PHOENIX — As school districts continue to face budget challenges amid declining enrollment, the Arizona Auditor General’s Office recently released a report identifying which districts are in the highest financial risk and which are approaching it.
Auditor General’s financial risk report
According to the annual report, out of 207 school districts analyzed, nine of them are in the highest financial risk category, and nine more are approaching that category. That’s an increase from last year, when there were only two highest risk districts and seven that approached that category.
From this year’s report, the following are in each category:
Highest risk:
- Antelope Union High School District
- Hayden-Winkelman Unified School District
- Isaac Elementary School District
- Joseph City Unified School District
- Palominas Elementary School District
- Santa Cruz Elementary School District
- Sierra Vista Unified School District
- Tucson Unified School District
- Wilson Elementary School District
Approaching highest risk:
- Balsz Elementary School District
- Chino Valley Unified School District
- Fountain Hills Unified School District
- Hyder Elementary School District
- Mammoth-San Manuel Unified School District
- Round Valley Unified School District
- Sacaton Elementary School District
- Scottsdale Unified School District
- Young Elementary School District
The Auditor General’s Office looks at 10 different measures in determining high risk:
- Change in weighted student count
Budget limit reserve for:
- Operating budget
- Capital budget
- Operating budget
Financial position of:
- General fund operating reserve ratio
- General fund operating margin ratio
- General fund change in fund balance
- General fund operating reserve ratio
- Capital monies redirected to operations
- Small school budget limit adjustment
- Frozen tax rate
- If a district is in receivership
What school districts are doing
For years, ABC15 has been tracking school closures and staffing cuts as districts face declining budgets due to a decrease in student enrollment and/or voters rejecting budget ballot measures. The Isaac School District, last year, fell under receivership and ended up closing two schools to continue to pull itself out of financial insolvency.
More districts are turning to campus closure and/or staffing cuts.
It’s been a difficult, emotional few years for school leaders as well as the families.
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Since the 2023-2024 school year to the present day, nine school districts in the Valley have chosen to close school campuses. Four made that decision just this school year and will close some buildings at the end of this academic year. Two more school districts, the Alhambra Elementary School District and Peoria Unified, are still considering closures.
For a full list and recap of the nine districts that have closed schools, click here.
Both the Balsz Elementary School District and Scottsdale Unified School District are in the “approaching highest risk” categories, and both districts have made the decision recently to close schools.
Scottsdale Unified is in the middle of figuring out staffing cuts.
“None of the work was taken lightly, and there's a recognition that the budget decisions will have an impact on people,” said Dr. Scott Menzel, the superintendent of Scottsdale Unified, in a board meeting on January 20.
The district is looking at potentially cutting more than 50 positions, trying to address a $7.7 million budget shortfall. The district’s decision to close down two schools at the end of this school year will address about $2.5 million of that.
On that list of potential cuts, it includes some guidance counselors, which some community members spoke out about, creating a petition in hopes of preventing the cuts.
The proposed ratio for students to counselors would be 450 students to 1 counselor, up from the 375:1 ratio. The state’s average is 645:1 in the 2023-2024 school year, according to the Arizona School Counselor Association. The American School Counselor Association recommends a 250 student to 1 counselor ratio.
With these proposed cuts, the district says each school would still have counselors.
"I mean, they save lives every day talking to students and navigating difficult situations with students. So, it's very, it's very disheartening. I'm very disappointed,” said Bryn DeFusco, a parent in Scottsdale Unified.
The district’s leadership will meet again in February to continue discussions of the potential cuts.
As for the other districts that are on either financial risk list, they’ve been working with the Auditor General’s Office on ways to balance their budget and submitted action plans.
You can look up a school district’s financial status and the full report on the Auditor General’s Office webpage here.
Scottsdale Unified provided a statement in response to the financial risk:
"Scottsdale Unified takes the Auditor General’s analysis seriously and has already begun taking action to address the identified financial risks. The Governing Board has approved the closure of two schools for 2026–27, will consider budget reduction decisions on February 10, and has signaled two additional closures and repurposing for 2027–28 as part of a multi-year financial stabilization plan.
These steps, while difficult, are intentional and necessary to align facilities, staffing, and resources with current enrollment and revenue realities. The district is committed to making thoughtful, transparent decisions now to ensure long-term financial sustainability and protect classroom resources for years to come."
Wilson Elementary School District’s leadership’s response to the financial risk:
"Wilson Elementary School District is aware of the Auditor General’s financial risk analysis and current risk designation. Wilson is actively working with state agencies to address the items identified. The district has taken corrective steps to strengthen internal processes and oversight, and there is no evidence of financial instability or misuse of funds. Wilson remains committed to transparency, accountability, and full compliance, and will continue working collaboratively to move out of the high-risk classification."
