Gann Limit

What is the Gann limit?

California Proposition 4 (1979), also known as the Gann limit, was approved by voters with the goal of keeping state and local government spending, including school spending, capped at 1978–79 levels, adjusted for changes in population and inflation. For local educational agencies (LEAs), issues with the limit can occur if revenues from taxes (both local revenues and state aid) increase at a greater rate than average daily attendance (ADA) and inflation, or if there is a drop in ADA. Since 1987, the state and LEA limits essentially have been administered as a combined total. As such, any LEA with more tax revenue than their limit allows may request the state to share some of the state’s limit to cover the shortfall in lieu of issuing refunds to taxpayers. Requests for more limit have been automatically approved, and the process for requesting more limit from the state has been incorporated in the Standardized Account Code Structure (SACS) software. 

AB 130

Assembly Bill (AB) 130 (Committee on Budget, Chapter 44, Statutes of 2021), the Transitional Kindergarten through Grade 12 budget trailer bill, made some changes to the statutes regarding the Gann limit. If an LEA is at or above its limit, the process stays the same with two exceptions. The first is that LEAs must increase their limit, rather than opt to refund taxes. The second is that LEAs no longer have to submit a letter to the Department of Finance about the increase.

For LEAs that have more limit than they need, the changes in AB 130 require those LEAs to return the extra limit back to the state. For the 2019–20 and 2020–21 fiscal years, the limit is automatically transferred to the state and the Superintendent of Public Instruction must notify affected LEAs of the reduction to their limit. This process is in lieu of requiring LEAs to go back and adopt a resolution to decrease the limit. Beginning in 2021–22, the California Department of Education (CDE) will incorporate the reduction process in the SACS software. LEAs will only need to adopt a resolution adjusting the limit, consistent with LEAs' previous practices pursuant to Government Code 7910(a).

On August 5, 2021, the CDE notified LEAs that had additional limit in the 2019–20 fiscal year that their Gann limit had been reduced. The CDE also provided additional instructions about how to reflect the decrease in limit in the SACS software.

To view the City of Hayward's Gann Appropriations Limit click the link below: