school districts; records; noncompliance; penalties

HB2481 - 572R - S Ver

Senate Engrossed
House Bill

school districts;
records; noncompliance; penalties

State of Arizona

House of Representatives

Fifty-seventh Legislature

Second Regular Session

2026

HOUSE BILL 2481

AN
ACT

amending sections
15-272, 15-302, 15-481 and 15-491, Arizona Revised
Statutes; relating to school district financial records.

(TEXT OF BILL BEGINS ON NEXT PAGE)

Be it
enacted by the Legislature of the State of Arizona:

Section 1. Section 15-272, Arizona Revised
Statutes, is amended to read:

START_STATUTE
15-272.

Duties; department of education; state board of education;
sanctions for noncompliance with uniform system of financial records

A. The department of education shall advise and
consult with the auditor general in
the preparation
preparing
and
implementation of

implementing
a uniform system of financial records.

B. The state board of education, on report from the
auditor general, shall determine whether school districts are maintaining the
uniform system of financial records. If the state board of education
determines that a school district is not in compliance with the uniform system
of financial records or has failed to correct a deficiency
within
ninety days after receiving notice from the auditor general
for one of the following periods of time
, the state board of
education shall
:

1. If the school district fails to
correct a deficiency within ninety days after receiving notice from the auditor
general, do both of the following:

(
a
)
Direct
the superintendent of public instruction to withhold up to ten
per
cent
percent
of the portion of state monies to the
school district for each violation from the date of the determination until
such time as the auditor general reports
the school district's
compliance
with the uniform system of financial records. The auditor general
and the department of education shall assist the school district to achieve
compliance during such period.

(
b
) Consult
with the department of education to determine the amount of training and other
interventions necessary or appropriate to assist the school district to achieve
compliance and direct the d
epartment of education to
provide
to the school district a list of approved
training programs and providers for the training and interventions
prescribed by the state board and the department pursuant to this
subdivision.�
Not later than thirty calendar days after
the school district receives the list of approved training programs and
providers from the department, the school district shall implement any
interventions that are prescribed pursuant to this subdivision and shall
provide Any training
that is prescribed pursuant to this
subdivision to the school district's superintendent, business manager and chief
financial officer and any other administrator or executive identified by the
state board of education or the department of education.
The school district shall notify the department when each intervention
is implemented and when each administrator completes the training.� The
department shall notify the state board of education when the training and
interventions provided pursuant to this subdivision are completed.

2. If the school district fails to
correct a deficiency within eighteen months after receiving notice from the
auditor general,
notify the school district governing
board that the school district's superintendent is ineligible to receive
performance-based pay, including the portion of the superintendent's
annual salary that is classified as performance pay pursuant to section 15-341,
subsection A, paragraph 39, for the period beginning on the first day of the
eighteenth month after the school district receives notice from the auditor
general and until such time as the auditor general reports the school
district's compliance with the uniform system of financial records.

C. The general budget limit and maintenance and
operations section of the budget for the current year and for the budget year
if the school district is not in compliance before the end of the current year
,
shall be reduced by the amount determined in subsection
B
, paragraph 1 of this section
until the state board of
education determines that the school district is in compliance.

D. If compliance is determined by the state board of
education in the same year as the determination of noncompliance or in the
first year after the fiscal year of the determination of noncompliance, the
resulting adjustment to budgeted maintenance and operations and to the general
budget limit may be applied to the fiscal year of the determination of
noncompliance equal to the amount adjusted in that fiscal year or to the
current year equal to the amount adjusted in the current year.� Previously
withheld monies that resulted from the determination of noncompliance shall be
returned in the year compliance is determined.
END_STATUTE

Sec. 2. Section 15-302, Arizona Revised
Statutes, is amended to read:

START_STATUTE
15-302.

Powers and duties

A. The county school superintendent shall:

1. Distribute all laws, reports, circulars,
instructions and forms that the county school superintendent may receive for
the use of school officers.

2. Record all official acts.

3. Appoint governing board members of school
districts to fill all vacancies, but the term of the appointment shall be until
the next regular election for governing board members, at which time a
successor shall be elected to serve the unexpired portion of the
term. A person who is subject to registration as a sex offender in
this state or in any other jurisdiction is ineligible for appointment under
this paragraph. Within thirty days after notification of a vacancy,
the school district governing board may submit up to three names to the county
school superintendent for consideration of an appointment to fill the
vacancy. The county school superintendent is not required to appoint
a governing board member from the list of names submitted by the governing
board. The county school superintendent, if the county school
superintendent deems it in the best interest of the community, may call a
special election to fill the vacancies. If an election is called,
the newly elected member shall serve for the remainder of the unexpired portion
of the term.

4. Make reports, when directed by the superintendent
of public instruction, showing matters relating to schools in the county as may
be required on the forms furnished by the superintendent of public instruction.

5. Have such powers and perform such duties as
otherwise prescribed by law.

6. On or before October 1 of each year, report to
the superintendent of public instruction the amount of monies received from
state school funds, special school district taxes and other sources, the total
expenditures for school purposes and the balance on hand to the credit of each
school district at the close of the school year.

7. Contract with the board of supervisors for the
board of supervisors to conduct all regular school district elections.

8. Be responsible, in cooperation with the school
district governing boards and the board of supervisors, for all special school
district elections.

9. Maintain teacher and administrator certification
records of effective dates and expiration dates of teachers' and
administrators' certificates in compliance with guidelines prescribed in the
uniform system of financial records for those school districts for which the
county school superintendent is the fiscal agent. The county school
superintendent shall not draw a warrant in payment of a teacher's, substitute
teacher's or administrator's salary unless the teacher, substitute teacher or
administrator is legally certified during the fiscal year in which the term for
payment is demanded.

10. Notify a school district three years before the
expiration of a revenue control limit override that the school district's
budget must be adjusted in the final two years of the override pursuant to
section 15-481, subsections
P

Q

and
Q

R
, if the voters
do not approve another override.

11. In collaboration with the department of
education and other state agencies, assist school districts, charter schools,
county free library districts, municipal libraries, nonprofit and public
libraries, tribal libraries, private schools and tribal schools on using
student data, staff development, curriculum alignment and technology to improve
student performance.

