Capital monies redirected to operations
What is this measure telling me, and why is it important?
This measure shows the percentage of intended capital funding districts have 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 if they are putting off necessary operational spending cuts or when large capital spending needs arise, especially if they have lower-than-average capital reserves.
Tell me more about capital monies redirected to operations.
Arizona school districts receive revenues from local, State, and federal sources. In general, districts receive local and State revenues based on an equalization formula set by State law. This “equalization formula funding” provides the base funding for districts through locally levied property taxes and State-appropriated monies. That formula includes 2 main components: the revenue control limit (RCL), intended to fund districts’ operational needs, and district additional assistance (DAA), intended to fund districts’ capital needs. Districts can choose how to allocate each of these components annually between the Maintenance and Operation (M&O) and Unrestricted Capital Outlay (UCO) Funds based on their anticipated needs.
Districts with voter-approved operating or capital overrides have additional resources available to meet their needs. Often, districts with overrides allocate their RCL and DAA resources differently based in part on their ability to use override monies for only the limited voter-approved operating or capital purposes. Accordingly, our analysis includes districts’ capital overrides in total intended capital funding when looking at the percentage of that funding that was redirected to operational spending.
How were districts identified as high risk for this measure?
All districts that directed DAA funding of more than 25 percent of their total DAA and capital override amount to their M&O Fund in either the current year or on average over the last 5 years could be considered at higher risk for this measure. However, to recognize such redirection represents less risk for districts with larger capital reserves, we limited the districts considered high risk for this measure to those with a fiscal year 2022 per pupil capital budget limit reserve less than that year’s State-wide average of $1,099* per pupil.
*Calculated the per pupil reserve amount for each district and then averaged, excluding districts with extreme values that would skew the average.
How was this measure calculated?
|DAA redirected to M&O Fund - RCL redirected to UCO Fund||= Capital monies redirected to operations percentage|
|(Total DAA + capital override)|
The 5-year average was calculated by adding the percent of capital monies redirected to operations for each year and dividing by 5.
DAA and capital override amounts were obtained from the Arizona Department of Education as of December 19, 2022, as follows:
- Fiscal year 2023: BUDG25 report for each district, which includes the intended allocations for the current year based on each district’s most recent adopted or revised expenditure budget.
- Fiscal years 2019 through 2022: BUDG75 reports for each district, which includes the final district allocations for each year.
Districts at high risk for this measure
|District||Among the highest-risk districts||County||FY 2023 percentage||5-year average percentage|
|Antelope UHSD||Yuma County||87.4%||59.0%|
|Apache Junction USD||Pinal County||44.7%||28.8%|
|Baboquivari USD||Pima County||100.0%||100.0%|
|Balsz ESD||Maricopa County||43.0%||30.4%|
|Canon ESD||Yavapai County||100.0%||47.2%|
|Cave Creek USD||Maricopa County||81.5%||89.9%|
|Chinle USD||Apache County||90.3%||88.9%|
|Colorado River UHSD||Mohave County||56.2%||29.1%|
|Coolidge USD||Pinal County||50.0%||67.4%|
|Cottonwood-Oak Creek ESD||Yavapai County||40.0%||45.2%|
|Elfrida ESD||Cochise County||N/R||28.3%|
|Eloy ESD||Pinal County||N/R||28.1%|
|Florence USD||Pinal County||N/R||28.3%|
|Glendale UHSD||Maricopa County||60.5%||42.6%|
|Hackberry ESD||Mohave County||N/R||71.6%|
|Heber-Overgaard USD||Navajo County||41.0%||34.7%|
|Humboldt USD||Yavapai County||N/R||39.0%|
|J.O. Combs USD||Pinal County||31.7%||30.8%|
|Mammoth-San Manuel USD||Pinal County||N/R||44.8%|
|Marana USD||Pima County||30.8%||34.5%|
|Mohave Valley ESD||Mohave County||N/R||28.3%|
|Naco ESD||Cochise County||N/R||50.1%|
|Page USD||Coconino County||26.2%||41.9%|
|Paradise Valley USD||Maricopa County||57.4%||58.6%|
|Phoenix ESD||Maricopa County||45.0%||38.3%|
|Picacho ESD||Pinal County||100.0%||47.6%|
|Pinon USD||Navajo County||100.0%||100.0%|
|Prescott USD||Yavapai County||36.3%||53.2%|
|Red Rock ESD||Pinal County||55.4%||34.9%|
|Safford USD||Graham County||N/R||45.3%|
|Santa Cruz Valley UHSD||Pinal County||N/R||53.8%|
|Sedona-Oak Creek JUSD||Yavapai County||63.2%||22.1%|
|Superior USD||Pinal County||3.3%||25.5%|
|Tombstone USD||Cochise County||76.7%||58.5%|