i v i l Rights
( OCR). With the exception of aid for Limited English Proficiency
programs, no direct state aid is speci f ical ly provided for desegregation
programs. D i s t r i c t s must raise funds local ly to support these programs;
A. R. S. 915- 910. H permits d i s t r i c t s to increase property taxes above the
RCL and CORL in order to raise needed funds.
Expenditures Budaeted Pursuant TQ
A. R. S. 615- 910. H Are Increasing
School d i s t r i c t s are making increased use of their a b i l i t y to budget
outside the RCL and CORL for desegregation programs. The number of
d i s t r i c t s has increased from one in fiscal year 1983- 84 to ten in fiscal
year 1990- 91. Total expenditures for desegregation programs outside the
RCL and CORL grew from approximately $ 15.9 mi l lion in fiscal year 1985- 86
to $ 33.8 million in fiscal year 1989- 90. For fiscal year 1990- 91
d i s t r i c t s have budgeted $ 47.3 m i l l ion outside the revenue limits for
desegregation.
Ntanber of school d i s t r i c t s - The number of school d i s t r i c t s budgeting
funds outside the RCL and CORL has grown since the provision was enacted
in 1983. In fiscal year 1983- 84 Tucson Unified School D i s t r i c t began
using this option. Phoenix Union High School D i s t r i c t began budgeting
desegregation expenditures outside the revenue limits in the following
year. As shown in Table 1, six d i s t r i c t s began budgeting under the
provision in the last two years.
TABLE 1
DISTRICTS BUDGETING FOR DESEGREGATION PURSUANT
TO A. R. S. § 15- 910. H
D i s t r i c t FY 87- 88 FY 88- 89 FY 89- 90 FY 90- 91
Phoenix Elementary
Tempe Elementary
Wilson Elementary
Roosevelt Elementary
Cartwright Elementary
Phoenix Union
Agua Fria Union
Tucson Un i f i ed
Mesa Un i f i ed
Scottsdale Unified
Total D i s t r i c t s
Source: Arizona Department of Education
Ex~ enditure nrowth - Arizona school d i s t r i c t s budgeting pursuant to
A. R. S. 915- 910. H spent approximately $ 33.8 mi l l ion on desegregation
programs during fiscal year 1989- 90, more than twice the amount spent in
fiscal year 1987- 88. Desegregation expenditures are also growing as a
percentage of d i s t r i c t s ' total expenditures.
Table 2 ( see page 17) shows budgeted and actual desegregation
expenditures for each d i s t r i c t budgeting for desegregation under the
provisions of A. R. S. 915- 910. H since fiscal year 1987- 88. D i s t r i c t s
using this provision over several years show a pattern of increasing
budgets and expenditures for desegregation. For example, Phoenix Union
desegregation expenditures increased by 115 percent between 1987- 88 and
TABLE 2
COMPARISON OF ACTUAL DESEGREGATION EXPENDITURES TO
BUDGETED DESEGREGATION EXPENDITURES
FISCAL YEARS 1987- 88 THROUGH 1989- 90
( Unaudited)
D i s t r i c t
Phoenix UHSD
Budget
Actual
Var i ance
Tucson USD
Budget
Actual
Var i ance
Phoenix ESD
Budget
Actual
Variance
Agua Fria UHSD
Budget
Actual
Var i ance
Tempe ESD
Budget
Actual
Var i ance
Roosevel t ESD
Budget
Actual
Var i ance
Cartwright ESD
Budget
Actual
Variance
W i I son ESD
Budget
Actual
Var i ance
Source: Compiled by Auditor General Staff from annual financial reports
provided by school d i s t r i c t s .
1989- 90, Tucson Unified desegregation expenditures increased 26 percent
and Agua Fria Union High School D i s t r i c t desegregation expenditures grew
45 percent during the same period.
We did not find that any d i s t r i c t s spent more than they budgeted for
desegregation programs during this period. Most d i s t r i c t s spent less.
In some cases, underspending was substantial. For example Phoenix
Elementary School D i s t r i c t spent only $ 1.2 mi l lion of i t s $ 2.7 mi l lion
desegregation budget in fiscal year 1989- 90 because i t did not implement
a proposed magnet school and a basic s k i l l s laboratory. Phoenix Union
underspent by $ 1.2 mi l l ion in 1989- 90 and Tucson Uni f i ed underspent by
$ 900,000 during that same year.
Desegregation expenditures are becoming a larger percentage of total
expenditures in several d i s t r i c t s . Table 3 ( page 19) shows this trend
for the four d i s t r i c t s that have been budgeting pursuant to
A. R. S. $ 15- 910. H for more than one year. Phoenix Union desegregation
costs increased from 3.4 percent of total expenditures in fiscal year
1985- 86 to 10.9 percent in fiscal year 1989- 90. Phoenix Union's 1990- 91
budget estimates that desegregation expenditures w i l l again account for
10 percent of the d i s t r i c t ' s total costs. Expenditures for desegregation
in Tucson Unified grew from 2 percent in 1985- 86 to 4.2 percent in
1989- 90.
TABLE 3
DESEGREGATION EXPENDITURES AS PERCENT OF TOTAL EXPENDITURES
SELECTED SCHOOL DISTRICTS
( Unaud i t ed)
Fiscal Desegregation Total
District Year Ex~ enditures Expend i tu res( a) Percent
Phoenix Union 85- 86 $ 2,488,758 $ 73,991,360 3.36%
86- 87 4,642,142 105,815,108 4.39
87- 88 7,668,435 100,704,664 7.61
88- 89 13,812,551 131,819,394 10.48
89- 90 16,458,105 151,256,999 10.88
Tucson Unified 85- 86 4,000,000 204,050,686 1.96
86- 87 4,000,000 228,759,897 1.75
87- 88 7,901,142 242,982,919 3.25
88- 89 9,124,845 233,909,670 3.90
89- 90 9,944,928 237,739,025 4.18
Phoenix Elementary 86- 87 44,472 29,332,075 0.15
87- 88 207,435 32,328,685 0.64
88- 89 848,431 33,900,433 2.50
89- 90 1,192,505 44,805,615 2.66
Agua Fria Union 87- 88 78,459 6,369,435 1.23
88- 89 83,938 10,138,320 0.83
89- 90 113,609 8,953,503 1.27
( a) Maintenance & Operation and Capi t a l Outlay expendi tures on1 y.
Source: Auditor General Staff analysis of financial information provided
by school districts.
lrn~ act On
Eaualization
Desegregation expenditures outside of the RCL and CORL have not had a
significant impact on equalization. Although the amounts budgeted for
desegregation appear to be directly related to assessed valuation per
pupil, their overall impact appears limited. The growth of expenditures
budgeted outside the RCL and CORL for desegregation and the increasing
number of school d i s t r i c t s using this option could create a greater
impact on equalization in future years.
Chapter 399, Section 20. C. 8 of the 1990 Session laws directs the Auditor
General to evaluate the impact of desegregation expenditures budgeted
pursuant to A. R. S. $ 15- 910. H on the equalization of school d i s t r i c t
expenditures. However, equalization is a broad term that is not defined
in Arizona law. For the purposes of this analysis, therefore, we worked
with staff from the Arizona Department of Education ( ADE) to define
equalization as a system of school finance in which the revenue available
is not predominantly a function of wealth. Our analysis of the impact of
desegregation expenditures uses the same methods employed by AD€ to
assess the equalization of school finance statewide.
Our analysis of desegregation budgets for fiscal year 1990- 91 used
two- way correlation to determine the relationship between d i s t r i c t wealth
and amounts budgeted for desegregation outside the RCL and CORL.
D i s t r i c t wealth was defined as assessed valuation per pupil. The
correlation between the two variables for a l l 33 d i s t r i c t s e l i g i b l e to
budget pursuant to A. R. S. $ 15- 910 was 0.8, evidence of a strong direct
relationship. In effect, the data suggest that richer school d i s t r i c t s
tend to budget funds for this purpose because they have the means to do
SO.
Since most e l i g i b l e d i s t r i c t s did not budget funds outside the revenue
limits, we further evaluated the relationship between wealth and
desegregation budgets by limiting the analysis to the ten d i s t r i c t s that
budgeted for desegregation in fiscal 1990- 91. The correlation for these
d i s t r i c t s was even higher ( 0.851, also suggesting that d i s t r i c t s with
high assessed valuation per pupil are more l i k e l y to budget greater
amounts for desegregation.
The impact of desegregation expenditures budgeted outside the revenue
limits on equalization statewide appears to be limited to date.
Desegregation expenditures amounted to 5.8 percent of the total
expenditures in the eight d i s t r i c t s using A. R. S. $ 15- 910. H in fiscal year
1989- 90 and less than one percent of a l l education expenditures statewide
during that year. However, the steady growth in the number of d i s t r i c t s
using this method of financing desegregation and the increasing amounts
spent could increase the impact on statewide equalization in future years.
