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Neb. Lawmakers Back New Funding Formula, Increased Aid

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Nebraska lawmakers have revamped the state's school finance formula--some say at the cost of forcing small schools to close.

The legislators approved a new funding formula late last month, along with an appropriations bill that will boost state aid to schools by $110 million in the 1998-1999 school year to $573 million. Nebraska currently pays about 40 percent of public schools costs. With the new money, that proportion will rise to roughly half.

After weeks of speculation about a veto, Gov. Ben Nelson, a Democrat, signed the bill into law June 3. He called the law "a compromise" that might need future adjustment.

Lawmakers said change was necessary to compensate for a projected $200 million loss in property taxes because of a tax-relief and -equalization law the legislature passed last year. That law caps property taxes, which provide the local revenue for schools, at $1.10 per $100 of assessed value starting July 1, 1998. Two years later, the limit drops to $1. School districts are allowed to override the limit, but only with a majority vote in a local referendum.

"I'm very satisfied," said Sen. Ardyce L. Bohlke, who chairs the education committee and led the fight for the bill. Ms. Bohlke, like all of her colleagues in Nebraska's single-chamber legislature, is an Independent. "I wanted to make sure the schools with the greatest needs received the correct proportion of state aid," she said.

The formula-overhaul bill, which passed the legislature by a veto-proof majority of 36-13, stirred most of the controversy. Like the existing aid formula, it makes allotments for special education and transportation costs. But the new formula for the first time provides more money to districts with poor students and those who do not speak English as a first language.

In addition, it sets base per-pupil funding in a new way, replacing multiple tiers based roughly on school enrollments with three categories related to population density. Under the scheme, school systems serving areas that meet the definition of "very sparse"--having, among other characteristics, fewer than one pupil for every two square miles--get larger per-pupil allotments from the state. Finally, the formula penalizes districts that don't levy at least 90 percent of the property-tax maximum.

Promoting Consolidation

Proponents of the bill said it rewards efficiency by holding some smaller schools to the same per-pupil spending allotment as their larger counterparts. The higher costs of running small schools should be recognized by the state only when school size is determined by population scarcity, the backers contended.

But opponents railed against what they saw as forced school consolidations, a dirty word in many Nebraska towns. Arguing that small schools are often more successful, critics also said the formula should take outcomes into account. "The emphasis was on cost per student. ... I felt we needed to look at the entire picture," said Sen. Elaine Stuhr, who represents a rural area about 70 miles west of Lincoln and voted against the formula bill.

"People don't want to say it's a large school-small school conflict," she added, "but in a sense, it is."

Sen. William R. "Bob" Wickersham said he voted for the bill as the best alternative this year to creating havoc statewide, but "I'm not happy with it." Mr. Wickersham, who represents a vast, thinly populated legislative district in the state's northwest corner, said the bill was put together too hurriedly.

Superintendent John Erickson of Verdigre said his 250-student system in the state's rural northeast is likely to lose about $185,000 in state aid next year. While people talk about consolidation, he said, "if you dig deeper, you are talking about destroying communities and families" because a school is often the soul of a town. Besides, he added, "we've looked at consolidation; it won't save money."

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