31-01-2025
Isaac Elementary can now pay employees through the end of the school year, receiver says
Isaac Elementary School District employees received their overdue paychecks Friday after experiencing a week of uncertainty amid the school district's financial crisis.
The news came after the school district approved a deal with the neighboring Tolleson Union High School District, which agreed to essentially loan Isaac Elementary $25 million to keep its doors open.
The agreement with Tolleson Union, along with other funds that have been recovered, means Isaac Elementary will be able to cover all of its payroll and operating expenses through the end of the school year, according to Ryan Anderson, general counsel to J.S. Held, a consulting firm that was appointed by the State Board of Education to take over the district and resolve its financial crisis.
"With this emergency funding issue resolved, we will re-focus on the much needed cost cutting measures and looking to liquidate assets to resolve the financial issues at Isaac," said Keith Kenny, a director at J.S. Held, in a statement. Kenny can now do this work "without the looming threat of an immediate closure" of the district, Anderson said.
Andrea Valencia, an Isaac Elementary kindergarten teacher and the president of the Isaac District Education Association, a union representing Isaac employees, said in a statement that the week "took a toll on our educators and our community."
But, she said, "We stood together because we knew we couldn't let these schools fail."
"I couldn't be more proud of our members for showing up for our students but also for pressuring their elected leaders to keep Isaac schools open," Valencia said.
Isaac Elementary's agreement with Tolleson Union came after the Maricopa County Treasurer's Office said it would no longer honor any of Isaac Elementary's expenses until the district could pay its debt. The district owed Maricopa County $28.5 million that, as of last Friday, it had "no clear plan to repay," according to Maricopa County Board of Supervisors Chairman Thomas Galvin.
That meant Isaac Elementary could not access funds to cover payroll. The district, which serves about 4,800 K-8 students in Phoenix, was placed under receivership by the State Board of Education two weeks ago after it had overspent its budget by millions. The majority of its students are low-income, and many are English language learners.
Some relief came when the U.S. Department of Education agreed to return $6 million in pandemic relief funds to Isaac Elementary, which had inadvertently forfeited the money after failing to submit a required report on time. That money went toward the district's debt with Maricopa County.
Then, it appeared support would come in the form of legislation. Rep. Matt Gress, R-Phoenix, introduced a bill that would have directed Maricopa County Treasurer John Allen to issue $2.5 million to cover one payroll for the school district. That money would have been an advance on Isaac's basic state aid. But after House Bill 2610 was unanimously approved by the House Education Committee on Tuesday, it stalled, as financial support appeared to be on the way from Tolleson Union instead.
On Wednesday night, the Tolleson Union Governing Board approved a resolution that would authorize the district to enter into a $25 million leasing agreement with Isaac Elementary. Tolleson Union had funds it could use to help Isaac Elementary, and Governing Board President Leezah Sun, a former Democratic representative in the Legislature, said it was a "win-win situation." What had been offered so far by the Legislature was not enough, she said.
"The issue at hand is the time sensitivity to rescue 5,000 children," Sun said Wednesday. At that point, Isaac Elementary employees had already worked for a day without pay, and it was not clear the district would be able to remain open without an immediate influx of cash.
Under the agreement, Isaac Elementary will lease the ground under Isaac Middle School to Tolleson Union, which will then lease back the use of Isaac Middle School to Isaac Elementary for the term of the agreement. Isaac Elementary must repay the $25 million, with a 6% interest rate, within five years. An earlier version of the agreement had a repayment term of 12 years. The repayment duration was revised to avoid potential legal challenges under a state statute relating to the investment of public funds, according to Joseph Ortiz, a spokesperson for Tolleson Union.
On Friday, Gress, the chairman of the House Education Committee, said in a social media post that he was relieved that thousands of kids would "not be turned away from school." But he said he was "deeply concerned that these two school districts have engaged in a highly unusual and potentially unlawful financial transaction that has made an absolute mockery of school finance." The House Education Committee was "carefully reviewing the details of this agreement," Gress said.
Tolleson Union Superintendent Jeremy Calles said Wednesday that the agreement had been reviewed by several attorneys. The Arizona Attorney General's Office reviewed the agreement and had no objections to it, said spokesperson Richie Taylor.
Gress' bill to advance $2.5 million to the district would have also removed the district's Governing Board members from office and put measures in place to fire the superintendent, chief financial officer and Governing Board members of school districts placed under receivership in the future. He previously said that more reforms would be needed before the Legislature could provide additional financial support.
Isaac Elementary's superintendent and chief financial officer have resigned.
Marisol Garcia, an Isaac Elementary teacher and the president of the Arizona Education Association, said in a statement on Friday that the crisis was resolved "because Isaac educators spent their working hours making sure their students were in a safe environment to learn while spending early mornings and late nights pressuring their elected leaders to solve a crisis that someone else created." On Thursday, two days after the district missed payday, the Arizona Education Association handed out $15,000 in gift cards to Isaac Elementary Staff to cover emergency needs.
"Our members went into work every day not knowing when they would get paid or if schools would be open beyond this week, but they knew how important it was for the future of this community and so they showed up for their students," Garcia said.
Tomasa Acosta, parent of an Isaac Elementary eighth grade student, said the week had been hectic, stressful and disappointing.
Though she said she was grateful that teachers could be paid through the end of the year, Acosta worried that after that, the district would be in limbo. She said she was concerned about potential staff cuts and school closures, even though her child will have graduated from the district by then. "Who is going to be laid off? Which schools are going to be open?" she said. "I'm going to be affected as a community person."
Acosta also said she hoped everyone involved in the financial crisis would be investigated. "I just want justice for our students, and they deserve that," she said.
In a statement, Arizona Superintendent of Public Instruction Tom Horne said he applauded teachers' "patience and heroism in continuing to do their jobs this week."
Arizona Attorney General Kris Mayes said she would investigate Isaac Elementary's financial mismanagement.
Reach the reporter at mparrish@
This article originally appeared on Arizona Republic: Isaac Elementary's financial crisis resolved after district approves deal
