Latest news with #LegislativeBill303
Yahoo
02-06-2025
- Business
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New school finance commission approved with hopes for long-term Nebraska property tax reform
State Sens. Wendy DeBoer of Omaha and Jana Hughes of Seward, from left, take photos of the successful vote to move forward a School Finance Review Commission led by Hughes in 2025 and sought by DeBoer in earlier years. May 21, 2025. (Zach Wendling/Nebraska Examiner) LINCOLN — Nebraska lawmakers greenlit a long-term commission Friday to review how the state funds its K-12 schools, a step that could lead to future property tax relief after the latest efforts fell short this year. Legislative Bill 303, from State Sen. Jana Hughes of Seward and introduced at Gov. Jim Pillen's request, passed 48-0. It would create an 18-member School Financing Review Commission to regularly review and suggest possible improvements to the state's main state aid formula to divert sales and income tax dollars to public K-12 schools: the Tax Equity and Educational Opportunities Support Act. 'I hope to be a fly on the wall of those meetings anyway,' said Hughes, who plans to reintroduce legislation in 2026 for additional property tax relief. 'When you hear ideas, then it might spark something else that gives you better ideas.' LB 303 received widespread support, including from the Nebraska Farm Bureau, Nebraska Farmers Union, Nebraska State Educational Association, Nebraska Rural Community Schools Association, Nebraska Council of School Administrators, Nebraska Association of School Boards, Greater Nebraska Schools Association, Educational Service Unit Coordinating Council and the OpenSky Policy Institute. The 'TEEOSA' formula, created in 1990 and perpetually adjusted since, in most basic terms, diverts 'equalization aid' to public school districts if it calculates that a local district has more 'needs' than 'resources.' 'Needs' is calculated among 18 buckets, including a district's poverty concentration, students with limited English proficiency, transportation needs and student growth. 'Resources' includes six buckets of funds, such as estimates of property taxes that could be raised with a $1 tax levy and net option enrollment funds. The formula diverts about $1.2 billion between 245 school districts each year. An increasing number of districts do not receive any TEEOSA aid under the formula, which is why Pillen and other senators in 2023 created 'foundation aid,' distributing $1,500 to school districts roughly for each student. About 60% of foundation aid is considered a 'resource.' Pillen, in a Friday statement, said the state's history with TEEOSA has indicated some 'glaring flaws.' He thanked Hughes for championing a commission that Pillen said could find the 'right solutions' to funding schools and 'ultimately be a part of solving our property tax crisis.' Hughes said the 'significant milestone' has been 'a long time coming' with multiple senators, including State Sen. Wendy DeBoer of Omaha and former State Sen. Al Davis of Hyannis, who each proposed similar commissions. DeBoer, now in her seventh year, routinely fought for the commission, including with LB 500 this year, because she believes it is the best way for a 'deep dive look' at TEEOSA and property taxes generally. She said it can help understand if the state is on the right path,' or if corrections are needed, 'not just today but in the long run.' DeBoer and Hughes are among a rare crop of senators who understood TEEOSA before coming to the Legislature, Hughes because of school board service in Seward and DeBoer because of preparations during her 2018 campaign and as a self-described 'nerd.' The two senators said the implementation of term limits in 2006 also complicated major changes to TEEOSA. State Sen. Dave Murman of Glenvil, chair of the Legislature's Education Committee, said the commission shows the need to reform property taxes and how the state funds its public schools. 'I agree with the desperation of farmers and homeowners that nothing else has worked, so it's worth a try with the commission,' Murman said. A former senator had questioned whether a commission was needed, arguing that lawmakers didn't need an outside advisory group and could act right away for any TEEOSA changes. Murman said the commission could be beneficial, but he's been hesitant to support one in the past because he feared school officials might push conversations in ways that support their local schools or a set group of schools. He said their representation is needed, but he also wanted more taxpayer representation. Hughes embraced those suggestions. With those reservations, Murman said senators should take any recommendations with 'a grain of salt' as they have the final say in legislation. Murman plans to appoint himself as the Education Committee representative on the commission. Hughes, vice chair of the Legislature's Education Committee, has made it one of her personal legislative missions to reform the state's model for funding K-12 schools. Over her years in the Legislature, she hopes to lower school property tax levies and push them closer together. Right now, school districts can tax up to $1.05 per $100 of taxable property valuation. TEEOSA considers a 'local effort rate' of $1 per $100 of taxable property valuation for every school district, a mathematical model to determine what a district could theoretically contribute. LB 303 would have originally lowered both the maximum tax rate and the 'local effort rate' by 3 cents, thereby distributing more dollars to schools to