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TED: COMING UP NEXT ON "ARIZONA HORIZON", BUSINESS AND POLITICAL RELATIONSHIPS WITH MEXICO AND CANADA AMID THE TRUMP ADMINISTRATION'S THREATS OF TARIFFS.

>>> ALSO TONIGHT, A CLOSER LOOK AT NEW IMMIGRATION POLICIES THAT ALLOW FOR MIGRANT ARRESTS AT SCHOOLS AND CHURCHES.

>>> THE LATEST ON THE FINANCIALLY TROUBLED ISAAC ELEMENTARY SCHOOL DISTRICT, NEXT ON "ARIZONA HORIZON."

GOOD EVENING, AND WELCOME TO "ARIZONA HORIZON."

I'M TED SIMONS.

A 10% TARIFF ON ALL PRODUCTS FROM CHINA WENT INTO EFFECT AFTER MIDNIGHT WITH CHINA WASTING LITTLE TIME AND RESPONDING WITH TARIFFS ON U.S. NATURAL GAS, COAL, FARM MACHINERY AND OTHER PRODUCTS.

THOSE TARIFFS OFFICIALLY TAKE EFFECT NEXT MONDAY.

CHINA IMMEDIATELY IMPLEMENTED RESTRICTIONS ON THE EXPORT OF CERTAIN MINERALS, MANY OF WHICH ARE CRITICAL IN THE PRODUCTION HIGH-END PRODUCTS.

IT FOLLOWS YESTERDAY'S PAUSE IN TARIFFS ON PRODUCTS FROM MEXICO AND CANADA, THAT PAUSE IS IN EFBT FOR 30 DAYS.

WE'LL HAVE MUCH MORE ON TARIFFS AND NEIGHBORING ALLIES IN JUST A MOMENT.

>>> ROBERT F. KENNEDY JR.'S NOMINATION TO BE THE NATION'S HEALTH SECRETARY NARROWLY SURVIVED A PARTY-LINE VOTE.

MANAGED TO SECURE VOTES OF ALL REPUBLICANS DESPITE LOCAL CRITICISMS OF VACCINES AND TRADITIONAL MEDICAL PRACTICES.

THE NOMINATION HEADS TO A FULL SENATE VOTE, AND THE INTELLIGENCE COMMITTEE TODAY APPROVED THE NOMINATION OF TULSI GABBARD AS NEXT DIRECTOR OF NATIONAL INTELLIGENCE, ALONG PARTY LINES WITH ONE DEMOCRATIC SENATOR NOTING GABBARD'S HISTORY OF EMBRACING CONSPIRACY THEORIES AND DISTRUSTING THE VERY SPY AGENCY SHE WOULD OVERSEE.

GABBARD'S NOMINATION HEADS FOR FULL SENATE VOTE.

>>> GOVERNOR HOBBS HAS A NEW STATE BUDGET CHIEF, BEN HENDERSON SERVICE AS DIRECTOR OF OPERATIONS.

HENDERSON TAKES OVER FOR SARAH BROWN WHO GAVE NOTICE HE WOULD RESIGN ON FEBRUARY 12 AS THE GOVERNOR AND LEGISLATURE GET SET TO WORK ON A STATE SPENDING PLAN.

>>> AS WE MENTIONED, THE TRUMP ADMINISTRATION'S PROPOSED TARIFFS ON GOODS FROM MEXICO AND CANADA WERE SUPPOSED TO GO INTO EFFECT YESTERDAY, THEY DID NOT, AFTER AGREEMENTS WERE REACHED BETWEEN THE COUNTRIES AND NEIGHBORING ALLIES TO PUT RESTRICTIONS ON HOLD FOR 30 DAYS, BUT WHAT DOES ALL THIS UNCERTAINTY ABOUT TARIFFS MEAN ABOUT THE RELATIONSHIPS BETWEEN THE TWO COUNTRIES?

GLENN WILLAMSON AND MIKE HUCKINS SENIOR VICE PRESIDENT OF AFFAIRS FOR THE GREATER CHAMBER.

SO MUCH GOING ON, I CAN BARELY SPIT IT OUT.

GLENN, WANT TO START WITH YOU, LET'S START WITH THE PAUSE, YOUR THOUGHTS ON THE ACTIONS YESTERDAY?

