School district financial risk analysisDecember 2020

District

Demographic information

Less common revenues

County: Maricopa County
Operational peer group (FY 2020): 8
Legislative district(s): 19 and 27
FY 2019 FY 2020
Students attending: 1,491 1,407
Number of Schools: 4 3
FY 2020
Desegregation
0
Federal impact aid
0
Small school adjustment
0
Voter-approved budget overrides
1,550,000
Total less common revenues per pupil
1,102

Analysis results

Summary of risks identified:

The District’s weighted student count has declined 21 percent since fiscal year (FY) 2017, reducing its student-count-generated revenues and budget limits. By not cutting spending below available revenues, the District incurred a deficit General Fund balance of just over $608,000 in FY 2018. The District also overspent its operating budget limits in FYs 2018 and 2019, by over $513,000 and $238,000, respectively. When the District was not able to meet its financial obligations in FY 2018, the State Board of Education appointed a financial receiver. In FYs 2019 and 2020, the District redirected 40 percent and 45 percent, respectively, of its capital monies to operational spending to compensate for the prior overspending. Those redirected monies and the District’s spending cuts allowed it to stay within its FY 2020 budget limits but also led to the recent reduction in its capital budget limit reserve.

District response:

In June 2018, Murphy Elementary School District(MESD) was placed into receivership by the Arizona State Board of Education as a result of budget over-expenditures and management concerns. A new management team was brought in to improve budgetary controls and return MESD to financial solvency.

During the past 2 years, MESD has eliminated the accumulated Maintenance & Operations deficit primarily through staff reductions and outsourcing of food service and custodial services. As a result of these significant cuts, MESD will close out FY20 with a budget surplus exceeding $519k in the Maintenance & Operations budget and over $169k in Unrestricted Capital Outlay Budget. The reason for the redirection in the District Additional Assistance was due to the districts previous overspending. In the coming years MESD will have the extensive proceeds from the sale of the Alfred F. Garcia Elementary School property. Thus putting far less strain on the Unrestricted Capital Outlay Budget, allowing for monies in this account to increase in the coming fiscal years. At the time the community approved the sale of Alfred F. Garcia, the Murphy community overwhelmingly supported our capital override increase from $350k to $500k per year, for the next seven years.

Halfway through FY21, MESD does not anticipate the need to move any monies to the General Fund. Following the sale process of the former Alfred F. Garcia Elementary School campus, completion of selling the property is expected to occur in summer 2021.

Moving forward, our FY21 budgetary goals are based upon our forecasted FY22 ADM. The purpose of this is to enter into FY22 with a carry forward well above the current $519k.

Long-Term Foundational Changes​:

Throughout this entire process, the MESD Board has transformed with four new board members joining the MESD Board. They have engaged their efforts and passion for Murphy in their actions as board members. Willingly, the board members have attended training both internally and externally to improve themselves in their capacity as board members.

Also during this time, an entirely new administration team has been created. Along with a new Superintendent, there is a new Business Manager, new Director of Special Education & ELD Programs, new Director of Federal Programs, new Director of HR/Payroll/Benefits, new Director of Curriculum, and a new Board Secretary.

MESD has renewed educational partnerships allowing it to offer additional learning opportunities to its students and better serve its community.

As you can see, through extensive financial, structural, organizational changes, Murphy has progressed significantly towards providing an educational environment that our community deserves. Given the strong financial performance, fewer audit findings in FY20, favorable projected results for FY21, and a stable school board, the administrative team believes MESD is prepared to move out of receivership.

Change in weighted student count
-10.2% -20.9%
(1-year) (4-year)
Fiscal year Group A WSC
2021 1,401
2020 1,560
2019 1,658
2018 1,695
2017 1,772
Operating budget limit reserve
100.0% 18.2%
(1-year change) (3-year change)
Fiscal year Balance
2020 $519,265
2019 ($238,042)
2018 ($513,426)
2017 $439,229
Capital budget limit reserve
-28.8% 100.0%
(1-year change) (3-year change)
Fiscal year Balance
2020 $169,365
2019 $237,935
2018 $72,390
2017 $19,433
General Fund operating reserve ratio
9.3% -0.6%
FY 2020 unaudited 2019 audited
Fiscal year Balance Expenditures
2020 unaudited $829,172 $8,944,021
2019 audited ($57,984) $9,228,759
General Fund operating margin ratio
5.8% 1.5%
FY 2020 unaudited 2019 audited
Fiscal year Revenue Expenditures
2020 unaudited $9,489,976 $8,944,021
2019 audited $9,367,774 $9,228,759
General Fund change in fund balance
100.0% 90.5%
FY 2019 to FY 2020 unaudited 2018 to 2019 audited
Fiscal year Change amount
2019 to 2020 unaudited $779,062
2018 to 2019 audited $550,182
Capital monies redirected to operations
0.0% 25.4%
(FY 2021) (5-year average)
Fiscal Year Capital monies Amount redirected
2021 $1,008,973 $0
2020 $786,547 $355,995
2019 $583,296 $233,296
2018 $435,584 $85,584
2017 $447,910 $97,910
Small school budget limit adjustment

N/A - District is too large to be eligible for adjustment.

Fiscal year Adjustment
2021 $0
2020 $0
2019 $0
2018 $0
2017 $0
Frozen tax rate

District's primary property tax rate is not frozen.

Receivership

District was placed in receivership in June 2018.