text:
Report to the Arizona Legislature
By the Auditor General
July 1996
Report # 96- 9
July 9,1996
DEPUT* C" OITOI1 GE* IErl* L
Members of the Arizona Legislature Dr. James Howard, Superintendent
Prescott Unified School District
The Honorable Fife Symington, Governor
Dr. George Garcia, Superintendent
The Honorable Lisa Graham Keegan Tucson Unified School District
State Superintendent of Public Instruction
Dr. Ren6 Diaz, Superintendent
Phoenix Union High School District
Transmitted herewith is a report of the Auditor General, A Performance Audit of Selected
School Districts Regulated by the Arizona Department of Education ( ADE). This report
is in response to a May 30,1995, resolution of the Joint Legislative Audit Committee. This
performance audit was conducted pursuant to the provisions of A. R. S. $ 41- 2958. This is
the fourth in a series of four audit reports regarding public education.
The purpose of this audit was to determine the potential for improving the efficiency of
school district operations throughout the state. This audit addresses seven administrative
and support functions in three school districts: Phoenix Union High School District
( PUHSD); Prescott Unified School District ( PUSD); and Tucson Unified School District
( TUSD). The seven areas reviewed were:
1. Pupil Transportation 2. Food Services Programs
3. School District Administration 4. School Discipline
5. The Safe Schools Program 6. Property Control
7. Custodial Services.
While results varied by district, we found that districts can make significant improvements
in the efficiency of their pupil transportation programs and can make their food services
programs more self- supporting. An analysis of the number of administrative staff per
student indicates more study might identify possible savings in the area of school district
2 9 1 0 NORTH 44TH STREET m SUITE 4 1 0 . PHOENIX, ARIZONA 85018 . ( 6 0 2 ) 5 5 3 - 0 3 3 3 rn FAX ( 6 0 2 ) 553- 0051
July 9,1996
Page - 2-
administration. When reviewing school disciplinary policies, we found that districts are
not recording and reporting all unsafe incidents that occur on campuses. We also reviewed
the Safe Schools Program, but found data limitations and the Program's relative newness
do not allow evaluation of its effectiveness at this time. Noting the amount of property for
which districts cannot account, we found that the districts need to strengthen procedures
to reduce property loss. Finally, we found custodial services are relatively efficient and
that the schools and offices visited appeared generally well maintained.
My staff and I will be pleased to discuss or clarify items in the report.
This report will be released to the public on July 10,1996.
60118s R. Norton
Auditor General
The Office of the Auditor General has conducted a performance audit of selected Arizona
school districts, whch are regulated by the Arizona Department of Education ( ADE). This
audit was conducted pursuant to the provisions of A. R. S. § 41- 2958 and in response to a
May 30,1995, resolution of the Joint kgslative Audit Committee. This is the fourth in a series
of four audit reports regarding public education.
School District Operations
This audit represents the Office of the Auditor Gen-eral's
first performance audit of school district opera-tions
regulated by ADE. Budget reform legislation in
1993 expanded the Auditor General's scope of work to
include, among others, ". . . the Depmtment ofEducation
including the programs and activities administered, pre-scribed
or regulated by the Depmhnent." h o n a is one of several states reviewing school district
performance. Most notable is Texas, which is currently conducting comprehensive reviews of
each of its school districts. Because of the magnitude of Arizona's school district operations
and limited time, this audit was limited to assessing the potential for improving the efficiency
and effectiveness of programs witlun individual school districts, as well as improving K- 12
programs such as transportation and food services statewide.
This audit addressed seven administrative and support functions in three school districts:
Phoenix Union High School District ( PUHSD); Prescott Unified School District ( PUSD); and
Tucson Unified School District ( TUSD). The seven areas reviewed at each district were:
1. Pupil Transportation 2. Food Services Programs
3. School District Administration 4. School Discipline
5. The Safe Schools Program 6. Property Control
7. Custodial Services.
Pupil Transportation
( See pages 5 through 10)
A review of pupil transportation services in three school districts indicates the potential for
improved efficiency. A transportation consultant retained by our Office determined that TUSD
could save between $ 1.9 and $ 2.7 million annually with more efficient bus routes and better
bus utilization. The transportation consultant also concluded that PUHSD may be able to
improve efficiency by contracting all pupil transportation. PUSD may be able to further
improve its efficiency by better routing and scheduling of buses or contracting for pupil
In addtion, the State's funding formula for transportation expenses may actually encourage
school districts to be inefficient for three reasons. First, the formula pays districts for annual
bus miles driven. The more miles driven, the greater the payment. Second, the formula will
also pay a district at a higher rate per mile if its average daily route miles per transported
students is greater than one mile. Thud, the formula pays many districts more than actual
costs. Statewide, districts were paid nearly $ 19 million more than actual costs for fiscal year
1994 transportation expenses. For the three school districts reviewed, PUHSD received
approximately $ 4.5 million in excess of actual costs and TUSD received $ 1.9 million in excess
of actual costs, whereas PUSD received nearly $ 80,000 less than actual costs. Other states pay
only actual costs or less to encourage efficiency.
Finally, the Legislature should consider revising the State's transportation funding formula
to prevent school districts from receiving payments for the cost of student bus passes and
tokens for public transportation, and the miles their students ride on city buses. For example,
in fiscal year 1995- 96 PUHSD received approximately $ 3.6 million more than what it actually
cost to transport students using public transportation. TUSD received approximately $ 400,000
more than costs during the same period. Because ADE does little to venfy transportation
information submitted by school districts, ADE was unaware of this situation.
Food Services Programs
( See pages 11 through 17)
A review of food services programs in the school districts indicates the potential for increased
cost recovery and improved efficiency at the district level, as well as statewide. School district
food services programs should pay the total cost of providing food services. When food
services operations are not self- supporting, the district must use general operating funds that
could otherwise be used for education.
Our review of food services programs in the three school districts indicates the potential for
efficiency improvements at these three districts as well as statewide. Further, none of the three
districts' food services operations fully paid for the indirect costs, such as costs for district level
and site administration and utilities, incurred by their operations. Statewide, in fiscal year
1994- 95, only 89 out of 182 districts' food service operations had expenditures exceeding
revenues by a total of over $ 3.6 million. Statewide, district food services operations paid only
$ 2.4 million of an estimated $ 13.6 million in indirect costs.
There are three factors that may keep food services programs from attaining self- sufficiency.
First, some districts have hgh food and labor costs. Second, some schools operate only one
lunch period, which increases labor costs and may lower food services revenue. Third, some
schools do not participate in the National School Lunch Program. As a result, these schools do
not receive subsidies and donated commodities from the United States Department of
Agriculture ( USDA).
School District
( See pages 19 through 25)
A review of administrative and support staffing levels indicates that further analysis could be
productive. The audit compared administrative and support staffing numbers and salary costs
per student for each of the three districts with similar Arizona school districts. Based on
comparisons with districts of similar size, type, and location, results indicate that the size and
cost of district administration per student varies significantly. The variance in the number of
staff per student and salary costs per student may indicate opportunities for improved
While these ratios should be used only as a starting point for further analysis, they serve to
focus attention on the efficiency of administrative staffing. To this end, ADE should consider
periodically analyzing and publishing ratios for all school districts in the State.
School Discipline
( See pages 27 through 29)
Two issues surfaced in the assessment of school discipline. The three school districts do not
record and report all unsafe incidents on campuses and may not be applying discipline
policies consistently. Currently, school districts are required to record and report only
incidents that lead to suspensions. In fiscal year 1994- 95, PUHSD had 2,823 suspensions;
PUSD had 849 suspensions; and TUSD had 7,174 suspensions. Although reporting the number
of suspensions is important, it does not reflect the total number of incidents where students
required discipline. Without complete reporting, decision makers do not have sufficient
information to address problems. In addition, whle all three districts have written discipline
policies, PUHSWs discipline handbook allows school administrators considerable discretion
in determining how to discipline students.
The Safe Schools Program
( See pages 31 through 35)
Each of the three districts reviewed participates in the Safe Schools Program; however, several
factors prevent an assessment of the program's effectiveness at this time.
Established in 1994, the Safe Schools Program provides funding to selected school districts to
fund on- campus police and/ or probation officers to limit violent behavior in school, improve
student understanding of the law, and reduce the number of students referred to juvenile
court or detained in state and county correctional facilities. Funding for the 68 districts
involved in the Program has increased from $ 2.5 million in fiscal year 1994- 95, to $ 5 million
for fiscal years 1995- 96 and 1996- 97. A legislative committee administers the Program with
assistance from its staff and the Arizona Department of Education ( ADE).
We could not determine whether the Safe Schools Program has met its goals. Data limitations
and the Program's relative newness prevent analyses. In addition, determining whether school
district expenditures for the Program were appropriate was also difficult because clear
guidelines for expenditures have yet to be established. Finally, although program guidelines
require school districts to submit program completion reports and return unspent money at
year end, many districts statewide have failed to comply with these requirements for fiscal
year 1994- 95.
Property Control
( See pages 37 through 38)
The three districts reviewed cannot locate significant amounts of property. PUHSD cannot
account for more than $ 1.3 million in property in fiscal year 1994- 95, including approximately
200 computers; TUSD cannot account for property valued at nearly $ 400,000; and PUSD
cannot account for property valued at more than $ 100,000.
Custodial Services
( See pages 39 through 40)
Custodial services maintains more square footage than is recommended by industry standards
in each of the three school districts reviewed. Industry standards require a custodian to
maintain, on average, between 18,000 and 20,000 square feet. Each of the 3 districts reviewed
averaged between 23,000 and 35,000 square feet per custodian. Even though the three districts
budget less than the industry standard for custodial services, the schools and administrative
offices visited during the course of the audit appeared generally well maintained.
Further Work Needed
in School Districts
and Department
This audit identified potential improvements that can be
made in the efficiency and effectiveness of the operations
of the three school districts we audited. Additional work
is needed to follow up on these potential improvements,
particularly as they may relate more generally to the 230
other districts not included in this audit. Much of this
further work can best be performed by ADE in its role of
overseeing the statewide public education system.
However, some operations and programs we examined, such as pupil transportation, are
directly funded by the State, producing a direct state interest. In these instances, additional
performance audit work on a statewide basis is warranted.
Table of Contents
Introduction and Background . . . . . . . . . . . . . . . . . . . . . . . . .
Chapter I: Pupil Transportation . . . . . . . . . . . . . . . . . . . . . . . .
Major Issues
Pupil Transportation Operations
CanBeMoreEfficient . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State Funding for School District
Pupil Transportation May
Encourage Inefficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Double Payment for Public Transportation
Expenses Should be Eliminated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ADE Does Not Verify
TransportationExpenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Opportunities for Contracting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Further Work Needed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Chapter ll: Food Services Programs . . . . . . . . . . . . . . . . . . . . 11
Major Issues
Many School District Food Services
Programs Are Not Self- Supporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Food and Labor Costs Are Excessive
in Some School Districts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
School Districts with Only One Lunch
PeriodHaveHigherCos ......................................
Some Schools Do Not Participate in the
National School Lunch Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Table of Contents ( con't)
Chapter II: ( con't)
Opportunities for Contracting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Further Work Needed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Chapter Ill: School District Administration . . . . . . . . . . . . . . . . 19
Major Issues
Variance in Administrative Staffing and
Costs Indicate the Need
for Further Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part- time Employee Benefit Packages
Impactcosts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Opportunities for Contracting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Further Work Needed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Chapter IV: School Discipline . . . . . . . . . . . . . . . . . . . . . . . . . 27
Major Issues
School Districts Do Not Record and Report
All Unsafe Incidents on Campus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
School Districts May Not Apply
Discipline Policies Consistently . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Opportunities for Contracting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Table of Contents ( con't)
Chapter V: The Safe Schools Program . . . . . . . . . . . . . . . . . . 31
Major Issues
Effectiveness of Safe Schools
Program Unknown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenditure Guidelines Needed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Compliance with Financial
Requirements Is Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Opportunities for Contracting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
FurtherWorkNeeded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Chapter VI: Property Control . . . . . . . . . . . . . . . . . . . . . . . . . 37
Major Issue
School Districts Cannot Account
for Some Fixed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Opportunities for Contracting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Further Work Needed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Chapter VII: Custodial Services . . . . . . . . . . . . . . . . . . . . . . . . 39
MajorIssue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Opportunities for Contracting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Further Work Needed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Agencies Response
Table 1 School District Transportation Costs
and State Payments
Fiscal Year 1994- 95 ( Unaudited) . . . . . . . . . . . . . . . . . . . . . . . 7
Table 2 Maximum and Actual School District
Indirect Expenses
Fiscal Year 1994- 95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Table 3 School District Food Services
Revenues and Expenditures
Fiscal Year 1994- 95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Table 4 Food and Labor Costs for the
Selected Districts
Fiscal Year 1994- 95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Table 5 Phoenix UHSD, Prescott USD, and
Tucson USD Staffing
Fiscal Year 1994- 95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Table 6 Ratio of Students to District Administration
and Support and Other Operational Support
Staff for Selected and Comparable
School Districts
Fiscal Year 1994- 95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Table 7
Table 8
Table 9
Table 10
Salary Costs for Administration and Operations
per Student for Selected and
Comparable School Districts
Fiscal Year 1993- 94 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Safe School Grant Awards and Expenditures
Fiscal Year 1994- 95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Safe School Grant Projected Expenditures
Fiscal Year 1995- 96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Square Footage per Custodial Staff
As of March 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
The Office of the Auditor General has conducted a performance audit of selected Arizona
school districts, which are regulated by the Arizona Department of Education ( ADE). This
audit was conducted pursuant to the provisions of A. R. S. 541- 2958 and in response to a
May 30,1995, resolution of the Joint Legslative Audit Committee. This is the fourth in a series
of four audit reports regarding public education.
During fiscal year 1994- 95, the Arizona Department of Education provided services to the
State's 233 school btricts under policies set by the State Board of Education, the State Board
of Vocational and Technological Education, and the State Board for Charter Schools.
Altogether, school districts statewide educate nearly 700,000 students and range in size from
as few as 2 students in Blue Elementary School District in Greenlee County, to as many as
65,230 students in Mesa Unified School District. The Fiscal Year 1995 Annual Report of the
Arima Superzntenht ofpublic lnstructim reports that Arizona school districts received a total
of nearly $ 3.5 billion from federal, state, county, and local sources. State expenditures for
public education accounted for about $ 1.7 billion. School districts use these monies to provide
students with a variety of services including regular and special education, desegregation
programs, pupil transportation, food services, counseling, safety programs, extracurricular
activities, and medical services.
Audit Purpose and Reporting
In 1993, as part of budget reform legislation, the Legislature mandated a review of ". . . the
Department of Education including the programs and activities administered, prescribed m regulated
by the Depauhmt." The purpose of this audit was to determine the potential for improving the
efficiency and effectiveness of school district operations throughout the State. As a result, this
audit report is organized into seven chapters that examine selected administrative and support
functions in school districts. Each chapter identifies important issues that have the potential
for cost savings and/ or other improvements within the selected school districts, and other
districts statewide. In addition, each chapter assesses whether there is potential for contracting
various school district services to reduce costs, and whether further work could assist ADE
in its oversight and monitoring of specific education programs on a statewide basis.
School Districts
To determine the potential for improving the efficiency of school districts statewide, we
reviewed selected administrative functions in three Arizona school districts: Phoenix Union
High School District ( PUHSD), Prescott Unified School District ( PUSD), and Tucson Unified
School District ( TUSD). These districts were selected based on student enrollment and
demographic data, as well as school district staffing data. In addition, we considered the type
of district, as well as geographic location, to ensure diversity.
w Phoenix Union High School District, located in Maricopa County, encompasses the
majority of the Phoenix area and serves over 18,000 9th- through 12th- grade students. The
District has eight high schools, two alternative high schools, and one vocational school. In
fiscal year 1994- 95, PUHSD expended over $ 175 million and employed 2,423 FTEs, 1,265
of whom were certified teachers.
Prescott Unified School District, located in Yavapai County, serves 5,000 kindergarten
through 12th- grade students from Prescott and the surrounding areas. The District has six
elementary schools, two middle/ junior high schools, and one high school. In fiscal year
1994- 95, PUSD expended over $ 23 million and employed 544 FTEs, 280 of whom were
certified teachers.
Tucson Unified School District, located in Pima CountyI encompasses most of central and
western Tucson, and serves over 57,000 kindergarten though 12th- grade students. The
District has 78 elementary schools, 19 middle/ junior high schools, 11 high schools, and 9
alternative education programs. In fiscal year 1994- 95, TUSD expended over $ 361 million
and employed 6,306 FTEs, 2,972 of whom were certified teachers.
Audit Scope
and Methodology
To provide a comprehensive view of school district operations, we conducted a detailed
review of selected administrative and support functions in PUHSD, PUSD, and TUSD. These
functions include pupil transportation, food services, school district administration, school
violence, the Safe Schools Program, property control, and custodial services. Academic- related
functions were excluded from this review.
Information was obtained and analyzed from a variety of sources. First, to determine school
district staffing levels, detailed information on school district staffing and expenditures was
obtained from the selected school districts. Second, we reviewed literature, including journal
articles, books, reports, and studies from other states and experts in the field. Third, district
administrators, teachers, students, and others in the three selected school districts were
interviewed. Finally, due to the size and complexity of district transportation operations, a
school transportation consultant was employed to determine the potential for cost savings in
the areas of bus routing, organization, and staffing.'
1 Jan P. Vanderwall. Transportation System Analysis of Selected Arizona School Districts, April 8,1996.
f i s audit was conducted in accordance with government auditing standards.
The Auditor General and staff express appreciation to the Superintendents and staff of the
three school districts reviewed, the school districts' students and their families, and the
Anzona Department of Education management and staff for their cooperation and assistance
throughout the audit.
( This Page Intentionally Left Blank)
A review of pupil transportation services in three school districts identified four major issues
affecting these services. Specifically, district transportation operations could be more efficient;
the state funding formula for pupil transportation may encourage inefficiency; double
payment for public transportation expenses should be eliminated; and the need for ADE to
venfy district transportation information to ensure that school districts receive the appropriate
amount of state equalization assistance. In addition, contracting pupil transportation may be
a reasonable aikrnaiive to disirici- operated programs.
With the exception of special needs students, state law does not require school districts to
transport students to and from school. However, the State will reimburse school districts that
choose to provide transportation to eligible students.' School district payments are calculated
using the total annual miles driven multiplied by an established dollar amount. This dollar
amount is based on the average daily route mileage per transported students. With the
exception of bus tokens and passes, actual district costs for pupil transportation are not
considered when calculating payments. School districts receive this payment in the form of
state equalvation assistance, whch is used to fund district expenses. In fiscal year 1994- 95, the
State paid school districts more than $ 120 million to cover pupil transportation costs.
Major Issues
1. Pupil T~ anspmtationO perations Can Be Move EfSunent- School districts can reduce costs
by transporting students more efficiently. During our review of the three school districts,
we identified opportunities to improve efficiency. For example:
Tucson Unified School District: TUSD's transportation costs may be unnecessarily
high because the District does not use its computerized routing system as effectively
as it could. The District currently transports about 13,000 students to and from 108
schools each day. TUSD relies on a computerized transportation routing system to
schedule 221 buses to pick up and return students to more than 3,800 bus stops. Most
1 Eligible students include elementary students residing more than one mile from school and middle- and high-school
students who live more than one and one- half miles from school.
buses make three trips in the morning and another three trips in the afternoon.
However, according to our transportation consultant, TUSD could save between $ 1.9
and $ 2.7 million annually by reducing operating and capital costs, including bus
drivers and school buses. Specifically, our consultant found that by staggering school
start and end times to allow four instead of three morning and afternoon bus trips,
TUSD could reduce the number of buses and drivers needed. In addition, our
consultant found that TUSD could further improve efficiency and reduce costs by
updating bus routes annually and limiting the distance buses travel without students.
Not only would this improve efficiency by reducing costs, it would also better meet
student needs. The district should adjust routes for new students, and students who
have moved.
Prescott Unified School District: Although PUSD appears to provide relatively
efficient pupil transportation, the District could reduce costs by better use of its buses.
The District currently transports more than 1,700 students to and from 9 schools each
day, with 18 buses that make 2 morning trips and 2 afternoon trips each day. However,
since all 6 elementary schools begin and end school at the same time, the District needs
more buses and drivers than if school schedules were staggered. In addition, since
PUSD does not transport elementary and secondary students that live near each other
on the same bus, bus routes are duplicated and buses travel more miles. However,
according to the District, parents prefer to separate these two age groups.
Phoenix Union High School District: PUHSD uses three methods to transport
approximately 7,000 students to and from 11 high schools each day. First, PUHSD
provides free public bus tokens and passes to more than 6,000 needy students living
more than one and one- half miles from school. Second, the District contracts with a
private company to transport more than 500 students. Finally, PUHSD provides
district- operated transportation to nearly 250 special- needs students and students
enrolled in magnet programs, which are specialized school programs designed to
attract students from across the entire district. For these students, the District operates
37 buses that make 1 morning and 1 afternoon trip each day. According to our
consultant, since only a small number of students each day are transported directly by
the District, PUHSD may want to re- examine whether contracting all pupil transporta-tion
is more cost- effective than maintaining and operating its own buses.
A 1993 KPMG Peat Manvick report on school district transportation in Arizona identified
that school districts could improve efficiency and reduce costs by maximizing the use of
buses and drivers.' The report examined pupil transportation in selected Arizona school
districts and recommended that three districts schedule their bus routes and stagger school
schedules to reduce the total number of buses and drivers required. The report estimated
that these 3 districts could reduce their bus fleet by a total of 14 buses, which would save
approximately $ 420,000 annually.
1 KPMG Peat Marwick, Study of Support Functions in Selected Arizona School Districts, October 1993.
2. Staie Funding fm School Did& Pupil Tmnsportation May Encourage Inefficimj - The
formula used to pay school districts for pupil transportation expenses may actually
encourage districts to be inefficient for several reasons. First, the state transportation
funding formula is based on total miles driven and, second, the formula pays many
districts for more than actual costs. According to our transportation consultant, a funding
formula based on miles driven may encourage districts to drive more miles than necessary
to increase their payments. Moreover, some school districts may have an added incentive
to travel more miles because Arizona's formula pays districts $ 1.59 per mile if the average
daily route mileage per transported student is between one- half and one mile, and $ 1.95
per mile if the average mileage per student is more than one mile. Both PUHSD and TUSD
receive $ 1.95 per mile, while PUSD receives the lower rate of $ 1.59 per mile.
Table 1
School District Transportation Costs and State Payments
Fiscal Year 1994- 95
( Unaudited)
Actual District State
School Districts Transportation Costs Pavment Totals Difference
Phoenix UHSD $ 1,936,069 $ 6,394,766 $ 4,458,697
Prescott USD 512,372 436,227 ( 76,145)
Tucson USD 9/ 43 6,542 11,332,049 1,895,507
Statewide 101,958,902 120,813,654 18,854,752
Source: AudiWGeneral staff analysis of Arizona school district actual transportation costs and state payments
obtained from ADE.
