.jpg)
LINCOLN — A new state commission charged with reviewing and suggesting updates to how Nebraska funds its public K-12 schools kicked off its first meeting Monday largely with a consensus that the state should dole out more aid to local schools.
The work of the new School Financing Review Commission revolves around property taxes and state income and sales tax dollars distributed under Nebraska’s Tax Equity and Educational Opportunities Support Act, better known as TEEOSA or the state aid formula. The formula, at a basic view, considers a district’s “needs” minus its “resources.” A district receives “equalization aid” if it has a positive balance.
For the 2025-26 school year, TEEOSA is calculated between 18 “needs,” such as addressing student growth, poverty or English language learners, and six “resources,” including some income tax funds in a given district and how much a district could collect if it taxed the property within its boundaries at $1.
While all schools receive some level of state funding, only 50 of the state’s 245 school districts are equalized, a calculation that fluctuates annually in part because of property valuations.
Gov. Jim Pillen, addressing the commission recently, asked that commissioners leave any preconceived ideas behind and look at what’s best for Nebraska and its schools.
“It’s critical, we all agree, you never, ever, give up on a kid,” Pillen said. “Can’t let one be left behind.”
Brady Public Schools Superintendent Ann Foster, one of 17 members of the mostly governor-appointed commission, which still has one vacancy still to fill, said she recognizes the work is twofold: property tax relief while keeping kids at the “heart” of all decisions.
Local school property taxes accounted for about $2.9 billion of a $5.3 billion total in property taxes collected statewide last year. Schools receive about $5 billion in total revenue each year, including federal and general state aid plus state dollars to offset some local property taxes through tax credits.
Voters prohibited the state from levying separate property taxes in 1966.
Pillen and state lawmakers took a first stab at addressing TEEOSA after he took office in 2023 by establishing baseline “foundation aid” for each district — $1,500 for K-12 students plus $900 for pre-K students.
State Sen. Jana Hughes, one of 18 commissioners and vice chair of the Legislature’s Education Committee, passed the legislation this spring establishing the new financing commission to suggest possible tweaks to TEEOSA. The formula has been perennially updated since 1990.
Pillen and state lawmakers took a first stab at addressing TEEOSA after he took office in 2023 by establishing baseline “foundation aid” for each district — $1,500 for K-12 students plus $900 for pre-K students.
State Sen. Jana Hughes of Seward, one of 18 commissioners and vice chair of the Legislature’s Education Committee, passed the legislation this spring establishing the new financing commission to suggest possible tweaks to TEEOSA. The formula has been perennially updated since its creation in 1990.
A lawmaker-led committee thought up TEEOSA and a similar school financing review commission took effect after it passed. That group disbanded in 2002.
State law requires the new commission to produce a first report of recommendations by Dec. 1, with most commissioners saying they want to meet at least monthly until then.
‘Overreliance’ on property taxes During Tuesday’s meeting, the commission broke into small groups to think up goals for the commission — with agreement there must be a balance among revenue sources, including as funding variables change.
In large part, commissioners said they want to get away from an “overreliance” on property taxes.
Millard Public Schools Superintendent John Schwartz said his group wanted to highlight sustainability and predictability for school districts, the state and taxpayers. But he said doing so should not erode intended property tax relief efforts, which his group said “might add value.”
State Sen. Dave Murman, chair of the Legislature’s Education Committee, suggested educating the public about TEEOSA could be a good focus. Schwartz and former State Sen. Lou Ann Linehan of the Elkhorn area agreed. Linehan chaired the Legislature’s Revenue Committee for six years.
“If it was simpler, I think, and people understood it better, school funding would even have more support than it does now,” Murman said.
Other commissioners, such as Hughes and Nebraska State Treasurer Tom Briese, suggested long-term plans that would have the state assume greater responsibility for school funding.
Hughes, vice chair of the Education Committee, highlighted a long-term goal to push school property tax rates closer together, which vary between 30 cents and $1.05 per $100 of property valuations. Her original bill in the spring, which included the commission, also sought to do this.
However, Hughes’ original plan, which had earned the backing of Pillen and many school and ag advocates, needed about $120 million in state funding to work.
That remained out of reach with current tax revenues, as the state continues to face budget woes and as lawmakers reject suggestions to add sales taxes to goods and services currently exempt from them or to increase taxes on tobacco or vape products.
Briese again suggested the state take on the operational expenses of local schools, 80% of which are staff salaries and benefits, an idea Briese, Pillen and other lawmakers tried to rally behind in summer 2024.