12. Assist schools in meeting yearly adequate
progress goals as defined by criteria established by the state board of
education and implemented by the department of education.

B. At the request of
school districts and charter schools, the county school superintendent may
provide discretionary programs in addition to the programs prescribed in
subsection A of this section.

C. The county school
superintendent may:

1. Provide the services prescribed in subsections A
and B of this section in the county or jointly with two or more counties
pursuant to title 11, chapter 7, article 3.

2. Review the operations and finances, including
expenditures, of any school district that is located in the county.

D. Each county school superintendent may establish
an advisory committee to the office of the county school superintendent.
END_STATUTE

Sec. 3. Section 15-481, Arizona Revised
Statutes, is amended to read:

START_STATUTE
15-481.

Override election; budget increases; eligibility; informational
pamphlet; notice; ballot; effect

A. If
a proposed budget of a school district exceeds the aggregate budget limit for
the budget year, at least ninety days before the proposed election the
governing board shall order an override election to be held on the first
Tuesday following the first Monday in November as prescribed by section 16-204,
subsection F for the purpose of presenting the proposed budget to the qualified
electors of the school district who by a majority of those voting either shall
affirm or reject the budget. At the same time as the order of the
election, the governing board shall publicly declare the deadline for
submitting arguments, as set by the county school superintendent pursuant to
subsection B, paragraph 9 of this section, to be submitted in the informational
pamphlet and shall immediately post the deadline in a prominent location on the
district's website. In addition, the governing board shall prepare
an alternate budget that does not include an increase in the budget of more
than the amount allowed as provided in section 15-905. If the
qualified electors approve the proposed budget, the governing board of the
school district shall follow the procedures prescribed in section 15-905
for adopting a budget that includes the authorized increase. If the
qualified electors disapprove the proposed budget, the governing board shall
follow the procedures prescribed in section 15-905 for adopting a budget
that does not include the proposed increase or the portion of the proposed
increase that exceeds the amount authorized by a previously approved budget
increase as prescribed in subsection
P

Q
of this section.

B. The
county school superintendent shall prepare an informational pamphlet on the
proposed increase in the budget and a sample ballot and, at least forty days
before the election, shall transmit the informational pamphlet and the sample
ballot to the governing board of the school district. The governing
board, on receipt of the informational pamphlet and the ballot, shall mail or
distribute the informational pamphlet and the ballot to the households in which
qualified electors reside within the school district at least thirty-five
days before the election. Any distribution of material concerning
the proposed increase in the budget shall not be conducted by children enrolled
in the school district. The informational pamphlet shall contain the
following information:

1. The
date of the election.

2. The
voter's polling place and the times it is open.

3. The
proposed total increase in the budget that exceeds the amount allowed pursuant
to section 15-905.

4. The
total amount of the current year's budget, the total amount of the proposed
budget and the total amount of the alternate budget.

5. If
the override is for a period of more than one year, a statement indicating the
number of years the proposed increase in the budget would be in effect and the
percentage of the school district's revenue control limit that the district is requesting
for the future years.

6. The
proposed total amount of revenues that will fund the increase in the budget and
the amount that will be obtained from a levy of taxes on the taxable property
within the school district for the first year for which the budget increase was
adopted.

7. The
proposed amount of revenues that will fund the increase in the budget and that
will be obtained from other than a levy of taxes on the taxable property within
the school district for the first year for which the budget increase was adopted.

8. The
dollar amount and the purpose for which the proposed increase in the budget is
to be expended for the first year for which the budget increase was
adopted. The purpose statement shall only present factual
information in a neutral manner.� Advocacy for the expenditures is strictly
limited to the arguments submitted pursuant to paragraph 9 of this subsection.

9. At
least two arguments, if submitted, but not more than ten arguments for and two
arguments, if submitted, but not more than ten arguments against the proposed
increase in the budget. The arguments shall be in a form prescribed
by the county school superintendent, and each argument shall not exceed two
hundred words. Arguments for the proposed increase in the budget
shall be provided in writing and signed by the governing board. The
ballot arguments for the proposed increase in the budget shall be signed as the
governing board of the school district without listing any member's individual
name for the arguments for the proposed increase. If submitted,
additional arguments in favor of the proposed increase in the budget shall be
provided in writing with a signed, sworn statement by those in
favor. Arguments against the proposed increase in the budget shall
be provided in writing with a signed, sworn statement by those in
opposition. If the argument is submitted by an organization, it
shall contain the sworn statement of two executive officers of the
organization. If the argument is submitted by a political committee,
it shall contain the sworn statement of the committee's chairperson or
treasurer. If the argument is submitted by an individual and not on
behalf of an organization, a political committee or any other group, the
person
individual
shall submit the
argument with a sworn, notarized statement. The names of persons and
entities submitting written arguments shall be included in the informational
pamphlet. Persons signing the argument shall identify themselves by
giving their residence address and telephone number, which may not appear in
the informational pamphlet, except that the person's city or town and state of
residence shall appear in the pamphlet. Any argument that is
submitted and that does not comply with this paragraph may not be included in
the pamphlet. The county school superintendent shall review all factual
statements contained in the written arguments and correct any inaccurate
statements of fact. The superintendent shall not review and correct
any portion of the written arguments that are identified as statements of the
author's opinion. The county school superintendent shall make the
written arguments available to the public as provided in title 39, chapter 1,
article 2. A deadline for submitting arguments to be included in the
informational pamphlet shall be set by the county school superintendent.

10. A
statement that the alternate budget shall be adopted by the governing board if
the proposed budget is not adopted by the qualified electors of the school
district.

11. The
current limited property value and the net assessed valuation provided by the
department of revenue, the first year tax rate for the proposed override and
the estimated amount of the secondary property taxes if the proposed budget is
adopted for each of the following:

(a) An
owner-occupied residence whose assessed valuation is the average assessed
valuation of property classified as class three, as prescribed by section 42-12003
for the current year in the school district.

(b) An
owner-occupied residence whose assessed valuation is one-half of
the assessed valuation of the residence in subdivision (a) of this paragraph.

(c) An
owner-occupied residence whose assessed valuation is twice the assessed
valuation of the residence in subdivision (a) of this paragraph.

