Nebraska school funding meeting raises questions of state contributions, local control

School district leaders on the new School Financing Review Commission also said they are wary of losing local control if the state takes a more direct role in funding.

Lawmakers and former lawmakers said they understood concerns about local control, but they said state funding doesn’t mean the state will dictate district operations.

Much of the commission’s focus was the history of school funding, particularly the Tax Equity and Educational Opportunities Support Act, or TEEOSA. “If we are to get a grip on the state’s property tax crisis, we must be willing to address the ever-growing burden that falls on property tax as a result of footing the bill for our schools,” Pillen said.

The Omaha Public Schools, Nebraska’s largest school district, was the lone entity to testify against Legislative Bill 303, which created the commission, at its hearing in February.

That bill initially included a lower cap on the maximum property tax rate and sent more state funds to public schools. The financial components of the bill were removed, but the formation of the commission survived.

OPS received about $392 million from the state in its current budget, which totals $812 million. The district has opposed a shift from local to state funding.

In a 2024 written statement before the special session to find property tax relief, the district stated that reliance on state funds reduces autonomy over budget priorities.

It also stated “property tax is the most predictable and stable tax source” and one that districts themselves control. School board member Shavonna Holman, who serves on the commission, declined to speak to The World-Herald, saying she could not speak on behalf of the district.

Ann Foster, superintendent of Brady Public Schools, shared similar concerns: “Being out in western Nebraska, I don’t want to lose the autonomy to be able to offer full family insurance. I don’t want to be able to lose the autonomy to be able to set our teacher salaries for our needs and for our cost-of-living in a rural area.”

Brady enrolls about 200 students. She and other superintendents on the commission emphasized the great differences in demographics, enrollment and geography among their districts, creating challenges for statewide education policies.

Meanwhile, State Treasurer Tom Briese said he thinks the state should fund all of education, a shift he acknowledged would take a lot of time. But he felt that should be the long-term goal.

Lawmakers pushed back on the notion that funding would limit school districts.

“I don’t think your concern about the erosion of local control is misplaced. But I don’t think you should pair that concern with funding,” State Sen. Eliot Bostar of Lincoln said. “I think the threat, if you will, of interest in wanting to micromanage school districts exists, even if there is no funding at all.”

Sen. Jana Hughes of Seward sponsored LB 303 and said when she was on the school board in Seward, state control wasn’t tied to money. “The state would say, ‘Hey, schools, you have to do X, Y, Z, and I’m not giving you money to do it. You just have to do it.’ They do it all the time.”

In the most recent Legislative session, lawmakers passed bills that banned cellphone use in schools and limited sports by students’ assigned sex at birth.

Hughes said she ran for the school board to rein in property taxes. She also observed how higher property assessments led to reduced state funding, recalling her district would get about $250,000 in a budget of about $18 million.

In recent years, districts have received funding per pupil, but most are not receiving funds through TEEOSA. Pillen said of 244 school districts in Nebraska, more than 200 don’t get TEEOSA dollars. Hughes said TEEOSA worked when it started, but it hasn’t been adjusted to account for things like agricultural land value increases to maintain state funding.

Lou Ann Linehan, a former lawmaker who pursued legislation to relieve property taxes, said at the meeting that they would have to take a look at alternative sources to fund schools, like income and sales taxes. Bills the past two years have tried to tax services and junk food or increase the tax on tobacco and vapes and junk food in the name of property tax relief but ultimately failed or advanced in a heavily diminished form.

“It kills me,” Linehan said.

The commission consists of Nebraska Commissioner of Education Brian Maher and 17 members whom Pillen appointed under various criteria in LB 303. It will meet again in September and plans to meet at least monthly ahead of Dec. 1, when it must submit a report to the Legislature. The commission doesn’t have an expiration date, so it will continue to work on funding reforms into 2026.