Some School Districts Fund Deseareaation
Proyams Without Usina The Fundina provision^
Of A. R. S. 115- 910. H
Some Arizona school d i s t r i c t s fund desegregation programs within the
revenue control l i m i t and capital outlay revenue l i m i t . Most d i s t r i c t s
e l i g i b l e to budget desegregation expenditures outside the revenue limits
do not do so. A few d i s t r i c t s implement desegregation programs
voluntarily using operating funds budgeted within the limits.
Chapter 399, Section 20. C. 3 of the 1990 Session Laws requires the Auditor
General to compare the expenditures budgeted pursuant to A. R. S. § 15- 910. H
to expenditures of other school d i s t r i c t s of similar size and character
that have not budgeted such expenditures. Making such a comparison,
however, is d i f f i c u l t because few Arizona d i s t r i c t s are similar in size
and character. For example, Tucson Unified is equalled in size only by
Mesa Unified School D i s t r i c t but the two d i s t r i c t s d i f f e r radically in
character. Tucson is an urban d i s t r i c t with 45 percent minority
enrollment while Mesa i s suburban with 16 percent minority enrollment.
Even where d i s t r i c t s appear to be similar in size and character, there
may be other significant differences. For example, the Roosevelt and
lsaac elementary d i s t r i c t s have comparable enrollments and minority
populations but have different desegregation programs and
responsibilities. Roosevelt has an agreement with OCR to eliminate
racial desegregation while lsaac has an agreement to ensure services for
minority language students. Moreover, Roosevelt o f f i c i a l s also noted that
their d i s t r i c t funds some programs for minority language students within
the revenue limits.
Finally, comparison among d i s t r i c t s is also hindered by lack of statewide
program definitions. D i s t r i c t s not budgeting desegregation expenditures
outside the revenue limits do not specifically i d e n t i f y expenditures for
desegregation programs in their financial reports. As a result, we had
to rely on estimates of desegregation expenditures provided by d i s t r i c t
o f f i c i a l s .
Recognizing these l imitations, we selected school d i s t r i c t s for
comparison with d i s t r i c t s budgeting desegregation expenditures outside
the revenue limits. We identified d i s t r i c t s of similar size and
character to the extent possible. The comparison group included
d i s t r i c t s that were e l i g i b l e to budget pursuant to A. R. S. 515- 910. H and
d i s t r i c t s not e l i g i b l e to do so. For a l l d i s t r i c t s selected, we
requested information on programs that were similar in purpose ( e. g.,
English as second language instruction, resources devoted to bilingual
education) to the desegregation programs in the d i s t r i c t s that were
budgeting outside the RCL and CORL. The comparison d i s t r i c t s selected
are presented below. Detailed enrollment and financial data for each of
these d i s t r i c t s is presented in the Appendix.
BUDGETING UMHR A. R. S. 515- 910. H NOT BUDGETING W RA. R. S. 515- 910. H
K) R DESEGREGAT I ON FOR DESEGREGATION
Wilson Elementary Tol leson Elementary
Phoenix Elementary
Rooseve I t E l emen t a ry
Tempe E I emen t a ry
Cartwright Elementary
Isaac Elementary
Alhambra Elementary
Glendale ESD
Agua Fria Union Tolleson Union
Phoenix Union Glendale Union
Yuma Union
Scottsdale Unified Deer Valley Unified
Tucson Unified No Comparable D i s t r i c t
Based on the information provided by the d i s t r i c t s , each comparison
d i s t r i c t budgets some funds for desegregation programs ( Table 4).
Funding is provided by the d i s t r i c t s ' maintenance and operation budgets,
and available federal grants. However, these programs are generally
smaller in size than in d i s t r i c t s budgeting for desegregation outside the
RCL and CORL. Median desegregation expenditures for d i s t r i c t s budgeting
pursuant to A. R. S. 015- 910. H were approximately $ 1.7 mi l l ion in fiscal
year 1989- 90; the median for the comparison d i s t r i c t s ( excluding Yuma
Union and Glendale Elementary) was $ 288,300. Only one comparison
d i s t r i c t , lsaac Elementary, had expenditures comparable to the two
d i s t r i c t s , Phoenix Elementary and Roosevelt Elementary, to which it is
compared .
TABLE 4
DESEGREGATION EXPENDITURES IN COMPARISON DISTRICTS
FISCAL YEAR 1989- 90
( Unaudi ted)
D i s t r i c t
lsaac Elementary
Deer Valley Unified
Alhambra Elementary
Tolleson Elementary
Glendale Union
Tolleson Union
Yuma Union
Glendale Elementary
Estimated
Ex~ enidt ures( a)
( a) D i s t r i c t s not budgeting pursuant to A. R. S. 515- 910. H are not required to maintain
separate records of expenditures for desegregation programs. The figures presented
i n this table are estimates provided by d i s t r i c t business officers.
( b) Salaries only.
( c) Information not available. However, G l endale ESD spent $ 250.000 on materials a1 one.
Source: Auditor General staff survey
Most of the comparison d i s t r i c t s shown in Table 4 have agreements with
OCR to implement programs for minority language students. These
d i s t r i c t s are lsaac Elementary, Glendale Elementary, Tolleson Union, Yuma
Union and Glendale Union. O f f i c i a l s in four of the five d i s t r i c t s stated
that they were not aware of the options allowed by A. R. S. 015- 910. H.
O f f i c i a l s in two d i s t r i c t s noted, however, that they would consider
budgeting these programs outside the revenue limits in future years.
We also contacted a second group of four other d i s t r i c t s that have
agreements with OCR but have not budgeted desegregation expenditures
pursuant to A. R. S. 515- 910. H. We asked o f f i c i a l s i n these d i s t r i c t s what
they are doing to comply with their agreements and why their
desegregation programs are not budgeted outside the RCL and CORL. These
d i s t r i c t s and their estimated desegregation expenditures were: Kayenta
Unified School D i s t r i c t -- $ 1.3 mi l lion, Dysart Unified School D i s t r i c t
-- $ 500,000 and Eloy Elementary School D i s t r i c t -- $ 410,000. Holbrook
Elementary School D i s t r i c t reported budgeting a total of $ 150,000 for a
three year period. O f f i c i a l s in these d i s t r i c t s reported that they did
not know that they could budget for desegregation outside the RCL and
CORL but one indicated that it would be an option for them in the future.
Altogether, we contacted 20 of the 33 Arizona school d i s t r i c t s that have
agreements with OCR. Except for the d i s t r i c t s currently budgeting
desegregation expenditures under A. R. S. $ 15- 910. H, most of the d i s t r i c t s
were unaware of their a b i l i t y to budget outside of established revenue
limits. As d i s t r i c t s learn about this law, the number of d i s t r i c t s
budgeting outside the RCL and CORL may increase.
The extent to which these d i s t r i c t s w i l l be able to fund additional
expenditures appears l i m i ted. The 23 d i s t r i c t s not using A. R. S.
$ 15- 910 . H in fiscal year 1990- 91 general ly have lower assessed valuat ion
per student than do the 10 d i s t r i c t s that budget outside the revenue
limits. The median for the former is $ 20,046 compared to $ 76,285 for the
l a t t e r . However, some d i s t r i c t s with low assessed valuation per student
spent almost as much for desegregation purposes during fiscal year
1989- 90 as wealthier d i s t r i c t s . For example, Isaac Elementary with an
assessed valuation per student of $ 22,028 funded an estimated $ 2 million
desegregation program within the revenue limits during fiscal year
1989- 90 while Phoenix Elementary with an assessed valuation of $ 76,167
spent $ 1.2 mi l l ion pursuant to A. R. S. 515- 910. H..
Conclusion
Arizona can expect cont inued growth in the amount of desegregation
expenditures budgeted outside the revenue limits. The d i s t r i c t s
currently budgeting pursuant to A. R. S. 515- 910. H have shown a trend of
increasing expenditures each year and i t is not clear where or when these
expenditures w i l l " top out1'. Further, more d i s t r i c t s can be expected to
take advantage of this provision, since lack of knowledge about it
appears to have been the pr i mary reason they have not used i t to date .
Although the overall effect of these expenditures on equalization of
school financing is limited by their relatively small size in proportion
to a l l educational expenditures, their impact is to reduce equalization
since they appear to be highly related to d i s t r i c t wealth. This impact
may increase as more d i s t r i c t s begin to budget outside of the revenue
l i m i ts.
CHAPTER Ill
SOME EXPENDITURES ARE NOT DIRECTLY
RELATED TO COURT ORDERS AND AGREEMENTS
A limited analysis of desegregation expenditures indicated that some
d i s t r i c t s budgeting under A. R. S. 515- 910. H have spent desegregation funds
for purposes not directly related to their court orders and agreements.
Given the broad nature of most d i s t r i c t s 1 orders and agreements, we found
many expenditures can be related to the desegregation programs and
a c t i v i t i e s identified in those orders and agreements. However, our
review also revealed that some costs charged as desegregation
expenditures were not related to their orders and agreements. Due to the
method Tucson Unified School D i s t r i c t uses to charge costs as
desegregation expenditures, we were unable to complete our review of that
d i s t r i c t .
