Horne refutes Governor’s false allegations over management of federal grant money

For immediate release: September 11, 2023
Contact: [email protected]
 

Horne refutes Governor’s false allegations over management of federal grant money

PHOENIX – State Superintendent of Public Instruction Tom Horne has sent a letter to Governor Katie Hobbs refuting her criticisms of the Department of Education’s management of the federal Emergency Assistance to Non-Public Schools (EANS) program.

September 11 , 2023

Governor Katie Hobbs
1700 W. Washington
Phoenix, Arizona 85007

Governor Hobbs,

Last week, I publicized a quick response to a public letter from you criticizing me regarding the Emergency Assistance to Non-Public Schools (EANS) program. At that time, I promised a more detailed refutation. This is that detailed refutation.

As you are no doubt aware, Section B-5 of the United State Department of Education's official guidance for the EANS funds states: "By accepting an EANS award from the Department, a Governor automatically designates the SEA (State Education Agency, in this case the Arizona Department of Education) to administer the EANS program. The SEA will be the payee or fiscal agent in G5 for purposes of accessing Federal funds on the date of award." (emphasis added)

On April 17th of this year, the Governor's Office of Strategic Planning and Budget (OSPB) wrote a letter to our department's Chief Financial Officer demanding that $22 million of non-obligated funds be reverted from the Arizona Department of Education (ADE) to the Governor's Office. We initiated a process with OSPB to establish a contract which would follow USDOE guidance but would give you decision making power over the $22 million.

This also shows a fundamental ignorance by OSPB of the federal guidance. OSPB demanded that we revert funds. As the designated federal fiscal agent, ADE does not have physical possession of funds to revert. Rather, the money is held by the U.S. Treasury and when a grantee is awarded funding, ADE, as the federally designated fiscal agent, passes that money ultimately to the grantee.

Our office has been in consistent communications with OSPB since April, five full months, to collaborate on the best way to ensure these monies are spent in accordance with the law and to avoid reversion of funds to the federal government.

In your letter you stated, "As suggested by USDOE, the easiest method of collaboration is a simple written agreement between our Offices that will enable OSPB to disburse funds to ADE for disbursement to its non-public school grantees ... " If OSPB were dispersing funds to ADE, then OSPB would be the fiscal agent. But the above quoted guidance specifically says that ADE has to be the fiscal agent.

We proposed that simple agreement to you on June 12th. If you had agreed, you would have control over these funds now. You still would have had decision-making power for the $22 million of undisbursed money but the process would have been legal. Your proposal was not legal.

We proposed the solution on June 12th, but you responded that it was in violation of federal law. That was the exact opposite of the truth. We were following the above quoted guidance, and you would have been violating the above referenced guidance. Your statement that our proposal would violate federal law was a false statement. And there was no reason for you to argue about that because you still would have been given the decision-making power over the $22 million.

The Arizona Department of Education is prepared to act as the designated fiscal agent, and this process would not have had one minute of delay had your OSPB staff not erroneously insisted in July of this year that our draft lnteragency Service Agreement was out of compliance with federal law. In fact, it was your proposal that was out of compliance, and our proposal that was in compliance, as any reader can see by looking at the above quoted guidance from the federal government.

If you produce something in writing from the federal government that says that your proposal will be acceptable to them, we will gladly agree to it. In that case, it will be your responsibility to administer the program, and we can wash our hands of it. Alternatively, you can accept our proposal to make the transaction legal and you will still have decision-making power over the $22 million.

There is no reason that a meeting between our staffs could not have worked this out. There is no earthly reason for you to have publicized a personal attack on me over this technical issue that could have been resolved by a meeting of our staffs.

Sincerely,

Tom Horne
State Superintendent of Public Instruction