As shown in Table 1, PUSD was paid nearly $ 80,000 less than its actual costs for pupil
transportation in fiscal year 1994- 95, which may indicate that receiving the higher rate can
be the difference between making and losing money transporting students. In fact, a
private transportation company in Arizona will attempt to keep a school district's average
daily route mileage high enough to allow the district to be paid at the higher rate. In fiscal
year 1995- 96,174 Arizona school districts qualified for the higher rate of $ 1.95 per mile and
49 districts received $ 1.59 per mile. Sixteen school districts paid at the higher rate have
average daily route mileage per student that exceeds the one- mile threshold by one- tenth
of a mile or less. In addition, ADE transportation reports show the state funding formula
allowed Arizona school districts to be paid nearly $ 19 million more than what it cost them
to provide pupil transportation for the same period.
Other states do not rely exclusively on mileage in determining funding levels for pupil
transportation. For instance, Minnesota pays school districts on a per- student basis rather
than by mileage. In addition, while Wisconsin and Texas pay school districts based on
mileage, they also consider such factors as student population density. Further, the state
transportation funding formula in these states does not compensate districts at a rate high
enough to pay all district transportation costs. In fact, Wisconsin state law mandates that
state payment not exceed actual transportation costs. In addition, according to our
consultant, state transportation funding formulas should be more closely related to the
actual cost of transportation rather than miles driven.
Double Payment for Public Transportation Expenses Should Be Eliminated- The
Legslature should consider revising the transportation funding formula to prevent school
districts from being paid twice for the costs of transporting students using public buses.
A 1993 statutory revision to the transportation formula appears to have created a mechanism
that allows districts to be reimbursed both for the bus fares and the miles students traveled
on the public transit system. As a result, in fiscal year 1995- 96, PUHSD received
approximately $ 3.6 million and TUSD approximately $ 400,000 more than it cost to transport
students using public buses.
Before the 1993 legislation, school districts were paid for students who used public
transportation by including miles students traveled on city buses in the districts' total
annual mileage. However, the current funding formula allows districts to receive payments
based on the highest annual total mileage of the previous three fiscal years and does not
specifically prohibit districts from receiving payments for both the actual costs of public
transportation and the public transportation miles included in the total annual mileage. Tlus
creates a double payment in some cases, and the same double payments will again be made
in 1997, unless the statute is changed. Therefore, the Legislature should consider revising
the transportation funding formula as soon as possible.
4. ADE Does Not Vmfy Transportation Expenses - Although A. R. S. 515- 921 requires the
Superintendent of Public Instruction to venfy the accuracy of school district transportation
mfomation, ADE only requires districts to report school bus odometer readings, but does
not verify the accuracy of that information. Other transportation information, such as
contract and public transportation mileage and the number of eligible students, is not
reviewed or verified. As a result, ADE cannot ensure that state payments to school districts
for transportation expenses are appropriate. Other states' audits of district transportation
information and our transportation consultant recommended that tlus information be
verified to ensure accuracy.
Opportunities for
Of the three school districts we reviewed, only PUHSD currently contracts with a private
company to provide regular pupil transportation. While PUHSD provides district- operated
transportation to approximately 250 students, the District contracts transportation for mow than
500 students at an estimated annual cost of $ 1.3 million. Although PUHSD has previously
decided against contracting district- operated transportation, our consultant indicated that
PUHSD may want to re- examine whether contracting all pupil transportation would be more
efficient than providing district- operated service. Contracting the entire transportation operation
may allow the District to reduce operating and capital costs by eliminating its bus fleet,
employee salaries, maintenance, and other expenses. PUSD recently considered contracting
pupil transportation, but decided the estimated annual cost savings of more than $ 38,000 was
not enough to justify contracting pupil transportation. According to our transportation
consultant, PUSD's loss of nearly $ 80,000 for fiscal year 1995- 96 and its aging bus fleet may
cause the District to reconsider contracting pupil transportation in the future.
Further Work
Because the State directly funds district pupil transportation programs, it has a direct interest
in ensuring programs are efficiently operated. Based on the results found in the three districts
audited, a statewide audt of pupil transportation appears warranted to identify whether other
districts can reduce transportation costs. Also, because ADE has historically performed limited
verification of transportation data submitted by the districts, further audit work may be
warranted to determine the accuracy of district transportation information and expenses.
1. ADE should develop and present for legislative consideration:
a. Improvements to the transportation reimbursement formula; and
b. Statutory corrections to the funding formula to disallow payment for public
transportation mileage.
2. ADE should review and verify school district transportation expense information.
A review of food services programs in three school districts identified five major issues affecting
the operations of those programs. Specifically, many school district food services programs are
not self- supporting; food and labor costs in many districts exceed industry standards for school
districts; replacing multiple lunch periods with single lunch periods impacts costs; and some
schools do not participate in the National School Lunch Program. In addition, contracting food
services is often not costeffective since most school districts that contract actually lose money.
However, the potential exists for improved efficiency in district- run programs.
Shortly after the passage of the National School Lunch Act, the Arizona Legislature established
the Arizona School Lunch Program in 1947. One hundred eighty- two of the 233 school districts
in Arizona currently participate in the National School Lunch Program. The primary purpose
of tlus program is to provide low- cost, nutritious meals to eligible schoolchildren. Participating
school districts receive cash reimbursements and donated commodities from the United States
Department of Agriculture ( USDA). All food services income is to be used for the operation
or improvement of food services programs. However, the USDA recommends that food services
operations pay the total cost of providing food services using sales and reimbursement
revenues, and try to minimize or eliminate subsidies from the school districts general operating
Major Issues
1. Many School District Food Sentices Programs Are Not Self- Supporting- Many school
district food services programs are unable to pay all operating expenses with sales and
reimbursement re~ enueW.~ h en food services programs are not self- supporting, school
districts must pay food services expenses with monies from their general operating funds,
monies that could otherwise be used for educational purposes.
United States Department of Agriculture, Food and Nutrition Service Study of Food Sm'ces Management Compa~ ies
in School Nutn'tion Program, June 1994.
Food services revenues are generated primarily from cash sales to students and federal reimbursements for
those who qualify for free and reduced- price meals. The federal reimbursements are also subject to a state
revenue match requirement.
None of the three districts' food services programs we reviewed fully pay all indirect
expenses. Indirect expenses include those costs that are not directly related to the food
services program, such as costs for district level and site administration, utilities, accounting,
custodial services, and other expenses. The United States Department of Education ( USDOE)
and ADE use student participation rates in school lunch programs and other factors to
determine the maximum amount of food services revenue a school district can use to pay
for indirect expenses. As shown in Table 2, the 3 districts combined paid only $ 94,709 of
the possible $ 1.58 million to the districts' general operating fund.
Table 2
Maximum and Actual School District lndirect Expenses
Fiscal Year 1994- 95
School District
Phoenix UHSD
Prescott USD
Tucson USD
Combined Totals
Maximum lndirect
Ex~ ensesA llowed
Actual lndirect
Ex~ ensesC laimed
Statewide $ 13,554,928 $ 2,373,879
a PUHSD has chosen not to use food services revenue to pay indirect costs in an effort to keep student lunch prices
TUSD pays for certain services, such as personnel and finance, as direct costs rather than claiming them as part
of indirect expenses.
Source: Auditor General staff analysis of Arizona school district food services expenditures obtained from ADE for
fiscal year 1994- 95.
Statewide, few school district lunch programs pay the total amount of their indirect costs.
Of the 182 districts participating in the National School Lunch Program, 146 have extensive
enough school lunch programs to quallfy to pay for indirect costs.' Of these 146 districts,
Federal regulations govern whether a school district participating in the National School Lunch Program is
allowed to use food services revenues to pay for indirect costs. To do so, districts must have a certain
participation rate and level of indirect expenses. The 36 school districts in Arizona that do not qualify are
generally very small districts where the participation rate is low or there are not significant indirect expenses.
only 4 transferred enough revenue to the district's general operating fund to pay for these
additional food service costs. Another 119 of 146 districts did not transfer any revenue to
pay for these costs. The remaining 27 districts paid approximately $ 2.4 million. This is less
than 18 percent of the $ 13.6 million in indirect expenses allowed statewide. Some of these
27 school districts, such as Mesa Unified School District, paid a large portion of their indirect
costs. In fiscal year 1994- 95, Mesa Unified paid $ 865,700 of a possible $ 930,394 for indirect
Even when indirect costs are excluded, one of the three district programs had expenses that
were higher than revenues. As shown in Table 3, TUSD had food services expenses that
exceeded revenues by approximately $ 500,000 in fiscal year 1994- 95. However, according
to TUSD officials, its food services expenditures that year included monies spent from an
accumulated balance in its food services fund to renovate high school cafeterias. TUSD did
not provide documentation as to the specific amount expended on these renovations.
Table 3
School District Food Services Revenues and Expenditures
Fiscal Year 1994- 95
Food Services Food Services
School Districts Revenues a Ex~ enditures
Phoenix UHSD
Prescott USD
Tucson USD
" Food services revenues do not include interest income.
Food services expenditures do not include indirect cost transfers or transfers from the maintenance and operations
or capital outlay funds.
lncludes expenditures to renovate high school cafeterias.
Source: Auditor General staff analysis of Ariimna school district food services revenues and expenditures for fiscal
year 1994- 95.
Many school districts statewide had expenses greater than revenues in fiscal year 1994- 95.
Eighty- nine of the 182 school dstricts that submitted complete food services annual financial
reports to ADE in fiscal year 1994- 95 reported food services expenses exceeding revenues.
Revenue shortages ranged from less than $ 150 to more than $ 500,000 and totaled
approximately $ 3.6 million statewide.
2. Food and Labm Costs Aue Excessive in Some School Districts- Some school districts' food
services programs have higher food and labor costs than recommended by industry
standards. Since food and labor costs can account for approximately 85 percent of food
services expendihms, food and labor costs as a percentage of total revenues are important
indicators of program efficiency.
As shown in Table 4 ( see page 15), of the three school districts we reviewed, only PUSD
had food costs exceeding the industry standard of 40 percent during fiscal year 1994- 95.
However, in all three districts labor costs exceeded industry standards, with TUSD's labor
costs 5 percent higher than the industry standard of 45 percent. According to ADE, food
and labor costs can vary due to such factors as the size of the school district, the geographic
location, and district salary schedules for classified food services employees.
Of the 182 school districts reporting food and labor costs for fiscal year 199495,43 had food
costs exceeding 40 percent of revenues, and 77 had labor costs exceeding 45 percent of
revenues. If the 43 school districts with food costs exceeding 40 percent of revenues reduced
these costs to the industry standard, statewide savings would total more than $ 5.9 million
annually. Similarly, if the 77 school districts with labor costs exceeding 45 percent of
revenues reduced these costs to the industry standard, statewide savings would total more
than $ 5.2 million annually.
3. School Districts with Only One Lunch Period Have Higher Costs- Despite higher costs,
some Amona high schools have replaced multiple lunch periods with a single lunch period.
Of the three districts we reviewed, only PUSD retains multiple lunch periods in all of its
schools. In PUHSD and TUSD, some lugh schools use a single lunch period. Some school
administrators prefer a single lunch period because it may help to minimize the potential
for student incidents and reduce truancy. However, in PUHSD and TUSD, the one lunch-period
policy has increased labor costs because more food service workers are needed to
handle an increased number of students in a shorter time. According to a TUSD study, labor
costs at one high school increased by more than $ 20,000 the first year. Moreover, a single
lunch period can lead to greater capital costs since more equipment may be needed to serve
the increased number of students.
We surveyed the 19 largest urufied and high school districts in the State, including PUHSD
and TUSD, and found that 9 districts have implemented a single lunch period in 1 or more
of their schools.
