AEL faces uncertain future over legitimacy, longevity

The Legislature overrode the Aggregate Expenditure Limit (AEL) again this session, leading some to question its legitimacy and staying power.

In February, the Senate passed a resolution to allow local school districts to spend more than the AEL, a limit that is set annually, which is allowed. According to the text in the bill, the Arizona Department of Education notifies the Legislature when spending from local school districts exceeds the AEL, and because the terms of the limit are in the state Constitution, a two-thirds vote in each chamber of the Legislature is required to override the limit for a given year.

The AEL caps the amount of funding a school district can spend. It was approved by voters in 1980 by a ballot measure, and the 1980 budget has been used to calculate the spending cap every year since then.

This limit is calculated every year by the fiscal year 1980 spending limit, adjusted for current cost-of-living and inflation metrics, and adds 10% of that metric to that. For the fiscal year 2023, the AEL was set at over $6.4 billion.

According to the bill, the Department of Education said local school districts would spend more than $1.3 billion above the limit.

Marisol Garcia, president of the Arizona Education Association, said the AEL is a limiting factor on student opportunity and prevents growth for technology in the classroom or pay for teachers.

“I think it’s an outdated law that was created, you know, when I was in third grade, I think, in Tempe Elementary,” Garcia said. “A part of the concern that we have with it is that it doesn’t take into account anything from inflation to technology that is so much more available and necessary in schools.”

Beth Lewis, executive director of Save Our Schools Arizona, said the AEL is “antiquated.”

“The aggregate expenditure limit is 43 years old at this point. It’s antiquated and doesn’t account for 21st century learning models,” Lewis said. “We know the funds are desperately needed.”

Rep. David L. Cook, R-Globe, said the AEL is used as a “political football” and a way for the Legislature to show the state that it is investing in education.

“It was originally derived to be a time to stop and blow your horn to the public about we are investing more in education today,” Cook said. “But now it’s just used as a political football weapon … it was a way to cover the news cycle.”

The AEL override passed the Senate with a 23-7 vote. Cook said people who oppose the bill are people who want to cut education spending.

“Some members think that we need to cut education spending. They see the dollar amounts and they want to cut education spending. I’m not one of them,” Cook said. “I want to make sure that schools are funded, I want to make sure that kids are smart.”

He introduced a bill and a resolution in January to repeal the AEL, but the bill stalled after a second hearing. Because it would repeal a constitutional law, it would have required a three-quarters approval from both the House and the Senate.

Two House Democrats Amish Shah, D-Phoenix, and Nancy Gutierrez, D-Tucson, introduced similar bills. Rep. Jennifer Pawlik, D-Chandler, introduced a bill that would have raised the base rate from FY1980 to FY 2022-2023’s level of inflation. Each of those bills have stalled, however.

Lewis said the AEL creates “division and chaos” in politics regarding education funding.

“We desperately need a long-term fix for this so that we don’t keep bumping up against the cap and having it become a political football every single year,” Lewis said. “We know the funds are desperately needed.”

She said the AEL affects rural communities, which can depend more on state funding than larger cities that use property taxes. These schools are also large employers within communities.

“There’s no fallback,” Lewis said. “It’s not like in a suburb where, you know, maybe some sort of solution could be arrived at. In a rural area, everybody is just out of work and the entire town shuts down.”

Cook said the decision to override the limit was partly about local economies.

“We need to raise a little bit now because we don’t need to put school districts in crisis,” Cook said. “You’ve got bus drivers, cafeteria workers, janitors, your teachers – if you have to shut those down and lay off … taking that revenue away and the job who wants to do that?”

Cook said to fix the AEL, the formula that determines it yearly should change. He said when the AEL first came into effect, the level of inflation was lower. He said charter schools are not included and do not have to abide by the AEL and he wants to see an even playing field between the two, as both are publicly funded.

“It’s a messed-up formula,” Cook said.

Lewis called the formula a “broken three-legged stool.”

Sen. Christine Marsh, D-Phoenix, said she proposed a more moderate solution along with repealing the AEL that would have “kicked the can down the road” for years to come. She introduced legislation to lift the limit this year and proposed raising the base limit to match the spending level in FY 2024-25 in two separate bills.

She said she does not expect anything to get done regarding the long-term future of the AEL this session, but is hopeful for the future.

“There are a lot of options. I don’t see it happening this session, although I would love it if it did,” Marsh said. “But you know, I think ultimately in the next couple of sessions, we are going to have to get in and solve it more permanently.”

She said she is encouraged by the “necessary” bipartisanship behind the issue of the AEL and said rural school districts and their surrounding communities would take the hit if the limit was not lifted.

“We needed to lift it, didn’t matter whose name was on it,” Marsh said.

Lewis and Garcia want the AEL to be repealed anyway. Garcia said she hopes it can be repealed.

“We need to repeal it,” Garcia said. “There’s a broad coalition of people who understand this needs to be dealt with and we’re really hoping that this becomes an issue that we can confront quickly.”

Arizona is 47th in the country in per-student spending from K-12 at about $8,600 per student, according to U.S. News and World Report. Lewis said the AEL is making it harder for the state to rise from that low ranking.

She said if the AEL was put on the ballot, voters would reject it because of a different voting population from 1980.

“It’s a silly law that came to be in an entirely different time,” Lewis said. “I wasn’t even born yet, it’s not the same voters.”