TUSD Collects More Than $63 Million Annually for Desegregation: Who Makes Sure the Money Is Spent Legally?
Arizona law permits Tucson Unified School District to collect a substantial property tax for desegregation programs without annual voter approval. But the authority to collect the money comes with specific restrictions, financial reporting requirements, and management accountability.
John C. Blackshire, Jr. The Accountware Group | October 20, 2026
Introduction: A $63 Million Question for TUSD Taxpayers
Tucson Unified School District (TUSD) has an unusual source of funding that distinguishes it from many other Arizona school districts.
For fiscal year 2026–2027, TUSD has budgeted approximately $63.4 million for desegregation activities, financed primarily through a special property tax levy.
This funding originates in the District's historical desegregation litigation and is authorized under Arizona Revised Statutes §15-910.
Unlike ordinary school district operating revenue, this funding is not primarily determined by the number of students attending TUSD schools.
Instead, Arizona law allows qualifying desegregation expenditures to be financed through a secondary property tax, subject to statutory restrictions.
The District's FY2027 desegregation expenditure budget is $63,407,092, while its reported desegregation tax levy is $63,711,047.
These are substantial amounts of public money.
The central question is not simply whether TUSD has the legal authority to collect the taxes.
Who is responsible for ensuring that the District spends every dollar on activities authorized by law, and what independent assurance do taxpayers receive that those responsibilities are being fulfilled?
The answer involves the Superintendent, Chief Financial Officer, program administrators, Governing Board, Audit Committee, external auditors, Arizona Department of Education, and Arizona Auditor General.
However, these parties do not have identical responsibilities.
Understanding those distinctions is essential to effective public-sector financial governance.
1. Why Does TUSD Receive Desegregation Funding?
TUSD was involved in federal desegregation litigation for decades.
The litigation concerned historical racial and ethnic discrimination and the District's obligations to provide equitable educational opportunities.
Court-supervised plans addressed such matters as student access, magnet programs, educational achievement, curriculum, staffing, and other measures intended to remedy the effects of discrimination.
In 2021, TUSD achieved unitary status, ending the longstanding federal desegregation court supervision.
However, ending federal court supervision did not automatically terminate the District's authority to finance certain continuing desegregation activities.
Arizona law allows qualifying activities that were required or permitted under applicable desegregation orders or agreements to continue receiving authorized funding, subject to the law's requirements.
This creates an important distinction.
TUSD no longer operates under the same federal court supervision, but it continues to collect substantial property taxes for programs connected to its historical desegregation obligations.
That makes ongoing financial accountability especially important.
2. Where Does the $63 Million Come From?
The funding is primarily generated through property taxes imposed on taxable property within TUSD's boundaries.
The process begins with the District's proposed desegregation budget.
Management identifies the activities it intends to finance and calculates the associated expenditures.
The Governing Board reviews and adopts the budget.
The amount to be raised through property taxes is then processed through the applicable county tax levy procedures.
Pima County establishes and collects the resulting property taxes under Arizona law.
The authority to finance qualifying desegregation expenditures is established principally by A.R.S. §15-910.
The important point is that this is locally generated tax revenue authorized by state law, even though the underlying educational obligations originated in federal desegregation litigation.
It is not an annual federal grant that automatically arrives from Washington.
Does the tax require voter approval?
Arizona law allows the qualifying desegregation levy to be imposed without a separate annual voter election.
However, the District cannot collect unlimited amounts.
The law contains eligibility requirements, historical expenditure limitations, and reporting obligations.
The absence of a voter approval requirement makes transparent Governing Board review especially important.
3. How Much Is TUSD Budgeting for FY2027?
The District's June 16, 2026 Governing Board budget materials identify the following expenditures:
FY2027 desegregation expenditure category | Budget |
Salaries | $42,723,821 |
Employee benefits | $13,357,550 |
Purchased services | $3,991,502 |
Supplies | $1,500,780 |
Other expenditures | $1,833,439 |
Total | $63,407,092 |
Salaries and benefits total approximately $56.1 million, representing about 88.4% of the desegregation expenditure budget.
That means most of the funding supports personnel.
