Nebraska’s approach to school funding has shifted significantly in recent years, with a greater reliance on state funds rather than local property taxes. However, recent budgetary challenges could put this trend at risk, as the School Financing Review Commission discussed recently.
Historically, Nebraska’s school funding was primarily supported by local property taxes, which accounted for about 55% of the costs three years ago. State income and sales taxes contributed approximately 35%, while federal funds made up the balance. In a recent shift, state funding increased to 53%, reducing the burden on local property taxes to 38%. This resulted in a reduction in property taxes for many Nebraskans, though not sufficiently to prevent initiatives aimed at further lowering or eliminating these taxes.
However, changes in federal tax policies and a sluggish economy have led to a $367 million reduction in state revenue projections over the current and next fiscal years. Despite these challenges, Sen. Jana Hughes emphasized the importance of maintaining the state’s current contribution level to 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 stated.
Looking ahead, there are discussions among commission members about increasing the state’s share of school funding to between 60% and 75%. Nevertheless, some caution that increased state funding might lead to a reduction in local control over education spending. Liz Standish, a commission member and associate superintendent for business affairs for Lincoln Public Schools, expressed concern over the potential loss of local authority, stating, “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.”
Sen. Hughes, however, downplayed these concerns, arguing that local control would remain intact. “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 assured.
The commission is scheduled to reconvene on November 18 and is expected to submit a report on school finances to the Legislature by December 1.