School Districts
Phoenix UHSD
Prescott USD
Tucson USD
Industry Standard
Table 4
Food and Labor Costs for the Selected Districts
Fiscal Year 1994- 95
Food Costs As a
Percentage of
Revenue a
Labor Costs As a
Percentage of
Revenue a
a Food services revenues do not include interest income.
Industry standards obtained from 1993 KPMG Peat Marwick Study $ Selected Arizona School Districts, and
Dorothy V. Pannel, Cost ContvoI Manual for School Foodservices, 1994.
Source: Auditor General staff analysis of fiscal year 1994- 95 food and labor expenditures for all 182 Arizona school
districts that submitted complete food services annual reports to ADE.
According to the American School Food Service Association, a single lunch period limits
a food services program's abdity to remain self- sufficient, because of higher labor costs and
the potential for lower revenues.
4. Sonw Schools Do Not Participate in the National School Lunch Proprn - Although most
h o n a school districts participate in the National School Lunch Program, some schools
do not. Of the three school districts we reviewed, PUSD is the only district that does not
fully participate in the National School Lunch Program.
Schools participating in the National School Lunch Program receive approximately $ 1.80
per lunch for each student eligible for a free meal and a lesser amount for students eligible
for reduced- price meals. Since federal reimbursement rates are generally hgher than the
price of full- priced meals, the Program helps subsidize the cost of food service operations.
In addition, participating schools receive free commodities from the U. S. Department of
Agriculture, which further reduces school food costs. Without these subsidies, students
attending nonparticipating schools may pay significantly more for their school lunches.
High school students in PUSD pay approximately twice as much for a school lunch than
students attending high schools that participate in the Program: about $ 2.50 per lunch
compared to about $ 1.25 per lunch. In addition, nearly 275 PUSD middle- school students
who are currently eligible for free or reduced- price meals will be unable to benefit from
the National School Lunch Program once they attend hgh school.
According to PUSD's food service manager, Prescott High School does not participate
because of federal restrictions on the sale of soda inside the cafeteria and unwillingness to
use federally provided commodities. To comply with federal regulations, other schools
offer soda for sale outside the cafeteria.
In Arizona, contracting school district food services programs does not appear to be cost-effective.
Of the three school districts we reviewed, only PUHSD seriously explored food
services contracting. In 1989, PUHSD contracted with a food services management company
to operate two high school food services programs. PUHSD compared the contractofs
performance with two food services programs of comparable size operated by the District.
After the first 6 months, the 2 contracted schools had a combined loss of over $ 26,000, versus
an $ 11,000 profit in the 2 District- operated programs. According to the District, the loss is
primanly due to administrative and management fees of over $ 62,000 paid to the contractor
for 6 months of operation.
Of the 220 school districts with food services programs in the State, 33 are currently
contracting with private food services providers. In fiscal year 1994- 95, food services expenses
exceeded revenues at 26 of these 33 school districts, resulting in a loss of more than $ 1 million.
Further Work
Although food services operations are essentially funded by the school districts without direct
state funding, those programs that are not self- supporting require subsidization with monies
from the districts' general operating funds. General operating funds, comprised of state aid
to education and local taxes, are primarily designated to pay for basic education expenses such
as teacher salaries and materials. Using these monies to subsidize inefficient food services
operations takes resources away from students' education. Since nearly half of the school
i districts require subsidization for food and labor expenses, and most districts require
I subsidization for indirect costs, ADE should determine why this is occurring and work with
school districts to develop self- supporting food services operations.
I ADE should encourage school districts to take actions to make their food services operations
self- supporting.
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CHAPTER Ill
A review of school district administration and support in three school districts identified two
major issues affecting the efficiency of district staffing. Specifically, the size and cost of
admitustration varies among school districts, and part- time employee benefit policies impact
costs. School districts should evaluate the potential for maximizing the efficiency of various
administrative and support functions.
School district administration usually consists of a superintendent who reports to an elected
governing board, and, in the larger districts, several assistant superintendents who directly
supervise various functions, and numerous support staff. The number of administrative and
support positions varies among school districts depending on student population, the number
and variety of academic and extracurricular programs, and the district's educational and
management philosophy. Budget constraints may also affect the number of administrative and
support positions within a school district. Two of the three school districts we reviewed have
taken steps to reduce the number of district employees due to lack of funds. Over the last 2
years, PUHSD has cut 450 positions, or approximately 18 percent of total district positions,
including over 100 administrative and support positions. Similarly, PUSD has cut 46 positions,
or approximately 8 percent of district employees, including 13 administrative and support
positions. TUSD has not laid off any district employees since 1990.
Major Issues
1. Variance in Administrative Stafiing and Costs Indicate the Need for Further
Study- Significant differences in the number of administrative and support staff per
student and salary costs per student between districts may indicate an opportunity to
reduce administrative costs in school districts statewide. Two of the three districts we
examined had staffing ratios and salary costs hgher than comparable districts. However,
more detailed analysis is needed to determine the causes for the differences in staffing and
costs, and whether the causes are justified.
Examining school district staffing and related salary costs is an important first step toward
identifying possible savings in administrative and support costs in school districts. To
conduct our review, we collected School District Employee Report ( SDER) information for
fiscal year 1994- 95, which includes the number and classification of employees, for all
Arizona school districts. Ths information is prepared and certified by the school districts
to ADE, which uses the information to meet federal reporting requirements. We did not
audit these data or reports but used the data as reported by the districts. Table 5 shows
school district staffing by classification for PUHSD, PUSD and TUSD.
Table 5
Phoenix UHSD, Prescott USD, and Tucson USD Staffing
Fiscal Year 1994- 95
Staffina Classification Phoenix UHSD Prescott USD Tucson USD
District Administration and Support " 103 20 305
School Administration and supportb 202 40 533
Instruction ' 1,265 280 2,972
Instructional Support 367 79 943
Other Operational Support ' - 486 - 125 1,553
Total District Staff 2-, 423 - 544 6-, 306
" District Administration includes the superintendent, assistant superintendents, business managers,
administrative assistants, directors, supervisors, vocational education administration, curriculum coordinators,
and any principals and assistant principals on special assignment at the district level. Support includes head
teachers at the district level, accountants, auditors, buyers, research staff, personnel assistants, attendance staff,
bookkeepers, clerical secretaries, and District switchboard operators.
School Administration and Support includes bookstore managers, food service managers, principals, assistant
principals, lead teachers, attendance staff, bookkeepers, clerical secretaries, and school switchboard operators.
Instruction includes regular education, special education, and vocational education classroom teachers.
Instructional Support includes guidance counselors, librarians, librarian aides, and a media specialist, and aides
for elementary, secondary, special education, and vocational education teachers.
Other Operational Support includes all remaining positions at the district and school level, such as data
processing, transportation, food services, adult education, cashiers, printing, and warehouse.
Source: Auditor General staff analysis of fiscal year 1994- 95 School District Employee Reports obtained from
Since the focus was on school district administration, staffing levels and salary costs were
examined for two categories: School District Administration and Support and Other
Operational Support. Similar to other studies conducted in Arizona and elsewhere, we
calculated ratios for each category based on staff per student and total salary costs per
student for PUHSD, PUSD, and TUSD, as well as for school districts of comparable size,
type, and location.
As shown in Table 6, both PUHSD and TUSD have ratios of students per administrative
and support staff that are significantly lower, or potentially less cost- efficient, than
comparable school districts. On the other hand, PUSD's ratio of students per district
administrative and support staff is significantly higher or potentially more cost- efficient,
than comparable school districts.
Table 6
Ratio of Students to District Administration and Support
and Other Operational Support Staff for
Selected and Comparable School Districts
Fiscal Year 1994- 95
Ratio of Students to Staff
Selected and Comparable
School Districts a
Phoenix UHSD
Median for comparable school districts
Prescott USD
Median for comparable school districts "
Tucson USD
Ratios for the other comparable school
District Administration Other District wide
and Support Operational Support
" Comparable school districts were determined by number of students ( between 5,000 and 40,000, and 40,000 or
more students); type of school district ( such as union high school or unified districts); and location ( urban or
Comparable school districts include Glendale, Tempe, and Yuma UHSDs.
Comparable school districts include Amphitheater, Chandler, Deer Valley, Flagstaff, Gilbert, Lake Havasu,
Paradise Valley, Peoria, Scottsdale, Sierra Vista, and Sunnyside USDs.
The only comparable school district is Mesa USD.
If PUHSD staff involved in desegregation programs are not included in the analysis, the ratio of student to
district administration and support is 194: l and the ratio of students to other operational support is 40: l.
If TUSD staff involved in desegregation programs are not included in the analysis, the ratio of student to district
administration and support is 199: l and the ratio of students to other operational support is 40: l.
Source: Auditor General staff analysis of School District Employee Reports for 226 Arizona school districts
obtained from ADE for fiscal year 1994- 95.
Another way to identify opportunities for improving efficiency is to review salary costs.
As indicated in Table 7 ( see page 23), both PUHSD and TUSD pay more per student for
administration and operations salaries than the median for comparable school districts in
the State. We calculated salary costs for fiscal year 1993- 94 using Annual Financial Reports
submitted to ADE.
However, greater numbers of staff and higher salary costs for PUHSD and TUSD
administration may be related, in part, to court- ordered desegregation programs, whch
have additional management and reporting requirements. In addition, although both
TUSD and its comparable school district educate about 60,000 students each, TUSD
operates approximately 30 more schools and, therefore, employs additional administrative
and support staff.
Variance in the number of staff per student and the salary costs per student may indicate
a potential opportunity to streamline non- academic positions. For example, a 1993 KPMG
Peat Marwick study of 26 Arizona school districts also found significant variance in the
number of students to upper and middle management The study concluded that if school
districts with a below- average student- to- manager ratio could achieve the average ratio,
as much as $ 7.5 mlllion in salary costs could be saved by the districts. Although tlus audit
performed a similar analysis of the three school districts and their comparable groups,
further work is needed to determine whether there are opportunities for savings.
2 Part- ti~ neE mployee Benefit Packages Impact Costs- Part- time compensation practices can
affect school districts' salary- related costs. Employee health benefits at PUHSD, PUSD, and
TUSD represent a sigruficant expense totaling approximately 15 percent of total salary cost.
As a result, providing benefits to part- time employees increases school district costs.
During our review of the three school districts, we found that all three districts provide
varying levels of health benefits to employees working fewer than 30 hours per week, such
as bus drivers, food service workers, and clerical staff. TUSD provides partial health
benefits to employees working 20 to 30 hours a week, wlule PUHSD provides full health
benefits to employees working 24 hours per week or more, and PUSD provides full health
benefits to employees working 20 hours per week or more. A PUSD official estimates the
District could save more than $ 100,000 annually by not providing health benefits to about
70 district employees working fewer than 30 hours. In an effort to reduce costs, PUSD's
governing board has decided to gradually discontinue benefits to employees working
fewer than 30 hours per week.
Table 7
Salary Costs for Administration and Operations per Student
for Selected and Comparable School Districts
Fiscal Year 1993- 94
Selected and Comparable
School Districts '
Salarv Costs per Student '
Administration ( District wide)
Phoenix UHSD $ 172 '
Median for comparable school districts $ 121
Prescott USD $ 122
Median for comparable school districts ' $ 122
Tucson USD $ 150 g
Median for comparable school district $ 81
" Comparable school districts were determined by number of students ( between 5,000 and 40,000, and 40,000 or
more students), type of school district ( such as union high school or unified districts), and location ( urban or
Comparable school districts include Glendale, Tempe, and Yuma UHSDs.
Comparable school districts include Amphitheater, Chandler, Deer Valley, Flagstaff, Gilbert, Lake Havasu,
Paradise Valley, Peoria, Scottsdale, Sierra Vista, and Sunnyside USDs.
