TUSD’s Financial Crisis: The September ADM Numbers Are In—October 15 Is the Next Critical Date

In my earlier article, “TUSD’s Financial Crisis: The Numbers to Watch in the Coming Weeks,” I identified Average Daily Membership (ADM) as one of the most important numbers to watch in determining the developing financial condition of Tucson Unified School District.

We now have another important piece of the puzzle.

The September 15, 2026 numbers show TUSD with total ADM of approximately 34,438.4, compared with approximately 35,965.6 on July 15, 2026.

That is a decline of approximately: 1,527.2 ADM — or 4.25%.

That number should command the attention of TUSD management, the Governing Board and the Audit Committee.

Why?

Because this isn't simply an enrollment statistic. ADM drives money.

The September Numbers

The change between the July 15 and September 15 reports is substantial:

Measure	July 15, 2026	September 15, 2026	Change
Total ADM	35,965.595	34,438.397	(1,527.198)
Percentage change	—	—	(4.25%)

The decline is also spread across numerous grade levels rather than being attributable to one isolated grade.

Some of the more significant declines include:

Grade	July 15	September 15	Decline	% Decline
Kindergarten	1,268.202	1,143.338	124.864	9.85%
Grade 2	2,748.290	2,487.258	261.032	9.50%
Grade 3	2,913.041	2,643.014	270.027	9.27%
Grade 4	2,967.483	2,796.199	171.284	5.77%
Grade 6	2,751.644	2,587.024	164.620	5.98%
Grade 9	3,192.964	2,992.228	200.736	6.29%
Grade 11	3,070.038	2,870.388	199.650	6.50%

There were some areas of improvement. Grade 5 increased approximately 1.21%, and Grade 8 increased approximately 3.61%.

But the overall result remains: TUSD's reported total ADM declined approximately 4.25% between the July 15 and September 15 measurements.

Kindergarten Should Get the Board's Attention

One number deserves particular attention.

Kindergarten ADM declined approximately 9.85%.

The July 15 figure was approximately 1,268.2.

By September 15, it was approximately 1,143.3.

That is a reduction of almost 125 kindergarten ADM.

Kindergarten is particularly important strategically because today's kindergarten class becomes part of the District's enrollment base for many years.

A weak incoming class can therefore be more than a one-year enrollment issue.

If smaller entering classes repeatedly replace larger graduating classes, enrollment pressure can become structural.

The Governing Board should understand whether this kindergarten decline represents demographics, enrollment timing, families selecting alternatives, data-reporting differences, or some combination of these factors.

But Don't Make the Wrong Comparison

There is an important limitation to these numbers.

The July 15 and September 15 figures should not automatically be interpreted as 1,527 individual students physically leaving TUSD during those two months.

These are ADM reporting measurements.

Reporting periods, attendance, student eligibility, data corrections and other factors can affect the calculation.

Therefore, I would not characterize the 4.25% change as proof that TUSD “lost 1,527 students” between July and September.

The financially important fact is narrower and more defensible:

The reported ADM measurement declined by approximately 1,527, or 4.25%.

Now we need to determine whether that decline persists as the school year progresses.

October 15 Becomes the Next Critical Measurement

That is why October 15, 2026 is so important.

As TUSD accumulates its first 40 days of membership experience, we should obtain a much more useful indication of the District's FY2027 ADM trajectory which drives the tax revenue from the State.

The question will be whether September's 4.25% decline: improves, stabilizes or becomes worse.

The first-40-day information should give us a substantially better basis for evaluating whether management's enrollment and revenue assumptions for FY2027 remain reasonable.

Compare the Actual Numbers With the Budget Assumption

This is where enrollment becomes a financial-management issue.

TUSD's FY2027 budget was constructed using assumptions concerning declining student counts.

Those assumptions now need to be compared with actual results.

If management assumed approximately a 2% decline but the eventual ADM/WSC experience is materially worse, the difference could create additional revenue pressure.