>> CANADA IS A CONFUSED NATION RIGHT NOW WHO THOUGHT THEY HAD A DEAL, AND THEY WOKE UP ONE MORNING AND FOUND OUT THE DEAL ISN'T THERE ANYMORE, SO WE'RE NOW TRYING TO UNDERSTAND WHAT IT IS THAT THE PRESIDENT WANTS.

TED: WHAT IN GENERAL?

IS THERE A HINT?

HE SAYS HE WANTS TO STOP WITH FENTANYL.

HE WANTS TO STOP WITH ORGANIZED CRIME.

HE WANTS TO STOP WITH ILLEGAL IMMIGRATION AT THE NORTHERN BORDER.

RESPONSE?

>> MY BELIEF PERSONALLY IS THAT THE BORDER AND THE FENTANYL WAS A WAY TO LEGALLY, IN HIS MIND, GET AROUND THE U.S. MCA AGREEMENT.

I BELIEVE THERE ARE OTHER SETS OF ISSUES HE'S INTERESTED IN.

TARIFFS BEING ONE, SPENDING ON CANADIAN MILITARY BEING ANOTHER, HE WOULD LIKE TO SEE THAT COME UP, BUT UNFORTUNATELY THE WAY THIS WAS PRESENTED TO CANADA, IT WAS A DO OR DIE, IT CAME AT THEM SO HARD, IT HAS CAUSED A POLITICAL EMOTIONAL BACKLASH IN CANADA, WHERE NATIONAL ANTHEMES ARE BOOED ON THE ICE WHEN HOCKEY PLAYERS ARE PLAYING.

>> THE U.S. NATIONAL ANTHEM.

>> THAT'S TOUGH.

IT'S EMOTIONAL RIGHT NOW FOR CANADIANS.

TED: AS FAR AS MEXICO AND ARIZONA'S RELATIONSHIP WITH MEXICO AND THE U.S.

RELATIONSHIP THERE, YOUR THOUGHTS ON AN AGREEMENT, IT SOUNDS AS IF THE IDEA OF PUTTING NATIONAL GUARD TROOPS AT THE BORDER, SOUNDS LIKE THEY HAD DONE THAT OR PLANNING TO DO THAT.

>> TED, THANKS FOR HAVING US, I APPRECIATE IT.

THE MEXICAN GOVERNMENT WAS PLANNING ON DOING SOME OF THOSE ITEMS, WASN'T A TOTAL STRETCH TO GET THERE WHAT THEY AGREED UPON YESTERDAY, WE'RE THANKFUL TO THE ADMINISTRATION FOR REACHING THE AGREEMENT TO AVOID THE TARIFFS FOR THE SHORT TIME BEING.

WE UNDERSTAND IT'S NOT A PERMANENT FIX BUT GLAD THEY GOT TO A RESOLUTION YESTERDAY WITH NOT TOO MUCH PAIN.

I THINK THERE WILL BE FURTHER CONVERSATIONS HERE OVER THE NEXT 30 DAYS TO SEE WHAT THE LONG-TERM SOLUTION IS, BUT IT'S GOING TO TAKE SOME PAIN FROM ALL SIDES TO GET TO A RESOLUTION THAT CAN BE ACCEPTABLE BY EVERYONE.

TED: WE'RE GOING TO GET TO GLENN IN A SECOND, BUT SOUNDS LIKE TRUST HAS TAKEN A HIT NORTH OF THE BORDER.

MEXICO'S IDEA OF THE U.S.

ABIDING BY THE RULES, HAS THAT TAKEN A HIT?

>> I THINK SO.

WE NEGOTIATED THE USMCA WHICH PRESIDENT TRUMP WAS IN CHARGE OF IN HIS FIRST ADMINISTRATION, SO A LITTLE CONCERNING TO SEE THAT BEING A GRENADE THROWN INTO THAT, SO THOSE ARE THE RULES OF THE ROAD, SO SETTING THE NEW TARIFFS UPENDS IT A LITTLE BIT.

HOPEFULLY COOLER HEADS PREVAIL AND WE'LL COME TO A RESOLUTION.

TED: THE TRUST, YOU THOUGHT YOU HAD A DEAL, TURNS OUT YOU DIDN'T.

WHAT DOES ALL THAT MEAN?

NOT ONLY IN TERMS OF BUSINESS AND INVESTMENT HERE IN ARIZONA AND IN THE U.S., BUT JUST IN THE NATIONAL PSYCHE?

