The 1999 Legislative Session

LB 149 - Guaranteed Funding

Anyone who questions the generally nonpartisan nature of the Nebraska Unicameral Legislature should take careful review of the passage of LB 149 in 1999.  In addition to the major impact the measure had on public education and school finance, it made a strong case for the unique Nebraska legislative system.  The system was founded in 1934, in part, on the principal that legislators would serve the people best if they looked upon issues from a nonpartisan perspective rather than along party lines.  In fact, a reasonable assumption could be made that LB 149, which became law over Governor Johanns' objection, would not have passed at all had legislators abided the opinion of their partisan-elected governor.

The genesis of LB 149 was the discovery in late 1998 that a discrepancy existed between the Legislature's Fiscal Office and the Department of Education with regard to the projected state aid amount for 1999-2000.  In October 1998, the Legislative Fiscal Office determined the funding level for state aid in 1999-00 at $598.7 million.  However, in December 1998, NDE certified state aid for 1999-00 in the amount of $574.7 million - a difference of $24 million.  The department's lower amount was due to adjustments in state aid from the prior year (1998-99) in which the majority of all local systems had received more state aid than they should have received.  In fact, it was believed that 62% of all Nebraska school systems had received more state aid than actually due to them in 1998-99.¹ But how did this happen?

There were actually a number of factors that caused the over-funding of state aid for the 1998-99 school fiscal year.  The department's certification amount was derived by taking the Fiscal Office's estimate of $598.7 million (less $2 million for reorganization incentives) less $22 million for prior year adjustments due to the use of more recent data elements and a fixed Local Effort Rate (LER) of $1.00 in the recalculation of 1998-99 aid.  In essence, NDE had discovered that the 1998-99 state aid certification had been $22 million more than what it should have been, resulting in local systems actually owing the state due to the receipt of excess state aid.

It must be remembered that in 1997 the Legislature passed LB 806 in order to conform the state aid formula to the pending implementation of the levy limits, which were established under LB 1114 (1996).  Under LB 806, the Local Effort Rate (LER) would be determined each year by NDE.  Beginning for the 1998-99 state aid year, the department would annually set the LER at the greater of:

1. The maximum levy less 10¢; or
   
   
2. the rate which, when multiplied by the total adjusted valuation of all taxable property in local systems receiving equalization aid under the school finance formula, will produce the amount needed to support the total formula need of such districts when added to state aid appropriated by the Legislature for the ensuing school year along with other actual receipts.²

The local effort rate yield (total property tax) would then be determined by multiplying each local system's total adjusted valuation by the established local effort rate.

Ultimately, the department used $1.00 for the LER to compute state aid for the 1998-99 school fiscal year.  Senator Ardyce Bohlke would later explain to her colleagues during floor debate that the LER should have been set at 96¢ rather than $1.00.  The four-cent gap helped to cause an over-certification of state aid in 1998-99 in the amount of $22 million.  Bohlke explained:

A floor for the local effort rate was amended in LB 806, which kept it at a dollar this past December when actually it should have been 96 cents.  This created a gap of 22 million.  The reason the local effort rate tried to go down was because the calculated needs of the districts went down.  Because we do not have complete data by December 1, it is necessary to use estimates.³

But there were other factors involved in the $22 million mistake.  Not the least of these factors was the implementation of an entirely new tax system on motor vehicles.

LB 271 was passed in 1997 to replace the property tax system on motor vehicles with a tax and fee schedule based in part on the age of the vehicle.  The new system became operative on January 1, 1998 and was meant to be relatively revenue-neutral, so that political subdivisions would not experience any major loss or gain in revenue from motor vehicle taxation.  The problem faced by the Department of Education was the lack of available revenue data concerning the new motor vehicle tax system for the computation of state aid in the 1999-2000 school fiscal year.  LB 149 would attempt to correct this by including at least eight months of motor vehicle tax data within the recertification of state aid.

As Senator Bohlke alluded during floor debate, another factor in the miscalculation of state aid related to the actual spending of local systems.  Along with the passage of LB 1114 (1996), the Legislature passed a companion measure, LB 299 (1996), which imposed strict spending limitations on school systems.  For 1996-97, school systems were placed under a 2% spending lid, and, for 1997-98, school systems faced a 0% spending lid.  In 1998 the Legislature passed LB 989 to impose a permanent 2.5% base spending limit for school districts.  At the time of the state aid certification on December 1, 1998, the department, according to the law, utilized a three-year averaging of local system data.  The result of these various spending lids and the three-year averaging process could not help but to cause anomalies in spending patterns among local systems, and a corresponding effect on actual local system needs.

Introduction and Public Hearing

The chair of the Education Committee, Senator Ardyce Bohlke, served as chief sponsor of LB 149, while all other members of the committee cosponsored the bill.  But for all practical purposes, the bill was referred to as a "committee bill" in order to demonstrate the unification of the committee on the issues contained within the measure.  LB 149, without doubt, represented the overriding objective of the Education Committee relevant to the agenda for public education in 1999.  The measure would have the distinction of being the first bill to receive a public hearing before the Education Committee during the 1999 Session.  In a rapid succession of events, LB 149 was introduced on the second day of the session (January 7th) and its public hearing was held on the ninth day (January 19th).  Even before the tenth and final day of bill introduction for the 90-day session, LB 149 was advanced from committee and ready for floor debate.

The public hearing for LB 149 was held on the day after the first recess day of the 1999 Session (the Legislature had been in recess due to the state holiday honoring Martin Luther King).  The hearing is memorable for both the large number of proponent testifiers and the relative brevity of the event.  It was very apparent that a number of organizations and school districts had organized ahead of time in order to make their case for advancement of the bill.  In fact, almost all the organizations representing public education had met prior to the hearing and discussed how best to support the measure.  It was decided to place at the forefront of the list of testifiers one of Nebraska's more respected and recognized education leaders, Liz Karnes, who was, at the time, a member of Omaha Westside Community Schools' Board of Education.  Karnes would be followed by then President of the State Board of Education, Bev Peterson, who was followed by Kim Ma, a student within the Lincoln Public School system.  Bryce Neidig of the Nebraska Farm Bureau was specifically asked to testify in order to give the measure a broader range of support.⁴

The groups representing public education chose to communicate, for the most part, through a single spokesman.  Duane Obermier, President of the Nebraska State Education Association, testified on behalf of his own organization along with such groups as the Nebraska Association of School Boards, the Greater Nebraska Schools Association, the Nebraska Rural Community Schools Association, Class Is United, Friends of Rural Education, and the Nebraska Council of School Administrators.⁵

At the conclusion of the public hearing schedule for January 19th, the Education Committee met in executive session.  The committee advanced LB 149 with committee amendments attached by a unanimous 8-0 vote.⁶

• Amend the school finance formula by requiring the recertification of state aid to be paid in the 1999-2000 school year by April 1, 1999;
  
  
• Set the local effort rate at 10¢ below the maximum levy for the certification of state aid;
  
  
• Change the certification deadline for future years to February 1st;
  
  
• Remove a state aid estimation procedure;
  
  
• Declare the certification of state aid made on December 1, 1998; and
  
  
• Clarify that the estimate the Department of Education provides to the Governor, Appropriations Committee, and the Education Committee is meant for the necessary funding level for the following school fiscal year.

Sources:  Legislative Bill 149, Provide for recalculation and recertification of state aid to schools, sponsored by Education Committee, Nebraska Legislature, 96th Leg., 1st Sess., 1999, 7 January 1999; Neb. Legis. Journal, Com AM7 to LB 149 (1999), 20 January 1999, 272.

"Time is of the essence"

Floor debate on LB 149 began on the morning of February 3, 1999.  "To my newly elected colleagues," Senator Bohlke said in her opening remarks, "we are asking you to absorb a great deal in a short amount of time."⁷  The chair of the Education Committee proceeded to give her colleagues, both new and veteran, an oral history of the school finance formula since 1990.  Such an historical background is important, she felt, in order to explain the situation that arose in 1999 and the need for passage of LB 149.  "The formula is meant to react, but the "respin" this December resulted in an overall loss of $22 million to school districts," Bohlke said.⁸  "Unless we react, schools will have to pay that back by debiting the aid they will receive next year," she added.⁹  In the meantime, school districts will need to determine their staffing for the following year, and, by law, disperse reduction-in-force notices to teachers by April 15th.  "Time is of the essence," Bohlke said at the conclusion of her remarks.¹⁰

Of course, not everyone was in a hurry to pass LB 149.  Governor Mike Johanns, for instance, did not see the need to expedite the legislative process.  Shortly after the bill was advanced from committee, the newly elected Governor asked aloud, "Why rush?"¹¹  "Let's be careful and deliberate ... LB 149 is really bigger than a simple one-time adjustment to the formula," he said, "It raises questions that I believe deserve debate and consideration."¹² At that point in time, Johanns had not yet unveiled his 1999 budget proposal to the Legislature.  But it was known already that the proposal did not include an additional $22 million for public education to make up for the error made during the calculation of state aid.  Even before first-round debate began, it was clear that a battle lay ahead between the Legislature and the executive branch.

Nevertheless, on the first day of debate, Senator Bohlke was met with relative cooperation from her fellow legislators on the issues posed by LB 149.  The committee amendments were adopted almost immediately by a solid 33-0 vote.¹³ Senator Bohlke attempted to steer the debate along the lines of enhancing predictability within the state aid formula, and creating a more stable system for school districts to count upon from one year to the next.  And to a great extent, her strategy was successful.  No one disagreed with the need for a more predictable state aid formula.  But there were a few that disagreed with the overall impact of the legislation.  Some felt the bill might tie the hands of future Legislatures on the issue of appropriations for state aid to schools.  A thought that may have already crossed Governor Johanns' mind by this time.

The debate on February 3rd had some very positive qualities, both on the merits of the legislation itself and on school finance policy generally.  For instance, Senator Bohlke mentioned in her opening remarks that the Department of Education would soon have printouts available on the district-by-district impact of the legislation.  This prompted Senator Pam Brown of Omaha to remark:

[L]ast year, I think it was, there was a statement made on the floor that we were going to ... we were no longer going to legislate by printout, and I was absolutely delighted with that statement because I thought, well, at least we're going to talk about the policy that is directing what we're doing in terms of funding for education rather than constantly pouring over the numbers and seeing who wins and who loses and not having some sort of stable policy that guides us and that ... that helps us know that what we're doing has some meaning besides whether it's a win or lose situation.¹⁴

Senator Ron Raikes of Lincoln added his comments later in the debate.  "Not having printouts is maybe not realistic, but certainly having printouts that are more simple and can be more quickly calculated is a possibility," Raikes said.¹⁵  The discussion certainly did not lead to any resolution on the issue of printout politics, but it was at least addressed.  The Legislature recognized that it was likely to be dependent, to some degree, on how the numbers stacked up before it ratified a change in policy.

Another major theme of the February 3rd debate related to the history of school finance policy and tax policy in Nebraska.  Speaker Doug Kristensen of Minden, for example, was very concerned that his colleagues understand how the Legislature arrived at the current school finance formula and also how property tax policy had evolved in recent years.  "If we're going to talk about policy and philosophy this morning, I at least want to make sure that I put in what I believe that history was and try to get us on at least some agreement as to where our policies, in the past, have been," Kristensen said.¹⁶  The Speaker wanted his fellow lawmakers to know the difference between measures aimed at school finance reform and measures aimed at property tax relief:

Why [LB] 1059 came into being was we were afraid of being sued and so what that formula was designed to do was to bring people in and try to equalize and put more money in and give it to those school districts who needed the money and so we could try to form people into a more uniform opportunity. ... [LB] 1059 was not a property tax bill.  [LB] 1059 was all about trying to keep us from being sued in this state and about equalization aid. ... [LB] 806 was about filling the gap that schools had.  [LB] 806 was not about property tax relief.  Property tax relief was [LB] 1114.¹⁷

While some might differ about the true nature of these past legislative measures, Speaker Kristensen helped to frame the intent of LB 149.  LB 149, the Speaker asserted, was about fixing a problem related to school finance, and not about property tax relief.

According to Senator Pam Redfield of Omaha, the policy questions related to LB 149 could not be divorced from the property tax relief initiatives already approved by the Legislature.  "[T]his body has worked very, very hard to provide property tax relief to the people in the state of Nebraska and tried to equalize the spending in the schools across the state," Redfield said.¹⁸ Passage of LB 149, she believed, would be contrary to those property tax relief efforts.

As occurred in so many previous policy discussions, Senator Bob Wickersham of Harrison seemed to have the appropriate answer at the appropriate time:

We made the policy decisions with [LB] 1114 and [LB] 806.  What were those policy decisions?  Those policy decisions were that we would have a calculation of an amount that would support schools.  Needs, if you've seen the simplistic framework for the school aid formula, needs minus resources equals aid.  In [LB] 806 we framed a means for calculating needs--average costs in two ... in three different groups:  standard, sparse and very sparse.  That's the framework for calculating needs.  In [LB] 1114 we set one of the important parameters for determining resources, and that was local property taxes.¹⁹

Wickersham went on to say that the levy limitations and all the policy ramifications attached to those levy limits were the obligation of the state to address.  LB 149, in his opinion, was designed to balance the policy decisions relevant to tax matters with those related to school finance.

In no small way, Senator Chris Beutler of Lincoln also helped to frame the discussion, first by placing the issue at a level any politician would have to consider:

[M]y commitment to the bill goes back to the question of trust, it goes back to keeping your word, it goes back to some things that have been said on the floor before.  But this is not just a simple matter of trust, it's at a higher level than that, especially considering this institution, the 49 of us and our relationship with our constituencies, and what we tell them, and what they expect from us, and what we expect from them.²⁰

Beutler used an analogy that both lawyers and non-lawyers alike could understand by relating the issues surrounding LB 149 with the legal doctrine of detrimental reliance.  In this case, school districts and patrons of those school districts relied upon the Legislature to establish a functional property tax system and school finance system such that they would not be harmed or otherwise incur damages.  Naturally, Senator Beutler did not mean to imply the existence of any literal and binding contract.  But the meaning of his analogy, an expectation that the Legislature would resolve problems created by its own policy directives, was well spoken.

After several hours of discussion, the Legislature voted to cease debate.  In her closing remarks, Senator Bohlke expressed her appreciation for the debate and promised to work with anyone having questions between first and second-round debate.  She reiterated the urgency of the situation and assured her colleagues that printouts would soon be available.  Lastly, she reminded her colleagues, the essence of the legislation lay in the long-range effect it would have in predicting future certifications of state aid.  "I believe that the predictability that all of us have been talking about and the improvement of stability are absolutely key," she said.²¹  And, likely based in part upon the trust factor mentioned by Senator Beutler and others, the Legislature voted to advance the bill by a 42-0 vote.²² It would be the last time LB 149 would receive unanimous support.

