This Arizona school district wants $20M from APS as utility moves away from coal. Here's why

A rural school district in eastern Arizona says it needs millions of dollars from Arizona Public Service Company to keep its schools running as the community it serves transitions its economy away from a coal power plant.

Joseph City Unified School District, which serves an unincorporated community between Winslow and Holbrook just south of the Navajo Nation, is using an APS rate case before the Arizona Corporation Commission to try to secure funds for its future.

With the loss of hundreds of jobs on the horizon from the 2025 closure of Cholla Power Plant, the district requests only one thing from the commission: an order saying APS must pay the district $20 million, the amount the district is projected to lose over the next 10 years because of the plant's closure and the decline in student numbers and tax dollars that will result.

APS insists that Joseph City Unified has enough student enrollment and alternative job options for the community's economy to stay afloat.

But when the district's superintendent, Bryan Fields, testified in the rate case on Sept. 6, he said the district, a cornerstone of the community, wouldn't survive without financial assistance from APS. Not only would the district suffer, he said, but so would the community at large.

"The whole community kind of centers around the school for using facilities and meetings and things because there's no city government," Fields said. "So we're very rural, but connected with all the local groups, churches, organizations."

Loss of power plant jobs means loss of students and school funding

Joseph City Unified is one of 27 intervenors in the APS rate case. Other intervenors include the Navajo and Hopi tribes, the Sierra Club, Walmart and AARP. Some intervenors want money from APS; others simply want to keep rates from going up as much as APS desires.

APS plans to allocate $10.4 million to communities in Navajo County, with half of this going directly to Joseph City Unified, according to APS spokesperson Mike Philipsen. That money is part of the utility company's Coal Community Transition fund. The Navajo Nation and the Hopi Tribe are also slated to get money from the APS transition fund, Philipsen said in an emailed statement.

This money could cover the district's financial losses for the first three years after the plant's closure, APS attorney Jeff Allmon said during the Sept. 6 hearing.

Navajo County is already one of the most impoverished counties in the country, said Fields, the Joseph City Unified superintendent, in written testimony. More than a quarter of residents live in poverty and earn a median income that is almost 63% less than the state average, he said.

In addition to losing nearly $60 million in property tax revenue, the Joseph City area is at risk of losing 190 jobs, according to an economic impact statement prepared at the request of the school district.

The snowball effect of the economic losses — the loss of students, the loss of faculty, the loss of educational programs — would be "devastating" to the community, Fields said. Advanced learning and extracurricular programs would likely be the first programs cut if the district doesn't receive more financial assistance from APS, he said.

"Many of the employees live in our community. Their families attend our schools, a lot of the power plant employees will be on the school district board, they'll help operate our school," Fields said during his testimony. "When they do finally close and shut down, it's gonna have a big impact on us financially and with our students."

With the plant's closure, nearly a quarter of the district's student body — about 100 students — is expected to leave, according to financial impact statement author Jeremy Calles, the superintendent and former chief financial officer of Tolleson Union High School District. Enrollment is essential for maintaining funding for transportation and other school services, said Calles, who testified on Sept. 6.

Joseph City Unified Business Manager Steve Mills said the district is most concerned about the consequences Joseph City's children will face as a result. With the incoming loss of students, funding and teachers, Mills said children may be placed in larger classrooms and have fewer opportunities to socialize as after-school programs get cut.

Few options available to boost district funding

In preparation for the layoffs, the district expanded its bus routes to attract more students from Holbrook and Winslow. This strategy led to slight increases in enrollment from 2018 to 2023.

But Amanda Ormond, executive director of Arizona State University's Just Energy Transition Center, which has been advising Joseph City Unified, said the enrollment increase is not enough to offset financial damage the district will face in the coming years.

Ormond said she worked with the district to find alternative funding sources but eventually learned that property tax overrides and the grants currently available could not help. Overrides are unlikely to be approved by the community and an unincorporated community like Joseph City is ineligible for most grants, she said.

APS is considering remote work options for Cholla Power Plant employees, according to Allmon, the APS attorney. Other employees may be offered the opportunity to transfer to other APS plants in the state, he said.

While moving employees to other APS plant locations may help improve their financial security, it will not help Joseph City's economy or school district stay afloat, Ormond and Fields said.

An APS proposal is in the works to repurpose the Cholla Power Plant, according to statements Allmon made during the hearing. But even if a repurposing plan is approved, Fields said, the process could take a decade or longer. By then, it could be too late to help the Joseph City community recover, he said.

Harping, the Arizona Corporation Commission judge overseeing the rate case, is expected to provide recommendations to the five-member commission. A final decision from the commission on the rate case is expected at the end of this year or the beginning of next year, according to ASU's Just Energy Transition Center.

There are only four coal plants left open in Arizona, all of which are expected to shut down within the next decade. Ormond said the impact of Joseph City Unified's intervention spreads beyond life in Joseph City: it could become precedent elsewhere as coal communities transition away from economic reliance on the fossil fuel industry.

"We've used their resources for decades," Ormond said. "I think it's incumbent upon the regulatory framework, those that regulate the utilities, to make sure that they're not just leaving these communities behind."

This article originally appeared on Arizona Republic: Joseph City schools wants $20M from APS to ease coal transition