Newsletter, May 17, 2013
As I begin this newsletter, I’m waiting for news on whether the Governor has signed LB 407 into law. LB 407 is this session’s legislation determining how much overall state aid is provided to our public schools and how that state aid is distributed.
While I’m relieved and pleased at having reached this point, it’s been a long and difficult process to get here. To a certain extent, it’s only right that the process should be tedious. State aid to schools represents a nearly one-third of the total state budget. With LB407, the state will provide $906 million and $940 million in state aid for the next two fiscal years. This is an approximately 5.5% average increase over the two years.
Crafting state aid legislation is always a challenge. Nebraska has 249 very different school districts stretched across a state that is extremely diverse in terms of population and other demographics. The TEEOSA (Tax Equity and Educational Opportunities Support Act) formula attempts to respond to that diversity and meet the specific individual and unique needs of 249 school districts while also considering the burden placed on taxpayers.
In its simplest form, the TEEOSA formula is: “Needs” minus “Resources” equals “Equalization Aid”, but that’s where simplicity ends. Oddly enough, LB 407 was intended to simplify the formula. Early in the process, an intense lobbying effort, led primarily by lobbyists representing large school districts, threatened to derail the original bill and the committee amendment.
So began a process of compromise which I entered into reluctantly, but out of necessity because the state budget needs a state aid bill. I regret is that the final compromise does not serve the school districts in District 41 as well as LB 407 in its original form.
In its final form, LB 407 allows all schools the opportunity to grow their budgets. It lowers the local effort rate. The formula uses the local effort rate to determine the level of funding that a district should exact from local property taxes. Dropping the local effort rate can mean more state aid to a district. Beyond these two provisions, other features such as allowances and adjustments were added. In some cases, school districts didn’t benefit from the compromise as much as they’d planned.
The media often portrayed the LB 407 negotiations as a struggle between rural and urban schools. Although I diligently tried to stay away from that portrayal, the negotiations were often just that.
Discussion centered on the misguided notion that, because a rural school district’s levy was low, they weren’t paying their fair share. This is incorrect and overlooks the fact that agricultural land values have skyrocketed in recent years. School districts, particularly those with declining enrollment, have more “resources” (i.e. local property taxes) at their disposal. This explains why 114 school districts are non-equalized and don’t receive any equalization aid because their resources are greater than their needs.
Many a sleepless night passed before the compromise allowing LB 407 to proceed was reached. However, the May 15 passage of the state aid bill is just a temporary stopping point.
As chair of the Education Committee, I introduced a resolution that requires the Education Committee to conduct a comprehensive interim study on how Nebraska finances public education. The Committee will examine every aspect of the current state aid funding formula including alternative funding methods.
Our goal is to achieve stability, simplicity, predictability and most important, equity in funding public schools across the state – rural and urban, large and small. A tall order to be sure, but I’m confident we can meet the challenge.