"The long-awaited printout"

It took over a month after advancement from General File, but the Legislature finally had the chance to view what Senator Bohlke called the "long-awaited printout" on Monday, March 8th.²³ This date would mark the first of two separate days of second-round consideration.  Staff from the Department of Education had worked through the weekend to put together complete notebooks of information concerning the impact of LB 149.  Legislators, staff, and media all received the information at basically the same time.  And the information could hardly be classified as a mere printout as the case may have been in previous legislative sessions.  It was evident that Senator Bohlke, her staff, and department staff truly wanted the data to paint a complete picture of each local system's fate under LB 149.  Printout politics had gone high-tech.

As with all "printouts," there was both good news and bad.  The figures demonstrated a need for increased appropriations for 1999-2000 state aid in the amount of $19.4 million rather than the earlier projection of $22 million.²⁴  The majority of the state's local systems, numbering 286 at that time, would either break even or receive increases from the amount certified on December 1, 1999.²⁵  Forty-seven local systems would stand to lose state aid under LB 149 as compared to the original certification amount.²⁶ The loss or gain of state aid may have been due to any combination of factors, such as changes in other revenues, property tax valuations, or student enrollment.

Second-round debate began on March 8th with a motion by newly elected Senator Mark Quandahl to bracket the legislation until March 15th.²⁷ The Omaha senator explained that he, along with his colleagues, had just received the notebook of data and he wanted time to digest the information.  He would later withdraw the motion, but, until then, Senator Bohlke was allowed to explain some of the materials and data.  And perhaps one of the more interesting questions about the data was how or why the total amount needed had been revised down to the $19.4 million figure.  Bohlke explained that the lower amount was due to the use of more accurate figures related to the new motor vehicle tax and fee system.

"Autopilot System"

One of the overriding themes of the debate on March 8th was not so much the data contained in the notebooks but rather when the notebooks were made available.  In particular, Senator Pam Brown of Omaha expressed her dismay and concern about this situation.  "[W]e get this data at what I would consider certainly the eleventh hour and are expected to digest it," she said.²⁸  Senator Bohlke responded that it was not her intention to take LB 149 to an immediate vote for advancement that day.  "I want to reemphasize; in a short time, that we will obviously not be doing a vote today," Bohlke said.²⁹ Nevertheless, Senator Brown would repeat her concern that the body needed more time to digest the information.

In fact, Senator Brown was the first to use an expression that came to be the buzz word to describe LB 149, whether correctly labeled or not.  And this was likely related to the true nature of Senator Brown's concern about the legislation.  During the debate, Senator Brown spoke of the process outlined in LB 149 to determine appropriate levels of state aid from year to year.  Said Brown:

I am more concerned about the part of LB 149 that sets up the process for the future that automatically has a calculation that is going to set the amount for state aid, because the reason that got us here, even though there were ... there were certain circumstances that may have been unique, the reason that got us here is that we had unique problems in the way that we calculated the amount.³⁰

Brown compared LB 149 to the act of surrendering "our appropriating responsibility to a process," the process she would call an "autopilot system."³¹ From that moment forward, LB 149 became known as the state aid autopilot bill among legislative circles.  Senator Brown's concern would mirror that of the Governor, who would eventually veto the measure based upon that very reason.

So what did Senator Brown mean by autopilot?  And why did she perceive this as a negative aspect of the legislation?  To answer the first question, one must look no further than the Fiscal Note attached to the measure.  On January 28, 1999, Sandy Sostad, an analyst for the Legislative Fiscal Office, wrote:

LB 149 changes the basis for determining the total amount to be appropriated for state aid.  The amount of TEEOSA aid for the following school year is currently determined by the Legislative Fiscal Analyst based on language requiring the appropriation to 'result in a statewide tax levy for each year's state aid calculation that would be less than the maximum tax levy' specified for schools in statute.

The bill provides that NDE will determine the appropriation level by using a LER [local effort rate] of $.10 less than the maximum tax levy in statue.  Use of a fixed LER to calculate the appropriation level means the amount of state aid to be appropriated will not be determined until NDE is able to run the formula with the required data elements in late January, for the February 1 certification of state aid.³²

Since the Legislature convenes in early January of each year, both the legislative and executive branches would need to wait until NDE certifies state aid in order to know the exact level of appropriation for state aid.

Once certified, school districts would begin budget plans based upon those funding expectations.  Senator Brown equated this process to a sort of appropriation on autopilot because, in part, the Legislature does not typically begin its own budget debate until late in the session.³³ It could conceivably be regarded, therefore, as tying the hands of the Legislature on the issue of state aid.  Although the Legislature always retains the authority to pass legislation that effectively voids a given state aid certification and requires a new one based upon other parameters.  Nevertheless, the overall advantage of the system proposed under LB 149 was most definitely in favor of school districts.

The other question posed by Senator Brown's opposition to the system proposed by LB 149 is why she would perceive it as a negative.  It certainly had nothing to do with negative sentiments toward public education since she had sponsored and/or supported other K-12 oriented legislation in the past.  The answer was found in her comments during floor debate on March 8th.  The very term "autopilot" implies that the Legislature would have no say, or little say in this arena of state appropriations.  In fact, Governor Johanns wrote in his veto message perhaps what Senator Brown was thinking during debate on bill.  "LB 149 has severely limited elected officials' flexibility in the state budgeting process," Johanns wrote.³⁴ In short, it was a matter of state control over political subdivisions versus the other way around.

After a lengthy discussion, Senator Quandahl withdrew his motion to bracket.³⁵  Perhaps in an effort to close debate for the day, Senator Bob Wickersham, a proponent of the legislation, moved to indefinitely postpone the bill.³⁶ Under the Rules of the Legislature, this automatically gave the chief sponsor of the bill, Senator Bohlke, an opportunity to request that the bill be laid over.  And this she did.  LB 149 was laid over ostensibly for the purposes of allowing legislators and staff to review the data.

"One by land, two by sea"

The second and final day of Select File debate occurred on March 10, 1999.  The delay gave legislators about a day and a half to look over the data and come to grips with their opinion about the legislation.  And there would be one last attempt by those who feared the loss of legislative control over school funding issues.

Speaker Kristensen offered what really was the only serious amendment to the bill since its advancement from committee.  The amendment proposed to keep the provisions of LB 149 relatively in tact.  In future years, as per the bill, state aid would be certified by February 1st during the legislative session.  The Kristensen amendment would add a new provision to provide that if the Legislature decided to appropriate a lesser amount than what the certification called for, then the February 1st certification is automatically null and void.³⁷ A new certification would be completed based on the final appropriation.

The Speaker's amendment was filed on March 9th, a day before the debate took place.  The K-12 education community was alerted and communication was dispatched to urge senators' opposition to the measure.  This lobbying effort certainly did not escape the attention of the Speaker.  Said Kristensen:

I assume, by this morning, most of you have gotten a frantic panic call from your superintendent.  Obviously, the K-12 educational lobby has probably visited with you.  I suppose part of it is 'the British are coming, the British are coming, one by land, two by sea,' they're here to storm the state aid bill and we're not going to get our money, and we're going to create terrible calamity, we're going to create unstability, and that you won't have state aid to schools.³⁸

Kristensen asked his colleagues to carefully consider the ramifications of LB 149 in its present form.  "The issue is, who really are the stewards and what really is your job here as a state legislator towards the state budget," he cautioned.³⁹

The K-12 lobby may have had reason to worry considering the language contained in the Kristensen amendment.  It certainly would have given back to the Legislature the ultimate control over its budget, but it also had the potential to create havoc on local school district budgets and staffing.  The amendment essentially required schools to look forward to, but not count upon, the certification of state aid issued on February 1st.  Since the Legislature typically does not finalize its own budget until late in the session, schools would be waiting with fingers crossed that the certification was worth the paper on which it was written.  In the meantime, the April 15th deadline to issue reduction-in-force notices could lapse with still no word on the Legislature's final decision on state aid appropriations.  But the Speaker's concern appeared to be first and foremost with the budget situations faced by the Legislature.  And he certainly was not alone, since the administration's concern appeared to mirror that of the Speaker's.