The only comparable school district is Mesa USD.
Salary figures do not contain salaries associated with capital expenditures and special state/ federal projects.
If salary costs for PUHSD staff involved in desegregation programs are not included in the analysis, salary costs
equal $ 151 per student for administration and $ 545 per student for operations.
If salary costs for TUSD staff involved in desegregation programs are not included in the analysis, salary costs
equal $ 142 per student for administration and $ 204 per student for operations.
Source: Auditor General staff analysis of fiscal year 1993- 94 Arizona school districts' Annual Financial Reports
submitted to ADE. ( Fiscal year 1994- 95 data is not yet available.)
The Arizona Education Association recently conducted an insurance benefits survey of
school districts. Of the 104 districts surveyed, 27 school districts offer benefits to employees
working fewer than 30 hours per week.
Some school districts, such as Mesa Unified School District ( MUSD), do not pay health
benefits to employees working fewer than 30 hours per week. However, MUSD reports
that its policy makes it more difficult to recruit and retain staff, since other school districts
provide benefits to employees working fewer than 30 hours per week.
Each of the three school districts currently contract or have considered contracting a variety
of administrative and support services. For example, PUHSD contracts for some personnel
recruitment, and has considered contracting the payroll function. In addition, the district
provides research and management information services on a contract basis to other local
school districts. PUSD currently contracts for equipment repair and legal services, and has
considered contracting district maintenance. TUSD currently contracts a number of services
including printing services, some staff training, and computer and equipment repair, and has
considered contracting the management of the maintenance system.
According to experts, nearly every school district function could potentially be contracted out.
In addition to the services mentioned above, some school districts could also contract other
administrative and support services such as public relations, risk management, and even
district management services. However, to determine whether contracting could reduce costs,
school districts should further study district- operated administrative and support services.
Further Work
The work presented in this audit is a starting point for identifying possible savings in
administrative and support costs in school districts. The three districts audited, or other
interested parties, need to do more detailed analyses to determine the causes for the
differences in staffing patterns and costs presented, and whether the causes are justified.
However, even if the ratios by themselves are not conclusive, they can be of great value in
creating a focus on administrative staffing efficiency and in educating parents and district
taxpayers about district administrative practices. Preparing similar ratios for the other school
districts in the State could yield similar benefits throughout Arizona.
In the future, ADE should periodically analyze and publish staffing ratios and salary cost
ratios for all school districts to allow districts, state policymakers, and taxpayers to review
whether significant differences exist among comparable districts. One possible means of
disseminating the data would be to include it in the school report cards published by ADE.
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A review of school safety in three school & stricts identified two major issues regarding school
districts' responses to unsafe incidences on campus. First, measuring the extent of unsafe
incidences is difficult, because school districts do not consistently record and report all
disciphe incidents. Second, school districts may not apply disciphe policies consistently. The
potential exists to more effectively address unsafe incidences in schools.
Rapid growth in juvenile crime has increased public interest in improving school safety.
Although school safety statistics are incomplete, total juvenile arrests for violent offenses
increased nearly 150 percent in Arizona since 1984. Schools must deal with such problems as
weapons violations, gang involvement, fights, and theft on campus. The three districts we
reviewed respond to these growing problems with various discipline policies, safety
programs, and specialized personnel. PUHSD employs security staff as well as human
relations specialists and probation counselors. PUSD employs security staff for high school
students and behavior coaches at the elementary levels. TUSD employs campus monitors and
has a safety department that employs security and violence prevention staff. All three districts
have police officers on some campuses.
Major Issues
1. Sclzool Districfs Do Not Remd a dR eport All Unsafe liunundenotsn Campus- T he current
methods for recording disciplinary actions taken in the three districts do not accurately
measure the number of unsafe incidents on campus. To better assess school violence,
administrators should track all unsafe incidents by type. Incident data enables administra-tors
to plan and evaluate disciplinary actions and safety programs.
Our review of PUHSD, TUSD, and PUSD found that school districts, and individual
schools within a district, track and report safety information differently. Currently, the
federal govenunent requires schools to report incidents resulting in suspension. In fiscal
year 1994- 95, PUHSD reported 2,823 student suspensions; PUSD reported 849 student
suspensions; and TUSD reported 7,174 student suspensions. These statistics include both
in- school and out- of- school suspensions. However, this information is inadequate since
suspension is often the consequence of last resort and, therefore, does not include all
incidents that occur on campus. We did find two schools in PUSD that track all incidents
that occur on campus by type of violation. This information is used to identify problem
areas and develop plans and programs to address them. A principal in one of these
schools identified fighting as a significant problem and took steps that reduced fights by
nearly 40 percent
In addition, school districts report law violations differently. State law requires schools to
contact law enforcement agencies when incidents involve weapons. Whle PUHSD's
discipline handbook does not specifically require schools to contact law enforcement
agencies when incidents involve weapons, TUSD's discipline handbook and PUSD's high
school discipline policy require schools to contact law enforcement when incidents involve
weapons. TUSD's and PUSD's discipline handbooks also require schools to contact law
enforcement personnel for other incidents such as aggravated assault and sexual
misconduct, while PUHSD's discipline handbook does not
Th~ lsa ck of comparable data lunits the statewide analysis of unsafe incidences. According
to officials from ADE, school districts throughout the State track and report incidents
differently. Currently, there is no statewide system to ensure incident data is comparable
between school districts and consistent from year to year. As a result, the State lacks
accurate information and cannot accurately evaluate the effectiveness of specific safety
programs or target resources to areas of greatest need. In addition, the lack of comparable
data limits the usefulness of the school safety information the Department reports on its
school report cards.'
According to the experience of other states and a national expert, state education
departments should establish consistent incident tracking systems to improve program
planning and evaluation. Florida's State Board of Education established a statewide,
cornputenzed, incident- reporting system to improve the quality and consistency of district
information. As a result, the Florida Department of Education can now obtain consistent,
and accurate, incident data from all schools w i t h Florida, whch is used to assess needs
and evaluate school discipline and safety programs. The federal government is
considering Florida's system as a model. In addition, a California Advisory Panel on
School Violence recently recommended that the legislature enact a uniform incident report
procedure that is empirically validated and checked for reliability across districts. A
national expert on school safety recommends that state education departments develop a
standard reporting format to be used throughout the state.
2. Sclzool Districts May Not Apply Discipline Policies Consistently - School districts may
not be consistently applying or communicating discipline policies. All three school
districts reviewed have written discipline policies, as required by state law, which prohibit
certain student actions and explain possible consequences. However, the PUHSD
discipline handbook states clearly that the discipline procedures listed are " guidelines
only," allowing school administrators considerable discretion in determining how to
disciphe students. Although federal privacy laws prevented us from reviewing student
1 School report cards are designed to provide increased school accountability and more information to parents
and students about a school's programs and projects.
records to determine whether discipline was consistent with district standards, a 1993- 94
PUHSD survey indicates approximately one- half of district students surveyed did not
agree that students who break rules are appropriately disciplined. Unclear discipline
policies may also lead to inconsistency. For example, a recent survey conducted by TUSD
found that about one- third of district teachers and administrators believe discipline rules
are not clear and disciplinary actions are not fair. A national school safety expert indicated
that when rules are not clear, school officials may substitute their own rules, which may
not be appropriate. In contrast, most of the students and teachers we interviewed in PUSD
believe discipline is consistent.
Opportunities for
None of the three districts audited currently contract for school security services. We did not
review whether contracting is a feasible option.
ADE should develop and implement a statewide incident reporting system, including
specifying a standard reporting format for unsafe incidences.
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In addition to school safety, we also reviewed the Safe Schools Program in three school
districts and identified three major issues affecting the program. Specifically, the effectiveness
of the Safe Schools Program is unknown; gudehes governing expenditures need clarification;
and compliance with financial reporting requirements is limited.
The Joint Legislative Committee on School Safety ( Committee) was established by Session
Laws 1994, Chapter 201, Sections 23 and 25, to implement and evaluate the Safe Schools
Program. Safe Schools grants allow school districts to fund on- campus police and/ or
probation officers in an effort to limit violent behavior in school, improve student understand-ing
of the law, and to reduce the number of students referred to juvenile court or detained in
state and county correctional facilities. The Committee reviews school district applications and
selects districts to receive Safe Schools grants. ADE administers the Program, including
distributing monies to school districts and assisting with program evaluation. The Legislature
has increased Safe Schools Program funding from $ 2.5 million in fiscal year 1994- 95 to $ 5
million in both fiscal years 1995- 96 and 1996- 97. Of the 86 school districts that applied for Safe
Schools Program monies, 68 received support, including the PUHSD, PUSD, and TUSD.
Major Issues
1. Eflectivivertess of Safe Sclzools Propm Unknown - Since the Safe Schools Program has not
yet been implemented for a full school year, there is not enough information to evaluate
the Program's overall effectiveness. While we obtained anecdotal information illustrating
the successes of the Safe Schools Program, an evaluation of the Program's overall
effectiveness is difficult for at least three reasons. First, because the Program is designed
to prevent incidents from occurring through both education and enforcement efforts, data
needs to be collected over a longer period of time to assess its impact
Second, wlule the Committee collected district incident data to assess changes after the
Program's first semester, the Committee did not clearly specify the types of statistics
districts should report. As a result, districts interpreted the Committee's directions
ddferently, and reported information that is inconsistent and, in some cases, incomplete.
For example, PUHSD reported information for 21 types of violations it tracks, whereas
PUSD reported information on 9 types of violations and TUSD on only 3. In addition, all
3 districts provided information on only those incidents that resulted in suspension.
Finally, the Committee did not collect or analyze information on juvenile court referrals
and detentions, even though one of the goals specified in statute is to reduce the number
of student referrals and detentions.
For the evaluation due October 1, 1996, ADE is requesting that districts report " the
number of incidents that threatened the safety of students, including but not limited to
incidents of illegal activity." In addition, ADE collects safety information in its annual
Comprehensive Health and Prevention Program Survey that could potentially be used in
future years to evaluate the Safe Schools Program. However, to ensure that ADE collects
school Information that is comparable within and across districts, ADE needs to define the
specific statistics districts should report In addition, ADE has no plans to analyze juvenile
court referral and detention data.
2. Expenditure Guidelines Needed- It is difficult to determine whether school districts are
using Safe Schools Program grants appropriately since the Committee has not developed
clear guldehes detaLling how participating districts can spend the funds. While state law
indicates funds should be used to implement school safety plans, it does not specify any
prohibited uses of funds. In fact, one committee member suggested that guidelines should
not be developed so that districts have discretion in determining their local safety needs.
The three districts we reviewed received about 10 percent of the total available Safe
Schools funds in both fiscal years 1994- 95 and 1995- 96. Table 8 ( see page 33) and Table 9
( see page 34), illustrate their allocations and expenditures.
Unclear expenditure guidelines and vague information requirements make it difficult to
assess whether district purchases were authorized or appropriate. The only discernable
guidelines governing use of funds are those derived from discussions documented in
committee minutes, interviews with committee members, and previous committee actions.
It appears that the Committee's funding priorities are officer salaries and training needs,
although the Committee approved requests for other expenses on a case- by- case basis. In
addition, the forms used by districts to request grant monies and report expenditures are
very general and do not provide sufficient detail for analysis. Our review identified
vehcle and computer expenditures that appear to depart from the Committee's intended
use of funds. Specifically:
Vehicles- In fiscal year 1995- 96 TUSD's requested grant amount included an
estimated $ 60,000 needed for vehicles. Currently, TUSD and the Pima County Sheriff's
Department have an intergovenunental agreement that includes approximately $ 45,000
to purchase 2 vehicles for county sheriff officers that, according to a county official, will
remain county property. Because TUSD's application to the Committee did not itemize
expenses for vehicles, it is unclear whether the Committee was aware TUSD planned
to use grant monies to pay for vehicle purchases for use of and ownership by a
different political subdivision. Contrary to this request approval, in both fiscal years
1994- 95 and 1995- 96, PUSD's requests to purchase vehcles for officers were denied on
the basis that it was an inappropriate use of funds. PUSD had itemized the vehcles in
its applications to the Committee.
