The Arizona State Board of Education voted Dec. 5 to withhold three percent of Globe Unified School District’s state funding after determining the district failed to correct long-standing financial and operational deficiencies identified by the Arizona Auditor General. The decision followed nearly two years of audits, corrective plans, and follow-up reviews that ultimately concluded the district remained out of compliance with the state’s Uniform System of Financial Records.
The funding reduction, estimated at approximately $300,000, is expected to begin with the district’s January payments and will remain in place until the Auditor General determines Globe Unified has sufficiently corrected the deficiencies. While state law allows the board to withhold up to 10 percent of funding, the board typically withholds three percent for noncompliance.
According to the Auditor General’s Office, school districts are routinely audited for USFR compliance, but sanctions of this nature are uncommon. Earlier this year, eight districts statewide were flagged for potential sanctions; only Globe Unified and Window Rock Unified were ultimately referred to the board for action.
“The Auditor General’s Office regularly audits school districts for compliance with the USFR and notifies the Arizona Department of Education and Arizona State Board of Education when districts are determined to be not compliant with the USFR or have failed to correct deficiencies within 90 days after receiving notice of noncompliance,” said Sean Ross, executive director of the Arizona State Board of Education. “Based on the review, the Auditor General determined the district had not made adequate progress to correct USFR deficiencies and remained in USFR noncompliance.”
The issues leading to the funding withholding date back to at least fiscal year 2023. The Auditor General notified Globe Unified in January 2024 that it was not compliant with USFR requirements based on its FY23 audit submissions and a performance audit conducted that same month. The district was given 90 days to correct the deficiencies.
In August 2024, Globe Unified submitted a corrective action plan and met with the Auditor General’s Office. However, a status review conducted between January and March 2025 found the district had not made adequate progress in correcting the issues, prompting the Auditor General to formally request board action under Arizona law in August 2025.
Superintendent Christa DalMolin East, Ed.D, who assumed the role in March 2025 following the departure of former Superintendent Jerry Jennex, acknowledged the district’s failure to achieve compliance in a public letter to the board, emphasizing that the findings did not involve fraud or financial mismanagement.
The Auditor General’s performance audits identified deficiencies across multiple operational areas, including purchasing, credit card oversight, cash handling, transportation reporting, conflict-of-interest disclosures, and information technology controls. While no fraud was found, auditors concluded the district’s weak internal controls increased the risk of errors, misuse, or future misconduct.
Among the findings:
Trent Lyon, Globe Unified’s director of business operations, said the three percent withholding represents about $300,000 and could remain in place for one to two years, depending on how quickly the district satisfies the Auditor General’s requirements.
“The Superintendent has indicated the district will adjust internal budgets by scrutinizing spending, using attrition savings, and potentially drawing from outside funds to address any gaps,” Lyon said.
Lyon emphasized that the majority of audit findings were procedural in nature and that no improper purchases or financial misconduct were identified. He said the district uses only two traditional credit cards, while most of the cards cited in the audit were vendor or fuel cards required by local merchants and transportation operations.
“We plan to use the feedback to improve our systems, moving from compliance to excellence in how we operate,” Lyon said.
Under state law, any funds withheld can be restored once the Auditor General determines the district has achieved compliance. Ross said the board relies on the Auditor General’s assessments when deciding whether to return withheld funds.
Globe Unified officials say they are continuing to work with the Auditor General’s Office, implementing a corrective action plan that includes additional staff training, stronger internal audits, improved documentation, and clearer accountability across departments.
“There is no set timeline,” Lyon said. “But we plan to demonstrate compliance as quickly as possible.”
State Auditors Report- GUSD
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