However, while the education community may not have liked his proposal, some of his colleagues in the Legislature did like it.  Speaker Kristensen raised some very good points about the state budget-making process and where the buck stops.  He pointed out that funding for Medicaid and public assistance were already two major areas where the Legislature had little control.  If LB 149 passed in its present form, another major portion of the budget, state aid to education, would also be more or less taken off the table for debate.  "That means that if we have an economic downturn, if we have short monies, half of the budget you're not going to be able to touch," Kristensen said.⁴⁰  The Speaker also asked his colleagues to remember their constitutional responsibilities.  "Who does watch the state budget?" he asked, "What is your ultimate role?"⁴¹

In order to counter the Speaker's move, Senator Bob Wickersham filed an amendment to the amendment.  The Wickersham proposal would allow a school district to exceed the maximum property tax levy in the amount of the difference of the February 1st certified state aid and the recertified amount in the event the Legislature fails to appropriate sufficient funds to meet the initial certification.⁴² It would essentially hold the Legislature's feet to the fire since few if any state lawmakers would want to cause an increase in property taxes.

Senator Wickersham most assuredly did not want to cause increases in property taxes, nor did he particularly relish offering the amendment that he did.  "I'm going to ask you to vote for the amendment to the amendment even though I don't like it, but I think it's the only fair way that we can frame our discussion this morning," he said.⁴³  And his point in requesting such a vote was as compelling as anything the Speaker had to say in defense of his own initial amendment.  Said Wickersham:

What does that mean?  It means that if the schools had to go back to the property tax base because we wouldn't keep our commitments to K-12 education, that they would go back to property taxes.  They have no place else to go.  Within the framework that we have imposed on them, they have no place else to go.  And if we won't keep our commitments, at least we ought to be honest about it and say that we know what the impact of failure to keep our commitment is, and that is higher property taxes.  We ought to recognize that that is what Senator Kristensen's amendment is about and not play games with our constituents.⁴⁴

It may or may not have been Senator Wickersham's intent to use his own amendment to make his colleagues think twice about the Kristensen proposal.  Whether a surprise or not, some legislators seemed to buy into both ideas, which would have flown in the face of the property tax relief concept promoted in the previous three sessions.

The chair of the Appropriations Committee, Senator Roger Wehrbein, seemed to like both amendments as an effort to maintain some flexibility for state lawmakers.  Senator Pam Brown, whose concerns were prominently voiced during first-round debate, also seemed to go along with the proposals.  Senator Chris Beutler, an ardent supporter of LB 149, also rose to cast his support for the Kristensen plan.  But not all were enamored.

Senator Stan Schellpeper of Stanton wanted to color the Kristensen proposal in a different light.  Said Schellpeper:

The real thrust behind the Kristensen amendment is Governor Johanns' property tax plan.  You know, you can talk about anything you want but that's the real thrust behind the Kristensen amendment.  This body has to decide if we want to support education with sales and income taxes or go back to using more ... more property taxes. ... We started it, let's not jump off the ship today.⁴⁵

Senator Schellpeper was referring to the Governor's budget proposal to apply additional funds to the property tax relief effort.  It was widely known by then that the Governor had not intended to devote additional resources for state aid as required under LB 149.

For her part, Senator Bohlke knew full well what Senator Wickersham intended with his amendment to the amendment - to make the body completely aware of the impact the Kristensen amendment might have on schools.  It also concerned the age-old discussion about shifting education funding toward state support through sales and income taxes and away from local property taxes.  She asked her colleagues to consider the impact of the combined proposals on schools:

And what would happen if we passed the Wickersham amendment and then passed the Kristensen amendment and then we would come in at the beginning of a session and we would certify aid February 1, and then schools would not know until we ended that session, after they have set their budgets, hired the teachers, as to really what they ... what amount of aid they would be receiving?⁴⁶

Bohlke urged her colleagues to stay the course on property tax relief by advancing LB 149 in its existing form and to uphold the proper funding of public education.

In his closing comments, Senator Wickersham reiterated that he neither liked his own amendment nor the Kristensen amendment.  But he felt if the body was destined to adopt the Kristensen amendment, then it should accordingly vote in favor of his amendment first.  The Legislature heeded his advice, but just barely.  The Wickersham amendment was adopted by a 25-20 vote.⁴⁷ This set the stage for the final item of discussion, the adoption of the Kristensen amendment as amended by the Wickersham amendment.

The body continued debate on the overall proposal.  Senator Bohlke became more animated in her opposition to the Kristensen plan.  She drew upon her recollection of prior school finance policy issues, including the inception of the TEEOSA in 1990.  "I stand firm on that, that I think we definitely need to vote 'no' on the Kristensen amendment, because I think actually, if we would adopt the Kristensen amendment, it takes us back actually prior to LB 1059, on where we were on determining state aid for education," she said.⁴⁸

Senator Ron Raikes of Lincoln, a member of both the Education and Revenue Committees, joined Senator Bohlke in opposition to the Kristensen amendment.  Already a recognized authority on school finance issues, Senator Raikes drew the body's attention to an important, yet undisclosed aspect of the Wickersham-Kristensen proposal.  Raikes admitted that he voted in favor of the Wickersham amendment with reservation, which he then shared with members of the Legislature.  The levy exclusion contained in the Wickersham amendment, Senator Raikes noted, would treat schools disparately.  He explained:

The state aid formula contributes aid to schools, to local school districts on an equalized basis, a capacity to pay.  Nonequalized schools, you understand, with the Wickersham amendment, are, in effect, held harmless.  If we cut state aid, nonequalized schools will not be affected.  Nonequalized schools, and there are several in the state, have more resources than needs now, that's why they're nonequalized.  Equalization is an effort to bring equalized districts up to the nonequalized ones.⁴⁹

Naturally, Senator Wickersham, himself an authority on school finance, was aware of the implications of his own amendment.  But Raikes' comments were particularly helpful to those listening carefully to understand just how the packaged amendment might affect schools within their own legislative districts.

Drawing to some degree on Raikes' remarks, Speaker Kristensen closed on his amendment by urging his colleagues to remember their roles in state government.  "My job is not to be the state super school board," he said, "My job is to be a state senator."⁵⁰  He added, "My job is not to blindly close my eyes and say, whatever it takes, you're not going to be held harmless."⁵¹ He insisted that public schools would need to participate, like everyone else, in the state budget-setting process and to ride the peaks and valleys of the economic situations faced by the state.

In a rather dramatic moment in the legislative life of LB 149, all 49 members of the Legislature were present for the vote to adopt the Kristensen amendment, as amended by the Wickersham amendment.  And all participated in the vote, which left the Speaker and perhaps the Governor on the short end.  The amendment was defeated by an 18-31 record vote.⁵²

Senator Bohlke and fellow members of the Education Committee had scored a major victory in the defeat of the Kristensen amendment.  It meant that LB 149 would be considered for advancement in tact, as originally proposed.  Another roll call vote was taken on the issue of advancement.  LB 149 advanced to the final-round of consideration by a 46-3 vote.⁵³  Speaker Kristensen was among those voting to advance the bill.