>> SO I THINK THERE'S A BIG, BIG DIFFERENCE FROM COMMERCE AND POLITICS AND PEOPLE.

SO ARIZONA DOES TOURISM FROM CANADA, COMMERCIAL INVESTMENT FROM CANADA, AND THEN WE HAVE POLITICS THAT TOUCHES CANADA, AND I SAY THAT AS A FORMER DIPLOMAT FOR CANADA.

RIGHT NOW AT THIS MOMENT IN TIME, THE BUSINESS COMMUNITY IS WATCHING, BUT NOBODY IS GOING TO DO ANYTHING AT THIS MOMENT IN TIME.

THERE'S A GREAT DEAL OF BELIEF THAT THIS IS A FORM OF NEGOTIATION, AND THAT THERE ARE THINGS BEHIND THINGS THAT THIS PRESIDENT IS INTERESTED IN, AND THIS HAS BROUGHT EVERYBODY TO THE TABLE, AND YOU CAN LOOK AT IT, TED, FROM THIS POINT.

IF HE'S WILLING TO DO THIS TO HIS BEST TWO FRIENDS, HOW WOULD YOU LIKE TO BE A THIRD COUNTRY ON THE OUTSIDE GOING, IF HE'S WILLING TO DO THAT TO THOSE PEOPLE, WHAT'S HE WILLING TO DO TO US?

TED: WHAT IS MEXICO, DO YOU THINK, WILL THEY CHANGE BUSINESS INVESTMENT IN ARIZONA AND THE U.S.?

WHAT DOES THIS CHANGE?

>> YEAH, I THINK RIGHT NOW PRETTY MUCH ANYTHING IS ON THE TABLE.

THEY'RE GOING TO STICK TO THEIR GUNS AND DO WHAT'S BEST FOR THEM, OBVIOUSLY, THE FACT THAT GLENN BROUGHT UP NEGOTIATION IS A BIG PART OF IT TO WHERE THEY CAME TO THE TABLE YESTERDAY, THE TALKS WILL CONTINUE.

WE'RE HOPEFUL THAT BOTH SIDES CAN REACH AN AGREEMENT AND WE GET TO SOMEWHERE THAT IS ACCEPTABLE TO BOTH SIDES, BUT THERE HAS TO BE CHANGE ON OUR SIDE IN THE U.S. AND ON THE MEXICO SIDE.

>> THE UNCERTAINTY IN TERMS OF BUSINESS DOES NOT LIKE UNCERTAINTY AND EVERYTHING IS THROWN AGAINST THE WALL AND IT'S ONE BIG WHOOPY, HOW DOES THAT IMPACT BUSINESS?

>> HOW I LOOK AT IT, TED, THIS IS LIKE A 35-YEAR MARRIAGE IN THERAPY TRYING TO FIGURE OUT WHAT THE OUTCOME IS.

ONCE THE BLUSTER IS OUT OF THE WAY, THE REAL DISCUSSION BEGINS, AT THIS MOMENT IN TIME, MEXICO AND CANADA ARE NOW AT THE TABLE AND THEY'LL REALLY START NEGOTIATING.

I SAY THAT AFTER WATCHING THE EUROPEAN UNION TODAY, PRIOR TO BEING TARIFFS PUT ON THEM, THEY IMMEDIATELY SAID LET'S GO TO THE NEGOTIATING TABLE AND BYPASSED THE THREAT SCENARIOS THAT MEXICO AND CANADA WENT TO.

TED: THAT'S INTERESTING, THAT WOULD SUGGEST AND TRUMP SUPPORTERS WOULD SAY, SEE, IT WORKED?

>> YEAH, THEY HAVE A FAIR POINT.

THEY HAVE A FAIR POINT.

IT DID WORK, THEY GOT TO THE TABLE.

THE BUSINESS COMMUNITY, AS GLENN SAID, WAS APPREHENSIVE.

WE LIKE CERTAINTY, LIKE HE MENTIONED, SO THROWING THE TARIFF THREAT THROUGH THE WAS AN INTERESTING TACTIC THAT PAID OFF IN THE SHORT-TERM, WE'LL SEE THE LONG-TERM EFFECTS OF IT, YOU KNOW, BUSINESSES ARE STILL REALLY CONCERNED ABOUT THE LONG-TERM EFFECTS OF POTENTIAL TARIFFS THAT MAY COME BUT FOR NOW, COOLER HEADS PREVAIL AND WE HAVE SOME OF A PAUSE.

