Measures

Select a measure:

Budget limit reserve— Capital budget

74 of 207 districts are at high risk for budget limit reserve— capital budget

For our analysis, we look at 2 different measures to assess a district's budget limit reserves and its spending within its budget limits. Every Arizona school district annually adopts statutorily prescribed Maintenance and Operation (M&O) and Unrestricted Capital Outlay (UCO) Fund budget limits

that are, in part, based on the number of students attending its district. At the end of each fiscal year, any unspent operating or capital budget capacity is carried forward as a reserve in the applicable fund and increases the following years' total operating or capital budget limit. A negative reserve amount indicates a district spent beyond its budget limit in the current year or has not reduced spending enough to compensate for overspending in a prior year.

Arizona Constitution, Article 9, §21, prescribes a State-wide aggregate expenditure limitation that may require districts to reduce budgeted spending in years the districts exceed the limit, and possibly result in operating and capital budget limit reserve reductions. Arizona school districts' FY 2026 total budgeted expenditures of local revenues

exceeded the State-wide limitation by 13.83%. A.R.S. §15-911 allows the Arizona Legislature to authorize spending in excess of the limitation for the current fiscal year by March 1, and the Arizona Legislature took action in Laws 2025, SCR 1041, to authorize school districts to exceed the FY 2026 State-wide aggregate expenditure limitation.

What is this measure telling me, and why is it important?

This measure shows how a district's UCO Fund budget limit reserve

has changed over a 1- and 4-year period. Additionally, a district with a negative capital budget reserve overspent its statutory capital budget limit in that year and had future years' budget limits reduced to compensate for the overspending. Substantially declining, negative, or unfunded reserves indicate higher financial risk as less resources remain available for future capital spending needs.

Tell me more about capital budget limit reserve.

Districts with little or no budget reserves are more financially impacted by unexpected capital spending needs when they arise. Although districts may have the ability to sell bonds or access special funding from the Arizona Department of Administration's division of school facilities

for certain capital needs, those funding sources are not always available or allowed to be used depending on the districts' capital needs. Often, districts with little or no UCO Fund budget limit reserves need to allocate more of their current-year annual budget capacity to the UCO Fund to meet immediate capital needs. Doing so reduces the district's resources available for operational spending in that year and may require operational spending cuts if adequate M&O Fund budget reserves are also not available to avoid overspending.

Decreases in a district's UCO Fund budget limit reserve may result from a district's long-term spending plan and therefore represent less financial risk than unplanned reserve decreases. However, planned or unplanned, substantial decreases in budget reserves leave fewer resources available for future needs and therefore increase a district's financial risk. Additionally, districts with little or no budget reserves are more financially impacted by substantial decreases in student counts, which cause decreases in districts' budget limits and revenues. A district whose capital budget limit has decreased to an amount below its prior year UCO Fund expenditures must reduce its current year expenditures to avoid overspending.

In some instances, districts can report positive budget reserves, based on unspent budget capacity, even when they lack the cash to fully support spending that budget capacity (i.e., unfunded reserves). Districts with unfunded reserves may be able to work with their counties to increase future property taxes or, when unfunded reserves are caused by substantial property taxes owed to the district remaining unpaid, supplemental State aid may be requested to fund the existing budget capacity. A district with a frozen tax rate cannot increase its tax rate to generate monies for an unfunded reserve and only increases its unfunded reserve if it uses legal budgetary increases, such as small school adjustments , to set its budget limit beyond the resources it can generate through State and local taxes.

How were districts identified as high risk for this measure?

Districts were considered high risk for this measure if any of the following was true:

The district overspent its capital budget limit in the most recently completed fiscal year and in total overspent its operating and capital budget limit by more than 0.5 percent of the applicable years' total budget limit.
The district on average overspent its capital budget limit over the last 5 years and in total overspent its 5-year average operating and capital budget limit by more than 0.5 percent.
The district's budget limit reserve decreased by 25 percent or more in the most recent year, or by 50 percent or more over the last 4 years.
The district reported an unfunded budget limit reserve
(i.e., budget capacity exceeds available resources at fiscal year-end) of at least 10 percent in the most recently completed fiscal year, has a frozen tax rate
, and has a per pupil ending fund balance less than that year's State-wide average of $1,488
per student.
The district did not submit or submitted an incomplete and unreliable unaudited annual financial report
to the Arizona Department of Education, and we were unable to determine a reliable measure result.

