Broad Support for Bill Meant to Change School Funding and Provide Property Tax Relief

By Gordon HopkinsOn Monday, February 10, 2025, Governor Jim Pillen testified before the Nebraska Legislature’s Education Committee in favor of LB (Legislative Bill) 303, which is intended to provide Nebraskans with additional property tax relief by altering the Tax Equity and Educational Opportunities Support Act (TEEOSA). Senator Jana Hughes introduced LB303 at the Governor’s request.Property tax relief ash been the cornerstone of Governor Pillen's platform since he was elected. What is TEEOSATEEOSA has been Nebraska’s school funding formula since 1990. Its primary function is to provide state equalization aid to those schools where the needs exceed budget resources.According to Governor Pillen's his testimony, since 2000, school district taxes have increased from $1 billion to over $3 billion, and in that same time frame, the number of equalized school districts has dropped from 226 to just 60.“Nebraska’s students and taxpayers need stability in funding. School districts often live under uncertain budget circumstances. It is difficult to project the amount of dollars that will come from the TEEOSA formula as property tax valuations continue to rise across the state,” said the governor. “Providing stability to the TEEOSA formula is necessary and will require constant review and consideration. We must start managing the formula and not allowing the formula to manage us.”“During the current fiscal year, 111 schools have seen a decrease in state aid. Modeling from the Nebraska Department of Education shows that LB303 will provide just over $62 million more in state aid to schools,” said Senator Hughes. “While this doesn’t fully compensate for the loss due to rising valuations, it will lessen the impact on property taxpayers next year. Without the increase in funds provided to schools through LB303, the entire loss in state aid to these districts will fall to taxpayers.” What Changes Would Be Made?Among the proposed changes to TEEOSA in LB 303 are:Dropping the maximum levy from $1.05 to $1.02Increasing the minimum amount of state aid for each public-school student (Foundation Aid) by 6 percent, from $1500 to $1590 per studentProhibiting school districts with a base levy adjustment of lower than $.30 from receiving state aidCreating a commission to review the TEEOSA formula every year and provide feedback to elected officials on potential improvements Who Supports the Bill?NSEA (Nebraska State Education Association” President Tim Royers testified in support of the bill, describing it as “the best school funding bill to come from the governor’s office in at least a decade.”Other organizations testifying in favor of LB 303 included Greater Nebraska Schools Association (GNSA), Educational Service Units (ESUs), Nebraska Association of School Boards (NASB), Nebraska Council of School Administrators (NCSA), Open Sky Policy Institute, Nebraska Rural Community Schools Association (NRCSA), Schools Taking Action for Nebraska Children's Education (STANCE), Nebraska Farmers Union and the Nebraska Farm Bureau, representing a working group of ag organizations.One person testified in opposition to LB 303. Shane Rhian, chief financial officer for Omaha Public Schools, called the bill “another erosion of local control.”The loss of local control has been a major concern of school officials. Both Governor Pillen and Senator Hughes emphasized that maintaining local control among school districts was paramount to this legislation. What Do Local Schools Think?Reaction from local school officials has been one of cautious optimism.Mike Meyerele, Superintendent of Diller-Odell Schools, told FJN, “From my understanding, Diller-Odell Public Schools would be fine with the bill. The decrease in a max levy would not affect us, and I am all for the increase in Foundation Aid. It would seem to offer some stability in funding, which is appreciated.” Dr. Devin Embray, Superintendent of Fairbuiry Public Schools, said, “It appears on the surface that LB303 is a proactive bill that is addressing the school funding formula in small steps, which is a more agreeable way of doing business for a lot of us that are impacted by any change. From my limited experience with Nebraska school funding, it appears a step in the right direction if there is a succession plan to follow that keeps schools whole in the process.” According to Dr. Chris Prososki, Superintendent of Southerm Schools District, “As a superintendent, I like the fact that she (Senator Hughs) is taking an incremental approach and not flipping a switch and changing the entire TEEOSA formula. In addition, by just lower the max levy by $0.03, it does not erode local control across the state. Lastly, I think it is very wise to form School Finance Reform Commission that can review the current state aid formula every year. I would recommend adding a school board member and a teacher to this commission as well because I think their voices need to be present at the table regarding any future recommendations to the TEEOSA formula.” Thayer Central Schools Superintendent Eric Miller said, “I have no issues with LB303. I like that it isn't a radical change and that it begins to address property tax relief and still allows for local control of our school districts. It has the support of the various Educational Organizations which is a positive as well. I really appreciate the provision on the 'creation of a commission to annually review the TEEOSA formula and provide feedback to elected officials.' This is an important step in giving feedback to individuals who don't utilize this formula on a regular basis.”

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