ease the burden of local property taxes. That would have cost more than $120 million, proving too big a hill to climb with the state's budget woes. Pillen originally included LB 303 in his budget proposal in January, but the Appropriations Committee made key diversions from Pillen's proposal, and downward economic projections in April derailed hopes to find additional funds without expanding sales taxes. Instead, the bill moved forward only with the review commission, the members of which will need to be appointed within one month of the governor signing the bill. A first report is due Dec. 1, with subsequent reports each Nov. 1 after. The commission's main duties are to: Evaluate TEEOSA and make recommendations for adjustments or changes 'that may be necessary to help prevent the increase of property taxes.' Regularly review both the 'needs' and 'resources' sides of the TEEOSA formula. Analyze how to minimize the negative impact on schools during times when the state might not be able to fully fund the TEEOSA formula. Examine the impact of funding for education on student achievement and outcomes, including access to early childhood education, student attendance, literacy, graduation rates, college-going rates and postsecondary workforce participation. Consider the impact of funding on issues and resources impacting students with relatively high needs, including students who live in areas of high concentrations of poverty, students with an individualized education program and students with limited English proficiency. Hughes' bill languished in the Education Committee until mid-May, largely because of a lack of funds. But it also stayed behind as a backup for property tax reform. 'We had to get a better feeling of what mechanisms might work to fund schools and property tax relief,' Murman said. 'We wanted to keep all options open.' Murman tried to keep LB 303 in committee longer than when the committee met May 9 to advance the bill 7-0, which could have hurt the chances of the bill reaching its finish line. The bill reached the full Legislature on May 15, the 80th legislative day, and passed on the 88th legislative day. Lawmakers will adjourn for the year Monday. At the committee meeting to advance LB 303, a committee staffer urged Murman to oppose LB 303, or at least not vote to advance it. But Murman voted it out of committee and approved it along the way. He said his concerns weren't personal. Hughes challenged Murman for committee chair in January. He won reelection 29-20. LB 303 sought three state senators as nonvoting members of the commission. However, Murman said the Education Committee chair should be a member, which some committee members pushed back on. Hughes changed her bill so the senators are the chairs of the Education and Revenue Committees, or their designees, and one at-large senator. No more than two senators can be of the same party, and both chairs are Republicans. If the Revenue Committee chair appoints himself, Hughes would not be able to serve on the commission because she, too, is a Republican. Hughes said she doesn't see a big recommendation coming from the commission this year but will continue work ahead of the 2026 session on how to drop school property tax levies and increase property tax relief. She plans to work with at least six other senators, two each from the Appropriations, Education and Revenue Committees, with even political party splits. 'People may or may not have noticed what a big bill it is,' DeBoer said, 'but it is a big deal towards the ultimate goal of finding the right way for Nebraska to finance education.' The School Financing Review Commission shall consist of: The state commissioner of education (currently Brian Maher), or the commissioner's designee, who will chair the commission. The state property tax administrator (currently Sarah Scott), or the administrator's designee. One representative of the governor appointed by the governor. Three members of the Legislature, including the chairs of the Education Committee (currently State Sen. Dave Murman) and Revenue Committee (currently State Sen. Brad von Gillern) or their designees. Up to two senators can be from the same political party. One member who is a representative of postsecondary education with expertise in school finance. One representative of a Class V school district (Omaha Public Schools). One representative of a Class IV school district (Lincoln Public Schools). Four superintendents or school board members representing Class I, II or III school districts (smaller than OPS or LPS). No more than two members can be from the same school district class. Five members appointed from the state at large, including at least one with experience in business, one with experience in farming and one who is an active certified teacher in a public school. The commission must meet at least once each calendar quarter. Commissioners would need to be designated by early July. The Nebraska Department of Education, Nebraska Department of Revenue and the Legislature's legislative fiscal analyst can provide data and assistance as needed. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Yahoo
06-05-2025
- Business
- Yahoo
Alternative Nebraska budget would repurpose, eliminate 16% of property tax relief
