TEEOSA review commission advanced

Lawmakers gave first-round approval May 21 to a measure that would create a commission to review the state’s school funding formula after amending out provisions that would have changed the formula and the school levy.

As introduced by Seward Sen. Jana Hughes, LB303 would make several changes to the Tax Equity and Educational Opportunities Support Act, or TEEOSA. The bill would increase school foundation aid by 6% — from $1,500 to $1,590 per student — beginning in fiscal year 2025-26.

The original proposal would lower the maximum property tax rate that schools may levy from $1.05 to $1.02 per $100 of taxable valuation. It also would create a base levy adjustment to reduce TEEOSA aid if the potential general fund levy is less than 30 cents.

Hughes said the original proposal had broad support from teachers, school districts and other stakeholders, with Omaha Public Schools offering the only opposition testimony at the hearing. Unfortunately, she said, the state’s current fiscal situation does not allow the original bill to go forward.

“What we don’t have now, at the end of the day, is the funds to do this,” Hughes said.

An amendment offered by the Education Committee and adopted 40-0 would strip all of the bill’s provisions except for creation of the School Finance Reform Commission. The commission would be tasked with studying and providing advisory recommendations related to school funding, including an evaluation of the TEEOSA formula, and issuing annual reports to the Clerk of the Legislature.

Hughes said the funding formula might not be as “skewed” as it currently is if such a commission had existed in the past to provide annual reports to lawmakers. Twenty years ago, she said, 200 of the state’s 240 school districts received equalization aid, while today that number is fewer than 60.

The 18-member committee would include 12 members appointed by the governor, including
five at-large members, four superintendents or school board members and representatives of
a class V school, a class IV school and postsecondary education with expertise in school finance.

The three nonvoting legislative members would include members of the Revenue and Education committees, with representation from each congressional district and no more than two members from the same political party.

Finally, the commission would include the commissioner of education, the property tax administrator and a representative of the governor’s office.

Following adoption of the committee amendment, lawmakers voted 39-0 to advance LB303 to select file.