Gov. Jim Pillen’s school finance and property tax reduction plan would mean more state dollars for every school district in the state — enough new dollars for most Omaha metro area districts to reduce their property tax demands by 5% or more.
But a World-Herald analysis of the plan to boost state aid to education and special education funding by more than $260 million also raises questions of equity, particularly when it comes to its state aid provisions.
The Westside school district, one of the metro’s wealthiest districts in terms of resident income and property value, would receive enough new state aid dollars under the plan that its per-pupil aid would approach that of OPS — a high-poverty district where roughly seven in 10 students qualify for free or reduced price school meals.
Westside’s gain of $1,500 per student under Pillen’s plan would raise its total state aid to more than $5,000 per student. OPS, which currently receives just under $5,800 per student from the state, would not receive the $1,500 increase.
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Millard, Papillion-La Vista, Ralston and Gretna likewise would not receive the additional state aid, despite currently receiving less aid per student than Westside.
The reasons for those seemingly contradictory results are complex and largely tied to the large number of Westside students who live outside the district’s boundaries and opt in — and the big state dollars the district reaps from such student transfers under state law.
Pillen’s plan would further benefit Westside and dozens of other districts across the state that already receive large amounts of option student aid. And that has some suggesting the governor’s plan could use some tweaking.
“Wow, that’s not good,” said State Sen. Justin Wayne, a former OPS school board member. “It’s crazy that the state aid per pupil (between Westside and OPS) would be about the same when you talk about the different needs.”
Pillen’s administration in a statement defended the workings of his plan. The additional aid that would go to districts with option students would provide more property tax relief for residents of those districts, the statement said.
The plan also “aligns with Governor Pillen’s vision that funding follow each student” — an apparent reference to the governor’s support for providing state dollars for private school choice. Pillen last week rallied in Lincoln with supporters of a bill to offer $25 million worth of tax credits to people donating to private school scholarship funds.
Sen. Lou Ann Linehan, who like Wayne is an Omaha senator who serves on the Legislature’s Education Committee, cautioned against anyone reading too much into the aid projections at this point. Lawmakers will surely examine such equity issues as the governor’s plan moves forward.
“We are at the beginning of a process,” Linehan said. “I don’t think we can expect to fix every wrinkle — it’s complicated. But I think we can make some improvements.”
Westside officials declined to comment.
A number of districts have also been reluctant to publicly state positions on the governor’s plan, saying they are still studying it. OPS noted in a statement that many pieces of the governor’s agenda could impact school funding, including the changes to school aid and special education, school budget lids and changes to the way agricultural land is valued.
“There are currently many moving parts that, when combined, could have a far greater impact than any single piece of legislation,” the statement said. “There are still essential questions to be addressed for something as important as this.”
Pillen’s school funding plan was generally well-received by the state’s education community when he rolled it out two weeks ago, mostly because all districts would see additional funding.
Nebraska’s new Republican governor had campaigned on a pledge to send state school aid dollars to all school districts in the state, including the mostly rural, land-rich districts that now often don’t qualify for aid. His solution is to guarantee districts at least $1,500 per student in state aid regardless of their current resources and needs.
While not all districts would gain dollars under that $113 million proposal, all districts would come out ahead under his plan to provide $157 million in additional state dollars to pay to educate children with disabilities.
The governor’s office provided a draft of the projected funding each district would receive from the school aid and special education increases. It shows total state funding would increase $23 million for OPS, $9 million for Millard, almost $13 million for Westside, $5 million for Bellevue, and almost $6 million for both Elkhorn and Papillion-La Vista.
If those new state dollars offset current property taxes dollar for dollar, it would be enough to reduce school tax levies in most metro districts by 5% or more. In OPS, the reduction would be 6% — about $157 for a home valued at $200,000 for tax purposes.
But Westside would by far benefit the most. It would receive enough new dollars to reduce its property tax request by more than 20% — equal to almost $600 in reduced property taxes on a $200,000 home.
Learning why begins with understanding how the state’s current school aid law functions.
First, a school district’s needs are determined based on student enrollment and other factors, including the percentage of students in poverty or who are learning English as a second language.
Then each district’s available local funding is calculated. Schools are held accountable for levying property taxes at a minimum level. Any district needs not covered by that minimum levy are then back-filled with state aid dollars called equalization aid.
Most metro school districts currently receive such equalization aid. For them, the $1,500 per student in foundation aid under the governor’s plan simply offsets equalization aid they currently receive. In effect, every dollar of foundation aid in the front door merely pushes an equalization dollar out the back.
Like many rural districts, Westside’s property resources and needs are such that it doesn’t qualify for equalization aid. That’s why under Pillen’s plan, it would receive the $1,500 in foundation aid for each of its 6,000 students — totaling more than $9 million.
But while Westside doesn’t receive equalization aid, that doesn’t mean it currently lacks state aid dollars. It receives substantial funding under another portion of the state aid law school that pays for students who opt into a district from their home school district under the state’s public school option enrollment program.
Remarkably, more than a third of Westside’s students are option students. And the state pays $10,625 for each of them.
As a result, Westside today receives more state dollars per student than equalization districts like Millard, Ralston and Papillion-La Vista. Pillen’s plan would widen that gap by another $1,500 per student.
Larry Scherer, a Lincoln attorney who as a legislative staffer helped craft the state’s school aid formula in the 1990s, said that seeming disparity can be traced to the generous way the state funds option students.
For example, today when a student attends school in Papillion-La Vista, Nebraska pays about $2,700 in state aid to help educate that student. But if the same student opts into Westside, the state pays almost four times that figure.
Scherer couldn’t recall why state policymakers decided to fund option students so generously, but said it was likely to keep districts — and their taxpayers — from being overly burdened by the students who transfer in. Policymakers also surely never imagined back then that a district one day would receive a third of its students through option enrollment.
The current $10,625 figure is based on the average statewide per-pupil cost. That is still less than Westside’s per-pupil cost of roughly $15,000 — the highest among the urban districts in the metro area.
While Westside is a relatively high-income district, last year 38% of its students qualified for free or reduced priced meals.
Westside certainly isn’t the only district receiving heavy option funding that would benefit under the governor’s plan. There are others throughout the state.
For example, Hemingford, a small district in the Panhandle, receives enough option funding that it receives slightly more state aid per pupil than neighboring Alliance, a district that qualifies for equalization aid. Under the governor’s plan, Hemingford would receive the additional $1,500 per student. Alliance wouldn’t.
Wayne said he has long had a problem with how the state funds option students compared to other students. With the governor’s plan potentially increasing that disparity, the funding bears scrutiny, he said.
“Why is a kid from North Omaha worth less if he goes to his neighborhood school?” he said.
Without tweaking option funding, Scherer said senators could also simply decide to offset all or part of the governor’s $1,500 in foundation aid dollars against option dollars, much the same way they’re offset for equalization districts.
“In principle, it should come off the top,” Scherer said.
Such a move would also save money for the state, or enable lawmakers to boost the amount of foundation aid for other non-equalization districts above the $1,500 figure the governor has proposed.
Several senators said they expect much work on the details of the governor’s plan as it moves forward.
“Overall, I think the governor’s education package is a good start,” said Sen. Lynne Walz of Fremont, the former chair of the Education Committee. “But there are still details that need to be worked out. It’s an opportunity to look at how we fund public education and make sure it’s equitable for every student.”