15-107

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.

(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.