School District Financial Risk Analysis


Financial position – General Fund change in fund balance

33 of 207 districts are at high risk for this measure

For our analysis, we look at 3 different measures to determine a district’s financial position: change in fund balance, operating margin ratio, and operating reserve ratio. Each of the 3 measures analyzes components of a district’s General Fund revenues, expenditures, and ending balances to identify potential risk related to General Fund resources. Although each of these measures looks at similar financial data, they focus on different relationships in that data. We assessed each measure individually to ensure that concerns present in 1 or 2 of the measures were not overlooked based on less concerning results for another measure.

Beginning in FY 2020, districts received COVID-19 federal relief grants with less restricted allowable uses than most other federal or State grants. Some districts’ financial position measures may have improved when they used federal relief monies for allowable spending, including maintaining operations , that might have otherwise been paid from the General Fund, contributing to larger General Fund balances than they likely would have without these federal relief grants. In total, State-wide district General Fund balances continued to increase in FY 2022, increasing 32 percent since FY 2020. In FYs 2020 through 2022, nearly half of Arizona school districts reported using at least some of their federal relief monies for allowable grant purposes in place of available State and local monies (see the District, charter, and ADE COVID-19 spending special report).

This measure shows the 1-year percentage change in a district’s General Fund balance for each of the most recent 2 years. A negative ratio indicates a decline in fund balance due to spending exceeding revenues in that year. Declining fund balances indicate higher financial risk as less resources remain available for future needs.

If a district’s change in fund balance ratio was -25 percent, the fund balance decreased by 25 percent from the prior year. Some positive or negative changes in fund balance are planned, while others are the result of changes in revenues without corresponding changes in spending. As a result, planned negative shifts in fund balance may not always reflect higher financial risk. However, even districts with greater-than-average fund balances increase their financial risk through large single-year reductions in fund balance.

All districts with a 1-year General Fund balance decrease of 25 percent or more, for either of the most recent 2 years, were considered high risk for this measure. Additionally, districts with a negative fund balance in the most recent year were considered high risk for this measure even when their fund balance increased from the prior year.

The applicable years’ ending fund balances were used to calculate each 1-year change percentage.

General Fund amounts were obtained from districts' audited financial statements or unaudited annual financial reports (AFR) as indicated below. Districts that are not required by State law to receive an annual audit generally do not prepare annual financial statements. However, all school districts are required to prepare AFRs each year. To analyze similar data when AFR data was used, we looked at the funds most commonly included in districts’ general funds in financial statements. However, financial statement and AFR amounts may not be consistent for the same funds if auditors identify adjustments that are reflected in financial statement amounts to correct errors or meet governmental financial statement reporting requirements. To avoid distorting the measure ratios based on reporting inconsistencies between unaudited AFR data and audited financial statement data, we did not compare data across those sources.

  • Fiscal year 2022: Amounts were obtained from unaudited district AFRs submitted to ADE as of December 19, 2022.
  • Fiscal year 2021: Amounts were obtained from district-submitted audited financial statements, if available for both years. Otherwise, amounts were obtained from district AFRs submitted to ADE as of December 19, 2022.

Districts at high risk for this measure

District Among the highest-risk districts County FY 2021 to FY 2022 FY 2020 to FY 2021 Additional information
Agua Fria UHSD Maricopa County -67.5% 8.9% No additional information
Aguila ESD Maricopa County 88.3% -50.6% No additional information
Alpine ESD Apache County -33.1% 1.6% No additional information
Antelope UHSD Yuma County 57.2% 76.9% FY 2022 fund balance amount was negative.
Apache Junction USD Pinal County -50.6% 29.0% No additional information
Benson USD Cochise County -32.6% 26.6% No additional information
Blue ESD Greenlee County -100.0% -30.6% No additional information
Buckeye UHSD Maricopa County -28.7% -2.5% No additional information
Congress ESD Yavapai County -100.0% 96.8% No additional information
Cottonwood-Oak Creek ESD Yavapai County -33.7% 100.0% No additional information
Flagstaff USD Coconino County -41.4% -20.7% No additional information
Gila Bend USD Maricopa County 34.5% -38.0% No additional information
Hackberry ESD Mohave County 100.0% -83.5% No additional information
Hayden-Winkelman USD Gila County -23.2% 100.0% FY 2022 fund balance amount was negative.
Isaac ESD
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Maricopa County 21.5% 55.7% FY 2022 fund balance amount was negative.
J.O. Combs USD Pinal County -13.4% -43.7% No additional information
Kingman USD Mohave County -56.9% -23.1% No additional information
Mingus UHSD Yavapai County -26.8% 51.6% No additional information
Mobile ESD Maricopa County 100.0% -100.0% No additional information
Nadaburg USD Maricopa County -100.0% 72.5% No additional information
Osborn ESD Maricopa County -27.5% 100.0% No additional information
Paloma ESD Maricopa County -53.6% -40.4% No additional information
Peach Springs USD Mohave County -58.6% 5.9% No additional information
Pinon USD Navajo County -31.7% -6.4% No additional information
Saddle Mountain USD Maricopa County -54.2% 32.6% No additional information
San Fernando ESD Pima County -31.8% -100.0% No additional information
Sentinel ESD Maricopa County -29.2% 23.2% No additional information
Skull Valley ESD Yavapai County -36.6% 100.0% No additional information
Solomon ESD Graham County -24.2% -49.4% No additional information
St. David USD Cochise County -47.7% 72.2% No additional information
Tonto Basin ESD Gila County -100.0% 100.0% No additional information
Wellton ESD Yuma County -55.9% 58.0% No additional information
Yarnell ESD Yavapai County 100.0% -44.9% No additional information