TED: REAL QUICKLY, HOW MANY TIMES CAN YOU THREATEN WITH TARIFFS?

ISN'T THAT A SILVER BULLET?

HOW MANY TIMES CAN DO YOU THIS?

>> GREAT QUESTION.

HOPEFULLY NOT TOO MANY TIMES.

I THINK YOU'RE ANYTHING TO SEE IT AGAIN, MAYBE NOT SO MUCH, HOPEFULLY WITH TWO CLOSEST PARTNERS BUT YOU'LL SEE IT WITH THE EUROPEAN UNION, YOU HAVE THE TARIFF IN PLACE WITH CHINA, WHO KNOWS WHO'S NEXT?

IT'S GOING TO BE A ROCKY ROAD OVER THE NEXT FEW MONTHS.

TED: GLENN, THE ROCKY ROAD UP IN CANADA INCLUDES THE PRESIDENT OF THE UNITED STATES SUGGEST IT WOULD BE A REALLY GOOD IDEA FOR YOU GUYS TO BECOME THE 51st STATE.

HOW DID THAT GO OVER?

>> LIKE A LEAD BALLOON.

AND I THINK THAT BY DESIGN, HE SOWS CHAOS, AND ANOTHER STRATEGY IS INSTEAD OF LAW BEING A MAJOR GRENADE AT CHINA AND HAVING POTENTIALLY MILITARY BLOWBACK, HE LESSENED THAT BY GOING AFTER CANADA AND ARIZONA AND BLENDED CHINA IN, IN AN INCORRECT HIT AND POSSIBLY THAT COULD HAVE BEEN THE CORE TARGET, NOT MEXICO AND NOT CANADA.

TED: WITH THAT IN MIND, WHAT HAPPENED IN 30 DAYS, QUICKLY?

>> QUICKLY, NEGOTIATIONS IN MEXICO AND CANADA AND IT WILL BE A DAY.

TED: WHAT DO YOU THINK?

>> NEGOTIATIONS ON BOTH SIDES.

EACH SIDE GIVES SOMETHING BUT HOLD OFF THE TARIFFS FOR THE LONGER TERM.

TED: ALL RIGHT, GENTLEMEN, GOOD CONVERSATION, GOOD TO HAVE YOU BOTH HERE.

THANK YOU FOR JOINING US.

>> THANK YOU, TED.

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TED: THE TRUMP ADMINISTRATION'S IMMIGRANT DEPORTATION POLICIES ARE LEADING TO PROTESTS IN ARIZONA AND AROUND THE COUNTRY.

THIS DEMONSTRATION TOOK PLACE IN DOWNTOWN PHOENIX WITH ESTIMATES OF 700 TO A THOUSAND PEOPLE TAKING PART.

NO REPORTS OF PROBLEMS, BUT A PROTEST IN GLENDALE SUNDAY NIGHT BECAME VIOLENT AND UNRULY WITH REPORTS OF PROTESTERS THROWING ROCKS AND CHUNKS OF CONCRETE AND GLASS BOTTLES AT OFFICERS.

A POLICE PATROL VEHICLE WAS BRIEFLY STOLEN AND SEVERAL POLICE VEHICLES WERE DAMAGED.

POLICE USED CHEMICAL SPRAY TO DISPERSE THE CROWD, THERE WERE NO REPORTED INJURIES OR ARRESTS.

THESE WERE OVER THE TRUMP ADMINISTRATION'S ENFORCEMENT ACTIONS THAT ALLOWS FOR ARREST AT SCHOOLS AND CHURCHES AND OTHER SENSITIVE LOCATION.

JOINING US IS PHOENIX IMMIGRATION ATTORNEY ELIZABETH CHATHAM, A PARTNERSHIP WITH STINSON LLC.

THE NEW POLICY REGARDING SCHOOLS AND CHURCHES, I THINK HOSPITALS TOO, WHAT IS THIS ALL ABOUT?

>> ONE OF 89 IMMIGRATION ENFORCEMENT ACTIONS BY THE TRUMP ADMINISTRATION AND IT'S ONLY BEEN ABOUT THREE WEEKS.

THIS PARTICULAR ORDER THAT WAS ANNOUNCED IS RELATED TO SECURING THE BORDER.