(d) A
business whose assessed valuation is the average of the assessed valuation of
property classified as class one, as prescribed by section 42-12001,
paragraphs 12 and 13 for the current year in the school district.

12. If the election is
conducted pursuant to subsection L or M of this section, the following
information:

(a) An executive
summary of the school district's most recent capital improvement plan submitted
to the school facilities oversight board.

(b) A
complete list of each proposed capital improvement that will be funded with the
budget increase and a description of the proposed cost of each improvement,
including a separate aggregation of capital improvements for administrative
purposes as defined by the school facilities oversight board.

(c) The
tax rate associated with each of the proposed capital improvements and the
estimated cost of each capital improvement for the owner of a single family
home that is valued at $80,000.

C. For the purpose of this section, the school
district may use its staff, equipment, materials, buildings or other resources
only to distribute the informational pamphlet at the school district office or
at public hearings and to produce such information as required in subsection B
of this section.� This subsection does not preclude school districts from
holding or participating in any public hearings at which testimony is given by
at least one person for the proposed increase and one person against the proposed
increase. Any written information provided by the district
pertaining to the override election shall include financial information showing
the estimated first year tax rate for the proposed budget override amount.

D. If
any amount of the proposed increase will be funded by a levy of taxes in the
district, the election prescribed in subsection A of this section shall be held
on the first Tuesday following the first Monday in November as prescribed by
section 16-204, subsection F. If the proposed increase will be
fully funded by revenues from other than a levy of taxes, the elections
prescribed in subsection A of this section shall be held on any date prescribed
by section 16-204. The elections shall be conducted as nearly
as practicable in the manner prescribed in article 1 of this chapter, sections
15-422
,

through

15-423,
15-424 and
section
15-426,
relating to special elections, except that:

1. The
notices required pursuant to section 15-403 shall be posted not less than
twenty-five days before the election.

2. Ballots
shall be counted pursuant to title 16, chapter 4, article 10.

E. If
the election is to exceed the revenue control limit and if the proposed
increase will be fully funded by a levy of taxes on the taxable property within
the school district, the ballot shall contain the words "budget increase,
yes" and "budget increase, no", and the voter shall signify the
voter's desired choice. The ballot shall also contain the amount of
the proposed increase of the proposed budget over the alternate budget, a
statement that the amount of the proposed increase will be based on a percentage
of the school district's revenue control limit in future years, if applicable,
as provided in subsection
P

Q
of
this section and the following statement:

Any budget increase authorized by
this election shall be entirely funded by a levy of taxes on the taxable
property within this school district for the year for which adopted and for
____ subsequent years, shall not be realized from monies furnished by the state
and shall not be subject to the limitation on taxes specified in article IX,
section 18, Constitution of Arizona. Based on the current net
assessed valuation used for secondary property tax purposes, to fund the
proposed increase in the school district's budget would require an estimated
tax rate of $_____________ per $100 of net assessed valuation used for
secondary property tax purposes and is in addition to the school district's tax
rate that will be levied to fund the school district's revenue control limit
allowed by law.

F. If
the election is to exceed the revenue control limit and if the proposed
increase will be fully funded by revenues from other than a levy of taxes on
the taxable property within the school district, the ballot shall contain the
words "budget increase, yes" and "budget increase, no", and
the voter shall signify the voter's desired choice. The ballot shall also
contain:

1. The
amount of the proposed increase of the proposed budget over the alternate
budget.

2. A
statement that the amount of the proposed increase will be based on a
percentage of the school district's revenue control limit in future years, if
applicable, as provided in subsection
P

Q
of this section.

3. The
following statement:

Any budget increase authorized by
this election shall be entirely funded by this school district with revenues
from other than a levy of taxes on the taxable property within the school
district for the year for which adopted and for ______ subsequent years and
shall not be realized from monies furnished by the state.

G. Except
as provided in subsection H of this section, the maximum budget increase that
may be requested and authorized as provided in subsection E or F of this
section or the combination of subsections E and F of this section is fifteen
percent of the revenue control limit as provided in section 15-947,
subsection A for the budget year.� If a school district requests an override
pursuant to section 15-482 or to continue with a budget override pursuant
to section 15-482 for pupils in kindergarten programs and grades one
through three that was authorized before December 31, 2008, the maximum budget
increase that may be requested and authorized as provided in subsection E or F
of this section or the combination of subsections E and F of this section is
ten percent of the revenue control limit as provided in section 15-947,
subsection A for the budget year.

H. Special
budget override provisions for school districts with a student count of less
than one hundred fifty-four in kindergarten programs and grades one
through eight or with a student count of less than one hundred seventy-six
in grades nine through twelve are as follows:

1. The maximum budget
increase that may be requested and authorized as provided in subsections E and
F of this section is the greater of the amount prescribed in subsection G of
this section or a limit computed as follows:

(a) For
common or unified districts with a student count of less than one hundred fifty-four
in kindergarten programs and grades one through eight, the limit computed as
prescribed in item (i) or (ii) of this subdivision, whichever is appropriate:

(i)

���������� Small
School�� Support Level Weight����������������� Phase Down

Student��� Student������� for
Small Isolated������������������� Reduction

Count
���
Count Limit
���
School
Districts
���
Base Level
���
Factor

�
125
� x 1.358
+ (0.0005 x���� x
$
=
$

������������������������� (500 � Student
Count))

������������������������������������������������� Small
Isolated

���������� Phase Down���� Phase Down������������� School
District

����������
Base
����
Reduction
Factor
�������
Elementary Limit

���������� $150,000��� -�
$

����� =
$

(ii)

���������� Small School�� Support Level Weight����������������� Phase
Down

Student��� Student������� for Small���������������������������� Reduction

Count
���
Count Limit
��
School Districts
������
Base
Level
���
Factor

�
125

x 1.278 + (0.0003 x���� x
$
=
$

������������������������� (500
- Student Count))

��������������������������������������������������� Small

���������� Phase
Down���� Phase Down��������������� School District

����������
Base
����
Reduction
Factor
���������
Elementary Limit

���������� $150,000��� ��
$
����� =�
$

(b) For
unified or union high school districts with a student count of less than one
hundred seventy-six in grades nine through twelve, the limit computed as
prescribed in item (i) or (ii) of this subdivision, whichever is appropriate:

(i)

���������� Small School�� Support Level Weight����������������� Phase
Down

Student��� Student������� for Small Isolated������������������� Reduction

Count
���
Count Limit
���
School
Districts
���
Base Level
��
Factor

�
100
� x 1.468
+ (0.0005 x���� x
$
=
$ __

������������������������� (500 � Student
Count))

��������������������������������������������������� Small
Isolated

���������� Phase
Down���� Phase Down��������������� District

����������
Base
����
Reduction
Factor
���������
Secondary Limit

���������� $350,000��� ��
$

������ =�
$

(ii)

���������� Small School�� Support Level Weight����������������� Phase
Down

Student��� Student������� for Small���������������������������� Reduction

Count
���
Count Limit
��
School Districts
������
Base
Level_
��
Factor

�
100

x� 1.398 + (0.0004 x���� x
$
=
$

������������������������� (500
- Student Count))

��������������������������������������������������� Small

���������� Phase
Down���� Phase Down��������������� School District

����������
Base
����
Reduction
Factor
���������
Secondary Limit

���������� $350,000��� ��
$

������ =�
$

(c) If
both subdivisions (a) and (b) of this paragraph apply to a unified school district,
its limit for the purposes of this paragraph is the combination of its
elementary limit and its secondary limit.

(d) If
only subdivision (a) or (b) of this paragraph applies to a unified school
district, the district's limit for the purposes of this paragraph is the sum of
the limit computed as provided in subdivision (a) or (b) of this paragraph plus
ten percent of the revenue control limit attributable to those grade levels
that do not meet the eligibility requirements of th
is
subsection. If a school district budgets monies outside the revenue
control limit pursuant to section 15-949, subsection
E
, the district's limit for the purposes of this paragraph
is only the ten
percent
of the revenue control
limit attributable to those grade levels that are not included under section 15-949,
subsection
E
. For the purposes of
this
subdivision, the revenue control limit is separated into elementary
and secondary components based on the weighted student count as provided in
section 15-971, subsection B, paragraph 2, subdivision (a).

2. If
a school district utilizes this subsection to request an override of more than
one year, the ballot shall include an estimate of the amount of the proposed
increase in the future years in place of the statement that the amount of the
proposed increase will be based on a percentage of the school district's
revenue control limit in future years, as prescribed in subsections E and F of
this section.

3. Notwithstanding
subsection
P

Q
of this
section, the maximum period of an override authorized pursuant to this
subsection is five years.

4. Subsection

P

Q
, paragraphs 1 and 2 of
this section do not apply to overrides authorized pursuant to this subsection.

I. If
the election is to exceed the revenue control limit as provided in section 15-482
and if the proposed increase will be fully funded by a levy of taxes on the
taxable property within the school district, the ballot shall contain the words
"budget increase, yes" and "budget increase, no", and the
voter shall signify the voter's desired choice.� The ballot shall also contain
the amount of the proposed increase of the budget over the alternate budget, a
statement that the amount of the proposed increase will be based on a
percentage of the school district's revenue control limit in future years, if
applicable, as provided in subsection
Q

R
of this section, and the following statement:

Any budget increase authorized by
this election shall be entirely funded by a levy of taxes on the taxable
property within this school district for the year for which adopted and for
_____ subsequent years, shall not be realized from monies furnished by the
state and shall not be subject to the limitation on taxes specified in article
IX, section 18, Constitution of Arizona. Based on the current net
assessed valuation used for secondary property tax purposes, to fund the
proposed increase in the school district's budget that will be funded by a levy
of taxes on the taxable property within this school district would require an
estimated tax rate of $__________ per $100 of net assessed valuation used for
secondary property tax purposes and is in addition to the school district's tax
rate that will be levied to fund the school district's revenue control limit
allowed by law.

J. If
the election is to exceed the revenue control limit as provided in section 15-482
and if the proposed increase will be fully funded by revenues other than a levy
of taxes on the taxable property within the school district, the ballot shall
contain the words "budget increase, yes" and "budget increase,
no", and the voter shall signify the voter's desired
choice. The ballot shall also contain the amount of the proposed
increase of the proposed budget over the alternate budget, a statement that the
amount of the proposed increase will be based on a percentage of the school
district's revenue control limit in future years, if applicable, as provided in
subsection
Q

R
of this section
and the following statement:

Any budget increase authorized by
this election shall be entirely funded by this school district with revenues
from other than a levy of taxes on the taxable property within the school
district for the year for which adopted and for _____ subsequent years and
shall not be realized from monies furnished by the state.

K. The
maximum budget increase that may be requested and authorized as provided in
subsection I or J of this section, or a combination of both of these
subsections, is five percent of the revenue control limit as provided in
section 15-947, subsection A for the budget year. For a common
school district not within a high school district or a common school district
within a high school district that offers instruction in high school subjects
as provided in section 15-447, five percent of the revenue control limit
means five percent of the revenue control limit attributable to the weighted
student count in preschool programs for children with disabilities,
kindergarten programs and grades one through eight as provided in section 15-971,
subsection B. For a unified school district, five percent of the revenue
control limit means five percent of the revenue control limit attributable to
the weighted student count in preschool programs for children with
disabilities, kindergarten programs and grades one through twelve. For
a union high school district, five percent of the revenue control limit means
five percent of the revenue control limit attributable to the weighted student
count in grades nine through twelve.

L. If
the election is to exceed district additional assistance and if the proposed
increase will be fully funded by a levy of taxes on the taxable property within
the school district, the ballot shall contain the words "budget increase,
yes" and "budget increase, no", and the voter shall signify the
voter's desired choice. An election held pursuant to this subsection
shall be held on the first Tuesday after the first Monday of
November. The ballot shall also contain the amount of the proposed
increase of the proposed budget over the alternate budget and the following
statement:

Any budget increase authorized by
this election shall be entirely funded by a levy of taxes on the taxable
property within this school district for the year in which adopted and for
_____ subsequent years, shall not be realized from monies furnished by the
state and shall not be subject to the limitation on taxes specified in article
IX, section 18, Constitution of Arizona. Based on the current net
assessed valuation used for secondary property tax purposes, to fund the
proposed increase in the school district's budget would require an estimated
tax rate of $____________ per $100 of net assessed valuation used for secondary
property tax purposes and is in addition to the school district's tax rate that
will be levied to fund the school district's district additional assistance
allowed by law.

