Debate begins on proposal to restructure Nebraska public school funding formula

Conflict emerges on whether aid should be targeted and differences in funding for rural districts

By: - April 3, 2023 10:30 pm

Debate on how to restructure the state’s school funding formula — abbreviated as TEEOSA — began on Monday, April 3, 2023, in Lincoln, Neb. (Zach Wendling/Nebraska Examiner)

LINCOLN — Debate began Monday on a legislative proposal to restructure Nebraska’s public school funding formula, a promise Gov. Jim Pillen made on the campaign trail.

Nebraska Gov. Jim Pillen introduced a series of education funding bills in January. (Aaron Sanderford/Nebraska Examiner)

Legislative Bill 583, proposed by State Sen. Rita Sanders of Bellevue at Pillen’s request, is part of a package of legislation to address school funding and property taxes. The changes would specifically address the Tax Equity and Educational Opportunities Support Act enacted in 1990, the main school finance formula known as TEEOSA.

Sanders said the “historic” changes would lead to direct investments in the state’s children.

“It is time that Nebraska gets behind funding our public schools and, while doing so, provides true property tax relief to Nebraskans,” Sanders said.

‘Step in the right direction’

The first component of LB 583 would ensure the state provides 80% of a school district’s special education funding needs when combined with federal funding. The funding would be covered by a new Education Future Fund that would be created by LB 681, proposed by State Sen. Rob Clements of Elmwood at Pillen’s request.

State Sen. Rita Sanders of Bellevue speaks on the floor of the Legislature regarding school funding on Monday, April 3, 2023, in Lincoln, Neb. (Zach Wendling/Nebraska Examiner)

“This is something that school districts have been left behind on for years,” Sanders said.

Under the bill, school districts would receive $1,500 for each student included in the formula. In fiscal year 2025-26, $600 per student per school would lower funding for certain districts. The bill would also reduce duplicate funding for students who use option enrollment to transfer school districts to receive just net option funding, not the baseline aid.

LB 583 also requires that districts report how much additional aid is received and how much property taxes are reduced.

State Sen. Tom Briese of Albion, who alongside Sanders met with school officials to restructure school funding, said LB 583 “truly represents a step in the right direction.”

‘Winners and losers’

Not every senator is optimistic, however, that the students most in need would benefit.

State Sen. Justin Wayne of Omaha said the proposal does nothing to address school funding for young people of color and low-income Nebraskans. These are among the first barriers they face in their lives, he added.

State Sen. Justin Wayne of Omaha speaks on the floor of the Legislature regarding school funding on Monday, April 3, 2023, in Lincoln, Neb. (Zach Wendling/Nebraska Examiner)

“At the end of the day, the formula isn’t working,” Wayne said. “At the end of the day, we are picking winners and losers and instead of just funding kids.”

Wayne said the tweaks to TEEOSA or other situations are examples of “quiet racism,” making changes while leaving behind the communities Wayne and others represent.

By itself, LB 583 does not provide property tax relief, Wayne said, which is why it is part of a package. 

He added that the proposal does nothing to address poverty and would increase the systemic racism that he said exists in school funding.

“Study after study, data point after data point, shows that the ZIP code you are born in and the income levels of your parents are the No. 1 and 2 factors to the educational opportunities you have,” Wayne said.

Helping rural Nebraska

State Sen. Mike Jacobson of North Platte said other inequities exist in western Nebraska.

Farmers and ranchers have predominantly paid their share of taxes, he said, yet they have have been predominantly underfunded by the state but relied upon “almost entirely” for property tax revenue.

“This is the first step to finally try to rectify that,” Jacobson said.

Briese said the funding would be sustainable in future years, which Sanders said is important because the funding needs to make sense when current senators are no longer there.

State Sen. Dave Murman of Glenvil, who chairs the Education Committee, said Nebraska does not adequately pay for poverty in the TEEOSA formula for any schools.

Sanders noted the complaints about the poverty allowance and said there can be some “real discussions” to adjust the formula.

‘Neediest students’

Wayne said he understands that LB 583 is part of a wider package and offered to not hold it up if he’s shown balance in the overall budget for each congressional district in new spending.

“Let’s not invest in the new idea of just throwing money at students,” Wayne said. “Let’s invest in the idea of making sure we put money to our neediest students.”

He noted that decreases in the TEEOSA formula in two years could force some districts to raise property taxes in order to offset the decreases.

“In the name of property tax relief, let’s provide resources to those who need it most,” Wayne said. “I don’t think that’s a crazy request. I don’t think that it’s arbitrary, nor unconscionable.”

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Zach Wendling
Zach Wendling

Zach Wendling is a senior at the University of Nebraska-Lincoln, double-majoring in journalism and political science. He has interned for The Hill and The News Station in Washington, D.C., and has reported for the Nebraska News Service and The Daily Nebraskan.