Another legislative session means another waiver on the aggregate expenditure limit, and with no end in sight, lawmakers and a school finance aficionado stress the need for a permanent fix given the perpetual limits school district budgets face. 

Entering the fifth consecutive fiscal year of a necessary waiver to avoid about a billion dollars in budget cuts to school districts, another single fiscal year fix cleared its first hurdle in committee Feb. 18, while legislative proposals to alter or do away with the limit altogether gained no ground.  

Lawmakers and education groups agree on bringing the 1980s budget limit in touch with contemporary school funding levels, but what exactly the long-term should look like is still a budding conversation. 

“It’s not like maybe we need to address it because we’re going to be over the limit,” Chuck Essigs, director of governmental affairs for the Arizona Association of School Business Officials, said. “We’re going to go way over the limit, and we’re going to continue to be over the limit until we fix how the limit is calculated.” 

Voters approved the aggregate expenditure limit, a constitutional amendment capping school district spending based on inflation and changes in student population, in 1980.

Since its inception, the Legislature has waived it a handful of times, with the most recent stint beginning in 2022. 

An increase in school funding coupled with a dip in student enrollment over the Covid pandemic pushed districts more than $1.15 billion over in FY2022. Districts exceeded the limit again in FY2023, and when it was poised to do so in FY2024 and FY2025, lawmakers preemptively raised the limit. District budgets ran over the limit by $1.38 billion in FY2023 and $1.36 billion in FY2024, and would have resulted in significant statewide school budget cuts absent legislative action. 

In facing the same situation in FY2026, Rep. Matt Gress, R-Phoenix, introduced House Concurrent Resolution 2003 which would preemptively provide another year-long fix. Gress previously identified waiving the aggregate expenditure limit as a priority for the legislative session.

He said increases in state spending on public schools created the “annual exercise” where districts exceed the spending cap and task the Legislature with overriding the limit with a two-thirds vote to ensure school budgets go unslashed. 

It’s true the state has continued to increase dollars to public schools. A report by the Joint Legislative Budget Committee shows the per-pupil funding from the state alone increased from $4,529 in FY2016 to $8,072 in FY2025. 

Essigs pointed to the continuation of the Classroom Site Fund as one exacerbating factor. In 2000, voters passed Proposition 301, which increased the state’s sales tax to provide additional funds for educational programs, with those funds exempted from the limit. 

But when the sales tax was continued in 2018, an exemption from the aggregate expenditure limit was not. 

Essigs said district budgets are nearly assured to run over the limit in  perpetuity, necessitating a change to the formula. 

He said one option could be exempting certain funds, or altering how the formula counts and weighs students. As it stands, the aggregate expenditure limit operates off a straight-student count, as opposed to one taking into account funding weights for students with disabilities or low-income students. 

Essigs brought into question the legitimacy of the expenditure limit in the first place given existing legislative oversight. 

“Why do you need a limit that controls spending authority by school districts when the legislature already has full control over the school budgets?”

Marisol Garcia, president of the Arizona Education Association, said another one year waiver is “bare minimum for public schools,” and “par for the course.” Garcia wants to see the limit eliminated entirely, or at least have educators at the table to discuss how to retool it for the future. 

“It is a limiting factor on what we can do for our students, and it is a political game that gets played every year, and I just think we’re done with it,” Garcia said. “It’s just disappointing that we’re still doing this.”  

Garcia noted the aggregate expenditure limit is considered a “bargaining chip,” in the state budget, too. Education groups have also called to tie the limit into Proposition 123, as lawmakers and stakeholders mull how exactly to continue allocating dollars from the state land trust fund to education. 

Meghaen Dell’Artino, lobbyist for the Education Finance Reform Group, told lawmakers Feb. 19 that making sure schools can spend the money to be allocated is a chief concern. 

Gress wants to see the aggregate expenditure limit updated to meet modern funding rates. 

“Longer term, we need to take a look at the AEL to maybe update it to reflect the investments,” Gress said. “I don’t believe getting rid of the AEL is prudent either, because it, I think, invites a conversation around school funding that is a healthy one.”

Essigs said for this session, preemptively waiving the limit, ahead of the March 1, 2026, deadline for FY2026, is a better way of approaching the AEL given the severity of the prospective budget cuts, but noted again that it can only go so far. 

“That’s a really good thing to do. It doesn’t fix the problem with the aggregate expenditure limit, but at least it prevents districts from being penalized until someone or some group can come up with a better way of addressing that issue.”

House and Senate Democrats introduced resolutions to incorporate weighted student counts into the formula and to repeal the limit, but the legislative attempts have failed to make it to committee. 

Gress’s resolution on the AEL passed the House Education Committee on Feb. 18 near-unanimously. He said it will not go to a floor vote until  budget negotiations.