CASA GRANDE – Three Pinal County School districts have been listed in a new financial risk report by the Arizona Auditor General’s Office as being at a higher risk than other districts in the state.
The report, which was released last week, lists a total of 13 districts in the state as being at a high financial risk, including Apache Junction Unified School District, Mammoth - San Manuel Unified School District and Stanfield Elementary School District in Pinal County. Each district was given the chance to respond to the report and have that response published with the report on the Auditor General’s website.
Deputy Auditor General Melanie Chesney said in a videoconference interview that the office releases an annual spending analysis for each district, but that’s more of a look back at the district's finances, she said.
The new report is an attempt to give the public and districts the most current information on where their district’s financial health is now and allow those groups to plan for the future or identify and create solutions for possible financial problems that are starting to show, she said.
The report is based on 10 risk factors and how those risk factors have changed over a one and four-year period. Those risk factors include: changes in the weighted student count for the district, changes in a district’s operating budget reserve, capital budget limit reserve, general fund operating margin ratio, general fund operating reserve ratio, and general fund change in fund balance. It also includes capital monies that were redirected to operations, if a school is eligible for the state’s small school budget limit program and any changes to those funds if the district is eligible, if a district’s tax rate has been frozen and if the district is in receivership.
None of the three districts in Pinal County are listed as in receivership.
However, all of the Pinal County districts have been reporting a decline in the weighted student count or enrollment over the last four years and last year. Many school districts this year have noticed a decline in enrollment due to COVID-19, Chesney said. However, enrollment at most of the districts on the high risk list has been declining for more than one year.
According to the report, Apache Junction USD had a nearly 21% drop in its weighted student count over the last four years, Mammoth - San Manuel USD had a nearly 25% drop and Stanfield had a 22% decrease.
The state allocates funds to school districts based on a weighted student count formula and a per student state equalization funding formula. The formulas take into account the total number of students in a school and the number of special educational needs students. Smaller districts are weighted more heavily because they have fewer students to spread the cost of operating the district over.
In fiscal year 2021, districts received about $4,785 for each weighted student.
That can be a lot of money for a district to lose, Chesney said.
According to the report, a loss in those state funds can affect a district’s general fund and operating and capital budgets and reserves.
“Revenue losses without similar levels of spending reductions will decrease available reserves. Districts with low or no reserves must react quickly to revenue losses to avoid overspending legal budget limits and available resources,” the report states.
Some districts may be able to cover the loss or part of the loss by getting voters to approve a bond or an increase in the district’s property tax rate, according to the report
Small districts who qualify for the state’s small school adjustment can increase their property tax rates without voter approval, as long as their tax rates haven’t been frozen, according to the report. The small school adjustment program applies to districts with a kindergarten through eighth grade student count of 125 students or less and districts with less than 100 high school students.
The three Pinal County districts listed in the report are too large to qualify for the program. Stanfield Elementary School District is the smallest of the three and has about 402 students attending this year, according to the report.
In their response to the report, Apache Junction USD stated that it has faced several financial challenges over the last 10 years including declining enrollment, increased special education costs and a failure to pass a bond or budget override in over 15 years.
The district states as part of its financial risk mitigation plan the district has implemented a hiring freeze in several departments, declined to fill positions when a person has retired or resigned when those positions are no longer supported by student enrollment figures, reduced the number of contracted special education staff in the district, reviewed staffing at the district to find more cost savings and efficiencies.
Apache Junction USD is exploring an incentive program that would encourage teachers to use less substitute teacher days and implemented a new time clock program that requires staff to punch in and out of work with a specific code. The new program is supposed to save the district about $40,000 a year.
The district also allowed employees in certain departments to place themselves on a voluntary furlough during online and hybrid schooling during the pandemic. This allows some employees to apply for unemployment and save the district money.
In its response to the report, the Mammoth - San Manuel USD pointed out that enrollment in the district started to slowly decline and more low-income families and retirees started moving into the area when the local mine closed in 1999. The district has closed all but one of its five schools. The district is hoping to get voter approval in 2021 to sell the buildings which it currently has to maintain along with the closed community swimming pool that the district is responsible for.
The one school that remains open, now houses prekindergarten through 12th grade students and $180,409 of capital funds had to be spent last year and expects to spend another $120,000 this year to modify it to meet the needs of all students and grade levels, according to the district’s response. The school was built in 1956.
