School budget limitations proposed

The Education Committee heard testimony Feb. 9 on a bill that would reduce state aid to schools and place restrictions on school budgets.

Introduced by Cedar Rapids Sen. Kate Sullivan on behalf of Gov. Pete Ricketts, LB959 is intended to ease property taxes, which are the main source of funding for Nebraska’s K-12 schools.

The bill would change the state’s school aid formula, resulting in approximately $3.5 million less state aid to schools in fiscal year 2017-2018. It also would limit schools’ budget growth and the amount of unused budget authority they can carry over from year to year. Several levy exceptions that school boards can use to fund capital projects without voter approval would be removed.

LB959 also would limit the budget growth of educational service units and the bond authority of community colleges.

Sullivan said the bill would control school spending without removing local control of school budgets or sacrificing quality in public education.

“In my estimation [the bill] allows education to be a part of the solution because they are the biggest users of the property tax dollars,” she said.

Gov. Pete Ricketts spoke in support of the bill, saying that 60 to 75 percent of the state’s property taxes and about 27 percent of the state’s overall budget is used to fund K-12 education. Ricketts said the bill would make incremental changes to school budgets to control spending and help reduce property taxes.

“Nebraskans are committed to public education,” he said. “But we also need to balance that out with the responsibility to the taxpayers.”

Rod Hollman, a farmer from Martell, spoke in support of the bill. He said his property taxes increased 130 percent over the last five years. Retired farmers and ranchers who rent out their land have been hit the hardest by property tax increases over the last few years, Hollman added.

“I’ve never seen landowners so frustrated and angry as I have over this,” he said.

Mary Lou Block, a farmer from Gothenburg, also testified in support of the bill. The valuation of her farm increased 37 percent last year, she said, with a corresponding increase in property taxes. She said it takes most of her income as a part-time dietician to pay her property tax bill. Block said controlling school spending would be one step toward giving farmers and ranchers property tax relief.

“I know that this is only one piece to the puzzle,” she said. “Reining in spending is incredibly important.”

Mike Lucas, superintendent of York Public Schools, testified in opposition to the bill. He said school spending has increased by an average of 3.5 percent annually over the last decade and the percentage of the state budget used for education has decreased.

“School spending is not the problem,” Lucas said. “We have a school funding problem.”

Lucas said the bill would impact a fund that schools use to pay for mold prevention and abatement projects, safety code upgrades, air quality control and the removal of environmental hazards. Schools levy additional money to pay for that fund, which currently sits outside the general levy schools use to pay for operating expenses. LB959 would place that fund within the general levy limit, forcing schools to cut staff and programs, Lucas said.

Linda Richards, speaking on behalf of the Nebraska Association of School Boards, also opposed the bill. Currently, some employer contributions for retirement expenses are excluded from school districts’ general budgets. LB959 would place those expenses under the general budget limit. Ralston Public Schools, where Richards serves as a board member, would need to cut 10 teachers to offset the $472,000 in retirement expenses that would fall under the budget limit, she said.

Virgil Harden, executive director of business for Grand Island Public Schools, also spoke against the bill. He said his district has a high proportion of students in poverty and a large special education program. He said the district’s budget must grow faster than the 2.5 percent that would be allowed under the bill.

“We spend the money to meet the needs of our children,” Harden said. “And 2.5 percent does not cut it.”

The committee took no immediate action on the bill.