School district financial risk analysis

Isaac Elementary School District—Among the highest-risk districts

General information
County Maricopa County
Operational peer group (FY 2023) 9
Legislative district(s) 26
School information FY 2022 FY 2023
Students attending 4,836 4,671
Number of schools 10 10

Summary of risks identified

Isaac Elementary School District is among the highest-risk districts for the fourth year in a row due to its change in weighted student count (WSC), operating and capital budget limit reserves, General Fund operating reserve ratio, General Fund change in fund balance, and frozen tax rate, as shown on the measure cards below.

The District's WSC has continued declining, with a 20.8 percent decline since fiscal year (FY) 2020 and a 4.8 percent decrease in FY 2024, to date, impacting its student-count-generated revenues and budget limits. The District's primary property tax rate has been frozen every year since FY 2017 except for FY 2020 due in part to levying for desegregation spending, limiting its available property tax revenue. The District continued to keep its FY 2023 General Fund spending within available revenues (i.e., positive operating margin), as it has since at least FY 2019. However, its spending reductions have not been enough to eliminate the District’s prior year deficit General Fund balance. The District reported a $2.4 million deficit General Fund balance in FY 2023, a $1.4 million improvement from FY 2022 and further improvement from its FY 2019 $8.3 million deficit balance. The District continued to use tax anticipation notes to accommodate spending with its cash deficit. We were not able to identify its FYs 2022 or 2023 borrowing costs as the District did not record or incorrectly classified those borrowing costs in its applicable annual financial reports, nor did it respond to our multiple requests for this information. Although the District's FY 2023 operating budget limit reserve grew to almost $2 million, it remains entirely unfunded due to the District’s negative Maintenance and Operation Fund balance. Further, the District’s capital budget limit reserves decreased by 87.2 percent from FY 2022 to FY 2023, reducing resources available for future capital needs. The District reported using more than $44.5 million from COVID-19 federal relief monies in FYs 2020 through 2023 with over $16 million 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 are no longer available to spend after September 30, 2024, the District should plan how it will adjust its spending in areas where it is using the remaining monies. While the District has made progress in addressing its identified risk areas, it is still among the highest-risk districts for the reasons we identified above.

The District provided a response to our analysis results that includes actions it has taken to address its risk areas, see below. However, the District included statements in its response that contradict the District’s data and our analysis results. Specifically, the District’s statement that its results represent an overall positive trend contradicts the declining results shown in the weighted student count and capital budget limit reserve measures. Additionally, we can’t confirm that the District’s improvements represent an overall positive trend as described in its response based on too few data points and external factors that will affect the District's future outcomes. Finally, while the District’s FY 2022 audited financial statements report a positive General Fund ending balance, it does not report a positive cash balance as stated in the District’s response. In fact, the District’s financial statements report $0 cash and investment balance in the General Fund as the District uses tax anticipation notes to continue operating at year-end when no cash is available.

District response

The data shown on the financial risk analysis continues to show an overall positive trend in the District’s financial data, with the exception of the change in weighted student count. The general fund balance increased to a positive cash balance at the end of FY2022. The district increased the operating budget reserve, however, the capital budget limit reserve was reduced to meet the capital needs of the district.

To address the change in student count, the district sold excess property to the City of Phoenix. The City contracted with a non-profit organization to build affordable housing units. Once completed, the project should attract families and increase the student count in the district. Other vacant properties, owned by the district, are being considered for sale and building additional units.

The annual expenditures will continue to be adjusted to operate within the student-count-generated budget limit and maintain a budget reserve. The district will continue to work with the county schools office and maintain the frozen tax rate to generate additional revenue and reduce the cash deficit in the general fund.

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

-4.8% -20.8%
(1-year change) (4-year change)

Fiscal year Group A WSC
2024 5,160
2023 5,420
2022 5,609
2021 5,756
2020 6,513

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

86.1% 100.0%
(1-year change) (4-year change)

Fiscal year Balance
2023 $1,998,947
2022 $1,074,254
2021 $433,289
2020 $233,626
2019 $242,755

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

-87.2% 100.0%
(1-year change) (4-year change)

Fiscal year Balance
2023 $117,883
2022 $920,074
2021 $295,404
2020 $5,375
2019 $55,470

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

-5.5% 0.5%
FY 2023 unaudited FY 2022 audited

Fiscal year Balance Expenditures
2023 unaudited ($2,391,936) $43,203,111
2022 audited $197,535 $40,595,323

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.
Financial position—
General Fund operating margin ratio

2.0% 3.6%
FY 2023 unaudited FY 2022 audited

Fiscal year Revenue Expenditures
2023 unaudited $44,103,638 $43,203,111
2022 audited $42,101,449 $40,595,323

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

37.3% 100.0%
FY 2022 to 2023 unaudited FY 2021 to 2022 audited

Fiscal year Change amount
2022 to 2023 unaudited $1,423,156
2021 to 2022 audited $2,287,210

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

15.8% 17.1%
(FY 2024) (5-year average)

Fiscal year Capital monies Amount redirected
2024 $2,539,503 $400,000
2023 $2,428,317 $400,000
2022 $2,235,936 $400,000
2021 $2,122,650 $400,000
2020 $1,831,729 $300,000

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.
Small school budget
limit adjustment

N/A - District is too large to be eligible for adjustment.

Fiscal year Adjustment
2024 $0
2023 $0
2022 $0
2021 $0
2020 $0

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 2021.

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.