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Senate Engrossed
school districts; receivership; mandatory consolidation |
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State of Arizona Senate Fifty-seventh Legislature Second Regular Session 2026
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SENATE BILL 1507 |
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AN ACT
amending title 15, chapter 1, article 1, Arizona Revised Statutes, by adding section 15-103.01; amending section 15-397, Arizona Revised Statutes; repealing section 15-103.01, Arizona Revised Statutes, as added by this act; relating to public schools.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Title 15, chapter 1, article 1, Arizona Revised Statutes, is amended by adding section 15-103.01, to read:
15-103.01. Small school districts; receivership; consolidation as a matter of law; new governing board; division of assets and liabilities for previously existing districts; powers and duties of receiver
A. Notwithstanding any other law, if the state board of education places a school district in receivership pursuant to section 15-103 on or before December 31, 2025 and the school district is in receivership on the effective date of this section and if the school district has a student count of less than three hundred, the following school districts are consolidated into one school district as a matter of law:
1. If the school district in receivership is a high school district or a union high school district, the school district in receivership AND the closest school district.
2. If the school district in receivership is not a high school district or a union high school district, the school district in receivership and the closest school district.
B. For the purposes of subsection A of this section, the closest school district is the school district that both:
1. Meets one of the following:
(a) Adjoins the school district in receivership.
(b) If there is no adjoining school district and only one school district is adjacent to the school district in receivership, the adjacent school district.
(c) If there is no adjoining school district and more than one school district is adjacent to the school district in receivership, the adjacent school district with the shortest distance between its boundaries and the boundaries of the school district in receivership.
2. Provides instruction to students in:
(a) Elementary grades, if the school district in receivership is a common school district.
(b) Secondary grades, if the school district in receivership is a high school district, a union high school district or a unified school district.
C. The terms of the governing board members of the previously existing school district that is not in receivership do not expire on the effective date of the consolidation and continue until January 1 following the next general election, and the terms of only THE TWO GOVERNING BOARD MEMBERS OF THE PREVIOUSLY EXISTING SCHOOL DISTRICT IN RECEIVERSHIP WHO RECEIVED THE HIGHEST NUMBER OF VOTES CASTED DURING THE LAST GENERAL ELECTION DO NOT EXPIRE AND CONTINUE UNTIL JANUARY 1 FOLLOWING THE NEXT GENERAL ELECTION, during which time the members of the governing boards of the previously existing school districts shall serve as the governing board of the new school district. At the next general election held following the consolidation and thereafter, five members shall be elected as prescribed by section 15-427, subsection B. The new board shall take office on January 1 following the general election.
D. The governing board of each previously existing school district shall prepare a list of assets for the previously existing school district before the end of the fiscal year in which the consolidation occurs. The governing board of each previously existing school district shall set aside sufficient assets or provide other means to satisfy the liabilities of the previously existing school district, and the new governing board shall approve the final division of all assets not later than thirty days after the lists of assets are prepared pursuant to this subsection. The area within the geographic boundaries of each previously existing school district remains subject to property taxes levied for bonds issued by the school district and any other outstanding debt that was lawfully incurred before the consolidation and that is not otherwise satisfied pursuant to this subsection.
E. Notwithstanding section 15-103, the receiver who is appointed by the state board of education:
1. Does not have the powers prescribed in section 15-103, subsection F.
2. Shall submit to the governing board of the new school district a copy of the report, financial improvement plan and budget that the receiver submits to the state board of education pursuant to section 15-103.
3. Shall advise the governing board of the new school district how the school district may eliminate any continued gross financial mismanagement and achieve financial solvency.
4. May recommend that the governing board of the new school district take any of the actions listed in section 15-103, subsection F.
F. Notwithstanding section 15-103, subsection J, the state board of education shall dismiss the receiver thirty days after all of the following occur:
1. The auditor general certifies that the school district has been financially solvent for one fiscal year.
2. The auditor general certifies that the school district's financial records are in compliance with the uniform system of financial records and generally accepted accounting principles.
3. The receiver certifies that the new school district is not engaged in gross mismanagement.
4. The state board of education determines that the new school district is able to pay its debts as those debts become due.
5. The new school district governing board notifies that state board of education that the advice and professional services of the receiver are no longer necessary.
Sec. 2. Section 15-397, Arizona Revised Statutes, is amended to read:
15-397. Effect of unification or consolidation of participating school districts
Notwithstanding sections 15-395 and 15-395.01, if a school district that was participating in a career technical education district at the time that the school district was unified or consolidated pursuant to chapter 4, article 3 of this title OR CONSOLIDATED PURSUANT TO SECTION 15-103.01, the successor school district that results from that unification or consolidation shall automatically continue to participate in that career technical education district in the same manner as the former school district that was unified or consolidated.
Sec. 3. Consolidation of districts; petitions; election; delayed repeal
A. Notwithstanding section 15-459, subsection A, Arizona Revised Statutes, on receipt of petitions bearing the signatures of two percent or more of the number of qualified electors who voted in whichever of the last two general elections resulted in the higher number of ballots cast and who reside in each of two or more school districts in the same county or in adjacent counties to consolidate the school districts or parts of the districts, the county school superintendent of each county affected, within ten days, shall call an election to determine the question on consolidation if both:
1. The combined student count of the school districts or parts of the districts is at least eight thousand but less than eight thousand four hundred.
2. The county school superintendent of each county affected received the petition on or before December 31, 2028.
B. Except as provided in subsection A of this section, an election called pursuant to this section, and a consolidation allowed by this section, are subject to section 15-459, Arizona Revised Statutes.
C. This section is repealed from and after June 30, 2029.
Sec. 4. Delayed repeal
Section 15-103.01, Arizona Revised Statutes, as added by this act, is repealed from and after December 31, 2029.