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13 Arizona school districts face high financial risk, according to new report

PHOENIX — More than a dozen school districts in Arizona are facing financial troubles, according to a new report by the Arizona Auditor General.

The report lists 13 school districts that are at higher financial risk than others based on their current and potential future financial difficulties.

“We looked at 10 financial risk measures,” Deputy Auditor General Melanie Chesney told KTAR News 92.3 FM. “Those measures relate to a district’s overall risk of not being able to operate within its available cash resources and budget constraints.

“What we found is that for some of those 13 school districts, they’ve already exceeded their budget limits and others have deficit balances or negative cash balances in their operating funds,” Chesney said.

The highest-risk districts include three from the metro Phoenix area: Apache Junction Unified, Isaac Elementary and Murphy Elementary.

Tucson Unified School District is the largest one on the list. The rest are in rural parts of the state.

Chesney said for some of these school districts that were already struggling financially, enrollment declines this fall “put them right over the edge into becoming high risk.” That’s because school funding is tied to enrollment.

Isaac Elementary School District’s student count has dropped by 27% over the last four years, the most compared to other districts across the state. Meanwhile, Apache Junction Unified and Murphy Elementary have both seen a 21% decline.

Chesney said if these highest-risk school districts don’t make budget cuts or find other revenue sources, they run the risk of having the Arizona State Board of Education appoint “a receiver.” This person, rather than the governing board, would temporarily make all financial decisions.

There are currently two districts in this situation, the Murphy Elementary and Cedar Unified districts. Three other school districts have been appointed a receiver since 2005.

“This is a very dire, last resort kind of consequence,” Chesney said. “We really would urge these school district governing boards to look at these 10 financial risk measures and take a really hard look at what sort of actions they can take to stay within their means.”

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