HB2555 - 472R - House Bill Summary

House of Representatives

HB 2555

schools; financial mismanagement provisions

Sponsor: Representative Anderson

dpas/e	Committee on K-12 Education
x	Caucus and COW
	As Engrossed and As Passed the House

HB 2555 makes changes to the statutes relating to school districts placed under receivership.

History

Laws 2005, Chapter 274 (HB 2417) established rules and regulations allowing the State Board of Education (SBE) to declare a receivership and to appoint a receiver to take control of a school district that is insolvent or has grossly mismanaged its finances.

A.R.S. Section 15-103 requires the SBE to review allegations of a school district being insolvent or grossly mismanaging its finances as delineated in statute and allows for a school district to respond to the allegations at a public hearing. The SBE must place a school district under receivership and appoint a receiver to take control of the school district if it has been demonstrated by a preponderance of evidence that the school district is insolvent or has grossly mismanaged its finances.

The receiver, on appointment, must begin a full review and investigation of the school district's financial affairs and submit to the SBE a detailed report listing the findings of the investigation. The report must include a financial improvement plan and budget that details how the school district will eliminate any continued gross financial mismanagement and achieve financial solvency, including a proposed timeline for achieving financial solvency. The report must be submitted within 120 days after the receiver's appointment. Additionally, the receiver must submit a quarterly progress report to the SBE and the SBE must review the progress of a receivership every six months.

Currently, only one school district is under receivership in Arizona pursuant to A.R.S. Section 15-103. On December 5, 2005, the SBE appointed a receiver to the Colorado City Unified School District No. 14 pursuant to a consent agreement and joint motion to enter consent order between the officials of the Colorado City Unified School District No. 14 and the SBE.

Provisions

· Gives the SBE the discretion to find a school district insolvent if it finds the school district has operated with a deficit equal to 5% or more of the school district’s revenue control limit for any fiscal year within the past two fiscal years.

· Requires the SBE to adopt rules specifying the management of a school district’s financial affairs between the time of the receiver’s appointment and the implementation of the improvement plan.

· Removes one of the requirements for the SBE to remove a school from receivership if the Auditor General certifies that the school district has been financially solvent for one fiscal year.

Amendments

Committee on K-12 Education

The Committee on K-12 Education adopted a strike-everything amendment as follows:

· Requires the county school superintendent to present the proposed budget of the accommodation school to the county board of supervisors for consideration, modification and adoption.

· Requires approval of the county board of supervisors for the county school superintendent to carry forward remaining monies from gifts, grants and devises.

· Requires the county board of supervisors to annually budget and expend an amount to meet the needs of the Special County School Reserve Fund.

· Makes technical and conforming changes.

· ---------- DOCUMENT FOOTER ---------

· Forty-seventh Legislature