Adjustments recommended for school aid
The Education Committee heard testimony Feb. 2 on a bill that would increase state funding for nonequalized school districts under the Tax Equity and Educational Opportunities Support Act (TEEOSA).
LB522, introduced by Cedar Rapids Sen. Kate Sullivan, would make several adjustments to the current TEEOSA formula. Sullivan said the bill represents another opportunity to adjust the formula with changing circumstances.
“These changes would provide direct support to school districts for students, reduce property taxes and improve communications with the public regarding how their state tax dollars are being used to support education,” she said.
In total, the proposed changes to the formula would result in estimated state aid funding increases of $11 million in fiscal year 2015-16 and $106.9 million in FY2016-17.
The bill would decrease the local effort rate from its current level of $1.00 to $.95 in FY2017-18 and thereafter. Decreasing the local effort rate would result in an estimated $53.6 million increase in state aid provided to school districts because the formula would assume a district has decreased resources.
LB522 would eliminate the current method of allocated income tax disbursement and replace it with 10 percent of the aggregated statewide income tax liability of all resident individuals for the prior year. The aid would be calculated by taking the aggregated income tax liability divided by the number of formula students.
Currently, statute caps allocated income taxes at $102.3 million. The new formula proposed by LB522 would result in an increase in state aid of $27.3 million in FY2017-2018 and would impact only nonequalized school districts.
Jon Habben, representing the Nebraska Rural Community Schools, spoke in favor of the bill. He said rather than eliminating the TEEOSA formula altogether, changes should be made to address current inequalities between rural and urban districts.
“I appreciate the idea that several factors are a part of this bill and try to address several components to stretch TEEOSA further,” he said. “We can’t lose sight of the fact that this formula does have positive attributes. We need to make a strong attempt at finding a way that isn’t just an ‘us versus them.’”
Liz Standish, associate superintendent of business affairs for Lincoln Public Schools, opposed the bill, saying it represents a move away from equalization aid.
“Equalization [aid] is a center point in school funding in Nebraska,” Standish said. “It must be recognized and preserved.”
The bill also would:
• eliminate the minimum levy adjustment and nonequalized minimum levy adjustment;
• change the net option formula funding so the amount per formula student would be reduced by the amount of state apportionment and income taxes;
• provide for state apportionment funding from the Temporary School Fund based upon formula students in public school districts only;
• provide for a one-time transfer of funds from the state Cash Reserve Fund to transition between methods for distributing state apportionment funds;
• eliminate the requirements of a school district with at least 900 formula students to levy a certain amount in order to be eligible for the averaging adjustment; and
• eliminate a requirement that state aid for a learning community be calculated as one entity, rather than separately for each school district within the learning community.
The committee took no immediate action on the bill.
