Hobbs attempts to claw back millions of dollars in misspent grants from Arizona summer camps

In 2022, Arizona gained access to a major infusion of federal money. Over $30 million flowed into the state to fund 164 summer learning camps, designed to make up for lost classroom time students missed out on during the COVID-19 pandemic.

Most of the camps were successful, but in some cases the money was either misspent or never spent at all. According to an analysis in the Arizona Republic, over $5 million went to “disallowed” expenses, and over $6 million went unspent.

Gov. Katie Hobbs’ office is now attempting to claw back as much of that money as possible. So far, they’ve recouped close to $900,000.

Former Arizona Republic senior reporter Mary Jo Pitzl wrote the piece. She focused, in particular, on money that went to one of the most egregious offenders: the Earth & Space Expedition Center.

Pitzl joined The Show and said much of the problem stemmed from the loose rules governing the AZ On Track program funds.

Full conversation

MARY JO PITZL: The state got millions of dollars from the feds to fund these summer camps, and there were pretty loose regulations of restrictions on how the money was to be used. There, apparently, were not strong provisions for how to see if the money was being spent properly before it went out the door.

SAM DINGMAN: Right. And this was sort of a unique feature of the AZ On Track program, right? There was this idea that the money would be dispersed and there would, at some point, be an audit of how the money was spent.

PITZL: Correct. And the need for, I mean, when it was rolled out in 2022, it was touted as having less red tape, fewer strings attached, because there was a sense that you had to get this money out pretty quickly, get these camps stood up. You can't leave the kids, you know, way behind on the learning curve for too long, and you've got to get rolling.

And the thought was that they would catch errors on the backside.

DINGMAN: So coming back to the Earth & Space Expedition Center, the way that they used their grant money from AZ On Track is very indicative of the pitfalls of that approach.

PITZL: Well, they were going to use it to provide learning programs — you know, look at the name of the organization, "Earth and Science" — so it would do a lot of really STEM, science, technology with a lot of really cool equipment, right? Because you're dealing with with space travel and, you know, and science discovery.

So there was talk of getting a flight simulator built using some of the AZ On Track dollars. That ultimately did not happen, and we can talk a little bit about that later.

DINGMAN: So the Earth & Space Expedition Center was one of the larger grantees of this program at $1.25 million. The state now wants $1.1 million of that amount back, which is obviously the vast majority of that funding.

A big part of the problem here is that the former executive director of the Earth & Space Expedition Center, Beverly Swayman, who was there when these grants came in, has since left.

Tell us a little bit about why the state is concerned about what the center used the money for under Swayman's direction and what she told you about that.

PITZL: So as the state started to go through basically a form of audit of the spending, they found just case after case where the documents that were sent in to say, "we spent money on A, B and C," did not meet the federal requirements. The center got the money and just started spending it.

They did start down the path of trying to buy a flight simulator, and when the governor's office got a look at that, they said, "No, you can't do that. This is money that's supposed to pay for the learning exercise, not for tangible equipment that has a long shelf life."

I mean, this is supposed to support things that would happen during a summer session, not a flight simulator that would live on and on and could be used by the center for future endeavors where they're charging the public to come in and use it.

There were just a lot of problems with the records, complicated by the fact that Ms. Swayman left the center. And, according to one of the board members who sort of had to pick up the mess here and figure out what was going on, the records were in disarray, and the board is in the process of trying to dissolve so that they do not incur the responsibility for this.

And I will say that the board's chairman, a guy named Gerry Deren, seems to be making a really good faith effort to work with the governor's office to try to track down this money, but they really can't. The money's not there to be to be recouped.

DINGAMN: Yeah.

PITZL: He believes — but can't prove —that probably a lot of it just went to keep the center running because it seemed to have hit hard times.

DINGMAN: Right.

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PITZL: But again, that was not the point of the grant.

DINGMAN: The details of what he's had to go through to unwind all of this are pretty remarkable, right? I mean, he's basically had to dig through boxes that are divided across a series of storage units?

PITZL: Yes. It was literally a look at a storage container that was just a jumble of equipment, paper receipts just sort of stuffed in boxes, no kind of apparent orderly system. So imagine walking into that storage unit and trying to figure out what the heck was going on with the science center.

DINGMAN: And you alluded to this a moment ago, Mary Jo, but I think it bears repeating: One of the other very bizarre elements of this story is that partially because of the way Swayman seems to have been running things, there has been some danger for the interim president of the board that you mentioned.

There is some possibility that he as an individual, along with the other members of the board, could be held personally liable for this money.

PITZL: Right. And that's why the board decided that they need to go out of business. They're registered as a nonprofit, but there's a procedure you have to go through to close out such an operation.

The last I checked, that was still on track, and the governor's office was sympathetic to the situation that they were in. So this could leave the state just holding the bag, meaning there will be no refund and basically no accountability.

DINGMAN: Well that, of course, brings us to what you get to at the end of your piece, which is that Gov. Hobbs' office has characterized the AZ On Track program as "a bad grant process."

What did they tell you about the state of their efforts to claw back this missing and misspent money, and how are they working with the state House to resolve this?

PITZL: Well, the way the process works is once the budget office has completed its review and reaches conclusions that some of these summer camps didn't spend the money properly, they make requests for "send the money back," "pay us back." And when nothing happens on that front, then they refer that money due to the attorney general's office.

Fun fact: the state attorney general is basically the collections agent for state government. And as of last week, I checked and nothing has yet been collected from the Earth and Science Center, nor from some of these other camps. But these grants were in 2022. I mean, we are near the end of 2025, and notably one year left in the current administration.

So you do wonder how effective the efforts to collect money will be, and if anybody will pursue that after the next election, when there's the possibility that there could be new players in the governor's office and in the attorney general's office.