“We have cut back on our administration expenses and with less students we have less teachers,” Mammoth - San Manuel USD states in its response. “We do however have to meet the increased adaptive education students in our district, increased minimum wage, and the need to continue to be competitive with other larger districts to recruit teachers to our area where we are the only industry in town; it has become increasingly more difficult. The loss of federal funding has also exacerbated the budgeting issue. Since 2013-14 we have had a loss of $316,821 in Title (I) and IDEA funds.”
Title I funds are federal monies that are designed to help schools that have a high percentage of low-income students pay for programs and services to help at-risk students succeed in school.
IDEA funds are part of the Individuals with Disabilities Education Act of 1975 provides states with grants to help fund programs and services for the education of students with disabilities. States are supposed to provide some matching funds for the program.
In order to cover some of the losses from declining enrollment, the Mammoth - San Manuel USD states that it has applied for more grants and is trying to make its community schools and food services departments more self-sufficient. The district has also installed a solar power system to help reduce the cost of electricity.
However, the district’s property tax rate was frozen by the Arizona Tax Commission in 2019 and it estimates that its ability to pass a bond or other voter approved funding measure is very low due to the number of low-income families living in the area.
Stanfield Elementary School Districts also acknowledged a decrease in enrollment in its area. It stated in its response that exit interviews with families who were withdrawing students from the district didn’t list any specific reasons that the district could control or change. The district was expecting a bump in enrollment in 2019 when two large manufacturing plants were expected to open in Pinal County this year, but that didn’t happen.
The pandemic has also contributed to the decline in enrollment this year, according to the district. And the district is predicting a 5% decline in average daily membership at the district for the next two years.
The district points out that its spending and revenues have traditionally remained steady over the years, it's just in the past couple of years that unexpected costs have arisen that caused the district to carry forward less money in its reserves than in past years.
The district also listed a number of actions it’s taken to reduce spending.
Those actions include restructuring the district’s operations, changes in internet providers and health insurance carriers and shifting from full-time to part-time contracted food services.
The changes saved the district $162,875 in 2019 and $329,385 in this school year, according to the district’s response, as well as reducing staff by seven full-time equivalent positions.
“Looking ahead to (Fiscal Year)22, the District plans to continue to be proactive to ensure that the General Fund operating margin, operating reserve, and change in fund balance ratios continue to improve,” the district states in its response. “The first strategy is to consider any needed reductions in force based on the 100 day student count. Also to be considered are a reconfiguration of grade levels combinations and classroom structures to maximize utilization of (Full Time Equivalent positions). There is a hiring freeze in place for FY22 staffing. All openings will be evaluated on a case by case basis to determine whether the position(s) is essential to District functions.”
The district has also applied for two building renewal grants with the state for repairs to district schools.
Chesney said the Auditor General’s Office plans to continue to update the report on a regular basis. The report, which is only listed online, can be changed as new financial data comes in.
“We hope districts and the public will use the information to help manage their district’s budgets,” she said.
CASA GRANDE — As the pandemic limits many activities, more locals are turning to golf courses for safe and socially distant fun.
“It’s great to see,” said Adam Krukow, director of golf at Francisco Grande Hotel & Golf Resort. According to Krukow, more locals have been participating in golf since April.
“I started seeing more and more people wanting lessons,” Krukow said.
According to Steve Hardesty, community services director for the city of Casa Grande, Dave White Municipal Golf Course saw record rounds from April into the warmer months.
“Golf and hiking and things like that really picked up,” Hardesty said.
However, lack of winter visitors may be impacting golf courses in the area during the cooler months.
“We do expect a slight decrease of rounds from winter activity as many of our winter visitors are not in Casa Grande at this time,” Hardesty said.
According to Hardesty, the months of November and December did not hit record rounds as the previous months did.
Krukow is also anticipating a drop in play due to the lack of winter visitors, including Canadians.
“Golf in all areas of the United States has really seen an increase in rounds during the response to COVID,” Hardesty said. “Golf is a great recreational activity that lends itself to social distancing as people typically play in groups of four or less.”
According to Hardesty, the City Council voted for new golf carts earlier this year, which are expected to come by the end of the month.
When the virus forced lockdowns in March, Gov. Doug Ducey kept golf courses open by declaring them as essential businesses. As part of his executive order, clubs had to close many indoor areas and facilities, but the courses themselves remained open for business.
For the most part, courses in the state did more than just stay open. Many saw their businesses thrive and even expand in some cases. Several courses have reported an increase in the number of rounds played since the onset of the virus earlier this year.
