Assigned to ED FOR COMMITTEE
ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
FACT SHEET FOR H.B. 2167
school districts; records; noncompliance; penalties
Purpose
Prescribes training requirements, civil penalties and bond and override election restrictions
for a school district that fails to correct a uniform system of financial records (USFR) deficiency
within specified timeframes. Transfers oversight and administrative requirements relating to the
School Financial Transparency Portal (Portal) from the Arizona Department of Administration
(ADOA) to the Arizona Department of Education (ADE) and establishes the Portal Fund.
Background
The Auditor General (OAG), in conjunction with ADE, must prescribe a USFR for school
districts to use each fiscal year. The USFR must: 1) provide for adjustment in consideration of
existing capabilities available at a reasonable cost to school districts; 2) allow schools to maintain
necessary records at a minimum cost; 3) prescribe guidelines applicable to procurement practices;
4) prescribe methods for apportioning specified revenues; 5) prescribe guidelines for apportioning
pupil enrollment and attendance; and 6) provide information to assist in determining equitable
distribution of state aid to schools. The OAG must inform any school district that fails to establish
and maintain the USFR, detail in writing the deficiencies of the school district and provide the
school district 90 days to correct the deficiencies (A.R.S. § 15-271).
If the State Board of Education (SBE) determines that a school district is not in compliance
with the USFR or has failed to correct a deficiency within 90 days after receiving notice from the
OAG, the SBE must direct the Superintendent of Public Instruction to withhold up to 10 percent
of the school district's state monies for each violation until the OAG reports that the school district
is in compliance (A.R.S. § 15-272).
A school district governing board may, and on petition of 15 percent of the school district
electors must, hold elections for specified purposes, including to decide whether: 1) school district
bonds will be sold to raise monies for specified purposes; and 2) to change the list of capital
projects or the purposes authorized by prior voter approval to issue bonds. Monies to redeem bonds
and pay interest are raised by assessing secondary property taxes in the school district (A.R.S. §
15-491).
If a school district's proposed budget exceeds the statutory aggregate budget limit for the
year, the governing board must order an override election to be held at least 90 days before the
election. An override election may be held to exceed the revenue control limit or district additional
assistance (DAA) and may be funded by assessing secondary property taxes or from revenues
other than a property tax levy (A.R.S. § 15-481).
ADOA must develop a transparent and easily accessible portal that includes school-level
data for charter schools, individual schools operated by a school district and school districts. FACT SHEET
H.B. 2167
Page 2
ADOA must contract with a third party that meets prescribed requirements to develop the Portal.
ADE and the Arizona State Board for Charter Schools must provide and assist with any necessary
data or financial information that ADOA or the contractor requests to implement the Portal (A.R.S.
§ 15-747).
There is no anticipated fiscal impact to the state General Fund associated with this
legislation.
Provisions
USFR Noncompliance
1. Requires, if a school district fails to correct a USFR deficiency within 18 months after receiving
notice from the OAG, the SBE to consult with ADE to determine the amount of training and
other interventions necessary or appropriate to assist the school district to achieve USFR
compliance and direct ADE to:
a) provide the training and interventions within 6 months;
b) impose a civil penalty, beginning the 18th month, against the school district in an amount
equal to one percent of the school district's most recent general budget limit each month
until the OAG reports the school district's USFR compliance; and
c) deposit penalties collected for USFR noncompliance in the Portal Fund.
2. Specifies that any training must be provided to the school district's superintendent, business
manager and chief financial officer and any other administrator or executive identified by the
SBE or ADE.
3. Requires ADE to notify the SBE when the provided training and interventions for USFR
noncompliance are completed.
4. Allows ADE to contract with a third party to provide the training and interventions for USFR
noncompliance.
5. Requires a school district to pay for any costs incurred by ADE to provide the training and
interventions for USFR noncompliance.
6. Prohibits, if a school district fails to correct a USFR deficiency within 90 days after receiving
notice from the OAG, the governing board from doing the following until the school district
has corrected any USFR deficiencies and complies with the USFR for at least 12 months:
a) ordering a DAA override election; or
b) calling an election to decide whether to issue school district bonds or change the list of
capital projects or the purposes of previously issued school district bonds.
7. Determines that a school district is considered to have corrected any USFR deficiencies on the
date the OAG reports that the school district is in USFR compliance.
Portal Transfer and Portal Fund
8. Transfers Portal oversight and administrative requirements relating to the Portal from ADOA
to ADE. FACT SHEET
H.B. 2167
Page 3
9. Transfers ADOA's contracts, rules, property, records, data, investigative findings and
obligations relating to the Portal to ADE on the general effective date.
10. Specifies that the transfer of matters relating to the Portal maintain the same status with ADE.
11. Establishes the Portal Fund, administered by ADE, and consisting of legislative appropriations
and civil penalties collected from school districts that fail to correct a USFR deficiency within
18 months after receiving notice from the OAG.
12. Allows ADE to use Portal Fund monies for the costs of the Portal, including the costs of the
contractor selected to develop the Portal.
13. Specifies that monies in the Portal Fund are continuously appropriated and exempt from
lapsing.
Miscellaneous
14. Makes technical and conforming changes.
15. Becomes effective on the general effective date.
House Action
ED 2/11/25 DP 7-5-0-0
3
rd
Read 2/26/25 32-26-2
Prepared by Senate Research
March 17, 2025
MH/SDR/ci