School district financial risk analysisDecember 2020

District

Demographic information

Less common revenues

County: Pima County
Operational peer group (FY 2020): 1
Legislative district(s): 2, 3, 4, 9, and 10
FY 2019 FY 2020
Students attending: 42,551 42,148
Number of Schools: 86 85
FY 2020
Desegregation
63,654,707
Federal impact aid
674,968
Small school adjustment
0
Voter-approved budget overrides
0
Total less common revenues per pupil
1,526

Analysis results

Summary of risks identified:

The District’s weighted student count has declined 11 percent since fiscal year (FY) 2017 including a 5 percent decline from FY 2020, reducing its student-count-generated revenues and budget limits. In FY 2019, the District did not reduce General Fund spending below available revenues (i.e., negative operating margin). However, the District reduced its expenditures to stay within its statutorily prescribed budget limits as its student counts declined, and in FY 2020, it grew its operating and capital budget limit reserves. The District’s primary property tax rate has been frozen since FY 2016 due in part to levying for desegregation spending. The District’s FYs 2019 and 2020 desegregation budget was not fully funded by property taxes or additional State aid due to its frozen tax rate and a related court case disputing the property tax type required to fund desegregation spending. As a result, the District’s operating and capital budget limit reserves at the end of FY 2020 were 21 percent and 34 percent underfunded, respectively.

District response:

The transition to current year funding in FY18 resulted in the district incurring two-years of enrollment losses resulting in a revenue reduction of over $6 million. The district opted to utilize cash reserves to offset the loss. In the FY19 budget, expense reductions were implemented to bring spending in line with the enrollment trend. However, in FY19 the district did not receive over $8 million in desegregation additional state aid revenue because of a recent victory in Arizona Tax Court that was subsequently appealed by the State. The district received a favorable ruling in July 2019 but has yet to receive the unpaid balance due for FY19 and FY20 which is now totaling over $11 million.

In addition, the district adopted a Contingency Reserve Policy on March 12, 2019. The policy instituted a carry forward reserve in the FY20 budget of 0.6% and was increased to 1% in the FY21 budget.

In response to the district’s declining enrollment, an enrollment task force was established in FY19 that revised the district’s open enrollment processes which had an immediate positive affect by minimizing losses that were as high as 3% the year prior down to less than 1% in FY20. The district’s financial position prior to the impact of COVID-19 had improved such that the FY20 budget capacity was increased by $5.5M due to better than anticipated enrollment. The district did incur additional expenditures related to COVID including the purchase of student technology, curriculum, and personal protective equipment (PPE). Despite the increased COVID spending, the district was able to increase carry forward reserves for M&O and Capital combined from $883k in FY19 to over $14 million in FY20.

The district built into the FY21 budget an enrollment loss contingency, increased carry forward reserves, and aligned spending with projected revenue.

Change in weighted student count
-5.2% -11.1%
(1-year) (4-year)
Fiscal year Group A WSC
2021 47,674
2020 50,274
2019 50,753
2018 52,334
2017 53,635
Operating budget limit reserve
100.0% 100.0%
(1-year change) (3-year change)
Fiscal year Balance
2020 $13,983,287
2019 $913,522
2018 $294,707
2017 $4,396,449
Capital budget limit reserve
100.0% 100.0%
(1-year change) (3-year change)
Fiscal year Balance
2020 $4,544,748
2019 $1,124,842
2018 $438,572
2017 $227,135
General Fund operating reserve ratio
5.3% 6.4%
FY 2020 unaudited 2019 audited
Fiscal year Balance Expenditures
2020 unaudited $16,871,279 $316,740,985
2019 audited $21,153,341 $329,404,373
General Fund operating margin ratio
3.3% -3.6%
FY 2020 unaudited 2019 audited
Fiscal year Revenue Expenditures
2020 unaudited $327,659,446 $316,740,985
2019 audited $317,813,423 $329,404,373
General Fund change in fund balance
100.0% -29.5%
FY 2019 to FY 2020 unaudited 2018 to 2019 audited
Fiscal year Change amount
2019 to 2020 unaudited $11,832,600
2018 to 2019 audited ($8,855,391)
Capital monies redirected to operations
11.8% 5.7%
(FY 2021) (5-year average)
Fiscal Year Capital monies Amount redirected
2021 $17,192,599 $2,021,154
2020 $13,987,211 $1,000,000
2019 $7,532,793 $728,880
2018 $2,709,499 $0
2017 $2,811,345 $0
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 has been frozen since FY 2016.

Receivership

District is not in receivership.