Assigned to ED AS PASSED BY HOUSE
ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
AMENDED
FACT SHEET FOR S.B. 1689
school districts; overexpenditures; ADE; notice
Purpose
Requires, if the Arizona Department of Education (ADE) determines without prior
notification from a county school superintendent that a school district's expenditures exceed the
school district's general budget limit or unrestricted capital budget limit, ADE to notify the county
school superintendent and take any required actions prescribed by statute. Allows a county school
superintendent to review the operations and finances of each school district within the county.
Background
A county school superintendent, on the voucher of a school district governing board, must
draw the county school superintendent's warrant on the county treasurer for all necessary expenses
against the school fund of a district. Unless ADE notifies the county school superintendent that
budget capacity exists, a warrant may not be drawn for an expenditure from the maintenance and
operation, capital outlay, adjacent ways or federal and state grant funds: 1) not included in the
school district's budget; or 2) for an expenditure that exceeds the amount budgeted and not
previously expended (A.R.S. § 15-304).
Statute requires a county school superintendent to notify ADE within two business days if,
in the county school superintendent's judgement, a school district has committed overexpenditure.
If ADE determines that a school district has failed to take appropriate action to resolve the
overexpenditure or determines that the original written notice of overexpenditure will cause the
school district's overall expenditures to exceed the school's general or unrestricted capital budget
limits by $50,000 or 0.5 percent, ADE must request that the matter be placed on a State Board of
Education (SBE) meeting agenda for action. Following a public meeting and taking testimony
from interested parties, the SBE must: 1) require ADE and the county school superintendent to
monitor the school district's expenditures; 2) direct ADE to contract with a level one fiscal crisis
team for on-site oversight and offsite monitoring for 12 months; 3) direct ADE to contract with a
level two discal crisis team for on-site oversight and offsite monitoring for 24 months; or 4) appoint
a receiver who may take any prescribed actions to address the financial mismanagement, subject
to the SBE's discretion. A school district that has been assigned a fiscal crisis team or receiver
must submit a fiscal management report to the SBE that outlines the plan to correct the
overexpenditure, including a timeline to resolve the overexpenditure and explanations of the
methods or procedures that will be implemented.
Overexpenditure means an expenditure that exceeds: 1) the general budget limit of the
school district or the amount budgeted by the school district, whichever is less; or 2) the
unrestricted capital budget limit of the school district or the amounted budgeted by the school
district, whichever is less (A.R.S. § 15-107). FACT SHEET – Amended
S.B. 1689
Page 2
There is no anticipated fiscal impact to the state General Fund associated with this
legislation.
Provisions
1. Requires ADE, if ADE determines without prior notification from a county school
superintendent that a school district's expenditures exceed the school district's general budget
limit or unrestricted capital budget limit, to notify the corresponding county school
superintendent and take any required actions prescribed by statute.
2. Allows a county school superintendent to review the operations and finances, including
expenditures, of any school district that is located in the county.
3. Makes technical and conforming changes.
4. Becomes effective on the general effective date.
Amendments Adopted by the House of Representatives
1. Requires ADE to take outlined actions if ADE, without prior notification, determines that a
school district's expenditures exceed the general budget limit or unrestricted capital budget
limit, rather than determines that a school district has committed an overexpenditure.
2. Allows a county school superintendent to review the operations and finances of any school
district within the county.
3. Makes conforming changes.
Senate Action Senate Action
ED 2/12/25 DP 6-0-1 ED 3/11/25 DPA 12-0-0-0
3
rd
Read 2/26/25 25-3-2 3
rd
Read 4/14/25 54-0-6
Prepared by Senate Research
April 14, 2025
MH/ci