Tempe School District approves FY2025–26 budget revision after enrollment drop

CFO Eric Thompson presented a revision to the Tempe School District's fiscal year 2025'26 annual expenditure budget and the Governing Board approved the revision during the Aug. 20 meeting.

Thompson told the board the district is updating the budget because the Legislature finalized state funding after the district had already adopted a budget, and because actual July enrollment figures allow a more accurate funding estimate. "We are down for the first time, under 9,000 ADM," Thompson said in his presentation, and he said the revised figures reduce the district's projected revenue.

The board approved the revision by voice vote after a brief discussion. The revision reflects a decrease from the previously adopted estimate of 9,080 average daily membership (ADM) to a lower current projection; Thompson said the change represents a drop of roughly 247 students from the adopted estimate and a year-over-year decrease of about 384 students. He said the reduction in ADM translates to roughly $1.5 million in lower funding compared with the adopted budget and about $2.3 million compared with last year.

Why it matters: most Arizona school funding follows student attendance and ADM, so lower ADM leads directly to less state funding. Thompson said the district's unrestricted reserves are being spent down to cover the shortfall: "Going into last year, we brought in 11,100,000.0. We're gonna come out with about 6,300,000.0," he said, and added that ESSER federal funds previously helped boost carryover amounts but are being drawn down.

Thompson also described a mix of one-time revenues and structural items affecting the budget. He reported about $614,000 tied to a continuation of a voter measure (referred to in the presentation as "prop 1 2 3") and roughly $500,000 in other one-time additions. Voter-approved capital override provisions expanding the district's capital override from $5,000,000 to $7,000,000 give administrators flexibility to reclassify some district additional assistance into maintenance and operations, Thompson said.

Superintendent Dr. Driscoll described why the district is advancing a separate bond program despite operating budget pressures. "That money is for critical maintenance and then the rebuilding of schools," Dr. Driscoll said, and she explained that bond (capital) dollars must be kept separate from operating funds and cannot be used to pay salaries. She said using bond funds for energy-efficiency projects (solar panels, efficient lighting, building automation) can lower future operating costs and help preserve dollars for teacher pay and classroom operations.

Board members asked questions about carryover targets, the timing of state litigation or rulings that might affect funding, and grade-level patterns in enrollment loss. Thompson estimated a likely carryforward (reserves) of roughly $1 million to $2 million depending on cost savings and enrollment changes this year. He also said the largest cohort loss appears between fifth and sixth grade and that district staff are still tracking where those students enrolled.

Action taken: the Governing Board voted to approve the FY2025'26 budget revision (agenda item 8.01). The motion was made, seconded and approved by voice vote; individual roll-call tallies were not recorded in the transcript.