Santa Cruz County: Treasurer says 2025 state-aid reduction was missed; refunds planned for District 28 taxpayers

Santa Cruz County Treasurer Alejandro Paz told the Board of Supervisors on Feb. 11 that a 2025 state-aid reduction for Santa Cruz Elementary School District 28 was not applied to the first set of tax bills, producing higher-than-expected notices for many property owners.

The treasurer said county staff received an Arizona Department of Revenue State Aid to Education worksheet on Sept. 9, 2025 that included a combined reduction rate of 3.9837 for District 28 but that the county applied an earlier 1.5606 reduction instead. "That was part of the...worksheet that was completed and submitted to them," Paz said, and later added, "Refunds will be made via check by mail... our goal is by March." He said the county applied a partial reduction (2.304) and is awaiting written confirmation from the Property Tax Oversight Committee (PTAC/PTOC) before reprinting corrected bills and issuing refunds.

Why it matters: residents said the miscalculation has immediate, personal consequences. "It's mortgage payments, retirees on fixed incomes," said Alejandro Castaneda, who addressed the board as president of the homeowners association and urged officials to "tell the truth in plain English" and produce a written corrective-action plan with named responsibilities. Vanessa Register, a Lake Patagonia resident, said her household faces roughly a $300 monthly increase tied to the bill.

How the error happened: county staff described a multi-step workflow. School districts and the county school superintendent complete PTAC tax-rate templates in June and July, the county compiles district tax-rate charts and forwards data to a consultant (TGI Systems) for test bills, and the county then sends final tax bills to the Arizona Department of Revenue. Officials said they received an updated state-aid reduction in September that should have been applied in the calculation but was missed when staff plugged rates into the test bill system.

Scope, refunds and timing: county staff estimated about 550 parcels in District 28 were directly affected by the missing reduction; the final dollar amount is pending PTAC confirmation and a rebill. Paz said refunds will be mailed as checks and will include interest calculated under Arizona Department of Revenue rules (described during the presentation as 7% annually and 0.001918% per day). The county also said it contacted major mortgage servicers and that many lenders have adjusted payments; when overpayments were received via mortgage companies, the county applied those to second-half installments at residents' request.

Procedural fixes and oversight: presenters described new controls including more reviewers on test bills, closer collaboration at in-person business-manager meetings next summer, a live rebill procedure to be presented for board approval, and both state and an independent audit in response to the incident. Superintendent Maya Donnelly said the county school superintendent’s office and the treasurer will continue working with district business managers to ensure templates match before Board certification.

Public reaction and next steps: speakers at the public comment period pressed for clearer communications, a detailed timeline showing where and why the checks failed, and outside review. The treasurer apologized for the error and for any hardship caused. Board members thanked staff for the presentation, acknowledged the frustration, and said they intend to hold additional study sessions and follow-up meetings to monitor corrective steps.

The board took no formal policy vote on remedying the bills at the Feb. 11 meeting; staff said they will return with corrected calculations, a rebill and a plan for refunds after PTAC confirmation.