This is not necessarily inappropriate.
Many desegregation activities involve teachers, instructional support personnel, counselors, administrators, and other employees.
However, personnel costs create an important internal control challenge.
The District must establish not only that an employee was paid correctly, but also that the employee's duties and the portion of compensation charged to desegregation funding qualify under the applicable legal requirements.
A legitimate salary expense is not automatically an authorized desegregation expense.
4. Arizona Law Restricts How the Money May Be Spent
The primary legal authority is A.R.S. §15-910.
Subsection J requires districts using the desegregation funding provisions to maintain separate desegregation budgets and report expenditures associated with qualifying activities.
The statute describes expenditures connected with complying with, or continuing to implement, activities required or permitted by qualifying desegregation orders or federal civil rights agreements.
This means TUSD must be able to connect its expenditures to the applicable desegregation purposes.
It is not sufficient to conclude that an expenditure is educationally beneficial.
A program can be worthwhile and still fail to qualify for financing through the desegregation levy.
Examples of potentially qualifying activities
Depending on their documented connection to the applicable orders and plans, qualifying expenditures may include:
Educational programs addressing unequal access or achievement.
Approved magnet school and student access activities.
English language development activities included in qualifying plans.
Student recruitment and equitable admissions programs.
Multicultural curriculum and related instructional support.
Professional development required to implement qualifying desegregation activities.
Evaluation, monitoring, and compliance reporting connected to those activities.
The eligibility of a particular expenditure depends on the underlying authorization and supporting documentation.
The fact that a program appears in the desegregation budget does not, by itself, prove that every expenditure charged to it is legally eligible.
5. The Requirement to Supplement Rather Than Supplant
One of the most important requirements in Arizona's desegregation reporting framework is that the funding supplement rather than supplant other educational funding.
A.R.S. §15-910(J) requires verification that desegregation funding supplements and does not supplant funding for other academic and extracurricular activities.
The distinction is significant.
Suppose TUSD historically paid for a regular educational program using ordinary operating revenues.
Management then decides to charge that program to desegregation funding, without establishing a qualifying desegregation purpose.
That would raise a supplanting concern.
By contrast, additional staffing or activities specifically required to implement an eligible desegregation measure may qualify.
Why this matters during TUSD's financial difficulties
TUSD faces declining enrollment and substantial pressure to reduce operating expenditures.
Those conditions create a risk that management could seek to move ordinary operating expenses into specially funded programs to relieve pressure on the Maintenance and
Operations Fund.
Such a transfer is not automatically prohibited.
However, the District must establish that the resulting desegregation expenditure is authorized and that the required supplement-not-supplant conditions are satisfied.
Financial pressure does not expand the legal definition of an eligible expenditure.
The CFO and program administrators should maintain documented reviews of significant changes in funding classifications.
6. Who Is Responsible for Ensuring That Expenditures Are Authorized?
Responsibility begins inside TUSD.
External auditors and state agencies provide additional oversight, but they do not replace management's obligation to establish and operate effective internal controls.
The Superintendent: Executive responsibility
Superintendent Dr. Gabriel Trujillo is responsible for directing District management and implementing Governing Board policy.
That includes ensuring that financial and program administrators understand and comply with the restrictions governing desegregation expenditures.
The Superintendent should require clear assignments of responsibility, regular compliance reporting, and corrective action when deficiencies are identified.
He should not depend exclusively on the CFO or external auditors to discover problems.
he CFO: Financial control responsibility
Chief Financial Officer Ricky Hernández has a central role in ensuring that the accounting system accurately records desegregation revenues and expenditures.
His responsibilities should include maintaining appropriate accounting classifications, expenditure approval procedures, payroll allocation controls, reconciliations, and financial reporting.
The CFO should also ensure that personnel charging expenditures to desegregation funds understand the eligibility requirements.
However, accounting personnel cannot independently determine every program's legal eligibility without input from those responsible for implementing and interpreting the approved desegregation plans.
The Finance Department and program management must work together.
Desegregation program administrators: Program eligibility responsibility
Program administrators should document why each activity qualifies.
