Chunk of Arizona school funding delayed for June due to $200M state budget shortfall

PHOENIX — Arizona schools have to wait longer than usual for nearly half of their state funding for June due to a budget shortfall, officials said.

Usually, public districts and charter schools receive all of their basic state aid — which goes toward operating costs — at the beginning of each month.

However, the Arizona Department of Education said only 60% of the funding was available for June due to a $200 million dollar state budget shortfall.

The department sent a letter to the schools telling them to plan for June without the additional 40% unless lawmakers pass a 2026 fiscal year budget or a supplemental spending bill by Friday.

Will budget shortfall hurt Arizona schools?

Superintendent of Public Instruction Tom Horne said “nobody will suffer” due to the budget shortfall, but education advocates say it will be a significant burden on some districts.

Horne said the new state budget, when passed, will include the portion of the June allocation that schools might not get. State lawmakers have until the end of June to pass a new budget.

“They won’t get all of the money that is due in the beginning of the month, but the rest of it will be paid more towards the middle of the month,” he told KTAR News 92.3 FM. “Nobody will suffer from not getting the funds. It (will) just be less in the beginning of the month,” he said.

However, Tyler Kowch with Save our Schools Arizona disagrees about the impact of the funding delay.

“While large school districts in Maricopa County might be able to shoulder that burden and move some money around, small school districts, rural school districts rely on that monthly payment to make payroll, to pay for utilities, and a 40% cut is substantial and will be harmful to those districts,” he said.

Why does Arizona have a $200 million education budget shortfall?

Horne said a variety of factors contributed to the budget shortfall, with Empowerment Scholarship Account (ESA) school voucher costs accounting for 20%.

He mentioned trade school West-MEC miscalculating its budget and a lawsuit involving returned Maricopa County property taxes as other contributing factors.

ESA funding increased from $714 million in fiscal year 2024 to $872 million in fiscal year 2025, according to the state Department of Education.

“It’s because more families wanted to have the benefit than we estimated. Since I took office, we’ve gone from 10,000 to 87,000 families,” he said.

Kowch, however, calculates that ESAs are responsible for about half of the funding gap, directly and indirectly.

“The ESA voucher program is $50 million over what the projections were for the costs for this year,” he said. “And then another large factor is that the budget committee underestimated public school enrollment for this year, in large part due to the voucher program. So that’s another $50 million. So almost half of this $200 million dollar shortfall is due to the voucher program.”

Funding for this journalism is made possible by the Arizona Local News Foundation.

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