In fiscal year 2009, Morenci Unified School District compared favorably to its peer districts in both student achievement and operational costs. The District’s student AIMS scores and 97-percent high school graduation rate were higher than the peer districts’ and the state averages. The District also drew many students from outside its boundaries, likely because of its higher student achievement. The District’s per-pupil spending of $6,246 was $2,816 less per pupil than its peer districts’ and the second lowest per-pupil spending amount in the State. Two uncommon circumstances contributed to the District’s exceptionally low spending. First, the District is located in a town that is essentially owned by a large mining company that helps lower costs for the District. Second, because a member of each household must work for either the mine or the school district, the District’s population has a very low poverty rate resulting in the District receiving less state and federal funding. The District’s per-pupil administration costs were 20 percent lower than peer districts’ because it had fewer schools for roughly the same number of students and consequently employed fewer administrative staff. However, the District lacked adequate accounting and IT controls to protect it from errors and fraud. The District also had much lower plant costs primarily because of lower water and electricity rates charged by the local mine-operated utility. Its transportation costs were also low because many students walked to school, but it needs to improve its transportation program reporting, record keeping, and preventative maintenance. Lastly, the District’s cost per meal was 19 percent higher than peer districts’ primarily because its low poverty level resulted in low participation, which reduced the amount of low-cost federal commodities available to the District to help lower food costs.