Aid-Formula Revision Sends Neb. Districts Scrambling

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With only a month to go until the start of school, education officials in an Omaha suburb are scrambling. Administrators of the Millard, Neb. district just learned that their state aid will be $2.1 million less than it was last year.

Other districts across Nebraska are facing comparable losses, while some are welcoming gains. In most cases, the state-aid numbers look little like they did last year and nothing like officials thought they would.

The main reason is an adjustment to the school-funding formula, passed by the legislature this year. The law, known as LB 1290, attempts to equalize the way property is appraised across the state by correcting assessments to 100 percent of market value.

Under the previous system, property-assessment rates varied widely among the state's 93 counties. While some counties appraised property at 100 percent of market value, others did so at 75 percent or 80 percent. That meant that some districts looked poorer than other districts of the same level of real wealth, and thus received more state aid than was justified.

The legislature called for assessment reform in 1990, as part of a school-finance-reform law. But implementation of the provision was delayed twice, and it was not put into effect until the passage of LB 1290.

Lawmakers debated again this year whether they should delay the measure because of possible misinterpretations. But several members of the unicameral legislature argued that counties that tax their property at full value should not be sending state-aid dollars to counties that have skirted the system.

"That was the inequity LB 1290 set out to correct,'' said Stan Sibley, the coordinator for government relations of the Omaha public schools, which received $7 million more than last year's state aid.

Nebraska is one of a number of states struggling with property-assessment variations, which analysts say are at the root of many school-finance inequities. (See Education Week, Jan. 16, 1991.)

For many Nebraska districts, however, the reforms seem less than equitable.

"I don't understand how Omaha gained so much and the rest of us, it seems, lost,'' said Linda Kincanon, the treasurer of the Fremont schools.

'Do We Raise Taxes?'

While Ms. Kincanon expected that her 4,400-student district would lose some funding, she did not anticipate the state's cut of more than $500,000.

"Do we raise taxes? Do we cut the budget? What do we do?'' she asked.

"Our biggest concern is the fact that it's just not consistent,'' said Richard Lewis, the assistant superintendent of the Millard district. "The legislature is making decisions without the slightest idea of what the impact will be.''

Even Omaha officials were caught off guard by their big increase in state aid. Residential property in Douglas County, where the city is located, has been valued at an estimated 79 percent. So officials actually were expecting the 43,500-student district would suffer a loss.

Instead, property-tax payers will face only about half of a 10 percent increase that was scheduled before the figures came out.

Lawmakers and other education officials attribute the surprises to a complex formula that should become less jarring with time.

If you see a big change, "don't assume you can point to [the adjusted property valuations],'' said Tim Kemper, the director of finance for the Lincoln schools, which gained about $200,000 this year.

"There are a lot of variables in this aid formula that interact,'' added Dennis Pool, the administrator for school finance and organization services for the state education department.

The new law changed the method for determining student-enrollment numbers, property-valuation data, and other figures used to assess a district's need.

In the long run, supporters of the new law say, the changes should contribute to a more equitable tax system.

"We have to treat everybody comparably,'' Mr. Kemper said.

Vol. 13, Issue 40

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