By Stacy Mantle
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Paradise Valley Unified School District closed the 2025-26 fiscal year with $253.7 million in maintenance and operations expenditures, about $16.8 million below its authorized spending limit, as administrators continue adjusting budgets to account for declining enrollment and rising costs.

The governing board unanimously approved the district's annual financial report Oct. 8, with officials outlining efforts to maintain financial stability, reduce reliance on costly contracted services and plan for future funding needs.

Assistant Superintendent of Business Operations Jill Barragan said the district reported an authorized maintenance and operations budget of about $270.5 million, with actual expenditures totaling $253.7 million.

The remaining $16.8 million represents unused expenditure authority rather than a cash surplus. Barragan said the district works to maintain an operating fund balance of approximately 14% to help manage financial fluctuations.

"We do always carry forward a budget balance and that is part of our total operating funds budget balance that we try to maintain at about that 14% that we talk about with the board and through bargaining and with our public each year," Barragan said.

The annual financial report provides a final accounting of district revenue and expenditures for the fiscal year. Arizona law requires districts to submit the report to the Arizona Department of Education by Oct. 15.

Barragan said the district's finance department processed more than 33,500 accounting entries and approximately 11,600 purchase orders during the year.

Enrollment and staffing remain part of budget planning

Paradise Valley Unified reported slightly more than 24,000 students in average daily membership, a figure used to determine state education funding. Its weighted student count, which accounts for additional funding associated with certain student populations, exceeded 36,600.

Board member Susan Christensen said her concerns involved declining enrollment and its effect on future revenues.

"I continue to be concerned about declining revenue due to declining enrollment," Christensen said.

She asked what steps the district was considering to address future financial pressures, including the possibility of changes to voter-approved funding and the use of underutilized facilities.

Barragan said adjusting expenditures to match available funding is already part of the district's annual budget process.

"Each and every year we are reducing from our budget those expenditures to make sure that we maintain the budget balance carry forward that we need," she said.

Because salaries and benefits represent the district's largest operating expense, staffing levels are reviewed as part of financial planning.

Barragan confirmed the district has made staffing reductions in previous years to manage its budget. She did not announce additional layoffs or identify specific positions for elimination during the meeting.

"We have cut staffing every year since I've been here," Barragan said. "We have reduced staffing, and that's a large part of how we're meeting any budget deficit that we might have each and every year."

She said district administrators and employee bargaining teams have begun conversations about future staffing needs, with additional discussions scheduled as part of the district's ongoing planning process.

Contracted services present additional costs

Salaries and benefits accounted for about 81.5% of the district's basic operating expenditures during fiscal year 2025-26, consistent with its historical range of 80% to 85%.

However, Barragan said the percentage has gradually declined as some personnel expenses have shifted into contracted services.

The district reported nearly $38 million in purchased services expenditures, a category that includes outside personnel and other contracted operations.

"When we can't find somebody to fill a position, we have to find a contracted service person to do so, and that almost always is more expensive than if we can hire someone in house," Barragan said.

In response to a question from a board member, Barragan identified special education teachers, instructional aides and related services as examples of positions the district has sometimes filled through outside providers.

She said the district is working to reduce those expenses where hiring employees directly would be more cost-effective.

Not all contracted services represent higher costs, however.

Barragan said custodial services account for an estimated $6 million to $7 million in purchased services. The district has  outsourced those operations because administrators determined that arrangement was more financially responsible.

The district's goal, she said, is to distinguish between services that are more economical to contract and positions that could be filled more efficiently with district employees.

Bond construction among major expenditures

The financial report also detailed expenditures outside the district's primary operating budget.

Paradise Valley Unified spent approximately $77.3 million from bond building funds during fiscal year 2025-26, reflecting significant activity on voter-funded capital projects.

"That was a big year for bond," Barragan said.

The district also reported about $63.8 million in debt service expenditures, more than $25 million in federal and state grant expenditures and approximately $25.7 million in Classroom Site Fund spending.

Maintenance and operations override revenue totaled about $30.9 million for the fiscal year.

Barragan explained the district's funding comes from a combination of local, state and federal sources, with Arizona's equalization formula determining how much of the formula-based funding responsibility falls to the state versus local property taxpayers.

The district reported approximately $125.7 million in state funding and more than $249 million from local sources.

Proposition 320 raises questions about future spending

Board members also discussed how Proposition 320, a statewide ballot measure addressing direct instructional spending, could affect future budget decisions if voters approve it.

The proposition would establish a requirement for school districts to direct 60% of specified expenditures toward direct instruction, with provisions allowing districts to make incremental progress toward that threshold.

Christensen asked whether the district would need to consider additional budget adjustments if the measure passes.

Barragan emphasized that the district has not made decisions related to the proposal.

"There are a few ways that can be achieved," she said.

Possible approaches could include reducing spending in other operational categories, increasing direct instructional expenditures or combining both strategies.

Barragan identified transportation, food and nutrition, facilities, student support, instructional support and administration among the other spending categories that districts could evaluate.

She also noted that the measure provides an opportunity to move toward the requirement in smaller increments.

"We have the ability to do about 0.5% each year and not receive a penalty for that," Barragan said. "So there is a potential for just being able to phase that in, and we will absolutely consider that in future budget decisions if that does pass."

No program changes or staffing decisions related to Proposition 320 were announced.

District continues evaluating facilities

The board also discussed how the district might make better use of underused facilities.

Barragan identified portions of Vista Verde Middle School as the district's largest vacant space, although she said most of the campus is being used.

She and Superintendent Dan Courson are scheduled to meet in approximately a month to discuss possible uses for the remaining space, with an update to the board expected afterward.

The district is preparing for its fiscal year 2027-28 budget cycle, which will include further review of enrollment, staffing and operating costs.

Barragan said the annual financial report provides both an accounting of the previous year's spending and information to guide future decisions.

"I think some of the most important reasons behind all of this is that policy and taxpayer insight that it provides people, as well as our financial transparency," she said.

A more detailed annual comprehensive financial report is expected in January or February.

Editor’s note:   A grant from the Arizona Local News Foundation made this story possible. The foundation awarded 15 newsrooms to pay for solutions-focused education reporters for two years. Please submit comments at yourvalley.net/letters or email them to AzOpinions@iniusa.org. We are committed to publishing a wide variety of reader opinions, as long as they meet our Civility Guidelines.

Stacy Mantle
Education Solutions Reporter

smantle@iniusa.org

Meet Stacy
Stacy Mantle is joining the team at Independent Newsmedia, Inc. as an Education Solutions journalist, thanks to a grant from the Arizona Community Collaborative. She has a long history in education that ranges from teaching junior high and middle school to developing curriculum and standards-based assessments.

Community: A longtime advocate for animal welfare, Stacy is deeply involved in rescue efforts and volunteers with several nonprofit organizations.

Random Fact: Once upon a time, she shared her home with a pet coyote and two wolf hybrids. The experiences were wild enough to become the subject of her first book!

Education: She holds a BA in English with a minor in Political Science, a Post-baccalaureate in Secondary Education, and an MBA with a emphasis on Marketing.

Hobbies: In her spare time, Stacy writes fast-paced urban fantasy novels, crafts small-batch artisan soap, and is always up for hiking or off-roading through the Arizona wilderness with her husband of 23 years.