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Published in Print: September 16, 1998, as Nebraska Reforms Fuel District Consolidations

Nebraska Reforms Fuel District Consolidations

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Nebraska's new property-tax lid has apparently speeded up school district mergers. But whether that result is ultimately deplorable or desirable depends on whom you ask.

In the past school year, 40 of the state's then-640 districts under-went mergers. That's up from about 30 the previous year, according to Roger Hudson, the director of school organization for the state education department.

State at a Glance: Nebraska

Population: 1,652,100
Governor: Ben Nelson (D)
State superintendent: Doug Christensen
Number of K-12 students: 291,590
Number of K-12 public school districts: 604
Fiscal 1999 K-12 budget: $752.7 million

"My guess is that the pace will accelerate in the years to come," said Mr. Hudson, who predicted about 50 mergers in the current school year.

Nebraska has the highest number of districts per capita, and a higher absolute number than all but four other states, despite a population that has been declining since the turn of the century. Many of the state's school systems have 30 or fewer children.

"For a long time we've tried to compensate for this demographic death spiral, but we're now finally at a point where lids on taxes bring the issue to a head," Mr. Hudson said.

Harder for Some

Legislators said they were looking to make schools more efficient when they revamped the state school aid formula in 1997. The legislation pumped more than $110 million into the schools from state tax revenues to make up for the expected shortfall from two lids on local property-tax rates passed by the lawmakers the year before. ("Neb. Lawmakers Back New Funding Formula, Increased Aid," June 11, 1997.)

The first of the lids in the 1996 law set the property-tax rate at no more than $1.10 for every $100 of assessed value. It went into effect this July. A second lid will drop the maximum allowable rate to $1 in 2001, further squeezing districts that had been collecting property tax at rates as high as $1.40.

While the additional aid combined with decreasing enrollment is enough to keep the state's average per-pupil spending from dipping, in terms of actual local budgets, the caps created shortfalls totaling more than $20 million.

"Getting to the $1.10 levy has been more difficult for some districts than for others," said John Bonaiuto, the executive director of the Nebraska Association of School Boards. "Where property values have remained flat and there were high levy rates to begin with, they've really struggled hard."

The effects of the lid were intensified when a law limiting school district and other local government spending increases to 2.5 percent a year also took effect in July. And a looming farm recession could make matters worse.

Already, a few districts have laid off teachers, many more have trimmed their budgets, and some have dissolved schools or merged with other systems. Taking another tack allowed under the new law, 22 districts have held local levy-rate override elections, 17 of which have been successful, according to Mr. Bonaiuto.

Necessary Changes?

Opponents of the school finance legislation say the funding formula is unfair to those rural schools that don't qualify for protection under the law's language on sparsely settled areas.

"Big schools and wealthy areas did better" under the formula than small schools in poor areas, asserted Nelson Dahl, the superintendent of the 100-student Lynch district and a member of Friends of Rural Education, an advocacy group. Mr. Dahl charged that the state's lawmakers favored the Omaha and Lincoln districts because those areas have the most political clout.

But others say the formula pushes forward changes that, in one sense, were already under way and, in another, are long overdue. Nebraska's population peaked in about 1900, leaving as its legacy not only hundreds of small school districts but a plethora of municipalities, fire districts, and other units of local government. The state can no longer afford those, according to the many legislators and state officials.

Even more foreboding for rural districts, the state's largest business interests are pushing for a proposed constitutional amendment, which will most likely be on the ballot in November. It would control state and local spending by limiting increases in tax collections to the combined rate of inflation and population growth each year.

Education groups, including the state teachers' union and the state school boards' association, are among those that have lined up in opposition to the amendment.

Vol. 18, Issue 2, Page 16

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