PHOENIX — Weeks after the Isaac Elementary School District was declared financially insolvent, there’s hope all district schools can remain open for the rest of the year.
“The crisis of Isaac being closed is over,” said attorney Ryan W. Anderson, who serves as the general counsel for the state-appointed receiver for the district. The receiver, picked by the Arizona State Board of Education last month, now controls financing and operations for the troubled district.
“We're very confident we will get through the end of the school year based on the budget capacity we've already allocated and more that we'll likely find,” Anderson said.
The Isaac School District encompasses nearly seven square miles in Phoenix. The boundaries stretch between Van Buren Street and Indian School Road, and from 51st to 27th avenues.
The district has 12 schools, with approximately 5,000 students, spanning from preschool to 8th grade.
Isaac School District’s superintendent and chief financial officer both resigned days after the state takeover.
Last week, Isaac entered a financial agreement with the Tolleson Union High School District to ease the immediate financial crisis, with Tolleson leasing land from Isaac for the total principal amount of $25 million. Isaac School District will be able to pay back the money over 12 years at a 6% interest rate. In turn, Tolleson Union could be making about $10 million off this deal if the Isaac School District takes all 12 years to pay it back.
“I think we've shown already that we're going to be creative,” Anderson said. County officials said the Isaac Elementary School District is estimated to be more than $28 million in debt.
The Maricopa County Treasurer's Office says the district has $16.6 million in fund deficits, $3.9 million in registered warrants, and an additional $8 million in tax anticipation notes that are due for repayment in July this year.
Before the agreement between the two school districts occurred, federal officials agreed to send back $6 million to the Isaac School District, which would be used toward debt instead of payroll. The financial chaos caused a three-day delay in making payroll last week. Teachers and other staff were eventually paid on Friday.
Looking forward, the receiver and his team have 120 days to submit a report detailing what caused the budget chaos and how to restore financial stability.
“It's a little too premature to know what happened,” Anderson said. “I suspect we're going to find that there were COVID grants from the federal government that were either overspent, meaning that they had utilized the federal dollars, or purchased things and didn't properly budget for them.”
Anderson says the team will also look at ways to pay off the debt, including selling district property, with many of those assets being raw land and other facilities instead of school buildings.
Isaac Schools had a 10% drop in enrollment over four years.
“We won't be looking to do a drastic closing of schools, but when you say everything's on the table, our job is to bring this school into financial and fiscal solvency,” Anderson said.
Anderson hopes the work over these first few weeks has built goodwill. He says receivership in Arizona has had a 100% success rate in restoring the financial well-being of school districts. However, he says the process can take up to 5 years.
Since 2005, eight school districts have been put in receivership by Arizona’s State Board of Education. Six have completed the program. Antelope Union High School District in Wellton, which was put into receivership in 2023, remains under state control.