Scope Of Expenditure Review
We reviewed financial information submitted to us by a l l eight d i s t r i c t s
that expended monies outside revenue limits for desegregation during
fiscal year 1989- 90. We performed a more detailed analysis of a sample
of the expenditures made by five of the d i s t r i c t s , testing their
relationship to the d i s t r i c t s ' agreements and court orders. The five
d i s t r i c t s included in our expenditure analysis -- Phoenix Elementary,
Phoenix Union, Roosevelt Elementary, Tempe Elementary, and Tucson Unified
-- were selected because their desegregation expenditures were the
largest of the eight d i s t r i c t s . This group includes d i s t r i c t s which were
under orders or agreements to correct racial discrimination, as opposed
to national origin only, since these are typically the most costly
programs.
To test the expenditures, we reviewed detailed monthly expenditure
listings ( both payroll and non- payroll) for fiscal year 1989- 90 to
identify any expenditures which did not appear to be d i r e c t l y related to
the particular d i s t r i c t ' s court order or agreement. Those individual
expenditures that did not appear to be related were subsequently compared
to various types of supporting documentation, such as invoices, purchase
orders, contracts, and travel reimbursements. Furthermore, we
followed- up with d i s t r i c t o f f i c i a l s to obtain additional explanations
regarding these expenditures.
While we were able to identify costs charged under A. R. S. 515- 910. H which
were not related to court orders or OCR agreements, our testwork and
findings are limited in three important ways.
8 Our most significant impediment was a lack of sufficient time to
conduct a thorough financial review. We could not conduct a random
sample, which means our findings cannot be considered representative
of desegregation expenditures from any one, or a l l , of the
d i s t r i c t s . Nor could we adequately verify oral explanations received
from d i s t r i c t o f f i c i a l s for expenditures. For example, we could not
verify the actual use of some equipment and personnel for
desegregation programs.
8 Second, the general lack of guidance and specificity within the
desegregation agreements and orders about proposed remedies, and the
lack of definitions for these programs, made it d i f f i c u l t to clearly
evaluate many expenditures.
8 Finally, because of the nature of certain expenditures ( i. e.,
conferences and workshops), or the methods used by the d i s t r i c t s in
accounting for expenditures ( i. e., receiving desegregation supplies
at a central d i s t r i c t warehouse), adequate documentation to support
certain expenditures as desegregation related was not always
available.
We were also limited by an apparent inconsistency in statutory language.
Chapter 399, Section 20. C. 2 of the 1990 Session Laws directs the Auditor
General to determine whether expenditures budgeted pursuant to A. R. S.
$ 15- 910. H related d i r e c t l y to the stipulations of court orders and
agreements. A. R. S. 515- 910. H authorizes d i s t r i c t s to budget outside the
revenue limits for expenses required or ~ e r m i t t e d by court orders and
agreements. Some expenditures we reviewed may be permitted but not
required. To be consistent with our legislative charge we report whether
expenditures are related to required a c t i v i t i e s but do not comnent on
whether expenditures are related to permitted a c t i v i t i e s .
Despite these limitations, our review demonstrates that the d i s t r i c t s
have in some cases used funds budgeted pursuant to A. R. S. 515- 910. H for
purposes not directly related to their court orders or OCR agreements.
A Varietv Of Deseqreqation Programs
Exist In Arizona School Districts
Reviewing the plans developed by the eight d i s t r i c t s budgeting under
A. R. S. 515- 910. H during 1989- 90, we found that a diverse group of
desegregation programs exist. We also discovered that the broad, general
nature of most orders and agreements means that many types of
expenditures are related to d i s t r i c t s t desegregation programs.
Deseare< lation - The d i s t r i c t s have implemented a variety of
programs in their e f f o r t to eliminate segregation. Generally, those
d i s t r i c t s budgeting smal ler amounts for desegregation ( under $ 1 mi l lion)
are typically addressing minority language discrimination, and therefore
u t i l i z e language improvement programs. For example, Agua Fria Union High
School D i s t r i c t , Wilson Elementary, and Cartwright Elementary d i s t r i c t s
a l l maintain English as a Second Language programs to help them meet the
requirements of their agreements. Language oriented programs can include
expenditures for salaries for bilingual teachers and teacherst aides,
teacher training, Spanish books, language tapes, and oral and written
language translation a c t i v i t i e s .
A t the other end of the spectrum, those d i s t r i c t s budgeting and spending
considerably more tend to have more extensive programs. Phoenix Union
High School D i s t r i c t , Tucson Unified D i s t r i c t , and Phoenix Elementary
D i s t r i c t , for example, have developed various strategies, including a
variety of magnet programs, to meet the obligations of their court orders
and ag reemen t s :
Phoenix Union offers 11 different magnet programs to attract students
to designated schools. Examples include aerospace education,
agribusiness and equine studies, lifetime a c t i v i t i e s and sports
services, foreign studies, and performing and visual arts. The
d i s t r i c t also offers tt low enrol lment coursestf in Latin, German,
anatomy and physiology, and soccer.
Tucson Unified's Safford Magnet Middle School features engineering,
technology research, and computer labs, whi le i t ' s Roskruge Middle
School is a bilingual magnet. In addition, the d i s t r i c t has
developed a Black Studies Program.
Phoenix el em en tar^'^ " Before and After School" daycare program was
implemented to encourage Anglo student enrollment. The district also
has four magnet schools with programs such as fine arts and
international studies, and accelerated curriculum programs in
computer use and programing, mathematics and science. In addition,
the district considers activities such as bilingual training,
transportation for magnet students, various track and field
endeavors, and an annual concert program as part of its effort to
eliminate racial discrimination.
Expenditure relations hi^ to orders and aureementg - Many of the
expenditures we reviewed appear to be related to court orders and OCR
agreements. As noted in Chapter I , the process for developing orders and
agreements is often a negotiated one which results in seemingly broad and
sometimes vague requirements for addressing discrimination at the
schools. As a result, many expenditures we examined were reasonably
related to these orders and agreements.
We found this to be particularly true for magnet programs. A br~ ad
definition of related expenditures is often applicable to magnet programs
used by some districts. Because of the nature of many magnet programs,
districts are able to justify expenditures as being related to their
orders or agreements. Phoenix Union, for example, spent desegregation
monies on items and services which might be considered unrelated if they
were not for a magnet program. During the fiscal year Phoenix Union
spent desegregation monies on:
Editing equipment for TV production studio and for " location shotsw
for the Performing Arts magnet - $ 22,624
Travel accommodations for 10 Foreign Studies magnet students to
Russia at a cost of $ 22,266
Production of recruitment video tapes for magnet schools - $ 7,800
Airfare and motel accommodations costing $ 5,598 for 20 Performing
Arts magnet students to compete in a music competition in Colorado
Equestrian lessons for 32 students enrolled in the Agribusiness and
Equine Studies magnet, at a cost of $ 2,560
Tuxedo rental for a production of Performing Arts magnet - $ 1,849
Plots of grass costing $ 478 to surround an art sculpture made by
students of the Performing Arts magnet
Magnet program expenditures such as these demonstrate the broad nature of
school d i s t r i c t desegregation programs.
Analysis Revealed Unrelated Expenditure
But Could Not Determine If
Supplantina Has Occurra
The results of our analysis indicated that some d i s t r i c t expenditures
charged to desegregation were not directly related to their court orders
or OCR agreements. However, we were unable to determine i f d i s t r i c t s
used the provisions of A. R. S. 915- 910. H to supplant existing expenditures.
Ex~ enditures not d i r e c t l v related - The results of our analysis of
d i s t r i c t desegregation expenditures indicated that some costs charged as
desegregation were not related to their orders and agreements. However,
i t was often d i f f i c u l t for us to determine i f certain expenditures were
directly related to desegregation a c t i v i t i e s . As a result, we developed
the following definition of an " unrelated expenditure" for use during our
review:
An expenditure was not directly related to court order or agreement
i f i t was a necessary and ordinary maintenance and operation or
capital outlay expenditure for a d i s t r i c t , unless the expenditure was
made to support an a c t i v i t y specifically dedicated to the
desegregation program.
Using this definition, we found that some expenditures were not directly
related to desegregation orders and agreements. For example,
Phoenix Elementary expended $ 164,994 of desegregat ion monies for i ts
gifted students program. The d i s t r i c t responded that the gifted
program was included in their agreement. However, we believe that
these expenditures were not directly related to desegregation. The
gifted program was in effect prior to the agreement, meaning the
expenditures could not have been incurred directly as a result of
compliance with the agreement.
In addition, A. R. S. 915- 770 requires d i s t r i c t governing boards to
identify gifted students and develop a curriculum to ensure that
gifted students w i l l receive special education. The d i s t r i c t also
receives, as part of i t s state aid, monies for the gifted program.