Table 8
Safe School Grant Awards and Expenditures
Fiscal Year 1994- 95
Grant Awards
Year- End Cash Balance
Phoenix UHSD Prescott USD Tucson USD
a Cost for three police officers for a partial semester.
Total of $ 16,181 for 1 probation officer for 1 semester, $ 2,028 for 1 computer and printer, $ 500 for travel, and $ 36
for training materials.
' Total of $ 78,000 for 4 probation officers for 1 semester, $ 15,046 for several part- time sheriff officers for 1
semester, and $ 15,062 for 4 computers and 3 printers.
Amount returned to ADE.
Source: Auditor General analysis of Safe School Grant allocations and expenditures for fiscal year 1994- 95.
w Computers - Based on actions documented in committee minutes, and interviews with
committee members, it appears computer purchases were intended only for probation
officers to allow online access to county court records so they could spend more time
on campus. However, in fiscal year 1994- 95, TUSD spent over $ 15,000 on computers for
3 police officers and the grant coordinator. In another example, in fiscal year 1994- 95,
the Committee authorized PUSD's request to purchase a computer for their probation
officer. However, as of May 23,1996, PUSD has not established a computer link with
the County, and the computer is used only for word processing.
3. Co~ izpliancew ith Finarzcial Requirements Is Limited- While each of the three districts
have submitted necessary program completion reports and returned unused money as
required, many school districts statewide have failed to do so.
Districts are required to submit completion reports indicating total actual expenditure and
cash balance amounts at the end of the program year. In addition, they are required to
return any unused money to ADE for reversion to the state general fund.
Table 9
Safe School Grant Projected Expenditures
Fiscal Year 1995- 96
Phoenix USD . Prescott USD
Grant Awards $ 116,571 $ 38,955
Projected Expenditures - 38,856 a - 38,722
Cash Balance $ 77,715 $ 233
" Cost fox first of three payments for three police officers.
Total of $ 38,648 for 1 probation officer for 1 full school year and $ 74 for supplies.
Tucson USD
" Total of $ 243,863 for 4 probation officers, 15 part- time sheriff officers for 1 semester, 2 full- time sheriff officers
with vehicles for 1 semester, and $ 6,464 for supplies and mileage for 1 semester as of May 1,1996.
Districts have until the end of the current fiscal year to spend these awards.
Source: Auditor General analysis of Safe School Grant awards and projected expenditures for fiscal year 1995- 96.
Many school districts statewide have also failed to comply with administrative
requirements for fiscal year 1994- 95. According to ADE records, as of May 3,1996, only
43 of 56 districts had submitted their completion reports. While ADE recently sent two
letters reminding districts to comply with requirements, they have not ensured that all
unused money was returned. As of May 3,1996, ADE can identify only 22 districts that
have returned unused money. Based on our review of 43 submitted completion reports,
we identified over $ 273,000 in unused Safe School Program grants, plus approximately
$ 13,000 in interest that districts may need to return.
If ADE exercised more administrative authority over the Safe Schools Program, it could
better ensure that districts comply with administrative requirements. For example, if ADE
applied guidelines governing most state aid to school districts, it could reduce a district's
current year allocation if a district does not return unused funds from a previous fiscal
Because the Safe Schools Program is designed to place police or probation officers on campus,
contracting does not appear to be a relevant option.
Further Work
After the Program has been in operation longer, and guidelines developed governing the use
of funds, a statewide audit of the Program should be conducted to determine the following:
Whether the Safe Schools Program is effective in school districts statewide.
Whether districts statewide are spending money on items that best serve the intent of the
Safe Schools Program, and if the expenditures were authorized by the Committee.
Whether districts statewide are complying with fiscal reporting requirements and
returning unused funds.
The Joint Legislative Committee on School Safety should consider : 1) requiring districts to
report complete and standardized information on school incidents, juvenile court referrals,
and detentions; 2) developing guidelines governing the use of funds; and 3) documenting all
funding decisions.
( This Page Intentionally Left Blank)
Our review of the three school districts found that all three districts need to improve property
control. Contracting some property control functions may be a cost- effective alternative to
district- operated programs.
According to A. R. S. 515- 341, school district governing boards are required to manage and
control all district property. Generally, property includes fixed assets such as land and
improvements, buildings and improvements, furniture and equipment, and vehcles. Because
these assets represent a major investment of district funds, school districts need to ensure all
district property is properly accounted for. The Unifmm System of Financial Recmds ( USFR)
provides policies and procedures for controlling general fixed assets. Districts use these to
establish and enforce an adequate property control system including establishing responsibil-ity
for managing the system, preparing and updating detailed lists of general fixed assets,
taking a physical inventory, and maintaining adequate insurance coverage.
Major Issue
1. School Districts Cannot Account for S mFix ed Assets- While each of the three school
districts has a system for idenbfying district property in order to safeguard assets, all three
districts cannot account for some property. School districts must take a physical inventory
of district property at least every three years and reconcile it to a list of the district's general
fixed assets. Districts list property that cannot be located as " lost," and issue an itemized
loss report to the school where the property was last located. If the school does not locate
the property, it is included in the district's inventory loss report During fiscal year 1994- 95,
PUI- ISD reported losing more than $ 1.3 d o nin district property in its loss report Items
identified in the loss report included approximately 200 computers. During the same
period, TUSD reported losing nearly $ 400,000 in property. In fiscal year 1993- 94, the last
time PUSD completed a physical inventory, PUSD could not locate over $ 100,000 in district
property. While the lost property accounts for less than 1 percent of the districts' total fixed
assets, property included in the districts' loss reports include such things as vehicles,
computers, laser printers, office copiers, musical instruments, exercise equipment, and
other property. Although district personnel indicated that some items appearing on the
loss reports may have been disposed of, stolen, or loaned to students, teachers, or other
schools, the districts are not certain what happened to the property.
None of the three districts have contracted for their property control systems. Further,
contracting a complete school district property control system may not be cost- effective
because the controls require documentation of all changes to the status of property throughout
the year and access to all buildings in order to conduct the physical inventory. However, some
Arizona school districts, such as Agua Fria Union High School District, Altar Valley
Elementary School District, and Colorado River Union H~ ghSc hool District, have contracted
with private companies to compile a list of fixed assets, develop property control procedures,
and provide staff training on the importance of property control.
Further Work
Based on our review of property control in each of the three school districts, there may be a
need statewide to strengthen measures to reduce property loss. ADE should work with
districts to review the types and amount of property being lost, and whether property control
systems are adequate and property losses can be reduced.
ADE should review the issue of school district property control systems to determine whether
districts can reduce the amount of property for which they cannot account.
Our review of custodial services in the three school districts did not identify any major issues
affecting the operation of custodial programs. When district custodial services are compared
to industry standards, district services appear to be relatively efficient. In addition, some
school districts that have contracted custodial services have not found it cost- effective.
Our review of PUHSD, PUSD, and TUSD did not identify any
major issues concerning custodial services. As shown in Table 10,
we found that, on average, each custodial staff person is maintain-ing
more than 23,000 square feet of space.
Table 10
Square Footage per Custodial Staff
As of March 1996
School Districts
Phoenix UHSD
Prescott USD
Tucson USD
Industry Standard
Staff a
Total Square Average Square
Footage Maintained Footage per
[ in millions) Custodial Staff
" Calculated district custodial staff in terms of full- time equivalents.
Source: Auditor General staff analysis of school district personnel data and total building square footage.
According to a 1993 KPMG Peat Marwick study of Arizona school districts, 1 custodial staff
person is needed to maintain between 16,000 to 20,000 square feet of space. This appears to
be consistent with a 1995 KPMG Peat Marwick review of a Texas school district, which
applied an 18,000 square footage standard.
Despite the fact that custodial staff at each of the three school districts are maintaining more
square footage per staff person than recommended by industry standards, schools and
administrative offices we visited appeared generally well maintained.
Although each of the three districts we reviewed has experience with contracting custodial
services, none currently contracts these services. In the past, PUSD and several PUHSD schools
have contracted custodial services. However, PUHSD found contracting was not cost- effective
and preferred the benefits of having greater control over district custodial staff.
Further Work
Based on our review of custodial services in each of the three school districts, there does not
appear to be a need for further work.
Agencies Response
( This Page Intentionally Left Blank)
Sratc uf Arizona
Department of Education
Lisa Graham Kccgan
Supcrintcndcnt of Public Insrrucrion
Response to Transportsxtioa
The Department of Education does verify transportation intormation submitted to it by
Districts. The Department does not audit the records of a school district nor does it
conduct on- site reviews of bus routes md bus maintenance records.
As required by Title 15- 92 1, the Department evaluates the transportation reports to
determine accuracy of miles reported and miles driven as compared to the prior year's
report. Whcn there is a discrepancy, the route mileage is adjusted. ' However, there is no
way for the Department to verify what is certified as contract mileage. This is an audit
While it is true that the Department of Education does not verify - sportation expenses, .
it does veri. ify the transportation support level as defined by law. Pursuant to Tirle 15- 922,
school districts are required to certify to the superintendent of public instruction the
information provided to the Department regarding transportation. As stated earlier, the
certified route reports are compared to the prior year's reports and discrepancies found
are questioned. Adjustments are madc to route miles when they are found to be in error.
153.5 Wcst Jcffcrson. Phoenix, Atizonn 85007 - 601- 542- 4361
Stale of Arizona
Department of Education
Lisa Graham Keegan
Superinrcndcnt of
Public Lnsmction
Response to Food Services Programs
1. Many School Districts' Food Services Programs are not self supporting.
The following factors need to be considered: - 7CFR 2 10.17 requires a state match to demonstrate support of feeding children.
Since there are no state revenues to meet the state match, Arizona utilizes the
attachcd formula. Without this support, the legislature would need to appropriate
Direct costs, such as, salaries of custodians, lunch room and playground aids, and
utilities are frequently a direct expense of a school district's food service
operation. These costs are reported as expenditures on the Annuai Financial
Small and nual districts do not have rhe buying power of larger districts. Food
costs are often higher in nrral districts.
r Salaries are often based on classified employee's salary schedules and food
service lms no control. Salaries are established by the unions.
2. Food and Labor cost are excessive,
Labor costs have been addressed abovc.
It is unclear which industry standards were used? Please refer to the docurnem
provided by ADE.
1535 West Jefferson, Phoenix, Arizona 85007 * 02- 542436 1
CFR 7, Part 210.7
The amount of the State Revenue Matching Requirement is determined
annually by the U. S. Department of Agriculture. The base figure
for this computation is the total amount of Section 4 funds
received in Arizona in 1981. ( Section 4 funds are the general
assistance funds provided for ALL school lunches. In 1990 this is
,1475 or . I675 for each student lunch.)
Arizona received $ 7,757,057 Section 4 funds in 1981. The state
match requirement can be no more than 30% of this amount. Since
Arizona's per capita income is less than the per capita income of
the united States, this percentage is reduced. For school year
1990, the percentage will be approximately 28%. This computes to
a dollar amount of $ 2,151,843 of state revenues.
. Since there are no designated state revenues for the National
School Lunch Program in Arizona, the State Agency uses the
following formula, using data from public school Annual Financial
Reports submitted to School Finance, to- meet this requirement:
State Revenue DIVIDED BY Total Revenue = State Revenue Factor
State Revenue Factor TIMES Food Service Expenditures from Funds 001
and 410 = State Revenue Match.
