Sierra Vista Unified board approves 2024–25 annual financial report amid questions about M&O cash deficit

The Sierra Vista Unified School District governing board on Oct. 1 approved the district's 2024'25 annual financial report following a presentation from a financial consultant who flagged a deficit cash balance in the district's Maintenance and Operations (M&O) fund.

Sarah Kirk, a financial consultant with Heinfeld, Meech & Co., told the board the annual financial report (AFR) summarizes district accounting for the period July 1, 2024, through June 30, 2025, and will be submitted to the Arizona Department of Education as required by Arizona Revised Statutes A7 15-904. The board voted to approve the AFR for submission and posting on the district website; the motion passed 5-0.

Kirk said the AFR shows total reported expenditures for fiscal year 2025 of about $57 million. She highlighted several fund-level figures: M&O expenditures of about $35.6 million against an M&O budget of roughly $38 million, yielding budget carryforward capacity of about $2.4 million; classroom site fund spending of about $5.4 million; unrestricted capital outlay spending near $1.9 million with an estimated $3.5 million carryforward; and food-service expenditures around $2 million.

The consultant explained that although the M&O fund showed budget capacity, the district had a deficit cash balance in that fund at year end. "That is showing a deficit because the district has a deficit cash balance in the M&O fund at the end of the year," Kirk said, adding that the district treasury has been transferring money from other funds periodically to offset the shortfall while staff investigates the cause.

Kirk also explained why some grant-related fund balances appear negative on the AFR: many federal and state grants are reimbursement grants, where the district pays expenses first and files for reimbursements or a completion report; when reimbursements remain outstanding at fiscal year end, the AFR can show a deficit fund balance that is expected to be offset in the following fiscal year.

Board members questioned whether the M&O cash deficit reflected overspending, delayed tax or state revenues, or coding shifts (for example, ESSER-funded positions moving into M&O after federal funds expired). Kirk said she had not completed a full root-cause analysis and recommended district staff and treasury review revenue timing, receivables, and recent budgeting and coding decisions to identify the source of the deficit.

The AFR also includes a separate school-level report that allocates expenditures by school site using the district's accounting unit codes; Kirk said some districtwide functions remain in a central (500) unit and certain local funds such as student club accounts are excluded from school-level totals.

Why it matters: the AFR is the district's official fiscal record for FY2025 and is used by ADE and the Auditor General's office for oversight. The M&O cash deficit does not necessarily mean the district exceeded its legal spending limits, but it raises questions about cashflow timing and fund structure that the board asked administration to investigate.

Board action and next steps: the board approved the AFR for submission to ADE and for posting on the district website (motion passed 5-0). Administration and the treasury will investigate the M&O cash deficit and report back with findings; the AFR numbers will also be included in the district's FY2026 budget revision as finalized carryforward amounts.

Sources: presentation and answers by Sarah Kirk of Heinfeld, Meech & Co., and board discussion during the Sierra Vista Unified School District governing board regular meeting on Oct. 1, 2025.