A tiny eastern Arizona school district received hundreds of thousands of dollars from the state to educate students who lived in nearby New Mexico, in violation of state law.
The Apache Elementary School District is located in Cochise County in southeastern Arizona, near the New Mexico state line. The district, which operates one of the few remaining one-room schoolhouses in Arizona, had only eight students in 2024, according to a new Arizona Auditor General’s report.
The Auditor General’s Office found the school district has enrolled students from New Mexico since at least 2021.
That isn’t a violation of the law, in and of itself. However, the law does require public state schools to charge tuition to those out-of-state families.
But auditors found that Apache Elementary School District didn’t charge that tuition to four New Mexico students in 2024 and 2025. Instead, the district received $55,000 in state funds to educate them, according to the report.
The auditor general published the report the same day Arizona Attorney General Kris Mayes announced a plea deal with a former Arizona resident who continued to receive school voucher dollars after she moved to Texas.
The auditor general notified the Arizona Department of Education about the issue at Apache Elementary in January 2025, prompting the department to look at the district’s enrollment data dating back to 2021.
The Department of Education found the district overstated its in-state enrollment from 2021 to 2023, costing Arizona a total of $198,061.
Typically, the Department of Education would take steps to claw back misallocated dollars, but the department waived that penalty because the funds in question amounted to 94% of the district’s total budget from 2021 to 2023. As part of that agreement, district officials had to follow certain conditions, including ensuring compliance with state law and audits of its enrollment figures.
In response to the audit report, district officials told the auditor general they were unaware that state law required them to charge tuition to out-of-state students and agreed to correct the issue.
“The District has implemented procedures to require acceptable proof of residence for each enrolled student at the time of enrollment and at the beginning of each new school year,” according to the district’s official response filed with the Auditor General’s Office.
Auditors also discovered the district inappropriately received more than $27,500 from the state in 2025 to reimburse New Mexico parents who drove their children to the schoolhouse, which is located in a remote part of Cochise County.
State law does allow school districts to pay parents for transportation in districts like Apache, where it is difficult to hire a full-time bus driver. But those families must live within the state of Arizona.
Again, district officials claimed they were unaware of the law prohibiting those expenditures and agreed to correct the practice.
Beyond the issue with out-of-state students, the auditor general identified more broad concerns with the district, which served just four in-state students from 2024 to 2026.
Like other small districts, Apache Elementary has to deal with relatively high overhead costs to serve its small student population. And, because it only has one school with one teacher, there are few ways to cut those costs.
“As a result, the District, its taxpayers, and the County school superintendent may benefit from evaluating the District’s options for providing education to the small number of Arizona students the District serves,” according to the report.
According to the auditor general’s analysis, the district spent $78,200 per student last year, nearly five times the statewide average of $15,982.
The Cochise County school superintendent had considered shutting the district down in 2017 when enrollment dropped to two students.
“According to District officials, the District had discussions with the County school superintendent and took action to improve District operations and increase student enrollment, and the County school superintendent ultimately decided to take no action at that time,” according to the audit report.
Auditors recommended the district work with the Cochise County superintendent to explore its options, including closing or consolidating with another nearby district. Apache Elementary could also remain open as a "transportation school district,” which does not provide education but receives state funds to transport students to other districts for classes.
The report notes that high school students in the area already travel to San Simon or Douglas, which are between 39 and 59 miles away.
District officials told the auditor general that they plan to meet with the county superintendent to discuss those options.
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