M. If
the election is to exceed district additional assistance and if the proposed
increase will be fully funded by revenues from other than a levy of taxes on
the taxable property within the school district, the ballot shall contain the
words "budget increase, yes" and "budget increase, no", and
the voter shall signify the voter's desired choice.� An election held pursuant
to this subsection shall be held on the first Tuesday after the first Monday of
November.� The ballot shall also contain the amount of the proposed increase of
the proposed budget over the alternate budget and the following statement:

Any budget increase authorized by
this election shall be entirely funded by this school district with revenues
from other than a levy of taxes on the taxable property within the school
district for the year in which adopted and for ______ subsequent years and
shall not be realized from monies furnished by the state.

N. If
the election is to exceed a combination of the revenue control limit as
provided in subsection E or F of this section, the revenue control limit as
provided in subsection I or J of this section or district additional assistance
as provided in subsection L or M of this section, the ballot shall be prepared
so that the voters may vote on each proposed increase separately and shall
contain statements required in the same manner as if each proposed increase
were submitted separately.

O. If a school district
fails to correct a deficiency within
eighteen months
after receiving
notice from the auditor general pursuant to section 15-271, the school
district governing board may not order an override election as provided in
subsection L or M of this section until the school district has corrected any
deficiencies.� For the purposes of this subsection, the school district is
deemed to have corrected any deficiencies from and after the date that the
auditor general reports that the school district is in compliance with the
uniform system of financial records.

O.

P.
If
the election provides for a levy of taxes on the taxable property within the
school district, at least thirty days before the election, the department of
revenue shall provide the school district governing board and the county school
superintendent with the current net assessed valuation of the school
district. The governing board and the county school superintendent
shall use the current net assessed valuation of the school district to
translate the amount of the proposed dollar increase in the budget of the
school district over that allowed by law into a tax rate figure.

P.

Q.
If
the voters in a school district vote to adopt a budget in excess of the revenue
control limit as provided in subsection E or F of this section, any additional
increase shall be included in the aggregate budget limit for each of the years
authorized. Any additional increase shall be excluded from the
determination of equalization assistance. The school district
governing board, however, may levy on the net assessed valuation used for
secondary property tax purposes of the property in the school district the
additional increase if adopted under subsection E of this section for the
period of one year, two years or five through seven years as authorized.� If an
additional increase is approved as provided in subsection F of this section,
the school district governing board may only use revenues derived from the
school district's prior year's maintenance and operation fund ending cash
balance to fund the additional increase.� If a budget increase was previously
authorized and will be in effect for the budget year or budget year and
subsequent years, as provided in subsection E or F of this section, the
governing board may request a new budget increase as provided in the same
subsection under which the prior budget increase was adopted, which shall not
exceed the maximum amount allowed under subsection G of this
section. If the voters in the school district authorize the new
budget increase amount, the existing budget increase no longer is in
effect. If the voters in the school district do not authorize the
budget increase amount, the existing budget increase remains in effect for the
time period for which it was authorized. The maximum additional
increase authorized as provided in subsection E or F of this section and the
additional increase that is included in the aggregate budget limit is based on
a percentage of a school district's revenue control limit in future years, if
the budget increase is authorized for more than one year. If the
additional increase:

1. Is
for two years, the proposed increase in the second year is equal to the initial
proposed percentage increase.

2. Is
for five years or more, the proposed increase is equal to the initial proposed
percentage increase in the following years of the proposed increase, except
that in the next to last year it is two-thirds of the initial proposed
percentage increase and it is one-third of the initial proposed
percentage increase in the last year of the proposed increase.

Q.

R.
If
the voters in a school district vote to adopt a budget in excess of the revenue
control limit as provided in subsection I or J of this section, any additional
increase shall be included in the aggregate budget limit for each of the years
authorized.� Any additional increase shall be excluded from the determination
of equalization assistance. The school district governing board,
however, may levy on the net assessed valuation used for secondary property tax
purposes of the property in the school district the additional increase if
adopted under subsection I of this section for the period of one year, two
years or five through seven years as authorized.� If an additional increase is
approved as provided in subsection J of this section, the increase may only be
budgeted and expended if sufficient monies are available in the maintenance and
operation fund of the school district. If a budget increase was
previously authorized and will be in effect for the budget year or budget year
and subsequent years, as provided in subsection I or J of this section, the
governing board may request a new budget increase as provided in the same
subsection under which the prior budget increase was adopted that does not
exceed the maximum amount permitted under subsection K of this
section. If the voters in the school district authorize the new
budget increase amount, the existing budget increase no longer is in
effect. If the voters in the school district do not authorize the
budget increase amount, the existing budget increase remains in effect for the
time period for which it was authorized. The maximum additional
increase authorized as provided in subsection I or J of this section and the
additional increase that is included in the aggregate budget limit is based on
a percentage of a school district's revenue control limit in future years, if
the budget increase is authorized for more than one year. If the additional
increase:

1. Is for two years,
the proposed increase in the second year is equal to the initial proposed
percentage increase.

2. Is
for five years or more, the proposed increase is equal to the initial proposed
percentage increase in the following years of the proposed increase, except
that in the next to last year it is two-thirds of the initial proposed
percentage increase and it is one-third of the initial proposed
percentage increase in the last year of the proposed increase.

R.

S.
If
the voters in a school district vote to adopt a budget in excess of district
additional assistance as provided in subsection L of this section, any
additional increase shall be included in the aggregate budget limit for each of
the years authorized. The additional increase shall be excluded from
the determination of equalization assistance. The school district
governing board, however, may levy on the net assessed valuation used for
secondary property tax purposes of the property in the school district the
additional increase for the period authorized but not to exceed ten years.� For
overrides approved by a vote of the qualified electors of the school district
at an election held from and after October 31, 1998, the period of the
additional increase prescribed in this subsection shall not exceed seven years
for any capital override election.

S.