State Sen. Machaela Cavanaugh of Omaha leads a listening session for Lincoln residents on property taxes. She is flanked by State Sens. Terrell McKinney of Omaha and Lynne Walz of Fremont. July 22, 2024. (Zach Wendling/Nebraska Examiner) LINCOLN — As debate on Nebraska's budget for the next two years begins, one state lawmaker has proposed a counter budget that would eliminate about 16% in anticipated property tax relief. State Sen. Machaela Cavanaugh of Omaha filed amendments Tuesday to defund the property tax credit meant to offset local school district taxes, which as of last fall became automatic on annual property tax statements. Next year, that fund will grow to $780 million and will grow again by $38 million in the following fiscal year. Eliminated tax relief Cavanaugh, a first-time member of the Appropriations Committee, seeks to instead direct about 58% of the $780 million total next year, or $455 million, toward more aid to schools, indirectly lowering property taxes. School district maximum property tax rates would fall from $1.05 to 80 cents, mirroring proposals from Gov. Jim Pillen and State Sen. Jana Hughes of Seward during the most recent special session on property taxes and again in this year's Legislative Bill 303. Another 26% of the property tax credit total, $203 million, would be directed to counties, aimed at reimbursing them for the expenses of operating local jails. Cavanaugh's proposal would not touch the $422 million planned next year for a separate property tax credit fund that directly offsets property taxes based on valuations. The remainder is $122 million that would be directed to other priorities, including investments in public health, public safety, court services and preventing sweeps of certain cash funds to shore up the funds. 'Solution to a manufactured budget crisis' The core budget bills are LBs 261 and 264 that the Appropriations Committee advanced with Cavanaugh as a lone 'no' vote. While lawmakers must budget for the next two years, Cavanaugh limited the breakdown of her amendments to just the next fiscal year. While declining to answer certain follow-up questions on her proposal, Cavanaugh said her budget would be balanced over the biennium. 'These amendments are a responsible solution to a manufactured budget crisis,' Cavanaugh said in a statement. 'They protect working families, ensure our schools and health systems remain strong, and invest in community-based justice — all without shifting the burden onto Nebraskans through tax hikes or reckless cuts.' Five Omaha-area senators and two lawmakers from Lincoln and Bellevue host a listening session on property taxes in Omaha on Sunday, July 21, 2024. From left, State Sens. Carol Blood, Christy Armendariz, Jane Raybould, Merv Riepe, Terrell McKinney, John Cavanaugh and Machaela Cavanaugh. (Zach Wendling/Nebraska Examiner) Separately, the conservative-leaning, free market-focused Platte Institute also proposed a budget alternative that includes 'freezing' the school district property tax credits and a separate fund for property tax relief at current levels. That would save about $162 million over the next two years. Cavanaugh's budget amendments also would take $135 million from the planned Perkins County Canal in western Nebraska and about $150 million set aside for a new state prison. About $100 million would be invested in the Nebraska State Penitentiary in Lincoln 'for comprehensive renovation, modernization and improvement,' while the other amount would be invested elsewhere. Targeted investments Among Cavanaugh's top priorities is preserving or investing: $28.7 million for the Vocational and Life Skills Programming Fund. $15.3 million for behavioral health. $10 million for food banks. $8 million for the Nebraska Water Sustainability Fund. $8 million for the Education Future Fund (retaining an annual $250 million transfer). $5 million for the Nebraska Soil and Water Conservation Fund. $5 million for the State Park Cash Revolving Fund. $4 million for the Middle Income Workforce Housing Investment Fund. $3.5 million for local public health departments. $3 million for domestic violence housing. $1.3 million for state specialized courts (such as problem-solving or veterans courts). $1.2 million for the Economic Recovery Contingency Fund. $1.2 million for court interpreters. $999,422 for probation community corrections. $500,000 for federally qualified health centers. $373,840 for juvenile justice. $284,738 for the Office of Public Guardian. Cavanaugh proposes to also fund all state 'code agencies,' those under the governor's direct oversight, at each agency's full appropriations request. All other state agencies would get a budget increase of up to 2.5% next year. She declined to say what the overall spending increase would be compared to the proposed Appropriations Committee budget. For example, Cavanaugh would give the University of Nebraska $50.6 million more than the Appropriations Committee proposed over the next two years — adding up to a $63.7 million bump for NU. The Attorney General's Office would be held flat, which comes as progressives such as Cavanaugh or State Sen. Danielle Conrad of Lincoln have scrutinized its spending. Similar to the advanced budget bills, Cavanaugh proposes to sweep money from at least 60 cash funds, but she declined to detail the total savings. 'These are not just line items — they are lifelines,' Cavanaugh said. 'We're choosing to invest in people, protect long-term reserves and lay a foundation for future prosperity.' 