Taxes and school funding are closely linked in this year’s Nebraska Legislature, so let’s look at a major proposal being considered in the debate – LB 589.
Known as the School District Property Tax Limitation Act, LB 589 would place a cap on what our public schools can request through property taxes each year.
OpenSky opposes LB 589, which essentially caps total revenue for schools, including districts with growing student populations and increasing needs beyond their control.
What the bill does
LB 589 would restrict growth in revenue available to school districts to 3% a year with the potential to override the cap based on a vote by the school board or district patrons. A provision would account for enrollment growth and other changes in student needs, but the factors used to raise the cap are in many cases not enough to cover the increased expense.
Basing growth on the prior year’s property tax request and non-property tax revenue as proposed in LB 589 means the cap would apply not just to property taxes, but to all sources of state revenue, excluding special education and federal funding. That means a district’s property tax request would need to go down any time it received an influx of non-property tax revenue like state aid.
It’s important to understand how these revenue caps would interact with increases in state aid, since the Legislature this year is considering a proposal, LB 583, from the Governor to increase state funding for K-12 education.
We looked at the impact of LB 589 on a number of the state’s school districts when connected with the governor’s proposal to increase state aid.
For many districts, what the state would add to the revenue pie would be eaten away by the proposed revenue cap. At Superior Public Schools, a district of 370 students in Nuckolls County, the state would provide approximately $780,000 in new state aid but reduce what it could draw from property tax revenue by $775,000. A slight deficit remains even if a supermajority of local school board members voted to exceed its property tax asking authority by an additional 7%.
Similarly, the revenue cap would limit what Papillion La Vista Community Schools, a suburban Omaha district with 11,600 students, the state would provide approximately $9M in new state aid but reduce what it could draw from property tax revenue by $10M. A deficit remains even if a supermajority of local school board members voted to exceed its property tax asking authority by an additional 4%.
Our school districts are already subject to both a spending limit and a levy limit. Further revenue restrictions, like those in LB 589, would significantly limit funding for school districts and make it more difficult to provide a quality education during a time of inflation, staffing shortages and increasingly complicated student needs.
