School District Ordered To Repay County's $425,000 Mistake

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Repaying Gila County the $425,000 it overpaid the Payson Unified School District should not be a problem.

According to PUSD business manager Bobette Sylvester, the money the county mistakenly gave the district was never spent and not included in the budget.

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Gila County Attorney Daisy Flores

Sylvester explained that the school budget is set by the legislature based on the tax allocations and by law, the school cannot spend more than that amount.

In short, the extra money that has been sitting in an account, was never part of the budget and will be returned to the county. To refund the money, however, the district must receive the school board's permission.

The overpayment to Payson was part of a $700,000-plus mistake the county made over the course of 2002 and 2003 fiscal years. School districts in Tonto Basin, Globe, Hayden, Pine, Miami and Young also received misallocations.

Early this week, Gila County Attorney Daisy Flores ruled that the misallocations must be repaid to the county, but gave the districts the option of paying the entire amount this fall or half now and half later.

Sylvester said her recommendation to the board would be the second option, half now and half later, because she wanted to be sure the refunds do not affect the tax rate.

Repayment of the money is on the Oct. 12 school board agenda.

When all schools involved return the money, it will then be allocated to where it was originally intended --ounty government and some cities and towns.

Sylvester also stressed that the county's overpayment error was one "the school could not have caught."

At a public meeting Tuesday evening in Globe, both Flores and County Treasurer Priscilla Knuckey-Ralls agreed with Sylvester that none of the school districts could have known they received excess funds because of the way state school funding is channeled through the county.

Districts receive funding twice a year, in November and May, and those allocations may include monies from previous years.

According to Sylvester, it would be impossible for a district to know because tax revenues are deposited into district accounts by the county treasurer's office.

"There's nothing to tell me if it's this year's or a prior year's tax collections," she said. "Therefore you can receive more tax money than what was estimated for that year."

At the public meeting in Globe, Flores was asked by concerned administrators if the county would issue a public statement that the schools bore no responsibility for the misallocations.

Flores agreed to do so and said she would issue an official press release that districts were not responsible or aware of the county's mistake.

On Thursday, Knuckey-Ralls issued a press release that said, "The Treasurer's Office emphasizes that none of the affected districts were at fault."

The county treasurer's mistake was uncovered in July during an audit. The error has been linked to a software change completed in 2001 by computer subcontractor Data Systems of Arizona.

Flores said there currently are no plans to take legal actions against the software manufacturer.

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