THAT'S THE NAME OF THE EXECUTIVE ORDER, AND THERE WAS A CHANGE IN POLICY, WHERE PREVIOUSLY, IN OTHER ADMINISTRATIONS GOING BACK TO 2011, SCHOOLS, PLACES OF WORSHIP, CHURCHES, DOMESTIC VIOLENCE SHELTERS, EVEN HOSPITALS WERE CONSIDERED SENSITIVE AREAS THAT WERE PROTECTED FROM IMMIGRATION ENFORCEMENT ACTION AND, IN FACT, THE PREVIOUS GUIDANCE WOULDN'T EVEN ALLOW I.C.E.

OR LAW ENFORCEMENT TO GO NEAR THESE SENSITIVE AREAS, AND THE REASON WAS TO LOOK AT ACTIVITIES CONDUCTED AT THESE LOCATIONS AND TO PROTECT THE LARGER COMMUNITY, SO THERE WAS NOT GOING TO BE A CHILLING EFFECT OR FEAR THAT SOMEONE WHO IS GOING TO ATTEND A SUNDAY SERVICE MIGHT ACTUALLY HAVE AN INTERACTION THAT THEY WEREN'T ANTICIPATING WITH IMMIGRATION.

TED: THE PRESIDENT SAYS THE FOCUS WILL BE ON DANGEROUS CRIMINALS.

HOW DOES THIS GET IMPLEMENTED?

>> IT'S INTERESTING BECAUSE IT HASN'T BEEN TRULY DEFINED.

DANGEROUS CRIMINALS COULD BE SOMEONE WITH AN OUTSTANDING WARRANT, IT COULD BE SOMEBODY THAT MIGHT HAVE HAD A PRIOR DEPORTATION ORDER, AND IT WASN'T ENACTED.

IT'S SORT OF LIKE A GRAY AREA IN TERMS OF HOW IT HASN'T BEEN CLEARLY DEFINED.

IN PRIOR ADMINISTRATIONS, IT HAS BEEN CLEARLY DEFINED IN TERMS OF WHO ARE THE PRIORITIES FOR LAW ENFORCEMENT TO GO AND APPREHEND, ARREST, INVESTIGATE, HAVE CONVERSATIONS WITH.

HERE I THINK THE BIG DIFFERENCE IS, I THINK THE COMMUNITY ISN'T CLEAR, ARE THESE KIDS IN SCHOOLS THAT POTENTIAL LEAKED BE NAMED IN A JUDICIAL WARRANT?

COULD THEY BE TEENAGERS THAT MIGHT LOOK LIKE THEY'RE AFFILIATED WITH EITHER U.S.

GANG OR INTERNATIONAL GANG.

IT NEEDS TO BE MUCH MORE CLEAR IN TERMS OF WHAT THESE PLACES OF WORSHIP AND SCHOOLS NEED TO DO IF THEY ARE FACING AN INTERACTION WITH LAW ENFORCEMENT.

TED: I WAS GOING TO ASK ABOUT THAT.

WHAT IF THEY REFUSE TO COOPERATE?

>> WELL, THE ADVICE -- DEFINITELY TALK TO YOUR LEGAL COUNSEL IS THE FIRST PIECE OF ADVICE, BUT SECONDLY, IT WOULD BE IMPORTANT THERE'S TRAINING AND A RESPONSE PLAN, AND A RESPONSE PLAN THAT SCHOOLS, CHURCHES CONSIDER WOULD BE IDENTIFY A CORE GROUP OF INDIVIDUALS THAT WOULD BE THE POINT OF CONTACT IN ORDER TO INTERACT WITH LAW ENFORCEMENT, AND THEN THEY COULD BE TRAINED ON REVIEWS WHAT A JUDICIAL WARRANT LOOKS LIKE, WHO NEEDS TO SIGN IT, IT NEEDS TO BE A JUDICIAL OFFICER, IT NEEDS TO NAME THE INDIVIDUAL THEY WANT TO TALK TO, AND SO THEY HAVE A RESPONSE PLAN IN PLACE, IF THOSE ITEMS, FOR EXAMPLE, THERE IS AN ASSIGNED JUDICIAL ORDER, THEY CAN REFUSE TO ASSIST THAT PARTICULAR REQUEST.

TED: THEY NEED A WARRANT?

>> A VALID JUDICIAL WARRANT.

TED: OKAY, THE IMPACT OF THIS, START WITH EDUCATION, THE STATE SUPERINTENDENT OF INSTRUCTION A REPUBLICAN IS NOT CRAZY ABOUT THE IDEA BECAUSE IT MEANS KIDS AREN'T GOING TO SCHOOL.