T.
If
the voters in a school district vote to adopt a budget in excess of district
additional assistance as provided in subsection M of this section, any
additional increase shall be included in the aggregate budget limit for each of
the years authorized. The additional increase shall be excluded from
the determination of equalization assistance. The school district
governing board may only use revenues derived from the school district's prior
year's maintenance and operation fund ending cash balance and capital outlay
fund ending cash balance to fund the additional increase for the period
authorized but not to exceed ten years. For overrides approved by a
vote of the qualified electors of the school district at an election held from
and after October 31, 1998, the period of the additional increase prescribed in
this subsection shall not exceed seven years for any capital override election.

T.

U.
In
addition to subsections
P

Q

and
S

T
of this section, from
the maintenance and operation fund and capital outlay fund ending cash
balances, the school district governing board shall first use any available
revenues to reduce its primary tax rate to zero and shall use any remaining
revenues to fund the additional increase authorized as provided in subsections
F and M of this section.

U.

V.
If
the voters in a school district disapprove the proposed budget, the alternate
budget that, except for any budget increase authorized by a prior election,
does not include an increase in the budget in excess of the amount provided in
section 15-905 shall be adopted by the governing board as provided in
section 15-905.

V.

W.
The
governing board may request that any override election be cancelled if any
change in chapter 9 of this title changes the amount of the aggregate budget
limit as provided in section 15-905.� The request to cancel the override
election shall be made to the county school superintendent at least eighty days
before the date of the scheduled override election.

W.

X.
For
any election conducted pursuant to subsection L or M of this section:

1. The
ballot shall include the following statement in addition to any other statement
required by this section:

The capital improvements that are
proposed to be funded through this override election are to exceed the state
standards and are in addition to monies provided by the state.

___________ school district is
proposing to increase its budget by $__________ to fund capital improvements
over and above those funded by the state. Under the students first
capital funding system, _________ school district is entitled to state monies
for new construction and renovation of school buildings in accordance with
state law.

2. The
ballot shall contain the words "budget increase, yes" and
"budget increase, no", and the voter shall signify the voter's
desired choice.

3. At
least eighty-five days before the election, the school district shall
submit proposed ballot language to the director of the Arizona legislative
council. The director of the Arizona legislative council shall
review the proposed ballot language to determine whether the proposed ballot
language complies with this section. If the director of the Arizona
legislative council determines that the proposed ballot language does not
comply with this section, the director, within ten calendar days after receiving
the proposed ballot language, shall notify the school district of the
director's objections
,

and the school district shall resubmit revised ballot language to the director
for approval.

X.

Y.
If
the voters approve the budget increase pursuant to subsection L or M of this
section, the school district shall not use the override proceeds for any
purposes other than the proposed capital improvements listed in the
informational pamphlet, except that up to ten percent of the override proceeds
may be used for general capital expenses, including cost overruns of proposed
capital improvements.

Y.

Z.
Each
school district that currently increases its budget pursuant to this section
shall hold a public meeting each year between September 1 and October 31 at
which an update of the programs or capital improvements financed through the
override is discussed and at which the public is allowed an opportunity to
comment and:

1. If the increase is
pursuant to subsection L or M of this section, at a minimum, the update shall
include the progress of capital improvements financed through the override, a
comparison of the current status and the original projections on the
construction of capital improvements, the costs of capital improvements and the
costs of capital improvements in progress or completed since the prior meeting
and the future capital plans of the school district. The school
district shall include in the public meeting a discussion of the school
district's use of state capital aid and voter-approved bonding in funding
capital improvements, if any.

2. If
the increase is pursuant to subsection E, F, I or J of this section, the update
shall include at a minimum the amount expended in the previous fiscal year and
the amount included in the current budget for each of the purposes listed in the
informational pamphlet prescribed by subsection B of this section.

Z.

AA. Subject
to the requirements prescribed by subsection O of this section,
if a
budget in excess of district additional assistance was previously adopted by
the voters in a school district and will be in effect for the budget year or
budget year and subsequent years, as provided in subsection L or M of this
section, the governing board may request an additional budget in excess of
district additional assistance. If the voters in a school district authorize
the additional budget in excess of district additional assistance, the existing
district additional assistance budget increase remains in effect.

AA.

BB.
Notwithstanding
any other law, the maximum budget increase that may be authorized pursuant to
subsection L or M of this section is ten percent of the school district's
revenue control limit.

BB.

CC.
If
the election is to continue to exceed the revenue control limit and if the
proposed override will be fully funded by a continuation of a levy of taxes on
the taxable property in the school district, the ballot shall contain the words
"budget override continuation, yes" and "budget override
continuation, no", and the voter shall signify the voter's desired
choice.� The ballot shall also contain the amount of the proposed continuation
of the budget increase of the proposed budget over the alternate budget, a
statement that the amount of the proposed increase will be based on a
percentage of the school district's revenue control limit in future years, if
applicable, as provided in subsection
P

Q
of this section and the following statement:

Any budget increase continuation
authorized by this election shall be entirely funded by a levy of taxes on the
taxable property in this school district for the year for which adopted and for
_______ subsequent years, shall not be realized from monies furnished by the
state and shall not be subject to the limitation on taxes specified in article
IX, section 18, Constitution of Arizona. Based on the current net
assessed valuation used for secondary property tax purposes, to fund the
proposed continuation of the increase in the school district's budget would
require an estimated continuation of a tax rate of $______________ per $100 of
assessed valuation used for secondary property tax purposes and is in addition
to the school district's tax rate that will be levied to fund the school
district's revenue control limit allowed by law.

CC.

DD.
If
the election is to continue to exceed the revenue control limit as provided in
section 15-482 and if the proposed override will be fully funded by a
continuation of a levy of taxes on the taxable property in the school district,
the ballot shall contain the words "budget override continuation,
yes" and "budget override continuation, no", and the voter shall
signify the voter's desired choice.� The ballot shall also contain the amount
of the proposed continuation of the budget increase of the proposed budget over
the alternate budget, a statement that the amount of the proposed increase will
be based on a percentage of the school district's revenue control limit in
future years, if applicable, as provided in subsection
P

Q
of this section and the following statement:

Any budget increase continuation
authorized by this election shall be entirely funded by a levy of taxes on the taxable
property in this school district for the year for which adopted and for ______
subsequent years, shall not be realized from monies furnished by the state and
shall not be subject to the limitation on taxes specified in article IX,
section 18, Constitution of Arizona. Based on the current net
assessed valuation used for secondary property tax purposes, to fund the
proposed continuation of the increase in the school district's budget would
require an estimated continuation of a tax rate of $______________ per $100 of
net assessed valuation used for secondary property tax purposes and is in
addition to the school district's tax rate that will be levied to fund the
school district's revenue control limit allowed by law.
END_STATUTE

Sec. 4. Section 15-491, Arizona Revised Statutes, is amended to read:

START_STATUTE
15-491.

