Senator proposes legislation to change Nebraska’s school funding formula

A bill attempting to increase equalization aid to schools and lower property taxes in the state legislature saw support and concerns during a Monday legislative hearing.

LB1038 aims to adjust several parts of the school funding formula TEEOSA, like lowering the maximum tax levy from $1.05 to 50 cents, while also redirecting money from property tax credits to go to schools. Sen. Jana Hughes introduced it in an attempt to give relief to taxpayers while making sure schools have the best chance for equalization aid. Currently, about 50 out of more than 200 districts receive equalization aid from the state.

“We have an opportunity here to control the money that we've given for property tax and use it in what, my opinion, is a better way,” Hughes said. “We're repurposing that money, being more targeted and accomplishing things that we haven't seen.”

The bill would also eliminate several parts of TEEOSA, including funding earmarked for schools using a community achievement plan and an averaging adjustment in the formula that helps larger districts with at least 900 students. Hughes said taking these parts out will help simplify TEEOSA.

“If I had $1 for every time I heard how complex TEEOSA was, we could fund TEEOSA,” Hughes said.

Dave Welsch, who serves as president of the Milford Public Schools board and supported the bill, said school levies currently range from 32 cents to the current maximum of $1.05.

“This is not a bill that's directed towards urban or rural,” Welsch said. “It's directed towards the entire state, because there are school districts across the state with high levies, and there school districts across the state that have lower levies.”

Kyle Fairbairn, director of the Greater Nebraska Schools Association, said bringing tax levies closer together was a positive aspect of the bill and would help taxpayers see what they pay. However, he opposed the bill because of the eliminations and a 40% decrease in property valuations in the TEEOSA formula for agriculture properties compared to a 10% decrease for residential.

“My group doesn't think that's fair,” Fairbairn said. “I don't have a lot of school districts that have ag values, so a 40% reduction in one and a 10% reduction in another, I think is a bit much with the way property taxes have gone up on residential in the past five years.”

Most speakers shared concerns with the lack of modeling that shows the impact the bill would have on school funding and property taxes. Hughes said she is waiting for those numbers from the state education department.

Five people spoke in support of the bill, two in opposition and four in a neutral capacity. The committee took no immediate action on the bill.

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