Pillen proposes $2.5 billion investment in Nebraska’s public education system

Gov. Jim Pillen and several state senators announced sweeping legislation on Tuesday that would change how the state funds public education in Nebraska.

The legislative package, announced at a news conference in the Governor’s Hearing Room, would provide school districts $1,500 for each student they enrolled, boost special education funding and create a special fund to make those programs sustainable into the future.

The suite of bills also includes a measure that would limit school districts’ revenue growth from property taxes.

The bills, which in all reflect a $2.5 billion investment in public education through the end of the decade, emerged from a trio of meetings conducted by the School Finance Reform Committee convened by Pillen after he won the governor’s seat last November.

Pillen, who called the state’s existing Tax Equity and Educational Opportunities Support Act “outdated and unfair,” said the group included senators, school administrators, school board members and representatives of farm advocacy groups.

At its most basic, the existing state aid formula considers a district’s needs against its resources. Schools where the need exceeds the resources that can be generated through local property taxes receive additional funding from the state known as equalization aid.

Only about 90 of the state’s 244 school districts currently receive equalization aid, with those districts typically being the largest in terms of student enrollment: Omaha, Lincoln, Millard and Grand Island.

That has drawn criticism from Republicans and rural lawmakers, who allege the state aid formula is unfair, and has led to legislation seeking to provide state aid to smaller schools in order to reduce their reliance on local property taxes.

On Tuesday, Pillen said bills put forward on his behalf would accomplish both goals.

“I’m really excited about the package of bills everybody has been working on,” Pillen said. “We’re addressing the needs of children and property taxes which was promised over three decades ago. This is what will deliver it.”

Mon. Rita Sanders of Bellevue introduced the main component (LB583) of the package which provides $1,500 in per-student aid – known more commonly as foundation aid – to school districts each year from the Education Future Fund.

The $113 million in foundation aid would be considered a local resource as part of the school funding formula, meaning it would reduce the amount of state aid equalized school districts now receive, but it would increase the amount of state funding to 180 districts across the state .

Both Sanders and Pillen said no school districts would receive less state aid than they are doing now. Pillen said the bill includes a “hold harmless” provision which would prevent school districts from sliding backward in state aid funding.

Sanders’ bill also boosts the amount of funding for special education services to Nebraska schools, bringing the total amount funded by the state and federal governments up to 80% — an investment of $157 million.

“We heard there was a desire to lift all the boats,” Sanders said. “The policy will help both equalized schools and un-equalized schools.”

To pay for the increase in state money to public schools, Sen. Rob Clements of Elmwood will introduce the Education Future Fund, which will be the subject of a $1 billion appropriation in 2023-24, and $250 million in each of the next six years following.

The proposed $2.5 billion fund, in addition to providing more state aid per student and to special education services, could be used for teacher retention programs or to establish mentorship opportunities in schools.

Clements, the Appropriations Committee chairman, said the fund will provide “dollar-for-dollar” property tax relief to Nebraskans: “That’s why I was willing to spend $1 billion as being one of the more conservative senators.”

The final piece of the package, (LB589) from Sen. Tom Briese of Albion, would limit the total amount in additional property taxes schools could request to 3% based on their total revenue. Briese referred to it as a “soft cap” that would fluctuate based on a school’s needs.

“It really is critical to the success of what we’re trying to do here,” he added. “It’s imperative we put some sort of cap or mechanism in place to ensure that happens.”

Fast-growing school districts, or those with large special education or English language learner populations could ask for more in property taxes with a supermajority vote of a school board, or of a school district’s voters, Briese said.

Pillen and members of the working group he put together to come up with the education finance proposals said they were optimistic the bills could navigate the legislative process and end up on the governor’s desk this year.

Senators and other groups outside of the governor’s committee said they looked forward to studying the proposals and their anticipated outcomes.

“We have funds to set aside for this now, which, we didn’t have all the revenue for that in the past,” said Sen. Mike Moser of Columbus, who appeared alongside nine other lawmakers at Pillen’s news conference. “I think the formula looks like everyone’s going to wind up whole when it’s all said and done.”

Mon. Lynne Walz of Fremont, who introduced a bill last year that would have created an education trust fund, said she wanted to see modeling for how much state aid each school district would receive under the proposal before throwing her support behind the bill.

Walz added that she generally supports establishing a trust fund for public education, calling it a good idea to protect schools against future economic downturns.

“If we don’t have some type of reserve that we can rely on in a down time, we’re just going to be going back to the property taxpayers and asking them to increase their property tax,” Walz said. “I’ve always felt a trust fund is a good, solid idea for Nebraska.”

Other groups said they were also waiting to hear more details about the project.

Lincoln Public Schools Superintendent Paul Gausman said the district supported Pillen’s announced desire to increase support for public education, including special education, mentoring and recruiting and retaining teachers.

“We are still analyzing how the proposed bills released today will impact Lincoln Public Schools and the community of Lincoln,” Gausman said in a statement. “We look forward to the continued collaboration with Gov. Pillen and state senators.”

The OpenSky Policy Institute said it planned to explore the impact of the proposals, adding it believed the best way to address property taxes in Nebraska was to boost state support for K-12 education.

“We look forward to modeling the components of his plan to better understand its long-term sustainability, as well as what impact the proposed revenue cap would have on public schools and the students they educate,” Executive Director Rebecca Firestone said in an email.

Pillen, who campaigned for governor as a fiscal conservative, said he viewed the bill with a billion dollar price tag as a long-term investment in Nebraska.

“There’s a big difference between spending and an investment,” Pillen said. “These are investments into the future of our children. These are investments that will also allow us to have a great impact on cutting property taxes across the state.”