Thus, this statute identifies such programs as a distinct
requirement, which would be necessary regardless of the existence of
a court order or agreement.
Phoenix Elementarv spent $ 6,000 for the treatment of termites and
another $ 800 for tree trimming at an unused school. According to a
d i s t r i c t o f f i c i a l , the d i s t r i c t had planned to open the school as a
new magnet program and the d i s t r i c t applied for a Federal magnet
grant to absorb a portion of the costs of opening the school.
However, the d i s t r i c t did not receive the grant and was, therefore,
unable to open the school as planned. The d i s t r i c t appears to have
been premature in i t s spending of any desegregation funds on the
proposed school p r i o r t o receiving approval for the c r i t i c a l Federal
magnet g rant .
Phoenix Elementarv charged the cost of retaining three retired
principals, approximately $ 48,000, to the desegregation fund.
D i s t r i c t representatives stated the principals were contracted with
to ease the transition of the new principals of magnet programs and
to perform a study of a proposed consolidated junior high school.
Based on our review of a memo regarding the retired principals duties
( contracts did not exist) and the report the principals issued, we
determined this expenditure was not related to the desegregation
agreement.
Phoenix Elementary also spent $ 98,968 of desegregation funds for City
of Phoenix police services for the purpose of having the officers
work with school administrators to identify truant, abused, and
neglected students and to take appropriate action to correct these
situations. The d i s t r i c t feels that the expenditures were reasonable
because the schools would be more secure which would positively
contribute to the students. Our testwork indicates that this
expenditure is not related to the desegregation agreement.
Rooseve l t E lementarv spent $ 2,491 in desegregat ion funds to purchase
various English- language childrens books for i t s Martin Luther
Elementary School library. A review of supporting documentation
indicated that the d i s t r i c t had already exceeded i t s capital outlay
budget for the library when i t made this purchase. The d i s t r i c t
o f f i c i a l we spoke with indicated the books were purchased to enhance
the gifted program at the school. However, we could not establish a
clear relationship between these books and the gifted program, which
is included in the d i s t r i c t ' s agreement.
Phoenix Union spent $ 9,122 on self- assertiveness training books for
" at risk" students district- wide. The d i s t r i c t maintains the books
were aimed at helping students l i k e l y to drop out of school, and,
that any dropout program of the d i s t r i c t i s considered a
desegregation expenditure because i t improves educational opportunity
for a l l students. We believe, however, that the expenditures would
have been more appropriately budgeted in the Dropout Prevention
Program which is also funded outside the revenue limits. In
addition, the d i s t r i c t spent over $ 2 million in state aid
specifically earmarked for this program.
Tucson Unified spent approximately $ 5,600 on f i l e cabinets, a phone
answering machine, and a copier. According to a d i s t r i c t o f f i c i a l ,
a l l were used, at least in part, to support the d i s t r i c t ' s magnet
schools. However, we could not determine that these expenditures
were related directly to any stipulations of the d i s t r i c t ' s court
order or administrative agreement.
Tempe Elementary expended $ 7,677 for an intercom system. According
to a d i s t r i c t o f f i c i a l , this capital outlay item was an item the
d i s t r i c t needed but could not fund within the revenue limits. The
d i s t r i c t considered this expenditure desegregation related and
allowable pursuant to A. R. S. $ 15- 910.1 which allows d i s t r i c t s to
budget outside the capital outlay revenue l i m i t up to 12 percent of
the amount of their maintenance and operation budget for
desegregation. Our testwork showed, however, that this capital
outlay expenditure appears to have been a normal operating
expenditure and not directly related to a particular desegregation
program or activity.(')
Supplanting - Chapter 399, Section 20. C. 2 of the 1990 Session Laws also
directed the Auditor General to determine whether expenditures budgeted
pursuant to A. R. S. $ 15- 910. H supplanted rather than supplemented other
sources of monies for operations or capital purposes. However, the words
" supplant" and " supplementn only occur in Chapter 399 of the 1990 Session
Laws. The concept of supplanting has not been an element related to
desegregation funding in this state and does not appear in A. R. S. $ 15- 910
or any other statutes that we are aware of. In addition, the term
" supplant" has not been defined. We conclude, therefore, that
supplanting is not prohibited.
In order to address our statutory charge, we defined supplanting as:
An expenditure made from A. R. S. $ 15- 910. H funds which was previously
made from State and other local funds.
( 1) During our review we also identified a number of items budgeted but not expended by
Tempe Elementary for desegregation that do not appear d i r e c t l y related to the
d i s t r i c t ' s OCR agreement. These include cafeteria equipment, shower s t a l l s and
1 i brary expansion. Tempe Elementary ' s detenni nati on that these i terns could be
budgeted as desegregation costs further i l l u s t r a t e s the broad defini ti on of
desegregation costs used by school d i s t r i c t s .
The conclusions derived from using this definition depend to a certain
extent on the point at which the definition is applied and the perceived
intent of the statute. Some school district officials argue the statute
was intended to provide relief to the districts which were having to
absorb the cost impacts of their orders and agreements within their
revenue limits and at the expense of their normal programs. Under this
interpretation of intent, one could argue that A. R. S. 815- 910 was
intended to at least allow districts -- at the time they first began to
budget i t -- to make a one- t ime shi f t of desegregat ion expendi tures
outside the RCL and CORL. Using this interpretation, supplanting occurs
only if districts subseauentl~ shift items usually budgeted in
maintenance and operation and capital outlay budgets ( within the revenue
limits) as desegregation. Our review did not identify any instances of
supplanting as indicated by this application of the definition.
If, however, the definition is applied to anv shifting of previously
expended funds, then all districts appear to have supplanted. We believe
that the very different conclusions about supplanting that result from
the differing interpretations of this term illustrate its limitations as
a criterion for determining whether expenditures are being properly
classified.
Another issue of supplanting relates to the allocation of certain
expenditures to the desegregation sections of the Maintenance and
Operation Fund. In our review, we observed that three of the five
districts charged a port ion of certain costs to desegregation ( e. g.,
salaries of superintendents, assistant superintendents, principals,
custodians, counselors, secretaries and other administrative personnel).
Other costs, including those for utilities, equipment, training, repairs
and maintenance, and supplies were also partially charged as
desegregation expenditures. Our definition of supplanting does not cover
a situation where it appears that expenditures would be made, whether or
not a desegregation order or agreement existed, because such expenditures
are necessary to the functioning of the district. Since the expenditures
would be made anyway, it could be argued that transferring a portion of
these costs to desegregation is supplanting since they would usually be
from maintenance and operation funds within the RCL. On the other hand,
i f the d i s t r i c t s can demonstrate that these a c t i v i t i e s are necessary for
desegregation, they may be able to support the allocation. This again
demonstrates the limitations resulting from the lack of a definition of
supplanting.
Review Of Tucson Unified
School District lncom~ letg
We could not complete our review of the Tucson Unified School D i s t r i c t ' s
desegregation expenditures. We were unable to review any Maintenance and
Operation Fund expenditures because the d i s t r i c t budgets and allocates
desegregation maintenance and operating expenditures using various
allocation methods ( e. g., derived from student/ teacher ratios, a portion
of total transportation costs, excess supplies and materials costs). The
d i s t r i c t generally allocates by determining amounts spent over and above
what non- desegregation schools are allowed to expend and designating
those as the desegregation expenditures. Consequent I y , i nd i v i dua I
maintenance and operation expenditures are not charged to specific
programs.
While A. R. S. $ 15- 910. H requires a detailed report of expenditures
incurred solely as a result of compliance with a desegregation order or
agreement, only general expenditure line item categories, such as
salaries, and supplies and materials, can be compiled using various
allocation methods. As a result, particular expenditures incurred solely
for desegregation programs cannot be identified. This lack of
documentation supporting desegregation expenditures precluded us from
determining whether such expenditures were directly related to
desegregation order or agreement.
We also received allegations from the Tucson Business Journal against the
d i s t r i c t regarding the possible misuse of i t s desegregation funds. Due
to time constraints, we could not f u l l y investigate the r e l i a b i l i t y or
veracity of these allegations and cannot report on them further at this
time. We are continuing to pursue this matter.
CHAPTER IV
STATES FUND DESEGREGATION PROGRAMS
IN A VARIETY OF WAYS
A survey of states in which school d i s t r i c t s are implementing
desegregation programs shows that states vary in their financial
participation. Among states which provide financial assistance to
d i s t r i c t s for desegregation, approaches used range from court ordered
cost sharing to assisting d i s t r i c t s implementing voluntary
desegregation. Several states surveyed provide no specific financial
assistance for desegregation programs.
Pumse, Scope
Chapter 399, Section 20. C. 5 of the 1990 Session Laws directs the Auditor
General to:
Gather information for comparison purposes from other states in which
there are school d i s t r i c t s under a court order of desegregation or
which are a party to an agreement with the United States department
of education o f f ice for c i v i I rights di rected toward remediat ing
alleged or proven racial discrimination. The auditor general shall
include information regarding the degree to which the state's
government is involved in the implementation of the court order or
agreement.
