PHOENIX — The Phoenix Union School District said it self-reported allegations of improper payments and potential fraud to the Arizona Auditor General’s Office on Oct. 25 after two separate audits revealed problems with the district’s hiring process.

PXU said there were concerns about the improper hiring and promotion of employees brought to the school board by the administration. One happened in July 2023, right after its former superintendent, Chad Gestson, resigned. More concerns came from the community after a survey in January 2024.

In a letter to the Arizona Auditor General’s Office, he said an audit found some employees were moved up the district’s pay scale without board approval. Administrators were also appointed to positions without properly conducting the interview and selection process, and district staff bypassed internal approval processes in the hiring or promotion process.

The report says most of those employees “who could have benefited from the district’s failure to comply with the lawsuits are related to each other by blood or marriage.” The potential cost to the district could be more than $650,000 during the superintendent’s previous tenure.

PXU Superintendent Thea Andrade said in a statement, in part: “While this issue did not occur under my watch, please be assured that I intend to address it and take the necessary steps to ensure this does not happen again never happen”.

The district says it has already taken steps to address the findings. Two leaders, the district’s former chief of staff and former chief development officer, resigned earlier this year ahead of the audit results. Three current PXU employees are on administrative leave while investigations are ongoing.

In addition, there were other remedies:

• In August, the Board revised PXU’s no-nepotism policy to address concerns about hiring close relatives. The revised policy prohibits a supervisory role between family members. It stipulates that relatives should not work at the same job and be evaluated by the same person.
• The district is in the process of interviewing all employees to determine family relationships. Any employee who violates the anti-nepotism policy will be transferred to a new position to avoid conflicts of interest.
• District HR policies have been revised to strictly prohibit skipping approval processes for new hires and/or employee promotions. PXU will also undergo an annual talent audit to monitor compliance with these changes.
• Additional compliance steps will include adjusting salary placements for all employees believed to have been displaced in the PXU wage program and steps to recover all unauthorized benefits.

The district says it is also trying to recover any funds improperly paid to employees.
“At PXU, we expect our more than 26,000 students and more than 3,500 team members to act and treat each other with integrity. Unethical behavior and misconduct will not be tolerated here at PXU. We will act quickly to investigate such allegations and cooperate with other agencies to ensure that the perpetrators are prosecuted to the fullest extent of the law,” Board President Ceyshe Napa said in a statement.

ABC15 has reached out to Gestson for comment, but has not yet heard back.