Funding sought for governor’s school aid proposal

The Legislature would appropriate $1 billion in additional funding to public schools this year under a bill heard March 15 by the Appropriations Committee.

LB681, introduced by Elmwood Sen. Robert Clements at the request of Gov. Jim Pillen, would transfer $1 billion from the state’s general fund to a new Education Future Fund in fiscal year 2023-24 and $250 million in FY2024-25.

The bill states legislative intent to appropriate the same amount to the fund each year after that.

Clements said LB681 is part of the governor’s education funding package, which includes LB583, sponsored by Sen. Rita Sanders of Bellevue. Her proposal would provide school districts with $1,500 in foundation aid per student and special education supplemental aid.

The Education Future Fund would serve as a “backup” to ensure that the new funding is sustainable over time, Clements said, even if the state experiences a revenue shortfall.

The fund could be used only to:
• provide foundation aid;
• provide additional aid for special education;
• increase school funding in a way that reduces property taxes by using state funding to offset property taxes; and
• fund grant programs for teacher retention, career and technical education and student mentoring.

Clements said a proposed amendment would establish an order of priority for expending money in the fund. The highest priority would be fully funding equalization aid, which is state aid intended to cover the difference between a district’s needs and its local resources, such as property taxes.

Special education supplemental aid would be the second highest priority, followed by foundation aid.

Pillen testified in support of LB681, saying the amendment is an agreement with school districts to ensure that the new fund first would be used to meet the state’s obligations under the current school funding formula and that additional special education aid would be a higher priority than foundation aid.

Lee Will, state budget administrator, also testified in support. Although the Legislature would have to replenish the fund eventually, he said, it is estimated to have a balance of just over $500 million by 2030.

Liz Standish of Lincoln Public Schools testified in support of the bill as modified by Clements’s proposed amendment, which she said is “critical.” Standish said prioritizing equalization aid would ensure that the Education Future Fund provides stability for equalized districts, which often cannot increase their property tax levy to make up for any reductions in state funding.

Testifying in opposition to LB681 was Bri Full on behalf of Omaha Public Schools. She said OPS opposes the concept of foundation aid because it would direct state funding to school districts that have more resources than needs.

The Legislature has in the past reduced equalization aid to balance the state budget, Full added, and OPS is skeptical that future lawmakers would continue the $250 million annual appropriation to the proposed fund in future economic downturns.

The committee took no immediate action on the bill.