15-107. School district overexpenditures; fiscal crisis teams; quarterly progress reports; fiscal management report; annual report; actions resulting from overexpenditures; professional development; definition

A. A county school superintendent, within two business days, shall provide written notice to the department of education, if, in the county school superintendent's judgment, a school district has committed an overexpenditure under this section. Notwithstanding any other law, a warrant shall not be drawn by a county school superintendent for an expenditure that is in excess of the amount budgeted and that has not been previously expended, unless the county school superintendent is notified in writing by the department of education that budget capacity exists as determined by the department based on information provided by the school district.

B. The department of education, in conjunction with the county school superintendent, shall monitor the school district and provide technical assistance to the school district and to the county school superintendent to resolve the overexpenditure.

C. If the department of education determines that the school district has failed to take appropriate action to resolve the overexpenditure or that the original notice of overexpenditure pursuant to subsection A of this section constitutes an overexpenditure that will cause the school district's overall expenditures to exceed the school district's general budget limit, unrestricted capital budget limit or soft capital allocation limit by fifty thousand dollars or one-half of one per cent, whichever is less, the department shall request that the matter be placed on the agenda of a meeting of the state board of education for action pursuant to this section.

D. At the request of the department of education, the state board of education shall call a public meeting to consider overexpenditures by any school district. The state board of education shall require the superintendent of the school district and any other school district personnel who may have information relevant to the overexpenditure to appear before the state board of education. After testimony from all interested parties, the state board of education shall take one of the following actions:

1. Require the department of education, in conjunction with the county school superintendent, to monitor the expenditures of the school district.

2. Direct the department of education to contract with a level one fiscal crisis team. The level one fiscal crisis team shall provide on-site oversight and off-site monitoring for the school district for no longer than twelve months and shall advise the school district on all financial issues and professional development training related to financial issues.

3. Direct the department of education to contract with a level two fiscal crisis team. The level two fiscal crisis team shall provide on-site oversight and off-site monitoring for the school district for no longer than twenty-four months, shall have the authority prescribed for level one fiscal crisis teams and may override any financial act or decision of the school district, including expenditures.

4. Appoint a receiver who, subject to the discretion of the state board of education, may take any actions prescribed in section 15-103, subsection F.

E. The level one and level two fiscal crisis teams shall be composed of at least one person who has knowledge of school finance and may include current or former school district financial officers, current or former school district business managers, certified public accountants and current or former school district superintendents. The fiscal crisis teams shall not include employees of the state board of education or the department of education.

F. The expenses incurred by a fiscal crisis team or by a receiver appointed pursuant to this section shall be paid by the school district. The state board of education shall review the expenses and costs of each fiscal crisis team at least once each calendar quarter.

G. Beginning ninety days after submitting the fiscal management report prescribed in subsection H of this section, the fiscal crisis team or receiver appointed pursuant to this section shall submit a detailed written quarterly progress report to the state board of education that includes all of the following:

1. The results of the review of the school district's finances, including expenditures.

2. The recommendations and decisions made by the fiscal crisis team or the receiver appointed pursuant to this section.

3. The status of the fiscal management plan described pursuant to subsection H of this section.

4. Recommendations to the state board of education on the content of professional development training related to overexpenditures.

5. Any recommendations of potential action to be taken concerning professional certificates issued to school district personnel by the state board of education or the department of education. The state board of education shall review the recommendations submitted pursuant to this paragraph and shall take appropriate action.

H. After appointment, the fiscal crisis team or the receiver appointed pursuant to this section shall review the financial affairs of the school district and may work with school finance personnel at the department of education to ensure that the finances of the school district are in compliance with the laws of this state. A school district that has been assigned a fiscal crisis team or a receiver pursuant to this section shall submit, in consultation with the receiver or the fiscal crisis team, a fiscal management report to the state board of education within one hundred twenty days after the date that the state board of education appointed the receiver or the fiscal crisis team. The fiscal management report shall include the following:

1. A description of the fiscal management plan that has been implemented to correct the overexpenditure, including the following:

(a) The manner in which the fiscal management plan will address the findings and recommendations of the fiscal crisis team.

(b) A timeline for complete resolution of the overexpenditure.

(c) A detailed explanation of the methods and procedures that will be implemented to prevent future overexpenditures.

(d) The identification of any issues that need to be resolved before the fiscal management plan may be fully implemented.

(e) The identification of any long-term issues resulting from the overexpenditure that will extend to future fiscal years.

2. A description of the manner in which the fiscal management plan was developed, including identification of the role of the fiscal crisis team or the receiver, the role of the school district governing board and the role of the administrators of the school district.

