Foundations of School Finance Policy

1
Foundationsof School Finance Policy
Presented by Nebraska Council of School
Administrators Michael Dulaney, NCSA Associate
Executive Director
2
I. Introduction School finance policy
discussions, similar to other policy matters, are
divided into three arenas The
philosophical The political The technical
3
II. Brief History of TEEOSA The Tax Equity and
Educational Opportunities Support Act
4
II. Brief History of TEEOSA
The policy preceding TEEOSA was the School
Foundation and Equalization Act of 1967 Three
major components
- Foundation aid - Equalization aid - Incentive
aid
5
II. Brief History of TEEOSA
The policy preceding TEEOSA was the School
Foundation and Equalization Act of 1967 Three
major components
- Foundation aid - Equalization aid - Incentive
aid
6
II. Brief History of TEEOSA
The birth of the present school finance system
involved several remarkable feats of political
achievement
v LB 1059 became law during a 60-day (short)
session v LB 1059 accomplished a major shift in
the source of funding for Nebraskas public
schools v LB 1059 not only survived a
gubernatorial veto, but also a referendum seeking
its repeal.
7

• II. Brief History of TEEOSA
• The intent of LB 1059 was to create a true
  equalization formula whereby school districts
  that need the most state financial support
  actually receive the most financial support.
• The intent of LB 1059 was to create real and
  lasting property tax relief by shifting more of
  the cost of public education to the state and
  away from local resources.
• In 1990, Nebraska was one of the nations
  highest-ranking states in terms of property tax
  dependence for public education. At the time,
  nearly three-fourths of the funds for Nebraska
  schools derived from property taxes.

8

• II. Brief History of TEEOSA
• The intent of LB 1059 was to create a true
  equalization formula whereby school districts
  that need the most state financial support
  actually receive the most financial support.
• The intent of LB 1059 was to create real and
  lasting property tax relief by shifting more of
  the cost of public education to the state and
  away from local resources.
• In 1990, Nebraska was one of the nations
  highest-ranking states in terms of property tax
  dependence for public education. At the time,
  nearly three-fourths of the funds for Nebraska
  schools derived from property taxes.

9

• II. Brief History of TEEOSA
• The intent of LB 1059 was to create a true
  equalization formula whereby school districts
  that need the most state financial support
  actually receive the most financial support.
• The intent of LB 1059 was to create real and
  lasting property tax relief by shifting more of
  the cost of public education to the state and
  away from local resources.
• In 1990, Nebraska was one of the nations
  highest-ranking states in terms of property tax
  dependence for public education. At the time,
  nearly three-fourths of the funds for Nebraska
  schools derived from property taxes.

10
II. Brief History of TEEOSA Policy
Issues (1) Over-reliance on the property tax
for school support (2) state aid had not kept
pace with increasing school costs and (3) the
over-reliance on the property tax and inadequate
state funding had created tax inequities for
Nebraska taxpayers and inequities in educational
opportunities for Nebraska students.
11
III. Finance Components LEVY LIMIT 1.05
applicable exclusions Early retirement
programs Building funds (commenced prior to
4/1/96) Judgments, to the extent not paid by
liability insurance coverage Lease purchase
contracts (approved prior to 7/1/98) Bond
debt Federal aid school districts may exceed
the maximum levy only to the extent necessary to
qualify to receive federal aid and For 2002-03
through 2007-08, an amount equal to the net
difference between the amount of aid that would
have been provided under the TEEOSA without the
temporary aid adjustment factor (upon a 3/4s
majority vote).
12
III. Finance Components SPENDING LIMIT 2.5 to
5.5 1 discretionary exclusions Special
education costs Capital improvements Bond
debt Interlocal agreements Repairs to
infrastructure by natural disaster Judgments,
except CIR orders, to the extent not paid by
liability insurance coverage Early retirement
programs Student growth.
13
III. Finance Components Use of adjusted
valuation. Demographic Factors Indian Land,
Limited English proficiency, Poverty, Extreme
remoteness. Local systems structure. Cost
groupings based on sparsity standard, sparse,
very sparse. Income tax rebate. Net option
funding. Transportation and special education
costs. Insurance premium tax funds.
14
III. Finance Components The Legislature took
action in the 2002 Session to reduce state aid
and then permit local systems to recoup the lost
revenue through a special levy limit exclusion.
The calculation of state aid would include a
Temporary Aid Adjustment Factor to reduce each
local school systems formula need, allocated
income tax funds and net option funding by
1.25. Levy Exclusion. LB 898 (2002) allowed
local systems to exceed the levy limitation with
a 3/4s majority vote of the school board by the
amount of state aid lost due to the Temporary Aid
Adjustment Factor.
15
Nebraska School Finance A research site
dedicated to the study of Nebraskas school
finance system http//schoolfinance.ncsa.org
Tutorial Policy History Policy
Timelines Section Summary Statutes Docume
nt Archive Composite Histories Legislative
Information Ballot Issues Glossary of Terms
16
Foundationsof School Finance Policy
Presented by Nebraska Council of School
Administrators Michael Dulaney, NCSA Associate
Executive Director