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 negative ratio indicates that the district spent more money than it received for the year. A district with low operating reserves exposes itself to higher financial risk each time its spending exceeds its revenues.

If a district's operating margin ratio was -10 percent, the district spent 110 percent of its revenue in that year. When annual spending exceeds revenues, districts are generally able to use operating reserves (i.e., fund balances) built up in prior years to meet current spending needs. However, when a district has little or no operating reserves, such spending can result in a negative balance.

A district's General Fund balance could be negative due to misallocation of State or local tax revenues between funds or budgetary overspending

All districts with a negative operating margin ratio could be considered at higher risk for this measure. However, to recognize that negative operating margins present less risk for districts with larger General Fund reserves, we limited the districts considered high risk for this measure to those with a negative operating margin ratio in either of the most recent 2 years and that do not have at least 2 months

General Fund amounts were obtained from districts' audited financial statements or unaudited annual financial reports

• Fiscal year 2025: Amounts were obtained from unaudited district AFRs submitted to Arizona Department of Education (ADE) as of November 24, 2025.
• Fiscal year 2024: Amounts were obtained from district-submitted audited financial statements, if available. Otherwise, amounts were obtained from district AFRs submitted to ADE as of November 24, 2025.