LINCOLN – Education organizations have joined the opposition to the Nebraska Legislature’s current bill that would reform the school funding model to provide property tax relief.

The Education Collaboration – which represents teachers, administrators, school boards, rural schools and more – said a proposed amendment to Bill 9 “risks breaking an existing school funding formula.”

That’s because the plan would direct a “disproportionate share of school funding” to schools through the state: nearly $2.3 billion. One section of a draft amendment and LB 1 proposes eliminating the general school fund levies in the future, as Gov. Jim Pillen proposed this summer.

“This proposed change would leave the allocation of critical funds entirely to future legislatures, significantly undermining local control,” the Education Collaboration said in a statement.

Maximum 25 cents tax

Eight organizations are represented in the group: Nebraska Council of School Administrators, Nebraska Association of School Boards, Nebraska State Education, Schools Taking Action for Children’s Education (STANCE), Greater Nebraska Schools Association, Nebraska Rural Community Schools Association, Educational Service Units Coordinating Council and Stand for Schools.

The legislature’s intent is to achieve property tax relief by targeting the largest property tax collector, which bears about 60% of the local tax burden: public schools in grades K-12, of which there are 244 districts.

The original LB 9, by state Sen. Jana Hughes of Seward, would have gradually reduced school districts’ tax authority to 25 cents by 2033-34. By initially reducing the tax rate to 65 cents, lawmakers would have had to find additional funds every two years to reduce it by another 10 cents. This was received more positively than eliminating that tax authority entirely.

One draft amendment still contained language that would abolish the tax agency. State Senator Lou Ann Linehan of Elkhorn, chair of the Finance Committee, said that was “incorrectly included.”

“The Revenue Committee voted for 25 cents because LB 9 ultimately reduced the levy to 25 cents,” Linehan wrote.

Linehan said she was “very disappointed” with the Education Collaboration’s statement, saying most schools are funded by property taxpayers. She noted that several schools already receive 60% of their funding from state and federal sources.

“So if 25% is not the right number, what is the right number?” Linehan asked, which she did several times during the special session.

Commission for School Financing

Education Collaboration said the proposed LB 9 plan does not provide new funding to schools. Instead, it is “a net loss of taxing authority, resulting in cuts to schools and less support for students.” Several school superintendents and school board members who have used Nebraska Department of Education funding models have estimated they, too, would suffer a net loss.

The group said that “property tax reform is urgently needed,” but added that increasing funding, particularly to address teacher shortages, is “equally important.”

“The rushed nature of this process does not allow for careful planning, sufficient foresight, or the involvement of school finance experts and models to prevent negative impacts and unforeseen consequences,” the statement said.

The education-oriented group recommended the establishment of a school finance commission “to avoid catastrophic outcomes”, which should consist of at least the following members:

• Members of the school board.
• School business managers from different schools.
• Delegates of the Nebraska Association of School Boards.
• Educators represented by the Nebraska State Education Associations.
• School finance officials at the Nebraska Department of Education.

Previous K-12 investments

Linehan said, “Obviously, the collaborative is not clear about what the bill does,” and said $1.8 billion would be new state funds. However, it would largely replace money that could come to schools through property taxes, and schools would retain at least $950 million in taxing power.

She pointed to 2023, when lawmakers increased state grants for schools by $328 million, “the largest increase in state funding in decades.” That includes $1,500 in basic grants per student and a doubling of state funding for special education.

A revised amendment to LB 9 is not yet available for review or public comment, but Linehan said the intention remains to increase state funding for schools by 3% annually.

In a special session, lawmakers are not bound to 90- or 60-day sessions. Linehan has said there is no end date for a reason and that 25 lawmakers will stay as long as they want.

The legislature ended its ninth day on Thursday and then abruptly adjourned for the weekend. Linehan said it was her job to negotiate and the committee needed to be ready to meet Monday morning. Debate on LB 9, a new tax package, could begin as early as Tuesday.

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