The failure of the Kristensen amendment dealt Governor Johanns a serious blow toward his property tax relief initiative.  It also solidified his opposition to LB 149 as he made public the day after the bill moved to the final stage.  "I don't care if it's 49-0," Johanns said referring to a pending final-round vote, "I will still veto the legislation, because it's bad public policy."⁵⁴ By this time, estimates had been released indicating that LB 149, coupled with a $1 levy limit, would cost the state an additional $84 million in state aid for the 2001-02 school year.  Members of the Legislature were heading into final-round consideration with their eyes wide open and aware of the consequences.

"A two-handed vote"

On March 17, 1999, Senator Bohlke was ready to make a stand on passage of LB 149.  She filed a motion to suspend the Rules of the Legislature and permit consideration of the bill on Final Reading.⁵⁵  Speaker Kristensen had not placed the bill on the agenda, but Bohlke was anxious to move the bill forward.  The motion passed by a 40-2 vote.⁵⁶  The Legislature proceeded to vote in favor of passage of LB 149 by a solid 43-3 vote.⁵⁷

Governor Johanns wasted no time in taking action on the legislation.  He returned the measure to the Legislature with his veto the next day, on March 18th, along with the following communication:

My veto of LB 149 has nothing to do with the additional $19.4 million that this legislation will authorize to be distributed to Nebraska public schools under the state aid finance formula.  To the contrary, had LB 149 centered solely on the issue of restoring additional funds to the school aid formula, then I would have signed the legislation into law.  My objection to LB 149 arises from provisions of the bill which clearly obligate the State while removing the flexibility of elected officials to make spending decisions based upon the entire state budget.

LB 149 changes the state aid calculation process to require that state aid amounts be certified each year on February 1.  The legislation also amends the statutory finance formula by fixing one calculation factor, the local effort rate, at ten cents below the maximum property tax levy.  The practical effect of this change is that the statutory formula will dictate to the Legislature a "needed" appropriation level.  Combined, these LB 149 provisions prohibit the Legislature from either increasing or decreasing the certified state aid amount during budget deliberations which occur later in each calendar year.  Thus, as adopted by the Legislature, LB 149 has severely limited elected officials' flexibility in the state budgeting process.  This is poor public policy.⁵⁸

Interestingly, LB 149 represented the first veto of Johanns' administration.  It would also represent his first overturned veto.

Senator Bohlke was quick to file a motion to override, doing so on the same day the Governor vetoed the bill.⁵⁹ She asked the Speaker to place the issue on the Legislature's agenda just as soon as possible, which turned out to be the afternoon of Monday, March 22, 1999.

For the proponents of the measure, the veto override was a relative sure thing, although such an event is never taken for granted.  The education community was unified in its support of the measure, and all representative organizations worked together to influence a successful outcome.  For the K-12 lobby, the final passage of LB 149 symbolized the conclusion of the legislative session, for all practical purposes.  This was thebill of the 1999 Session for public education interest groups.

There are not too many votes on veto overrides without accompanying political posturing on the floor of the Legislature.  LB 149 was no exception.  Even though most, if not all, legislators knew how they planned to vote, there was the inevitable discussion that precedes it.  Of particular amusement was Senator Gene Tyson's comment about the nature of the veto override in his opinion.  The Norfolk legislator said:

I was going to vote for LB 149, and then after our Governor vetoed it I was going to vote for the override, and I'm going to.  But I thought maybe some of you might have a little problem in voting for it so I'll tell you about how to make a two-handed vote.  With a two-handed vote, you take one hand and press the 'aye' button and use the other hand to hold your nose, because this requires a two-handed vote.⁶⁰

The "two-handed vote" comment related to the winner-loser situation faced within Tyson's own legislative district.  His largest school system, Norfolk Public Schools, actually lost state aid under LB 149, while the other school systems within in his district gained funding.  It was a good news, bad news situation for Senator Tyson, who did not particularly care for the existing school finance system.  But he still felt the right thing to do was pass the bill over the Governor's objection.

Senator Brown, one of the key opponents of LB 149, vowed to fight the measure to the last.  "I dearly regret that we have ceded to the executive branch our responsibility to protect our legislative process and our legislative integrity," she said.⁶¹  But the Omaha lawmaker also knew the likely outcome of the override vote.  "The chickens will come home to roost from this legislation both fiscally but, more importantly I believe, in the public's perception of whether we are doing our job and defending our institutional responsibility," Brown warned.⁶²

Senator Ernie Chambers of Omaha had become an outspoken critic of LB 149 on the basis that it surrendered one of the major duties of the Legislature.  Said Chambers:

When we think of the Legislature institutionally, we should never give over our duties, our responsibilities and our powers to anybody.  We should not willingly and voluntarily give over to an automatic system, whether it's a computer, a formula, or a board or agency, the duty and responsibility that we have to study serious matters and make independent decisions that are appropriate to that situation.⁶³

Senator Chambers would do his best to sway the body.  He was joined by Senator Pam Redfield, also of Omaha, who reminded her colleagues about one of the more under emphasized facts concerning LB 149.  This same issue, she said, was addressed in 1998 under LB 1175, which was vetoed by Governor Ben Nelson.

In 1998, the issue of guaranteed funding for public education took an entirely different course.  The Legislature, as if snapped to its senses by the Governor, reversed its decision by sustaining the veto and then passing a bill during special session without the controversial provisions.  Redfield thought the Legislature should remember its decision from just a year earlier, and remember why it had reversed itself.  Said Redfield:

And so I would urge you to think carefully as we vote this issue, recognizing the fact that there are important things in this bill that we can, as a body, carefully, carefully look at and deal with this session and correct, but we need to be very careful that we are not creating a monster that we will regret.⁶⁴

She reminded her colleagues that public education was but one of the very important "paramount" responsibilities of the state.⁶⁵

Since Senator Redfield raised the issue of recent legislation, at least one senator was not about to let it pass without adding his own thoughts.  Senator Ron Raikes reminded Redfield that "fixing the local effort rate," as he put it, was a double-edged sword.⁶⁶  "It seems to be the presumption that that automatically means that we are going to be putting more money into state aid," Raikes explained, "I would argue that that is not the case."⁶⁷  By examining the basic formula (needs minus resources equals aid), he said, it can be discerned that "if resources increase faster than needs, aid will in fact go down."⁶⁸ In other words, schools may or may not benefit from the autopilot policy proposed under LB 149.

For the most part, the discussion on March 22nd involved a one-sided debate among the opponents.  Parting shots fired across the bow.  The proponents were committed to seeing LB 149 through the legislative process.  As to the potential precedent set by this legislation, Senator Bohlke said she would welcome any precedent that involved a positive for education.  "I hope it continues to set the precedent that we in the Legislature have always done, and that's our support of K-12 education," she said in her closing remarks.⁶⁹  The veto override was successful by a 39-7 vote.⁷⁰

LB 149 was, in fact, Governor Johanns' first vetoed bill and represented his first overturned veto.  This, no doubt, was something the Governor kept in the back of his mind for the remainder of his tenure as the state's chief executive officer.  And for years afterward, members of the education community would be cognizant of their own part in helping to shape the outcome.

Governor Johanns apparently looked upon LB 149 as the final word on the issue of education funding.  As early as April 1999, while the Legislature was still in session, the Governor was mingling among educators and promising to work toward "consensus" on the issue.⁷¹  Appearing before the Delegate Assembly of the Nebraska State Education Association (NSEA), the Governor vowed to find a solution to education funding while at the same time easing the burden of property taxpayers.  "I will find a way to make that happen," Johanns promised.⁷²  At the same NSEA event, Senator Bohlke was honored with one of the coveted NSEA Friend of Education Awards for her dedication to education and, one can surmise, her work toward passage of LB 149.

LB 813 was principally designed by the Department of Education to remove obsolete language, clarify various provisions, and address issues brought forward since the previous legislative session.  For instance, the measure proposed to make some corrections and modifications to various criteria for quality education incentives established under LB 1228 (1998).⁷³  The bill renamed the Nebraska School for the Visually Handicapped to the Nebraska Center for the Education of Children who are Blind or Visually Impaired, and modified the mission of the institution.⁷⁴  The bill provided that reimbursements for wards of the court and short-term borrowings would be considered "special grant funds," which would allow schools to receive the funds outside expenditure lids.⁷⁵ But the bill would also contain some major substantive provisions, most of which were added later in the legislative process.

Leading up to the final stage of floor debate, one of the more significant aspects of LB 813 related to changes in the way Class I (elementary only) schools and their primary high school districts would coordinate the annual budget setting process.⁷⁶ This had been an ongoing issue within some local systems, and LB 813 would represent the latest attempt to resolve the matter.  However, the most controversial provision of LB 813 related to the cost groupings within the state aid formula, a provision that would not be added until the legislation had already reached the final stage of debate.

As Senator Bohlke would recall during floor discussion, she had been approached by several of her colleagues, Senators Baker and Schrock, concerning various school systems within their respective legislative districts.  These school systems, numbering eight or nine, were classified under the standard cost grouping under the school finance formula, but officials from these systems believed they would be better served by the formula if they were classified under the sparse cost grouping.  This would effectively afford them additional state aid.  At the time, the standard cost grouping produced approximately $4,300 per student, about $5,070 per student under the sparse cost grouping, and $5,572 per student under the very sparse cost grouping.⁷⁷

The eight or nine school systems at issue did not meet the criteria, established under LB 806 (1997), to be classified as sparse.  The criteria, at the time, defined the sparse cost grouping as those local systems that do not qualify for the very sparse cost grouping but which meet the following criteria:

The local system has less than two students per square mile in the county in which the high school is located, based on the school district census, less than one formula student per square mile in the local system, and more than ten miles between the high school attendance center and the next closest high school attendance center on paved roads;

The local system has less than one and one-half formula students per square mile in the local system and more than 15 miles between the high school attendance center and the next closest high school attendance center on paved roads; or

The local system includes 95% or more of a county.⁷⁸

These requirements, according to Senator Bohlke, precluded the qualification of the school systems brought to her attention by Senators Baker and Schrock.  "Their school district just ... the high school happens to be in the wrong place, which does not let them qualify under the miles [criteria] to another school," she explained on the floor.⁷⁹ The "wrong place," she would later clarify, refers to the exact location of the high school in relation to another high school.

In order to comply with the requests made by Senators Baker and Schrock, Bohlke agreed to file a motion for specific amendment to LB 813 in order to pull the bill back from Final Reading.⁸⁰  The amendment would expand the sparse cost grouping criteria as follows:

Less than two students per square mile in the county in which each high school is located, based on the school district census, less than one formula student per square mile in the local system, and more than ten miles between each high school attendance center and the next closest high school attendance center on paved roads;

Less than one and one-half formula students per square mile in the local system and more than 15 miles between each high school attendance center and the next closest high school attendance center on paved roads;

Less than one and one-half formula students per square mile in the local system and more than 275 square miles in the local system; or

Less than two formula students per square mile in the local system and the local system includes an area equal to 95% or more of the square miles in the largest county in which a high school attendance center is located in the local system.⁸¹

The changes would become operative in time for the 2000-01 school fiscal year.  But would it help those local systems identified by Senators Baker and Schrock?  Just as importantly, does this change represent sound public policymaking?

In truth, LB 813 represented the second occurrence for Senator Bohlke to recommend changes to criteria of the sparse cost grouping.  Perhaps out of political pressure, she had successfully recommended an amendment to LB 710 in 1997.  The amendment effectively altered LB 806, which had passed earlier in the same legislative session.  The amendment to LB 710 eliminated two of the original criteria proposed for the sparse cost grouping.⁸²

The amendment to LB 813, on the other hand, added a new criterion and modified another in order to qualify more local systems into the sparse cost grouping.  Not everyone was thrilled with the idea, including Senators Ron Raikes and Chris Peterson, who questioned the rationale offered by Senator Bohlke.  Senator Raikes, in particular, asked what impact the amendment would have on local systems within the standard cost grouping.  Said Raikes:

[T]he issue is that if the eight systems that you happen to pull out of the standard cost grouping and put into the sparse cost grouping were among the higher cost ones in the standard cost grouping, then the standard cost grouping cost per student would go down for the ... maybe not very much, but it would go down.⁸³

Senator Peterson was somewhat more direct in her comments, "Whenever we're dealing with the different classifications and there is change within those structures, it ultimately impacts the amount of the aid in the formula."⁸⁴ But were they correct in their criticism?

From an overall policy perspective, it may be argued that the criteria selected to be used in the formula passed under LB 806 may not have been as carefully determined as it could have been.  A more careful analysis may have saved some back peddling in subsequent sessions.  On the other hand, one might argue that no matter the amount of research into the proper criteria, nothing would prevent the inevitable political rambling and tweaking that ensued.  Senator Bohlke was doing her best to accommodate as many requests to change the formula as possible within the limits of her own political agenda.  Obviously, her amendment to LB 813 was not a violation of her own beliefs and objectives.

From an objective viewpoint, the Legislative Fiscal Office reported that the amendment would have "an impact on determining the cost groupings of schools in the certification of state aid beginning in 2000-01."⁸⁵  An analysis prepared by NDE demonstrated that if the provision had been in effect in 1999-00 the total amount of state aid would have decreased by $579,231.⁸⁶  The analysis indicated that nine school systems would move from the standard cost grouping to the sparse cost grouping.  School systems in the sparse cost grouping would experience a $1,562,363 increase in state aid and school systems in the standard cost group would experience a $2,141,594 decrease in state aid, thereby creating a net $579,231 decrease.⁸⁷  But it was not known exactly what impact the amendment would have for 2000-01 and subsequent years.  Senator Bohlke would later justify the change as "very minimal percentage impacts."⁸⁸  She added, "The standard cost group decreases by less than two-tenths of 1 percent; the sparse cost group increases by five one-hundredths of 1 percent."⁸⁹

Senators Raikes and Peterson may have had some good points to make, but they did not press the issue too terribly hard.  The Legislature accepted Senator Bohlke's rationale, approved her motion to return the bill to Select File, and eventually adopted her proposed amendment by a 29-1 vote.⁹⁰  The Legislature would ultimately pass LB 813 on a unanimous 44-0 vote.⁹¹

The office of county superintendent had been a fixture on the public education landscape since territorial days and into statehood.  On March 16, 1855, the Nebraska Territorial Legislature passed the Common Schools Act, which created the office of Superintendent of Public Instruction, the precursor to the office of Commissioner of Education.⁹² The measure also created the elected position of county superintendent.  The early role of the county superintendent included the apportionment of the county school tax to schools within the county, an activity we now associate with county treasurers.  The office of county superintendent evolved over the decades.  The office was generally in charge of various recordkeeping on behalf of the districts within the county and also became an integral part of the school reorganization process.

In 1997 the Legislature took action to eliminate the elected office of county superintendent by passing LB 806.  The measure was principally related to revising the school finance formula in connection with the levy limitations passed the previous year.  But one of the major features of the legislation was to seek efficiencies in education, in part, through elimination of the elected office.  In any other session, in any other year, perhaps, this would have posed political obstacles.  However, the passage of LB 1114 in 1996 and the pending implementation of statutory levy lids created an atmosphere conducive for restructuring local government.

