LINCOLN, Neb.—Federal stimulus dollars might be needed to help Nebraska schools dodge serious financial problems partially caused, oddly enough, by another part of the stimulus package.
On Tuesday, a key state lawmaker said that if all or much of the $234 million the state stands to get from the stimulus package for education isn’t dispersed as state aid to schools, they could get no increases in state aid over the next two years.
That’s largely due to projections that state revenues will decrease over the next two years because of the slowing economy.
But the stimulus package itself could widen the budget gap, possibly by a total of about $127 million over the next two years that make up the state-government budget cycle, Sen. Abbie Cornett of Bellevue said. The reason: State income taxes are expected to decrease because they are linked with federal income taxes, which are being reduced in the stimulus package.
The issues were discussed Tuesday during a meeting of the Legislature’s Education Committee. The group is expected to work with the budget-writing Appropriations Committee in coming days and propose how to spend stimulus dollars for education.
If all $234 million is distributed through the complicated state-aid formula, schools would be getting much more than they’ve anticipated over the last couple months, but roughly the same increase called for in the formula.
The proposed, two-year state budget calls for schools to get a $100 million increase in state aid from the state general fund over the next two years.
That $100 million increase is about $130 million less than what districts would receive over the next two years if the state-aid formula wasn’t changed.
But because of projections that revenues will decrease, “arguably, that $100 million doesn’t exist anymore,” said Sen. Greg Adams of York, chairman of the Education Committee.
If the state can indeed come up with the $100 million, stimulus dollars could be added to increase total state aid to the roughly $230 called for in the aid formula.
“There’s a lot of wheels in motion here,” Adams said.
Asked before the meeting of lawmakers how stimulus dollars should be used for state aid, Gov. Dave Heineman said it was premature to discuss it, saying “we’re all having conversations now” about the issue.
“When that extra education money goes away,” he said of the stimulus dollars, “how does that factor into the state-aid formula? It’s a complex issue and we’re trying to look out over the next four years.”
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