School district financial risk analysis—January 2026
Overview
This is an analysis of Arizona school district financial risk, using the most current data available for 10 financial risk measures. We monitor each district’s overall financial risk of not being able to operate within its available budget constraints and cash resources. We have been publishing this analysis since December 2020.
Key takeaways from this year's analysis
- As of January 2026, 9 out of 207 analyzed Arizona school districts are at higher financial risk and 9 are approaching the highest-risk category. This represents an increase from last year's report when our analysis identified 2 highest-risk school districts and 7 approaching the highest-risk category .
- Compared to our January 2025 report, in this year's report the number of school districts State-wide at high risk by measure increased for 7 of the 10 financial risk measures. See the "One-year change in the number of districts at high risk for each measure" table below for details.
- Districts experiencing declining student counts along with declining budget limit reserves and cash resources may need to immediately reduce costs to operate within budget constraints and cash resources. Such districts with multiple risk areas should analyze the cause(s) of their risks and identify and implement appropriate risk-mitigation actions. Eight of the 9 highest-risk districts developed a written financial risk action plan to mitigate their risks. The plans are available on each district’s page, other than Wilson Elementary School District, which instead describes why the District has not submitted a plan.
Current highest-risk districts, districts approaching highest-risk, and their locations
Current highest-risk districts
Districts approaching highest risk
The downloadable summary contains the list of high-risk measures for all the highest-risk districts and approaching highest-risk districts.
One-year change in the number of districts at high risk for each measure
| Measure | January 2025 | January 2026 | Change |
|---|---|---|---|
| Change in weighted student count | 46 | 69 | +23 |
| Budget limit reserve—Operating budget | 47 | 73 | +26 |
| Budget limit reserve—Capital budget | 43 | 74 | +31 |
| Financial position—General Fund operating reserve ratio | 15 | 15 | No change |
| Financial position—General Fund operating margin ratio | 34 | 50 | +16 |
| Financial position—General Fund change in fund balance | 47 | 56 | +9 |
| Capital monies redirected to operations | 47 | 51 | +4 |
| Small school budget limit adjustment | 6 | 9 | +3 |
| Frozen tax rate | 10 | 10 | No change |
| Receivership | 2 | 2 | No change |
The table above is based on a total population of 207 districts in both years' analyses.
Why monitor financial risk?
Our analysis focuses on identifying the districts at the highest risk of incurring budgetary overspending or cash deficits, based on both their
current and potential future financial difficulties. Districts that proactively address identified financial risks with an action plan, may be
able to prevent overspending or deficits from occurring. Districts with severe budgetary overspending and/or accumulated cash deficits are at
risk for receivership in accordance with A.R.S. §15-103.
Districts not included on the highest-risk districts list may still be identified as high risk for 1 or more individual measures.
The State results page summarizes results for each measure State-wide, by county, and by legislative district.
The Measures page explains how each measure was calculated, how we identified districts as high risk for each
measure, how many districts were identified as high risk in each of the last 5 years, and other measure-related information. The
About page describes how we identify the highest-risk districts.
How to determine if your district is at financial risk and create a financial risk action plan
For our school district financial risk analysis, we analyze the most current data available for 10 financial risk measures in the 7 categories listed below to identify the Arizona districts with the highest financial risk. Clicking on the category names below will bring you to the applicable measure page where you can learn more about each measure, including how it contributes to a district's financial risk, how it is calculated, and how we identify districts at high risk for the measure.
Also included below is a financial risk action plan template that we developed based on meetings with Arizona's current and past highest-risk districts as a tool any district can use to plan and take action to reduce its financial risks. District decision-makers can use the information provided in our analysis and action plan template to better understand district financial risks when evaluating district budget- and finance-related decisions.
Is the number of students attending the district, which is used to calculate base funding, declining substantially and causing revenue decreases?
Is the district substantially diminishing its Maintenance and Operation and Unrestricted Capital Outlay Funds' budget limit reserves; has the district exceeded its legal budget limits in the most recently completed fiscal year or on average over the last 5 years; or does the district have an unfunded budget limit reserve?
Is the district currently spending more in its general operating fund than it is receiving to operate, causing substantial declines in operating reserves? Or has the district's spending in recent years led to negative balances in its general operating fund?
Is the district redirecting a substantial portion of its intended capital funding to current operational spending leaving lower than average resources for capital needs?
Has the district recently lost the ability to increase its budget limit with a small school adjustment or is the district's small school adjustment at least 10 percent unfunded?
Has the district's property tax rate been frozen by the property tax oversight commission based on the constitutional limit for residential property taxpayers?
Is the district operating under a State Board of Education appointed receiver?
Financial risk action plan guidance and template for school districts
This guidance and template provide a step-by-step process district management can use to identify the district's financial risks and develop, implement, and monitor mitigating actions to address its financial risks.
Full data set available for download
In addition to this analysis, we have issued this data file in Microsoft Excel format, which contains the January 2026 data, analysis results, and other information presented on the State and district results pages, including identifying the highest-risk districts from the prior 2025 and the current January 2026 analysis.