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Answering questions about Tucson Unified School District's budget:

What do the numbers say about how we're handling our money?

Posted January 19, 2017

Recently, there have been allegations Tucson Unified School District has been using funds meant for teacher salaries to offset shortfalls in other areas. State law mandates that an independent, outside entity audit our financial records every year. The results of the audit were presented to the Governing Board on Tuesday evening. The Auditors also answered intense questioning from Governing Board members regarding these allegations regarding Prop 301 funds (a voter approved tax to supplement teacher pay).

In addition to the auditors, the Pima County Treasurer and the Chief Financial Officer for the office of the Pima County School Superintendent were on hand to answer any and all questions raised.

The yearly audit results in a document called the CAFR (Comprehensive Annual Financial Report).

You can find the entire CAFR report for 2016 (and the prior 12 years) on our website.

The District's financial statements have been audited by Heinfeld, Meech & Co., P.C., a certified public accounting firm. The goal of the independent audit was to provide reasonable assurance that the financial statements of the District for the fiscal year ended June 30, 2016, are free of material misstatement.

Bottom line of the 186 page report:


  • Tucson Unified School District revenues remained stable, increasing by $6 Million or 1%.
  • Tucson Unified School District consistently spent more on instruction and less on administration in 2016.
  • The District's debt was paid down by a total of $25 Million.
  • We achieved combined fund balance of $80 Million at the end of the school year, with $31 Million in uncommitted funds.
  • Tucson Unified School District ended the 2016 fiscal year in the black.


During the presentation, Senior Auditor Casey Good discussed what is called the "Equalization Rollover" from the state of Arizona. Essentially, the state withholds about four months' worth of payments to school districts across the state. As of January 19th of 2017 the current rollover across the state sits at $930 Million. Approximately, $46.3 Million of that is owed to Tucson Unified School District.

This rollover and other reimbursements totaled $86 Million for 2016. That means Tucson Unified School District must pay its bills while waiting for funds to come in. That's where questions came up regarding what's called "interfund borrowing."
Interfund borrowing is initiated by the Pima County Treasurer when a payment must be made but the district has not yet been paid or reimbursed. Districts who don't have funds to cover their expenses must borrow money and pay interest on that loan--taking additional funds out of the classroom.

Note: The numbers in parentheses below refer to time stamps on the video of the governing board meeting, in minutes and seconds.



Mr. Good with Heinfeld, Meech & Co., P.C., noted (@23:15), "Not everyone is paying you when they should be, or ideally when you would like them to. You're spending money. You are waiting for the state of Arizona and the Federal Government to pay you. It doesn't mean you can't stop paying your bills."

That's where the interfund borrowing comes in. However, it should be noted the district has nothing to do with this practice; it is initiated and completed by Ms. Ford, the Pima County Treasurer.

Ms. Ford explained to the board that all of the district funds are pooled into what she calls our "operating account" where all of our bills are paid. Ms. Ford says (@24:58), "It's prudent for you to be able to use your own money to be able to clear your checks and pay your bills, because if there's no money in that account then I have to turn around and borrow money or loan money to you at the expense of the taxpayers of Pima County [in interest]."

(@25:20) "The deficits that you're seeing in this interfund borrowing it's really being caused by the delay in the payments from the state for your equalization. All of that money is paid back the minute I get those funds in, which is usually the first several days of July." (@26:04) "If the state was paying you what they owe you for that current fiscal year in the fiscal year you wouldn't have most of this interfund borrowing." (@26:33) "TUSD is not alone in this situation, every school district in Pima County is."

The questioning went on for about 45 minutes. At one point, Superintendent H.T. Sanchez asked (@38:19), "Did the district CFO or anybody in the district direct the use of 301 funds directly to cover debts or accounts that had not yet been funded by the state?" Mr. Good responded," No."

Later, Governing Board President Michael Hicks asked (@43:58), "How many other districts that you know of used their 301 funds to supplement deficiencies within their system?" Mr. Good responds, "It's interfund borrowing, it's a common practice. It is an unfortunate practice for governmental reporting. Interfund borrowing is not an indication of deficiencies... We test that fund and were given specific procedures to test that fund and we found you are in compliance with state requirements."

Treasurer Ford came back to the mic to reiterate (@46:28), "It's not misusing those funds, you're taking advantage of having that money sitting basically in a savings account to be able to pay your teachers. If you weren't doing that and I had to turn around and borrow money, or even worst yet, actually register warrants, because you couldn't borrow for whatever reason--which I have had that happen to some of our depositors before--I would be returning your teachers' paychecks unpaid."

President Hicks went on to ask what will happen when the district pays out all of the 301 money at the end of this school year (which was recently approved by the Governing Board). Ms. Ford mentioned that it's possible the district would have to borrow money to pay bills while waiting for the state to pay the district.

It would be important to note that at the end of the discussion, one board member asked Ms. Ford, "How many districts do interfund borrowing?" Her reply was "All of them."