To collect the required information, Auditor General staff contacted
academic and legal experts to identify states with school desegregation
programs. Suggestions were also solicited from the advisory committee
appointed for this study and audit staff reviewed information collected
by the Arizona House of Representatives Education Committee staff in May
1990. States were selected in order to provide information about
different approaches used to fund desegregation. Ten states were
contacted: CaI i fornia, Connecticut, I l l inois, Massachusetts, Minnesota,
Missouri, New Jersey, Ohio, Washington and Wisconsin.
Information was collected using a questionnaire that included questions
about the number and type of desegregation programs in each state,
methods and amounts of state funding and controls over the process. We
contacted superintendents of education or other senior staff and made
add i t i ona l contacts as recomnended by these i nd i v i dua l s .
Mechanisms For Fundinq
Deseareaation Prwrams
Six of the ten states contacted assist school d i s t r i c t s in funding
desegregation programs. State aid is provided to share the costs of
court ordered desegregation, to assist d i s t r i c t s complying with state
mandates for desegregation and for voluntary desegregation.
Court ordered cost sharing - Two of the states we contacted, Ohio and
Missouri, provide aid as directed by federal courts. Court orders vary
within each state and establish several different requirements for state
aid for desegregation.
Ohio - Federal courts in Ohio ordered the state to share costs for
desegregating schools in five d i s t r i c t s . In Cincinnati, Columbus and
Lorraine, an i n i t i a l audit was performed to determine the estimated
cost of desegregation for these d i s t r i c t s . The state's share of the
desegregation costs was $ 35 million for Cincinnati, $ 44 million for
Columbus and $ 1 m i l lion for Lorraine. Payment of these amounts was
distributed over a five to seven year period. Actual expenditures
for the Cleveland and Dayton desegregation are audited each year and
the state is obligated to pay half of the costs identified by the
audit. During fiscal year 1990 state o f f i c i a l s estimate that state
aid for desegregation was approximately $ 42 mi l l ion.
Missouri - Methods for sharing desegregation costs in Missouri are
also governed by court orders which d i f f e r in their requirements. In
St. Louis the state is obligated to fund a l l transportation costs and
half of maintenance and operation costs. The state negotiates with
the St. Louis d i s t r i c t to establish program costs. A l l expenditures
are subject to post audit. The state must also provide specific
amounts of aid for capital outlay ($ 114 mi l lion) and magnet schools
($ 59 million) in St. Louis. The desegregation order for the Kansas
City schools, on the other hand, requires the state to pay whatever
costs the d i s t r i c t can prove that i t cannot afford. Kansas City
school o f f i c i a l s submit a desegregation budget to the supervising
federal court which must approve i t . Once the court establishes the
total program cost and the d i s t r i c t ' s a b i l i t y to fund it, the state
must fund the remaining costs. As a result, the state pays from 74
percent to 90 percent of the operating costs for the Kansas City
desegregation program. In addition, the state has been ordered to
fund $ 250 million in capital improvements in the Kansas City
d i s t r i c t . State o f f i c i a l s estimate that the state's share of
desegregation costs in St. Louis and Kansas City during fiscal year
1990 was about $ 236 mi l lion.
The Ohio and Missouri cases suggest that court ordered cost sharing does
not permit state o f f i c i a l s to control the costs of the desegregation
programs they fund. Although the states may negotiate with the d i s t r i c t s
or make proposals to the courts, the ultimate decision rests with the
courts. The states are limited to funding the programs established by
the courts at the levels required by the courts.
State mandated cost sharing - Two states, California and Massachusetts,
have establ ished programs for assisting school d i s t r i c t s in meeting
desegregation costs. This aid is available for d i s t r i c t s implementing
court ordered desegregation programs as well as d i s t r i c t s that are
voluntarily desegregating.
CaI ifornia - CaI ifornia has provided financial assistance for
desegregation programs since 1984. Currently, 55 d i s t r i c t s are
implementing desegregation plans, primarily addressing racial
discrimination. Programs in 12 d i s t r i c t s resulted from lawsuits
which were resolved primarily through consent decrees; the remainder
are voluntary programs. State aid is generally available for a l l
desegregation a c t i v i t i e s except capital outlay and is provided on a
reimbursement basis. Each d i s t r i c t develops desegregation plans and
programs that are submitted to the state department of education for
review and approval. A t the end of the year, d i s t r i c t s submit claims
for reimbursement to the state comptroller ( 100 percent of i n i t i a l
program cost and 80 percent of program expansions). The compt rol ler
audits the claims and submits the valid portions to the legislature
for funding. Total state aid for desegregation during fiscal year
1990 was $ 513 mi l lion, of which $ 434 mi l l ion went to the 12 d i s t r i c t s
under court order.
California has no specific limits on desegregation assistance. The
department of education review, comptrollerls audit and legislative
appropriation are the major controls. Although this process provides
opportunities for the state to control desegregation costs, one
o f f i c i a l pointed out that the department of education often fai Is to
aggressively review programs submitted by d i s t r i c t s and that
d i s t r i c t s are often successful in convincing the legislature to fund
claims disallowed by the comptroller.
Uassachusett~ - Massachusetts shares desegregation costs with school
d i s t r i c t s that are addressing racial and national origin
discrimination. Four d i s t r i c t s are under court order to desegregate
and 14 are implementing plans under agreement with the state
department of education. The legislature appropriates desegregation
aid funds in five categories: improving desegregated schools, magnet
schools, urbadsuburban transfer programs, transportation and
construction. This aid is given in addition to basic school aid. To
obtain desegregation aid, d i s t r i c t s apply for grant funds in the
categories appropriated by the legislature. The department of
education reviews the requests and allocates the available funds. As
a result, each d i s t r i c t ' s amount and proportion of aid may vary. In
some cases, adequate funds may not be avai lable to fund programs at
statutory levels. For example, the state is supposed to provide 100
percent of transportation costs for desegregation but the actual
appropriations are approximately 50 percent of the costs. Overall,
Massachusetts o f f i c i a l s indicate that the state funds about 30
percent of desegregation costs. During fiscal year 1990, this
amounted to approximately $ 30 million ( excluding construction costs
which were not available).
Voluntarv state cost sharing - Two states, Minnesota and Wisconsin,
provide financial aid for desegregation programs implemented by d i s t r i c t s
voluntari ly.
Minnesota - Three school d i s t r i c t s in Minnesota are currently
implementing voluntary programs to remedy racial discrimination. One
d i s t r i c t , Minneapolis, was previously under a court order to
desegregate; the order was l i f t e d in 1980. Minnesota's program is
intended to encourage and assist d i s t r i c t s in voluntarily
desegregating and to preclude lawsuits. Aid provided by the state
supports a l l costs of a desegregation program approved by the state
department of education. D i s t r i c t s must submit a comprehensive
desegregation plan to the comnissioner of education for review and
approval. Once a plan is approved, d i s t r i c t s must submit updates
every two years. Funding is provided by the legislature based on
budgets submitted by d i s t r i c t s with approved plans and aid varies
among d i s t r i c t s depending on the specifics of their plans. The three
participating d i s t r i c t s received $ 17 mi l lion during fiscal 1990.
Minnesota has recently expanded aid for desegregation. Beginning in
fiscal year 1991, the state is providing $ 200,000 to three d i s t r i c t s
to develop a plan for moving students between d i s t r i c t s . The state
has also appropriated $ 1 mi l l ion over a two ear period to reimburse
d i s t r i c t s hiring minority s t a f f . Another Y 2 million is available
during the next two years to provide 50 percent matching grants to
d i s t r i c t s for desegregation related capital outlay projects.
rlisconsin - Wisconsin supports desegregation efforts in four
d i s t r i c t s by providing transportation aid. Three d i s t r i c t s have
i n i t i a t e d intra- district busing; state aid for these d i s t r i c t s is
provided in the form of additional funds for each student bused.
These students are weighted more heavily in the calculation for state
equalization aid. The fourth d i s t r i c t , Milwaukee, has established an
extensive busing program with 24 suburban school d i s t r i c t s . The
state aids this program by paying 100 percent of the t u i t i o n costs,
based on actual attendance, for students who travel across d i s t r i c t
lines to attend school. The estimated cost of Wisconsin's program in
a l l four d i s t r i c t s during fiscal year 1990 was $ 50 mi l lion.
These state cost sharing programs -- both mandated and voluntary --
provide greater opportunity for the states to control the cost of their
share of d i s t r i c t desegregation programs. In contrast to court ordered
cost sharing, the state programs provide for state level review and
approval of both program content and funding levels. Although the
California process appears to give d i s t r i c t s the opportunity to recover
costs disallowed by the comptroller, that decision is made by the state
legislature rather than the courts.