Elections on school property; exceptions

A. The governing
board of a school district may, and on petition of fifteen percent of the
school electors as shown by the poll list at the last preceding annual school
election shall, call an election for the following purposes:

1. To locate or change the location of school
buildings.

2. To purchase or sell school sites or buildings or
sell school sites pursuant to section 15-342 or to build school
buildings, but the authorization by vote of the school district shall not
necessarily specify the site to be purchased.

3. To decide whether the bonds of the school
district shall be issued and sold for the purpose of raising monies for
purchasing or leasing school lots, for building or renovating school buildings,
for supplying school buildings with furniture, equipment and technology, for
improving school grounds, for purchasing pupil transportation vehicles or for
liquidating any indebtedness already incurred for such purposes.� Bonds issued
for furniture, equipment and technology, other than fixtures, shall mature not
later than the July 1 that follows the fifth year after the bonds were issued.�
A school district shall not issue class B bonds until the school district has
obligated in contract the entire proceeds of any class A bonds issued by the
school district. The total amount of class A and class B bonds
issued by a school district shall not exceed the debt limitations prescribed in
article IX, sections 8 and 8.1, Constitution of Arizona.

4. To lease for twenty or more years, as lessor or
as lessee, school buildings or grounds. Approval by a majority of
the school district electors voting authorizes the governing board to negotiate
for and enter into a lease. The ballot shall list the school
buildings or grounds for which a lease is sought. If the governing
board does not enter into a lease of twenty or more years of the school
buildings or grounds listed on the ballot within twenty years after the date of
the election and the board continues to seek such a lease, the governing board
shall call a special election to reauthorize the board to negotiate for and to
enter into a lease of twenty or more years.

5. To change the list of capital projects or the
purposes authorized by prior voter approval to issue bonds.

6. To extend from six to ten years the time period
to issue class B bonds authorized in 2009 or earlier.� Elections pursuant to
this paragraph may not be held later than the sixth November after the election
approving the issuance of the bonds.

B. A petition is not required for holding the first
election to be held in a joint common school district for any of the purposes
specified in subsection A of this section. The certification of
election results required by section 15-493 shall be made to the board of
supervisors of the jurisdictional county.

C. When the election is called to determine whether
or not bonds of the school district shall be issued and sold for the purposes
enumerated in the call for the election, the question shall be submitted to the
vote of the qualified electors of the school district as defined in section 15-401
and subject to section 15-402.

D. The governing board shall order the election to
be held and the election notice and procedures to be conducted in the manner
prescribed in title 35, chapter 3, article 3. If a petition for an
election has been filed with the governing board as provided in subsection A of
this section, the board shall act on the petition within sixty days by ordering
the election to be held as provided in this subsection. If a school
district bond election is scheduled for the same date a school district will
hold an override election, the governing body shall deliver a copy of the
notice of election and ballot to the county school superintendent who shall
include the notice of election and ballot with the informational pamphlet and
ballot prepared for the override election. Mailing of the
information required for both the override and bond elections shall constitute
compliance with the notice provisions of this section.

E. The elections to be held pursuant to this
section shall only be held on dates prescribed by section 16-204, except
that elections held pursuant to this section to decide whether class B bonds
shall be issued, or any other obligation incurred that will require the
assessment of secondary property taxes, shall only be held on the first Tuesday
after the first Monday of November.

F. Subsection A, paragraph 2 of this section does
not apply to the sale of school property if the market value of the school
property is less than $50,000.

G. Bond counsel fees, financial advisory fees,
printing costs and paying agent and registrar fees for bonds issued pursuant to
an election under this section shall be paid from either the amount authorized
by the qualified electors of the school district or current operating funds.
Bond election expenses shall be paid from current operating funds only.

H. For any election conducted to decide whether
class B bonds will be issued pursuant to this section:

1. Except as provided in paragraph 2 of this
subsection, the ballot shall include the following statement:

The capital improvements that are proposed to be funded
through this bond issuance are to exceed the state standards and are in
addition to monies provided by the state.

__________ school district is proposing to issue class B
general obligation bonds totaling $__________ to fund capital improvements over
and above those funded by the state.� Under the students first capital funding
system, _________ school district is entitled to state monies for new
construction and renovation of school buildings in accordance with state law.

2. For a school district that is a career technical
education district, the ballot shall include the following statement:

________, a career technical education district, is proposing
to issue class B general obligation bonds totaling $_________ to fund capital
improvements at a campus owned or operated and maintained by the career
technical education district.

3. The ballot shall conform to the requirements of
title 35, chapter 3, article 3.

4. At least eighty-five days before the
election, the school district shall submit proposed ballot language to the
county school superintendent and the director of the Arizona legislative
council. The director of the Arizona legislative council shall
review the proposed ballot language to determine whether the proposed ballot
language complies with this section. If the director of the Arizona
legislative council determines that the proposed ballot language does not
comply with this section, the director, within ten calendar days after
receiving the proposed ballot language, shall notify the school district and
the county school superintendent of the director's objections, and the school
district shall resubmit revised ballot language to the director for approval.

5. Not later than thirty-five days before a
class B bond election conducted pursuant to this section, the school district
shall mail an informational pamphlet prepared by the county school
superintendent to each household that contains a qualified elector in the
school district. The informational pamphlet shall contain, at a minimum, the
following information:

(a) An executive summary of the school district's
most recent capital plan submitted to the school facilities oversight board.

(b) A complete list of each proposed capital
improvement that will be funded with the proceeds of the bonds and a
description of the proposed cost of each improvement, including a separate
aggregation of capital improvements for administrative purposes as defined by
the school facilities oversight board.

(c) The tax rate associated with each of the
proposed capital improvements and the estimated cost of each capital
improvement for the owner of a single family home that is valued at $100,000.

