Citizen Report: MCBOS June 23, 2026 Special Meeting
FY 2025 Audit Presentation & Executive Session
Executive Summary
On Tuesday, June 23, 2026, the Maricopa County Board of Supervisors held a virtual Special Meeting at 11:30 AM to receive the Arizona Auditor General’s presentation of the County’s FY 2025 audit results. All five supervisors attended remotely.
Key Finding: The Auditor General issued a qualified opinion on federal compliance due to non-compliance issues — the County failed to report accurate information on federal grants and the Housing Authority had 100% exception rate (25 of 25 files tested) for missing documentation. This is a significant finding that should concern taxpayers.
Meeting Details
| Meeting | Time | Location | Format | Attendance |
|---|---|---|---|---|
| Special | 11:30 AM | Virtual (Supervisors’ Auditorium) | Remote webinar | All 5 supervisors (remote) |
Major Findings: FY 2025 Audit Results
Financial Statement Audit: UNMODIFIED (Clean) Opinion
The Auditor General issued an unmodified (clean) opinion on the County’s financial statements, meaning they are considered reliable.
Key Financial Data:
- Total Net Position: $6.1 billion as of June 30, 2025
- Net Position Increase: $454.6 million in FY 2025
- Breakdown:
- $4.4 billion invested in capital assets
- $952.8 million restricted
- $725.6 million unrestricted (available reserves)
Revenue Trends (FY 2024-2025):
- Total revenues decreased by approximately $166 million
- Federal and state grants revenue decreased $86.5 million (primarily COVID funding ending)
- State shared sales taxes increased $36 million
Expense Trends:
- Total expenses increased by $66.2 million
- Public safety expenses increased $82.8 million
- General government expenses decreased $36.7 million
Federal Compliance Audit: QUALIFIED OPINION (Non-Compliance Found)
The Auditor General issued a qualified opinion due to non-compliance on federal grant reporting. This is serious — it indicates the County did not follow federal requirements.
Four Audit Findings (Two Financial, Two Federal)
Finding 2025-01: Risk Management Deficiencies
Type: Financial Statement Finding
Issue: County’s process for managing and documenting risk may put operations and IT systems data at risk
Status: Similar finding reported since 2017
Corrective Deadline: June 30, 2026
Recommendations:
- Complete implementation of policies to effectively manage risk
- Identify, classify, and inventory the data the County maintains
Finding 2025-02: IT Controls Insufficient
Type: Financial Statement Finding
Issue: Control procedures over IT systems and data were not sufficient, increasing risk that systems/data may not be adequately protected
Status: Similar to 2024 finding (first reported FY 2023)
Corrective Deadline: June 30, 2026
Recommendations:
- Periodically monitor employee compliance with access and contingency planning policies
- Develop, document, and implement IT policies for change management and logging/monitoring
Finding 2025-101: Federal Reporting Failures (Community Development Block Grants)
Type: Federal Compliance Finding
Issue: Human Services Department did not report complete or accurate information for 5 of 5 subawards (100% failure rate) on the federal reporting system
Impact: Reduces transparency of subaward expenditures
Status: Similar to prior year finding (first reported FY 2024)
Corrective Deadline: December 31, 2026
Recommendations:
- Immediately report required subawards in federal system
- Follow policies for FFATA (Federal Financial Accountability and Transparency Act) reporting
- Implement department’s FFATA reporting policy requirements
- Develop and implement procedures for independent reviews
Staff Response: Marcy Flanagan (Human Services Director) reported all recommendations are now complete as of June 22, 2026 — ahead of schedule. However, she noted that because many CDBG contracts are multi-year contracts dating to 2021, the same files may continue to trigger findings in future audits until those contracts end.
Finding 2025-102: Housing Authority Documentation Failures
Type: Federal Compliance Finding (Component Unit)
Issue: Housing Authority of Maricopa County did not maintain complete and accurate participant files for 25 of 25 samples tested (100% exception rate)
Specific Problems Found:
- Missing EIV (Employment Income Verification) reports
- Incorrect income calculations for some files
- Certifications not completed timely (2 of 25)
- One tenant file not provided
- No Social Security support documentation (3 of 25)
- Annual recertifications not performed timely
Risk: Some participants could have been ineligible to receive program benefits
Corrective Deadline: April 12, 2026 (per Housing Authority’s own auditors)
Chair Brophy McGee’s Response: Expressed serious concern about 100% exception rate. Requested additional information about compliance officer duties and certification processes. Plans follow-up questions through County Manager.
Shaun Manatt (Housing Authority Director) Response:
- Acknowledged awareness of finding
- Stated EIV reports have been corrected for all 25 flagged files
- Implemented 100% quality control review of all files
- Compliance officer now confirms monthly that EIV reports are in files
- Could not clearly explain the process that ensures documentation gets into files — focused on checklists rather than procedures
Prior Year Findings: Status
Three Prior Findings FULLY CORRECTED:
- County School Superintendent’s Office finding
- Inventory practices error
- Emergency Rental Assistance Program federal compliance finding
Three Prior Findings PARTIALLY CORRECTED:
- The two IT findings and the federal reporting finding above are continuations of prior year issues
Vote Analysis
Motion: Executive Session
| Action | Details |
|---|---|
| Motion Maker | Debbie Lesko |
| Second | Mark Stewart |
| Vote | Unanimous 5-0 |
| Method | Voice vote (not roll call — unusual for virtual meeting) |
Pattern Continues: Debbie Lesko made the motion for Executive Session — continuing the pattern where she makes the majority of motions.