Some States Provide No
Direct Aid For Deseareaation
School d i s t r i c t s in four of the states we contacted have implemented
desegregation programs without state aid specifically for this purpose.
Connecticut, I l l i n o i s , New Jersey and Washington do not provide state aid
specifically to assist d i s t r i c t s in implementing desegregation programs.
D i s t r i c t s in these states rely on other forms of state aid and local
taxes to support their desegregation plans.
New Jersey - New Jersey exercises extensive control over school
d i s t r i c t desegregation plans. Currently 84 d i s t r i c t s are
implementing desegregation programs. Seventeen are the result of
court order, one i s voluntary and 66 were ordered by the state. New
Jersey mandates desegregation and state law allows the department of
education to review d i s t r i c t performance and order corrective action
i f they are found to be discriminating against students. The
department can order d i s t r i c t s to develop plans to correct problems.
D i s t r i c t s can select one of 13 model plans. Once approved, d i s t r i c t s
have 60 days to begin implementing desegregation plans. Failure to
implement plans can result in state- ordered actions and, ultimately,
state takeover of the d i s t r i c t . This high level of state authority
grows out of New Jersey's tradition of centralized control over i t s
schools which requires that each d i s t r i c t ' s budget must be approved
by the department of education.
Desegregation programs in New Jersey school d i s t r i c t s are funded as
part of regular operations and are not specifically identified.
Beginning in fiscal year 1992, however, the state w i l l provide grants
t o t a l l i n g $ 300 per student to d i s t r i c t s implementing desegregation
programs. This new aid was enacted to provide assistance to
d i s t r i c t s that lost funds in the recent revision of New Jersey school
finance system and amounts to 8.8 percent of the state's per pupil
aid.
Washinaton - Two school d i s t r i c t s in Washington are implementing
desegregation plans with no specific state financial assistance for
their programs. Seattle and Tacoma have established voluntary
desegregation programs although neither they nor any other d i s t r i c t
in the state have ever been under a court order or OCR agreement.
The desegregation programs are funded from sources generally
available for a l l local educational programs ( e. g., basic state
school aid). According to one o f f i c i a l , Washington's high state
share of education funding ( 78 percent) allows d i s t r i c t s to carry out
a c t i v i t i e s that preclude c i v i l rights complaints and lawsuits.
Connecticut - School d i s t r i c t s in Connecticut are responsible for
ensuring that their schools are desegregated. Connecticut has a
state mandate that the student bodies of a l l schools within a
d i s t r i c t be within plus or minus 25 percent of the d i s t r i c t ' s
minority population as a whole. D i s t r i c t s support their plans from
funding sources that are available to a l l education programs and the
state department of education has no specific information how each of
the 166 d i s t r i c t s meets this mandate or what costs they incur.
However, a recent lawsuit is challenging this system on the grounds
that the state law allows a 100 percent minority school to be
considered racially balanced i f i t reflects i t s d i s t r i c t ' s racial
make- up. The governor has appointed a comnission to make
recommendations to change the program and consider funding options,
such as state funding for magnet schools and transportation costs.
The commission is due to report on December 31, 1990.
I l l i n o i s - I l l i n o i s has 49 d i s t r i c t s that are implementing
desegregation. These programs are not specifically i d e n t i f i e d in
d i s t r i c t budgets. B i l l s have been introduced in the legislature
during each of the past five years to provide some state funding for
d i s t r i c t desegregation programs but none have been enacted. Although
the state provides no financial aid, the department of education uses
federal funds to offer consulting services and technical assistance
to d i s t r i c t s in developing desegregation plans. D i s t r i c t s also
u t i l i z e federal funds for " urban i n i t i a t i v e programs" and magnet
schoo l s .
Conclusion
The Auditor General survey of states found a wide range of state
involvement and support for school d i s t r i c t desegregation programs. The
level of program and financial control exercised by the states also
varied. States with court ordered desegregation, such as Missouri and
Ohio, appear to have the least control over programs and funding, most of
which is determined by the courts. State- mandated desegregation programs
and financial support appear to offer significant opportunity for states
to control d i s t r i c t a c t i v i t i e s and, in some cases, avoid court actions
that would otherwise l i m i t state control. New Jersey demonstrates that a
state can exercise strong control in the absence of state aid i f i t has a
t r a d i t i o n o f centralized control in education.
However, even New Jersey is planning to provide some state aid for
desegregation and Connecticut is considering state aid to strengthen
d i s t r i c t desegregation programs. These changes, when viewed alongside
the financial assistance in other states, suggest that state funding is
an important element for implementing desegregation programs.
CHAPTER V
OPTIONS FOR FUNDING AND CONTROLLING
DESEGREGATION PROGRAMS IN ARIZONA
Our review of programs in Arizona and other states indicates that the
Legislature has a variety of options for strengthening accountability and
control over desegregation programs. Accountability should be
strengthened regardless of whether the Legislature changes the financing
structure for desegregation. Options for funding desegregation programs
range from State participation in developing desegregation plans to State
aid for desegregation programs. Increasing the State's role in
desegregation programs may also create legal responsibilities for the
State.
Identifying the best option for financing desegregation programs in
Arizona depends on the extent to which the Legislature wishes to control
this aspect of school finance. The approaches used in the other states
we contacted vary widely, ranging from strong state level control to
almost complete local discretion. Determining the appropriate level of
control is a policy decision that is beyond the scope of this review.
Therefore, we make no recommendations regarding the various options
presented. We do note, however, that some comnonly accepted aspects of
accountability appear to be lacking in Arizona's desegregation finance
process and present recommendations for strengthening accountability.
St renathenina Accountability
Our review of desegregation expenditures demonstrates that the current
system lacks accountability in certain areas. Options for strengthening
accountability should be implemented regardless of any other changes the
Legislature may or may not make to the current system. These options
include more clearly defining the concept of supplanting, requiring
compliance reviews and improving expenditure reporting by d i s t r i c t s .
S ~ p l a n t i n a definition - As noted in Chapter Ill, Auditor General staff
had d i f f i c u l t y evaluating whether d i s t r i c t use of funds for desegregation
involved supplanting as requested by Laws 1990, Chapter 399,
Section 20. C. 2. This directive seems to suggest that supplanting is not
permitted or was not intended when the Legislature established the
provisions for budgeting outside the revenue limits. However,
A. R. S. 515- 910. H neither discusses nor forbids supplanting and may permit
d i s t r i c t s to s h i f t funds previously expended as part of their regular
budgets to their desegregation program. I f the Legislature wishes to
forbid this or any other form of supplanting, i t should consider defining
or authorizing the Arizona Department of Education ( ADE) to define what
constitutes supplanting of educational expenditures and the extent to
which such supplanting i s allowable.
Compliance review - Arizona law does not provide for any review of
expenditures for desegregation programs. Current audit requirements do
not specifically address desegregation expenditures; they are audited, i f
at a l l , as part of the district- wide single audit i f a single audit is
required. Because these expenditures are a relatively small proportion
of total d i s t r i c t expenditures, they are not l i k e l y to be material to the
d i s t r i c t s ' financial condition. As a result, accountability for
desegregation expenditures is very limited.
The Legislature should consider amending A. R. S. 515- 914 to require that
d i s t r i c t s budgeting pursuant to A. R. S. 515- 910. H obtain a compliance
review of these expenditures as a separate part of their regular
financial audit from an independent c e r t i f i e d public accountant. As part
of this requirement, the Legislature should define relevant terms as
needed and direct ADE and the Auditor General to establish a compliance
program to be followed by the independent auditor. The Legislature
should also consider establishing penalties for failure to u t i l i z e these
funds as requi red by law.
The compliance review of desegregation expenditures w i l l add tasks to the
independent financial audits and may increase their costs. We have no
basis for estimating the additional costs since the procedures are not
yet defined. However, the compliance review i s recommended as a limited
review and is not expected to add significant new a c t i v i t i e s to the
established audit function. The ten d i s t r i c t s budgeting pursuant to
A. R. S. 015- 910. H in fiscal year 1990- 91 pay between $ 6,400 to $ 52,500 to
meet current audit requirements. We do not anticipate the new compliance
review requirements w i l l appreciably increase these audit fees. However,
the Legislature may wish to allow d i s t r i c t s to include these additional
costs among the expenditures budgeted outside the revenue limits.
Budgetina and reportina requirements - Establishing specific budgeting
and reporting requirements would provide useful information about how
d i s t r i c t s spend funds budgeted pursuant to A. R. S. 015- 910. H. Currently,
d i s t r i c t s are required to report expenditures in line item format but a l l
this t e l l s is the functional categories and object codes to which funds
were recorded. Such reporting does not indicate what programs the funds
are used for and, thus, limits a reviewer's a b i l i t y to determine i f
expenditures are used for the purposes intended in court orders and OCR
ag reemen t s .