This computation is done for every public school participating in
the National School Lunch Program. The total of the State Revenue
Match from each public school district, plus the state revenues
reported on the Food Service Annual Financial Reports submitted by
state correctional agency is then the State Match for Arizona.
Response to Auditor General Audit of
Selected Arizona School Districts
I Dr. hn6 X. Diaz, Superintendent
( Tkie District finds the following statements in the study misleading
I 1. State Ftndulsf for School District Pupil Transtlortation Mav Encourage Inefficiency,
I p. 7, # 2.
I The state funding fonnula for pupil traneportertion based on miles driven and cost per
mile, as referred to by the Auditor General's study, ia part of a district's budget
limitation for expenditure purposes. However, Table 1 and the eucceeding paragraph u explanation change from the state funding formula concept to introduce a discussion on
revenues received from State Equalization Assistance payments. These payments do
s not affect a district's budget limitation or actual costs.
By listing State Equalization Assistance payment totals to school diatricta together
I with actual c o ~ t sin Table 1, there is an implication that the districts have exceeded
their budget capacity in fiscal year 199495 when in fact this is not true. If the purpose
of the study was to determine appropriate State Equalization Assistance payments,
there is no benefit to be derived from discussing actual transportation costs.
State Equalization Assistance payments are a source of revenues to a district which
limit the amount of revenues a district receives fi- om local property taxes. The amount
of State Equalization Assistance received by a district varies from year to year
1 depending on that district's total student count, budget limit and assessed valuations.
State Equalization hsistance has no relationship to any expenditures made by a
district for transportation expenditures or any other budgeted line item.
1 2. Double Payment fqr Public Transportation Expenses Should Be Eliminated. p. 8 119.
Specifically, with regard to Phoenix Union High School Diartrict ( PUHSD), the Auditor I General reports that the PUHSD was double paid by more than $ 3.6 million in 1994- 95
baered on amounts claimed for student bue passes and tokens, PUHSD fdowed ARB
I 15- 945 in calculating its 1994- 95 transportation revenue control limit and made the
required revisions to its 1994- 95 mileagehus pass report. No reduction in funding level
occurred as a result of these revisions. PUHSD was not double paid and it followed the
statutory formula.
By explicitly stating that districts were " paid twice for costs of transporting students
using public buses" and attributing an overpayment to PUHSD of $ 3.6 million to thia
" error" the Auditor General is mi~ leadmg the reader as explained in the preceding
paragraphs. State Equalization: payments bear no relationship to the costs of
transporting students or to a district's budget capacity. Even if PUHSD had not
received $ 3.6 million in Gtate Equalization Assistance, this amount would have been
assessed in local property taxes and would not have affected the budget capacity or
amount expended on transportation.
PUHSD recommended to the Auditor General's Office that the report be revised to
clarify that " payments" referred to State Equalization Assistance and not the amount
avcrilabla to a district for expenditure$.
- Stcs te Fbding Formula
Funding for pupil transportation should not be considered separate and apart from funding
forv school districts' total operations. The pupil transportation formula is only one piece of
the Revenue Control Limit Calculation which also includes separate ca1culations for regular
education and speciaYvocationa1 education, teacher experience, and auditing senrices. While
pupil transportation expenditures may be less than the amount of the transportation
ca: lculation portion of the Revenue Control Limit, regular education and epecial education
sections of the budget are undwfunded in terms of their expenditure levels. School district
governing boards are given the authority to budget funds according to need, regardlesa of
any individual calculations that make up the Revenue Control Limit total. By focusing on
pupil transportation in isolation, the Auditor General's study ignoreis the much larger issue
of lack of funding for education in the entire school finance formula. Reducing the amount of
furlds available to erchool districts through the transportation calculation without increasing
the ftnding available in the other portions of the Revenue Control Limit would result in
sipificant cuts to regular and special/ vocational educational programs.
- C. cgtracted Services
Phoenix Union High School District currently contracts its vocational, athletic, field trip, and
desegregation bua services. Transportation for handicapped students is provided by the
dh~ tricwt hile regular education students ride the city buses. There are numerous difficulties
in transporting handicapped students that make contracting this service unfeasible:
I. Currently the district has SO different routes for students. These routes can change
any time a new student enrolls. The route times are not the same every day or for
- every route.
2. An increasing number of students are traneported from home on one side of the district
to a program in a school on the other aide. Since medically fragile student8 cannot be on
the bus for more than 45 minutes, this situation can create the need for a new route,
3. Every route requires a bus driver and an aide. If a student har a medical condition such
as seizures or the need for clearing of air passagea, that student may require a personal
I aide in addition to the bus aide. All bus drivers and aides must be trained to handle
wheelchair students, to deal with disruptive behavior, and to respond appropriately to I emergency situations. A bus driver's duties are not limited to merely transporting
students & om one location to another. It is necessary for bue staff to interact with
I parents and students and to be a part of the school staff. This would not be possible if
the district contracted bus transportation for handicapped students.
These factors make it difficult to design specification8 for a vendor response to an RFP. In ( addition, the district contacted bus transportation vendors and found that they were not
willing to accept the liability associated with transporting handicapped students.
Phoenix Union High School District has s national reputation for its program in contracting
bus transportation. The district has had contracted bue services for many years and is I frtquently contacted for information on effective contracting procedures by other school
dil ; tricts.
The Phoenix Union High School District Gwerning Board has consistently chosen not to
) charge its food services program an indirect cost factor in an effort to keep student lunch
prices low. In fact, Phoenix Union High School District's lunch price is the lowest in the
fl vsta~ llledye. nAtnsw oinudldi rbece t bceoasrt icnhga rtghee wbouurdlde nn eocf essusiptaptlee mane ninticnrge atshee i nM tahien tleunnacnhc per iacne. d AOsp ae rraetsiounlts,
The 1994/ 95 SDER report contained numerous data emors which lead to faulty conclugions.
( Fc~ re xample, campus clericel staff was inaccurately included in the district level staff count,
thlereby inflating the district total. Another illustration of incorrect data was the double
counting of administrative pcwitions. A third example was that aome campus ( sdminietrative positione were included in the Diehid's administrative totals.
A second area in the Auditor General's study focused on student to staff ratios and the cost ( of administrative support staff in several difitricb. The district recognizes that its
administrative and support staff costs, as well as student to staff ratios, may be slightly # higher than those of the mmpariaon di8tricta of Glendale, Tempe, and Yuma. However, the
stl~ dydo es not consider factors that require additional staffa nd costs for serving students in
an inner- city school district, e. g., safety programs, teen pregnancy programs, gang ( prevention programs, and student languagddiversity programs. In addition, the study does
not address the additional staff and cost associated with ensuring that Phoenix Union H[ lgh
# School District schools are not segregated.
It is the district's contention that the methodology used in the study to compare
) al! ministration and operational costs is inappropriate. Four school districts were used to
calculate a median ratio of students to staff and salary cost per student.' Whenever a
rnldian is used as a measure of comparison, fifty percent of the comparison group win
al*. vays fall above the median and fifty percent will always fall below the median.
There is no direct or indirect relationship between operating efficiently and falling above or
below the median. In fact, when comparing the ratio of students to staff and salary cost per
stlident, a school district could fizll above the median and still not operate efficiently.
Cclnversely, a district could fall below the median and operate in a most efficient manner.
hrthermore, a sample size of four school districts is too small to draw conclusions, make
re~: ommendations and generalize for the entire state about appropriate costs and ratios of
students to staff, Four district8 are not reprerentative of the state's union high school
dkrtricts. Additionally, the districts used in the comparison group are not comparable in
skldent demographics, size, staffing and location.
Th. e district recommends that the Auditor General:
Validate the accuracy of the data in the SDER report for future studies of other
Arizona school districts
Use current year ( 95/ 96) SDER report data
Develop a methodology that uses commonly accepted research and statistical
Compare Phoenix Union High School District with districts having similar
characteristics in Arizona and other statea
Consider other factors that require additional staff and costa
Delineate district office administration from school administration in separate tables
and charts
The recommendation in the study regarding limiting health benefits to part- time employees
wr: m interesting. While this approach might result in initial savings, the long- term costs
mrxy be greater. The cost for recruitment and retention of qualified employees may be
greater than the initial savings of eliminating the health benefits. Not reported in this study
was the significant eavinga Phoenix Union High School District accrued fmm its
restructured employee benefits package, The package implemented in 1994195 saved the
dintrict more than $ 600,000 in a one year period. In so dourg, the district accomplished
significant benefits savinp without harming its employees or its ability to retain qualXed
Tl~ ed istrict questions the assumption throughout this study that contracted services
generally result in greater efficiency and effectiveness. Phoenix Union High School District's
e~ lperiences have fisquently contradicted this assumption. For example, contracted
services in the are= of food service, computer repair, custodial services and printing were
folmd to be more expensive. Additionally, the district had less control over the quality of
se! Nices provided.
The district agrees that contracted services can result in greater eficiencies under certain
cosditions. Phoenix Union High School District provides contracted services to other school
diritrids in the areas of microcomputer services ( repair, installation, training, Internet,
elf ctronic mail); network services ( local area netvPork inetallation, mainframe connectivity,
network troubleshooting, Appleshare technical support, Novell technical support);
m; dnframe computer services ( payroll, student information, state reports, personnel and
accounting, property control); reeearch services ( surveys, testing, profiles, program
ev. aluations); and warehousing services. Contracted services, therefore, can result m
greater efficiencies depending upon district size, available resources and expertise, and the
nature of the services provided.
Tfrie district has reviewed the major issues addressed in the Auditor General's etudy on
sc: hool violence. Phoenix Union High School District presently uses a uniform reporting
fokat for remrdmg and reporting campus incidents. The format is revises and updated
each year in an effort to include all incidents. Assistant principals and security personnel
are inserviced annually to review the discipline handbook and to clarify language.
Ph, oenix Union High School District has made the following recommended changes in the
1996- 97 discipline handbook. In explaining the purpose of the discipline regulation, the
di:.~ tricht as defined specific conduct and the resulting discipline, However, the district haa
m. 6ntained discretion for administrators in determining the level of discipline for each
vic) lation. Mowing administrators to consider the student's behavioral history and the
specific situation results in better decisions for students and school etaff, Policy and
procedures in the discipline handbook are designed to ensure safe and orderly learning
en. vironments.
? r:~ e level of property loss in Phoenix Union High School District is a concern. Phoenix Union
High School District recognized this property loss problem and initiated a plan in the fall of
189fj. The district will implement security camera surveillance systems at all its schools
beginning the summer of 1996, This should greatly reduce losses resulting h m theft and
PRESCOTf UNIFIED SCHOOL DISTRICT NO. 1
' I46 South Granite Street
Prescott, Arizona 86303
( 520) 445- 5400
' 9 eT DR. JAMES 0. HOWARD, SUPERINTENDENT
July 1, 1998
Mr. Douglas R. Norton
Auditor General
Offlce of the Auditor General
2910 North 44th Street Suite 410
Phoenix, Arizona 8501 8
Dear Mr. Norton:
Attached is our responw to the preliminary report draft of the performance audlt
completed by your staff.
If you have questions or need clarification on any of our comments please call me at
520- 445- 5400,
CC: Mr. Kevin Kelly
July 1, 1996
Chapter 1 : Pupil Transportation
Start and end times for the 9 elementary, middle, and high schools will be staggered
for the 1996- 97 school year as the report has recommended. This will allow for 3 trips
in the morning and 3 trips in the afternoon which will decrease the number of buses
and drivers needed but increase the number of miles driven and bus drlver hours
worked. The district will be placed in the high rate category with the State paying
$ 1.95 a mile rather than the current $ 1.59 per mile. This increase in revenues will
allow the district to cover its actual transportation costs.
