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Reporter: Steve Nuñez

PHOENIX (KGUN9-TV) - It's stage two in the state's battle to end Tucson Unified School District's embattled ethnic studies program. At issue: do the district's Mexican-American studies classes violate state law? The state Superintendent said yes even though an independent audit said no.

Now an administrative law judge in Phoenix will make the final ruling. But as 9 On Your Side has learned, a decision in favor of ethnic studies may not stop the state from sanctioning the district by cutting $15 million from its budget.

The burden of proof lies on the shoulders of State Superintendent John Huppenthal. He did not attend the appeals hearings.  

Kathy Hrubluk, Assistant State Superintendent, testified the state conducted its own investigation because the district failed to provide the independent auditors with all of the course materials.

The state's attorney asked Hrubluk if evidence showed the classes are being taught with a racial bias. Hrubluk answered, "Yes."

She pointed to evidence that showed the program's curriculum failed to provide teachers with a blue print that outlines content for lesson plans. Hrubluk said not having a clear road map for instruction leaves the door wide open for teachers to teach radical and racist viewpoints without oversight.  

But on cross examination, Hrubluk admitted state investigators did not interview supporters of the program.

We asked Hrubluk why the state is rejecting its own commissioned audit that cost taxpayers $110,000.
 
Nuñez asked: "What did state investigators do that the auditors did not do?"

"We took a very extended review of materials submitted to us," replied Hrubluk.

The state then called on TUSD Superintendent Dr. John Pedicone to testify.

Pedicone backed the state's claim and testified the ethnic studies program, in fact, lacks a vigilance in structure.

But in surprise testimony that could prove damaging to the state's case, when asked what he observed in the classrooms during his unannounced visits, Pedicone testified he witnessed students who were engaged in critical thinking when analyzing a political cartoon.

Pedicone said, "It's not doing any of those things to promote ethnic solidarity. What it does is encourage students to be proud of who they are."

Nuñez asked: "Will you file a lawsuit to at least stop him ( Huppenthal) from sanctioning the school district?"
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"Honestly, that would be up to the governing board," answered Pedicone. "It would put us in a very difficult position. What I hope is that we get a ruling and a consistent decision."

The third and final hearing will take place on September 14th. Administrative Law Judge Lewis Kowal will make a ruling sometime after that. But despite his ruling, Huppenthal still has power to sanction the district.

TV cameras were not allowed inside of the hearing room.