Failed Policy Proposals

Unsuccessful Past School Finance Legislation

Bill:  LB 387	Introduced in:  1999
One-liner:  Provide for a facility factor in determining state aid to schools
Introduced by:  Bohlke	Committee:  Education
Disposition:  IPP 4/12/2000	Introduced bill
Summary:  LB 387 establishes a facility factor to be added to local system formula need for purposes of computing state aid to schools beginning in 2001-02.  After consulting with experts in the field of educational facilities, the Department of Administrative Services is required to annually determine a replacement cost per square foot to use in calculating the facility factor.  Local school systems that do not qualify for equalization aid are to receive an amount equal to the facility factor for each net option student. The addition of a facility factor will increase the formula need for schools. Based on current law, an increase in formula need will result in a redistribution of state aid provided to schools beginning in 2000-01.  The exact amount of increase in formula need is unknown.  It is estimated that need could increase by over $265 per student and total need by $77.8 million (assuming 291,500 students and a replacement cost of $110 per square foot).

Bill:  LB 470	Introduced in:  1999
One-liner:  Redefine "low-income child" for purposes of state aid to schools
Introduced by:  Wickersham	Committee:  Education
Disposition:  IPP 3/16/1999	Introduced bill
Summary:  LB 470 changes the definition of low-income child for purposes of calculating adjusted formula students for each local school system in the state aid formula.  The formula allows a poverty factor to be applied in determining formula students.  The determination of the poverty factor is based upon the definition of low-income children.  The bill defines a low-income child as a child under age 19 who lives in a household with an adjusted gross income equal to or less than the annual amount used to determine children eligible for school lunch programs.  Current law defines a low-income child as a person under age 19 living in a household with an adjusted gross income of less than $15,000. The change in definition will probably increase the number of low-income children identified in some school systems.  This will increase the poverty factor for affected schools in the state aid formula, which will increase formula need.  The State Department of Education indicates the poverty factor adds 8,766 formula students in the most recent state aid calculation.  Using the standard cost grouping cost, the poverty factor adjustment accounts for about $38 million of the state aid distributed.  If the bill results in a 10% increase in low-income students, there could be up to a $3.8 million shift in aid.  However, without data on the change in low-income children, the increase in formula need is not known.  Any increase in need will result in a redistribution of state aid between school districts based on current law.

Bill:  LB 540	Introduced in:  1999
One-liner:  Change provisions for reserve increases and state aid to schools
Introduced by:  Bohlke	Committee:  Education
Disposition:  IPP 4/12/2000	Introduced bill
Summary:  LB 540 allows a school district, with 10,000 or less students and a reserve less than the allowable reserve percentage specified in statue, to increase it's annual allowable growth in reserve percentage above the 2% growth rate permitted in current law.  The bill provides for additional annual percentage growth of .5% to 2.5%, depending on the student membership of the district.  Smaller districts (0 to 471 students) are allowed up to a 4.5% annual growth in reserves.  Districts with 471 to 3,044 students can have a 3.5% increase, and districts with 3,044 to 10,000 students may have an annual increase of 2.5% in reserves. An increase in the allowable annual reserve growth percentage may result in an increase in property taxes levied to increase cash reserves of school districts with less than 10,000 students.  The fiscal impact is dependent upon decisions made by local school boards.

Bill:  LB 635	Introduced in:  1999
One-liner:  Change provisions for adjusted valuation and state aid to schools
Introduced by:  Stuhr	Committee:  Revenue
Disposition:  IPP 1999	Introduced bill
Summary:  LB 635 changes the computation of adjusted valuation for the purposes of determining state aid to schools.  Currently, the Property Tax Administrator computes adjusted valuation for school systems by assuming real property other than non-agricultural land is valued at 100% of market value and agricultural land is valued at 80% of market value.  The adjusted value is used to determine local resources for school systems for state aid purposes. The bill changes the adjusted valuation used in the formula for real property to the actual amount certified by the county, if the valuation is from 92% to 100% of market value.  The value for agricultural land is the amount certified by the county, if the amount is from 74% to 80% of market value.  The bill requires the Property Tax Administrator to value land at 100%, if the valuation of real property is below 92% of market value or above 100%, and if the value of agricultural land is less than 74% or more than 80%. The bill will have a fiscal impact for school systems in the amount of state aid received.  A change in adjusted valuation used in the state aid formula will increase or decrease the local resources of school systems.  School systems having valuations that fall within the acceptable ranges in the bill will have their adjusted valuations stay the same or be decreased to the actual amount certified.  A reduction in local resources, for state aid purposes, will increase the need for equalization aid.  Since the appropriation level for state aid is currently fixed at a certain level, any changes in valuation will result in a shift in state aid between school systems beginning in 2000-01.

Bill:  LB 646	Introduced in:  1999
One-liner:  Change provisions for calculation of state aid to schools and provide for professional staff incentive aid
Introduced by:  Raikes	Committee:  Education
Disposition:  IPP 3/8/1999	Introduced bill
Summary:  LB 646 provides for additional state aid to school systems in the form of professional staff incentive aid.  Schools will be eligible to receive incentive aid to be used for the salaries and benefits for professional staff.  The amount of aid for each school system will be derived based upon weighting factors assigned to each professional staff member.  Special education staff members are excluded from the calculation.  A weighted staff factor is developed for each system based upon criteria outlined in the bill.  This amount is divided by a statewide average professional staff factor to determine a system's incentive factor.  The incentive factor is then multiplied by the product of the system's adjusted formula membership times the system's average formula cost per student.* If the amount is greater than zero, then the bill requires the Legislature to appropriate this amount as staff incentive aid to the local system.  The State Department of Education (NDE) is to evaluate the success of the program and the appropriateness of weighting factors after five years. The General Fund fiscal impact of the bill in terms of increased state aid to schools cannot be determined without additional information on the number of teachers and administrators weighted by the bill and their level of educational attainment and length of service.

Bill:  LB 668	Introduced in:  1999
One-liner:  Change provisions for average formula carper student regarding state aid to schools
Introduced by:  Wickersham	Committee:  Education
Disposition:  IPP 4/12/2000	Introduced bill
Summary:  LB 668 provides for the calculation of a size adjustment factor for school systems with less than 900 adjusted formula students for purposes of determining state aid (TEEOSA).  The bill requires the State Department of Education (NDE) to calculate a minimum and a maximum cost per adjusted formula student and a straight-line adjustment factor to be used to determine a school system's size adjustment factor.  The size adjustment factor is multiplied by the average formula cost for the standard cost grouping to determine the average formula cost per student for school systems with less than 900 students.  This calculation is also done for the school system's qualifying for the sparse or very sparse cost grouping and the greater of the calculation required in the bill or the current calculation of average formula cost per student is used. The addition of a size adjustment factor will increase the formula need of some school systems with less than 900 adjusted formula students.  An increase in formula need for some systems may increase the amount of aid provided to these districts.  Under current law, any increase in aid will be shifted from other school systems qualifying for equalization aid.  NDE does not have data on the amount of aid that would be shifted between systems pursuant to the bill, but it estimated the shift in aid would not be significant.

Bill:  LB 715	Introduced in:  1999
One-liner:  Provide for an estimation grid under school financing provisions
Introduced by:  Raikes	Committee:  Education
Disposition:  Placed on General File 3/17/1999; Raikes priority bill 2000; advanced to Select File 2/25/2000; bracketed; IPP 4/12/2000	Introduced bill
Summary:  LB 715, as amended, changes the calculation of needs for school systems in the Tax Equity and Educational Opportunities Support Act beginning with state aid provided in 2001-02.  The bill retains three cost groupings (very sparse, sparse and standard) for purposes of determining state aid but eliminates the current calculation of cost grouping cost per student and provides for the calculation of a formula cost per student in each cost grouping. The bill provides that the formula need for each local system will be equal to the sum of the formula cost per student times the weighted formula students in the system, plus the transportation allowance and the special education receipts allowance.  Formula cost per student is equal to the preliminary formula cost per student times a spending index.  The preliminary formula cost per student is determined by calculating a typical cost per student.  The typical cost per student for each local system equals the sum of: the system cost divided by the weighted formula students in the system; plus the basic student cost; plus the product of the demographic ratio times the demographic coefficient; plus the product of the scale coefficient times the weighted formula students.  The factors used to determine the typical cost per student are inflated each year by a cost growth factor. The bill repeals the "lop-off", stabilization factor, and small school stabilization adjustment in the current state aid formula.  The allowable growth percentage for each local system is also amended.  The bill eliminates a current provision requiring the State Department of Education (NDE) to determine a target budget level for each system.  The amount of net option funding for a school system is to be based on the local system formula cost per student rather than the cost grouping formula cost per student. LB 715 has no fiscal impact for any state agency.  It is also fiscally neutral (within $400,000) in terms of the total amount of state aid distributed to school systems.  However, the bill will have a fiscal impact for individual school systems.  NDE has prepared a model to illustrate the fiscal impact of LB 715 if it had been in effect for the 2000-01 certification of state aid.  NDE indicates that the model shows that most school systems in the standard cost grouping will receive increased state aid pursuant to LB 715, and most school systems in the sparse and very sparse categories will have a decrease in state aid.  The model shows an increase in equalization aid of $6.1 million for schools in the standard cost grouping and a decrease in aid of $3.9 million for schools in the sparse cost grouping and $3.1 million for schools in the very sparse category. The model also shows there would be an increase in funds provided to school systems through the net option funding component of the formula.  Any increase in net option funding will be offset by a like reduction in the total amount of funds provided as allocated income tax funds through the formula.  NDE indicates that in most cases the formula cost per student is greater than the cost grouping cost per student, so using formula cost per student to determine net option funding results in an increase in this component of the formula.  School systems receiving net option funding will receive a net increase in state aid if the increased amount of net option funding is greater than the decreased amount of allocated income tax funds. The changes in the allowable growth rate for the budget of expenditures allows some lower spending school systems to grow at a higher rate.  School systems opting to spend more to grow at the allowed accelerated rate will receive additional state aid in the following fiscal year.

Bill:  LB 1044	Introduced in:  2000
One-liner:  Change agricultural land valuation provisions under the Tax Equity and Educational Opportunities Support Act
Introduced by:  Wickersham	Committee:  Revenue
Disposition:  IPP 3/13/2000	Introduced bill
Summary:  LB 1044 changes the adjusted value of agricultural land from 80% to 70% of market value for purpose of calculating state aid to schools under the Tax Equity and Educational Opportunities Support Act.  The change in valuation will impact state aid beginning in 2001-02. The change in valuation of agricultural land means that school districts with agricultural land will have lower formula resources for state aid purposes.  This will allow school districts with agricultural land to qualify for an increase in equalization aid and consequently a reduction in property taxes paid for the support of schools.  Using state aid calculations for 2000-01, it is estimated the change in adjusted value for agricultural land will result in a $19.5 million increase in state aid to schools.  This will translate into a like reduction in property taxes levied for school districts.  Of the $19.5 estimated change in property taxes levied, about $12.7 million of this reduction will accrue to the agricultural sector.

Bill:  LB 1058	Introduced in:  2000
One-liner:  Change state aid calculations for school districts
Introduced by:  Wickersham	Committee:  Education
Disposition:  IPP 4/12/2000	Introduced bill
Summary:  LB 1058 changes the amount allocated to the School District Income Tax Fund in the Tax Equity and Educational Opportunities Act.  Currently, the state aid formula provides that a capped amount of funds is allocated to this fund.  The amount is capped at $102,289,817, which was the amount provided in 1992-93.  The bill increases this amount each year based upon the increase over the prior year in the cost growth factor for the standard cost grouping.  The first adjustment is to be made for school year 2000-01. The fiscal impact of the bill will be an increase in the amount of allocated income tax funds provided to schools through the state aid formula in years when the cost growth factor increases.  The cost growth factor did not increase from 1999-00 to 2000-01 in the state aid formula.  So, the bill will have no fiscal impact in 2000-01.  In the future, if there is an increase in the cost growth factor, then additional general funds will be required for state aid.  The cost growth factor increases primarily based upon growth in the number of students and increases in the allowable growth rate.  The fiscal impact for individual school districts if the cost growth factor increases will be additional revenue from allocated income tax funds.  This revenue will be counted as a local resource, so there will be a like decrease in equalization aid for equalized school districts.  Non-equalized school districts will experience an increase in revenue unless they are impacted by the minimum levy penalty.

Bill:  LB 1161	Introduced in:  2000
One-liner:  Change the Tax Equity and Educational Opportunities Support Act
Introduced by:  Bohlke	Committee:  Education
Disposition:  Advanced to General File 2/7/2000; Speaker priority bill; IPP 4/12/2000	Introduced bill
Summary:  LB 1161 increases the amount of general funds from $2 million to $5 million that are set aside for base year incentive payments to schools that consolidate or unify.  The increase in set aside will be effective for 2000-01 and 2001-02.  Current law provides that total incentive payments are limited to 1% of the amount appropriated to the Tax Equity and Educational Opportunities Fund minus the funds set aside for base year incentives.  The bill increases the limitation to 2% of the state aid appropriation less funds set aside for base year incentives. The fiscal impact of the bill is an increase of $3 million general funds in 2000-01 in 2001-02 for base year incentives.  The actual fiscal impact of the bill will depend upon mergers and unifications that occur prior to August 2, 2001.  It is possible that $5 million will not be needed for base year incentives in these two fiscal years.  The bill directs that any excess appropriation be transferred to the Tax Equity and Educational Opportunities Support Act Stabilization Fund on August 16, 2000. Incentive payments in 1999-00 totaled $1.76 million of general funds.  Base year incentives in 1999-00 amounted to $1.36 million.  Total incentives in 1999-00 were $3.12 million.  Incentive payments in 2000-01 total $2.7 million.  The amount of base year incentives is not currently known.  It is assumed base year incentives will add at least $1.3 million to this amount, so total incentives may be at least $4 million in 2000-01.  The Department of Education indicates that base year incentives may be greater than $1.3 million if certain large mergers or unifications that are being discussed occur. The increase in the limitation on the amount of incentives allows the additional state aid for base year incentives to be expended if needed and allows an increase in total incentive payments in 2001-01 and 2001-02. NOTE:  The Committee Amendments extend the deadline for consolidations and unifications to qualify for the incentives from August 2, 2001 to August 2, 2004.