How was this measure calculated?

The applicable UCO Fund budget limit reserve amounts from the last 5 years were used to calculate the 1- and 4-year change and 5-year average overspending amount.

How many districts have been identified as high risk for this measure in each of the last 5 years?

Report date	Number of districts at high risk
December 2021	47 of 207
December 2022	41 of 207
December 2023	46 of 207
January 2025	43 of 207
January 2026	74 of 207

Data source

Fiscal years 2021-2025 budget limits, expenditures, and budget limit reserves were obtained from the Arizona Department of Education's (ADE) BUDG75 report for each district and fiscal year, as of November 24, 2025.

Fiscal year 2026 budget limits were obtained from ADE's BUDG25 reports for each district, as of November 24, 2025.

Frozen tax rate data was obtained from the Property Tax Oversight Commission

's report, 2025 Review of School Districts that Exceed the 1 Percent State Constitutional Limit.

Fiscal year 2025 M&O and UCO Fund ending fund balances were obtained from ADE as of November 24, 2025, from district-submitted unaudited annual financial reports .

Districts at high risk for this measure

School district	County	Legislative district(s)	1-year change	4-year change	Additional information
		1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Alhambra Elementary School District	Maricopa County	24 and 26	-60.6%	6.2%	No additional information
Ash Fork Joint Unified School District	Yavapai County	1 and 6	-44.0%	-8.1%	No additional information
Balsz Elementary School District	Maricopa County	8	-35.4%	-35.3%	No additional information
Bicentennial Union High School District	La Paz County	30	-17.8%	-50.4%	No additional information
Blue Ridge Unified School District	Navajo County	6 and 7	-50.5%	100.0%	No additional information
Bonita Elementary School District	Graham County	19	-6.1%	-41.6%	Frozen tax rate; FY 2025 reserve at least 10 percent unfunded.
Bouse Elementary School District	La Paz County	30	-62.6%	100.0%	No additional information
Bullhead City Elementary School District	Mohave County	30	-71.5%	-70.1%	No additional information
Canon Elementary School District	Yavapai County	1	-74.6%	-78.7%	No additional information
Casa Grande Union High School District	Pinal County	16 and 23	-67.1%	-58.6%	No additional information
Chinle Unified School District	Apache County	6	-31.1%	-18.4%	No additional information
Chino Valley Unified School District	Yavapai County	1	-46.2%	100.0%	No additional information
Cochise Elementary School District	Cochise County	19	-78.6%	-79.1%	No additional information
Colorado City Unified School District	Mohave County	30	-53.3%	-0.2%	No additional information
Colorado River Union High School District	Mohave County	30	-52.7%	100.0%	No additional information
Congress Elementary School District	Yavapai County	1	-100.0%	-100.0%	See data for overspending amounts.
Continental Elementary School District	Pima County	19 and 21	-57.7%	-66.4%	No additional information
Coolidge Unified School District	Pinal County	16	-46.2%	100.0%	No additional information
Crown King Elementary School District	Yavapai County	1	-38.1%	-4.3%	No additional information
Douglas Unified School District	Cochise County	19	-35.5%	-29.6%	No additional information
Florence Unified School District	Pinal County	7, 15, 16, and 17	-41.3%	100.0%	No additional information
Fountain Hills Unified School District	Maricopa County	3	-45.0%	-76.2%	No additional information
Grand Canyon Unified School District	Coconino County	6	-28.1%	15.9%	No additional information
Hayden-Winkelman Unified School District 1 of 9 highest-risk districts	Gila County	7	-3.4%	-39.5%	Frozen tax rate; FY 2025 reserve at least 10 percent unfunded.
Heber-Overgaard Unified School District	Navajo County	7	-62.6%	-44.4%	No additional information

Measures

Budget limit reserve— Capital budget

74 of 207 districts are at high risk for budget limit reserve— capital budget

Districts at high risk for this measure

Additional school district resources

Arizona Auditor General

Measures

Budget limit reserve— ​ Capital budget

74 of 207 districts are at high risk for ​ budget limit reserve— ​ capital budget

Districts at high risk for this measure

Additional school district resources

Arizona Auditor General

Budget limit reserve— Capital budget

74 of 207 districts are at high risk for budget limit reserve— capital budget