TUSD’s Financial Crisis: The Numbers to Watch in the Coming Weeks
Tucson Unified School District is entering an important period in determining the severity of its developing financial problems.
TUSD adopted its FY2026–27 budget using an assumption of approximately a 2% decline in Weighted Student Count (WSC). Because student counts ultimately affect Arizona school funding, the accuracy of that assumption could have a significant effect on TUSD's revenue, expenditures and cash position.
We are now reaching the point in the school year when actual student data should begin providing a clearer picture.
Three issues deserve particular attention:
What is happening to TUSD's Average Daily Membership (ADM) and WSC?
How much M&O cash did TUSD actually have available entering FY2026–27?
Do the ADM numbers presented to the Governing Board reconcile to the data being reported to and calculated by the Arizona Department of Education?
These are not separate questions. They are components of the same financial equation.
Why ADM Matters
Average Daily Membership is much more than an enrollment statistic.
TUSD submits student information through the Arizona Education Data Standards, commonly known as AzEDS. The Arizona Department of Education uses those data in calculating ADM and other school-finance measures.
The basic financial progression is:
Student Data → ADM → WSC → State Funding → Cash
Consequently, a larger-than-expected decline in ADM can ultimately contribute to a larger-than-expected decline in WSC and formula-driven revenue.
That matters because TUSD's budget assumed approximately a 2% WSC decline.
If the actual WSC decline turns out to be materially greater than 2%, management will need to determine the resulting revenue shortfall and what expenditure reductions may be necessary to keep the budget and cash flow in balance.
What the CFO Told the Governing Board
At the September 8, 2026 Governing Board meeting, TUSD CFO's Office presented the District's “SY 2026–27 10th Day Enrollment Update.”
The presentation reported total ADM declining from:
36,117.0 in FY2025–26
to
35,089.5 in FY2026–27
—a decline of 1,027.5, or approximately 2.8%.
The arithmetic is correct.
But that is not the most important question.
The important question is:
Where did the underlying ADM numbers come from, and how do they reconcile to the student data TUSD submitted through AzEDS and the ADM and WSC calculated by the Arizona Department of Education?
That reconciliation is important because the Governing Board needs more than a percentage displayed on a presentation slide. It needs to understand what the number represents and what it means for TUSD's budget and cash flow.
Available ADE Data Show a Different Early Indicator
I independently reviewed available Arizona Department of Education SFOB Attending ADM information.
Using the July 15, 2026 FY2025–26 information and the early August 15, 2026 FY2026–27 information, I calculated:
FY2025–26 ADM: 35,910.41
FY2026–27 ADM: 33,913.90
Difference: −1,996.51
Percentage change: approximately −5.6%
That is materially different from the 2.8% decline presented to the Governing Board.
However, there is an extremely important qualification.
The two ADE measurements are at very different stages of their respective school years.
The July 2026 prior-year information is much more mature, while the August 15 FY2026–27 data were captured very early in the new school year.
Therefore, the 5.6% should not be characterized as TUSD's final FY2026–27 ADM decline.
It is better viewed as an early warning indicator and an unreconciled difference requiring further analysis.
The Grade 12 Number Deserves Attention
One number in the CFO's presentation particularly stands out.
The presentation reported Grade 12 ADM increasing from:
2,966.50 to 3,232.50
That is an increase of:
266 ADM, or 9.0%.
Looking at the cohort another way, FY2025–26 Grade 11 ADM was 3,100.75. The following year's reported Grade 12 ADM was 3,232.50.
That suggests the cohort increased approximately 4.25% as it moved from Grade 11 to Grade 12.
That is possible. Transfers, returning students, reclassifications, retained students, alternative programs and other factors could contribute to such a result.
But the number should be reconciled.
The available August 15 ADE SFOB information I reviewed showed FY2026–27 Grade 12 ADM of approximately 2,822.54, compared with the CFO presentation's 3,232.50.
That is a difference of approximately 410 ADM.
