Scottsdale Unified scandals prompt changes to state law, new criminal penalties

(Source: 3TV/CBS 5)

The education funding bill signed by the governor this week adds a host of new criminal penalties on school officials and outside vendors in response to recent scandals at the Scottsdale Unified School District, House Speaker J.D. Mesnard confirmed Saturday.

The new law makes school officials personally liable for violations of state procurement regulations. The stated purpose of the law is to "ensure maximum practicable competition" when districts seek bids for goods, services, and construction projects.

Three school officials at the Scottsdale Unified School District were forced to resign this year after the district accused them of violating laws and regulations on procurement or conflicts of interest. A fourth administrator is currently on paid administrative leave for unspecified reasons, although it appears to be connected to payment discrepancies to employees.

[READ MORE: Scottsdale Unified approves $180K in severance agreements for embattled administrators]

House Bill 2663 makes it a class four felony for school officials to knowingly skirt procurement laws and a class six felony to accept personal gifts from a vendor over $300. The newly signed bill also includes criminal penalties for the vendors who offer those gifts.

In March, the Scottsdale Unified School District accused its former superintendent, Dr. Denise Birdwell, of personally accepting more than $30,000 in payments from the head of an architecture firm seeking business with the district.

The firm’s then-president, Brian Robichaux, had been previously convicted of a felony and did not hold an architecture license.

HB 2663 requires school districts to obtain proof that construction service providers have a valid license. It also grants the Arizona Attorney General’s Office new authority to interrogate under oath school officials and vendors suspected of breaking procurement laws.

[READ MORE: Felon issued checks to Scottsdale superintendent; district moves to fire her]

The procurement issues at Scottsdale Unified were initially uncovered by a group of concerned parents who poured through reams of financial records and documents.

Under the new law, school districts will be required to post their budgets and audit information on their websites, but a last-minute amendment to the bill exempts charter schools from those rules along with the new procurement penalties.

Districts vs. charters: different transparency and accountability rules

By next school year, both district schools and charter schools will have to post information on their websites showing the amount of teacher salary increases they provide. Because the additional school funding passed by the legislature this session is not specifically mandated to be used on teacher pay, the online posting requirement is designed to pressure both districts and charter schools to implement the governor’s goal of providing 20 percent raises by 2020.

But while district schools will also have to post their budgets and audit information prominently on the homepage of their websites, charter schools will not.

A suite of floor amendments introduced by House Speaker J.D. Mesnard shortly before the bill’s final passage exempted charter schools from the newly adopted rules about online posting of budgets, procurement penalties and gift restrictions.

[EDITOR’S NOTE: An earlier version of this story said charter schools were required under existing law to publish their budgets on their websites. That is inaccurate. Instead, the provision was a newly proposed requirement under HB 2663 for both districts and charters that was later limited to only district schools by Mesnard’s amendment.]

Most charters are already exempt from state laws on public bidding anyway and the amendments were designed to maintain that distinction, Mesnard said.

But the changes, introduced about 48 hours prior to the vote according to one lawmaker, irked Democrats and charter school watchdogs.

“Parents have a right to know how charter schools spend their money,” said Jim Hall of Arizonans for Charter School Accountability. “If they can't see the budget, then they have no idea where the money is really going.”

Critics said Mesnard’s amendments harmed efforts for greater transparency just months after high-profile financial issues at two charter schools, Discovery Creemos and StarShine academies.

“In my experience, charter school parents want more information not less,” said Democratic state Representative Mitzi Epstein on the House floor Wednesday.

“It's like we're asking parents to go digging through the garbage to find information! Come on!” added Democratic state Representative Charlene Fernandez.

Mesnard suggested on the House floor that the purpose of the amendments, particularly the exemption on the online posting requirement, was to ease the regulatory burden on charters, which he said do not have the same administrative resources as district schools. He told Epstein on the floor that parents could still find a school’s budget in other places, like the Auditor General’s report.

“Existing charter school laws and the state charter school board already provide transparency and accountability,” he said via text on Friday.

The underlying education bill, HB 2663, enhanced the state charter board’s authority to close schools in financial trouble, he added.

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