School funding changes advance

Lawmakers advanced a bill March 30 that would alter the state’s school aid formula and limit the amount that school districts could levy to pay for certain projects.

Introduced by Cedar Rapids Sen. Kate Sullivan on behalf of Gov. Pete Ricketts, LB959 is intended to slow the increase in property taxes, which are the main source of funding for Nebraska’s K-12 schools. The bill originally would have limited schools’ budget growth and eliminated several levy exceptions.

An Education Committee amendment, adopted 28-0, replaced the bill. It would eliminate the minimum levy adjustment in the state’s school aid formula at the end of the 2016-17 school fiscal year. The adjustment reduces state aid to schools with a levy below $0.95 per $100 of valuation.

It also would change an averaging adjustment that provides additional state aid to some school districts with more than 900 students. The adjustment, based on formula need per student and a district’s levy, currently ranges from 50 percent to 90 percent. The amendment would calculate the adjustment at 90 percent for all qualifying districts.

Sullivan said the proposal—the result of months of work by the Education and Revenue committees—is not perfect but would provide some property tax relief. The adjustments that the bill would eliminate encourage school districts to either keep their levies too low or raise them higher than necessary in order to secure more state aid, she said.

“At the end of the day, I think that [the bill] represents not only an improvement in how we fund education but also gives good accountability to your taxpayers,” Sullivan said.

Sullivan said the proposal would result in an estimated $8.5 million increase in state aid that would predominantly go to rural school districts. No districts would lose money under the bill, she added.

The amendment also would limit existing provisions of the Qualified Capital Projects Undertaking Fund (QCPUF) to existing projects. School districts currently can levy an additional $0.052 outside the $1.05 levy limit to fund projects related to life safety, environmental hazards, accessibility barriers and mold in existing school buildings and grounds. New projects would be funded under a $0.03 levy.

Sullivan introduced an amendment, adopted 33-0, to remove the requirement that school districts can approve projects using QCPUF funds only if the project could not have been reasonably foreseen or prevented.

Sen. David Schnoor of Scribner supported the bill. He said eliminating the adjustments in the state aid formula is a small, incremental change but will provide some reduction in property taxes.

“This does not, in my view, solve our property tax dilemma,” he said. “But it helps.”

Senators voted 38-0 to advance the bill to select file.