Executive Session Content
Topic: Legal advice related to litigation next steps forward
Notable: Chair Brophy McGee announced that Supervisor Stewart was “excused to meet with his counsel and staff as you designate, and the remainder of the board will meet with our attorney.”
This is significant: Mark Stewart (District 1) has separate legal counsel from the County’s attorney. This suggests he may have a conflict of interest or separate legal exposure related to the litigation being discussed.
The County’s attorney is identified as Brooke Worcester. Stewart’s separate counsel is Steve Tully (who will coordinate with “Corey” — likely a reference to another attorney).
No details provided on which litigation case was discussed.
Attendance & Participation
All Supervisors Present (Virtual):
- ✅ Kate Brophy McGee (Chair, District 3) — remote
- ✅ Debbie Lesko (Vice Chair, District 4) — remote
- ✅ Mark Stewart (District 1) — remote
- ✅ Thomas Galvin (District 2) — remote
- ✅ Steve Gallardo (District 5) — remote
Staff Present:
- Juanita Garza, Clerk of the Board
- Jen Pokorski, County Manager
- Brooke Worcester, Legal Counsel
- Marcy Flanagan, Human Services Director
- Shaun Manatt, Housing Authority Director
Auditor General Team:
- Lindsey Perry, Arizona Auditor General
- Katherine Edwards-Decker, Financial Audit Director
- Michelle Walters, Financial Audit Manager
Key Exchanges from Transcript
On Housing Authority 100% Failure Rate
Chair Brophy McGee: “I am concerned anytime I hear a 100% exception as opposed to and and for me it doesn’t boil down to the document just wasn’t put in the file.”
Auditor General Perry: “Certainly, documentation is it can be an issue, right? Because for auditors, we come into a file and we may say, ‘Did it ever exist? Was it completed and not documented? Or was it just not done?’ And it’s really difficult for us to determine which one is it.”
Translation: The auditors cannot tell if the Housing Authority simply failed to document work that was done, or if the work was never done at all. Both scenarios are problematic.
On Compliance Officer Role
Chair Brophy McGee: “All he does, your compliance guy, is look in the file and say, ‘Yep, we got it.’ What I’m trying to figure out… is how did it get there? What steps did you have to go through?”
Shaun Manatt: “The EIV report is an actual HUD report that is generated by the property manager… part of their annual recertification process… that is the process in which is being followed up by our compliance officer.”
Translation: Manatt could not clearly explain the process for ensuring documentation compliance — only that a checklist exists and someone checks it. This is a red flag for audit purposes.
On Federal Reporting Failures
Marcy Flanagan: “All of the recommendations actually are complete as of yesterday… The main one was to get a procedure in place. We had a policy in place… but having step-by-step procedures of what goes into making those policies happen is really important.”
Translation: The County had policies on paper but lacked implementation procedures — a recurring theme in government accountability failures.
Patterns & Observations
1. Recurring IT Findings (Since 2017)
The risk management and IT control findings have been reported since 2017 (Finding 2025-01’s predecessor) and since 2023 (Finding 2025-02). The County has had years to fix these issues but has not completed corrective action.
Question: Why has the County failed to implement adequate IT risk management for nearly a decade?
2. 100% Exception Rate is Unprecedented
A 100% failure rate (25 of 25 files) on Housing Authority documentation is extraordinarily high. Even the Auditor General expressed surprise at the scope.
3. “Checklist Culture” vs. Process Accountability
Shaun Manatt repeatedly referenced checklists and compliance officers who verify checklists, but could not articulate the process that ensures federal compliance. This suggests a culture of box-checking rather than actual accountability.
4. Separate Legal Counsel for Supervisor Stewart
Mark Stewart has separate legal counsel (Steve Tully) from the County’s attorney (Brooke Worcester). This is unusual and suggests either:
- A conflict of interest in the litigation matter
- Potential personal legal exposure for Stewart
- A disagreement with County legal strategy
No explanation was provided for why Stewart needs separate representation.
5. Virtual Meeting Format Raised Issues
Multiple audio problems occurred during the meeting:
- Microphone “rumbling” during presentation
- Speaker on mute initially
- Technical difficulties delayed proceedings
The virtual format also meant the public could not observe body language or sidebar conversations.
6. Lesko Motion Dominance Continues
Debbie Lesko made the Executive Session motion — continuing the documented pattern where she makes 100% of motions in many meetings.
Citizen Questions Raised
- Why has the County failed to correct IT risk management issues since 2017? What is blocking implementation?
- How could the Housing Authority have a 100% documentation failure rate? Is this incompetence, lack of resources, or systemic failure?
- Why does Supervisor Mark Stewart need separate legal counsel? What litigation involves him personally?
- What federal grants are at risk due to the qualified opinion? Could the County lose federal funding?
- Why was the Executive Session vote done by voice rather than roll call? The meeting summary confirms the vote was 5-0, but the transcript shows voice vote — less transparent than roll call.
- How much is the County spending on audit remediation? Two IT findings have persisted for years — what has this cost taxpayers?
- Are Housing Authority participants receiving benefits they’re not eligible for? The 100% documentation failure raises eligibility questions.
Financial Impact Summary
| Category | Amount |
|---|---|
| Total County Net Position | $6.1 billion |
| Unrestricted Reserves | $725.6 million |
| Revenue Decrease (FY24-25) | -$166 million |
| Expense Increase (FY24-25) | +$66.2 million |
| Federal Grants Decrease | -$86.5 million |
Bottom Line: The County has strong financial reserves ($725.6 million unrestricted) but received a qualified opinion on federal compliance — meaning taxpayers cannot have full confidence that federal grant money is being properly managed.