Bill:  LB 204	Introduced in:  2001
One-liner:  Change the maximum levy and change state aid distributions to schools
Introduced by:  Wickersham	Committee:  Revenue
Disposition:  IPP 3/15/2001	Introduced bill
Summary:  LB 204 repeals the provision in current statute that decreases the maximum levy limitation for schools to $1.00 per hundred dollars of valuation beginning in 2001-02.  The repeal will mean the levy limitation for schools will remain at $1.10 in 2001-02 and thereafter.  Section 3 provides for a recertification of 2001-02 state aid on or before ten days after the effective date of the act.  The act has an emergency clause. Repeal of the scheduled decrease in the levy limitation for schools to $1.00 will increase resources for school districts in the state aid formula (TEEOSA).  An increase in formula resources will reduce the amount of general funds required for state aid to schools by an estimated $89.4 million in 2001-02 and $95.7 million in 2002-03.  Schools will have the authority to levy property taxes up to $1.10 to replace revenue that will not be received as state aid.  The fiscal impact of the bill for individual school districts is not able to be determined. *Technical Note:  The bill does not change the levy amount used in the calculation of lop-off aid to correspond to the repeal of the decrease in the overall levy limitation.

Bill:  LB 248	Introduced in:  2001
One-liner:  Change provisions relating to other actual receipts under the Tax Equity and Educational Opportunities Support Act
Introduced by:  Wickersham	Committee:  Education
Disposition:  IPP 4/19/2002	Introduced bill
Summary:  LB 248 amends the definition of actual receipts in the state aid formula (TEEOSA).  The bill provides that 50% of private contributions, including receipts of cash and tangible property from private foundations, individuals, associations, or charitable organizations are considered to be actual receipts for purposes of determining local system formula resources.  Receipts from a single fundraising event that generates less than $5,000 are excluded.  Currently, receipts from private foundations, individuals, associations or charitable organizations are not included as actual receipts. The State Department of Education indicates that the statewide amount of contributions and donations was $93,175 in 1999-00.  If the bill had been in effect for the 2001-02 state aid certification, then actual receipts of school districts would have increased by $46,587.  An increase in local resources for school systems will result in a decrease in state aid, if the school systems with the increase in receipts pursuant to the bill, are eligible for equalization aid.  The change in the formula will have an impact on state aid distributed beginning in 2002-03.

Bill:  LB 290	Introduced in:  2001
One-liner:  Change provisions for valuation of agricultural and horticultural land and school state aid calculations
Introduced by:  Jones	Committee:  Revenue
Disposition:  IPP 2/26/2002	Introduced bill
Summary:  LB 290 changes agriculture land value from 80% to 50% of actual value.  It is operative on January 1, 2001.  This bill will increase state aid to schools.  The Legislative Fiscal Office estimates the increase at almost $47.5 million in FY2003. All else being equal, this bill could result in a tax shift from agriculture land to other property.  The reason is because it lowers the taxable value of agriculture land while not changing the taxable value of other property.  Additionally, certain school districts may receive additional state aid as noted above. Valuation data used for state aid to schools is from the previous year, and this bill is operative on January 1, 2001.  Therefore, the additional state aid will not be distributed until one year after the valuation of agriculture land is reduced to 50%.  In other words, the valuation changes will occur before state aid catches up with the changes.  This may cause political subdivisions severe cash flow problems.

Bill:  LB 378	Introduced in:  2001
One-liner:  Change provisions for calculation of the local effort rate under the Tax Equity and Educational Opportunities Support Act
Introduced by:  Robak	Committee:  Education
Disposition:  IPP 4/19/2002	Introduced bill
Summary:  LB 378 changes the calculation of adjusted valuation in the state aid formula (TEEOSA).  The bill requires that the local effort rate yield will be the rate determined by multiplying the total formula valuation of all local systems by the local effort rate.  Total formula valuation is defined as the local system's adjusted valuation times a local income factor.  The local income factor equals one plus half of the difference of a local system income ratio minus one.  The local system ratio is the ratio of the local system's adjusted gross income per return divided by the state adjusted gross income per return.  The changes in the formula will have a fiscal impact on state aid distributed beginning in 2002-03. The estimated fiscal impact of the bill for school systems is shown in the following table based upon the 2001-02 certification of state aid.  The bill will result in a decrease in valuation for school systems with low income relative to the state average income.  There will be an increase in valuation for school systems with high income relative to the state average income.  A decrease in valuation will result in decreased resources in the formula, which will increase state aid for equalized school systems with lower income relative to the state average.  An increase in valuation will result in increased resources in the formula, which will decrease state aid for equalized school systems with higher income relative to the state average.  The overall estimated fiscal impact of the bill is a $10,488,000 increase in state aid.

Bill:  LB 422	Introduced in:  2001
One-liner:  Change the calculation of state aid value
Introduced by:  Wickersham	Committee:  Revenue
Disposition:  IPP 2/26/2002	Introduced bill
Summary:  LB 422 changes the adjusted value of agricultural land from 80% to 70% of market value for purpose of calculating state aid to schools under the Tax Equity and Educational Opportunities Support Act.  Agricultural land that receives special valuation (greenbelt) is reduced from 100% to 87.5% for state aid purposes.  The changes in valuation will impact state aid beginning in 2002-03. The change in valuation of agricultural land means that school districts with agricultural land will have lower formula resources for state aid purposes.  This will allow school districts with agricultural land to qualify for an increase in equalization aid and consequently a reduction in property taxes paid for the support of schools.  Using state aid calculations for 2001-02, it is estimated the change in adjusted value for agricultural land will result in a $15.4 million increase in state aid to schools.  This will translate into a like reduction in property taxes levied for school districts.

Bill:  LB 478	Introduced in:  2001
One-liner:  Provide for an extreme poverty student factor under the Tax Equity and Educational Opportunities Support Act
Introduced by:  Schimek	Committee:  Education
Disposition:  IPP 5/15/2001	Introduced bill
Summary:  LB 478 changes the calculation of need in the state aid formula (TEEOSA).  The bill provides for the calculation of an extreme poverty factor for local systems.  The extreme poverty factor will apply to local systems having 35% or more formula students to whom the poverty factor is applied.  The extreme poverty factor equals the total students in the local system to whom the poverty factor applies times .20.  The bill provides that the extreme poverty factor will only be used to calculate formula need and will not be used to calculate cost group costs.  Beginning in 2002-03, the lop-off provisions will not apply to local systems that receive less than 20% of their general fund operating expenditures from property taxes. School systems may exceed their applicable allowable growth rate for costs pursuant to extreme poverty student education programs included in their school improvement plans beginning in 2001-02.  The bill requires the State Department of Education (NDE) to recalculate and distribute additional state aid for systems that qualify for the extreme poverty factor in 2001-02.  Intent language provides for an appropriation of $15 million of general funds in 2001-02 to fund the extreme poverty factor. The extreme poverty factor will increase the need calculation in the state aid formula.  This will result in an increase in equalization aid paid to school systems.  The amount is unknown without a state aid run.  The fiscal impact of the bill in 2001-02 is $15 million of general funds pursuant to the intent language in the bill.

Bill:  LB 519	Introduced in:  2001
One-liner:  Change state aid calculations for schools
Introduced by:  Jensen	Committee:  Education
Disposition:  IPP 4/19/2002	Introduced bill
Summary:  LB 519 changes the calculation of allocated income tax funds in the state aid formula (TEEOSA).  The bill provides that the amount appropriated to the School District Income Tax Fund will be adjusted for any increase in the cost growth factor for the standard cost grouping over the prior year.  The bill provides that the first adjustment will be made for 2001-02*. Currently, the appropriation for the School District Income Tax Fund is capped at $102,289,817.  The amount distributed as allocated income tax funds in the formula is determined by subtracting the amount paid for option students from the $102.3 million.  Since the distribution of funds for option students is increasing each year, the allocated income tax portion of the formula is decreasing.  Using the state aid certification for 2001-02, the bill would increase state aid by an estimated $290,900.  This increase in state aid would be paid to school systems that are non-equalized. *Technical Note:  The bill will require a recertification of state aid if the intent is to make the adjustment effective for the 2001-02 school year.

Bill:  LB 520	Introduced in:  2001
One-liner:  Change provisions for calculation of local system formula need under the Tax Equity and Educational Opportunities Support Act
Introduced by:  Raikes	Committee:  Education
Disposition:  IPP 1/23/2002	Introduced bill
Summary:  LB 520 changes the calculation of need in the state aid formula (TEEOSA) beginning in 2002-03.  The bill provides that the current amount of need determined for a local system will be multiplied by a local commitment index to determine the local system's formula need.  The local commitment index is computed by taking an average of the local system's target budget level and its general fund operating expenditures* from the same data year and dividing the result by the local system's target budget level.  The bill also eliminates the lop-off, minimum levy, stabilization and small school stabilization provisions in the current formula. The fiscal impact of adding the local commitment index to the formula is estimated to be a decrease in overall state aid distributed of $3,411,000.  The fiscal impact of the local commitment index and the elimination of the lop-off, minimum levy, stabilization and small stabilization provisions is an estimated increase in state aid of $8,347,000.  The table below shows the shift in funding between school systems with the local commitment index and a combination of the local commitment index and the elimination of the lop-off, minimum levy and stabilization factors. *Technical Note:  The fiscal impact was computed based upon assuming that the general fund operating expenditures used in the bill will be inflated by the cost growth factor.

Bill:  LB 521	Introduced in:  2001
One-liner:  Change allowable growth percentage provisions under the Tax Equity and Educational Opportunities Support Act
Introduced by:  Raikes	Committee:  Education
Disposition:  IPP 1/23/2002	Introduced bill
Summary:  LB 521 changes the calculation of the allowable growth rate for expenditures of school districts.  The bill provides that the applicable allowable growth rate for a school system will be the greater of the target budget growth rate (current allowable growth rate) or the growth rate necessary to fund total formula needs of the system. The allowable growth rate for school systems is currently 2.5% to 4.5%.  The bill will allow some school systems to increase spending above the current allowable growth rate.  This will increase need for state aid purposes, which will result in an increase in state aid provided two years in the future.

Bill:  LB 522	Introduced in:  2001
One-liner:  Change allowable growth rate provisions under the Tax Equity and Educational Opportunities Support Act
Introduced by:  Raikes	Committee:  Education
Disposition:  IPP 1/23/2002	Introduced bill
Summary:  LB 522 changes the allowable growth rate for expenditures by school districts.  The bill provides that the applicable allowable growth rate for a school system will be the greater of the target budget growth rate (current allowable growth rate) or the percentage increase in formula needs for the local system.  The percentage increase in formula needs is determined by dividing the local system's formula needs by the formula needs from the prior year. The change will increase the amount that can be spent by some school systems.  School systems are currently allowed to increase spending by 2.5% to 4.5%.  School systems whose formula need increases by a percentage greater than their allowable growth rate will be allowed to increase spending by the higher percentage.  School systems that increase spending above the current allowed growth rate will increase the need calculation in the state aid formula, which will result in an increase in state aid provided two years in the future.

Bill:  LB 532	Introduced in:  2001
One-liner:  Provide for changes to adjusted valuation under the Tax Equity and Educational Opportunities Support Act
Introduced by:  Hudkins	Committee:  Education
Disposition:  IPP 2/20/2002	Introduced bill
Summary:  LB 532 allows any local school system or county official to file a written request by January 5th with the Property Tax Administrator to amend the adjusted valuation, which is computed by the Property Tax Administrator for purposes of state aid, due to the annexation of property prior to December 31 of the preceding year.  The annexation must result in a loss of 5% of more of the assessed value of either the annexing entity or the entity from which the property being annexed is taken.  The Property Tax Administrator must approve or deny the request and forward any recertifications of adjusted value to the State Department of Education by January 15th. The bill allows the transfer of annexed property from one school district to another to be reflected a year earlier in the state aid calculation.  The change in adjusted valuation may increase the state aid received by the school system from which the land is annexed and decrease the state aid paid to the school system receiving the annexed territory.  The bill allows the change in state aid to coincide more closely with the ability of a school system to tax the land that is annexed.

Bill:  LB 535	Introduced in:  2001
One-liner:  Change local system formula resources computations under the Tax Equity and Educational Opportunities Support Act
Introduced by:  Dierks	Committee:  Education
Disposition:  IPP 4/19/2002	Introduced bill
Summary:  LB 535 provides that receipts from the Environmental Protection Act will not be considered as a local resource for purposes of state aid (TEEOSA).  The Department of Environmental Quality indicates that penalties collected in calendar year 2000 pursuant to the Environmental Protection Act totaled $916,500.  It is assumed that some portion of these penalties, as well as penalties assessed in calendar year 2001, will be reflected as receipts by school systems on the 2000-01 Annual Finance Report, which is the basis for determining state aid paid in 2002-03.  If the receipts from these penalties are excluded as a local system resource, then actual receipts of school districts will decrease by the excluded amount.  A decrease in local resources for school systems will result in an increase in state aid, if the school systems with the receipts excluded pursuant to the bill, are eligible for equalization aid.