The idea of eliminating the office of county superintendent certainly did not originate in 1997.  Senator Brad Ashford of Omaha introduced LB 184 in 1993 to do away with the office, but the measure was indefinitely postponed by the Education Committee just one day after its public hearing.⁹³  As a compromise to the notion of eliminating the office, Senator Ardyce Bohlke offered a bill in 1997 to create regional superintendents of public instruction as opposed to one office per county.  Her bill, LB 789, also was killed in committee.⁹⁴  In the same session, Senator Elaine Stuhr of Bradshaw introduced LB 808 to phase out the office.⁹⁵ In fact, it was Senator Stuhr who successfully engineered a plan to eliminate the elected office within the confines of a bill she would ultimately vote against final passage, LB 806.

As advanced from committee on March 25, 1997, LB 806 did not carry any provisions related to the elimination of the elected office of county superintendent.  Then, during second-round floor debate of the measure, Senator Stuhr and Senator Paul Hartnett of Bellevue successfully amended LB 806 to provide intent to eliminate the office by June 30, 2000.⁹⁶ (This was essentially the intent and purpose of LB 808, which had not been advanced from committee.)  The Stuhr-Hartnett proposal required the Department of Education to make recommendations on the disposition of duties assigned to county superintendents and to report back to the Legislature by December 1, 1997.

The amendment was adopted by a unanimous 36-0 vote although Senator Bob Wickersham did voice concern about the impact it might have on rural-oriented counties.⁹⁷  Senator Stuhr defended her amendment, in part, by noting the support of those most affected.  "[W]e have been working very hard with the County Superintendents Association and also with the Nebraska Association of County Officials, and they have all agreed to this amendment," Stuhr said.⁹⁸

As amended, LB 806 required the Education Committee to prepare legislation in time for the 1998 Legislative Session to carryout the intent to eliminate the elected county positions.⁹⁹  This, in fact, was done in the form of LB 1217 (1998), introduced by Senator Stuhr.¹⁰⁰ While the bill was advanced from committee, it was done so late in the 60-day session, leaving it stranded on General File.  Now dedicated to the mission, Senator Stuhr tried again in 1999 with the introduction of LB 272, the bill that finally carried out the intent of LB 806.

The introduced version of LB 272 did exactly what was expected under LB 806.  The bill struck all references to the elected office of county superintendent effective June 30, 2000 and transferred the duties to county clerks and treasurers, and school officials.  Based upon the recommendations of the study group organized by the Commissioner of Education, LB 272 also proposed to eliminate county reorganization committees.  This was something of an unexpected turn since LB 806 did not specify the elimination of these committees.

LB 272 proposed to transfer the duties of the county reorganization committees to the State Committee for the Reorganization of School Districts.  The move to eliminate these local committees was defended by Brian Halstead who represented the Department of Education and the Commissioner of Education.  Testifying before the Education Committee on January 25, 1999, Halstead said:

When the Legislature gave us the duty to study the duties of the county superintendent, we weren't authorized to change the reorganization laws and we knew that very clearly.  But in the meetings and in the discussion, there was a consensus that if it could be streamlined, that it would make it easier and more efficient and be more consistent across the state if there was one body overseeing it instead of multiple bodies.¹⁰¹

Halstead indicated that the move to eliminate the county committees resulted in the request by the department for appropriations to hire additional staff.  If the state-level committee on reorganization assumed the new duties, the department would need to hire another employee beginning in the 2000-01 fiscal year.

The dissolution of the county committees did not sit well with one member of the Education Committee.  Senator Bob Wickersham questioned whether it was really necessary to eliminate the committees.  He cast doubt about the rationale provided by Senator Stuhr.  "I'd need to hear a more compelling reason and some protections at the state level assuring us that the state committee will be properly sensitive to what local conditions are," Wickersham said during the public hearing.¹⁰² Wickersham reminded those present that the Legislature had committed a considerable amount of time in the previous two sessions to fine-tune the reorganization process.  And now LB 272 proposed to eliminate one of the underpinnings from the reorganization procedures.

Senator Stuhr had stated in her opening remarks that the elimination of the local committees was a matter of efficiency in the reorganization process.  "The current process of a County Reorganization Committee has actually lengthened the reorganization process ... one body responsible for overseeing reorganizations would provide a greater efficiency and consistency," she stated.¹⁰³ Later in the hearing she added that some reorganizations require multiple county committees and sometimes delayed the process due to logistics in bringing all concerned together at one time.

Senator Wickersham was not alone in his opposition to the bill, at least at the early stages of the legislative process.  Christine Nielsen, who represented the Nebraska Association of County Superintendents, also cast her organization's opposition to the bill.¹⁰⁴ This was the same organization that supported the move to eliminate their elected offices, according to Senator Stuhr, during floor debate on LB 806 (1997).  Nielsen's testimony pointed out a number of perceived flaws in the legislation and many questions she believed were left unanswered in the bill.

The county superintendents' organization may have officially opposed the bill, but some of their own members actually participated in developing the recommendations that became LB 272.  In fact, the Commissioner's study group was comprised of county superintendents, school superintendents, and school board members.  LB 272 was the result of a broad-based consensus on how to carryout the intent of the Legislature to dissolve the elected office of county superintendent.

Interestingly, the bill did not preclude the appointment of county administrators to take on many of the same types of duties performed by the elected officials.  This would remain a local decision by each county government.  "If a county board wishes to continue the functions of a county school administrator, it may contract with a qualified individual to do so," Stuhr wrote in her statement of intent.¹⁰⁵  Absent an appointed officer, the former duties of the county superintendent would be divided among other county officials and individual school district personnel as directed by the legislation.

1. Eliminated the office of county superintendent of public instruction effective June 30, 2000 and provides for an optional office of county school administrator.
   
   
2. Records in the office of county superintendent would be transferred to the respective county clerk.
   
   
3. County reorganization committees were eliminated.
   
   
4. The State Committee for the Reorganization of School Districts was assigned the duties and responsibilities of the former county reorganization committee in the reorganization and unification processes.
   
   
5. The State Board of Education was authorized to adopt rules and regulations for the State Reorganization Committee.
   
   
6. Additional responsibilities for school district superintendents:

• Certificates allowing an individual under age 16 to work would be filed with school superintendents;
  
  
• Superintendent would receive lists of students enrolled in public, private, denominational, or parochial schools;
  
  
• Superintendent would compare lists to census information for compulsory attendance requirements;
  
  
• Teachers and administrators would register certificates with superintendents of school district;
  
  
• Superintendent would have the authority to endorse certificates; and
  
  
• Superintendent of a primary high school district would be responsible for receiving applications for work permits for individual aged 14 to 16.

LB 272 impacted the statutes relevant to the school finance formula but only in a minor way.  Prior to LB 272, the Commissioner of Education was authorized to notify the appropriate county superintendent of any school district that had not submitted budget documents, financial reports, and statistical reports in a timely fashion.  The county superintendent would then direct the applicable county treasurer to withhold funding to the school district until such documents and reports were received by the Department of Education.  LB 272 eliminated the "middle man" and authorized the Commissioner to work directly with the appropriate county treasurer on such matters.¹⁰⁶

LB 272 was poised for the fast track in the legislative process.  The Legislature had already committed itself to the action proposed in the measure.  LB 272 was advanced from the Education Committee on a 7-1 vote on February 8, 1999.¹⁰⁷  Senator Wickersham was the lone dissenting vote, but it would be the only time he would cast a negative vote on the measure.  LB 272 received unanimous votes for advancement throughout all stages of floor debate and received final approval on March 20, 1999 by a 46-0 vote.¹⁰⁸

For those who monitor school finance policy, it is essential to pay close attention to the revenue "side" of the equation.  School officials and lobbyists for education organizations typically devote as much attention to revenue-related legislation as education-related legislation.  Whether by design or happenstance, the Revenue and Education Committees meet in public hearing rooms directly across the hallway from each other on the first floor of the Capitol, although the committees do not conduct hearings on the same days of the week.  In recent years, at least one member and as many as four members of the Education Committee also served as members of the Revenue Committee.  The connection between the committees has had positive effects on both education and revenue policy decisions over the years since discussions on one subject are often interrelated with the other.

