Tempe Elementary School District board approves 2024–25 annual financial report as carryforward falls

The Tempe Elementary School District Governing Board on Oct. 15 approved the district—s fiscal year 2024—625 annual financial report following a presentation by Chief Financial Officer Eric Thompson.

Thompson told the board the district recorded about $170,000,000 in total expenses for the year, including bond expenditures, and about $105,000,000 charged to the maintenance and operations (M&O) fund. "The vast majority of all those expenses are salary and benefits," Thompson said, noting roughly $90,000,000 of the M&O total went to salaries and benefits and about $21,000,000 to special education.

The report shows the district—s M&O carryforward has declined from a peak of about $11,000,000 to roughly $8,700,000 as one-time federal pandemic funds were spent down. "Those federal funds are gone now, and so we're starting to spend them down," Thompson said, adding that declining enrollment has accelerated the need for adjustments.

Why it matters: The annual financial report (AFR) summarizes required fiscal reports the district must file with the Arizona Department of Education and frames near-term budget choices. Thompson said the district is spending more than it is bringing in and will need to make cuts over time if revenues do not recover. At the same time, the district reported growth in some targeted funds: the classroom-site fund increased its carryforward by about $250,000 while delivering higher classroom expenditures and an average compensation increase for teachers.

Highlights and discussion points

- Revenues and expenses: Thompson reported $170 million in total expenses and said approximately $105 million were charged to M&O; about $90 million of that is salaries and benefits. He told the board the district is "spending more than we're bringing in," with a drawdown of carryforward balances.

- Carryforward and grants: Thompson said the carryforward decreased by about $2.5 million from the peak after moving allowable expenses into other funds (for example, indirect cost and capital accounts) to avoid supplanting grant monies.

- Classroom-site fund and teacher pay: Thompson said the classroom-site fund ended the year with a larger carryforward and supported increased teacher pay. "We increased teacher pay by 2% in M&O plus the additional $500 in classroom-site funds," he said; board members and staff discussed how the statutory funding formula (set at a minimum of 2% or inflation, whichever is less) and falling enrollment limit available increases.

- Food service: The report shows the district served nearly 2,000,000 meals at no cost to students and that food service participation rose even as enrollment fell. Thompson said the district moved more than $500,000 from the food-service program into the indirect-cost fund to help offset other expenses.

- Electric buses and capital strategy: Thompson said federal grants and bond funds helped the district purchase electric buses and chargers. "We've got 15 buses so far. We've got another 15 on order that should be arriving probably around the end of the calendar year, to get us about 30," he said, adding that grants and bond proceeds together pay for buses and some charger infrastructure. Board members asked for the total fleet size; Thompson said he did not have the exact total on hand and would provide that figure later.

Board action and next steps

A motion to approve the fiscal year 2024—625 AFR carried on a voice vote with the board saying "Aye." The board directed that the required reports be uploaded to the Arizona Department of Education as part of the AFR filing process. No amendments or changes to the AFR were proposed during discussion.

What was not stated

Thompson and the board discussed moving costs among funds to manage carryforward levels; where specific future cuts would be made if revenues decline was not specified in the presentation. A precise total for the district's bus fleet was not provided during the meeting; Thompson offered to obtain and share that number.

Ending

Board members thanked staff for meeting the Oct. 15 filing deadline; Thompson noted the meeting was scheduled online to allow timely submission. The board voted to approve the AFR without further discussion.