Bill:  LB 560	Introduced in:  2001
One-liner:  Provide for extended contract days under the Tax Equity and Educational Opportunities Support Act
Introduced by:  Beutler	Committee:  Education
Disposition:  IPP 4/19/2002	Introduced bill
Summary:  LB 560 amends the state aid formula (TEEOSA) to include an extended teacher contract allowance to provide each school district with funding equivalent to extend the contract of every teacher for five days per year.  Beginning with state aid distributed in 2002-03, any district may apply for the extended contract allowance.  The total amount of the allowance shall not exceed five days times the number of FTE teachers times the daily rate of $227.46.  Thereafter the daily rate will increase by the basic allowable growth rate.  School districts are allowed to exceed their allowable growth rate in the first year that a district receives an extended contract allowance by the amount received.  Thereafter, it may be exceeded by the amount of any increase. In 2002-03 and 2003-04 the extended contract allowance amount is added to the general fund operating expenditures for each cost grouping after the cost grouping is adjusted by the cost growth factor.  Thereafter, general fund operating expenditures will reflect prior year expenditures for extended contracts.  The fiscal impact of the bill for school districts will depend upon whether the district applies for extended contract funds and if the district receives equalization aid. The definition of teacher in the bill is a certificated employee who is not performing the duties of a school administrator.  It is assumed that this definition refers to teachers and other certificated staff.  The fiscal impact of the bill in 2002-03 for extended teacher contract allowances is estimated to be $23,871,000 of general funds.  This estimate is derived using fall of 1999 FTE teachers and certificated staff.  The total increase in formula need is estimated to be $25.9 million, but $2 million of the need is for districts that will not receive aid for extended contracts because they are non-equalized.  The estimated fiscal impact for 2003-04 is $24,468,000 based on the current allowable growth rate of 2.5%.  One-time costs of $7,500 are estimated for NDE administrative expenses in 2001-02.

Bill:  LB 576	Introduced in:  2001
One-liner:  Change calculations of state aid and provide for professional staff incentive aid under the Tax Equity and Educational Opportunities Support Act
Introduced by:  Price	Committee:  Education
Disposition:  IPP 5/15/2001	Introduced bill
Summary:  LB 576 provides that the local system formula need calculation in the state aid formula will be adjusted by a professional staff incentive factor beginning with state aid paid in 2002-03.  The staff incentive factor is based on the number of full-equivalent teachers and other support staff, in the prior year, who are required to hold a certificate.  These FTE are weighted based upon degree level achieved and years of experience and the total is divided by the number of unweighted staff in the district to determine the local system weighting factor.  A statewide average factor is determined in the same manner for all professional staff employed in the state.  Each local system's weighting factor is then divided by the statewide average factor to determine the local system's professional staff incentive factor.  The factor is multiplied by local system need to determine the amount required to be added to calculated needs for the professional incentive factor. The bill as written will have an estimated fiscal impact of $1.7 billion because the calculated need of each school system is increased by the product of the professional staff incentive factor times each system's formula need.  If the intent of the bill is to adjust the formula need of each system by the professional staff incentive factor, then the estimated fiscal impact is $1.5 million of general funds in 2002-03.  This interpretation assumes that some school systems will gain need and others will lose need.  The gain in need, for school systems with a professional incentive factor above the statewide average, is estimated to be about $25.9 million and the loss of need, for school systems with a professional staff incentive factor that is less than the statewide average, is estimated to be $24.4 million.  It is estimated the State Department of Education will have one-time administrative expenses of $15,000 general funds in 2001-02 to implement the bill. The fiscal impact was estimated using 1998 data on teachers in Class II-VI school districts.  The bill includes all certificated staff, which will increase the number of staff used in the calculation by about 10%.  It is assumed the inclusion of staff in Class I districts as well as other certificated staff in all school districts to compute the fiscal impact of the bill will not appreciably change the overall statewide fiscal impact.  The impact for individual districts will change based on the inclusion of additional staff and their experience levels and degree attainment.  The estimated fiscal impact calculation was not adjusted to reflect equalized and non-equalized districts.

Bill:  LB 602	Introduced in:  2001
One-liner:  Redefine general fund budget of expenditures under the Tax Equity and Educational Opportunities Support Act
Introduced by:  Hartnett	Committee:  Education
Disposition:  IPP 4/19/2002	Introduced bill
Summary:  LB 602 amends the definition of general fund budget of expenditures in the state aid formula (TEEOSA), beginning in 2001-02.  The bill provides that general fund budget of expenditures will not include budgeted expenditures for coal, gas or any other fuel, electricity, water and sanitary sewer service, gas and oil for motor vehicles, telephone service and school safety and security plans and procedures. The exclusion of these items from the budget limitation on school districts will increase the spending authority of school districts by the amount of the exclusions.  This will increase state aid two years in the future.  Since these expenditures are still part of the computation of general fund operating expenses for state aid purposes, there may be an additional increase in state aid two years in the future, if other spending is increased.

Bill:  LB 609	Introduced in:  2001
One-liner:  Change equalization aid and the minimum levy adjustment under the Tax Equity and Educational Opportunities Support Act
Introduced by:  Raikes	Committee:  Education
Disposition:  IPP 1/23/2002	Introduced bill
Summary:  LB 609 changes lop-off and the minimum levy adjustment in the state aid formula (TEEOSA) beginning in 2002-03.  The lop-off change provides that no local system may receive equalization aid such that when total aid is added to a levy of $.87, multiplied by the local system's adjusted valuation divided by one hundred, would result in total local system revenue from state aid plus property tax receipts, that will exceed the total of the preceding year's state aid plus property tax receipts plus adjustments.  Current law requires the aid amount to be added to a levy of $.90 beginning in 2002-03.  The minimum levy adjustment is also to be applied to local systems that have a levy less than $.87, rather than $.90. There were 25 local systems subject to lop-off in the 2001-02 certification of state aid.  These systems were lopped-off, received decreased equalization aid, in the amount of $5.5 million.  If the levy provision had been set at $.87 rather than $.90, then fewer systems would have been lopped-off and there would have been an increase in equalization aid provided. There were 36 local systems that were subject to the minimum levy adjustment in the 2001-02 certification of state aid.  These systems had a minimum levy adjustment of $12.7 million.  If the bill had been effect in 2001-02, it is estimated that only 26 local systems would have been subject to the minimum levy adjustment, which would have increased the amount of state aid paid by about $1 million.  The systems that received additional equalization aid would also be eligible to receive the stabilization factor.

Bill:  LB 660	Introduced in:  2001
One-liner:  Change basic allowable growth rate provisions under the Tax Equity and Educational Opportunities Support Act
Introduced by:  Hartnett	Committee:  Education
Disposition:  IPP 4/19/2002	Introduced bill
Summary:  LB 660 changes the need computation in the state aid formula (TEEOSA).  The computation of formula need will be based upon using two calculations of allowable growth.  The formula will provide for growth in general fund operating expenditures based on the percentage increase in certain components of the Consumer Price Index plus an allowable growth rate for employee compensation. The basic allowable growth rate for general fund expenditures will be the percentage increase in the previous 12 months of the components of the Consumer Price Index (CPI) which include transportation costs, utility costs, and supply costs.  The basic allowable growth range will up to 2% above the allowable growth rate that is established. The basic allowable growth rate for expenditures for employee compensation will be 1% plus the percentage change in the CPI for Urban Wage Earners and Clerical Workers for the preceding 12 months.  The allowable growth range will be up to 2% above the allowable growth rate that is established.  The Department of Education (NDE) is to determine the percentage of increase.  Employee compensation includes salary, taxes, insurance and retirement. These two allowable growth rates will be used to compute the average formula cost per student in each cost grouping.  This cost is then used to compute need in the state aid formula.  It is assumed the bill will result in a significant annual increase in need in the state aid formula by an unknown amount.  Any increase in need will increase state aid two years in the future.

Bill:  LB 689	Introduced in:  2001
One-liner:  Provide for indexed formula need under the Tax Equity and Educational Opportunities Support Act
Introduced by:  Raikes	Committee:  Education
Disposition:  IPP 1/23/2002	Introduced bill
Summary:  LB 689 changes the calculation of formula need in the state aid formula (TEEOSA) beginning in 2002-03.  The bill requires the calculation of a spending ratio and spending index to be used to adjust the need of school systems.  Formula need is calculated for each school system using the same calculation process as in current law.  A spending ratio is then calculated for each system (system general fund operating expenses* divided by the system's formula need).  The spending ratio is used to determine a spending index.  The spending index is the lesser of .5 (1 + spending ratio) or 1.  The indexed formula need for each system is then determined by multiplying the local system formula need times the spending index. The bill also eliminates the lop-off provision in the current formula and the current minimum levy adjustment.  The bill provides for a new minimum levy adjustment that will be calculated and applied to any local system, with a general fund levy of less than $.90, that is not receiving equalization aid.  Currently, the minimum levy adjustment is applied to any local system with a general fund levy less than $.90. The fiscal impact of adding the spending index to the formula is estimated to be a decrease in overall state aid distributed of $29,432,000, using the state aid certification for 2001-02.  The fiscal impact of the spending index , the elimination of lop-off and change in the minimum levy provision is an estimated decrease in state aid of $19,097,000.  The table below shows the shift in funding between school systems with the spending index and with a combination of the spending index, the elimination of lop-off and change in the minimum levy adjustment. *Technical Note:  The fiscal impact was computed based upon assuming that the general fund operating expenditures used in the bill will be inflated by the cost growth factor.

Bill:  LB 690	Introduced in:  2001
One-liner:  Change provisions for calculation of formula need under the Tax Equity and Educational Opportunities Support Act
Introduced by:  Raikes	Committee:  Education
Disposition:  IPP 4/19/2002	Introduced bill
Summary:  LB 690 changes the calculation of need in the state aid formula (TEEOSA).  Beginning in 2002-03, the bill provides that an average cost per student will be calculated by dividing the total estimated general fund operating expenditures for all local systems by the adjusted formula students for all local systems.  This eliminates the current method of calculating a separate cost per student for each of the three cost groupings based on spending by school systems in each cost grouping.  After a statewide average cost per student in all local systems is calculated, then a cost grouping multiplier will be applied to determine the cost grouping cost.  The cost grouping multiplier for the standard cost group is 1.0, the sparse cost grouping is 1.115 and the very sparse cost grouping is 1.127. Using the 2001-02 certification of state aid, it is estimated that the statewide average cost per student would be $4,906.  The multiplier will increase the cost grouping cost for the sparse and very sparse cost groupings, but the multiplier effect does not increase the cost grouping costs up to the level calculated in the current formula.  The net change in state aid is estimated to be $17,039,000.  All school systems in the standard cost grouping will gain aid and all school systems in the sparse and very sparse cost groupings will lose aid.  The following table shows the estimated change in cost grouping cost and the resulting change in state aid pursuant to the bill if it had been in effect for the 2001-02 certification of aid.

Bill:  LB 746	Introduced in:  2001
One-liner:  Change provisions for calculation of formula need under the Tax Equity and Educational Opportunities Support Act
Introduced by:  Raikes	Committee:  Education
Disposition:  IPP 4/19/2002	Introduced bill
Summary:  LB 746 changes the calculation of need in the state aid formula (TEEOSA) beginning in 2002-03.  The bill provides that an average cost per student will be calculated by dividing the total estimated general fund operating expenditures for all local systems by the adjusted formula students for all local systems.  This eliminates the current method of calculating a separate cost per student for each of the three cost groupings based on spending by school systems in each cost grouping.  After a statewide average cost per student in all local systems is calculated, then a system cost will be added to the formula need for each local system in the sparse and very sparse cost groupings.  The system cost will be $265,000 in 2002-03.  The system cost will be increased each year by the basic allowable growth rate. Using the 2001-02 certification of state aid, it is estimated that the statewide average cost per student would be $4,906.  The net change in state aid is estimated to be $19,632,000.  All school systems in the standard cost grouping will gain aid and some school systems in the sparse and very sparse cost groupings will gain aid and some will lose aid.  The following table shows the estimated change in cost grouping cost and the resulting change in state aid pursuant to the bill if it had been in effect for the 2001-02 certification of aid.

Bill:  LB 747	Introduced in:  2001
One-liner:  Change provisions for the local effort rate under the Tax Equity and Educational Opportunities Support Act
Introduced by:  Raikes	Committee:  Education
Disposition:  IPP 1/23/2002	Introduced bill
Summary:  LB 747 pertains to the local effort rate used in the calculation of state aid (TEEOSA).  The bill provides that if the maximum levy for school systems is $1.10 or more for any school year beginning in 2002-03 or thereafter, then the local effort rate shall be the maximum levy less $.15. The current local effort rate is $.90, based upon a maximum levy of $1.00 less $.10.  If the maximum levy is increased to $1.10 or more in the future, then the local effort rate will be the maximum levy less $.15 instead of $.10.  The bill has no fiscal impact unless the maximum levy is changed in Section 77-3442.  If the maximum levy is increased to $1.10 or more in the future, then the amount of state aid distributed will increase.  State aid will increase because the local effort rate will be $.05 less than what is required under current law.  A lower local effort rate increases the amount of equalization aid paid to school systems. In the current certification of state aid for 2001-02, state aid increased by $89 million when the levy limit and the local effort rate decreased by $.10.  So, a $.05 decrease in the local effort rate, based on the 2001-02 aid certification, will result in about $44.5 million of additional state aid being distributed to school systems, if the maximum levy was at $1.10.

Bill:  LB 748	Introduced in:  2001
One-liner:  Change provisions for calculation of state aid, allowable growth rates, and the Hardship Fund under the TEEOSA
Introduced by:  Raikes	Committee:  Education
Disposition:  IPP 4/19/2002	Introduced bill
Summary:  LB 748 changes the calculation of need for school systems in the Tax Equity and Educational Opportunities Support Act beginning with state aid provided in 2002-03.  The bill retains three cost groupings (very sparse, sparse and standard) for purposes of determining state aid but eliminates the current calculation of cost grouping cost per student and provides for the calculation of a formula cost per student in each cost grouping.  The change in the calculation of formula need is phased-in during 2002-03 and 2003-04.  It is fully implemented in 2004-05. Beginning in 2004-05, the bill provides that the formula need for each local system will be equal to the sum of the formula cost per student times the weighted formula students in the system, plus the transportation allowance and the special education receipts allowance.  Formula cost per student is equal to the preliminary formula cost per student times a spending index.  The preliminary formula cost per student is determined by calculating a typical cost per student.  The typical cost per student for each local system equals the sum of: the system cost divided by the weighted formula students in the system; plus the basic student cost; plus the product of the demographic ratio times the demographic coefficient; plus the product of the scale coefficient times the weighted formula students.  The factors used to determine the typical cost per student are inflated each year by a cost growth factor. The bill eliminates the "lop-off", stabilization factor, and small school stabilization adjustment in the current state aid formula.  The allowable growth percentage for each local system is also amended.  The amount of net option funding for a school system is to be based on the local system formula cost per student rather than the cost grouping formula cost per student.  The allowable growth rate is changed to equal the local system's spending index allowable growth rate in 2004-05. The fiscal impact of the bill is unable to be projected without a state aid run.  A similar bill introduced in the 2000 Session (LB715) was fiscally neutral (within $400,000) in terms of the total amount of state aid distributed to school systems.  However, the bill had a fiscal impact for individual school systems.  The State Department of Education prepared a model to illustrate the fiscal impact of the bill introduced in the 2000 Session.  The model at that time showed that most school systems in the standard cost grouping would receive increased state aid and most school systems in the sparse and very sparse categories would have a decrease in state aid.  The model also showed there would be an increase in funds provided to school systems through the net option funding component of the formula.  Any increase in net option funding will be offset by a like reduction in the total amount of funds provided as allocated income tax funds through the formula.