They should maintain records connecting expenditures to authorized program objectives.
For employees, that may require job descriptions, assignment records, payroll allocation support, and evidence of actual duties.
For purchased services, it may require contracts, deliverables, invoices, and documentation demonstrating the relationship to qualifying activities.
The first line of responsibility belongs to the personnel approving and administering the expenditures.
The Governing Board: Oversight responsibility
The Governing Board adopts the desegregation budget and is responsible for overseeing management's use of public resources.
Board approval of a budget does not relieve management of its responsibility to ensure individual expenditures are authorized.
The Board should receive regular information about actual expenditures, budget variances, program performance, audit findings, and corrective actions.
It should also ask whether the District has adequate procedures to prevent ineligible expenditures from being charged to the desegregation funds.
The Audit Committee: Independent governance scrutiny
TUSD's Audit Committee can provide important oversight through its chartered responsibilities.
It should examine whether management has established adequate controls over restricted-purpose funding and whether internal and external audit work provides sufficient assurance.
The Committee should not approve routine invoices or become responsible for operating the program.
Those are management responsibilities.
Its role should be to challenge management's control design, review significant findings, monitor corrective actions, and communicate material risks to the Governing Board.
The exact authority of the Committee depends on its approved charter.
7. What Does Arizona Law Require TUSD to Report?
A.R.S. §15-910(J) establishes unusually detailed reporting requirements for desegregation activities.
The required information includes districtwide and school-level financial and program information.
Among the statutory reporting subjects are:
Sources and uses of desegregation money.
Descriptions of desegregation activities by school.
Magnet program information, where applicable.
Student participation in desegregation activities.
Academic achievement information.
Employee positions funded by desegregation money.
Employees at district administrative offices financed in whole or part by desegregation funding.
Verification that funding supplements rather than supplants other funding.
Verification that expenditures are educationally justifiable.
Evaluation of the effectiveness of desegregation measures.
The statute also requires annual reporting to the Arizona Department of Education, including information collected by July 15.
These requirements create a substantial public accountability framework.
The important question is whether the information is being used for effective management and oversight, rather than merely assembled to satisfy annual reporting obligations.
8. Who Independently Checks TUSD's Expenditures?
Several external parties have oversight responsibilities, but the nature and scope of their work differ.
Independent external auditors
TUSD's financial statement auditors examine the District's financial statements and applicable internal controls and compliance matters under the scope of their engagement.
Audits may identify accounting deficiencies, misstatements, or noncompliance.
However, a standard financial statement audit does not necessarily test every desegregation expenditure for eligibility.
The scope of any separate desegregation expenditure examination should therefore be reviewed carefully.
Stakeholders should determine whether the District obtains independent testing specifically designed to address eligibility, payroll allocations, supplanting, and statutory reporting requirements.
An audit opinion on the overall financial statements should not be interpreted as proof that every desegregation expenditure was legally authorized.
Arizona Department of Education
The Arizona Department of Education receives prescribed school district financial and desegregation reports.
It also participates in establishing reporting requirements and processes the information required by statute.
The Department's receipt of a report does not necessarily mean that it has examined every underlying transaction.
The District should identify which submissions are subject to substantive state review and which are primarily reporting requirements.
Arizona Auditor General
The Arizona Auditor General prescribes Arizona school district accounting requirements in coordination with the Department of Education.
The Uniform System of Financial Records establishes accounting and internal control requirements applicable to school districts.
The Auditor General also conducts financial, compliance, and other reviews within its statutory responsibilities.
These activities provide an important source of independent accountability.
However, the existence of statewide accounting standards does not mean that the Auditor
General annually performs a transaction-by-transaction examination of all TUSD desegregation expenditures.
Federal authorities
Federal civil rights authorities may have jurisdiction over relevant civil rights compliance matters.
However, TUSD's historical desegregation litigation should not be confused with a current federal grant audit.
The legal basis for the local tax levy and the applicable expenditure requirements must be analyzed separately from federal grant compliance rules.
9. What Internal Controls Should TUSD Have?
The COSO Internal Control—Integrated Framework provides a useful structure for evaluating the District's desegregation controls.
