Nebraska lawmakers stepped up their debate last week on major changes to both the amount state taxpayers spend on K-12 education and how that money is distributed among the state’s 668 school districts.
Most of the debate centered on a bill introduced by Sen. Ardyce Bohlke’s education committee that would hasten efforts to distribute state education money more equitably among rich and poor districts. The bill would modify a funding formula passed by the legislature in 1990 by sending more money to needier districts.
At the same time, a strong push both in the legislature and among state residents for limits on local property taxes makes the proposed change even more crucial for needy districts, Sen. Bohlke said. “With the possibility of levy lids, those districts could have some very severe reductions.”
She offered the example of Hastings. The school district in the south-central Nebraska city levies more than $1.50 per $100 of property valuation for its schools. A proposal considered last week by the legislature’s revenue committee would cap local property taxes at $1.10 per $100 of assessed value.
“If the limit is $1.10,” Sen. Bohlke said, “they are taking three to five million dollars from a district with about 3,000 students, with the possibility of closing a building or certainly letting some teachers go.”
Winners and Losers
In Nebraska’s unicameral legislature, a bill must pass the full body three times before it is sent to the governor. Sen. Bohlke’s bill first passed the legislature 29-2 on Feb. 20, and lawmakers last week debated the measure but did not cast the second vote.
The bill would tie the distribution of the state’s insurance tax to the equalization formula. The measure also would institute a formula to reduce the percentage of income-tax revenue from each district that is returned directly to that district, and would use the surplus to increase equalization aid.
Currently, districts get back 20 percent of the income tax paid by their residents.
The bill’s supporters say the rebate works against equalization because wealthier districts pay more money in, and therefore get more money back.
But Sen. William R. Wickersham, who opposed Sen. Bohlke’s bill, said the rebate saves districts from too much reliance on property taxes.
Meanwhile, the Nebraska Supreme Court struck a blow for equalization efforts in a March 1 ruling. The court upheld the state’s 1993 “affiliation” law, which requires that property-tax burdens and benefits be spread evenly among all elementary school districts that are affiliated with the same high school.
Observers were unsure last week how the decision might shape the continuing debate over efforts to revamp school funding.
Lawmakers and school officials engaged in that debate got their first real glimpse of the potential impact of proposed formula changes last week, when the state education department released data showing how the formula changes in the education committee’s bill would play out in each district.
When the printout reached the desk of Les Sladeck, the associate superintendent for operations at Omaha’s Westside schools, he found that his district stood to lose about $1.8 million from its budget of about $35 million.
“We’d be reducing programs and staffing,” he said of the 5,000-student district. “You take $1.8 million and that’s approximately 45 teachers out of about 400 in the district.”
Westside’s projected loss was among the highest of the state’s districts.
Overall, the new formula would put another $21.5 million into equalization districts. Approximately 260,000, or 91 percent, of the state’s students would find themselves in districts receiving equalization aid.
