Arizona Department Of Education Guarantees Schools Will Receive Payment For Earlier Shortfall
By Matthew Holloway |
The Arizona Department of Education sent information to the State Treasurer’s Office earlier this week regarding supplemental dollars to be sent to Arizona public schools following a shortfall this year. The information confirms funding will be sent to schools immediately, following the newly signed state budget.
As soon as the new state budget was signed into law, the Department of Finance personnel began working on this process, ensuring that schools would not face funding shortfalls.
This move by the Department of Education makes sure that schools will receive full payments for June and beyond, avoiding the crisis that emerged at the end of the 2025 fiscal year.
At the close of FY2025, Arizona’s education system faced a shortfall of just under $200 million, which was due to several factors.
The biggest factors in this shortfall were caused by recalculation of Statewide Average Daily Membership, the Qasimyar tax lawsuit, the Empowerment Scholarship Account, and the Qualifying Tax Rate Levy.
The recalculation of the state’s Average Daily Membership (ADM) caused a $45 million adjustment. This is the state’s method for counting enrolled students, which determines how much funding public schools receive per student. The state had overestimated student enrollment, likely due to increased withdrawals as families opted for other methods of schooling, some paid for by the Empowerment Scholarship Account (ESA).
In an unexpected blow to the state’s finances, Arizona settled Qasimyar v. Arizona. This was a tax lawsuit over disputed property assessments, resulting in a large payment of $69 million from the state’s general fund. This same fund also supports public education, causing a significant amount to be taken away from public schools across the state.
Arizona’s ESA program exceeded its projected cost by $52 million in FY2025. With more families taking advantage of the program than people anticipated, the general fund was strained even more, reducing resources for public schools.
The last big blow to public school funding was the Qualifying Tax Rate Levy, which is a property tax that contributes directly to school funding. This brought in $17 million less than what was projected.
Despite all the financial pressures, the Arizona Department of Education took early action. Before the new budget’s approval, ADE had already distributed roughly 63% of June’s payment.
With the new budget in place, the remaining balance will be paid immediately, restoring full funding levels for schools.
Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.