I. For any election conducted to decide whether
impact aid revenue bonds shall be issued pursuant to this section:

1. The ballot shall include the following statement:

The capital improvements that are proposed to be funded
through this bond issuance are to exceed the state standards and are in
addition to monies provided by the state.

__________ school district is proposing to issue impact aid
revenue bonds totaling $__________ to fund capital improvements over and above
those funded by the state.� Under the students first capital funding system,
_________ school district is entitled to state monies for new construction and
renovation of school buildings in accordance with state law.

2. The ballot shall contain the words "bond
approval, yes" and "bond approval, no", and the voter shall
signify the voter's desired choice.

3.
At least eighty-five
days before the election,
the
school district
shall submit proposed ballot language to the director of the legislative
council.� The director of the legislative council shall review the proposed
ballot language to determine whether the proposed ballot language complies with
this section. If the director of the legislative council determines
that the proposed ballot language does not comply with this section, the
director, within ten calendar days
after receiving
the proposed ballot language, shall notify the school
district of the director's objections
,
and the
school district shall resubmit revised ballot language to the director for
approval.

4. Not later than thirty-five days before an
impact aid revenue bond election conducted pursuant to this section, the school
district shall mail an informational pamphlet prepared by the county school
superintendent to each household that contains a qualified elector in the school
district.� The informational pamphlet shall contain, at a minimum, the
following information:

(a) The date of the election.

(b) The voter's polling place and the times it is
open.

(c) An executive summary
of the school district's most recent capital plan submitted to the school
facilities
oversight
board.

(d) A complete list of
each proposed capital improvement that will be funded with the proceeds of the
bonds and a description of the proposed cost of each improvement, including a
separate aggregation of capital improvements for administrative purposes as
defined by the school facilities
oversight
board.

(e) A statement that impact aid revenue bonds will
be fully funded by aid that the school district receives from the federal
government and do not require a levy of taxes in the district.

(f) A statement that if the bonds are approved, the
first priority for the impact aid will be to pay the debt service for the bonds
and that other uses of the monies are prohibited until the debt service
obligation is met.

(g) A statement that if the impact aid revenue bonds
are approved, the school district shall not issue or sell class B bonds while
the district has existing indebtedness from impact aid revenue bonds, except
for bonds issued to refund any bonds issued by the board.

J. If the voters approve the issuance of school
district class B bonds or impact aid revenue bonds, the school district shall
not use the bond proceeds for any purposes other than the proposed capital
improvements listed in the informational pamphlet, except that up to ten
percent of the bond proceeds may be used for general capital expenses,
including cost overruns of proposed capital improvements. The
proposed capital improvements may be changed by a subsequent election as provided
by this section.

K. Each school district that issues bonds under this
section shall hold a public meeting each year between September 1 and October
31, until the bond proceeds are spent, at which an update of the progress of
capital improvements financed through bonding is discussed and at which the
public is allowed an opportunity to comment. At a minimum, the
update shall include a comparison of the current status and the original
projections on the construction of capital improvements, the costs of capital
improvements and the costs of capital improvements in progress or completed
since the prior meeting and the future capital bonding plans of the school
district. The school district shall include in the public meeting a
discussion of the school district's use of state capital aid and voter-approved
capital overrides in funding capital improvements, if any.

L. If a school district fails to
correct a deficiency within
eighteen months after
receiving notice from the auditor general pursuant to section 15-271, the
school district governing board may not call an election for the purposes
specified in subsection A, paragraph 3 or 5 of this section until the school
district has corrected any deficiencies. For the purposes of this
subsection, the school district is deemed to have corrected any deficiencies
from and after the date that the auditor general reports that the school
district is in compliance with the uniform system of financial records.

L.

M.
If
an election is held to change the purpose or list of capital projects
authorized by prior voter approval to issue bonds pursuant to subsection A,
paragraph 5 of this section, the following requirements apply:

1. The election may be held only on the first
Tuesday after the first Monday in November.

2. Not later than thirty-five days before the
election, the school district shall mail an informational pamphlet prepared by
the county school superintendent to each household in the school district that
contains a qualified elector. The informational pamphlet shall contain, at a
minimum, the following information:

(a) The date of the election.

(b) The voter's polling place and the times it is
open.

(c) A statement as to why the election was called.

(d) A complete list of each proposed capital
improvement that is in addition to the initial capital improvements presented
in the informational pamphlet when the bonds were approved and the proposed
cost of each improvement, including a separate aggregation of capital
improvements for administrative purposes as defined by the school facilities
oversight board.

(e) A complete list
of each capital improvement that was presented in the informational pamphlet
when the bonds were initially approved and that is proposed to be eliminated or
to have its cost reduced, and the proposed cost of each improvement, including
a separate aggregation of capital improvements for administrative purposes as
defined by the school facilities oversight board.

(f) Arguments for and against the proposed change,
if submitted, as provided by section 15-481, subsection B, paragraph
9. The ballot arguments for the proposed change shall be signed as
the governing board of the school district without listing any member's
individual name for the arguments for the proposed change.

3. The ballot shall contain the words "change
capital improvements, yes" and "change capital improvements,
no", and the voter shall signify the voter's desired choice.

4. If the election is to add a purpose that was not
on the initial ballot, the ballot shall list the purpose that is proposed to be
added.

M.

N.
If
an election is held to extend the time to issue bonds pursuant to subsection A,
paragraph 6 of this section, the following requirements apply:

1. The election may be held only on the first
Tuesday after the first Monday in November.

2. Not later than thirty-five days before the
election, the school district shall mail an informational pamphlet prepared by
the county school superintendent to each household in the school district that
contains a qualified elector. The informational pamphlet shall contain,
at a minimum, the following information:

(a) The date of the election.

(b) The voter's polling place and the times it is
open.

(c) A statement as to why the election was called.

(d) Arguments for and against the proposed change,
if submitted, as provided in section 15-481, subsection B, paragraph
9. The ballot arguments for the proposed change shall be signed as
the governing board of the school district without listing any member's
individual name for the arguments for the proposed change.

3. The ballot shall contain the words "extend
time to issue bonds, yes" and "extend time to issue bonds, no",
and the voter shall signify the voter's desired choice.
END_STATUTE