'We have to do what we can' Multiple senators said the Cavanaugh amendments were dead on arrival as property tax relief rises among a top issue for constituents, even though it is assessed locally. State Sen. Paul Strommen of Sidney meets with his staff on the floor of the Nebraska Legislature. March 26, 2025. (Zach Wendling/Nebraska Examiner) Pillen, too, has set his sights on increased property tax relief after the budget is balanced, saying in a recent interview with the Nebraska Examiner that he is '100% confident' that the Legislature can balance the budget and keep growth in statewide property taxes flat. That comes in the face of what has in two of the past three years been an annual increase of $300 million. Last year, for the first time in 26 years, property taxes decreased by $6 million from a $5.3 billion total. State Sen. Paul Strommen of Sidney, a freshman on the Appropriations Committee, said he has learned this year that part of his committee's role is balancing taxes and state services, not choosing one over another. Like many senators, he said the top concern for constituents is tax relief. 'At the end of the day, we just have to figure out what we can do to balance all of that,' Strommen said. 'Not everybody's going to be happy, but we have to do what we can.' SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Yahoo
11-02-2025
- Business
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School, ag advocates largely endorse Nebraska school finance reform proposal
State Sen. Jana Hughes of Seward, center, talks with State Sens. Wendy DeBoer of Omaha, left, and State Sen. Teresa Ibach of Sumner at a legislative retreat in Kearney on Friday, Dec. 13, 2024. (Zach Wendling/Nebraska Examiner) LINCOLN — Education advocacy organizations and the state's largest rural-focused organizations largely endorsed an 'incremental' proposal Monday to reform Nebraska's core school finance formula. Legislative Bill 303, from State Sen. Jana Hughes of Seward and introduced at the request of Gov. Jim Pillen, would bring down maximum school property tax rates by 3 cents, from $1.05 to $1.02. More state funds would be funneled toward the state's 245 school districts using the state aid formula, the Tax Equity and Educational Opportunities Support Act (TEEOSA) passed in 1990. TEEOSA includes many funds that amount to a district's 'equalization aid,' based on 'needs' minus 'resources.' For the 2024-25 school year, 75% of the state's school districts did not receive equalization aid. The Hughes effort continues a push by her and Pillen to increase the number of districts receiving equalization aid. The bill also would increase recently established 'foundation aid,' by 6%, to $1,590 from $1,500 roughly per each K-12 student. The state would invest nearly $120 million in new state funding over the next two years, which is included in Pillen's recommended budget as a strategic investment, in a year where the state must close a projected $432 million budget deficit. In addition, LB 303 would create a 15-member School Finance Reform Commission, consisting of superintendents, the state education commissioner, lawmakers and representatives from the Nebraska Department of Education. The goal of that group is to find longer-term solutions. 'This is a little bite at the apple, and I hope we keep making chunks at it as we go forward,' Hughes told the Education Committee, where she serves as vice chair. Hughes, a former school board member for Seward Public Schools, said school finance has been 'largely left on auto steer for decades.' She said she appreciated Pillen's willingness to start pulling some levers in the formula 'to steer us on a new course.' Hughes has dedicated her time in the Legislature to school finance reform. In her second year last summer, for Pillen's desired special session, she proposed a 10-year plan to lower maximum property tax rates. By the end of her 'Lower The Levy Cap' plan, the state would have taken on a majority of operational expenses for schools to reverse increasing reliance on property taxes. Pillen had a similar goal, but his summer plan sought to take on all operational expenses, eliminating the general fund property tax rate for schools, before lawmakers pivoted to Hughes' model, which fell short in the 17-day special session. The governor repeated his ambition Monday that the state should fund, but not run, local K-12 schools. He said the state must find a balance among federal, state and local funding. 'School districts often live under uncertain budget circumstances,' Pillen said. 'That's not the way to educate and have a focus on our kids.' Hughes received widespread support at the hearing, including from the: Educational Service Unit Coordinating Council (ESUCC). Greater Nebraska Schools Association (GNSA). Nebraska Association of School Boards (NASB). Nebraska Council of School Administrators (NCSA). Nebraska Rural Community Schools Association (NRCSA). Nebraska State Educational Association (NSEA). Schools Taking Action for Nebraska Children's Education (STANCE). OpenSky Policy Institute. Nebraska Farm Bureau and the Ag Leaders Working Group with Nebraska Cattlemen, Nebraska Corn Growers Association, Nebraska Pork Producers Association, Nebraska Sorghum Producers Association, Nebraska Soybean Association, Nebraska State Dairy Association, Nebraska Wheat Growers and Renewable Fuels Nebraska. Nebraska Farmers Union. Individual school districts: Lincoln Public Schools, Milford Public Schools, Millard Public Schools and Papillon-La Vista Community Schools. Shane Rhian, chief financial officer for Omaha Public Schools, was the lone opponent testifying against Hughes' bill. He argued the bill would hurt OPS's budget in the near future and amount to 'another erosion of local control.' Rhian said one variable that could impact OPS the most is the full district might no longer qualify for universal free lunch and breakfast soon, leading to a projected loss in $30 million