Golf is big business in the state. According to a 2016 study from the University of Arizona, golf contributes $3.9 billion to the state’s economy every year. And that number has likely increased, said Bob Sykora, the general manager of Mesa Country Club.
“We were already trending to grow in golf,” he said. “We are in a position to grow. We were in a position where we were looking to have accelerated growth in golf. … While the pandemic didn’t hurt us necessarily, we were already on that trajectory.”
According to the UA report, golf tourism, in which people come from out of state to either play or watch golf, is responsible for $1.1 billion of that nearly $3.9 billion output. In a year where people are traveling less and less, courses have had to rely on the business of locals for much of this year.
For whatever reason, whether it be curiosity, passion or mere boredom, more Arizonans are playing golf in 2020 than in years past.
Given the lift that the golf industry typically gives to Arizona’s economy, worth nearly $4 billion annually, it is not surprising that courses were allowed to stay open, despite calls from some local governments to temporarily close them.
Nationwide, Arizona’s golf impact compares well to that of other golf-heavy states.
Of the 35 states included in the most recent economic reports from We Are Golf, a golf advocacy group, Arizona ranks 18th in the number of courses it has. However, golf in the state ranks in the top 10 in many significant economic factors, including total economic output and jobs created.
COOLIDGE — Although Pinal County is feeling the loss of Canadian snowbirds this year — both residents and tourists — there is some room for optimism. While the pandemic suppressed the economy this year, could a snowbird “boom” be in order down the road?
Glenn Williamson, CEO of the Canada Arizona Business Council, speculated that both business and marketing partnerships implied an increase in Canadian investment in the region, and that an uptick in both snowbirds and full-time residents would follow.
In fact, while only 30% of residing Canadians made it down to Arizona this year, Canadian companies were still establishing ties to the area.
“Pinal County has an opportunity to rise to the surface big time,” Williamson said. “We’ve got a boatload of Canadian EV companies looking at that area and going ‘wow.’”
The electric vehicle market overall provides the lynchpin for the Canada-Arizona relationship. There are also several thousand employees of Canadian companies working in northern Mexico as well, putting Arizona in the middle of North American supply chains.
The CABC is interested in two aspects of the EV relationship. One is partnering with companies that supply components for the vehicles that Lucid and Nikola plan to build in the area. The Canadian company Jomi Engineering purchased a building this year in Casa Grande to build roof components for Lucid’s electric vehicles.
But Williamson believes the area will see greater investment in the EV market overall. Currently there are several Canadian companies that build EV scooters or buses, such as GreenPower Motor Company, which has offices in California. Williamson sees something similarly happening around Casa Grande and Pinal County. If Arizona’s market for EV is robust enough, it could begin to directly compete with California for those kinds of companies.
“I’d love to see Pinal County become the Michigan of EV,” Williamson said. “Pinal County could be a major stronghold for North America the way Michigan was for gasoline cars.”
Even from the standpoint of attracting retirees, much like within the U.S., Williamson still sees an opportunity to pull in snowbirds who would typically winter (or retire) in Florida out west instead. Up until the pandemic, the state hadn’t necessarily been active in efforts to draw in Canadians; the influx more or less happened on its own.
“Canadians have hit this re-set button by taking this year down,” Williamson said. “The normal, ‘Let’s just go to Florida’ mindset will maybe change. We are hoping Arizona really starts marketing.”
A future marketing campaign also wouldn’t have to limit itself to retirees. Williamson believes that the pandemic has changed how many people view work and that the increase in remote opportunities means younger people could also relocate to meet their preferences.
“With COVID-19 being what it is,” Williamson said, “there is a huge population of younger people that is going: ‘You know what? I can work from wherever I want.’”
That is not to say that the losses this year were not impactful. In addition to a 70% drop in winter residents from Canada, there was also an 80% drop in Canadian tourists. That resulted in millions of dollars in economic losses — tourists alone spend about a billion dollars a year in Arizona. Although RV parks have filled in vacancies locally, the rental housing market has taken a hit. Williamson believed the area hit hardest was the restaurant industry.
According to Williamson, there are around 500 Canadian companies with a presence in Arizona overall. In a typical year, Canadians rent or own about 100,000 homes in the state. Historically, the majority of snowbirds came directly south from Alberta. Now, most winter residents come from the large eastern cities in Ontario and Quebec. Prior to the pandemic there were slightly over 200 flights a week between Toronto and Phoenix.