Education Committee considers school funding changes

Gov. Jim Pillen’s proposed state takeover of operating costs for Nebraska schools was the focus of a legislative hearing Thursday, even though many details of the plan still need to be worked out.

Pillen has proposed expanding the state sales tax and other measures to pay school operating costs that are currently paid by property taxes. Declaring a property tax crisis, the governor has called the Legislature into a special session to try and pass those ideas. But at Thursday’s public hearing, Connie Knoche of the Open Sky Policy Institute urged senators not to rush into anything.

“We believe that the path to meaningful and sustainable property tax reform will come through a thorough and comprehensive review of the way we fund public education in our state, and there is no silver bullet to updating our school funding system,” Knoche said. "And any real change will require significant expertise brought to bear through an open and transparent process."

Ben Welsch of the Nebraska State Education Association – the school employees union – said it’s important to maintain local control of schools. Acknowledging state policy had recently shifted school costs onto local property taxpayers, he cautioned against a total reversal.

“The pendulum has already gone to where the locals are taking on that burden. How far should the pendulum – like, do we really go 100% the other way, then?” he asked.

Pillen’s plan would still have schools use property taxes to pay for building projects and other voter-approved uses. Sen. Lou Ann Linehan questioned why having the state pay a larger share of overall costs would threaten local control any more that some current arrangements.

“Omaha, Hastings, South Sioux City, other schools where you have a large number of low income kids – and this should be, I'm not saying this is wrong – they get 60% of their money from the federal government and the state now. Sixty percent. And we haven't had any effect on their local control. So why is it that if we get to 80% (state and federal share) that's going to affect it?” Linehan asked.

The governor has proposed that while the Legislature should act on his tax changes now, senators should wait until next year to make changes in the state school aid formula. Linehan has introduced a so-called “shell” bill – one that says the Legislature will act in the future, but without any details – in case it’s needed later in this special session. The NSEA’s Welsch objected to that procedure.

“The very essence of a democratic legislative system is to ensure that all stakeholders have a clear understanding of the proposed policies and the potential impacts before any decisions are made," he said. "When a shell bill is introduced without specific content, it deprive citizens, advocacy groups and other interested parties have the opportunity to adequately prepare and present their views during legislative hearings."

More from the Legislature's special session:

Online sports betting touted as way to reduce property taxes

Committees hear support, opposition to Pillen’s budget and tax proposals

Legislation to legalize online sports betting introduced in special session

Senator introduces bill to sell state plane for property tax relief

Supporters promote alternative to Pillen's property tax proposal

Sen. Danielle Conrad criticized Pillen and the senators he worked with on his plan this summer for not providing details of how they think the new school finance system would function.

“It is beyond reckless that there is no proposal put forward by said Governor and said legislative leaders to show how that would work," Conrad said.

Conrad did secure a promise from Sen. Dave Murman, chair of the Education Committee, that he would hold a public hearing if there was going to be an effort to fill one of those “shell” bills with details and try to get it passed during this special session.

“I think it would ease committee members mind and the public's mind if there was some sort of commitment to actual transparency, that the shell bills will not be utilized as vehicles for major changes to educational funding or policy without again being subjected to public hearing. Do you feel like that's a commitment that you could make?” she asked

“Sure,” Murman replied, drawing an “okay” from Conrad.

Public hearings for this special session are currently scheduled to end Saturday. The Legislature will then take Monday and Tuesday off while the Revenue Committee tries to put together a tax package, which Speaker John Arch said could be debated as soon as next Thursday.