School Funding Bill On Hold

By Gordon HopkinsOn Friday, February 11, the Nebraska Legislature heard testimony for and against multiple bills that would change the way public schools are funded.Senator Lynne Walz (District 15), who heads up the Legislature’s Education Committee, is the sponsor of LB (Legislative Bill) 890, which would change the state education aid formula. Under LB890, each district would receive education stabilization base aid (ESBA) paid from a new trust fund. The bill also would increase the allocation of state income taxes to school districts from the current 2.23 percent to 20 percent in 2023-24. The bill would also decrease the local effort rate, a component of the school funding formula that uses property valuation to determine how much a district can contribute in property taxes to fund a school.A companion funding measure, LB 891, is sponsored by Senator Brett Lindstrom (District 18) and would reduce school districts general fund levy to a maximum of 95 cents, rather than a $1.05. This bill also breaks out the district’s building fund and allowing a maximum of 10 cents.Later that day, Walz announced her intention to put the bill on hold, citing strong opposition.SustainabilityAccording to OpenSky Policy Institute, a think tank and advocacy organization based in Nebraska, “Nebraska currently ranks 49th nationally in the percentage of K-12 funding that comes from the state, which has left schools heavily reliant on property taxes.”OpenSky is supportive of the bills but have expressed concerns as to their long term sustainability.“LB 890 – in conjunction with LB 891, which is before the Revenue Committee – would increase state K-12 aid in a way that ensures all schools get more dollars. This would allow schools to reduce property tax levies while also preventing funding cuts that harm educational opportunities for students,” OpenSky published on their website on February 10. “As is the case with LB 723 (a proposed bill to change provisions relating to the calculation of tax credits under the Nebraska Property Tax Incentive Act), however, neither LB 890 nor LB 891 creates new revenue streams to offset their fiscal impact. In this way, all three measures create sustainability concerns as they could force cuts to schools, health care and other services should state revenues lag in the future.”OppositionThere is opposition to the bill. Senator Tom Briese (District 41), said the bill would eliminate the Refundable Income Tax Credit and also claimed the bulk of the money will go to urban schools, “The way I see this is that you are essentially forcing rural Nebraska property tax payers to pay more property taxes, so we can send more money to urban schools. That's just not going to work the way it's set up now, so that's why I strongly oppose what we're talking about here.”While a number of school districts voiced their support, Omaha Public Schools Superintendent Cheryl Logan is opposed. Omaha Schools rely heavily on state aid and Logan said the bill would lead to greater unpredictability than the current school funding formula.Local ReactionThese bills have found a fan in Fairbury Public Schools Superintendent Stephen Grizzle, who Tweeted on February 9, “And if we understand the way it’s structured, it’s sustainable AND with the Trust Fund component, it can withstand the 'ebbs & flows' of incoming revenue. Simply put, it would work.”Grizzle previously told FJN, “LB 890/891 represents a yearlong, collaborative effort from the education community to offer a suggestion to improve school funding. I have been a superintendent for 13 years and every time we/I would testify, it was either 'oppose' or 'agree, but…' And each time a senator would ask, 'what suggestions do you have to create legislation that would work?' The education community has never offered a plan. Until now.”Grizzle said, “Chip Kay (Finance Director) & Troy Loefflholz (Superintendent) of Columbus Public Schools embarked to create a new way to fund schools. As you recall, Fairbury is a member of STANCE (Schools Taking Action for Nebraska Childrens’ Education), 19 mid-sized districts that represent all types of school communities across Nebraska. We have schools that get a lot of state aid, and schools like Fairbury, who get very little. So, if a plan could be positive for our STANCE schools, there is a good likelihood it would be good for the rest of the state. Chip & Troy started meeting with many educational groups and senators this summer and fall. Sen. Walz decided it was worthy of a bill and crafted LB 890/891.”“This would fundamentally shift our district from relying on our local property taxes to fully fund our schools to receiving some state funds, in a much healthier balance! It creates a sustainable funding mechanism, which Nebraska has struggled with. This would move Nebraska from its current position of 49th in the country to 13th in the country in supporting education with state funding!,” said Grizzle. “We definitely support LB 890 and hope the legislative process does not detract from the potential benefits that Fairbury property tax payers could receive.”Another Superintendent, Randy Schlueter of Tri County Public Schools, is more ambivalent, “As you can imagine this legislation is complex. There is no doubt in my mind that LB 890 and LB 891 would infuse additional dollars into the Thayer Central district, which would allow the district to lower the local levy and provide property tax relief. Currently LB 1107 provides a 25 percent rebate specific to the local district levy, this would go away with the passage of LB 890 and LB 891. The question that I keep asking myself is which model really best serves my local community. The other question I ask myself is that if legislation is passed that provides additional dollars from the State to a local district, what happens if the State chooses to adjust that funding at any point? There is a great deal to think about as the search continues for true property tax relief in rural Nebraska.”Randy Page, Superintendent of Thayer County Public Schools, said, “I believe the state of Nebraska needs to address how public education is funded in our state prior to taking action to fund private education. From my perspective it is a matter of sequencing of priorities, maybe LB 890 and LB 891 will help to define state funding to a greater extent.”

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