By Staff Reporter |

Gov. Katie Hobbs says public education is woefully underfunded, but fiscal reporting indicates districts are flush with cash.  

According to the latest Arizona Department of Education annual financial report, public school districts carried forward more than $8.3 billion in unspent funds from the 2024-25 fiscal year. 

That is nearly equivalent to total appropriations that the state allocated for public education in the 2024-25 fiscal year: $8.9 billion, which goes beyond K-12 schools to include the Board of Regents, community colleges, and universities. 

That $8.9 billion accounts for 55% of total appropriations out of the state’s general fund, which amounted to more than $16.2 billion in the 2024-25 fiscal year. 

Within the $8.3 billion carried over from the 2024-25 fiscal year:

• $1.6 billion for bond building
• $1.3 billion for maintenance and operations
• $1.2 billion for “other” funding
• $941,000 for the Classroom Site Fund and Instructional Improvement Fund
• $884,000 for unrestricted capital outlay
• $708,000 for federal projects
• $672,000 for bond principal deduction
• $393,000 for debt service
• $248,000 for food service
• $150,000 for adjacent ways
• $147,000 for school plant
• $41,000 for state projects

The emergency deficiencies correction, building renewal, and new school facilities funds had negative balances of approximately $395,000, $19 million, and $33 million, respectively. 

Last fall, the Common Sense Institute estimated that school districts hold more than $20 billion in combined cash reserves and underutilized real estate. 

Public school district enrollment has declined steadily since 2008, more so in recent years after the state allowed universal enrollment for the ESA program in 2022. 

Hobbs has advocated for lawmakers to revive Proposition 123, which would take around $300 million every year from the State Land Trust Permanent Fund and give it to education. $300 million is equivalent to a drop in the public education fund bucket: approximately 3% of what the state allocated from its general fund in the 2024-25 fiscal year.

Hobbs credited Prop 123 as providing “critical funding” for districts and educators in her State of the State address earlier this year. The governor said the funding provided by the proposition curbed the budget shortfall and would enable teacher pay raises and prevent future tax hikes. 

The governor and lawmakers have failed to reach a consensus on renewing Prop 123. The proposition expired in June 2025. 

Teresa Leyba Ruiz, the Democratic nominee for superintendent of public instruction, wants to claw back another 3% from a potential funding source. As reported earlier this week, Ruiz proposed reverting the $350 million set aside in Empowerment Scholarship Account (ESA) program funds back to public schools. 

32% of educators reported having an external job and 21% of educators indicated additional paid responsibilities and a second job outside their school, according to a 2024 report by Hobbs’ Educator Retention Task Force issued in partnership with the Arizona State University Morrison Institute for Public Policy. 

That same report identified inadequate salary, unpaid duties and hours, pay differences, and salary compression as issues impacting retention. The report estimated that only 16% of educators agreed that their salary was satisfactory and motivated them to stay in their professions.

A more recent poll of more than 9,300 educators during the 2025-26 school year by the Arizona Department of Education also found that teacher pay was one of the biggest sources of dissatisfaction for educators. 

AZ Free News is your #1 source for Arizona news and politics. You can send us news tips using this link.