PHOENIX -- Questions are being raised about whether Maricopa Community Colleges misused public monies.

An investigative report by the Arizona Office of the Auditor General concluded MCC unlawfully loaned public monies to corporations.

For years, MCC worked closely with several non-profit corporations.

Auditors found MCC "unlawfully loaned more than $3 million during a six-year period" by paying 26 non-profit employees through state payrolls. They were reimbursed by the non-profits weeks later.

"You don't want the government making loans to private organizations," said Jeff Larson, general counsel for the Office of the Auditor General. “The constitution prohibits public institutions from loaning money and this was a loan."

MCC vehemently protested auditors’ finding, calling them “nonsensical.”

A spokesperson said MCC believed they had hired the non-profit employees “in good faith” but have since “ended its employment relationships with the three nonprofit organizations."

The auditor general’s report also said MCC allowed nearly two dozen of those non-profit workers to enroll in the Arizona State Retirement System, even though they were not eligible to do so.

“Everyone wants to be in the Arizona State Retirement System, it's a great system," said Larson.

MCC statement said "the district was fully reimbursed in every case, and the state and the taxpayers bore absolutely no cost. It is important to emphasize this point: This practice cost the taxpayers nothing."

"You have a statute. You don't follow the statute. I'd say that's not legal," said Larson.

The benefits for the approximately two dozen non-profit employees is now hanging in the balance.

A spokesperson for the Arizona State Retirement System said they have not decided yet how it will handle the unusual situation.