We included 207 of the State's 236 school districts in our financial risk analysis. Transporting districts, career and technical education districts, and accommodation districts were not included as they operate very differently than most school districts not only in terms of the services they provide, the students they serve, and the programs they offer, but also in their available funding streams. Therefore, the measures in our analysis do not apply to them in the same way.

We assigned risk points to each district that met any measure's defined-risk thresholds

For this year's January 2026 analysis, the scope and methodology for identifying high-risk districts within each measure are consistent with prior years' analyses, unless otherwise noted. Additionally, the Measures page describes the scope and methodology for identifying high-risk districts within each measure. Below is a summary of significant changes from last year's analysis:

Revised measure methodology

• We updated our methodology in the change in weighted student count measure to assign varying risk points to districts experiencing declines in weighted student counts over 1-year and 4-year periods. Districts can receive up to 5 risk points, allocated according to percentage thresholds that reflect both the size of the district and the magnitude of its decline in weighted student count. We added a multiplier to the 4-year decline risk points for districts with consecutive year-over-year declines, to capture the risk associated with persistent downward trends in weighted student counts. We revised the measure description page to include a new section describing how risk appoints are assigned for both the 1- and 4-year declines including the multiplier impact. Under this revised methodology, districts are now classified as high risk for this measure when they receive 3 or more risk points. To account for the impact of small school adjustments, districts that levy a small school adjustment and do not have a frozen tax rate will have their risk points reduced by 2.5 under the weighted student count indicator. We also revised the measures page to include examples that show how a district's calculated risk points are used to determine districts that are at high-risk for the change in weighted student count measure. Previously we used multiple percentage thresholds based on district size to identify high-risk districts and assigned 5 risk points to all high-risk districts.
• We updated our data source in all 3 financial position measures when using annual financial report (AFR) data to sum the applicable General Fund amounts from all funds each individual district designated as part of its General Fund in the applicable years' AFR. Previously, when analyzing AFR data we used only the 5 most commonly included funds for all districts.
• We updated our methodology in the Financial position—General Fund operating margin ratio measure to modify how we reduce risk for districts with larger General Fund reserves. Previously, we reduced risk for districts that have a per pupil General Fund balance greater than 25% of the State-wide average. Now, we reduce risk for districts that have at least 2 months of the most recent years' General Fund expenditures in reserves at the end of the most recent fiscal year. This aligns with the Government Finance Officer's Association best practice recommendations for minimum fund balance reserves and is considering individual district risk, rather than using a Statewide metric.
• We updated our methodology in the budget limit reserves measures to increase risk points by up to 1 additional point for each measure, for districts with declining budget limit reserves if their operating or capital budget limit has decreased to an amount below its prior year expenditures in the applicable fund. This change will better capture a risk of overspending in future years for districts with already declining reserves.
• We updated our methodology in the small school budget limit adjustment measure to modify how we assigned risk points for districts that become ineligible to levy a small school adjustment in either of the last 2 years. Previously, all districts that historically levied a small school adjustment and became ineligible in either of the last 2 years were assigned 5 risk points. In this year's analysis, we used multiple percentage thresholds to assign risk points based on the percentage of the current year total operating and capital budget limit the most recently budgeted small school adjustment would have represented, had the district been eligible. This change will better reflect the risk to individual districts based on the impact each affected districts' previous small school adjustment had on its budget limit calculation.

District decision-makers and other stakeholders can use the information provided on the highest-risk districts and the data and analysis results for all districts to better understand district financial risks. Districts not included on the highest-risk districts list may still be identified as high risk for 1 or more individual measures. Therefore, all district stakeholders can use this data and any risks identified when evaluating district budget- and finance-related decisions.

The State results page summarizes results for each measure State-wide, by county, and by legislative district. The Measures page explains the measures analyzed and how we determined each measure's high-risk districts.