School district financial risk analysis

Tonto Basin Elementary School District—Among the highest-risk districts

General information
County Gila County
Operational peer group (FY 2023) 12
Legislative district(s) 7
School information FY 2022 FY 2023
Students attending 74 78
Number of schools 1 1

Summary of risks identified

Tonto Basin Elementary School District is among the highest-risk districts due to its change in weighted student count (WSC), operating and capital budget limit reserves, General Fund operating reserve ratio, General Fund operating margin ratio, General Fund change in fund balance, unfunded small school budget adjustment, and frozen tax rate, as shown on the measure cards below.

The District's WSC has declined 14 percent in FY 2023, to date, impacting its student-count-generated revenues and budget limits. Additionally, the District's primary property tax rate has been frozen since FY 2019, and the District has not decreased its small school adjustment to stay within the revenue it will generate based on its frozen tax rate. As a result, its small school adjustment has been partially unfunded, leaving its FY 2023 operating and capital budget limit reserve more than $400,000 unfunded. As the District did not reduce spending, General Fund expenditures exceeded available revenues (i.e., negative operating margin) in FYs 2022 and 2023, reducing the District’s General Fund balance by over 83 percent during FY 2023 to an over $163,000 deficit. If the District spends based on budget capacity, its General Fund deficit will worsen. The District reported using over $700,000 from COVID-19 federal relief monies in FYs 2020 through 2023 with almost $35,000 remaining to spend as of June 30, 2023. As these are one-time monies, to avoid future financial risk and to ensure it will be able to spend within its available cash resources and budget capacity when these relief monies run out or are no longer available to spend after September 30, 2024, the District should plan how it will adjust spending in areas where it used relief monies.

District response

The decrease in current student counts is being investigated by the District with errors in the District’s rollover of its Student Information System (SIS) having been identified. The District expects these and other potential errors to be corrected on the January 2023 BSA 55-1 report when published by ADE. The District monitors spending to ensure spending stays within the State calculated budget limit, though the District’s frozen tax rate results in unfunded budget capacity. The District has not reduced its small school adjustment to stay within the revenue it will generate based on its frozen tax rate, however, the District will budget only the funded portion of its small school adjustment in its working budget. The District’s FY24 tax rate of 5.0475 is below the frozen tax rate of 6.7724, suggesting its small school adjustment will be fully funded in FY24.

The District's General Fund has carried a deficit cash balance in recent years due to absorbing additional food service expenditures to correct prior year deficit cash balances in the District's food service fund. The District has struggled to keep up with rising food and supplies costs during and after COVID and does not have many options to shop for pricing based on vendors willing to deliver to the District. The District will maximize grant funding opportunities for its Food Service program, as well as operating costs in order to free up monies to correct this deficit. The District is still in the process of researching grant funding opportunities for its food service program, such as the Fresh Fruits and Vegetables Program, as well as other grant funding sources that can help free up Maintenance and Operation (M&O) Fund capacity. The District will analyze its Food Service operations to determine where cost saving measures can be implemented. The remaining COVID-19 monies to spend are reserved for the learning loss set aside and are not being used to fund any ongoing operations.

Analysis and data

Additional information about each measure, including how each measure was calculated and how districts were identified as high risk for each measure, is available on the Measures page.

High risk
Change in weighted
student count

-14.0% 3.0%
(1-year change) (4-year change)

Fiscal year Group A WSC
2024 104
2023 121
2022 116
2021 101
2020 101

This measure shows a district's change in group A weighted student count (WSC) over a 1- and 4-year period. A single-year substantial decrease in WSC, or smaller but repeated decreases over more years, may expose a district to higher financial risk due to the loss of student-count-generated revenue.
High risk
Budget limit reserve—
Operating budget

-31.4% 100.0%
(1-year change) (4-year change)

Fiscal year Balance
2023 $228,717
2022 $333,487
2021 $303,558
2020 $38,810
2019 ($9,093)

This measure shows how a district's Maintenance and Operation (M&O) Fund budget limit reserve has changed over a 1- and 4-year period. Declining, negative, or unfunded M&O Fund budget limit reserves indicate higher financial risk.
High risk
Budget limit reserve—
Capital budget

-18.4% 100.0%
(1-year change) (4-year change)

Fiscal year Balance
2023 $30,827
2022 $37,772
2021 $27,079
2020 $737
2019 $954

This measure shows how a district's Unrestricted Capital Outlay (UCO) Fund budget limit reserve has changed over a 1- and 4-year period. Declining, negative, or unfunded UCO Fund budget limit reserves indicate higher financial risk.
High risk
Financial position—
General Fund operating reserve ratio

-9.0% -2.7%
FY 2023 unaudited FY 2022 audited

Fiscal year Balance Expenditures
2023 unaudited ($163,152) $1,810,259
2022 audited ($44,098) $1,655,434

This measure shows the percent of General Fund monies held in reserve for future spending (i.e., fund balance), compared to total spending from the prior year. A negative operating reserve ratio indicates a negative fund balance, which means the district must use monies received in the following year to cover prior-year spending.
High risk
Financial position—
General Fund operating margin ratio

-4.7% -6.2%
FY 2023 unaudited FY 2022 audited

Fiscal year Revenue Expenditures
2023 unaudited $1,728,371 $1,810,259
2022 audited $1,558,651 $1,655,434

This measure shows the percent of district General Fund revenues not spent in the year received for each of the most recent 2 years. A district with below-average operating reserves exposes itself to higher financial risk each time its spending exceeds its revenues (i.e., negative operating margin).
High risk
Financial position—
General Fund change in fund balance

-83.4% -100.0%
FY 2022 to 2023 unaudited FY 2021 to 2022 audited

Fiscal year Change amount
2022 to 2023 unaudited ($74,189)
2021 to 2022 audited ($78,460)

This measure shows the 1-year percentage change in a district's General Fund balance for each of the most recent 2 years. Declining fund balances or a negative fund balance in the most recent year indicate higher financial risk as less resources remain available for current and future needs.
Capital monies
redirected to operations

0.0% 0.0%
(FY 2024) (5-year average)

Fiscal year Capital monies Amount redirected
2024 $51,531 $0
2023 $45,117 $0
2022 $42,003 $0
2021 $51,690 $0
2020 $41,569 $0

This measure shows the percentage of intended capital funding the district has redirected to operational spending rather than capital spending in the current year and on average over the last 5 years. Districts that direct a substantial portion of their intended capital funding to operational spending may be at higher financial risk.
High risk
Small school budget
limit adjustment

District's small school budget limit adjustment is not fully funded because of a frozen tax rate.

Fiscal year Adjustment
2024 $550,000
2023 $550,000
2022 $550,000
2021 $550,000
2020 $550,000

This measure shows a district's additional budget capacity from a small school adjustment in the current year and each of the prior 4 years. The loss of the ability to include a small school budget limit adjustment or an unfunded small school budget limit adjustment due to a frozen tax rate may indicate higher financial risk.
High risk
Frozen
tax rate

District's primary property tax rate has been frozen since FY 2019.

This measure shows whether a district has a frozen primary property tax rate, limiting the District's ability to increase its property tax revenue to fund its allowable budget limits.
Receivership

District is not in receivership.

This measure identifies whether a district is operating under a State Board of Education-appointed receiver due to gross mismanagement or insolvency.