LINCOLN, Neb.—Significant school-funding changes that supporters say are needed to more fairly distribute hundreds of millions of state dollars, but that opponents worry could leave many school districts relying more on local property taxes, got first-round approval from the Legislature Wednesday.
The proposed changes to the complicated school funding formula that dictates how much money goes to each of the state’s more than 254 school districts could save about $50 million next year. That savings attracted support for the measure, with lawmakers counting on that to help fill an expected, $58 million budget gap caused by slow growth in state revenues.
“We’re looking at a way to avoid paying for the things we said we’d pay for the last two years,” said Sen. Gail Kopplin, a retired school administrator from Gretna.
Without changes in the funding formula, total state payments to public schools would increase by $132 million next year, a 17 percent spike compared to this year.
Lawmakers and Gov. Dave Heineman have pointed to that increase as a sign the school-funding system needs changed.
Supporters of the measure stayed mostly quiet on Wednesday, a sign that many believe the changes are necessary, but are reluctant to say so publicly because of affect the changes could have on schools in their legislative districts.
While all types of districts will be affected, lawmakers who have studied the changes detect a theme.
“It’s the smallest districts that get hit hardest,” said Sen. Lavon Heidemann of Elk Creek, chairman of the budget-writing Appropriations Committee.
The 262-student Creek Valley Schools district in Lodgepole and Chappell, for example, had expected to get $135,000 more in state aid next year than it did this year. But it will get $113,000 less if the changes in the bill (LB988) get final approval.
“I’ve just given up on trying to figure it out,” Creek Valley Superintendent Dennis O’Connor said when asked why the changes would cut money to the consolidated district. “It just seems like the big districts benefit more. I’m about to throw up my hands.”
O’Connor expects the district may have to dip into savings to make up for the decreased funding.
Supporters of changes in the formula point out that smaller districts tend to get more state aid per student than larger districts. The new formula, they say, relies less on an assumption that small districts deserve more per student and offers a more accurate calculation of the real financial needs of districts.
Generally, the amount of aid districts receive is figured by subtracting the ability of districts to pay for schools from what their educational needs are.
“We’re trying to get as accurate a picture as possible of what it costs to educate,” said Sen. Greg Adams of York, a former teacher who helped craft the changes as a member of the Legislature’s Education Committee.
There are several ways the bill would slow growth in state aid.
Under one change, the budget lids of districts would have to be more closely tied to their financial needs. Too often, said Sen. Ron Raikes of Lincoln, architect of the bill, districts identify needs that overshoot their budgets.
The bill also increases what is known as the “local effort rate.” It is a figure used to determine the amount of local property taxes each school system could receive at a typical tax rate when applied to property values.
At the same time, the bill changes how property values are determined in the part of the state-aid formula that calculates how much money districts can raise on their own for education.
Currently, the formula assumes that county assessors set values at 100 percent of their market values. The bill changes that to 96 percent.
Raikes said that change is a response to the fact that assessed values are often below true market values and would help keep districts from “looking poor” so they can get more state aid.
Even though many senators had concerns, lawmakers sought to make few changes to the bill on Wednesday.
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