Bill:  LB 749	Introduced in:  2001
One-liner:  Provide for teacher salary enhancement payments under the Tax Equity and Educational Opportunities Support Act
Introduced by:  Raikes	Committee:  Education
Disposition:  IPP 4/12/2001	Introduced bill
Summary:  LB 749 amends the state aid formula (TEEOSA) to include a teacher salary allowance beginning in 2002-03.  The teacher salary allowance is equal to $50 per adjusted weighted formula student.  The amount is increased by the allowable growth rate each year thereafter.  Schools must maintain teacher salary expenditures at least at the prior year level plus the amount of the allowance in 2003-04.  Thereafter an additional maintenance level is required.  School districts are allowed to exceed their allowable growth rate in 2002-03 by an amount equal to $50 times the number of adjusted weighted formula students. The estimated fiscal impact of the bill salary allowances is estimated to be $15,447,000 of general funds.  This estimate is derived using 1999 adjusted weighted formula students and the 2000-01aid certification.  The total increase in formula need is estimated to be $16.6 million, but $1.1 million of the need is for districts that will not receive aid for salary allowances because they are non-equalized.  The estimated fiscal impact for 2003-04 is $15,833,000 based on the current allowable growth rate of 2.5%.  One-time costs of $15,000 are estimated for NDE administrative expenses in 2001-02.

Bill:  LB 793	Introduced in:  2001
One-liner:  Provide for teacher salary enhancement payments under the Tax Equity and Educational Opportunities Support Act
Introduced by:  Kremer	Committee:  Education
Disposition:  IPP 4/12/2001	Introduced bill
Summary:  LB 793 amends the state aid formula (TEEOSA) to include a teacher salary allowance beginning in 2002-03.  The teacher salary allowance is equal to $50 per adjusted formula student.  The amount is increased by the allowable growth rate each year thereafter.  Schools must show the State Department of Education (NDE) that the funds received for allowances in 2002-03 and 2003-04 were used to increase salaries.  In order to receive the allowance in 2004-05 and thereafter schools must maintain teacher salary expenditures for each position at a level equal to or greater that the salary for the position in 2002-03.  School districts are allowed to exceed their allowable growth rate by an amount equal to $50 times the number of adjusted formula students in 2002-03. The bill also provides that if a school is subject to a minimum levy formula adjustment that is greater than or equal to the allocated income tax funds plus the teacher salary allowance then the school system shall not receive allocated income tax funds or the teacher salary allowance.  If the minimum levy adjustment is less than allocated income tax funds and the salary allowance, then the school will receive the difference between the total of the income tax funds plus the salary allowance less the minimum levy adjustment.  This provision may mean some school districts will not receive additional state aid for salary allowances.  The fiscal impact of this provision is not taken into account in the following estimate of the fiscal impact of the bill. The estimated fiscal impact of the bill for salary allowances is estimated to be $15,447,000 of general funds.  This estimate is derived using 1999 adjusted weighted formula students and the 2000-01aid certification.  The total increase in formula need is estimated to be $16.6 million, but $1.1 million of the need is for districts that will not receive aid for salary allowances because they are non-equalized.  The estimated fiscal impact for 2003-04 is $15,833,000 based on the current allowable growth rate of 2.5%.  One-time costs of $15,000 are estimated for NDE administrative expenses in 2001-02.

Bill:  LB 799	Introduced in:  2001
One-liner:  Change the Master Teacher Program, the Attracting Excellence to Teaching Program, and state aid to education provisions
Introduced by:  Raikes	Committee:  Education
Disposition:  IPP 4/26/2001	Introduced bill
Summary:  LB 799 amends the Master Teacher Program, the Attracting Excellence to Teaching Program and includes a differential salary allowance in the state aid (TEEOSA) formula.  The following provisions have a fiscal impact. (1) Master Teacher Program (Sections 1-4).  The program is currently authorized in statute, but is not funded.  The bill reduces the current authorized annual salary bonus for a master teacher from $5,000 to $2,500.  It adds a provision providing a $5,000 bonus only to persons who teach in a school building in which at least 40% of the students qualify for the poverty factor in the state aid formula.  The $1 million cap on the number of teachers that may receive an annual bonus is eliminated.  It also repeals the cap on the number of teachers that may receive the first half of a registration award each year. Since the program is not currently funded, the fiscal impact to fund the bill is estimated to be a minimum of $246,250 of general funds in 2001-02 and $457,500 of general funds in 2002-03.  This will provide for salary bonuses, registration awards and $10,000 of administration costs for the State Department of Education (NDE).  The fiscal impact will increase if any master teachers qualify for the $5,000 bonus based upon teaching in a school building with at least 40% of the students qualifying for the poverty factor.  It is not known how many teachers will qualify for the $5,000 bonus under the criteria of the bill. (2) Attracting Excellence to Teaching Prog.  (Sections 6-7).  The program is authorized in statute, but is not funded.  The bill amends statute to provide that the loan forgiveness program will only be open to students who agree to teach in a public school in the state, rather than in either a public or private school.  It is possible that the exemption of students, who will teach in private schools from the program, may reduce the cost of the program, if funding was allocated.  The cost of the program is an estimated $2,710,000. (3) Differential Salary Allowance (Sections 8-12).  The bill amends the state aid formula (TEEOSA) to include a differential teacher salary allowance beginning in 2002-03.  The differential salary allowance is equal to $2,500 times 1.15 days times the number of FTE teachers who teach in a school building in which at least 40%of the students qualify for the poverty factor in the state aid formula.  The differential rate is increased by the allowable growth rate each year thereafter.  Schools must prove to NDE that the differential salary amount is provided to teachers who teach children in buildings where at least 40% qualify for the poverty factor.  School districts are allowed to exceed their allowable growth rate by the amount of the differential salary allowance in 2002-03.  The State Department of Education (NDE) can require schools to submit data necessary to implement the bill. The estimated fiscal impact to provide aid for differential salary allowances beginning in 2002-03 is $7,421,000 of general funds.  This estimate is derived using the 2001-02 state aid certification and data provided by NDE showing the number of teachers (3,000) providing instruction in school buildings in which at least 40% of the students qualify for the poverty factor.  The total increase in formula need is estimated to be $7.5 million, excluding FTE in Class I school districts.  About $1 million of the need will not be distributed for salary allowances because the teachers are in school districts that do not receive equalization aid.  The estimated fiscal impact for 2003-04 is $7.6 million based on the current allowable growth rate of 2.5%.  The fiscal estimate does not adjust for districts that will be excluded from receiving the salary differential if all teachers in the district teach in buildings that qualify for the poverty factor.  One-time costs of $15,000 are estimated for NDE administrative expenses in 2001-02.

Bill:  LB 812	Introduced in:  2001
One-liner:  Change adjusted formula student provisions under the Tax Equity and Educational Opportunities Support Act
Introduced by:  Cunningham	Committee:  Education
Disposition:  IPP 4/19/2002	Introduced bill
Summary:  LB 812 changes the calculation of adjusted formula students in the state aid formula (TEEOSA).  The bill provides that adjusted formula students will be the greater of the calculated formula students (current law) or a three-year average of calculated formula students.  The three-year average is calculated by adding the calculated formula students for the year of the aid distribution plus the adjusted formula students used in the final calculation of state aid for each of the prior two years and dividing this amount by three.  The bill will go into effect for the 2002-03 distribution of state aid. It is estimated the bill will result in an overall decrease of $647,600 in state aid, using the 2001-02 distribution of state aid.  There will be a decrease in the cost group cost for each of the three cost groupings.  There will also be an increase of 4,111 in the adjusted weighted formula students used in the formula calculation.

Bill:  LB 893	Introduced in:  2002
One-liner:  Exempt certain school maintenance and improvement costs fro from the property tax levy limit
Introduced by:  Jensen	Committee:  Revenue
Disposition:  IPP 2/20/2002	Introduced bill
Summary:  LB 893 provides an additional exclusion from the levy limitation for school districts.  The bill excludes expenditures for fire and life safety improvements.  It also excludes funds levied for percentage increases in building operation and maintenance costs and energy costs over the building operation and maintenance and energy costs paid in1999-00, that are in excess of the basic allowable growth rate.  The bill defines building operation and maintenance costs and energy costs. The exclusions will allow school districts to increase property taxes to cover the cost of fire and life safety improvements and a certain percentage of building operation and maintenance costs and energy costs.  Using 1999-00 expenditures for life safety improvements, building operation and maintenance and energy expenses as a base, school districts could increase the property tax levy each year for the amount of costs in excess of the 1999-00 base plus 2.5%. Building operations and maintenance costs totaled $195.2 million on the Annual Finance Report submitted by school districts in 1999-00.  Energy costs are included within this category of expenditures on the report.  It is not known if all expenditures in this AFR category would be included in the definition of building operation and maintenance and energy costs in the bill.  It is estimated that building operations and maintenance costs will be $243 million in 2002-03, based on an average growth rate of 7% per year.  The bill allows school districts to levy additional property taxes for the percentage increase above 1999-00 expenditures that is in excess of the basic allowable growth rate of 2.5%.  So, school districts could exceed the levy limit by about $43 million in 2002-03 for building operation and maintenance costs and energy costs.  The amount of the additional exclusion for life safety improvements is not known. If schools increase spending by $43 million in 2002-03, then the "need' in the state aid formula will increase and there will be an increase in state aid provided two years later, in 2004-05.

Bill:  LB 934	Introduced in:  2002
One-liner:  Change school tax levy provisions is and state aid calculations
Introduced by:  Kristensen	Committee:  Revenue
Disposition:  IPP 4/19/2002	Introduced bill
Summary:  LB 934 increases the levy limitation for school districts from $1.00 to $1.025 for 2002-03 and all subsequent years.  The levy limits used to calculate the minimum levy adjustment, lop off and the stabilization adjustments are also changed.  It is estimated that the fiscal impact of the bill will be decreased state aid of about $22.3 million, using the state aid certification for 2002-03.  The increase in the levy limitation will allow school districts to access additional property tax resources to offset the decrease in state aid.

Bill:  LB 1053	Introduced in:  2002
One-liner:  Change maximum levy exemptions for schools
Introduced by:  Connealy	Committee:  Revenue
Disposition:  IPP 2/20/2002	Introduced bill
Summary:  LB 1053 provides an additional exclusion to the levy limitation for school districts.  Schools may exclude the amounts, in excess of the prior year's expenditures, levied to pay for sums ordered by the Commission of Industrial Relations to certificated employees as compensation and benefits.  The amount of exclusions in the future for compensation ordered by the CIR is unknown.  School districts under order from the CIR will be able to increase their property tax rates to cover the increased amount of compensation required by the CIR.  An increase in school spending for employee compensation will increase state aid paid two years in the future.

Bill:  LB 1059	Introduced in:  2002
One-liner:  Authorize school districts to charge fees for extracurricular activities
Introduced by:  Kristensen	Committee:  Education
Disposition:  IPP 3/5/2002; portions amended into LB 1172 (2002)	Introduced bill
Summary:  LB 1059 allows a school district to charge a fee for extracurricular activities in an amount not to exceed actual cost.  The fee may also be waived on the basis of need.  Extracurricular activities are defined as optional activities that are supervised and administered by the school district. The fiscal impact of the bill will vary by school district depending upon whether fees are currently charged for extracurricular activities, as defined in the bill, and the amount of such fees.  School districts currently have different policies regarding the assessment of fees for extracurricular activities.  The statutory authorization to charge fees for extracurricular activities may result in an increase in revenue for some school districts or may be revenue neutral in terms of allowing schools to continue current charges.  A decrease in revenue may occur if a school district is charging an amount in excess of actual cost or is charging a fee for an activity that does not comply with the definition of extracurricular in the bill.

Bill:  LB 1099	Introduced in:  2002
One-liner:  Change budget limitations for political subdivision and schools
Introduced by:  Wickersham	Committee:  Revenue
Disposition:  IPP 4/19/2002	Introduced bill
Summary:  This bill changes the Nebraska Budget Act. On or after July 1, 2003, current year's restricted funds shall be adjusted by subtracting the prior year's total receipts of motor vehicle taxes minus the budgeted amount. Budget limitations do not apply to restricted funds budgeted in support of a service if there is an agreement operated by one of the parties or by a certain type of independent third party; however, after July 1, 2002, this does not apply if the contracts to purchase goods or services are made generally available to the public by the other party to the agreement. This same provision applies to schools allowable growth rates. The bill is operative on July 1, 2002, and has the emergency clause.

Bill:  LB 1124	Introduced in:  2002
One-liner:  Provide an exception to school levy limitations for certain medical costs
Introduced by:  Jensen	Committee:  Revenue
Disposition:  IPP 2/20/2002	Introduced bill
Summary:  LB 1124 provides an additional exclusion to the levy limitation for school districts.  Schools may exclude the amounts levied to pay for the cost of salaries and benefits for health care professionals and health care assistants employed by a district and the cost of equipment, supplies and training for the health care staff that is necessary for emergency response protocols to life-threatening conditions.  The bill also allows school districts to exceed the allowable growth rate by the amount of these costs each fiscal year. The amount of levy exclusions in the future for the compensation of health care professionals and related operating expenses is unknown.  The data will have to collected from school districts in order to project the cost of the exclusions.  School districts with these costs will be able to increase their property tax collections to cover the amount spent on health care professionals and related operating expenses.  The bill allows school districts at the levy limit and the spending limit the authority to increase expenditures.  An increase in school spending will increase "need" in the state aid formula.  This will increase state aid paid two years after the spending increase is initiated.

Bill:  LB 1134	Introduced in:  2002
One-liner:  Provide for a separate cost grouping for certain unified systems under the Tax Equity and Educational Opportunities Support Act
Introduced by:  Schrock	Committee:  Education
Disposition:  IPP 3/5/2002	Introduced bill
Summary:  LB 1134 establishes an additional cost grouping for purposes of calculating state aid to school districts.  The bill adds a unified system cost grouping.  The unified cost grouping includes unified systems with two unifying school districts and up to 800 formula students and unified systems with three or more school districts and up to 1,000 formula students.  The average formula cost per student in each cost grouping is calculated by dividing total general fund operating expenditures for the cost grouping by total adjusted formula students for systems in the cost grouping.  The bill provides that the average formula cost per student for the unified system cost grouping shall not be less than the midpoint between the average formula cost per student in the sparse cost grouping and the average formula cost per student in the standard cost grouping.  Districts that withdraw from a unified system within eight years are to pay back the amounts of state aid received that were attributable to the participation in the unified system cost grouping.  The paybacks are through reductions in future state aid payments over a five year period. The creation of an additional cost grouping will change the cost grouping cost of all school districts in the standard and sparse cost groups.  Data provided by the State Department of Education (NDE) for the 2001-02 state aid certification shows that four systems were unified.  Three of the four systems will qualify for the new cost grouping per the definition in the bill.  Two of the systems are in the sparse cost group and one is in the standard cost group. The two unified systems that are currently in the sparse cost group would have experienced a $792.41 per formula student increase in their cost group cost by being included in the unified cost group.  This would mean additional state aid if the systems are equalized.  The one unified system in the standard cost group would have experienced a $1,594.76 per formula student increase in its cost group cost by being included in the unified cost group. All other equalized school districts in the standard and sparse cost groups would have lower cost group costs and receive a smaller amount of state aid.  There should not be an overall change in the amount of state aid distributed.  The changes in state aid pursuant to the bill will occur beginning in 2003-04.

Bill:  LB 1159	Introduced in:  2002
One-liner:  Permit schools to exceed their allowable growth rate to teacher compensation expenses
Introduced by:  Kristensen	Committee:  Education
Disposition:  IPP 2/7/2002	Introduced bill
Summary:  LB 1159 allows school systems to exceed the system's allowable growth rate for expenditures to pay for the amount of total teacher compensation which exceeds the amount of total teacher compensation budgeted for the previous fiscal year. The bill does not define total teacher compensation.  It is assumed that expenditure increases for wages and benefits are included in the exclusion.  The State Department of Education (NDE) indicates that budget forms submitted by school districts do not show the required information, so adjustments in the budget forms will be required to collect data to compute the amount excluded from the spending lid. The exclusion of increased costs for teacher compensation from the spending lid will allow school systems that are not at the levy limitation to levy additional property taxes in the amount of the increased spending authority.  Any increase in spending pursuant to the exclusion will increase "need" in the state aid formula which will result in additional state aid being paid two years after the spending increase is initiated.  The initial fiscal impact of the bill for the state will occur in 2004-05, if spending by schools is increased pursuant to the bill in 2002-03. Data from the Annual Finance Report is used to calculate the total cost of teacher salaries and benefits in 2000-01 to be $958 million.  The growth in teacher salaries and benefits in the last ten years has averaged 4.5%.  If $43 million ($958.1 x .045) of additional spending is added to the 2001-02 calculation of "need" pursuant to the bill, then state aid would increase by about $41 million.  This estimate is the maximum fiscal impact of the bill assuming all school districts would have the levy authority and opt to levy additional property taxes in the amount of the increased spending authority.

Bill:  LB 1160	Introduced in:  2002
One-liner:  Increase the maximum school levy for teacher compensation purposes
Introduced by:  Hartnett	Committee:  Revenue
Disposition:  IPP 2/20/2002	Introduced bill
Summary:  LB 1160 increases the levy limitation for school districts to $1.10 beginning in 2002-03.  The amount levied in excess of $1.00 is to be used only for the enhancement of total teacher compensation.  The bill does not define total teacher compensation.  It is assumed that total teacher compensation includes wages and benefits. The bill does not adjust the local effort rate.  Current law provides that the local effort rate is the maximum levy less $.10.  If the intent of the bill is to have the local effort rate increase to $1.00, then increased property taxes collected pursuant to the $.10 increase in levy authority will be offset by a reduction in state aid. If the intent of the bill is to have the local effort rate remain at $.90, then school districts will be able to levy an additional $.10 to enhance teacher compensation.  A $.10 increase in property taxes levied by school districts is $93.9 million based on the latest CTL.  The additional spending by school districts will increase "need" in the state aid formula which will increase state aid paid two years after the spending increase is initiated.  The estimated increase in state aid in 2004-05, based on $93.9 million of additional spending by school districts, is $87.8 million.

Bill:  LB 1162	Introduced in:  2002
One-liner:  Provide a quality education incentive factor in the state aid formula
Introduced by:  Brown	Committee:  Education
Disposition:  IPP 3/5/2002	Introduced bill
Summary:  LB 1162 includes an additional factor in the computation of adjusted formula students for purposes of state aid to school districts in 2003-04 and 2004-05.  The bill provides for a quality education incentive factor for those systems that met the qualifications established in the Quality Education Accountability Act.  The factor is equal to the number of formula students in each system times $37.92 in 2003-04 and $39.82 in 2004-05. The bill as written would significantly reduce cost grouping costs in the state aid formula because the number of adjusted formula students would increase dramatically.  No fiscal impact can be determined. The bill could be drafted to include the quality education incentive aid as an allowance.  If this was the intent of the bill, then the estimated maximum fiscal impact is $6.1 million in 2002-03, using the number of formula students in school districts that qualified for the Quality Education Incentive Program in 2001.  This assumes that all schools qualifying for the incentive aid are eligible for equalization aid.

Bill:  LB 1170	Introduced in:  2002
One-liner:  Change the state aid formula to account for qualified early childhood education programs
Introduced by:  Raikes	Committee:  Education
Disposition:  IPP 2/7/2002	Introduced bill
Summary:  LB 1170 makes changes to the Tax Equity and Educational Opportunities Support Act (TEEOSA).  The bill includes the prior year membership of children in qualified early childhood education programs in the determination of formula students for state aid purposes.  The early childhood education participants are also weighted for purposes of determining adjusted formula students.  The weighting factor for early childhood students in qualified full day programs is 1.2 and the factor for children in qualified programs that are not fullday is .6.  Receipts from federal Head Start programs that are used for qualified early childhood education programs are included as accountable receipts in the calculation of state aid.  The State Department of Education (NDE) is to determine whether a program is qualified based upon the definition in the bill.  Qualified programs must have received state funding in a prior school year from the Early Childhood Education Grant Program. NDE indicates there may be an increase of approximately 210 children from early childhood education programs that will be counted for state aid purposes each fiscal year.  This will result in minimal increases in the cost growth factor and the number of adjusted weighted formula students.  Changes in the calculation of these components will result in an estimated increase in "need" of about $950,000 in 2003-04.  Any federal Head Start receipts used by these programs would offset this increased need as an accountable receipt.  Presently, based upon data from the Annual Finance Report, there are no programs receiving Head Start funds that would be required to count the receipts as an accountable resource.  The amount of additional state aid pursuant to the bill will increase annually based on the increase in early childhood program participants that qualify for inclusion in the state aid calculation.  Schools with qualified early childhood education programs will receive increased aid through the state aid formula, if the district is eligible for equalization aid.  However, these schools will no longer be receiving state funding from the Early Childhood Education Grant Program.

Bill:  LB 1174	Introduced in:  2002
One-liner:  Adopt the Public Elementary/Secondary Student Fee Authorization Act and change employment provisions and state aid calculations
Introduced by:  Raikes	Committee:  Education
Disposition:  IPP 2/28/2002	Introduced bill
Summary:  LB 1174 is the Public Elementary and Secondary Student Fee Authorization Act.  The act provides that a school or an educational service unit (ESU) may collect fees for extracurricular expenses that are not incurred to meet accreditation requirements.  Students may be required to furnish certain personal or consumable items and clothing for specified courses and activities.  A school store may be operated.  Entities requiring fees pursuant to the act must have a policy to waive fees for students who qualify for free or reduced-price lunches.  Current law allowing a fee for eye protective devices is eliminated.  Funds collected pursuant to the act may not be included in the determination of state aid.  The poverty factor in the state aid formula is increased. The bill eliminates the requirement for coaches or supervisors of extracurricular activities to have a valid teaching certificate.  The State Department of Education (NDE) is to request a criminal history record check by the State Patrol of persons who are employed to coach or supervise extracurricular activities that do not have a valid Nebraska certificate to teach.  The $33 cost of the criminal history record check is to be borne by the individual.  The State Patrol will incur additional cash fund expenditures to process the criminal history record checks.  In the initial years of the bill, the number of additional record checks is projected to be minimal, so a slight increase of about $3,000 in the State Patrol Cash Fund will be necessary. The fiscal impact of the bill will vary by school district and ESU depending upon whether fees are currently charged for extracurricular activities as defined in the bill.  School districts and ESU's currently have different policies regarding the assessment of fees for various purposes.  The statutory authorization to charge fees for extracurricular activities may result in an increase in revenue for some school districts/ESU's or may be revenue neutral in terms of allowing schools/ESU's to continue current charges.  The bill may result in a decrease in revenue for a school district/ESU if fees are currently being charged for other purposes that are not included in the allowable fees pursuant to the bill. The provision prohibiting the inclusion of funds collected pursuant to the act in the determination of state aid should have little, if any, fiscal impact because it is assumed that these receipts are not currently included in the computation of state aid.  NDE indicates that the increase in the poverty factor in the state aid formula may increase state aid by $3.9 million beginning in 2003-04, based upon the 2001-02 certification of aid.  (The increase is due to districts becoming eligible for equalization aid pursuant to the change).  The number of weighted formula students will increase for school districts with a high percentage of students qualifying for free lunches.  The increase in students will reduce cost group costs and result in a redistribution of state aid between school systems.  Those districts that qualify for equalization and have a high number of students to which the poverty factor applies will likely receive an increase in state aid and other equalization districts will receive a decrease.

Bill:  LB 1175	Introduced in:  2002
One-liner:  Provide for a student fee subsidy within the state aid formula
Introduced by:  Raikes	Committee:  Education
Disposition:  IPP 2/28/2002	Introduced bill
Summary:  LB 1175 changes the calculation of state aid pursuant to the Tax Equity and Educational Opportunities Support Act beginning in 2003-04.  The bill provides for a student fee subsidy to be included in the formula.  The amount of the student fee subsidy is added to other formula components to determine formula need.  The amount of the student fee subsidy in the state aid formula for 2003-04 is $250 times the local school system's weighted formula students.  The student fee subsidy is increased by the basic allowable growth rate each year.  The State Department of Education estimates that formula need will increase by $79.5 million based on the 2001-02 distribution of state aid and this will increase state aid by an estimated $65.6 million beginning in 2003-04 and $70 million in 2004-05. The bill requires each school district to establish a student fee fund that contains at least 105% of the student fee allotment ($500 in 2003-04) times the number of weighted formula students used in the state aid certification for that year.  The amount of the student fee allotment is increased by the basic allowable growth rate each year.  Schools are also required to establish a student fee schedule for courses, activities and equipment or supplies that are not required for graduation.  Every student is allocated an amount equal to the student fee allotment times the weighting factor for the student's grade each year.  The student can then use this allotted amount to participate in the courses and activities for which fees are set to the extent of the student's allocation.  In 2003-04, a school district may exceed its applicable allowable growth rate by the amount of the student fee allotment times the number of weighted formula students. School districts receiving equalization aid that are not at the levy limit will be able to levy additional property taxes in 2003-04 to handle their half of the student fee allotment (the state provides the other half).  Schools that are at the levy limit will have to decrease spending in other areas to provide for their share of the student fee allotment.  School districts that do not receive equalization aid will need to use local resources to fund the entire student allotment fee.  It is assumed that the revenue pursuant to the student fee subsidy and from the student fee fund will replace revenue lost from not having students pay out-of-pocket fees for activities. It is assumed that the requirement for schools to have a $500 student fee allotment in 2003-04 will increase needs in the state aid formula by an estimated $159 million in 2005-06**.  It is estimated that state aid provided pursuant to the bill in 2005-06 will increase to a total of $131.2 million.