I. On or before December 31, the state board of education shall submit an annual report to the governor, the president of the senate and the speaker of the house of representatives. The state board shall provide a copy of this report to the secretary of state and the director of the Arizona state library, archives and public records. The annual report shall include the following:

1. A summarized compilation of the fiscal management reports submitted by school districts pursuant to subsection H of this section.

2. The actions taken by the state board of education, the department of education, school districts, fiscal crisis teams and receivers during the most recently completed fiscal year.

3. Recommendations regarding improvements to the laws of this state or to administrative actions required under the laws of this state.

J. A school district that is assigned a level two fiscal crisis team or a receiver pursuant to this section shall require professional development training for school district governing board members and appropriate administrative personnel of the school district, including the school district superintendent, who are involved in district finances and budgeting, as determined by the level two fiscal crisis team or by the receiver. The professional development training shall be selected from a list approved by the state board of education and the cost of the professional development training shall be paid by the school district. Governing board members and district administrative personnel shall complete at least twelve hours of professional development training within one hundred twenty days after the assignment of a level two fiscal crisis team or the appointment of a receiver. The fiscal crisis team or the receiver shall report to the state board of education whether the professional development training requirements prescribed in this subsection have been met.

K. A school district governing board member who fails to complete the professional development training within the time prescribed in subsection J of this section is guilty of nonfeasance in office, and the state board of education shall forward a complaint to the attorney general. The attorney general may bring an action in superior court against a school district governing board member for failure to comply with the professional development training requirements prescribed in subsection J of this section. If a court determines that a school district governing board member failed to comply with the professional development training requirements prescribed in subsection J of this section, the court shall issue an order removing the school district governing board member from office. Any vacancy in the office of the school district governing board as a result of a court order issued pursuant to this subsection shall be filled in the manner provided by law.

L. If any of the administrative personnel of the school district fail to complete the professional development training within the time prescribed in subsection J of this section, the state board of education may take appropriate action concerning current certificates held by that person.

M. All information received and records or reports kept by the state board of education during an investigation resulting from a complaint against a receiver appointed pursuant to this section or section 15-103 are confidential and not a public record.

N. For the purposes of this section, "overexpenditure" means an expenditure in excess of any of the following:

1. The general budget limit of the school district or the amount budgeted by the school district, whichever is less.

2. The unrestricted capital budget limit of the school district or the amount budgeted for capital by the school district, whichever is less.

3. The soft capital allocation limit of the school district or the amount budgeted for soft capital by the school district, whichever is less.

15-107. School district overexpenditures; fiscal crisis teams; quarterly progress reports; fiscal management report; annual report; actions resulting from overexpenditures; professional development; definition

A. A county school superintendent, within two business days, shall provide written notice to the department of education, if, in the county school superintendent's judgment, a school district has committed an overexpenditure under this section. Notwithstanding any other law, a warrant shall not be drawn by a county school superintendent for an expenditure that is in excess of the amount budgeted and that has not been previously expended, unless the county school superintendent is notified in writing by the department of education that budget capacity exists as determined by the department based on information provided by the school district.

B. The department of education, in conjunction with the county school superintendent, shall monitor the school district and provide technical assistance to the school district and to the county school superintendent to resolve the overexpenditure.

C. If the department of education determines that the school district has failed to take appropriate action to resolve the overexpenditure or that the original notice of overexpenditure pursuant to subsection A of this section constitutes an overexpenditure that will cause the school district's overall expenditures to exceed the school district's general budget limit, unrestricted capital budget limit or soft capital allocation limit by fifty thousand dollars or one-half of one per cent, whichever is less, the department shall request that the matter be placed on the agenda of a meeting of the state board of education for action pursuant to this section.

D. At the request of the department of education, the state board of education shall call a public meeting to consider overexpenditures by any school district. The state board of education shall require the superintendent of the school district and any other school district personnel who may have information relevant to the overexpenditure to appear before the state board of education. After testimony from all interested parties, the state board of education shall take one of the following actions:

1. Require the department of education, in conjunction with the county school superintendent, to monitor the expenditures of the school district.

2. Direct the department of education to contract with a level one fiscal crisis team. The level one fiscal crisis team shall provide on-site oversight and off-site monitoring for the school district for no longer than twelve months and shall advise the school district on all financial issues and professional development training related to financial issues.

3. Direct the department of education to contract with a level two fiscal crisis team. The level two fiscal crisis team shall provide on-site oversight and off-site monitoring for the school district for no longer than twenty-four months, shall have the authority prescribed for level one fiscal crisis teams and may override any financial act or decision of the school district, including expenditures.

4. Appoint a receiver who, subject to the discretion of the state board of education, may take any actions prescribed in section 15-103, subsection F.

E. The level one and level two fiscal crisis teams shall be composed of at least one person who has knowledge of school finance and may include current or former school district financial officers, current or former school district business managers, certified public accountants and current or former school district superintendents. The fiscal crisis teams shall not include employees of the state board of education or the department of education.

