Welcome!
This is an analysis of Arizona school district spending at both the State and individual district levels that addresses the requirement in Arizona Revised Statutes §41-1279.03 for the Auditor General to monitor Arizona school districts to determine the percentage of every dollar they spent in the classroom. We have been monitoring this since FY 2001.
State results
State-wide, school districts spent a combined $11.6 billion in FY 2022, $9.3 billion for day-to-day operations. Dollars spent on instruction and total per-student spending continued to increase from the prior year. The State results page provides an analysis and breakdown of State-wide district spending by operational area, as well as trends in spending over time and more details on the State’s average teacher salary.
District results
Each school district must decide where to allocate their resources. The District results page provides an analysis and breakdown of each school district’s spending by operational area, as well as trends in spending over time and details on each district’s average teacher salary. Peer group averages are included for some measures for comparison purposes and can help identify opportunities for increased efficiency.Overview
The State’s total spending increased more than $1 billion from FY 2021, which was likely due to COVID-19 relief spending.
The State-wide ISP decreased to 54.5%, a 0.8% decrease from FY 2021, and 57% of districts had decreased ISPs.
The State’s per student operational spending amount increased by $753 or 7.6%, and less than half went toward instruction.
The State’s average teacher salary increased to $58,366, with districts using COVID-19 monies to help fund increase, and 72% of districts’ average teacher salaries increased from FY 2021.
We have identified inefficient district practices that, if addressed, could result in more money available for instruction.
Nearly all districts returned to in-person learning, and meals served, riders transported, and miles driven increased State-wide compared to the prior fiscal year.
Total spending
Why monitor total spending?
The State’s total spending represents school districts’ combined operational and nonoperational spending and provides a broader perspective on the amount districts spend for day-to-day operations as well as other purposes such as securing capital assets and paying interest on debt. Operational spending, which is the focus of most of our analysis and represents the larger portion of total spending, includes districts’ instructional spending as well as spending for student support, instruction support, administration, plant operations, food service, and transportation. Nonoperational spending includes districts’ spending on land and buildings, equipment, interest, and other spending areas (see the "Spending areas" section of the Glossary page for descriptions of all operational and nonoperational areas).
How have COVID-19 federal relief monies affected total spending?
As shown below, there have been substantial increases in total spending, with the most recent year-to-year increase exceeding $1 billion. These increases were likely due to the continued influx of COVID-19 federal relief monies that were generally allowed to be used in addition to or instead of State and local monies available for similar purposes. According to our Office’s special report on school districts’ COVID-19 federal relief spending, districts reported spending approximately $942 million of COVID-19 relief monies in FY 2022.
Year-to-year changes in total spending for FYs 2020 through 2022
FY 2020
Operational spending
$8,168,932,343
Nonoperational spending
$1,819,100,206
Total spending
$9,988,032,549
Total spending percentage point change from prior year
+2.3%
Total spending change in dollars from prior year
+$222.18 million
FY 2021
Operational spending
$8,425,313,015
Nonoperational spending
$1,989,022,129
Total spending
$10,414,335,144
Total spending percentage point change from prior year
+4.3%
Total spending change in dollars from prior year
+$426.30 million
FY 2022
Operational spending
$9,254,303,250
Nonoperational spending
$2,347,092,712
Total spending
$11,601,395,962
Total spending percentage point change from prior year
+11.4%
Total spending change in dollars from prior year
+$1.19 billion
Instructional spending percentage
Why monitor instructional spending percentage?
The State-wide instructional spending percentage (ISP) represents how much of school districts’ total operational spending was for instruction versus other operational areas such as student support, administration, and plant operations (see the “Spending areas” section of the Glossary page for descriptions of all operational areas). An increasing ISP means a district allocated a higher proportion of its spending to instruction than in the prior year, while a decreasing ISP means a district allocated a lower proportion of its spending to instruction than in the prior year. Spending on areas other than instruction directly affects a district’s ISP and the monies it has available for its instructional program costs such as paying teacher salaries and purchasing instructional supplies.State-wide ISP percentage point change from prior fiscal year
State-wide ISP decreased
A lower proportion of the increased operational spending was allocated to instruction than in the prior fiscal year. This is why the State-wide ISP decreased despite an increase in dollars spent on instruction.
