The District is among the highest-risk districts for the second year in a row. The District’s fiscal year (FY) 2021 weighted student count (WSC) decreased 12.4 percent during the COVID-19 pandemic, impacting its student-count-generated revenues and budget limits. In FY 2022, to date, the District recovered just over half that decline for an overall 5.5 percent WSC decrease since FY 2018. The District overspent its operating budget limit every year since fiscal year (FY) 2017, overspending its FY 2021 operating budget limit by over $1.4 million, only $200,000 less than its prior years’ $1.6 million overspending. The District reduced over $525,000 of spending subject to its operating budget limit but reported using more than $1.6 million from COVID-19 federal relief monies to maintain its operations in FY 2021, and still was not able to spend within its operating budget limit. The District further reported it plans to spend 13.8 percent, or $1 million, of its remaining relief monies to maintain operations. 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 are no longer available to spend after September 30, 2024, the District should plan how it will adjust its spending in areas where its remaining monies are used. On average, the District has redirected 34.7 percent of its capital monies to operations since FY 2019 to lessen its operating budget overspending. However, those redirected monies contributed to the District overspending its capital budget limit in 4 of the last 5 years, including FY 2021, limiting the District’s ability to meet its future capital needs.
District response:
Decrease in Funding
Safford Unified School District (SUSD) passed a 5% M&O override in 2008 to assist in providing competitive compensation and benefit packages. Attempts to renew the override failed in 2015 and 2020. However, at the fault of the business management, expenses centered in wages were maintained and caused an over-expenditure of operational funds.
A decline in weighted student count over the past five years from 3510 to 3189, (-9.1%) (figures reflected from 7/28/17 APOR55 and FY 2022 December BSA55 reports respectively).
For the FY 2022 school year, SUSD has experienced an increase of 233 students (as of December 2021). This is a move in the right direction, but is still an overall decrease from the FY 2018 school year of -158 students.
In FY 2021, the increase in Arizona’s minimum wage created an increase in classified pay of approximately $650K each year for which there was no dedicated revenue increase to fund the spending. With the minimum wage increasing another 5.3%, this takes the cost up to around $684,000 annually.
Projected Ideas for Resolution (Updated)
SUSD’s Governing Board is aware of the overspending issues centered in the above decreases in funding. The cuts below have been put in place and approved by the SUSD Governing Board.
FY 2021 decision implemented FY 2022 - Three CTE teacher prep period buyouts can be transferred from M&O budget to CTE funding sources for an approximate annual savings of $30K. Implementation from this year will continue forward into future years as necessary.
FY 2021 decision implemented FY 2022 - Due to declining enrollment, and through attrition, SUSD cut 17 teaching positions K-12 for a projected savings of $1.19 million. These positions will not be added back unless an increase in student enrollment and funding warrant it.
FY 2022 - With the guidance of ADE Exceptional Student Service staff, SUSD was able to cut $222,375 from its M&O budget.
FY 2021 - ESG Grant funds were used to absorb some M&O overages in payroll expense.
FY 2021 - ESSER I and II Grant funds were used to relieve pressure from M&O in the areas of technology, curriculum, learning loss, and personnel expense related to COVID-19 cleaning processes. There are still funds available in ESSER I and II Grants for continued funding into FY 2022 and some into FY 2023. ESSER III Grant funds recently received the first round of approvals which may be used to cover spending originally slated for M&O going forward into FY 2022 through FY 2025. Once the ESSER Grant funds are expended / retired, we are confident that the DAA fund will accommodate what ESSER has been / will be covering.
The Legislature added revenue to the student funding formula which we are thankful for. If this continues as the Legislature considers the fate of the budget aggregate spending limit in the Spring of 2022, SUSD will have made progress in obtaining its goal of cutting and maintaining $1.4 million from its budget over-expenditure (an additional period of time may be necessary if unforeseeable budget issues arise). It is projected that with the budget adjustments made, injection of ESSER Grant funds, and DAA reinstatement to full force, SUSD is on the right track to correct the over-expenditure issue(s) of the past and maintain proper sustainability going forward. As a District Administration, we continue to look forward in working with the Arizona Auditor General’s Office for guidance and direction to work through this issue.
County—Our analysis of Arizona Department of Education (ADE)-provided county data. For district boundaries encompassing more than 1 county, the county in which the district office resides is presented.
Operational peer group—District groups based on size, type, and location used in our Annual School District Spending Report.
Legislative districts—Our analysis of school district and legislative district boundaries.
Students attending—Our analysis of ADE-provided, school-district-reported attending ADM counts. ADM numbers are rounded to the nearest whole number.
Number of schools—Our analysis of ADE’s attending average daily membership (ADM) reports and School Facilities Board district-wide building reports.
Desegregation—Additional local and State monies for districts, which are allowed by law to increase their expenditure budgets and levy monies without voter approval to comply with a court order or administrative agreement with the U.S. Department of Education’s Office for Civil Rights.
Federal impact aid—Federal monies provided to districts that have been impacted by the presence of tax-exempt federal lands or the enrollment of students living on federal lands, such as military bases and reservations.
Small school adjustment—Additional local and State monies for small districts, which are allowed by law to increase their expenditure budgets and levy monies without voter approval if their student enrollment is within the following prescribed numbers:
Grades K-8 with 125 or fewer students.
Grades 9-12 with 100 or fewer students.
Voter-approved budget overrides—Additional local monies districts may levy through voter-approved increases to district expenditure budgets.
Source: Desegregation, small school adjustment, and voter-approved budget override amounts - FY 2020 ADE BUDG75 report. Federal Impact Aid amounts - FY 2020 district submitted, unaudited annual financial reports.
School district financial risk analysisDecember 2020