Bill:  LB 1201	Introduced in:  2002
One-liner:  Change and add provisions relating to state aid demographic factors and provide exceptions to levy and expenditure limits
Introduced by:  Suttle	Committee:  Education
Disposition:  IPP 4/19/2002	Introduced bill
Summary:  LB 1201 makes changes to the state aid formula (Tax Equity and Educational Opportunities Support Act) and increases levy and expenditure limitations for school districts.  The following provisions will have a fiscal impact for the state and school districts: (1) Changes in the state aid formula calculation (Sections 3, 4, and 5) - The bill increases the poverty factor and the limited English proficiency factor used in the calculation of adjusted formula students for state aid purposes.  The State Department of Education (NDE) indicates that the change in the poverty factor would have decreased state aid by $16.7 million, if the factor had been changed in the 2001-02 certification.  Total state aid decreases because there is an increase in the number of adjusted formula students which results in a decrease in cost group costs.  Equalized school districts with few poverty students will receive less state aid.  School districts with a greater percentage of poverty students will receive an increase in state aid, if the increase in aid due to the change in the poverty factor offsets the decrease in aid from the change in the cost group cost.  The overall decrease in state aid is due to some districts no longer being equalized and the impact of the stabilization factor. The increase in the limited English proficiency factor from .25 to 1.0 will also increase adjusted formula students in the state aid formula.  This will decrease cost group costs which will result in a change in state aid for districts.  Schools with a high number of these students may receive increased state aid. The bill also adds a factor for special education students into the computation of adjusted formula students.  The bill allows schools that have special education students in excess of the statewide average to weight these students for purposes of increasing the number of adjusted formula students for the system.  The increase in adjusted formula students will decrease cost group costs and result in a change in state aid.  Schools with a high number of these students may receive increased state aid.  Data is not currently available to compute the impact of the special education factor. Section 5 provides that a minimum levy adjustment will not be made if the reason that a school district levy is below the required minimum levy is because of state aid received from the changes in the limited English proficiency and poverty factors.  This provision may result in additional state aid for school districts that benefit from the change in these factors. All of these changes in the computation of state aid will occur beginning with state aid distributed in 2003-04. (2) Authority to exceed allowable growth rate (Sections 6 & 7) - The bill allows school districts to exceed their allowable growth rates in the ensuing year by the amount that NDE computes as the increased cost for the estimated increase in students who will enroll and qualify for the English proficiency factor or the poverty factor.  Districts may also exceed the allowable growth rate by the amount of additional state aid the system actually receives due to the change in the limited English proficiency and poverty factors.  These provisions allow a school district to increase spending from property taxes by the amount of the exclusions.  This will increase state aid two years later when the increased expenditures are included in the calculation of aid. Section 7 allows a school that has 40% or more students in the district qualifying for free lunch or free milk or a district with 5% of more limited English proficiency students to exceed the allowable growth rate by up to 2% by an affirmative vote of 75% of its board.  Currently, school boards can only vote to exceed the allowable growth rate by 1%.  This will allow certain school districts to increase spending from property taxes by an additional 1%.  If the 1% spending growth is approved, then state aid will increase two years later when the additional spending is included in the calculation of aid.  NDE indicates that 39 school districts had 40% of more students qualify for free lunches and free milk and 26 districts had 5% or more limited English proficiency students for the 2001-02 certification of state aid. (3) Exclusions to the levy limitation (Section 1) - The bill allows school districts to exceed levy limitations by the amounts levied to provide funding for exceptions to the allowable growth rate in Section 79-1028.  The levy exclusions include expenditures for: cooperative agreements; repairs to infrastructure damaged by disasters; judgments; voluntary termination agreements; certain lease purchase contracts; projected increases in formula students; building and maintenance costs; and retirement incentive plans.  NDE indicates that if schools had excluded these amounts from the levy limits in 2001-02, then an additional $59 million of property tax revenue could have been generated from exclusions for formula student increases ($3.8 million), building and maintenance costs ($.6 million), and the other listed exclusions ($54.6 million). If school districts exceed levy limitations by these amounts, then state aid will increase two years later when the increased expenditures are included in the calculation of aid. In summary, the bill will have a significant undetermined fiscal impact on future state aid payments to school districts.  There may also be significant increases in property taxes levied by schools pursuant to the bill.

Bill:  LB 1204	Introduced in:  2002
One-liner:  Provide for adjustment of state aid and property tax receipts due to certain property transfers as prescribed
Introduced by:  Raikes	Committee:  Education
Disposition:  Placed on General File 3/6/2002; IPP 4/19/2002	Introduced bill
Summary:  LB 1204 provides for the adjustment of state aid payments and county tax receipts to reflect transfers of property in certain instances.  The bill allows a school district to apply for state aid when there is a loss of valuation due to the dissolution or reorganization of a Class I or a change in school district boundaries because of the annexation of property by a city or village.  The district losing valuation will qualify for state aid in the amount the district would have received if the adjusted valuation for the transferred property had not been included in the state aid calculation. Eligible districts must apply to the State Department of Education (NDE) by August 20 to receive funds for the ensuing school year.  The state aid for districts receiving additional valuation will be reduced in the same amount as the state aid calculated for the district losing the valuation.  If the reduction in state aid is greater than total state aid payments received by a district, then the county treasurer is to withhold the amount needed from levy proceeds and transmit it to NDE.  The tax proceeds will be deposited in a newly created Dissolution, Reorganization, and Annexation Cash Fund.  NDE is to distribute the fund to districts losing valuation.  Any interest proceeds remaining in the fund on June 30 are remitted to the General Fund. The bill allows school districts that lose or gain valuation due to the dissolution or reorganization of a Class I or an annexation to reflect the change in valuation in the year in which it occurs.  Currently, the valuation loss or gain would be reflected a year later in the calculation of state aid. The bill will have a minimal fiscal impact for NDE to revise a rule.  It is assumed the department can handle the rule revision with its existing resources.  There may be a slight increase in annual revenue for the General Fund due to the investment of funds remitted by the counties for a period of time prior to their distribution to the schools.

Bill:  LB 1252	Introduced in:  2002
One-liner:  Provide for certification of state aid as prescribed
Introduced by:  Raikes	Committee:  Education
Disposition:  Placed on General File 3/19/2002; IPP 4/19/2002; portions amended into LB 898 (2002)	Introduced bill
Summary:  LB 1252 changes the calculation of state aid to education for 2002-03, 2003-04, and 2004-05.  The bill reduces each local school system's "need", transportation and special receipts allowances, allocated income tax funds and net option funding by 5%.  The bill reduces the factors used to compute the stabilization factor and small stabilization adjustment by 5%.  The budget authority of Class I school districts is reduced by 5%.  LB 1252 also requires the recertification of 2002-03 state aid before April 1, 2002. The bill will have a minimal fiscal impact for the State Department of Education (NDE) to recertify state aid for 2002-03.  It is assumed the recertification can be handled with existing resources of the department. NDE estimates the fiscal impact of the bill to be a $86 million decrease in state aid in 2002-03.  All local school systems will receive a decrease in state aid.  The fiscal note prepared by NDE shows a reduction of $85 million in equalization aid, $3.3 million in allocated income tax funds, $1.8 million in net option funding and $90,000 in the small school stabilization adjustment.  There is an increase of $1.4 million in the stabilization factor because of the decrease in state aid. School districts that are not at their levy limitation and expenditure limitation may levy additional property taxes to offset the loss of state aid.  School districts that are restricted by limitations will have to reduce spending, use reserves, or go to a vote to exceed the limitations.

Bill:  LB 370	Introduced in:  2003
One-liner:  Change provisions relating to school consolidation incentive payments
Introduced by:  Baker	Committee:  Education
Disposition:  IPP 5/29/2003	Introduced bill
Summary:  LB 370 reinstates the incentive program for school districts that reorganize or unify.  The bill provides that base year incentive aid for reorganizations will be provided through 2006-07.  Incentive aid for the second and third year of the program will be provided through 2008-09. LB 5 in the Second Special Session of 2002 repealed the incentive program.  LB 5 provides that there will be an appropriation of $2 million for base year incentive aid in 2002-03.  A cap was also established on the total amount of base year (2002-03) and second and third year incentive payments (2003-04 and 2004-05) that will be paid in 2002-03, 2003-04 and 2004-05.  The total payments over the three-year period cannot exceed $3,383,646.  Since the language limiting payments under the program for these three fiscal years is not changed, it is assumed that these provisions remain intact. The bill will have an estimated fiscal impact of $2 million of general funds in 2003-04 and 2004-05 for base year incentive aid.  The actual amount of base year incentive aid will depend upon the school districts that reorganize and request aid.  It is assumed that second year aid in 2004-05 for those districts that receive base year aid in 2003-04 will be an additional $ 2 million, if all reorganizations are consolidations.  In 2005-06, the fiscal impact of the bill is estimated to be approximately $6 million of general funds.

Bill:  LB 387	Introduced in:  2003
One-liner:  Provide a sales tax on food with proceeds to be distributed to school districts
Introduced by:  Louden	Committee:  Revenue
Disposition:  IPP 5/1/2003	Introduced bill
Summary:  This bill repeals the sales tax exemption on food, and it creates the School Aid Distribution Fund.  This Fund receives all the sales tax revenues from the sales tax on food and distributes them as noted in the bill. It has the emergency clause, and is operative July 1, 2003.   FY2004 FY2005 FY2006 FY2007 Department of Revenue 102,289,000 105,217,550 108,146,099 111,074,649 Legislative Fiscal Office 106,468,539 117,889,709 119,658,055 121,452,926 General Fund Revenue Impact (rounded to nearest $1,000) 104,379,000 111,554,000 113,902,000 116,264,000

Bill:  LB 486	Introduced in:  2003
One-liner:  Change allowable growth rate provisions for school building operation and maintenance costs
Introduced by:  Price	Committee:  Education
Disposition:  IPP 5/29/2003	Introduced bill
Summary:  LB 486 changes the building maintenance exclusion for school districts from the spending limitation.  Currently, a school may exceed its applicable allowable growth rate if the construction, expansion or alteration of buildings increases maintenance costs by at least 5%.  The bill provides that the spending limitation may be exceeded if maintenance costs increase by at least $10,000. The State Department of Education indicates there were no exclusions to the spending limit for increased maintenance costs in 2001-02 and 2002-03.  In 2000-01, five schools were approved for the exclusion in the amount of $204,341.  The bill will likely increase the number of schools qualifying for the exclusion and the amount of exclusions qualified for.  The amount of future exclusions is unknown.  An increase in spending by schools with local tax dollars, as a result of the maintenance exclusion, will increase "need" in the state aid formula.  This will increase state aid two years after the spending increase is initiated.

Bill:  LB 545	Introduced in:  2003
One-liner:  Impose a local option income tax to support schools
Introduced by:  Schrock	Committee:  Revenue
Disposition:  IPP 3/19/2003	Introduced bill
Summary:  LB 545 provides for a local resident individual income tax to be imposed for local school systems.  The tax rate may be imposed if it is approved by a majority of registered voters.  The term and the amount of the tax is to be voted upon.  A school board also has the authority to terminate the tax.  The Department of Revenue is to administer the tax and remit the proceeds for credit to a separate fund for each school district or system levying a local income tax.  Tax proceeds are paid to districts or systems on a monthly basis. The fiscal impact of the bill in terms of increased tax proceeds for schools cannot be calculated because no tax rate is established.  It is unknown how many schools may opt to implement the tax and at what rate.  The bill does not specify whether the proceeds from the tax are considered to be a resource for state aid purposes.  If so, then schools that receive equalization aid which opt to levy the local income tax, will lose state aid of an equal amount two years after the tax is initiated.  School systems that are not equalized will have an increase in state aid pursuant to the bill. It is assumed the Department of Revenue will have increased expenses to administer the bill.  The Department estimates there could be a significant cost to develop computer systems, create forms and hire additional staff to implement the changes since each school system could have its own tax rate for an unlimited period of time.

Bill:  LB 620	Introduced in:  2003
One-liner:  Authorize a school income tax
Introduced by:  Jones	Committee:  Revenue
Disposition:  IPP 3/19/2003	Introduced bill
Summary:  LB 620 provides for local school support income tax to be imposed each year beginning January 1, 2004.  The Tax Commissioner is to collect the taxes and remit the proceeds to the local school system or district on a monthly basis.  A local system or school district may impose a local school support income tax if a majority of the registered voters authorize the tax.  The vote must be prior to October 1st of the year prior to the year in which the tax is to be imposed.  The tax may not be longer than five years.  The bill does not specify a tax rate.  Votes may be taken in subsequent years to rescind or modify local income taxes previously approved.  The bill appears to remove the temporary aid adjustment factor for 2004-05. The fiscal impact of the bill in terms of increased tax proceeds for schools cannot be calculated because no tax rate is established.  It is unknown how many schools may opt to implement the tax and at what rate.  The bill does not specify whether the proceeds from the tax are considered to be a resource for state aid purposes.  If so, then schools that receive equalization aid which opt to levy the local income tax, will lose state aid of an equal amount two years after the tax is initiated.  School systems that are not equalized will have an increase in state aid pursuant to the bill.  The elimination of the temporary aid adjustment factor in 2004-05 will increase state aid by approximately $25 million.

Bill:  LB 621	Introduced in:  2003
One-liner:  Impose a school income tax
Introduced by:  Jones	Committee:  Revenue
Disposition:  IPP 3/19/2003	Introduced bill
Summary:  LB 621 provides for a local school support income tax to be imposed each year beginning January 1, 2004.  The income tax rate is 10% of the Nebraska income tax liability.  The tax rate of a local system may be increased by a majority vote of registered voters.  A Local School Support Income Tax Fund is created.  Revenue raised by a local system is distributed to the system on a monthly basis based upon estimates of the amount of tax to be collected.  School districts within a system receive funds based upon weighted formula students.  If there are insufficient funds to make the estimated payments, then funds are transferred from the General Fund.  Transfers are reversed when sufficient funds are available.  Revenue from the income tax is considered to be a resource for state aid purposes. The Department of Revenue estimates the bill will increase income tax revenue for schools by $56.1 million in 2003-04, $115.3 million in 2004-05 and $121.4 million in 2005-06.  Since the bill provides that the income tax revenue is considered to be a resource in terms of computing state aid, then only school districts that are not receiving equalization aid will receive a net increase in revenue.  However, there will be a two year delay until the receipts are shown as a resource for purposes of state aid so all school systems will receive increased income tax revenue for a two year period. The State Department of Education (NDE) indicates there are 25 non-equalized school systems that had a total income tax liability of $56.8 million in tax year 2001.  Under the bill, these systems will receive an additional 10% of income tax proceeds, or about $5.7 million of increased revenue on an annual basis. School systems receiving equalization aid will have increased income tax proceeds from the bill for two calendar years, which will increase revenue received in 2003-04, 2004-05 and 2005-06.  Beginning in 2005-06, the state aid for equalized systems will decrease by the amount of the increase in income tax revenue that was received in the second preceding year.  Overall state aid payments will decrease by the amount of income tax resources received by equalized school systems beginning in 2005-06.  Using above estimates, state aid will decrease by about $53.3 million in 2005-06 and $109.6 million in 2006-07 pursuant to the bill.

