The Office of the Auditor General has conducted a performance audit of the Deer Valley Unified School District pursuant to A.R.S. §41-1279.03(A)(9). This performance audit examines six aspects of the District’s operations: administration, food service, student transportation, plant operation and maintenance, expenditures of sales taxes received under Proposition 301, and the accuracy of district records used to calculate the percentage of dollars spent in the classroom.

The District’s per-pupil administrative costs were 5 percent ($25) higher than those for other districts of similar size. The District spent 8.9 percent of its total current dollars on administration, higher than the comparison districts’ average of 8.1 percent, but lower than the state average of 9.5 percent. The District’s slightly higher per-pupil administrative costs were due to higher staffing and salary levels. Specifically, the District has a higher ratio of administrative staff to students than the average for the comparable districts. To achieve the same ratio of administrative staff to students as the comparable districts, Deer Valley would need to reduce its 307 fulltime equivalent administrative positions by 24. Further, the District’s higher number of administrative staff negates its cost savings from using contracted administrators. Deer Valley contracts for the services of 9 retired administrators, and by doing so, saves money by generally paying a lower salary rate and by not paying certain benefits. The District contracts for more administrators than the comparable districts, but these savings are offset by having more administrative staff. Finally, the District’s starting salary rate for administrative support staff was 5 percent higher than the average of comparable districts.

The District’s food service program was self-sufficient. The program generated over $9.2 million in revenue, covering $8.6 million in operating costs, $315,000 in capital purchases, and $307,000 of indirect costs, such as electricity, water, and waste removal. The program’s $2.01 cost per meal was similar to the comparable districts’ average of $1.99; however, its $269 cost per student was $29 higher than the comparable district average of $240 per student. This is due primarily to the District’s serving more meals per student. Deer Valley has closed campuses, which means students cannot leave campus for lunch, which appears to result in more students eating school meals. Because it serves more meals, the District spent 4.8 percent of its available operating dollars on food service, compared to an average of 4.1 percent for the comparable districts. The District developed and monitored one performance measure for its food service program, but should incorporate additional measures to help manage the program and keep meal costs as low as possible.

The District spent 31 percent ($64) more per student and a higher percentage of its total current expenditures on transportation than the comparable districts. As a result, the District subsidized its transportation program with $1.4 million that potentially could otherwise have been spent in the classroom. A major factor in the District’s higher transportation costs is that it encompasses three times as many square miles as the comparable districts. However, several other factors also contributed to its high per-student transportation costs, including inefficient routes and bus storage locations and having more transportation employees than comparable districts. The District operated its high school transportation routes at only 53 percent of capacity, its buses traveled about 24 percent farther to begin routes, and it employed 48 percent more drivers and 57 percent more bus aides than the comparable districts averaged. The District also counted riders improperly and did not maintain sufficient documentation to support either the number of riders transported or miles traveled. Performance measures would help identify inefficiencies, but the District has not  established such measures.

The District spent 10 percent less per pupil and 9 percent less per square foot on plant operations and maintenance costs than its comparable districts. These lower costs were not due to differences in square footage, as Deer Valley USD and the comparison group both averaged about 127 square feet per pupil. The District’s plant operations and maintenance costs accounted for 10.8 percent of its total current expenditures, slightly less than the comparison districts’ and the state-wide averages. Deer Valley has lower costs largely because it spends less than the comparison group to contract for repair and maintenance services. This is partially due to the District’s having newer buildings that need fewer repairs. Its average building age was 12 years, while the comparison group average was 17 years. However, district administrators also attribute the lower contract costs to having more employees who are trained to perform technically advanced repair work, such as chiller and air conditioner repairs. Having on-site expertise reduces the need for more costly contracted services. Finally, the District dedicated 19 full-time staff to implement its preventative maintenance schedule, compared to 5 staff, on average, at the other districts.

In November 2000, voters passed Proposition 301, which increased the state-wide sales tax to provide additional resources for education programs. The District can make several improvements in how it administers its Proposition 301 monies. Its Proposition 301 plan did not state which positions were eligible for Proposition 301 monies or the amount of performance pay an employee could earn. Further, the District did not maintain adequate documentation to support the propriety of its Proposition 301 expenditures, may have supplanted about $1 million of expenditures that should have been paid from other monies, and spent about $116,000 of menu monies for expenditures not allowed by law.

Statute requires the Auditor General to determine the percentage of every dollar Arizona school districts spend in the classroom. Therefore, auditors reviewed the District’s recording of classroom and other expenditures to determine their accuracy. After adjusting approximately $4.6 million of the District’s $179 million total current expenditures for coding errors, the District’s classroom dollar percentage decreased from 61.9 percent to 60.2 percent. While this revised percentage remained above the state average, it was 1.6 percentage points below the comparable districts’ average and 1.1 percentage points below the national average. As a result of this lower percentage and the lower total spending noted below, the District spent only $3,374 per pupil in the classroom, $291 per pupil less than comparable districts and $420 per pupil less than the state average.

The District spent $5,608 per pupil, which is $320 less than the $5,928 per pupil that the comparable districts averaged and almost $900 below the state average of $6,500. The District received and spent fewer operating dollars than the comparable districts for many reasons, including the following: the District did not receive desegregation monies, did not operate a career ladder program, and did not have a K-3 override. Additionally, the District had fewer English Language Learners or special needs students for whom a district receives additional funding and, with its lower poverty rate, received less Federal Title I program monies.