School districts that decreased their ISPs
1 One district was excluded for not having reliable data for both years.
State-wide ISP and percentage point change from prior fiscal year (20-year trend)
| Fiscal year | Instructional spending percentage | Percentage point change from prior year |
|---|---|---|
| 2002 | 58.2% | +0.5% |
| 2003 | 58.6% | +0.4% |
| 2004 | 58.6% | No change |
| 2005 | 58.4% | -0.2% |
| 2006 | 58.3% | -0.1% |
| 2007 | 57.9% | -0.4% |
| 2008 | 57.3% | -0.6% |
| 2009 | 56.9% | -0.4% |
| 2010 | 55.9% | -1.0% |
| 2011 | 54.7% | -1.2% |
| 2012 | 54.2% | -0.5% |
| 2013 | 53.8% | -0.4% |
| 2014 | 53.8% | No change |
| 2015 | 53.6% | -0.2% |
| 2016 | 53.5% | -0.1% |
| 2017 | 53.8% | +0.3% |
| 2018 | 54.0% | +0.2% |
| 2019 | 54.7% | +0.7% |
| 2020 | 54.9% | +0.2% |
| 2021 | 55.3% | +0.4% |
| 2022 | 54.5% | -0.8% |
State-wide ISP highlights since we began monitoring in 2001
In 2000, voters approved an increase in State sales and use taxes to be used for education funding, and in 2018 it was renewed for an additional 20 years. We are required to monitor the amount of monies school districts spend in the classroom, which we monitor through the ISP, and we have reported each district’s ISP annually since FY 2001 (see the “Objectives” section on the Resources page for more information about why we monitor dollars spent in the classroom through the ISP). The graphic above shows the most recent 20 years of changes in the State-wide ISP. We have also highlighted the State-wide ISP from the initial year of monitoring, and the highest and lowest ISPs since we began monitoring.
Initial fiscal year
FY 2001
57.7%
Highest fiscal year
FY 2004
58.6%
Lowest fiscal year
FY 2016
53.5%
Per student spending
Why monitor per student spending?
Considering spending on a per student basis controls for differences or changes in the number of students attending districts. This measure can be used to evaluate how much a district or the State spent for each student, on average, as compared to other districts, states, or the nation, and to analyze spending changes over time. It also provides context for spending percentages because sometimes a small change in spending percentage can equate to a large change in dollars spent. Per student operational spending represents how much money school districts spent per student for their day-to-day functions or activities such as for instruction, administration, and plant operations (see the “Spending areas” section of the Glossary page for descriptions of all operational areas).State-wide per student operational spending increased
Per student operational spending increased
State-wide per student operational spending trends
| Students attending |
| Operational area |
| Totals |
Average teacher salary
Why monitor average teacher salary?
Teacher salaries are one of a school district’s most significant costs and have been a topic of high interest in recent years in Arizona. In FYs 2018 through 2021, additional State monies were provided to districts with the intention of increasing teacher salaries 20 percent from the FY 2017 base year. These monies were distributed to districts based on each district’s number of students and not on how much each district would need to increase its average teacher salary 20 percent. As a result, some districts may have received less monies than needed to meet the intended goal and others may have received more monies. The bar chart includes the intended goal and actual cumulative State-wide average teacher salary percentage increases between FYs 2017 and 2022.
Although new annual increases have ended, districts have continued to receive the additional amounts of monies they were appropriated in FYs 2018 through 2021 as those increases were intended to be permanent and were built into the base-level funding formula. This also means that it is not possible to track exactly how districts spent the additional monies because they were mixed with other district monies. Further, there was no requirement that districts spend these additional monies on teacher salaries; rather, districts could have spent these monies in different areas or on other needs.
State-wide average teacher salary increased 20.7%, or $9,994, since FY 2017, and districts used COVID-19 federal relief monies to help fund increase
The FY 2022 State-wide average teacher salary increased since the prior fiscal year to $58,366, resulting in a total increase of 20.7 percent since FY 2017. As shown in the bar chart, districts used COVID-19 federal relief monies in FYs 2021 and 2022 to fund a portion of these increases. Generally, COVID-19 federal relief monies were allowed to be used in addition to or instead of State and local monies available for similar purposes. As a result, some districts may have increased their General Fund balances by using COVID-19 federal relief monies for expenses such as maintaining operations and paying teacher salaries that might have otherwise been paid from General Fund monies. Our School District Financial Risk Analysis issued in December 2022 identified that State-wide, district General Fund The General Fund is a district’s primary operating fund. It accounts for all financial resources used for maintenance and operations, except those required to be accounted for and reported in another fund. For example, teacher and administrator salaries and benefits are normally paid from a district’s General Fund, but some salaries and benefits are paid from other more restricted funds, such as federal or State grant funds. balances increased 32 percent between FYs 2020 and 2022. Further, nearly half of school districts reported using at least some of their COVID-19 federal relief monies for allowable purposes in place of available State and local monies (see the District, charter, and ADE COVID-19 spending special report). Some districts may have chosen to use these monies to make one-time payments that increased their average teacher salary for the fiscal year, while others may have made increases to their salary schedules that represent an ongoing commitment of monies.
Cumulative State-wide average teacher salary increases since FY 2017
Most districts’ average teacher salaries increased, but 28% decreased between FYs 2021 and 2022
School district efficiency
Why monitor spending variation among similar districts?
Reviewing spending variation among similar districts is helpful because it shows that there may be possibilities for some districts to achieve lower costs by operating more efficiently. Operating efficiently is important because districts that outperformed their peers on operational efficiency measures tended to spend higher percentages of their total operating dollars on instruction. To compare spending variation in a meaningful way, we developed operational peer groups, which helped control for certain factors, such as a district’s size, type, and location, that can impact district performance on efficiency measures. The following figures show the range of spending for one efficiency measure, plant operations spending per square foot, within each peer group.Range of plant operations spending per square foot by operational peer group in FY 2020
Examples of wide spending variations among similar districtsPeer groups in towns and rural areas
Peer groups in cities and suburban areas
What are some inefficient practices we’ve identified?