Although COSO is not itself the source of TUSD's statutory expenditure restrictions, its principles provide a practical framework for managing compliance risk.
Control environment
The Superintendent and Governing Board should establish clear expectations that restricted-purpose funds may be used only for authorized activities.
Risk assessment
Management should identify the highest-risk expenditure categories.
For TUSD, payroll allocations, staffing changes, program reclassifications, purchased services, and administrative expenditures warrant particular attention.
Control activities
The District should maintain documented procedures for approving eligible programs and reviewing expenditures before payment.
Information and communication
Finance personnel, program administrators, executive management, and the Governing Board should receive timely information about eligibility, expenditures, and exceptions.
Monitoring
Management should regularly test compliance and correct deficiencies.
Internal audit can independently assess whether the controls are properly designed and operating effectively.
A well-designed system should prevent most ineligible expenditures before they occur, rather than rely exclusively on detecting problems after the fiscal year ends.
10. A Recommended Desegregation Control Matrix
TUSD should maintain a documented control matrix addressing the principal compliance risks.
Risk | Recommended control | Responsible party |
Ineligible programs | Written eligibility determination linked to the applicable authorization | Program management and legal review |
Ineligible employee costs | Approved job assignments and supported payroll allocations | Program management, HR, and Finance |
Supplanting ordinary expenses | Documented review of funding-source changes | Finance and program management |
Unauthorized purchases | Preapproval and expenditure coding controls | Purchasing and Finance |
Incorrect financial reporting | Monthly reconciliations and supervisory review | Finance |
Inaccurate program reporting | Reconciliation of program records to financial and personnel data | Program management |
Weak program outcomes | Annual performance evaluation | Program leadership |
Unresolved control deficiencies | Corrective-action tracking and escalation | Executive management |
Inadequate independent assurance | Risk-based internal audit and external examination | Audit Committee oversight |
The District should assign control owners, establish the frequency of each control, retain evidence of performance, and monitor exceptions.
These are recommended controls, not a claim that TUSD currently lacks every one of them.
11. Why Payroll Deserves Special Attention
With approximately $56.1 million budgeted for salaries and benefits, payroll represents the overwhelming majority of TUSD's desegregation expenditures.
This makes employee eligibility and payroll allocation central to the control environment.
Management should be able to demonstrate:
Which employees are financed by desegregation funding.
Which approved activities they perform.
Whether their duties match the authorized program.
How compensation is allocated when an employee works on multiple activities.
Whether changes in assignments are reflected promptly in the accounting system.
For example, an employee whose compensation is charged entirely to desegregation funding should have duties that support the approved allocation.
If the employee also performs unrelated general administrative work, the District should evaluate whether an allocation adjustment is necessary.
The precise documentation required depends on applicable accounting rules, employment arrangements, and program requirements.
This is a high-value area for internal audit testing.
12. Are Taxpayers Receiving Measurable Educational Results?
Legal expenditure eligibility is only one part of accountability.
Arizona's reporting requirements also address student achievement and the effectiveness of desegregation measures.
A program may be legally authorized yet fail to produce its intended educational outcomes.
The Governing Board should therefore examine both compliance and performance.
For example, management should report whether programs improve access to educational opportunities, reduce achievement disparities, and accomplish the objectives established in the applicable desegregation plans.
Performance measures should be tied to each program's actual objectives.
The District should avoid relying exclusively on expenditure totals or staffing counts as evidence of success.
Spending the authorized amount is not the same as achieving the intended result.
A meaningful annual evaluation should identify programs that are effective, programs that require changes, and programs whose continued funding should be reconsidered.
13. TUSD's Financial Difficulties Increase the Importance of Oversight
TUSD is experiencing declining enrollment, financial reserve pressures, and the need for substantial operating adjustments.
The Arizona Auditor General identified the District as being at high financial risk in January 2026.
Those conditions make controls over desegregation funding especially important.
Management should not treat the desegregation levy as an unrestricted alternative funding source for ordinary operating expenses.
Nor should it assume that the statutory maximum must be collected every year regardless of program requirements.