VALID POINT?

>> ABSOLUTELY A VALID POINT.

IT'S CREATING A CHILLING EFFECT, PEOPLE ARE SCARED TO SEND THEIR KIDS TO SCHOOL TO HAVE A SCARY SITUATION CONCERNED.

SCHOOLS ARE CONCERNED ABOUT ACTIVE SHOOTER, NOW THEY'RE HAVING TO LEARN HOW TO INTERACT WITH LAW ENFORCEMENT.

SO LAW ENFORCEMENT IS ALLOWED TO BE IN PUBLIC SPACES AND PUBLIC AREAS BUT NOT ALLOWED TO GO BEYOND INTO PRIVATE AREAS THAT YOU'D HAVE TO BE SCREENED OR HAVE SOMEONE ESCORT YOU INTO THE FACILITIES.

SO A LOT OF SCHOOLS IN ARIZONA, THEY'RE ACTUALLY PREPARING COMMUNICATIONS THAT ARE BEING SENT TO FAMILIES AND SAYING THAT IN THE STATE OF ARIZONA, IMMIGRATION STATUS DOESN'T MATTER.

WE'LL ALLOW AND ENROLL CHILDREN K-12, REGARDLESS OF THEIR IMMIGRATION STATUS TO ATTEND SCHOOL.

THAT SHOULD BE THE PRIORITY, AND THEN, YOU KNOW, IN TERMS OF INTERACTION THAT THEY HAVE, AND THEY WOULD HAVE, PROBABLY COMMUNICATED TO FAMILIES IN TERMS OF WHAT THEIR RESPONSE LOOKS LIKE, THEY'LL CONTACT PARENTS, MAKE SURE THEY'RE INFORMED.

TED: WHAT ABOUT TESTIMONY AT TRIALS?

WHAT ABOUT REPORTING CRIME, EVER SINCE WE'VE HAD EVEN SB-1070 THESE WERE CONCERNS BACK THEN.

ARE THEY CONCERNS WITH SOMETHING LIKE THIS?

CAN THE ARRESTS BE MADE AT A COURTHOUSE?

>> YES, THERE IS LIKE AN ALLOWANCE THAT THEY ARE ALLOWED TO BE PRESENT AT COURTHOUSES AND THEY HAVE TO COMMUNICATE, COORDINATE THAT KIND OF AN ARREST WITH BOTH FEDERAL AND STATE JUDICIAL AND PROSECUTORIAL OFFICERS.

YOU CAN'T JUST PICK SOMEBODY UP AFTER THEY ARE LEAVING THE COURTROOM AND SAY NOW YOU'RE GOING TO COME WITH ME, IT HAS TO BE MUCH MORE COORDINATED.

TED: REALLY QUICKLY, JUST THE IMPACT ON EVERYDAY LIFE, WHAT ARE YOU SEEING?

THINKING IS GOING TO HAPPEN?

>> WHAT I WOULD LOVE FOR PEOPLE TO HEAR IS PLEASE DON'T PANIC, A LOT OF INFORMATION YOU ARE HEARING RIGHT NOW IS VERY SCARY.

IT'S IMPORTANT TO GET EDUCATED, IT'S IMPORTANT TO HAVE A RESPONSE PLAN.

IT'S IMPORTANT TO KNOW WHERE YOUR DOCUMENTS ARE, AND IF YOU CAN, MAKE SURE YOUR IMMIGRATION STATUS IS SECURE, THIS IS A TIME DEFINITELY TO PURSUE THAT.

TED: ALL RIGHT, ELIZABETH CHATHAM, IMMIGRATION ATTORNEY, GOOD INFORMATION, GOOD TO HAVE YOU HERE.

>> THANK YOU SO MUCH.

.

>> THE FINANCIALLY TROUBLED ISAAC ELEMENTARY SCHOOL DISTRICT IN PHOENIX RECENTLY APPROVED A DEAL WITH THE NEIGHBORING TOLLESON UNION HIGH SCHOOL DISTRICT THAT ALLOWS SCHOOLS IN ISAAC TO KEEP THEIR DOORS OPEN AND EMPLOYEES PAID.

WE WELCOME MADELEINE PARRISH WITH AZCENTRAL.COM AND "ARIZONA REPUBLIC."

THANK YOU FOR JOINING US.