Bill:  LB 635	Introduced in:  2003
One-liner:  Exempt agricultural personal property from property tax and change school levy provisions
Introduced by:  Schrock	Committee:  Revenue
Disposition:  IPP 3/10/2003	Introduced bill
Summary:  LB 635 increases the maximum levy of school systems from $1.00 to $1.10 for 2003-04 and 2004-05.  The $.10 increase in the maximum levy also increases the local effort rate used in the calculation of state aid to schools from $.90 to $1.00.  The levy for the lopoff calculation in the formula is increased from $.90 to $1.00.  The levy for the small school stabilization calculation is increased from $1.00 to $1.10.  The bill also provides that agricultural personal property will be exempt from the personal property tax for tax years 2003 and 2004. The State Department of Education (NDE) indicates that the provisions in the bill to increase the maximum levy and the local effort rate would reduce the amount of state aid certified for 2003-04 by approximately $102 million.  It is estimated that the exemption of agricultural personal property from personal property taxes in 2003 will reduce valuations and result in a $12.7 million increase in state aid.  The net estimated fiscal impact of the bill in 2003-04, will be about an $89.3 million decrease in state aid.  Based on projected formula increases, the estimated fiscal impact in 2004-05 will be a decrease in state aid of $93.6 million. The $.10 increase in the maximum levy for school districts will allow schools to increase statewide property taxes by a maximum of $96.6 million per year, based upon 2002 valuations, less agricultural personal property.  If school districts use the increased levy authority to increase spending with property tax dollars and the "need" in the state aid formula increases, then there will be an increase in the amount of state aid distributed two years (2005-06) after the spending increase is initiated.

Bill:  LB 648	Introduced in:  2003
One-liner:  Increase the maximum school tax levy
Introduced by:  Hartnett	Committee:  Revenue
Disposition:  IPP 5/1/2003	Introduced bill
Summary:  LB 648 increases the maximum levy for school districts from $1.00 to $1.10 beginning in 2003-04.  The bill also increases the local effort rate used in the calculation of state aid to schools from $.90 to $.95.  The levy for the lop-off calculation in the formula is increased from $.90 to $1.00.  The levy for the small school stabilization calculation is increased from $1.00 to $1.10. The State Department of Education (NDE) indicates that the fiscal impact of the bill would be a $60.6 million decrease in state aid to school districts in 2003-04.  Most of the decrease in aid is due to the increase in the local effort rate.  An increase in the local effort rate increases the amount of resources for school districts that are used in the calculation.  This may result in some districts no longer being eligible for equalization aid.  NDE indicates that about $16.5 million of the decrease would result from the minimum levy adjustment that is applied to systems with levies of less than $.99. The $.10 increase in the maximum levy for school districts would allow schools to increase statewide property taxes by a maximum of $98.2 million per year, based upon 2002 valuations.  If school districts use the increased levy authority to increase spending with property tax dollars and the "need" in the state aid formula increases, then there will be an increase in the amount of state aid distributed two years after the spending increase is initiated.

Bill:  LB 649	Introduced in:  2003
One-liner:  Authorize additional tax levy authority for school buildings
Introduced by:  Hartnett	Committee:  Revenue
Disposition:  IPP 3/10/2003	Introduced bill
Summary:  LB 649 allows school districts to exceed the $1.00 levy limitation by up to $.05 to pay for special building funds and sinking funds established for the construction, expansion, or alternation of school district buildings.  The building projects must have commenced on or after April 1, 1996.  The bill has an emergency clause so it will be effective upon passage. School districts will be able to levy additional property taxes in an amount that would allow them to exceed their levy limitation by up to $.05 for the cost of special building projects.  If all school districts were to have existing building projects or initiate new projects allowing them to take the exclusion, then property taxes would rise by approximately $49.1 million each year, based on 2002 valuations.  Any increased spending by school districts will increase "need" in the state aid formula, which increases the amount of state aid distributed two years after the spending increase is initiated with property tax dollars.

Bill:  LB 698	Introduced in:  2003
One-liner:  Change calculation of state aid pursuant to the Tax Equity and Educational Opportunities Support Act
Introduced by:  Education Committee	Committee:  Education
Disposition:  x	Introduced bill
Summary:  LB 698 changes the Tax Equity and Educational Opportunities Support Act which provides state aid to school districts beginning in 2004-05.  The overall fiscal impact of the bill cannot be calculated because the impact of the new provisions relating to additional state aid for children in poverty and in English proficiency programs is unknown until school districts submit a plan for these services. The bill changes the computation of the needs component of the state aid formula.  Instead of using cost groups as the primary basis to calculate need, the bill establishes comparison groups for each school system to determine the amount of basic funding.  The comparison group for a school system is the next five systems that are larger than the system and the next five systems that are smaller than the system in size.  Basic funding is determined by first subtracting the allowances for poverty, limited-English proficiency students, special education, special receipts, transportation and elementary sites to determine adjusted general fund operating expenditures.  Then, for school systems with less than 900 formula students, the basic funding for the system becomes the average of the adjusted general fund operating expenditures of the comparison group of school systems, omitting the high and low systems from the calculation.  Basic funding for school systems with 900 or more formula students will be based on average adjusted general fund operating expenditures per student for the comparison group.  It is assumed the change from using cost groups to comparison groups for purposes of calculating basic funding will be cost neutral in terms of the total amount of state aid distributed because adjusted general fund operating expenses are not changed in the calculation.  However, there will be a shift in state aid between school systems. The new allowances established by the bill for poverty, limited-English proficiency, and elementary sites will not change the overall amount of state aid allocated, but will alter the distribution of aid between school systems.  The allowances enable expenditures for these types of programs to be attributed to the school system actually providing the program rather than have the expenditures spread out amongst all of the systems in a particular cost grouping. The bill establishes several adjustments that are to be subtracted or added to the basic funding for a school system.  A local choice adjustment will reduce state aid for systems with fewer than 390 students.  The averaging adjustment will increase state aid for systems whose basic funding per student is less than the statewide average basic funding per student.  The teacher education adjustment will increase aid for school systems having teachers with masters or doctoral degrees.  The student growth adjustment will increase aid for school systems that are experiencing a growth of more than 25 students.   The bill increases the stabilization factor from 85% to 90%.  The 5% increase in the factor may allow some systems to receive additional state aid.  The change in aid is not projected to be significant. The definition of valuation for state aid purposes is changed in the bill to assessed valuation rather than adjusted valuation.  Based on the 2002-03 distribution of state aid, it is estimated that this change will increase state aid by about $35.8 million. Section 21 provides that school systems may exceed the applicable allowable growth rate in 2004-05 by the amount that the poverty allowance plus the limited English proficiency allowance exceed the poverty weightings plus the limited English proficiency weightings times the cost grouping cost in the 2003-04 state aid allocation.  In the following years, school systems will be able to exceed the allowable growth rate if the growth in these two allowances is greater than the applicable growth rate of the school system.  These provisions allow school districts to increase spending with property tax dollars by the amount of exclusions.  This will increase state aid two years later when the increased expenditures are included in the calculation of adjusted general fund operating expenditures.  There will be an unknown fiscal impact from these provisions beginning with aid distributed in 2006-07.

Bill:  LB 769	Introduced in:  2003
One-liner:  Exempt expenditures for school resource officers from levy expenditure limits
Introduced by:  Hartnett	Committee:  Revenue
Disposition:  IPP 3/10/2003	Introduced bill
Summary:  LB 769 allows school systems, cities and villages to exceed their levy and spending limits to fund the costs of school resource officers.  Exclusions of these costs from the levy and spending limits may have a fiscal impact in terms of increased spending at the local level.  Any fiscal impact depends upon whether school resource officers are currently funded, which entity funds the officers, how existing costs are treated for lid purposes and whether the bill will result in an increase in spending by schools or cities for resource officers. The City of Lincoln indicates that the $267,697 the city currently expends on school resource officers is exempted under the provisions of the spending lid that allow the costs of interlocal agreements to be excluded from the lid.  The city would have additional levy authority pursuant to the bill, but Lincoln is well below the maximum levy limit, so the authority would not used in the near future. It is not known how much is currently expended at the local level for school resource officers.  The potential exists for increased spending for resource officers by school systems or cities if exclusions to the lid limitations are enacted.  A fiscal impact cannot be determined.  An increase in spending by school systems with property tax dollars increases "need" in the state aid formula which results in an increase in state aid two years after the spending increase is initiated.  School systems that are already paying for school resource officers may also increase spending by the amount spent on the officers due to the lid exclusions.

Bill:  LB 771	Introduced in:  2003
One-liner:  Change calculation of state aid under the Tax Equity and Educational Opportunities Support Act
Introduced by:  Synowiecki	Committee:  Education
Disposition:  x	Introduced bill
Summary:  LB 771 changes the computation of formula need for purposes of allocating state aid to schools through the Tax Equity and Educational Opportunities Support Act beginning in 2004-05.  The bill will increase the amount of state aid provided to schools. The bill provides for the calculation of a target per pupil foundation amount for each school district based upon size (large, moderate, small, very small, or elementary).  The bill states a minimum base target amount for each size of district that is multiplied by fall membership, an inflation factor and then adjusted by a linear interpolation.  This amount is then multiplied by 1.5% for very large districts only and an annual per pupil amount for an at-risk pupil, an English language learner, highly credentialed teachers is added.  The State Department of Education is to determine the annual inflation factor adjustment in rules and regulations. Sections 5 and 9 phase in the change in state aid over a five year period beginning in 2004-05 through 2008-09.  These sections provide that in the initial year (2004-05), only 20% of the amount calculated for target per pupil foundation aid, at-risk pupil aid and English language learner aid will be included in the calculation of need and 80% of the calculation of need will still be based on the cost grouping cost formula and allowances currently utilized to determine state aid.  In each of the four years thereafter the use of the new formula will increase by 20% each year and the use of the formula based on cost groups will decrease by 20% until 2008-09 when the new formula will be the basis to determine state aid.  The language in the bill appears to decrease the amount of the current allowances (transportation, special receipts) used in the calculation of need until 2008-09, when the full amount is included again. Section 5 also establishes the definition of a highly credentialed teacher credit.  The credit, which is to be included in the computation of state aid beginning in 2004-05 is $3,500 times the number of teachers employed in a district with master's or higher level degrees or having national board certification.  Assuming that about 40% of the teaching staff in the state have a master's degree or higher, the fiscal impact of this provision is $30 million of increased state aid in 2004-05.  This amount will change annually based upon the number of teachers with masters or higher degrees and an inflation factor that is used to adjust the amount provided per teacher. The State Department of Education (NDE) estimates that need in the state aid calculation will increase by at least $114 million and equalization aid will increase by $100 million in 2004-05 based upon the calculation of need using the target per pupil foundation aid, atrisk pupil aid, English language learner aid and aid for a credentialed teacher credit.  The calculation of need does not include an inflation adjustment as required in the bill.  Whatever inflation factor is decided upon will increase this estimate. Section 10 establishes The Cost of an Adequate Education Panel which is to meet periodically.  The panel is to contract to conduct a calculation of the cost of an adequate education and can recommend adjustments to the target per pupil foundation, at risk and English language learner amounts and the highly credentialed teacher credit.  A study shall be contracted for every five years beginning in 2007-08.  The annual costs of the panel will vary depending upon the number of members on the panel and whether a contract is established with an outside entity.  A fiscal impact of $5,000 to $65,000 per year is estimated. Sections 15 and 16 allow schools to exceed the allowable growth rate by the specific dollar amount to fund the local system's formula need.  Section 1 allows the levy limit to be exceeded to provide financing for the exceptions to the allowable growth rate.  These provisions allow school systems to increase spending with property tax dollars by the amount that is spent above the allowed growth rate in 2003-04.  Under the current formula, this will increase state aid two years later (2005-06) when the increased expenditures are included in the calculation of adjusted general fund operating expenditures, so these provisions will increase the amount of state aid required until the new formula is phased-in.  After the new formula is implemented, increased spending by schools will not increase the state aid provided two years later. Section 5 provides that the special receipts allowance will include the non-reimbursed portion of each district's total allowable excess cost.  This will increase the allowance for schools with special education programs and allow for the costs of the programs to be attributed to the schools with the actual expenditures.  The provision will result in a shift in state aid between school districts. Section 12 provides for the calculation of net option funding.  It appears that the language used will significantly increase the amount of net option funding provided to eligible school districts since the target per pupil foundation amount is multiplied by the net number of option students.  The target per pupil foundation amount as defined in the bill already has been multiplied by the district's fall membership. Section 18 repeals the Local Option Tax Control Act.  The repeal of this act eliminates the authority for voters to petition for an election to place a two-year budget limitation on a political subdivision that is funded by property taxes.  The bill will have a fiscal impact for NDE for administration.  It is estimated there will be one-time computer programming expenses of $10,000 of general funds to redo the calculation of state aid in 2003-04.  It is assumed the cost of rule revisions can be handled with the existing resources of the department. In summary, at a minimum, the bill will increase state aid by an estimated $100 million in 2004-05 and $200 million in 2005-06.  Thereafter, state aid will increase each year as the new formula is phased-in.  There may be increased spending by schools with property tax dollars in 2003-04 pursuant to the authorization to exceed the allowable growth rate by the amount necessary to fund need.  This will increase state aid by that amount in 2005-06.  The special receipts allowance provisions will shift state aid between school systems.  The net option provisions will increase state aid by an unknown amount.  Administrative expenses will increase by an estimated $10,000 of general funds in 2003-04 for computer programming and $5,000-$65,000 each year thereafter for the panel.