in state aid, approximately 9 cents for property taxes. He suggested keeping the current $1.05 lid for property tax rates, keeping foundation aid at $1,500 (which was established in 2023) but reducing the assumed portion that districts could contribute in the TEEOSA formula. TEEOSA currently sets this 'local effort rate' as the hypothesized value that school districts could contribute as $1 per $100 of valuations in the district. This goes into the 'resources' side of the equation, essentially hurting school districts that have lower tax rates. Hughes' bill would drop this to 97 cents, in line with her 3-cent drop in the maximum tax lid. Rhian said it should be 96 cents, without reducing the top tax rate cap, which would put the state on the hook for more funding to schools. It would not lower how much schools can raise in property tax rates. 'We appreciate Senator Hughes and the governor for their commitment to funding public schools and stand ready to be a partner in lowering the property tax burden for our patrons,' Rhian said. OPS has taken the stance of opposing legislation that could cause the district, the largest in the state, to be more reliant on state funding, earning the ire of some past committee members. Andrew Rikli, superintendent of Papillion-La Vista Community Schools, the fourth largest district in the state, said dropping the maximum tax rate can provide substantive tax relief. He and Liz Standish, associate superintendent for business affairs for Lincoln Public Schools, said they appreciated the bill represented an incremental step and that there would be a commission to help understand the complex formula. 'As much as we might want to make a major change, for those of us that work in school finance day to day, there's a lot of moving parts and you get really nervous about unintended consequences really quickly,' Standish said. Rikli said the commission over time can best monitor and respond to changes as needed, rather than perennial updates since the law's enactment in 1990. Tim Royers, president of the NSEA, representing 26,000 teachers statewide, recommended including school board members, chief financial officers or frontline educators and not just superintendents. He and Hughes noted the commission will need to fix the proposed group's membership so lawmakers are nonvoting members of the executive branch commission, as required under the constitutional separation of powers. Royers described LB 303 as 'the best school funding bill to come from the governor's office in at least a decade.' The NSEA generally stays neutral on TEEOSA-related bills, because of different district-level impacts, but NSEA supports the across-the-board increase in foundation aid. Pillen created that model to give all districts roughly $1,500 per student. LB 303 would increase that to $1,590 under Hughes bill, while bills from State Sens. Dave Murman of Glenvil and Wendy DeBoer of Omaha could lead to greater foundation aid overall, based on inflation or a district's specific needs. Colby Coash, on behalf of the school boards association, said his members appreciated the increased state investment in LB 303 for being an 'easily scalable bill.' 'But more than that, and in comparison to what we saw happen in the special session and previous sessions, we think this is a doable piece of legislation and it keeps local control central, which is really important to our members,' Coash said. Hughes said that if the state has additional funds, such as through a lower-than-projected deficit or increased revenue possibly through sales taxes, it would be used to lower valuations inside TEEOSA. This includes agricultural land, which has seen valuations skyrocket. State Sens. Tom Brandt of Plymouth and Myron Dorn of Adams, both farmers, partnered with Hughes on her bill. They identified about two dozen 'luxury' items and services, such as dating services or pet grooming, that are currently sales tax exempt that they say could be used to bring in new revenue for tax relief. Bruce Rieker, senior director of state legislative affairs for the Farm Bureau, cautioned the committee that members must not stop. He noted that in the next two years, property taxes would increase by approximately $600 million, meaning even with LB 303, that's an increase of $475 million statewide. Hughes said her long-term goal is moving school property tax rates statewide closer together. Over time, she said the state can focus more on student success and teacher or staff retention. 'It is a small step, but it is a step in the right direction,' Hughes said of her bill. 'If we can keep going down this path and whittling away this, I think we can get into a place where we're all in a better spot.' Dave Welsch, a farmer and current school board president for Milford Public Schools, with more than 33 years of school board experience, told the Education Committee he's worked intensively the past 10 years around the TEEOSA formula. He said the formula needs to be reviewed every year but encouraged a more comprehensive review and offered what he called 'The Simple Plan.' It seeks to repurpose the 'resources' side of TEEOSA and bring maximum property tax rates down to 45 cents. To do so, Welsch proposes repurposing the state's existing property tax relief programs and finding $240 million. 'LB 303 makes some steps in the right direction,' Welsch said. 'But if you don't have a target to aim at, you're going to miss it every time. Taking small steps, sometimes you get off track.' 2025.26 TEEOSA Model LB 303 SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
