1988-1989: Review


The Complete History of the Nebraska Tax Equity
and Educational Opportunities Support Act (TEEOSA)
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In 1988, Senator Ron Withem successfully moved the Legislature toward the next logical step on the joint issues of school organization and finance.  With the passage of LB 940 (1988), both the legislative and executive branches of the Nebraska government agreed to a methodical examination of the existing school structure and the examination of what could be.  LB 940 created the School Financing Review Commission to perform an in-depth study on school finance and produce recommendations for change.  Senator Withem was deliberate in the composition of the commission so that the executive branch would have a voice and would, hopefully, buy into the final recommendations of the study group.  The task assigned to this commission would be anything but simple and the one-year allotment of time to finish the work would prove insufficient given the magnitude of the issues involved.

One of the key elements of LB 940 was adequate funding.  The commission was given the authority to hire staff, including consultants, to obtain assistance from the Department of Education and the Department of Revenue in acquiring data needed to carry out its duties, and to contract for any necessary facilities, equipment, and services, including computer services.  To do all this, the bill appropriated $100,000 to the commission to carry out its function.  While not a tremendous sum, this appropriation would certainly permit the hiring of a consultant, and ultimately it did.

The sixteen-member commission consisted of representatives from the Legislature, the Governor, higher education, the Commissioner of Education, all classes of public schools, and two at large members.  By the end of 1988, it was clear the commission would need more time to complete its work.  Senator Withem successfully sought passage of LB 312 (1989) to give the study group one additional year.  The Legislature also passed LB 611 (1989) to provide some statutory guidance to the commission.  LB 611 also provided the "hammer" needed to ensure something would be done about property tax relief.  The legislation called for the automatic repeal of the existing formula on June 30, 1991, and called for a new school finance system to be in place by January 1, 1992.

Over an eighteen-month period, from 1988 to 1989, the commission held 21 meetings, five public hearings and listened to dozens of presentations by staff and outside experts in order to arrive at its conclusions.  The five public hearings were held in June and July, after the 1989 Session, at various points across the state in order to give ample opportunity for public discussion.  On January 1, 1990, the commission formally issued its final report entitled, "Funding Nebraska's Schools: Toward a More Rational and Equitable School Finance System for the 1990s."

The commission proposed five objectives to be incorporated into a new school finance system.  The first of these objectives was that 20% of all state income tax revenues should be dedicated for support of public schools.  The second objective involved the increase in the overall level of state support to a "target level" of 45% of the aggregate operational costs of the school system.  The third objective related to the actual formula itself.  The commission recommended the implementation of an equalization-based distribution formula to assure that all school districts have the fiscal ability to provide for the needs of students and measure district wealth in terms of both its available income tax resources and property tax resources.  The fourth objective called for real and effective growth limitations on the budgets of school districts, implying a relatively stringent base spending lid.  The fifth and final objective specifically referred to the issue that would cause the greatest amount of controversy.  The commission recommended increases in the state sales and/or income taxes as determined necessary and appropriate by the Legislature to fund the new school financed system.

While the commission was hard at work in 1989, the teachers of Nebraska would enjoy perhaps one of their greatest legislative successes through the passage of LB 89 (1989).  In 1989, the Nebraska State Education Association (NSEA) launched an extraordinary initiative to increase pay for its member teachers.  The issue of teacher pay had long been a part of the overall discussion concerning public school finance.  Public education, after all, is a labor-intensive operation.

As passed and signed into law, LB 89 created the Help Education Lead to Prosperity (HELP) Act.  The purpose of the Act was to promote excellence in education through increased teacher salaries with the intent that public schools have the capacity to recruit new teachers and retain quality teachers through salary increases.  The measure established a formula to determine the amount allocated to each school district, educational service unit, or state operated school on behalf of the teachers employed at each institution.  LB 89 and its accompanying appropriation ("A") bill, LB 89A, dedicated $20 million for each 1989-90 and 1990-91 to carryout the purpose of the Act.  This was a substantial decrease in the amount sought by proponents of the legislation, but it was still a victory for teachers in the sense that the Legislature officially recognized their underpayment.

The Legislature would periodically reauthorize the HELP Act to provide supplemental pay to teachers, but the amount appropriated for such purpose would gradually decline over the years.  By 1996, the annual amount appropriated was about $7 million.  This amount would ultimately be dedicated to the assistance of the School Employees Retirement System along with the OPS Retirement System and the two other state operated defined benefit retirement plans.


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