In performance audit reports we issued over the last 5 calendar years (2018-2022) alone, we identified opportunities for improved efficiency at multiple districts that, if acted upon, would enable these districts to save monies in various operational areas. Districts could then direct these cost savings to instruction—to increase teacher salaries, reduce class sizes, purchase instructional supplies—or to help meet other district priorities. The table below presents examples of the inefficient practices and related potential cost savings we identified in these audits.| Inefficient practice | Identified cost savings |
|---|---|
| Higher noninstructional staffing levels and/or compensation rates, paying employees for hours not worked, inadequate oversight of payroll process leading to errors in pay | $6,881,456 |
| Operating schools far below designed capacity and maintaining excess space | $1,280,819 |
| Disadvantageous solar contract terms, higher utilities rates and usage in comparison to peers | $660,000 |
| Setting meal prices too low or not appropriately charging for meals, excessive food waste or cost due to not utilizing commodities, lack of of meal-production monitoring or overproducing meals, inadequate oversight over participation in federal reimbursement programs | $424,847 |
| Not charging fees or obtaining grants or donations to cover costs of community programs | $369,300 |
| Lack of controls over fuel or general supplies use, not monitoring supply costs in comparison to peers | $271,133 |
| Unnecessary noninstructional travel expenses including spending more on meals and travel for employees and governing board members than State travel policy allows | $65,450 |
| Paying for students’ transportation for which the District does not receive funding | $29,532 |
How can districts use this information?
The wide range in operational costs between similar districts discussed earlier and examples of potential cost savings from our performance audits demonstrate why school district governing boards, administrators, and others should pay close attention to their district’s efficiency in operational areas. Doing so not only demonstrates good stewardship of public monies, but it also helps identify possible high-cost areas that, if addressed, could enable the district to devote a higher percentage of its resources to instruction, which may impact student achievement or teacher recruitment and retention.COVID-19 impact
COVID-19 pandemic affected school district operations and spending
Nearly all districts returned to in-person learning in FY 2022 and State-wide students attending increased by 2% since the prior fiscal year with total students attending still approximately 32,700 lower than pre-pandemic levels. While 70% of districts saw increases in their number of students attending, 30% saw a decline, which is important because most of a district’s funding is based on students attending. As a result, individual districts that had decreased numbers of students attending may have also experienced reduced base-level funding. However, districts had available a large influx of COVID-19 federal relief monies. During FY 2022, districts reported spending approximately $463 million in COVID-19 federal relief monies to maintain operations, primarily on classroom and nonclassroom salaries and benefits.
As of the end of FY 2022, districts reported more than half, or an estimated nearly $2 billion, remained in unspent awarded COVID-19 federal relief monies that will expire as late as September 2024. As we recommended in our special report on Arizona school districts’ reported spending of COVID-19 federal relief monies, districts should have a plan for how to spend these remaining one-time monies and plan for the impact it will have on continued district operations when these monies have been spent or expire.
Number of meals served reached a 5-year high, while riders transported and miles driven increased since prior fiscal year, but not back to pre-pandemic levels
Returning to in-person learning impacted not only how districts spent their monies but also how they operated support programs that had been previously adapted for virtual learning or a combination of learning environments. A district’s food service and transportation program operations are heavily dependent on whether students are attending in person. With nearly all districts returning to in-person learning in FY 2022, food service programs saw substantial increases in participation State-wide since the prior fiscal year as demonstrated by the increase in meals served State-wide, which exceeded pre-pandemic levels by 6%, or approximately 7.3 million. Similarly, transportation programs saw total miles driven and riders transported substantially increase since the prior fiscal year, but both remained lower than pre-pandemic levels. Specifically, total miles driven were still 18% or approximately 15.4 million lower than pre-pandemic levels and total riders transported remained 22% or approximately 57,500 lower than pre-pandemic levels.
Food service—meals
43% State-wide increase in meals served from prior fiscal year, including exceeding pre-pandemic levelsA majority of districts saw an overall increase in the number of meals served because of increases in students attending and a waiver from the federal government that allowed school districts to serve meals to all students for free regardless of household income during FY 2022. The large increase in number of meals served by districts resulted in increased spending to operate food service programs and may have required some districts to allocate previously reassigned monies back to their food service program or allocate new monies, which may have been one-time monies.
Transportation—riders
87% State-wide increase in riders from prior fiscal year, but still below pre-pandemic levelsTransportation—miles
65% State-wide increase in miles from prior fiscal year, but still below pre-pandemic levelsAlthough the total riders transported and miles driven increased from FY 2021, neither measure reached pre-pandemic levels. Districts reported varying impacts to their operations during FY 2022 such as reducing their number of routes to address a lack of available bus drivers or operating their existing bus routes with fewer riders because of a decrease in students choosing to ride the bus due to COVID-19 concerns or a decline in students attending.
If you are interested in Arizona school districts’ reported spending of COVID-19 federal relief monies through June 30, 2022, and planned future spending, see our Office’s special report summary and interactive dashboards.
