Page 16 - School Finance Manual 2025-26

Where Formula Dollars Come From 16

The money to support the Revenue Control Limit The Department of Education is charged with distributing
and District Additional Assistance, as set forth in the state aid (equalization assistance) from the state aid enti-
preceding sections, are obtained from two main sources tlement for school districts. In reality district’s’ with more
- state equalization assistance and property taxes. than 4,000 students will receive 1/12th of 2/3rds of the
state aid payments each month and the additional 1/3rd
State Equalization Assistance lump sum payment is rolled over in July of the subse-
quent fiscal year. A.R.S. §15-973 provides the following
The school finance formula attempts to ensure that each schedule for state aid distributions to school districts:
district has equitable budget capacity compared to others
in the state. Equalization assistance helps to ensure that On the fifteenth business day of:
the revenues available for district budgets are shared
equitably as described in A.R.S. §15-971. Equalization July 1/12 of the total amount is distributed
assistance is the amount of money that the state provides August 1/12 of the total amount is distributed
to school districts over and above the levy amount raised September 1/12 of the total amount is distributed
with the uniform Qualifying Tax Rate (QTR). If the local October 1/12 of the total amount is distributed
tax rate necessary to fund the RCL/DSL, DAA and allo- November 1/12 of the total amount is distributed
cation formulas is equal to or lower than the Qualifying
Tax Rate, no state equalization assistance is given. If December 1/12 of the total amount is distributed
the tax rate necessary to fund the formulas is greater January 1/12 of the total amount is distributed
than the Qualifying Tax Rate, state equalization assis- February 1/12 of the total amount is distributed
tance is provided in order to keep this portion of local March 1/12 of the total amount is distributed
property taxes uniform throughout Arizona. The amount April 1/12 of the total amount is distributed
of equalization assistance provided varies inversely with
a district’s per weighted student assessed property valu- May 1/12 of the total amount is distributed
ation. As the district assessed valuation per student goes June 1/12 of the total amount is distributed
up, the equalization assistance goes down. The state
equalization aid formula can be described as follows:
If a school district has cash flow problems, it can apply
1. Equalization base is the sum of the lesser of the to the Superintendent
RCL or DSL, plus District Additional Assistance of Public Instruction for
Allocation. early payments on the
2. District Preliminary Assessed Valuation (A.V.) - schedule shown above.
Including valuation of in-lieu contributions. Advance payments will
3. Qualifying Tax Rate (QTR) for 2025-26 is $1.5606 be made if state funds
for elementary level students and high school are available and if
students. Unified districts must separately deter- approved by the State
mine equalization based on PSD-8 student count Treasurer, the Director
and 9-12 student count. of the Department of
4. Qualifying Levy is the district’s Primary Assessed Administration and the
Valuation divided by 100 multiplied by the Quali- Superintendent of Public
fying Tax Rate. Instruction. In no event is
5. Equalization Assistance is the Equalization Base a school district allowed
minus the Qualifying Levy. to receive more than three-fourths of its total apportion-
ment before May 1 of the fiscal year.

Arizona Association of School Business Officials | School Finance Summary Manual