LB 194 (1999) is an example of this cross connection between revenue and education fields.  The bill was introduced on behalf of the Property Tax Administrator, Cathy Lang, and the Property Tax Division of the Department of Revenue.¹⁰⁹ Her office annually proposes technical and substantive cleanup provisions very similar to the way in which the Department of Education suggests cleanup bills to the Education Committee.

As introduced and advanced from committee, LB 194 did not change any sections of law directly related to the school finance formula nor education-related statutes generally.  Instead, the bill contained both technical and substantive changes to laws related to property tax assessment and other revenue matters.  For instance, the bill proposed that after July 25th of each year the county assessor, with approval of the county board of equalization, would correct the assessment roll and the tax list, if necessary, in the case of a clerical error that results in a change in the value of the real property.¹¹⁰  LB 194 changed the date by which the county assessor must complete the assessment of real property from April 1st to March 20th of each year.¹¹¹

The legislation took some rather dramatic steps toward centralization of standards used by county assessors.  Previous to 1999, the Property Tax Administrator was required to produce various manuals and guidelines to assist county assessors carryout their duties.  LB 194 changed the existing law to require all county assessors and deputy assessors to be educated and certified by the Property Tax Administrator.¹¹²  The bill required the Property Tax Administrator to establish, implement, and maintain a curriculum of educational courses for the certification and recertification for all county assessors.¹¹³ The Administrator must also establish, through rule and regulation, the required educational standards and criteria for certification and recertification.

The measure permitted the Property Tax Administrator to invalidate the certificate of any assessor or deputy assessor who willfully fails or refuses to diligently perform his/her duties concerning the assessment of property and the duties of each assessor and deputy assessor.  If the certificate of a person serving as assessor or deputy assessor is revoked, the person is removed from office, the office declared vacant, and the person is not be eligible to hold that office for a period of five years after the date of removal.¹¹⁴

LB 194 advanced from the Revenue Committee on February 3, 1999.¹¹⁵ The measure progressed through the legislative process and was amended several times before it reached the third and final stage of consideration.  On March 25th Senator Bob Wickersham, chair of the Revenue Committee and member of the Education Committee, moved to return the bill to Select File for specific amendment.  It was at this point in time that LB 194 would take on a direct relation to the school finance formula.

The amendment filed by Senator Wickersham would not have been offered on that day if LB 149, the controversial school finance bill, had not been passed over the Governor's objection just three days earlier.¹¹⁶  One of the major provisions of LB 149 was to change the state aid certification date from December 1st each year to February 1st each year.¹¹⁷  The idea was, in part, to utilize the most current data available, and, by moving the date to February 1st, it allowed the Department of Education to use more current data.  Senator Wickersham drew upon this objective in another change to the school finance formula.  "This change is only possible because in LB 149 we moved the certification date from December 1st to February 1st, so this is a reaction, if you will, in part, to the changes that we made in LB 149," Wickersham said.¹¹⁸

Prior to 1999, the Property Tax Administrator would compute and certify to the Department of Education the adjusted valuation for the current calendar year of each local system for each class of property in each such local system.  This function had to be completed by July 1st of each year.  The adjusted valuation of property for each local system would be used to calculate the state aid value in order to calculate state aid.  The Property Tax Administrator would then notify each local system of its adjusted valuation for the current calendar year by class of property, again by July 1st of each year.  The problem, as Wickersham explained, is that the "old July 1st date didn't allow the Property Tax Administrator's Office to use current information for that component of the valuation of a school district."¹¹⁹ The Property Tax Administrator had to use the prior year's data.

The Wickersham amendment to LB 194 proposed to change the July 1st deadline to October 10th beginning in 2000.  To help the Property Tax Administrator carryout this objective, the amendment required county assessors to certify the total taxable value by school district to the Property Tax Administrator by August 25th of each year.¹²⁰  "[T]he effect is that we will have more current information in the adjusted valuation numbers that are given by the Property Tax Administrator's Office to the Department of Education to be used in the state aid formula," Wickersham asserted to his colleagues.¹²¹

In addition to the foregoing date change, the Wickersham amendment also proposed to change the deadline by which a local system may file with the Property Tax Administrator written objections to the adjusted valuations prepared by the Property Tax Administrator.  The date had been July 31st and the Wickersham amendment changed the date to November 10th of each year.  The date by which the Property Tax Administrator had to respond to the request was changed from November 1st to January 1st.  Finally, the amendment changed the deadline for requests by local systems to file nonappealable corrections of adjusted valuation due to clerical error or, for agricultural land, assessed value changes by reason of land qualified or disqualified for special use valuation (greenbelt).  The date had been October 1st and the amendment changed the date to November 10th of each year and the Property Tax Administrator had to respond by January 1st of the following year.¹²²

Senator Wickersham's amendment apparently made sense to his colleagues.  There was no debate or discussion on the matter.  The rationale for the amendment was in harmony with that proposed under LB 149, which the Legislature had already passed into law.  "We have consistently worked to provide the most current information possible for use in the school aid formula, and I would suggest to you that this change is consistent with that," Wickersham said.¹²³  And his colleagues agreed by granting a unanimous 39-0 vote for adoption of his amendment.¹²⁴  The Legislature passed LB 194 on April 23, 1999 by a 42-0 vote.¹²⁵

In an era when the trend was fewer not more local governments, LB 87 (1999) seemed somewhat out of place at first glance.  Legislative Bill 87 was sponsored by Senator Bob Wickersham, chair of the Revenue Committee, and was actually a second attempt from a bill introduced a year earlier.  LB 1089 (1998) was advanced by the Revenue Committee and placed on General File on March 2, 1998.¹²⁶ LB 1089 was designated a Speaker priority, but the session ended before the measure could be debate.

The subject of both LB 1089 and its successor LB 87 was the creation of a new type of political subdivision called a joint public agency.¹²⁷ The idea was to give existing political subdivisions and state agencies another possible avenue for cooperation on joint projects, somewhat similar to interlocal agreements.  Under the Joint Public Agency Act, as created by LB 87, a school district, for instance, could form a joint public agency with a municipality (inside or outside Nebraska), a state agency, or even a federal agency.  Whatever the combination of joining parties, the legislation would not create any new property tax authority.  The levy limits would still apply and there would be no levy exclusion for such entities.  If a city and school district formed a joint public agency, for example, their combined property tax authority would have to cover the new entity.

The joint public agency would be allowed to own property, make contracts, employ workers, and otherwise enjoy the benefits of a governmental entity.  The agency would have its own board, would have the option to hire an executive director, would be subject to the open meeting laws, and would be subject to the Political Subdivision Tort Claims Act.  The agency may also issue bonds if doing so was consistent with the agreement between the parties that formed the new political subdivision.¹²⁸

LB 87 amended the school finance laws only in one area and that was related to the spending lid exclusions available to school districts.  Prior to LB 87, a K-12 or high school only (Class VI) district was granted the authority to exceed the local system's allowable growth rate for expenditures in support of a service that is the subject of an interlocal cooperation agreement or a modification of an existing agreement.  LB 87 expanded this section of law to include joint public agencies.¹²⁹