>> THANK YOU FOR HAVING ME.

TED: SEEMS LIKE WE'VE TALKED ABOUT THIS FOR A LONG TIME.

WE WANT TO GET DOWN TO THE BRASS TACKS HERE, WHAT IS THE LATEST ON THE DISTRICT?

>> AS OF RIGHT NOW, THE DISTRICT IS ABLE TO PAY EMPLOYEES AND FUND OPERATIONS THROUGH THE END OF THE SCHOOL YEAR, AND IN THE MEANTIME, THE CONSULTING FIRM WHICH HAS BEEN APPOINTED BY THE STATE TO OVERSEE THE DISTRICT'S OPERATIONS WILL COME UP WITH A LONG-TERM PLAN TO ADDRESS THE DISTRICT'S FINANCIAL CHALLENGES.

TED: HOW UNUSUAL IS IT TO HAVE THAT RECEIVERSHIP INVOLVED?

>> QUITE RARE FOR A SCHOOL DISTRICT TO GO UNDER RECEIVERSHIP.

ISAAC ELEMENTARY SCHOOL DISTRICT IS A RELATIVELY SMALL SCHOOL DISTRICT IN PHOENIX, SERVES ABOUT 4800 STUDENTS, PLACED UNDER RECEIVERSHIP BY THE STATE BOARD OF EDUCATION THREE WEEKS AGO, A FIRM IS OVERSEEING THE DISTRICT'S OPERATIONS AND THAT HAPPENS ON AVERAGE ONCE EVERY FIVE YEARS ACCORDING TO THE STATE BOARD OF EDUCATION.

TED: INTERESTING.

SO LOTS OF CONCERN THE TEACHERS WEREN'T GETTING PAID, PEOPLE WEREN'T GOING TO HAVE SCHOOLS.

IN COMES TOLLESON HIGH SCHOOL DISTRICT.

IT TAKES WORK TO FIGURE OUT WHAT'S GOING ON HERE?

>> SO THIS WAS APPROVED BY THE TOLLESON UNION'S GOVERNING BOARD LAST WEDNESDAY.

SO THE DEAL ESSENTIALLY ALLOWS TOLLESON UNION TO LOAN ISAAC ELEMENTARY $25 MILLION TO KEEP ITS DOORS OPEN, BUT WHAT IT ACTUALLY ENTAILS IS THAT TOLLESON UNION ACQUIRES LEASEHOLD RIGHTS OF ISAAC MIDDLE SCHOOL AND LEASES IT BACK TO ISAAC ELEMENTARY.

ISAAC ELEMENTARY WILL STILL RUN, THE DISTRICT HAS FIVE YEARS TO PAY $25 MILLION AND A 6% INTEREST RATE.

TED: HOW IS THAT GOING TO HAPPEN FOR A FINANCIALLY STRAPPED OPERATION?

>> GREAT QUESTION.

THE RECEIVER HAS UNTIL MAY TO COME UP WITH A PLAN TO SET THE FINANCES RIGHT.

I HAVE BEEN TOLD THAT MANY OPTIONS ARE ON THE TABLE.

SOME OF THOSE INCLUDE COST-CUTTING MEASURES, THEY ALSO INCLUDE -- SO ISAAC ELEMENTARY HAS UNDEVELOPED PLANNED AND COMMERCIAL BUILDINGS IT COULD SELL, SO THERE ARE A FEW SOLUTIONS IN PLAY, BUT IT REMAINS TO BE SEEN EXACTLY HOW THE DISTRICT IS GOING TO REPAY THAT.

TED: HOW DOES THE COUNTY COME INTO THIS?

THE COUNTY TREASURER IS SAYING WE'RE DONE WITH THIS, WE'RE OUT OF HERE.

THAT WAS A MAJOR FACTOR IN THIS WASN'T IT?

>> IT WAS.

THAT WAS THE REASON IT COULDN'T PAY EMPLOYEES BECAUSE FUNDING SOURCE FROM THE MARICOPA COUNTY TREASURER'S OFFICE WAS ESSENTIALLY CUT OFF BECAUSE IT OWED SO MUCH MONEY THAT MARICOPA COUNTY SAID IT HAD NO CLEAR PLAN TO REPAY.

IT OWED $28 MILLION TO THE COUNTY AND MARICOPA COUNTY TREASURER JOHN ALLEN SAID WE CANNOT CONTINUE TO HONOR DISTRICT EXPENSES UNTIL YOU SHOW US YOU CAN REPAY THE DEBT.

