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Horne, Hobbs at odds over COVID education funds

Posted 9/9/23

PHOENIX — A blame game between two top state officials threatens to lose the state more than $22 million in federal COVID relief dollars for education.

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Horne, Hobbs at odds over COVID education funds


PHOENIX — A blame game between two top state officials threatens to lose the state more than $22 million in federal COVID relief dollars for education.

An assistant to state schools chief Tom Horne sent letters accusing Gov. Katie Hobbs of removing its authority to administer Emergency Assistance to Non-Public School grants.

“This means that the Arizona Department of Education no longer has the ability to draw EANS funds from the U.S. Department of Education’s system to make payments under your contract with us,” wrote Steven Paulson, the agency’s chief procurement officer.

More to the point, Paulson told recipients to contact the governor’s office and ask how it intends to fulfill the requirements of the grant.

But Hobbs, in a letter Friday to Horne, said it was the U.S. Department of Education that lifted the authority of Horne’s agency to administer the funds after it failed to meet certain deadlines. That, she said, moved the dollars over to her office.

Hobbs, however, said her Office of Strategic Planning and Budgeting can’t disburse the dollars because Horne’s office hasn’t provided the necessary details about what grants have been awarded. So she is asking Horne to sign an agreement to have them work together to fulfill the grants.

Paying the existing obligations is only part of the problem.

The bulk of the funds actually are dollars the state Department of Education says it had so far been unable to allocate because no one had applied for them. Now, with the governor taking control, there is no way for the agency to find a way to give them out.

Time is running out: Hobbs said $6 million of the total will be taken back by the feds if the dollars aren’t allocated by the end of the month; Horne’s office pegs the dollars immediately at risk at $13.9 million.

Horne, for his part, has a different take than Hobbs on the whole thing.

“Every word in the governor’s letter is a lie, including ‘the’ and ‘and,’” he said in his own statement Friday about her letter to him.

Nor does Horne intend to sign any agreement.

“Due to her own actions, the governor now needs to take care of this problem, and not pass the buck to the Department of Education,” he said.

“She arranged for the federal government to change the fiscal agent from the (state) Department of Education to the governor,” Horne said. “The Arizona Department of Education has no ability to pay anyone for work done, or to authorize further work, because the governor has now become the fiscal agent.”

The dollars are part of a federal law approved to provide more COVID relief funds for education.

This cash was specifically earmarked for non-public schools, with a focus on those that have at least 20% of their students from low-income families and are most impacted by the pandemic.

Only nonprofit schools in existence prior to March 13, 2020, are eligible. The schools also cannot have sought loans under the Paycheck Protection Program.

Eligible expenses include everything from personal protection equipment and sanitizing supplies to funding reasonable transportation costs and maintaining remote or hybrid instruction. Dollars could go directly to schools or to private contractors to provide the services.

According to Hobbs, Arizona got nearly $109 million, with $22.3 million still unallocated. More immediately is that Sept. 30 deadline to what Horne’s office says is nearly $14 million of that — $6 million according to the governor — or forfeit it. The balance has to be used by Sept. 30, 2024.

So she wants Horne to sign an agreement with her office she says will allow the dollars to be distributed.

“If you fail to fulfill your duties as superintendent by cooperating with my office, money that should be spent in Arizona to educate our children will be distributed to other states,” she wrote to Horne.

Horne’s aides, however, said such an agreement is a moot point. They said once the governor’s office took back the money, it became the fiscal agent — and it became solely responsible for distributing it.

Hobbs, however, is painting all this as political, accusing Horne in a separate statement of “a gross dereliction of duties.”

“For months, Superintendent Horne has played political games while my administration has fought to deliver millions of dollars of funding to Arizona schools,” the governor said.

“This must end,” she continued. “Horne needs to put his partisan politics aside and do what’s right for the education of Arizona’s children.”

And Hobbs said Horne, by not following federal law “is sending a clear message that he believes his politics are more important than giving every Arizona student the education they need to thrive.”

What is complicating the matter is that while the federal law gives the dollars to the state through the governor’s office, it is the state Department of Education that is supposed to be the fiscal agent. And that requires a certain degree of cooperation between the two, cooperation both sides say has been missing.

Horne also called the governor’s statement about the need to spend the money to educate children “hypocritical.”

He pointed out that early in her administration, Hobbs canceled about $210 million in COVID grants Doug Ducey, her predecessor, had awarded in his last days in office at the end of 2022. That included $75 million to continue a summer school program for a second year.

Horne said those dollars would have helped students improve reading and math.

But Hobbs said at the time the dollars were awarded illegally as they lacked competitive bidding and later reallocated the funds.