Assigned to ED                                                                                                                  AS PASSED BY COW

 

 

 

 


ARIZONA STATE SENATE

Fifty-Seventh Legislature, Second Regular Session

 

AMENDED

FACT SHEET FOR H.B. 2481

 

school districts; records; noncompliance; penalties

Purpose

Prescribes training requirements, school district superintendent penalties and bond and override election restrictions for a school district that fails to correct a uniform system of financial records (USFR) deficiency within specified timeframes.

Background

The Auditor General (OAG), in conjunction with the Arizona Department of Education (ADE), must prescribe a USFR for school districts to use each fiscal year. The USFR must:
1) provide for adjustment in consideration of existing capabilities available at a reasonable cost to school districts; 2) allow schools to maintain necessary records at a minimum cost; 3) prescribe guidelines applicable to procurement practices; 4) prescribe methods for apportioning specified revenues; 5) prescribe guidelines for apportioning pupil enrollment and attendance; and 6) provide information to assist in determining equitable distribution of state aid to schools. The OAG must inform any school district that fails to establish and maintain the USFR, detail in writing the deficiencies of the school district and provide the school district 90 days to correct the deficiencies (A.R.S. § 15-271).

If the State Board of Education (SBE) determines that a school district is not in compliance with the USFR or has failed to correct a deficiency within 90 days after receiving notice from the OAG, the SBE must direct the Superintendent of Public Instruction to withhold up to 10 percent of the school district's state monies for each violation until the OAG reports that the school district is in compliance (A.R.S. § 15-272).

A school district governing board may, and on petition of 15 percent of the school district electors must, hold elections for specified purposes, including to decide whether: 1) school district bonds will be sold to raise monies for specified purposes; and 2) to change the list of capital projects or the purposes authorized by prior voter approval to issue bonds. Monies to redeem bonds and pay interest are raised by assessing secondary property taxes in the school district (A.R.S.
§ 15-491).

If a school district's proposed budget exceeds the statutory aggregate budget limit for the year, the governing board must order an override election to be held at least 90 days before the election. An override election may be held to exceed the revenue control limit or district additional assistance (DAA) and may be funded by assessing secondary property taxes or from revenues other than a property tax levy (A.R.S. § 15-481).

There is no anticipated fiscal impact to the state General Fund associated with this legislation.

Provisions

1.   Requires, if a school district fails to correct a USFR deficiency within 90 days after receiving notice from the OAG, the SBE to:

a)   consult with ADE to determine the amount of training and other interventions necessary or appropriate to assist the school district to achieve compliance; and

b)   direct ADE to provide to the school district a list of approved training programs and providers for the training and interventions prescribed by the SBE and ADE.

2.   Requires, within 30 calendar days after a school district receives the list of approved training programs and providers from ADE, the school district to:

a)   implement any interventions that are prescribed; and

b)   provide any training that is prescribed to the school district's superintendent, business manager, chief financial officer and any other administrator or executive identified by the SBE or ADE.

3.   Requires a school district to notify ADE when each intervention is implemented and each outlined school district administrator completes the training.

4.   Requires ADE to notify the SBE when the prescribed training and interventions are completed.

5.   Requires, if a school district fails to correct a USFR deficiency within 18 months after receiving notice from the OAG, the SBE to notify the school district governing board that the school district superintendent is ineligible to receive performance-based pay, including the portion of the school district superintendent's annual salary that is classified as performance pay.

6.   Determines that a school district superintendent is ineligible to receive performance-based pay beginning on the first day of the 18th month after the school district receives notice from the OAG of the USFR deficiency and until such time as the OAG reports the school district's compliance with the USFR.

7.   Prohibits, if a school district fails to correct a USFR deficiency within 18 months after receiving notice from the OAG, the governing board from doing the following until the school district has corrected any USFR deficiencies:

a)   ordering a DAA override election; or

b)   calling an election to decide whether to issue school district bonds or change the list of capital projects or purposes previously authorized by prior voter approval to issue bonds.

8.   Deems a school district to have corrected any USFR deficiencies after the date on which the OAG reports that the school district is in compliance with the USFR.

9.   Makes technical and conforming changes.

10.  Becomes effective on the general effective date.

Amendments Adopted by Committee of the Whole

1.   Replaces the requirement for the SBE to direct ADE to provide a school district that fails to correct a USFR deficiency within 90 days necessary training and interventions with a requirement for the SBE to direct ADE to provide such schools with a list of approved training programs and providers.

2.   Requires a school district that fails to correct a USFR deficiency within 90 days to implement any interventions and provide training to specified school district personnel within 30 calendar days after receiving the list of approved training programs and providers.

3.   Requires a school district to notify ADE when each intervention is implemented and each school district administrator completes the training.

4.   Removes the requirement for a school district that fails to correct a USFR deficiency to pay for any costs incurred by ADE to provide the training and interventions.

5.   Makes technical changes.

House Action                                                           Senate Action

ED                   2/10/26      DP       7-2-3-0               ED                   3/25/26      DP              4-3-0

3rd Read          2/25/26                  35-18-7

Prepared by Senate Research

April 16, 2026

MH/hk