The annual budget should be supported by a detailed assessment of authorized activities and expected costs.
The Governing Board should receive enough information to determine whether the proposed expenditures are legally eligible, financially justified, and connected to measurable educational objectives.
14. What Questions Should the TUSD Governing Board and Audit Committee Ask?
The following questions would provide a useful starting point for a formal oversight review.
Legal eligibility: Has management documented the specific legal or historical program authorization supporting each significant desegregation activity?
Payroll: Can the District demonstrate that all employees financed by desegregation funds perform duties consistent with the amounts charged?
Supplanting: What controls prevent ordinary operating expenditures from being improperly reclassified as desegregation expenditures?
Financial reporting: Are the annual desegregation expenditure reports reconciled to the general ledger, payroll records, and approved budgets?
Independent assurance: What specific independent examinations have been completed for the last five fiscal years, and what did they conclude?
Audit findings: Have any examinations identified questioned expenditures, deficiencies, or required corrective actions?
Program effectiveness: What educational outcomes have been achieved with the approximately $63 million annual investment?
Board accountability: Does the Governing Board receive the results of these reviews before approving the following year's desegregation budget?
Audit Committee involvement: Has the Audit Committee reviewed the adequacy of management's controls and the results of independent examinations?
Public transparency: Are the budgets, actual expenditures, program results, and examination reports readily accessible to taxpayers?
These questions do not presume wrongdoing.
They are ordinary questions of public-sector financial accountability.
15. The Audit Committee Should Not Replace Management
An important governance principle is that internal auditors and Audit Committee members should not become responsible for operating management's controls.
The Superintendent, CFO, and program administrators must establish and maintain the control system.
Internal audit should evaluate the design and operating effectiveness of that system.
If weaknesses are identified, management should develop a documented Management
Action Plan addressing the underlying causes.
The Audit Committee should monitor management's progress and report unresolved significant issues to the Governing Board.
This preserves accountability.
Management owns the control system.
Internal audit independently evaluates it.
The Audit Committee oversees the process.
The Governing Board remains accountable for governance.
Conclusion: The Right to Collect $63 Million Comes With a Duty to Account for Every Dollar
TUSD's desegregation funding is a significant public financial resource.
For FY2027, the District has budgeted approximately $63.4 million in desegregation expenditures, most of which support employee salaries and benefits.
Arizona law permits this funding because of the District's historical desegregation obligations and the continued implementation of qualifying activities.
However, that authority is not unlimited.
The District must maintain separate budgets, document eligible expenditures, report detailed financial and program information, and address statutory requirements concerning educational justification and supplementing rather than supplanting other funding.
The responsibility for compliance begins with management.
Superintendent Gabriel Trujillo and CFO Ricky Hernández have important executive responsibilities, together with the administrators who operate the desegregation programs.
The Governing Board must provide oversight.
The Audit Committee should evaluate the adequacy of management's control framework through independent assurance.
External auditors and state agencies provide additional scrutiny, but their work does not eliminate management's responsibilities.
The central question for TUSD stakeholders is not merely whether the District has the authority to collect approximately $63 million annually. It is whether TUSD can demonstrate that the money is spent on legally authorized activities, supported by effective internal controls, and producing measurable educational benefits.
That is the level of accountability taxpayers should expect from an organization managing nearly $800 million in annual public expenditures.
Sources and References
Arizona Revised Statutes §15-910 — School District Desegregation Expenditures. Primary statutory authority governing desegregation budgets, expenditure eligibility, reporting, and related restrictions.
TUSD Governing Board — June 16, 2026 Detailed Agenda. FY2027 desegregation budget and activity schedules.
Arizona Auditor General — School District Manuals and Memorandums. Uniform System of Financial Records and school district accounting requirements.
Arizona Auditor General — School District Budget and AFR Forms. Official budget and financial reporting instructions, including desegregation budget forms.
Arizona Revised Statutes §15-271. Auditor General responsibilities concerning school district accounting and financial reporting.
Arizona Auditor General — Compliance Review Reports. Independent reviews of school district compliance with financial record requirements.
TUSD Desegregation Department. District program information, reports, and supporting materials.
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