A 4.25% decline in this preliminary ADM measurement does not automatically mean a 4.25% decline in TUSD revenue. Arizona's school-finance formula is considerably more complicated than that.

But it is a warning signal that should be quantified.

Management should tell the Governing Board:

• What ADM did we budget?

• What WSC did we budget?

• What are the actual numbers now?

• What is the revised FY2027 revenue estimate?

Those are basic financial-management questions.

Enrollment Is Now a Financial-Control Issue

For TUSD, enrollment cannot be considered solely an educational-planning issue.

It is increasingly a financial-control issue.

The relationship is:

Enrollment → ADM → WSC → State Funding → Revenue → M&O Fund Balance → Cash

If the number at the beginning of that chain falls faster than management anticipated, the consequences eventually move through the rest of the chain.

The problem is that TUSD's costs do not automatically fall by the same percentage.

• Buildings remain open.

• Employees must be paid.

• Benefits must be funded.

• Transportation continues.

• Utilities must be paid.

• Technology and administrative systems remain.

That is the essence of a structural financial problem: revenues can decline faster than recurring expenditures.

The FY2024 and FY2025 Experience Makes This More Important

This would be less concerning if TUSD were entering FY2027 with a strong recent history of recurring operating surpluses.

It isn't.

My review of the District's Annual Financial Reports shows that M&O expenditures exceeded M&O revenues in both FY2024 and FY2025.

We will also know on October 15, 2026 how much the M&O expenditures exceeded M&O revenues in FY2026.

The M&O financial position deteriorated substantially over the years.

That means another material enrollment-driven revenue reduction would be occurring against an already weakened financial position.

October 15 Could Give Us Two Critical Pieces of Information

October 15 is important for another reason.

TUSD's FY2026 Annual Financial Report (AFR) is also due to the Arizona Department of Education in October.

That means we should soon have two important sets of information.

The FY2026 AFR should tell us what happened financially during the fiscal year ended June 30, 2026.

The developing FY2027 ADM information should tell us more about the enrollment trajectory affecting the current fiscal year.

Put those together and the financial picture should become much clearer.

What I Will Look for in the FY2026 AFR

When the AFR becomes available, I will focus immediately on five M&O numbers:

• M&O Revenue

• M&O Expenditures

• Transfers and Other Financing Sources

• Beginning M&O Fund Balance

• Ending M&O Fund Balance

I have already developed a preliminary estimate of the FY2026 deterioration.

The AFR should allow us to replace that estimate with actual reported numbers.

Then we can combine the FY2026 financial results with FY2027 enrollment information.

Then Comes the Most Important Number: Cash

This is ultimately where my analysis is heading.

How long can TUSD's existing operating structure be supported by its available financial resources?

Fund balance is important.

But fund balance and cash are not the same thing.

Payroll, benefits, vendors and other operating obligations ultimately have to be paid with cash.

Once we have the FY2026 AFR and better FY2027 ADM/WSC information, we should be in a much better position to construct an 18-month cash-flow forecast.

That analysis should help answer several questions:

When could ordinary M&O cash become insufficient?

When might TUSD need to rely increasingly on transfers, interfund resources or short-term liquidity mechanisms?

How much time does management have to bring recurring expenditures into alignment with recurring revenues?

Those questions are more important than simply asking whether TUSD adopted a legally balanced budget.

The October 15 Question

September has now given us a number: 34,438.397 ADM.

Compared with July: Down 1,527.198 ADM.

Down 4.25%.

Now we wait for the next measurement.

When the first-40-day information becomes available, I will be asking one basic question:

Is TUSD's actual FY2027 enrollment and ADM decline materially worse than the decline management assumed when it constructed the FY2027 budget?

If the answer is yes, the next question must be:

How many dollars of expected FY2027 revenue have been lost, and what expenditures will management reduce to compensate for that loss?

Those are questions the Governing Board and Audit Committee need answered.

The September numbers have given us another important piece of the puzzle.

October's numbers should tell us whether the financial problem is becoming more serious.