Governor Announces Bills Reforming School Financing

Last week, Nebraska Governor Jim Pillen, accompanied by several state senators including members of the Legislature's Education Committee, announced three priority bills for the Legislative session aimed at increasing the state's investment in education and reducing school reliance on property taxes.“We must and we will invest in every Nebraska kid so that the education they receive is the highest quality, no matter where they live in our state,” said Governor Pillen. “These bills are the culmination of great teamwork from groups representing stakeholders from across Nebraska. Through this legislation, we will ensure future generations of students are on solid footing, make funding more uniform across all school districts, and provide Nebraskans with property tax relief that is long overdue.”LB 583, introduced by Senator Rita Sanders, calls on the state to allocate $1,500 annually for every K-12 public school student through the Tax Equity and Educational Opportunities Support Act (TEEOSA). The increase amounts to nearly $113 million in state aid. In addition, the bill proposes a statutory provision that 80 percent of special education funding be covered through a combination of federal and state funding. The state portion, almost $160 million, would be on top of the existing $250 million in annual support for special education.Senator Rob Clements proposed legislation to create the Education Future Fund, which allocates $1 billion of state general funds during the 2023-2024 biennium and $250 million each year afterward for the purposes of:Providing $1,500 per student each year through TEEOSAFunding the state's portion of special educationIncreasing funds to K-12 educational entities, resulting in dollar-for-dollar property tax reliefAllocating grants aimed at retaining licensed teachers within NebraskaAllocating grants aimed at furthering career and technical training opportunities for K-12 grade studentsAllocating grants to increase mentoring opportunities for K-12 grade studentsThe final proposal (LB 589), brought on behalf of the Governor by Senator Tom Briese, creates a three percent cap on property tax revenue that a school district receives. It is a soft cap that can be overridden by 75 percent of voting school board members or the approval of 60 percent of the district's registered voters, should there be a need.The same week, Pillen unveiled a package of tax relief bills. Like his predecessor, Pete Ricketts, Governor Pillen has made tax relief the cornerstone of his administration's goals. Two of those measures focus on providing tax relief around education. Twenty-five million dollars in new tax credits would be made available to eligible organizations that grant scholarships to children wishing to attend private school. The program, introduced by Sen. Linehan, prioritizes children who are at the 100 percent poverty line. Children who have special needs, are in foster care, and have experienced bullying would also be among the first for consideration of a school-choice scholarship. The program proposes additional tiers of eligibility based on available funds.The second education-focused measure, proposed by Senator Dave Murman, would shift funding of community colleges from property tax revenue to state support. Under passage of this bill, state funds would be allocated to cover current property tax requests. This would result in an immediate statewide average property tax cut of 5.3 percent and by tax year 2026 Nebraskans would benefit from $282.5 million in tax relief.Local ReactionLocal reaction from public school officials is mixed. When asked for his reaction, Fairbury Public Schools Superintendent Stephen Grizzle responded, “Cautiously, skeptically optimistic.”Grizzle said, “It would be wonderful for districts like Fairbury to receive true state aid. If this plan went into effect for next year, it would be a boost of about $1.2 million dollars in aid. That would allow us to drop our tax request even further and for the fifth year in a row. However, the legislators most likely would also adopt strict caps that may hinder things as well. As a fiscal conservative, myself, I welcome these ideas. I am most interested in the discussion of increasing the state's reimbursement of Special Education costs as well. This would be another significant resource for us and allow us to reduce our levy even further.”Tiffanie Welte, superintendent of Tri County Public Schools, said, “I appreciate his expressed commitment to public school and special education funding. The fact that he's brought stakeholders together to discuss potential solutions to provide that support while still addressing property tax relief is also a welcome step in the right direction.”Concerns have been raised about how the tax cuts and increased spending will be paid for. Randy Page, superintendent of Thayer Public Schools, said, “It would appear there are dollars for rural schools through foundation aid and increased special education reimbursement that would allow levy reduction. I have concerns with the sustainability of this new level of state funding, but there are positive aspects to the plan in the form of the state stepping up its level of support for all schools.”It is not just school officials that are concerned. The governors plans were discussed at a recent meeting of the Jefferson County Board of Commissioners.“He's got some very big orders with his, first of all, big tax cut that he talked about last month. We lose about $750 million in revenue from that. And then with his school ideas, we're going to need about $1.5 billion for that. So that's two and a quarter over $2 billion,” said Commissioner Gale Pohlmann, “Where's that coming from?”Commissioner Mark Schoenrock said, “It's got huge implications.”

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