Page 5 - School Finance Manual 2025-26

OVERVIEW: “A Global Perspective” 5

The public elementary and secondary schools of Today) legislation. Students FIRST created a completely
Arizona are governed by the Arizona Constitution and new capital financing system aimed at creating minimum
Title 15 of the Arizona Revised Statutes (A.R.S.). The adequacy standards for capital related issues in public
legislature requires that the Arizona Department of schools. This system more tightly controls the capital
Education and the state’s Auditor General interpret Title funding as compared with the past when it was typically
15 and design the state’s Uniform System of Finan- financed by the sale of general obligation bonds. The
cial Records (USFR) which is used in maintaining local Students FIRST program is governed by the School
school district financial records and preparing reports. Facilities Division of the Arizona Department of Admin-
Two USFR manuals exist, one for school districts and istration.
one for charter schools. The USFR prescribes the
accounting system, minimum require- In 1995 the Legislature authorized
ments for internal controls, and The focus of this charter schools — a new educational
includes a detailed description of the option. In the first years, charter school
legally established chart of accounts manual is to provide funding was based on the RCL, CORL
structure. The USFR and Memo- an understanding of and Capital Levy Revenue Limit
randums are available to download (CLRL), which was calculated in the
from the Auditor General’s site (www. the way public school same manner as the districts. Over
azauditor.gov). The USFR includes a districts in the State of the years, the funding has evolved to
calendar, chart of accounts, compli- Arizona are funded. include Charter Additional Assistance,
ance requirements, best practice which replaced the CORL, CLRL and
procedures, and other valuable infor- Transportation funding, plus additional
mation. monies in lieu of capital funding from
the School Facilities Division.
In 1980-81, the Arizona Legislature refined the school
finance system to provide equal dollars per weighted Arizona also provides a universal voucher program,
pupil for school district operations through a balancing known as the Empowerment Scholarship Account
of the local qualifying property tax rate and State equal- (ESA) program, as an option for funding a students’
ization assistance. This concept, commonly referred to educational needs. ESAs provide taxpayer-funded
as the “equalization formula” allowed school districts vouchers to any K-12 students in the state, enabling
throughout the State of Arizona to experience similar parents to pay for private school tuition, homeschooling,
“effort” in raising educational dollars for their students or other educational expenses. Initially created for
irrespective of the property valuations within their students with disabilities, the program was expanded
boundaries. This equalization formula is still utilized in 2022 to a universal scale, making it available to all
today in funding a district’s Revenue Control Limit students regardless of income or academic perfor-
(RCL) and District Additional Assistance (DAA). Further mance. ESAs are funded based on the Charter School
details of these formulas are included in the section of funding formula.
this document entitled, Budget Formula Construction.
The focus of this manual is to provide an understanding
In 1994, the Arizona Supreme Court ruled that the of the way public school districts in the State of Arizona
state’s statutory formula for funding school facilities and are funded and does not include charter school funding.
equipment violated the Arizona Constitution. A four-year The sections that follow will help to better understand
struggle to create a new capital finance system ended some of the detailed components that make up the
July 9, 1998 when the legislature approved Students financing formulas.
FIRST (Fair and Immediate Resources for Students

Arizona Association of School Business Officials | School Finance Summary Manual