F. The expenses incurred by a fiscal crisis team or by a receiver appointed pursuant to this section shall be paid by the school district. The state board of education shall review the expenses and costs of each fiscal crisis team at least once each calendar quarter.

G. Beginning ninety days after submitting the fiscal management report prescribed in subsection H of this section, the fiscal crisis team or receiver appointed pursuant to this section shall submit a detailed written quarterly progress report to the state board of education that includes all of the following:

1. The results of the review of the school district's finances, including expenditures.

2. The recommendations and decisions made by the fiscal crisis team or the receiver appointed pursuant to this section.

3. The status of the fiscal management plan described pursuant to subsection H of this section.

4. Recommendations to the state board of education on the content of professional development training related to overexpenditures.

5. Any recommendations of potential action to be taken concerning professional certificates issued to school district personnel by the state board of education or the department of education. The state board of education shall review the recommendations submitted pursuant to this paragraph and shall take appropriate action.

H. After appointment, the fiscal crisis team or the receiver appointed pursuant to this section shall review the financial affairs of the school district and may work with school finance personnel at the department of education to ensure that the finances of the school district are in compliance with the laws of this state. A school district that has been assigned a fiscal crisis team or a receiver pursuant to this section shall submit, in consultation with the receiver or the fiscal crisis team, a fiscal management report to the state board of education within one hundred twenty days after the date that the state board of education appointed the receiver or the fiscal crisis team. The fiscal management report shall include the following:

1. A description of the fiscal management plan that has been implemented to correct the overexpenditure, including the following:

(a) The manner in which the fiscal management plan will address the findings and recommendations of the fiscal crisis team.

(b) A timeline for complete resolution of the overexpenditure.

(c) A detailed explanation of the methods and procedures that will be implemented to prevent future overexpenditures.

(d) The identification of any issues that need to be resolved before the fiscal management plan may be fully implemented.

(e) The identification of any long-term issues resulting from the overexpenditure that will extend to future fiscal years.

2. A description of the manner in which the fiscal management plan was developed, including identification of the role of the fiscal crisis team or the receiver, the role of the school district governing board and the role of the administrators of the school district.

I. On or before December 31, the state board of education shall submit an annual report to the governor, the president of the senate and the speaker of the house of representatives. The state board shall provide a copy of this report to the secretary of state and the director of the Arizona state library, archives and public records. The annual report shall include the following:

1. A summarized compilation of the fiscal management reports submitted by school districts pursuant to subsection H of this section.

2. The actions taken by the state board of education, the department of education, school districts, fiscal crisis teams and receivers during the most recently completed fiscal year.

3. Recommendations regarding improvements to the laws of this state or to administrative actions required under the laws of this state.

J. A school district that is assigned a level two fiscal crisis team or a receiver pursuant to this section shall require professional development training for school district governing board members and appropriate administrative personnel of the school district, including the school district superintendent, who are involved in district finances and budgeting, as determined by the level two fiscal crisis team or by the receiver. The professional development training shall be selected from a list approved by the state board of education and the cost of the professional development training shall be paid by the school district. Governing board members and district administrative personnel shall complete at least twelve hours of professional development training within one hundred twenty days after the assignment of a level two fiscal crisis team or the appointment of a receiver. The fiscal crisis team or the receiver shall report to the state board of education whether the professional development training requirements prescribed in this subsection have been met.

K. A school district governing board member who fails to complete the professional development training within the time prescribed in subsection J of this section is guilty of nonfeasance in office, and the state board of education shall forward a complaint to the attorney general. The attorney general may bring an action in superior court against a school district governing board member for failure to comply with the professional development training requirements prescribed in subsection J of this section. If a court determines that a school district governing board member failed to comply with the professional development training requirements prescribed in subsection J of this section, the court shall issue an order removing the school district governing board member from office. Any vacancy in the office of the school district governing board as a result of a court order issued pursuant to this subsection shall be filled in the manner provided by law.

L. If any of the administrative personnel of the school district fail to complete the professional development training within the time prescribed in subsection J of this section, the state board of education may take appropriate action concerning current certificates held by that person.

M. All information received and records or reports kept by the state board of education during an investigation resulting from a complaint against a receiver appointed pursuant to this section or section 15-103 are confidential and not a public record.

N. For the purposes of this section, "overexpenditure" means an expenditure in excess of any of the following:

1. The general budget limit of the school district or the amount budgeted by the school district, whichever is less.

2. The unrestricted capital budget limit of the school district or the amount budgeted for capital by the school district, whichever is less.

3. The soft capital allocation limit of the school district or the amount budgeted for soft capital by the school district, whichever is less.