The Arizona Office of Administrative Hearings was established in 1995 to ensure that the public receives fair and independent administrative hearings. The Office has implemented several controls to help ensure that it provides fair, independent, and timely hearings, but it should implement statutorily required training programs, enhance its policies and procedures for ensuring fair and independent hearings, and better comply with statutory hearing time frame requirements. Additionally, the Office’s method for calculating
the rates for its services results in inequitable agency charges, and the Office has further inflated these rates to make up for a shortfall in its State General Fund appropriation. To address these issues, the Office should implement a cost-based rate-setting method to develop consistent rates to charge all agencies for its services, and work with the Legislature to address its State General Fund appropriation shortfall.

The Arizona Board of Executive Clemency is responsible for granting parole to eligible inmates, revoking the parole/community supervision of violators, and recommending clemency actions to the Governor. In calendar year 2013, the Board made 317 parole decisions, 1,840 revocation decisions, and 55 clemency-sentence commutation, pardon, and reprieve decisions. We identified four areas where the Board can improve its operations. First, although the Board has strengthened its policies to help ensure that board members are free from conflicts of interest, additional steps are needed. Second, the Board should continue its efforts to develop a formalized, structured decision-making process so that its decisions are objective, consistent, and transparent. Third, the Board should continue its current efforts to better meet revocation hearing timeliness goals and victim notification requirements. Finally, the Board should develop and implement a transition plan to separate its board chair and executive director positions.

The State of Arizona Naturopathic Physicians Medical Board licenses naturopathic physicians and issues certificates to these physicians, medical assistants, and students participating in training programs. The Board should strengthen its licensing policies and procedures to better ensure that applicants meet all licensing and certification requirements. The Board should also continue to include paper renewal applications in its audits of continuing medical education and develop an electronic mechanism to track its compliance with licensing time frames. Because the executive director investigates complaints but also has authority to dismiss complaints, the Board should have policies establishing when such dismissals are appropriate and have the executive director report on complaint-related actions. In addition, the Board should adopt policies and procedures to guide its disciplinary decisions and timely complaint processing. Finally, the Board should improve the timeliness and accuracy of the information it provides to the public.

The best setting for abused or neglected children who are removed from their homes is a family-based setting, such as with a relative or in licensed foster care. Because it is not family-based, congregate care, such as emergency shelters, group homes, and residential treatment centers, is the least preferred placement option. However, the number of Arizona children and the length of time they are in congregate care has increased and as a result, the costs for this placement type nearly doubled between fiscal years 2009 and 2013. Contributing to the increase in congregate care use is an inadequate supply of foster care homes; various state practices, including some related to permanency goals and activities; and inadequate access to behavioral health services. Although the Arizona Department of Child Safety has taken some steps to reduce the use of congregate care, it should consider other states’ experiences to identify multiple strategies for reducing its use.

The Arizona Department of Administration administers a purchasing cooperative program that allows members to purchase goods and services from state-wide contracts. Statute authorizes the Department to establish a program fee that covers the costs of administering the purchasing cooperative program. However, the program’s fee revenue has exceeded the program’s administrative costs. Not only has the Department used program fee revenue to administer the purchasing cooperative program, it has also used this revenue to pay for most of the cost of the state electronic procurement system, ProcureAZ, and to pay the salaries and benefits of more than half of the Department’s procurement staff. Therefore, the Department needs to better align the program fee with program costs. In addition, the Department needs to improve the collection of program fee revenue and continue to strengthen its cash-handling controls over the processing of program fee revenue.

In fiscal year 2012, Duncan Unified School District’s student achievement was similar to peer districts’, and the District operated efficiently overall. Although the District’s administrative costs per pupil were slightly higher than the peer districts’ average, the District has taken steps to reduce its costs by reducing its number of administrative positions. The District’s plant operations, food service, and transportation programs were efficient with lower costs per square foot, per meal, and per mile, respectively, than peer districts’ averages. However, the District needs to improve its purchasing and computer controls. The District also needs to accurately determine, and report to the Arizona Department of Education, its ridership information to help ensure the District is properly funded and to allow it the ability to calculate and monitor transportation performance measures such as cost per rider and bus capacity utilization. Further, the District should ensure that its inmate worker documentation complies with statute.

In fiscal year 2012, Fowler Elementary School District’s student achievement was slightly higher than the peer districts’ averages, and the District operated efficiently. The District’s administrative cost per pupil was similar to the peer districts’ average, and it employed proper accounting and computer controls. The District’s plant operations costs per pupil and per square foot were lower than the peer districts’ averages primarily because of lower energy costs. Additionally, the District’s food service cost per meal was lower than the peer districts’ average, and the program was self-sufficient, in part, because the District paid the vendor that ran its program lower administrative and management fees than peer districts, on average. Further, the District’s transportation program was efficient, with lower costs per mile and per rider and efficient bus routes. However, the District did not accurately report its number of riders transported, which resulted in substantial overfunding for fiscal years 2011 through 2014.

In fiscal year 2012, Isaac Elementary School District’s student achievement was similar to peer district averages, and the District’s operational efficiencies were mixed, with much higher administrative and plant operations costs than peer districts’ averages but lower food service costs. Between fiscal years 2007 and 2012, the District decreased its classroom spending while it increased nonclassroom spending, primarily for administration and plant operations. At the end of fiscal year 2011, the District closed two schools to reduce costs, but its administrative and plant operations costs remained high, partly because of higher staffing levels. The District’s transportation program operated efficient bus routes but had much higher costs per mile and per rider than peer districts’, partly because it operated a smaller program but also because it offered more generous benefits. Finally, the District lacked adequate controls over user access to its computer network and systems.

In fiscal year 2012, Salome Consolidated Elementary School District’s student AIMS scores were lower than peer districts’ averages in three of four areas tested—math, reading, and science. Although the District’s per pupil costs were high in some operational areas, the District was reasonably efficient overall. The District’s administrative operations were reasonably efficient, but it lacked adequate controls over its payroll, purchasing, cash collections, and computer network and systems. The District’s plant operations were also reasonably efficient, and its food service costs were lower per meal than peer districts’ averages, but it had to subsidize its food service program, in part, because of its participation in a special National School Lunch Program provision. The District’s transportation program was also reasonably efficient with higher costs per mile but lower costs per rider. However, the District needs to improve controls over its fuel inventory and ensure that its bus drivers meet all certification requirements.

In fiscal year 2012, St. David Unified School District’s student achievement was much higher than peer districts’, on average, and the District was reasonably efficient in most operational areas. The District’s administrative costs were much lower than peer districts’, but the District lacked sufficient accounting and computer controls. The District’s plant operations and transportation program were reasonably efficient overall. However, the District needs to accurately determine and report to the Arizona Department of Education its bus ridership information to help ensure the District is properly funded and to allow it the ability to calculate and monitor rider-based transportation performance measures. The District’s food service program was inefficient, with a cost per meal that was much higher than the peer districts’ average primarily because of overstaffing and inefficient purchasing practices. As a result, the District spent $44,110 of its Maintenance and Operation Fund monies to subsidize the program.