Committee considers reductions in state aid to schools
The Education Committee heard testimony Jan. 25 on two proposals to cut state spending by reducing aid to schools.
The bills would reduce the base limitation rate for school districts for fiscal years 2011-12 and FY2012-13, which would affect budget lids and several elements of the aid formula.
LB235, introduced by York Sen. Greg Adams, would reduce Tax Equity and Educational Opportunities Support Act (TEEOSA) by 1 percent to $845 million in FY2011-12 and $903 million in FY2012-13.
“If we’re going to get at the kind of numbers the budget is demanding, we can’t nibble around the edge,” Adams said. “We have to get around the numbers that have the greatest impact, and one of those is school spending.”
Other recommendations in the bill include:
• reducing the limitations based on formula need from 120 percent to 110 percent of need;
• factoring the limitations on the prior year budget by the basic allowable growth rate;
• eliminating the calculation of the applicable allowable growth rate;
• restricting access to unused budget authority to the basic allowable growth rate applied to the prior year budget, minus budget exceptions;
• delaying the deadline for certifying the budget until July 1 for FY2011-12;
• permanently reducing the cost growth by eliminating the factor that is added on to the two years of basic allowable growth rates in the calculation;
• eliminating the need stabilization and the averaging adjustment beginning with the FY2011-12 calculation of aid;
• increasing the local effort rate from $1.00 to $1.025 for FY2011-12 and FY2012-13; and
• extending the allocated income tax reduction for FY2011-12 and FY2012-13 and increasing it to $21 million.
Alternatively, LB236 — also brought by Adams — would reduce TEEOSA by 1.5 percent to $800 million in FY2011-12 and $844 million in FY2012-13.
This bill was created as an alternative to LB235, Adams said. The mechanisms for reducing aid are the same in both bills, he said, but LB236 eliminates two adjustments and reduces state aid further than what is projected in LB235.
“I don’t want to go there, but I wanted you to see that that’s where we would have to go,” he said.
The two bills should be seen as “bookends,” he said, and the committee will work toward a final bill that contains elements of each, while being fair to all schools across the board.
Mark Shepard, associate superintendent for business affairs at Lincoln Public Schools, testified in support of LB235.
The most equitable option for K-12 schools is to reduce funding through TEEOSA, he said.
The influx of federal stabilization funds in the last budget allowed school districts to plan for these tough years, he said.
But LPS is a growing school district with over 900 additional students this year, Shepard said, and a lack of available funds will impact growth at some point.
“This is coming at a time when we are experiencing property valuation decrease,” he said.
The school district is considering whether to replace retired positions and evaluating current openings to accommodate the cuts, he said.
Jon Habben, executive director of the Nebraska Rural Community Schools Association, also testified in support of LB235. He praised efforts to make the formula fair to all school districts across the state, adding that the cuts could have become a “battleground” of urban versus rural.
Jerry Hoffman, representing the Nebraska State Education Association, also testified in support of LB235.
“We must work together and not be divided,” he said. “Economic recovery is and always has been dependent on putting education first.”
Liz Standish, an Omaha Public Schools administrator and proponent of the bill, agreed that LB235 addresses cuts in a fair and equitable manner.
There will be reductions in staff and class sizes, she said, but the alternative proposed in LB236 of eliminating the averaging adjustment would be more detrimental.
Virgil Harden, director of business for Grand Island Public Schools, also supported LB235, calling it “an honest and open attempt to try to deal with the situation.”
Grand Island Public Schools also will consider attrition, reducing staff and offering an early retirement incentive program, he said. “We’re prepared to do the things we need to do, but there will be a reduction to services for children.”
George Conrad, superintendent of Douglas County West Community Schools, testified in opposition to LB235, saying that even the more generous proposal would cut too much, resulting in elimination of 11 of 68 teaching positions at his school.
The committee took no immediate action on either bill.
