Budget squeeze seen to limit school finance reform, for now

Nebraska has been using more state funds and less in property taxes to pay for schools. But current budget problems could challenge that trend, as the School Financing Review Commission heard Friday.

Three years ago, local property taxes paid about 55% of school costs, state income and sales taxes paid about 35%, with federal funds providing most of the rest. Last year, with increased tax credits, the state paid about 53% for schools, and local property taxes 38%. So many Nebraskans saw a decrease in their property taxes – but not enough to prevent two petition drives aimed at reducing or eliminating them.

Now, federal tax changes and a weaker economy are reducing state revenue projections by $367 million over the current and next fiscal years. Sen. Jana Hughes said it’s important to hold on to the progress already made in bringing state funding to 53% of school costs.

“If we can hold the line when looking at a negative $200 million – whatever we’re looking at – then I think that’s a win for us,” she said.

Longer term, commission members discussed further increasing the state share of school costs, with several mentioning goals of between 60% and 75%. But others warned of a possible loss of local control that could accompany increased state funding.

“A board of education right now has local ability to appropriate funds to meet strategic goals, to advance their school district. And if we diminish that local board's authority to appropriate funds, because all of the appropriation comes through the state, that would be concerning,” said Liz Standish, a commission member and associate superintendent for business affairs for Lincoln Public Schools.

Hughes downplayed that concern.

“The state might give you more money, but you're determining where it gets spent. You're determining, are we hiring a new teacher for this? Are we going to invest in this? And we need a new roof. You're not giving that local control up,” she said.

The commission’s next meeting is Nov. 18. It is due to send a report to the Legislature on school finances by Dec. 1.