School district financial risk analysisDecember 2020

District

Demographic information

Less common revenues

County: Pinal County
Operational peer group (FY 2020): 10
Legislative district(s): 4 and 11
FY 2019 FY 2020
Students attending: 442 402
Number of Schools: 1 1
FY 2020
Desegregation
0
Federal impact aid
188,960
Small school adjustment
0
Voter-approved budget overrides
0
Total less common revenues per pupil
470

Analysis results

Summary of risks identified:

The District’s weighted student count has declined 22 percent since fiscal year (FY) 2017, reducing its student-count-generated revenues and budget limits. The District reduced its expenditures to stay within its statutorily prescribed budget limits, and in FY 2020, it grew its operating budget limit reserves. However, the District diminished its General Fund balance by 96 percent in FY 2019 and incurred a deficit General Fund balance of over $739,000 in FY 2020 by misallocating revenues to its Unrestricted Capital Outlay Fund. This led to the District reporting FYs 2019 and 2020 General Fund spending exceeding its revenues (i.e., negative operating margin). The District increased its capital budget limit reserve slightly in FY 2020, but its capital budget limit reserve has decreased by 90 percent since FY 2017.

District response:

In terms of the General fund operating margin, operating reserve, and change in fund balance ratios, following the FY2020 AFR analysis, the District noted an issue at the County level with tax levy funds being incorrectly appropriated between UCO and M&O. Corrections to fund balances from FY19 and corrections to revenue distributions for FY20 were made to remedy this. In an effort to reduce spending to be within current-year revenues, the District has taken cost savings measures in the last two fiscal years. These efforts have a combined savings to the District budget of $162,875, and comprise the following a restructuring of District operations that led to a reduction in force (RIF) of 2.0 FTE, and changes in both internet provider and health insurance carrier. In the current fiscal year, cost savings measures have resulted in a savings to the District’s budget of $329,385 and are comprised of a RIF of 5.0 FTE and the shift from full-time to part-time contracted food service management. Looking ahead to FY22, the District plans to continue to be proactive to ensure that the General Fund operating margin, operating reserve, and change in fund balance ratios continue to improve. The first strategy is to consider any needed reductions in force based on the 100 day student count. Also to be considered are a reconfiguration of grade levels combinations and classroom structures to maximize utilization of FTE. There is a hiring freeze in place for FY22 staffing. All openings will be evaluated on a case by case basis to determine whether the position(s) is essential to District functions.

In terms of student counts, the District recognizes that ADM has been declining for the past 8 fiscal years. Exit interviews during student withdrawals did not reveal any specific reasons that could be addressed or mitigated. Historically almost half of these withdrawals have been W-1s or summer drops. One event that can be quantified occurred in FY19 when the loss of 42 ADM resulting in a reduction in force of 3.0 FTE for a savings of $167,179. The District was expecting slight growth in ADM for the current fiscal year due to the opening of two large manufacturing plants within Pinal County. This did not materialize for the current year, and the District will continue to monitor potential increases to ADM as a result of these new places of employment. The District contributes lower ADM to the pandemic that it is currently operating within. This pandemic and its latent consequences make it difficult to project what enrollment will look like in the next two fiscal years. However, the District plans to project a 5% reduction of ADM from the 100 day count while planning for FY22 as well as FY23. As required, adjustments to staffing by reduction in force will be implemented.

In terms of the M&O BBCF and UCO unexpended balance being in decline over the last 3 years, the District would like to note that traditionally the M&O BBCF has held steadily at around 4%. In the last two years, unexpected expenditures have caused the District to carry forward less than 4%. These expenditures included tuitioned-out placement for District enrollees and fluctuations in ADM mid-year after contracts for staffing had been issued. The District has a very large BBCF for M&O of $314,821 for FY21 as a result of grant funding related to the pandemic. Moving into FY22, the projections for BBCF are again at or above 4%. It should be noted that the VW Bus grant that was originally allocated from UCO leaving $60,968 as BBCF for FY21 and has since been adjusted through journal entry to code $110,000 to the grant. The District had also identified several planned expenditures within the last two fiscal years. Planned one-time UCO costs totaled $667,865 and addressed issues related to school improvement efforts and deferred preventative maintenance. Currently there are two Building Renewal Grants on file with the School Facilities Board to ensure district facility project costs are not being borne by the District. These include a water main restructure and repair and roofing replacement.

Additionally, it should be noted that there are discretionary funds available to the District in the event that there are unforeseen expenditures. These funds are not used by the District for day to day operations:
  • Tax Credit and Auxiliary funds (Currently at $27,413 and $35,082 respectively)
  • PrePaid Account with the Trust (Currently at $177,177 per October 2020 statement)

Change in weighted student count
-8.9% -22.1%
(1-year) (4-year)
Fiscal year Group A WSC
2021 473
2020 519
2019 562
2018 588
2017 607
Operating budget limit reserve
100.0% 37.2%
(1-year change) (3-year change)
Fiscal year Balance
2020 $314,821
2019 $71,549
2018 $31,371
2017 $229,526
Capital budget limit reserve
22.4% -89.6%
(1-year change) (3-year change)
Fiscal year Balance
2020 $60,968
2019 $49,829
2018 $421,692
2017 $588,150
General Fund operating reserve ratio
-20.6% 0.3%
FY 2020 unaudited 2019 audited
Fiscal year Balance Expenditures
2020 unaudited ($739,979) $3,593,349
2019 audited $9,958 $3,735,844
General Fund operating margin ratio
-0.5% -4.6%
FY 2020 unaudited 2019 audited
Fiscal year Revenue Expenditures
2020 unaudited $3,576,135 $3,593,349
2019 audited $3,569,848 $3,735,844
General Fund change in fund balance
3.8% -95.7%
FY 2019 to FY 2020 unaudited 2018 to 2019 audited
Fiscal year Change amount
2019 to 2020 unaudited $29,517
2018 to 2019 audited ($221,597)
Capital monies redirected to operations
0.0% 0.0%
(FY 2021) (5-year average)
Fiscal Year Capital monies Amount redirected
2021 $202,016 $0
2020 $218,614 $0
2019 $235,020 $0
2018 $168,740 $0
2017 $174,128 $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 is not frozen.

Receivership

District is not in receivership.