Frozen tax rate
What is this measure telling me, and why is it important?
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. A frozen tax rate by itself increases a district’s financial risk, and it can lead to unfunded budget limits and negative cash balances , which further increase financial risk.
Tell me more about frozen tax rate.
Districts with frozen tax rates generally levy additional primary property taxes for statutorily allowed increases for small school districts or districts addressing student civil rights issues covered by federal court orders or agreements . Every December, the Arizona Department of Revenue, Property Tax Oversight Commission (PTOC) , identifies which districts cannot increase their property tax rates in the following year, freezing the district’s tax rate at the rate set in the previous August. PTOC freezes districts’ primary property tax rates if both of the following criteria from Arizona Revised Statutes §42-17151 exist:
- At least half of the residential properties in the school district have a total combined primary property tax rate greater than $10 per every $1,000 of assessed value. This equates to $1,000 on a $100,000 assessed value home.
- The district’s primary property tax rate exceeds 150 percent of the statutorily established qualifying tax rate (QTR).
When a district’s tax rate is frozen, it may not be able to generate enough property tax revenues to meet its allowable budget increases, which can result in unfunded budget capacity. State law allows districts to spend in some funds based on budget capacity, which compensates for revenue and spending timing differences without generally resulting in substantial borrowing costs. For districts with frozen tax rates, continuing to spend based on unfunded budget capacity will cause negative cash balances and likely increased borrowing costs.
How were districts identified as high risk for this measure?
All districts with frozen tax rates reported in PTOC’s most recently issued report, were considered high risk for this measure.
PTOC’s 2014 through 2022 annual reports, Review of School Districts that Exceed the 1 Percent State Constitutional Limit.
Districts at high risk for this measure
|District||Among the highest-risk districts||County|
|Ash Creek ESD||Cochise County|
|Bonita ESD||Graham County|
|Bowie USD||Cochise County|
|Double Adobe ESD||
1 of 3
|Elfrida ESD||Cochise County|
|Grand Canyon USD||Coconino County|
|Hayden-Winkelman USD||Gila County|
1 of 3
|McNeal ESD||Cochise County|
|Pearce ESD||Cochise County|
|San Simon USD||Cochise County|
|Santa Cruz ESD||Santa Cruz County|
|Somerton ESD||Yuma County|
|Tonto Basin ESD||Gila County|
|Valley UHSD||Cochise County|