Again, this does not prove that the CFO's number is incorrect. The reports may represent different calculation dates, reporting periods or methodologies.
But a difference of that magnitude deserves an explanation.
The Elementary-School Numbers May Also Matter for School Closures
The districtwide 2.8% decline also masks much larger changes at individual grade levels.
The CFO's presentation reported:
Kindergarten: −13.3%
Grade 2: −9.4%
Grade 3: −9.1%
Grade 4: −5.8%
Grade 6: −5.7%
Grade 9: −5.2%
According to the CFO's own figures, K–5 ADM declined approximately 5.8%.
That deserves attention beyond the immediate state-funding issue.
TUSD is simultaneously evaluating school utilization and possible school closures. A substantial decline concentrated in the elementary grades could therefore affect both financial planning and facilities decisions.
September 15 Is the Next Important Measurement
TUSD began classes on August 6.
By the September 15 Arizona Department of Education data-capture date, TUSD should have completed approximately 28 instructional days.
That means TUSD will be approximately:
70% through the first 40 instructional days
and
28% through the first 100 instructional days.
The September information therefore will not represent a completed 40-day or 100-day ADM.
Nevertheless, it should provide a considerably better indication of where FY2026–27 ADM is heading.
October 15 May Be Even More Important
TUSD should reach approximately its 40th instructional day around October 1.
The October 15 ADE data capture will therefore be the first regular monthly capture after
TUSD has completed the first 40 instructional days.
That makes October 15 an important financial measurement point.
If ADM continues declining materially faster than management anticipated, TUSD should be able to quantify the potential effect on WSC, state funding and its FY2026–27 budget.
The Other Missing Number: Cash
Student counts are only half of the financial problem.
The other critical question is:
How much unrestricted M&O cash did TUSD actually have available entering FY2026–27?
To develop a meaningful cash-flow forecast, at least four elements are necessary:
Beginning M&O cash
+ Monthly state and local revenue
− Prior-year liabilities paid from current-year cash
− FY2026–27 operating expenditures
= Projected M&O cash
That calculation should be performed monthly.
Only then can the Governing Board determine whether TUSD simply faces a budget problem—or whether it is approaching a genuine liquidity problem.
What Internal Audit Should Examine
This is an appropriate subject for independent Internal Audit review.
The Internal Auditor should be able to trace the information presented to the Governing Board through the entire process:
CFO presentation
↓
TUSD student-information system
↓
AzEDS submission
↓
ADE-calculated ADM
↓
Group A and Group B WSC
↓
State-funding calculation
↓
Monthly state-aid payment
That would answer a simple but fundamental governance question:
Can TUSD independently demonstrate where every material student-funding number presented to the Governing Board came from and how it reconciles to the State's calculations?
The Governing Board Needs an Updated Forecast
The issue should not presently be whether someone intentionally provided misleading information.
The available evidence does not establish that.
The more important governance issue is whether the Governing Board has been provided complete, reconciled and sufficiently current financial information to make informed decisions.
Once the September 15 and October 15 ADE information becomes available, management should update the Governing Board on at least:
Current ADM
Projected WSC
Variance from the 2% WSC budget assumption
Estimated state-funding variance
Current M&O cash
Projected monthly M&O cash through June 2027
Expenditure reductions required if revenue is below budget
Those are the numbers the Governing Board needs to manage the developing financial risk.
The Question TUSD Must Answer
The financial issue facing TUSD can ultimately be reduced to one question:
If TUSD's actual WSC decline is materially greater than the approximately 2% incorporated into the FY2026–27 budget, how large will the resulting revenue shortfall be—and when could that shortfall create a significant M&O cash-flow problem?
The answer is not yet known.
But over the next several weeks, the developing ADM information should give the Governing Board, Audit Committee and public a much better indication.
The September 15 data will be important.
The October 15 data should be even more informative.
And once those numbers are available, the District should reconcile them to its budget and produce an updated cash-flow forecast.
The detailed analysis supporting this article is available in the attached report: Status of the TUSD Financial Crisis — September 11, 2026.
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