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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 fiscal year 2001.
State results
State-wide, school districts spent a combined $10.4 billion in fiscal year 2021, $8.4 billion for day-to-day operations. Instructional spending and total per-pupil 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 instructional spending percentage increased to 55.3% (FY 2021) from 54.9% (FY 2020). 55% of districts increased their percentages.
The State’s per pupil operational spending amount increased by $840, or 9.2%, from FY 2020 to FY 2021. More than half the increase went toward instruction.
The State’s average teacher salary increased 16.5% since FY 2017—falling short of the State budget bills' intended 20% increase by FY 2021.
We have identified inefficient school district practices that, if addressed, could result in more money available for instruction.
Both the COVID-19 pandemic and federal relief monies affected districts’ operations, primarily in food service and transportation.
Instructional spending percentage
Why monitor instructional spending percentage?
The State’s instructional spending percentage 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 instructional spending percentage means districts allocated more of their resources to instruction than in the prior year. Spending on areas other than instruction directly affects districts’ instructional spending percentages and the monies they have available for their instructional programs such as to pay teacher salaries and purchase instructional supplies.State-wide ISP percentage point change from prior fiscal year
School districts that increased their ISPs
State-wide ISP and percentage point change from prior fiscal year
| Fiscal year | Instructional spending percentage | Percentage point change from prior year |
|---|---|---|
| 2001 | 57.7% | Initial 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% |
Per pupil spending
Why monitor per pupil spending?
Per pupil operational spending represents how much money school districts spent 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). Considering operational spending on a per pupil basis controls for differences or changes in the number of students attending districts. This measure allows for comparison of how much a district or the State spent for each student, on average, to other districts or states or analysis of 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.State-wide per pupil operational spending increased
State-wide per pupil operational spending trends
| FY 2021 | |||||
|---|---|---|---|---|---|
| Students attending | 844,570 | ||||
| Operational area | |||||
| Instruction | $5,521 | ||||
| Student support | $905 | ||||
| Instruction support | $576 | ||||
| Administration | $1,041 | ||||
| Plant operations | $1,168 | ||||
| Food service | $396 | ||||
| Transportation | $369 | ||||
| Totals | $9,976 | ||||
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. From fiscal years 2018 through 2021, additional funding was included in the State budget that was intended to increase the average teacher salary by 20 percent from the fiscal year 2017 base year. This plan is commonly referred to as “20x2020” because the final increase occurred in the 2020-2021 school year (fiscal year 2021). The bar chart shows the intended and actual percentage increases for each fiscal year.State-wide average teacher salary increased 16.5%, or $7,977, since FY 2017—falling short of the intended 20% increase by FY 2021
In fiscal years 2018 through 2021, additional monies were provided to districts through the State budget with the intention of increasing teacher salaries. These monies were distributed to districts based on their number of students and not on how much each individual district would need to increase its average teacher salary 20 percent, so some districts may have received less monies than needed to meet the intended goal and others may have received more monies. There was no requirement that districts had to spend these monies on teacher salaries, and could have spent these monies in different areas or on other needs. Also, districts mixed these monies with other district monies, so it is not possible to track exactly how districts spent them.Cumulative State-wide average teacher salary increase fell short of intended goal
Most districts increased their average teacher salaries, but less than half met the 20 percent intended goal
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. Although the COVID-19 pandemic impacted fiscal year 2021 district operations, wide spending variations have occurred in prior years as well. 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 2021
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 3 calendar years (2019-2021) 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. They could then direct these cost savings to instruction—to increase their teacher salaries, reduce class sizes, purchase instructional supplies—or 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 |
|---|---|
| Operating schools far below designed capacity and maintaining excess space | $966,819 |
| Higher noninstructional staffing levels and/or compensation rates, overtime and paying employees for hours not worked, inadequate oversight of payroll process leading to errors in pay | $913,470 |
| Disadvantageous solar contract terms, higher utilities rates and usage in comparison to peers | $660,000 |
| Lack of controls over fuel or general supplies use, not monitoring supply costs in comparison to peers | $271,133 |
| 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 | $179,207 |
| Not charging fees or obtaining grants or donations to cover costs of community programs | $35,700 |
| Unnecessary noninstructional travel expenses including spending more on meals and travel for employees and governing board members than State travel policy allows | $16,309 |
How can districts use this information?
The wide range in operational costs between similar districts discussed earlier and examples of identified 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
Districts were affected by the COVID-19 pandemic for all of fiscal year 2021, making the pandemic’s impact even more evident than in fiscal year 2020 when districts were impacted by the pandemic for only 3½ months. State-wide, students attending districts decreased by approximately 50,000 students, or 6%, which is the largest year-to-year change in students attending since 2001. In fact, State-wide students attending districts remained relatively consistent for the past 15 years before this decrease. Fiscal year 2021’s decrease is important because most of a district’s funding is based on students attending, so individual districts whose number of students attending substantially decreased likely also experienced reduced funding. However, districts also received a large influx of federal COVID-19 relief monies.
Many districts continued to adapt their operations to respond to the pandemic, including providing in-person, virtual, or a combination of learning environments, which may have impacted not only how they spent their monies but also how they operated support programs.
Number of meals served, riders transported, and miles driven decreased from prior year
State-wide, the COVID-19 pandemic impacted food service and transportation areas more than any other operational area. Fiscal year 2021 decreases in the State-wide number of meals served, riders transported, and miles traveled were substantial, whereas these measures had previously been relatively consistent.
Food service
15% State-wide decrease in meals served from prior fiscal yearA majority of districts saw an overall decrease in the number of meals served, likely because of decreases in students attending, or at least students attending in person. However, some districts saw increases in meals served as they were using flexible programs that allowed them to serve meals to their communities, which had high rates of participation.
Transportation
58% State-wide decrease in riders from prior fiscal yearTransportation
48% State-wide decrease in miles from prior fiscal yearUnlike food service programs, transportation programs had fewer options to continue normal operations in fiscal year 2021. Some districts continued to transport students but with much lower ridership, whereas others did not transport any students at all but instead used bus routes to drop off meals and homework packets to students. Districts could still claim these miles for reporting purposes, which is why miles did not decrease as much as riders did in fiscal year 2021.
If you are interested in Arizona school districts’, charter schools’, and the Arizona Department of Education’s reported spending of federal COVID-19 relief monies through June 30, 2021, and planned future spending, see our Office’s special report summary and interactive dashboards.