Chapter 3: School District Admlnlatratlon
We appreciate the fact that we compare favorably in our ratio of school administrators
to 8t~ dents. However, this high ratio does have its drawbacks. Without the proper
number of administrators it is difncult to initiate and cogordinate new programs or to
conduct studies and research of our activities to see if there are better ways to do the
job more efficiently and effectively. Without administrative supervision, development
and evaluation of our total staff will be limited.
Chapter 5: Property Control
There Is no doubt that the area of property control could be improved. This
Improvement however, is not likely to happen for PUSD unless resources are
allocated to administer a property control system on a daily basis. Currently PUS0
depends on principals and teachers to track inventory. Documentation of items sold,
transferred, discarded or stolen is not a top priodty when the business of the staff is to
educate children.
Mary Belle McCorkle, Ed. D.
James N. Christ
Gloria C. Copeland
Brenda B. Even. Ph. D.
Joel T. Ireland
George F. Garcia, Ed. D.
July 2, 1996
I Douglas R. Norton
Auditor General of Arizona
ATTN: Kevin Kelly ) 2910 N. 44th Street, Suite 410
Phoenix, AZ 8501 8
I RE: Draft Audit Report
( Dear Sir:
Attached, please find our comments on the Draft Audit Report of Selected Arizona School Districts.
I am afraid that your report presents an inaccurate picture of our District's support operations. Your
report has ignored much of our input; thereby making it incomplete. Moreover, the report relies on
erroneous data which gives a false picture in several areas. To present such a faulty analysis of
District operations does a great disservice to the dedicated professionals who do so much to insure
I that our infrastructure functions well as we provide a high quality educational program.
Our staff would be pleased to meet with you further to clarify where we believe that your report is
I incorrect.
Robert H. O'Toole
Executive Manager
Fiscal & Operational Support
P. O. Box 40400 * 1010 East 10th Street * Tucson. Arizona 85717 * ( 602) 617- 7492
Comments on the State Auditor General
Audit of Selected Arizona School Districts
July 1, 1996
The comments provided are made with the intent to improve the content of the report and assist the Auditor General's office
in providing an accurate and complete document.
) We would like to acknowledge the professional demeanor and courtesy of the Auditor General Office Audit Team led by
Mr. Kevin Kelly.
) Tucson Unified School District Comments:
INTRODUCTION AND BACKGROUND ) The Audit Purpose and Reporting paragraph, page 1, states " The purpose of this audit was to determine the potential for
improving the efficiency and effectiveness of school district operations throughout the State." The School Districts
I Reviewed paragraph, page 1, states " To determine the potential for improving the efficiency of school districts statewide,. . ."
TUSD notes that while effectiveness of school district operations was an equal focus of the purpose of the audit, only school
district efficiency was apparently studied. School District Support Operations exist for the sole purpose of supporting the I educational process. A more efficient delivery of this service might be possible but the true test is if the service is both
efficient and effective. More efficient delivery of services, where the provided efficiency is counter to effective
performance of the educational function, is a move away from the educational mission of the School system.
) Clrapfer I: Transportation
In response to the State Auditor's summary dated June 4, 1996, we have found significant discrepancies with the information
presented. A substantial discrepancy is the $ 9,436,542 reported as the District's total cost of transportation. The Indirect
Cost of support from other Fiscal and Operational Support units throughout the district is not reflected. Using the same
percentage of 16.77% indirect cost for Transportation as used by the audit team for Food Service, would add an additional
$ 1,901,367. Using this figure, the total transportation cost for transportation would be $ 1 1,337,909, slightly more than the
State reimbursement. The inconsistent application of costs throughout the report is of concern.
The information stated in the report raises the questions of accuracy in the recommended cost savings. The consultant
Ic laims that TUSD can save between 1.9 and 2.7 million dollars by reducing operational and capital costs, including drivers and buses. This figure is arbitrary and without foundation. The consultant that prepared this opinion provided no data to
support his opinions. It is not backed by data and would not meet any standard of research acceptable by professionals. I When asked to produce firm data to evaluate the claims of the consultant, an Edulog timeline report was provided. Nowhere
on these documents was there any evidence of the suggested 33% savings. From this information it is impossible to
substantiate these fig- u res. I The report states that by going to a four- tier route system in the morning and afternoon, these savings could be removed
from budget. We have studied this issue at great length over the years and, when possible, we have utilized more than three-
I tiers. We have also weighed the savings of an exclusive four- tier system against the detrimental effects on education and the
student's safety and welfare. Our studies indicate an exclusive four- tier system would only amount to a saving of 1- 2% of
buses, while decreasing our capacity to cover field trips and other extra- curricular events. It would also force the
Department to employ more drivers to cover a two shift day without making any significant change, plus or minus, in the
total number of miles driven, thus, decreasing our efficiency.
The four- tier system also creates major concerns for parents. Starting school later or ending earlier creates daycare and latch I key problems. It also raises safety concerns for students that are waiting for buses before daylight. The afternoon staggered
dismissals have a dramatic effect on scheduling after school tutoring and late activity buses which cause the students to
arrive home after dark during the winter months. Sport programs coordinating would require students to stay on school
I property up to 2 hours as they wait for competitors to arrive due to late dismissal caused by " staggering" times. The report
concentrates on questionable measures of efficiency without addressing the issue of effectiveness. Student Transportation is
to enhance education, not the other way around.
The consultant also refers to " updating bus routes annually". While the special education routes are updated annually and
daily, the magnet routes are updated annually and as needed. Regular education stops( which comprise of less than 25% of
our total stops), are updated as needed. Regular education stops are adjusted if not used, this is the safest and most
economical method of scheduling regular education routing. Each regular education stop has been checked by our safety
staff to meet criteria set by the State of Arizona and our own District's safety standards. It should be noted that the Arizona
Court of Appeals ruled that school districts can be sued for putting stops in dangerous locations. To create new stops each
year would make it not only impossible to institute this degree of quality control, but would be highly inefficient.
The consultant mentions the distance traveled without students, known as " deadhead miles." In a district with the area size
of TUSD, deadhead miles are unavoidable. To reduce the riding time for students, TUSD, starts routes at the farthest point
and works toward the respective schools. Otherwise, students could be on a bus up to 4 hours each day. To reach the
farthest point, deadhead miles are necessary.
The consultant implies that Arizona school districts intentionally inflate their mileage to produce more reimbursement
revenue and suggests that districts should be paid on a per student basis. A comparison of the 1994 and 1995 state mileage
reports would reveal that TUSD traveled over 200,000 miles less while transporting more students. In Roseville School
District, where the consultant is employed, there are 6800 students enrolled yet they transport 7300, 7% over enrollment. It
is obvious why the consultant prefers " per student" reimbursement. ,
The report suggests that Arizona's formula encourages school districts to transport students just outside the one mile radius
in order to collect the higher rate of $ 1.95. During the consultant's audit this issue was never addressed. If it had been, we
could have provided a 1995 study showing that a TUSD student travels by school bus an average of 2.87 miles tolfrom
school. This is another example of the auditor's lack of understanding of the transportation system and a demonstration of
preconceived conclusions.
Clzapter 11: Food Services
The facts selected and reporting format in the draft report continue to present an erroneous picture of TUSD financial
management of Food Services operations.
Three major errors in auditing, staff assessments, and reporting cause the report to be misleading and conclusions and
recommendations to be erroneous. 1.) Expenditure from the fund balance required to be reported on the Revenue and
Expense Report is assessed and reported in the summary and in Chapter I1 as an inefficient financial management situation
because the end result shows expenditures beyond revenues for the fiscal year. However, fund balance remains in excess
of 2.3 million dollars and operating revenues exceeded expenses by greater than $ 300,000. 2.) Refusal of auditors to
accept and report accurately the customary indirect expenses that are handled as a direct 710 fund expense responsibility.
3.) Accurate adjustment of labor cost percentages considering TUSD's inclusion of salaries normally paid for through
indirect cost transfer.
As currently presented the data, conclusions, and inferences are all incorrect and a distortion of fact.
Item 1. Intentional use of fund balance in SY94- 95 should not be linked to an assessment of inefficient operations. If the
unusually large capital expenditure of $ 820,000 from the fund balance in SY94- 95 were removed, budgeted and actual
operations revenues exceeded expenses by greater than $ 300,000. Current language in the report skews perception and
presents an erroneous situation. Required accounting procedures within 710 Fund do not permit a portion of the fund
balance to be placed in a restricted fund for building improvements and capital outlay.
End of Year Revenues Over ( Under) Expenses for 710 Fund
Adjusted SY94- 95* 389,858
* The intentional spending of money from the 710 fund balance was removed from usual and customary capital expenditures. It should be noted the
money used from the fund balance was spent to renovate a high school cafeteria increasing service, seating and production capacity and to provide
I equipment to meet production needs based on a decision to close high school campuses. The expenditure from the fund balance for these needs was
approximately $ 820,000. Total Revenue for SY94- 95 ($ 14,410,701.05) less Total Adjusted Expenses for SY94- 95 ($ 14,020,842,94) = Excess I Revenues of Expenses adjusted for use of Fund Reserve ($ 389,858,13).
Item 2 Based on TUSD's Indirect Cost allowable level of $ 1,199,159 and the amount of money transferred as indirect
I costs and paid as direct accountability from 710 fund, TUSD exceeded the 16.77% indirect cost ratio as costs associated
with food services operations. Table 2 information misrepresents the financial management of TUSD food services
operations. Footnote " b" should state that the total costs assumed by the department combining the indirect transfer and
I direct accountability exceeded the indirect cost level. TUSD designed its financial management approach to food services
operations by choosing to minimize the utilization of indirect transfer and maximizing direct absorption of services and
expenses into 710 fund responsibility and management. This approach maximizes efficiency in flow of operations
I processes by establishing direct control within the department of processes such as personnel management, payroll
processes to the point of processing check run, accounting , cash handling, custodial, repair, capital outlay for replacement
and allowable improvements to existing services, etc. In addition it offers the benefit of direct management control of
B services specific to the food services operations. Direct management control minimizes waste, improves communications,
and affords increased adaptability to changing needs.
To I achieve a lower food cost percentage of revenues of 38.5% it is often customary to have higher labor costs. The combination of the need for handling of food prior to service and the labor hours related to it is important to consider.
Adding the totals of the industry standards of 40% food cost of revenues and 45% labor cost of revenues equals 85% of
operating expenses related to these two categories. TUSD's total percentage of costs from these categories, even at the
percentages stated in Table 4 which misrepresents TUSD's labor costs because of inclusion of customary indirect labor
costs, does not exceed the statewide average shown as 90%. Adjusting the total of these categories by eliminating the
I labor costs associated with indirect costs results in TUSD's total for the two categories as 86.1 % rather than 89%. This is
only 1.1 % over the industry standard and equal to or less than the other schools identified in Table 4, and 3.9% less than
the statewide average.
I Detail of TUSD Food Services Department 710 fund direct accountability
( Item 3 At least $ 362,696 in labor costs reported within TUSD's 710 Fund direct expenses are those typically paid for
through indirect costs by other districts or are allowable as indirect costs references. Adjustments to the labor costs of 710
I fund for at least the $ 362,696 represents a comparison of like relationships to the other districts cited in Table 4. This
amount reduces TUSD's labor cost percentage of revenue to 47%.
usually recognized as Indirect Costs
Expense Identification
Central Facility Utilities
Personnel/ Payroll Operations Staff - 4 of 5 staff
Central Facility Custodians
Finance Operations Staff - 4 of 4 staff
Purchasing Operations Staff - 3 of 4 staf
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