The report claims schools have been spending less and less money in the classroom, making it sound like schools are not using all the cash they do receive.
But critics of the audit say that's wrong and that schools have been forced to spend more money on administrative and construction costs because the state stopped paying for that years ago.
On Thursday, Ducey said the report doesn't include money from Prop. 123, which passed last year.
He said if you add in his budget plan for the coming year that there's plenty of cash to give teachers a big pay raise.
"If you take all of this money combined, there's a potential for a $10,000 raise for each of our teachers. Our schools have additional needs in addition to that but there are dollars there to see our teachers get raises," Ducey said.
The governor's proposed teacher pay raise has been blasted as being too low. Some critics put it at $2 extra per week.
Copyright 2017 KPHO/KTVK (KPHO Broadcasting Corporation). All rights reserved.