2/11/2022 Important Information Aggregate Expenditure Limit and Mitigation Plan

Posted by Madison Communications on 2/11/2022

Madison Parents and Families,

Many are aware of the upcoming deadline for the legislature to act on the aggregate expenditure limit and its impact on school funding if no action is taken.

Madison is set to have just over a $6.6M cut in its budget if nothing is done by March 1. While other districts may have to take drastic measures immediately, such as shortening their school year, laying off staff and/or cutting employee salaries, Madison will NOT have to take these measures at this time. Because we have enough funds in reserves, we will be able to continue to operate normally for this school year.

However, we will go into next school year with $0 in reserves and we will still need to cut $6.6M from our budget. As such, this will impact class sizes, teacher and staff salaries, the purchase of classroom supplies and instructional materials, and the number of days schools are open.

We hope the legislature will act so that student learning is not disrupted. You can find additional information regarding this issue below.

Finally, we have been planning to modify our current face covering requirement now that COVID cases are declining and there is no indication of a new variant of concern. We are in regular communication with the MCDPH regarding this issue. It is not a matter of IF we will make face coverings optional this school year; it is a matter of WHEN we will do this. Transitioning to an optional requirement will be done in a responsible and prudent manner. You can expect additional communication by either next week or the following week.

We ask for your continued patience and understanding with this matter. We understand the various views of our diverse community and will do what is best for the students we teach and the staff we employ. Thank you for your continued cooperation.

Aggregate Expenditure Limit Q&A*

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.
  • Other money has been added to K-12 funding over recent years, including results-based funding and for school facilities.

Isn’t there Prop 208 funding in school budgets this school year (2021-22) that will help?

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.

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 not 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. 

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 already allocated to them, 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. 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. Again, for this school year, Madison will not have to do any of the above but may have to for next school year.

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.

*Information compiled from various sources.

Thank you,

Madison School District