February 8, 2022

Aggregate Expenditure Limit Frequently Asked Questions

There are a lot of questions about the Aggregate Expenditure Limit, the spending cap that is jeopardizing $1.1B in existing funding for K-12 district public schools. If you’re looking to gain a basic understanding of what the AEL is, start with this blog.

Thank you to AASBO for contributing to this FAQ.

Is there Prop 208 funding in school budgets this school year (2021-22)?

No. The JLBC has confirmed that since Prop 208 is still being litigated, there is no funding from Prop 208 in school budgets. If Prop 208 is found to be constitutional, the soonest the funding would be in school budgets is in 2023.

Why are schools exceeding the expenditure limit this year?

For a few reasons:

  • The expenditure limit fluctuates based on school attendance from the prior school year and inflation. School attendance decreased last year because of the pandemic, which has reduced the limit this year.
  • Funding for cuts to district additional assistance have been restored and funds for teacher pay have increased.
  • Prop 301 was extended by the legislature but its exemption from the aggregate expenditure limit was not continued. Now that more than $600 million per year counts towards the limit. (The constitution would need to be amended to address this issue.)
  • Additionally, other money has been added to K-12 funding over recent years, including results-based funding and for school facilities.
Can any potential budget cuts be offset with other funding that districts already have (e.g. a cash balance or ESSER funding)?

No, the federal COVID relief funding (ESSER) has a specific use related to the pandemic. It cannot be used to support general operations of a school district. Also, the funds are given to schools as a reimbursable grant. Schools expend the funds, then ask for reimbursement.

Is this an issue of schools overspending or staying within their budgets?

No. Schools were allocated this funding by the legislature in the current FY22 state budget. Schools worked with their governing boards to create budgets and are required to stay within those budgets. These budgets are within the limits set by the state legislature.

The aggregate expenditure limit is a different issue. It is a cap that is calculated by totaling up all of the funding spent by all school districts as a whole. The cap fluctuates each year based on enrollment and inflation, but sets a ceiling that schools can’t exceed without permission.

What is ADE’s role? What is the role of school districts?

ADE calculates how much districts spend as a whole towards the aggregate expenditure limit. School districts set their own budgets and would determine any necessary cuts should the cap not be addressed.

How is the limit calculated?

The aggregate expenditure limit was set in 1980 and adjusts each year based on school attendance from the prior school year and inflation. You can read more about the AEL is calculated in this document from AASBO.

Can schools exceed the limit?

Yes, schools can exceed the limit with a two-thirds vote of the legislature.

Has the legislature allowed schools to exceed the limit before?

Yes, most recently in 2007 and 2008.

If the aggregate expenditure limit is not addressed and schools can’t spend the $1.1B, what happens to that funding?

The funding has already been allocated to schools. The funds will sit on the books until they are allowed to spend it.

If the legislature does not act, what happens?

School districts will have to cut $1.1B from this year’s school budgets. Each individual school district will decide how to apply the 16% to their budget. Some examples of how the cuts could play out include teachers and staff being furloughed, classes could be combined, the school week could be shortened, access to electives or other programs could be cut or reduced, or schools could close down in April and May this school year.

What is the projected cut amount for each school district?

AASBO and ASBA created this resource that shows how much is projected to be cut by the district. Find it here.

What is the deadline?

The legislature’s action is needed by March 1.

If the spending limit is not addressed, when would schools have to implement the budget cuts?

The cuts would begin implementation on April 1.

What can I do to make sure we avoid these budget cuts?

You can email your legislators today to ask them to immediately address the aggregate expenditure limit.