>> THAT'S WHERE THE 25 MILLION COMES IN.

HOW DOES A SCHOOL DISTRICT WITH 4800 KIDS, HOW DO YOU GET $28 MILLION THE WRONG WAY?

>> SO THAT IS GOING TO BE A QUESTION THAT THE ARIZONA ATTORNEY GENERAL IS PLANNING AN INVESTIGATION INTO.

THAT IS SOMETHING THAT THE RECEIVER IS LOOKING INTO AND THAT'S GOING TO BE PART OF THE FIRM'S REPORT THAT COMES OUT IN MAY.

FOR NOW, WHAT I CAN TELL YOU IS THAT THE DISTRICT HAS BEEN ON THE LIST OF THE ARIZONA AUDITOR GENERAL'S HIGHEST RISK DISTRICT FOR FIVE CONSECUTIVE YEARS, AND THERE ARE FEW REASONS FOR THAT.

THE DISTRICT HAS DECLINING ENROLLMENT, IT DROPPED BY MORE THAN 20% SINCE 2019, AND THAT'S NOT UNIQUE TO ISAAC, MANY DISTRICTS HAVE DECLINING ENROLLMENT, THE DISTRICT STRUGGLED TO MANAGE AN INFLUX OF GRANTS THAT CAME DURING THE PANDEMIC.

THAT'S AN EXPLANATION THAT CAME FROM THE DISTRICT'S FORMER SUPERINTENDENT WHO HAS RESIGNED BUT THAT ONE OF THE FACTORS THAT MADE IT ONE OF THE HIGHEST RISKS.

TED: SUPERINTENDENT RESIGNED, AS FAR AS RECEIVERSHIP IS CONCERNED, DO WE KNOW HOW LONG THAT'S GOING TO LAST?

>> IT'S NOT CLEAR YET.

RECEIVERSHIPS LAST THREE TO FIVE YEARS, I'M TOLD, BUT DEPENDS ON HOW LONG THE PLAN ENTAILS.

TED: LEASING THE ELEMENTARY SCHOOL BY WAY OF ANOTHER HIGH SCHOOL, HOLY SMOKES, BY WAIVE THAT, TEACHERS ARE GETTING PAID, KIDS ARE GETTING TAUGHT, BUS DRIVERS ARE DRIVING KIDS, THAT'S GOING TO HAPPEN FOR A WHILE?

>> THROUGH THE END OF THE SCHOOL YEAR, THROUGH THE SPRING WHAT I'M TOLD BY THE RECEIVER.

TED: ONCE SPRING HITS, WHAT DO PARENTS DO ABOUT THE NEXT SCHOOL YEAR?

>> THAT'S A GREAT QUESTION.

I SPOKE TO ONE PARENT WHO WORRIED ABOUT STAFF CUTS AND POTENTIAL SCHOOL CLOSURES AFTER THE END OF THIS SCHOOL YEAR.

THE DEAL WITH TOLLESON UNION PREVENTS ISAAC FROM BEING ABLE TO CLOSE MORE THAN TWO SCOMBULS DOESN'T MEAN IT WOULD NECESSARILY BE OFF THE TABLE.

THOUGH I'M TOLD IT'S PREMATURE WHETHER THE DISTRICT CLOSES SCHOOLS.

>> LESSER HOLE THEY CAN FILL WHEN THE 28 MILLION, MAYBE THE COUNTY STEPS IN MORE?

>> YEAH, SO LONG AS THE DISTRICT SHOWS SUFFICIENT CASH BALANCE, THEY WILL STILL BE RECEIVING THE FUNDS NECESSARY TO PAY THEIR PAYROLL EXPENSES AND TRANSPORTATION AND THINGS LIKE THAT, AND THAT'S THE SITUATION THEY'RE IN CURRENTLY.

TED: GREAT REPORTING ON THIS, MADELEINE PARRISH, "ARIZONA REPUBLIC" AND AZCENTRAL.COM.

SOUNDS LIKE A MESS BUT YOU MADE SENSE OF IT.

THANK YOU FOR JOINING US.

>> THANK YOU SO MUCH FOR HAVING ME.

I APPRECIATE IT.

TED: THAT'S IT FOR NOW, I'M TED SIMONS.

THANK YOU FOR JOINING US, YOU