Following the money: How Arizona pays for public school students

By Stacy Mantle
Mail

Ask how much Arizona spends on its public schools and the answer can range from about $9 billion to nearly $17 billion — depending on what is being counted.

In fiscal year 2025, Arizona’s district and charter schools received about $9.14 billion through the state’s education funding formula while reporting nearly $16.66 billion from all funding sources. Together, those schools served nearly 1.1 million students.

Both numbers are accurate. They just measure different things.

“Basic State Aid is the amount appropriated by the Legislature that our department divvies up to the districts and charters based on their attendance,” said Doug Nick, communications director for the Arizona Department of Education. “It essentially pays for the education of the student, and it’s up to the local district or charter to spend the money appropriately for classroom instruction.”

But Basic State Aid is only one source of public-school funding.

Nick said schools may also receive federal funding for programs including Title I, English-language instruction, arts education, after-school programs, food and nutrition and teacher training. The amounts vary considerably among schools, and some programs are competitive rather than formula-based.

Districts have another potential source of revenue that charter schools do not.

“Districts, but not charters, can also call for bond and/or override elections to raise added funds from taxpayers within district boundaries,” Nick said.

Those differences help to explain why seemingly straightforward comparisons of Arizona’s education spending can produce dramatically different numbers.

How much does Arizona spend per public-school student?

Basic State Aid does not represent all the money available to Arizona public schools.

A January 2026 analysis by the Joint Legislative Budget Committee found Arizona's district schools reported approximately $13.87 billion in total funding in fiscal year 2025 while serving 866,481 students, or about $16,013 per student.

Charter schools reported approximately $2.78 billion for 224,448 students, or about $12,405 per student.

Combined, Arizona's district and charter public schools reported approximately $16.66 billion in funding for nearly 1.1 million students in fiscal year 2025 — roughly $15,270 per student.

The totals include state, federal and local funding and illustrate why Basic State Aid does not represent the full cost of Arizona's public-school system.

The funding mix also differs substantially between the two systems. District schools have access to local property taxes, bonds and overrides that charter schools generally do not, while charter schools receive Charter Additional Assistance.

Funding follows enrollment

District funding is calculated largely through Average Daily Membership, or ADM, a measure based on student enrollment. The formula considers grade levels, student needs, transportation and other statutory factors.

That means enrollment changes can move money.

“If an ESA student finishes a school year and then decides to go to a district or charter the next year, they would simply be counted as a student at the district or charter when they report their attendance after 100 school days,” Nick said.

Midyear transfers can be more complicated, Nick said, but the issue is not unique to ESA students. Similar adjustments occur when students enter Arizona schools from out of state.

“That same scenario occurs when, for example, a student moves from out of state to (Arizona) mid-school year, so it’s not just an ESA thing,” he said.

That means changes in enrollment can also change where state funding goes.

State versus local money

Arizona also uses local property tax collections in calculating district equalization assistance.

When qualifying local property-tax revenue rises, the amount the state must provide from the general fund generally falls.

For fiscal year 2027, new construction is expected to generate an additional $56.5 million in qualifying local property tax revenue. Because those dollars offset state formula costs, the state is expected to contribute $56.5 million less from its general fund.

Districts can receive money from still other sources, including the Classroom Site Fund, federal grants, school safety programs, special education funding and voter-approved bonds and budget overrides.

The Arizona Auditor General reported that school districts spent approximately $13.4 billion in fiscal year 2025, illustrating why the equalization figure alone does not represent all district spending.

Arizona's $800 million rollover

Arizona also continues to use an accounting mechanism dating to 2008 that delays hundreds of millions of dollars in payments to school districts until the following fiscal year.

For fiscal year 2026, the state deferred about $800.7 million in Basic State Aid payments to larger school districts until July.

“School districts ultimately are getting all of the money that they should be getting from the funding formula, but there’s $800 million that — it’s kind of like an IOU,” said Chuck Essigs, director of government relations for the Arizona Association of School Business Officials. “I’m going to pay you next month rather than this month.”

The practice began when the state faced severe revenue shortfalls during the Great Recession. Rather than make additional cuts to school funding, Arizona delayed a portion of what it owed districts into the next fiscal year.

The rollover has since become a recurring part of the state budget.

For districts, the issue is largely one of timing.

“Districts have to adjust maybe some of their expenditures to when the money comes in, and they have to make certain adjustments in their scheduling of expenditures,” Essigs said.

Employees continue to be paid on time, he said, but districts may adjust other spending around the delayed state payment.

“They might have some things that they’re ordering and telling the vendor, ‘I don’t want it until July,’ so it counts against next year’s budget,” Essigs said.

Essigs said the larger concern is what happens during the next major economic downturn. The rollover originally gave lawmakers a way to defer education spending rather than impose an equivalent immediate cut. With roughly $800 million already being pushed into the following fiscal year, that option is substantially more difficult to use again.

“The biggest concern is if the economy goes really bad across the country, the tax revenues are way down, there’s a crisis like there was from the Great Recession,” Essigs said. “The Legislature doesn’t have this tool to help bail it out, because they’ve already been delaying these payments for years after years after years.”

Arizona has reduced the rollover somewhat since it was created but has not eliminated it.

“This was a good idea at the time,” Essigs said, “but it’s not a good idea to not pay it off when you should be paying it off.”

One number doesn't tell the whole story

Other enrollment-based programs further complicate the picture.

The fiscal year 2027 budget includes $75 million in State Aid Supplement funding distributed to districts and charter schools using weighted student counts and $37 million in free and reduced-price lunch supplements.

The Classroom Site Fund provides nearly $1.13 billion in spending authority, while approximately $80.4 million from the Instructional Improvement Fund is distributed based on student counts.

Those programs demonstrate why comparisons based solely on Basic State Aid can understate total public school funding.

The opposite problem can occur when separate programs are added together without determining whether some money is already included in another total.

Understanding Arizona education spending, therefore, depends not just on knowing how much money appears in the budget, but also where that money originates, where it goes and whether it has already been counted.

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.