Administrative Cap Frequently Asked Questions

What are "Administrative Costs?"

Administrative costs are school district expenditures properly attributable to specific expenditure functions as defined in the Illinois Program Accounting Manual.  The following functions are included under "administrative expenditures' as prescribed by statute:

• 2320  Executive Administration Services (example: Superintendent & Assistants)
• 2330  Special Area Administration Services (example: Supervisor - Federal Programs, Special Programs & Title Programs)
• 2490  Other Support Services - School Administration (example:  Department Heads and Deans [not principals])
• 2510  Direction of Business Support Services (example:  Chief School Business Officials and Business Manager)
• 2570  Internal Services (example:   Distributing supplies, duplicating, etc. for the school system)
• 2610  Direction of Central Support Services (example:  Director / Manager of Planning, Information Services, Staff Services, etc.)

These total expenditures should include salaries, employee benefits, purchased services, supplies and materials, capital outlay, and other objects.  Explanations and descriptions may be found on pages 66 through 70 of the Illinois Program Accounting Manual.

What type of retirement costs should be deducted?

The Limitation of Administrative Costs legislation states that state-mandated retirement costs are not included, e.g., payments to the Teachers' Retirement System (TRS) and the Illinois Municipal Retirement System (IMRF).

What districts are affected by this legislation?

All school districts except Chicago School District 299 are affected by the legislation. However, school districts with administrative expenditures per pupil in the 25th percentile and below (the fourth quartile) for all districts of the same type (elementary, high school, unit) may waive the limitation. 

How do districts find out if they rank in the 25th percentile?

Districts may contact the School Business and Support Services Division of the State Board of Education at 217.785.8779 or access the information on-line at http://www.isbe.net/sfms/AdminCaps/AdminCaps.htm

How were these rankings calculated?

The rankings are based on school district's administrative costs per pupil. The administrative costs per pupil are calculated by dividing the administrative costs by the average daily attendance. The figures are derived from the most recently available Annual Financial Report and General State Aid Claim.

If a district is in the lowest 25th percentile, how is the cap waived?

A public hearing must first be conducted. After the hearing, the local school board must approve the waiver by a two-thirds vote. The district must then notify the State Board of Education within 45 days. The law does not provide specific details for how the hearing should be conducted.  We recommend the same process used for budget hearings be applied in this case.

If a district is in the lowest 25th percentile, should it waive the cap?

Districts should first determine that the administrative costs will increase more than 5% prior to waiving the cap.  The State Board of Education is required by statute to publish a list of all school districts waiving the cap.

Why do some districts' level of administrative costs seem high compared to other districts' levels of administrative costs?

Some districts, in the past, have included costs in the administrative functions which may be more appropriately charged to other functions, e.g., instructional supplies. Also, district enrollment impacts the level of administrative costs per pupil.

What may ISBE do if a district violates the 5% limit?

In accordance with Section 17-1.5 of the School Code, the State Superintendent may impose progressive sanctions against districts for non-compliance that may culminate in withholding all subsequent payments of General State Aid due the district. The State Board of Education is required by statute to publish a list of all school districts violating the limitation.

Are there any options if a district is not in the lowest 25th percentile and its administrative costs increase beyond the control of the district?

A district may request a waiver pursuant to Section 2-3.25g of the School Code if exceeding the limitation is solely because of circumstances beyond the control of the district and the district has exhausted all available and reasonable remedies to comply with the limitation. If approved, this waiver shall only apply to the specific school year for which the request is made. For more information on the waiver process, districts may contact the Rules and Waivers Division at the ISBE at 217.782.5270.