The Legislature should consider amending A. R. S. 015- 910 to require that
d i s t r i c t s report a l l expenditures budgeted outside the revenue limits by
program ( such as magnet school programs, special curricula and
transportation). This amendment should require that reports include both
budgeted and actual expenditures for each program identified in the
d i s t r i c t ' s court order or OCR agreement and would allow for meaningful
comparison of planned and actual a c t i v i t i e s .
lncreasinq State Role
In Formulatina Deseareaation Plan8
Existing State policy on funding desegregation programs in Arizona leaves
v i r t u a l l y a l l authority for decisions to school d i s t r i c t s . The State has
essentially no role in developing or implementing desegregation plans
that are funded outside the revenue limits. D i s t r i c t s and the courts or
OCR are currently responsible for developing agreements and orders, and
the d i s t r i c t s largely determine how much they w i l l spend to implement
them. As noted previously, d i s t r i c t s have broadly construed their
authority to make expenditures for desegregation programs. The
Legislature could take two actions to strengthen accountability in this
area.
F i r s t , the Legislature might consider amending A. R. S. 515- 910 to requi re
that d i s t r i c t s funding desegregation costs outside the revenue limits 1)
submit detailed desegregation program budgets to ADE on a form prescribed
by the Auditor General and the Superintendent of Public Instruction
showing specific a c t i v i t i e s and objectives, 2) obtain ADE approval for
desegregation program budgets and 3) conduct periodic outcome evaluations
of desegregation programs. Submitting budgets and obtaining State
approval are common features of the programs in several of the states we
contacted. California, Massachusetts, Minnesota and New Jersey a l l
require some form of state approval for d i s t r i c t s ' desegregation plans.
According to ADE s t a f f , the Department would need legislatively defined
c r i t e r i a or other guidance in order to conduct an adequate review.
Second, the Legislature might also consider authorizing ADE to consult
with school d i s t r i c t s in legal actions involving desegregation issues.
Currently, the State is not involved in the process for developing
agreements with OCR and court orders described in Chapter I. ADE
consultation would allow the State to have some input into the
development of desegregation agreements with the Office of C i v i l Rights
and desegregation orders of the courts. D i s t r i c t s should be required to
notify the State of any legal actions involving desegregation issues.
State Fundina For
Deseureaation Proarams
Another series of options for funding desegregation programs in Arizona
would be to provide State financial assistance, either through special
appropriations or grant programs, to d i s t r i c t s that are implementing
these programs. Programs in other states provide several models which
could serve as the basis for such aid. These include state approval of
desegregation programs as a prerequisite for aid and modifying the
distribution of State aid by weighting students more heavi ly in
desegregation d i s t r i c t s .
A l l of these options require the Legislature to identify specific funds
to be used for supporting the d i s t r i c t s ' desegregation plans. They
d i f f e r i n the manner in which the funds are distributed to the d i s t r i c t s .
These options may also require the Legislature to define what programs
w i l l be e l i g i b l e for funding. For example, Federal grants for magnet
programs are intended to support " . . . ( I ) the elimination ... of minority
group isolation ... and ( 2) courses of instruction ... that w i l l
substantially strengthen the knowledge of academic subjects and the grasp
of tangible and marketable vocational s k i l l s of students . . . . I 1 Grant
recipients are prohibited from using funds for any a c t i v i t y that does not
augment academic improvement.
State approval of desearqation plans - One approach would be to provide
aid for approved desegregation programs as is done in California,
Massachusetts and Minnesota. D i s t r i c t s in these states submit plans to
thei r respect i ve educat ion depar tments for approval . Once approved,
these plans serve as the basis for requesting specific appropriations or
allocating funds previously appropriated. The Arizona Legislature might
consider providing State aid to d i s t r i c t s for desegregation programs
based on programs approved by the Arizona Department of Education. ADE
would be given authority to review and approve plans that would qualify
for this aid. The Legislature could either appropriate funds to be
allocated by the ADE or could appropriate specific funds based on the
approved p l ans .
leiahted funding - A second approach would weight students involved in
d i s t r i c t desegregation programs more heavily than other students in
calculating State equalization aid. Wisconsin funds transportation in
three of the four d i s t r i c t s that are implementing desegregation
a c t i v i t i e s . The same method is used to fund special needs students in
Arizona schools such as disabled or the mentally and emotionally
handicapped. Implementing this option would require identifying target
students in each d i s t r i c t and determining an appropriate weighting
factor. Target students could include the minority that has been
discriminated against as well as majority students the d i s t r i c t hopes to
attract to specified schools. The Legislature might consider providing
aid to d i s t r i c t s for desegregation programs by adding a support level
weight to the weighted student count used in the calculation of the base
support level and base revenue control l i m i t .
Greater State Role In Fundina Deseclreaation
Could Increase State Responsibility
State assumption of a greater role in determining what school d i s t r i c t s
may do as part of their desegregation programs may also increase the
State's l i a b i l i t y for these programs. The current system, in which the
individual d i s t r i c t s determine how to fund compliance, has allowed the
State to avoid any responsibility for funding desegregation programs.
Under A. R. S. 915- 910. H d i s t r i c t s decide what actions w i l l be taken and
how they w i l l be funded. In effect, these decisions are l e f t to the
d i s t r i c t and the court or OCR. Establishing a State role in this process
could leave the State vulnerable to legal action i f a d i s t r i c t , OCR or
the supervising court believes that the State's decision prevents the
d i s t r i c t from desegregating.
However, the State may ultimately be held liable for the costs of
desegregation. As noted in Chapter II, the a b i l i t y of d i s t r i c t s to fund
desegregation programs under the current laws depends largely on each
d i s t r i c t ' s wealth. A poor d i s t r i c t could f i l e a lawsuit claiming that
the lack of State aid prevents i t from complying with i t s order or
agreement. The courts, using some of the legal precedents discussed in
Chapter I, could order the State to provide the funds needed by poor
d i s t r i c t s to desegregate their schools.
ADVISORY COMMIITEE RESPONSE
McDONALD BRAMMER YETWIN 8 LACY
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
a EVO DECONCIN~( 1 901- 1986) -
JOHN R. McDONALD J. wM. BRAMMER, JR.
RICHARD M. YETWIN JOHN C. LACY
DIN0 DECONCINI ROBERT M. STRUSE
WILLIAM 8. HANSON JOHN C. RICHARDSON
DAVID C. ANSON JAMES A. JUTRY
SPENCER A. SMlTH MICHAEL R. URMAN
DENISE M. BAINTON DAVID F. GAONA
KAREN J. NYGAARD LUIS A. OCHOA
SUSAN E. MILLER GARY F. URMAN
MARK D. LAMMERS FRANCES J. HAYNES
WAYNE E. YEHLING CHRISTINA URlAS
PHILIP R. WOOTEN
2525 EAST BROADWAY BOULEVARD. SUITE 2 0 0
TUCSON, ARIZONA 8 5 7 1 6 - 5 3 0 3
( 6 0 2 ) 3 2 2 - 5 0 0 0
FAX: ( 6 0 2 ) 3 2 2 - 5 5 8 5
December 12, 1990 2901 NORTH CENTRAL AVENUE, SUITE 1644
PHOENIX. ARIZONA 85012- 2736
( 6 0 2 ) 241- 0100
FAX: ( 6 0 2 ) 241- 0220
PLEASE REPLY TO TUCSON
VIA FEDERAL EXPRESS MAIL
Mr. Mark Fleming
Performance Audit Manager
State of Arizona
Office of the
AUDITOR GENERAL
2700 North Central Avenue
Suite 700
Phoenix, Arizona 85004
Re: Advisory Committee Report - Special Study:
Desegregation Expenditures
Dear Mark:
Following up our recent telephone conversations, please find
enclosed the Committee's Report for inclusion in the document you
are preparing to send to the Legislature.
The Committee gave me the responsibility of assembling and
processing the Report, and therefore it was not possible for the
Committee members to physically sign the document. All Committee
members were provided with a draft of this document, and although
it has been revised in some minor ways as a result of comments by
Committee members, it is in substantially the same condition as
the draft received by the Committee members. I have not
received, as of the time I send this material to you, any adverse
comment or dissenting opinions from any Committee member to the
Report which is enclosed. Accordingly, I think that the enclosed
Committee Report may be taken as a unanimous position of the
Advisory Committee.
On behalf of the entire Committee, I would like to express
the appreciation of the Committee members for the effort which
has been expended by the Auditor General, his staff and you, as
coordinator of this project. The Legislature handed the Auditor
General a charge which was ill- defined, prescribed a timeframe
DECONCINI McDONALD BRAMMER YETWIN 8 LACY
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
Mr. Mark Fleming
December 12, 1990
Page 2
within which it required a response which was unrealistic, and
provided a subject matter about which there is considerable
controversy and substantial technical difficulty.
I am sure you will notice that the Committee's Report is
critical of many of the conclusions reached by the Report. It is
the Committeets view that many of these conclusions were reached
as a result of the imperfections of the legislation and the
process, and not due to any inadequacy or lack of professionalism
on the part of the ~ uditor General or his staff.
Thank you for the opportunity of working with you on this
project, and I would appreciate it if you would please provide
each member of the committee with a copy of the final document
which is forwarded to the ~ egislature together with any other
information which may be transmitted in connection with it.
Very truly yours,
J. Wm. Brammer, Jr.
/ nj h
Enclosures
c: Advisory Committee Members ( w/ encl . )
Elizabeth Harmon, Esq.
Dr. Alejandro Perez
Julie Stout, Ph. D.
Chris Bustamante
RT OF THE ADVISORY COMElTTTEB
DATE : December 14, 1990
RE: Auditor General Report Regarding Special Study:
Desegregation Expenditures
I. Summarv of Conclusions and Recommendations
The Advisory Committee has reviewed the Report prepared by
the Auditor General regarding its special study of Desegregation
expenditures. The Committee is constrained to file a separate
report respecting that study, and the following is a summary of
its conclusions:
The Committee thanks the Auditor General and his staff for
the effort expended in producing the Report, and their kindness
towards the members of the Committee, despite the enormous
pressures caused by the inadequate time to permit a thorough
analysis of the issues which, for the reasons detailed in the
Committee's Report, resulted in a flawed report containing
erroneous conclusions and unwarranted assumptions.
The Committee feels that the conclusions reached by the
Auditor General are not supported by the facts and findings
contained in the Report. The reasons for the Committee's
conclusion is contained in the body of its Report.
The Advisory committee concurs that the present provisions
of A. R. S. 3 15- 910H permit an unequal burden to be borne by local
taxpayers in order to fund local district desegregation and
compliance efforts. However, this problem can onlv be addressed
within the context of a complete analysis and restructuring of
the entire system for financing education.
A. R. S. 3 15- 910H does not, nor did the study, address what
are acceptable levels of expenditures for desegregation or
compliance activities.
If the State chooses to limit or approve desegregation
expenditures, it must not only create an agency which will be
knowledgeable of acceptable and adequate levels for these
expenditures, but also be responsible for determining the
adequacy or propriety of the various school district programs
which those expenditures support.
The State must be willing to accept a major role in the
responsibility of insuring compliance with desegregation orders
and agreements once it chooses to become involved in any way in
approving, limiting or deciding appropriate funding levels for
desegregation expenditures.
The study reveals that less than 1% of the expenditures
budgeted by school districts pursuant to A. R. S. 15- 910H for
desegregation activities were judged to be not directly related
to the court order or administrative agreement.
11. General Observations and Comments
The Auditor General was handed an impossible task by the
Legislature. sections 20 and 21 of Chapter 399 of the 1990
Session Laws required the Auditor General to " conduct a study of
school district desegregation programs and expenditures of those
school districts which have budgeted for desegregation
expenditures pursuant to § 15- 910, Subsection H, Arizona Revised
statute^.^ In order to assist in this study, the legislature
required governing boards of school districts which budgeted
expenditures pursuant to A. R. S. S 15- 910H to provide certain
information to the Auditor General. Pursuant to that charge, the
Auditor General issued a memorandum dated August 14, 1990, to
certain school districts requiring those school districts to
provide certain information to the Auditor General no later than
August 31, 1990. Despite the compressed time frame, and the fact
that the last two weeks in August is perhaps the busiest time of
the entire year in any school district, the school districts
provided the information requested in a timely fashion.
Subsequent to receipt and review of the information provided
to the Auditor General by the school districts, on- site
investigations of those school districts were conducted by
Auditor General staff. That review was directed toward analyzing
certain expenditures which were categorized as " desegregation
expenditures," and the way in which that review was conducted,
together with an analysis of the items reviewed, is contained in
Chapter I11 of the Auditor General's Report.
111. Limitations of the Process
Unfortunately, the legislation mandating the Auditor
General's actions, culminating in the Report, did not permit the
Auditor General's activities, and hence the Report itself, to be
clearly focused upon what the Legislature is assumed to have
intended. There are at least two reasons for this problem: the
first was the inclusion within the legislation of imprecise and
undefined terms and concepts such as:
( a) " whether the [" desegregation"] expenditures
budgeted pursuant to 5 15- 910, Subsection H, Arizona Revised
Statutes, were related directlv to the stipulations of the
court order or administrative agreement;"
( b) " whether. . .[" desegregationM]. . . expenditures
were used to suwwlement and not sumlant any other sources
of monies for operational or capital purposes;"
( c) a comparison of " the expenditures budgeted pursuant
to 5 15- 910, Subsection H, Arizona Revised Statutes, to the
expenditures of other school districts of similar size and
character that have not budgeted [" desegregation"]
expenditures pursuant to 5 15- 910, Subsection H;" and
( d) an examination of the impact of [" desegregation"]
expenditures budgeted pursuant to S 15- 910, Subsection H,
Arizona Revised Statutes, on the esualization of school
district expenditures." ( Emphasis supplied in all cases.)
The second reason is that while the Auditor General was to
" conduct a study of school district desegregation programs and
expenditures of those school districts which have budgeted for
desegregation expenditures pursuant to S 15- 910, Subsection H,
Arizona Revised Statutes," the timing of the legislative action
and requirement of administrative response was such that an
appropriate examination either of the programs or the
expenditures as described in the legislation was effectively
precluded.
Despite the foregoing difficulties, the Auditor General and
his staff did the best job possible under the circumstances and,
in an attempt to comply with the legislative mandate, produced
the Report nearly within the unrealistic time frame prescribed in
the legislation. Indeed, the Report is replete with references
to the difficulty encountered by the Auditor General in
conducting the review and producing the Report as a result of the
inadequacies of the legislative charge. For example:
( a) While the Auditor General was required to compare
the expenditures of those districts budgeting pursuant to
A. R. S. 15- 910H to expenditures of other school districts
of " similar size and characterm that have not budgeted such
expenditures, the Auditor General has observed that such a
comparison is difficult because of the dissimilarity of
Arizona school districts, both as to size and character.
Report, page 21.
( b) Further, while the law required the Auditor
General to determine whether expenditures budgeted pursuant
to A. R. S. 5 15- 910H supplanted rather than supplemented
other sources of monies for operations or capital purposes,
neither the word " supplant" nor " supplement" are defined,
and neither appears anywhere within A. R. S. 5 15- 910 or any
other Arizona statute of which the Auditor General is aware.
While concluding that supplanting, whatever that term may
mean, is not prohibited by ~ rizona law, the Auditor General
nevertheless felt constrained to make the determination
required by the Legislature. Report, pages 33- 35.
( c) The ~ uditor General further observed that while he
was required to evaluate the impact of desegregation
expenditures on the " equalization of school district
expenditures," there was nowhere found within the directive
legislation, or any other to which the Auditor General
referred within the Report, a definition of " equalization"
for purposes of the investigation. Accordingly, the Auditor
General chose a specific definition and proceeded to base
the Report upon that definition. Report, page 20.
Nonetheless, the Auditor General's conclusion is that there
has been no significant impact on " equalizationN by virtue
of the " desegregation expenditures." Report, page 21.
( d) Another major difficulty encountered by the Auditor
General was the requirement that he determine whether
expenditures budgeted pursuant to A. R. S. 5 15- 910H " related
directlyX to the court orders or administrative agreements,
even though the provisions of A. R. S. § 15- 910H specifically
authorizes districts to budget for expenses which were
either " required or permittedn by those orders and
agreements.
On p. 31 of the Report is the definition of " unrelated
expenditureff ( a term nowhere found within the authorizing
legislation) which was formulated by the Auditor General.
This definition bears no relation to the reality of
supporting desegregation and compliance activities. The
legislature directed a study of expenditures, but provided
no guidance as to the standard against which they should be
measured. Faced with this, the Auditor General was required
to adopt its own standard, without legislative guidance.
~ ccordingly, the Auditor General limited his review to
expenditures " unrelated" to those activities " requiredx by
court order or administrative agreement, but not those which
might be permitted by those same documents. Report, page
28.
The unfortunate result of following this protocol was
that the Auditor General's analysis, although finding that a
very minor portion of the " desegregation expenses" examined
were " not directly related toff a court order or OCR
agreement, did not go on to determine whether or not those
same expenditures may have been " permitted" by those
documents. his conclusion was predetermined by the
adoption of the definition of " unrelated expenditures" found
on p. 31 of the Report. Accordingly, the committee feels
that the Report is fatally flawed in this respect due to the
limiting definition, one not at all either required or
permitted by the directive legislation, and one wholly
inconsistent with the plain language of A. R. S. 5 15- 910H.
With respect to the specific expenditures addressed
beginning on page 31 of the Report, and the Auditor General's
conclusion that several types of expenditures were not " directly
related to desegregation orders and agreements," it should be
pointed out that this analysis was based upon a review of ten
Arizona school districts engaged in expenditures in support of
desegregation or compliance activities. These districts had
1990- 91 maintenance and operation budgets approximating
$ 732,000,000.00. Approximately 6- 1/ 2% of that amount