Bill:  LB 785	Introduced in:  2003
One-liner:  State intent relating to school district grade offerings and state aid
Introduced by:  Hartnett	Committee:  Education
Disposition:  IPP 5/29/2003	Introduced bill
Summary:  LB 785 requires all that school districts in the state offer kindergarten to grade twelve instruction and have a minimum of 1,600 students, beginning in the 2005-06 school year.  Any district not meeting this requirement will receive 50% of the state aid to which it would have been entitled under the Tax Equity and Educational Opportunities Support Act.  The Education Committee is required to submit legislation to implement the provisions of the bill. The State Department of Education indicates that 236 school systems do not have 1,600 or more students based upon 2002-03 fall membership.  Using the state aid certification for 2003-04, these systems would have had state aid reduced by 50%, or $119 million if the bill was in effect for the 2003-04 school year. It is assumed that most school systems will merge, consolidate or unify if the bill is passed in order to continue operating in 2005-06.  Some school systems may opt to try to obtain voter approval to exceed the levy limit.

Bill:  LB 1037	Introduced in:  2004
One-liner:  Provide funding to schools using biodiesel
Introduced by:  Cunningham	Committee:  Agriculture
Disposition:  x	Introduced bill
Summary:  LB 1037 would establish a Biodiesel Fuel Fund that would be used by the Department of Agriculture to reimburse school districts contracting to use biodiesel fuel.  Reimbursements would be calculated so the net price to a district using at least a 2% biodiesel blend would not exceed the rack price for petroleum diesel fuel.  The methodology used by the Department of Agriculture to determine possible reimbursements appears reasonable; it is estimated that reimbursements could total approximately $110,000 to $150,000 per year.  Because the Biodiesel Fuel Fund does not have a source of revenue, it is estimated that the funding source would be the General Fund.

Bill:  LB 1079	Introduced in:  2004
One-liner:  Change provisions relating to state aid to schools
Introduced by:  Schrock	Committee:  Education
Disposition:  x	Introduced bill
Summary:  LB 1079 changes the calculation of state aid to education (TEEOSA) for 2004-05.  The bill decreases the levy limit for school systems from $1.05 to $1.00.  The temporary aid adjustment factor is eliminated for purposes of calculating state aid.  The cost growth factor is increased from 0% to 5% for 2004-05.  The certification of state aid for 2004-05 by the State Department of Education on February 1, 2004 is null and void and the department is required to recertify state aid by June 15, 2004 based upon the formula changes contained in the bill. The estimated general fund fiscal impact of the bill is a $161.5 million increase in the amount of state aid distributed to schools in 2004-05 and a $46.5 million increase in state aid for 2005-06.  The increase in the cost growth factor increases aid by $90 million in 2004-05 and $46.5 million in 2005-06.  The $.05 decrease in the levy limit decreases the local effort rate in the state aid formula by $.05 and increases aid by about $46.4 million in 2004-05.  School districts will have $.05 less of levy authority which may decrease property taxes levied statewide by up to $52 million.  The elimination of the temporary aid adjustment factor increases state aid by $25.1 million in 2004-05.  The elimination of the temporary aid adjustment factor also will reduce property taxes by up to $25.1 million because schools will no longer be able to levy an amount to offset the loss in state aid resulting from the temporary aid adjustment.

Bill:  LB 1105	Introduced in:  2004
One-liner:  Provide incentives for school district consolidation
Introduced by:  Raikes	Committee:  Education
Disposition:  x	Introduced bill
Summary:  LB 1105 provides that the state will fund incentive payments to encourage Class II and III school districts with less than 390 students to reorganize into Class II, III, IV or V school districts with greater than 390 students.  The incentive payments apply to consolidations after May 31, 2005.  Incentives are paid to reorganized schools for two years.  Base year incentives are paid in the initial year of reorganization.  The bill provides that $1 million be available each fiscal year for base year incentives through 2009-10.  These funds are to be prorated if the total is not sufficient to fund all schools qualified for incentives.  Beginning in 2010-11 and thereafter, $500,000 shall be allocated for base year incentives.  Base year incentives through 2009-10 will be equal to 50% of the amount calculated based upon an incentive of $1,000 to $4,000 per student.  Thereafter base year incentives will be 25% of the amount calculated. Through 2009-10, incentives in the second year of a consolidation will equal the other 50% of the original calculation unless funds were prorated for the base year.  If funds were prorated, then the second year incentive will also include the amount not paid in the first year of the reorganization due to the proration of funds.  After 2009-10, second year incentives will be reduced to 25% of the amount calculated plus the amount of base year incentive funds that may have been prorated.  Base year incentives are not included in formula resources for purposes of state aid and schools may exceed the budget lid by the amount of incentive payments received. The fiscal impact of the bill for the state depends upon the consolidations that occur.  In 2002-03, there were 134 Class II and III school districts with less than 390 students.  These systems had an average daily membership (ADM) of 32,891 students. The potential fiscal impact is overstated by some amount since all Class II and III school districts in the standard cost group with less than 390 students will probably not consolidate.  The fiscal impact is understated due to the use of 2002-03 ADM.  This is because declining membership in smaller school systems will mean a greater number of the schools will be eligible for an incentive in the future and the incentive may be higher as membership declines.  The fiscal impact may also be understated if some school systems in the sparse or very sparse cost groups consolidate.  The fiscal impact may also be impacted by consolidations of Class I and Class VI districts with Class II and III school districts.  This estimate also assumes that the consolidations will take place prior to 2010-11, prior to the reduction in the amount of incentives distributed. The amount of additional state aid required each fiscal year for incentives will depend upon the timing of consolidations.  The fiscal impact in the initial year of the bill (2005-06) is a maximum of $1,000,000 that is to be set aside for base year incentives.  If $1million of base year incentives are distributed in 2005-06, then the fiscal impact in 2006-07 would be $1 million to fund the second year of incentives authorized in 2005-06 and $1 million for base year incentives.  If base year incentives are prorated in 2005-06, then the fiscal impact in 2006-07, will be greater than $1 million for second year incentives, since the amount of the proration will have to be made up in the second year. The reorganization of schools into districts with 390 or more students will result in reorganization efficiencies which will reduce the amount that would have been expended by schools to operate with less than 390 students.  These efficiencies should result in a savings for property taxpayers in those merged school districts that had costs greater than their cost grouping cost prior to the merger.  The state will also realize a savings in state aid payments two years after the consolidation due to lower overall expenditures for schools.  Lower school spending translates into lower cost group costs which will reduce state aid for schools receiving equalization aid.  Any savings in state aid will occur beginning in 2006-07. School systems that opt to consolidate and receive incentive aid will have increased state incentive aid for two fiscal years.  The school system receiving the aid may exceed its budget lid by the amount of the incentive payment.  Consolidated school systems may also have increased expenditures related to consolidation such as retirement incentives, staff development assistance and transportation.  Based on the current school finance formula, consolidated systems may also receive stabilization aid for a couple of years after the state incentive aid payments end. In summary, the bill requires additional state aid for incentives.  The potential fiscal impact over the next seven years could be $24.7 million of general funds.  Some of the increased cost for incentives will be offset by decreased expenditures for state aid due to lower school spending.  There will also be some property tax relief for some districts that opt to consolidate.

Bill:  LB 1142	Introduced in:  2004
One-liner:  Remove before-and-after-school program costs from budget and levy limitations
Introduced by:  Schimek	Committee:  Revenue
Disposition:  x	Introduced bill
Summary:  LB 1142 allows school districts to exceed the levy limit by the amount levied to pay for before and after school programs for school age and prekindergarten children.  The bill also provides authority for a school district to exceed its allowable growth rate by the amount expended for such programs. The State Department of Education (NDE) indicates that 19 school districts operated a before and after school program in 2002-03.  There were 8,530 students enrolled in the programs.  NDE does not have information on the amount expended by schools for these programs.  It is possible that the passage of the bill will result in an increase in the number of before and after school programs offered by school districts since levy and spending limits may be exceeded by the amount spent on the programs. Current law allows schools to charge a fee for transportation to the programs and services provided.  The fees and expenditures for the programs are not included in the calculation of general fund operating expenditures for purposes of calculating state aid.  So, the bill has no fiscal impact on the amount of state aid distributed to schools. The exclusion of the amounts levied for these programs from the levy limit allows schools to levy additional property taxes to fund the programs.  The exclusion of the costs of the programs from the spending limit, allows for the expenditure of the additional property taxes collected to provide the programs.

Bill:  LB 1161	Introduced in:  2004
One-liner:  Provide for adjustment of state aid to reflect property transfers
Introduced by:  Raikes	Committee:  Education
Disposition:  x	Introduced bill
Summary:  LB 1161 provides for adjusted state aid payments to schools to reflect transfers of property due to annexation, dissolutions of Class I's, and reorganizations of one or more Class I school districts.  In order to receive additional state aid pursuant to the bill a school district from which property is being transferred must apply to the State Department of Education (NDE) on or before August 20th preceding the first fiscal year for which the property will not be available for taxation.  NDE, with the help of the Property Tax Administrator, is to calculate the adjustment in state aid due to the property transfer and increase the state aid payment to such school system.  State aid payments are also reduced by an equal amount for local systems receiving valuation.  The receipts pursuant to the bill are not included as formula resources for purposes of the state aid calculation. The bill allows school districts that lose valuation to receive state aid in the year in which the valuation is lost, rather than one year later.  Systems that gain taxable property will have a reduction in state aid in the year the school system has an increase in valuation pursuant to the acquisition of property, rather than a year later.  The exclusion of receipts pursuant to the bill as an accountable receipt for state aid purposes insures that state aid will not be reduced for the receiving system by the amount received. NDE and the Property Tax Administrator will have a minimal workload increase pursuant to the bill.  NDE will also have a minimal increase in expenditures to revise a rule.  It is assumed any increase in workload and expenditures can be handled with the existing staff and budgetary resources of the agencies.

Bill:  LB 1165	Introduced in:  2004
One-liner:  Adopt the Education Facilities Review Commission Act and provide for school bond state aid
Introduced by:  Price	Committee:  Education
Disposition:  x	Introduced bill
Summary:  LB 1165 is the Education Facilities Review Commission Act.  The bill establishes a seven member Education Facilities Review Commission within the State Department of Education (NDE).  The Commission is to establish standards for the approval or disapproval of reviewable building projects by school districts and educational service units.  Schools and ESU's must submit applications to the Commission for approval of reviewable building projects.  A hearing is held by the Commission on each application and a decision is made within 45 days by the Commission.  Decisions may be appealed.  The Commission may maintain an action for injunction against any school district or ESU undertaking a reviewable building project without approval. The bill provides a levy lid exclusion for schools to levy up $.06 for any special building fund or sinking fund project that has been approved by the Commission.  School districts may submit applications for school bond aid pursuant to the bill beginning in 2004.  NDE is to compute a school bond assistance factor for each eligible school district based upon a comparison of a district's adjusted valuation per student to the statewide average adjusted valuation per student.  The factor, which can be up to 40%, is to be applied to a district's scheduled debt retirement payments for ensuing fiscal year to determine a district's school bond aid.  The amount of school bond aid is to be deducted prior to calculating the property tax request for retiring the school bonds for building projects. The amount of general funds required for school bond aid in the future is unknown and depends upon building projects requested by schools and projects approved by the Commission.  Any project for which school bond aid is received will reduce property taxes levied for such project by a like amount.  It is assumed the fiscal impact for the general fund to provide school bond aid will escalate each year as new bonded projects are approved until such time (ten years or more) as some of the bonds for the projects are retired and a leveling off of the amount of school bond aid will occur. Using data on bonded projects for the last nine years, it appears that an average of $94 million of new bonds were issued each year during that time period.  If the bill had been in effect for the last nine years, and all of the property taxes collected for school bond levies had been for approved projects, then approximately $19 million of school bond aid would have distributed at the point where the leveling off of school bond payments occurs.  A lesser amount would be distributed in the early fiscal years of the bill.  The amount of aid would grow each year as the number of bond projects increases over time.  This estimate assumes an average bond assistance factor of 20%.  It is also possible that the bill will result in an increased number of bond projects in the future, since the state will be contributing to funding the cost of the projects. The $.06 levy lid exclusion for projects that have been approved by the Commission allows schools that have building projects and sufficient budget limit authority to increase school spending for operations by up to $.06, since the building projects are no longer within the levy limit.  Increased spending by schools translates into additional state aid (TEEOSA) two years after the spending occurs.  An additional $.06 of levy authority for schools is approximately $64.8 million in 2004.

Bill:  LB 1248	Introduced in:  2004
One-liner:  Provide for a system of funding elementary and secondary education as prescribed
Introduced by:  Maxwell	Committee:  Education
Disposition:  x	Introduced bill
Summary:  LB 1248 provides for (a) elimination of property taxes for K-12 school operations, (b) state assumption of all special education and alternative education costs, (c) replacement of the existing school aid formula with a flat per pupil amount increased each year by some measure of inflation, and (d) replacement of school property taxes and state aid with a new tax which is based on taxable income and 50% of property valuation.  The operative date of this act is July 1, 2005 (FY2005-06). Estimating the fiscal impact of this bill is extremely difficult as many of the terms in the bill are undefined.  For example, what are the criteria for assigning students to "alternative education" and what kinds of education programs would be provided? In terms of special education and alternative education students, would the state pay for the total cost or only the "excess allowable" costs? These definitions are needed to derive the number of students falling into the category of "mainstream" and applicable to the $6,000 per pupil allocation. In general, it appears that LB1248 would reduce school spending by providing less resources overall.  The cost in FY05-06 cannot be estimated with any accuracy as the cost and number of special and alternative education students under the bill is unknown which then makes the number of "mainstream" students unknown.  However using some very rough estimates, it appears that the amount of resources in FY05-06 could be from $50 to $100 million less than would otherwise occur under current law. In terms of taxes in FY05-06, rough estimates are a property tax reduction of $160-$170 million.  This is the difference between the current property taxes levied for school operations and the property portion of the new proposed tax.  These property tax savings would be offset to some extent by an increase in income taxes of roughly $65-$100 million.  The net income tax increase is the difference between (a) the amount of income tax used to fund current state aid through TEEOSA and Special Education (assume all from income taxes) net of the amount to fully fund special and alternative education under the proposal and (b) the income tax portion of the new proposed tax. Note that the potential property savings could also be offset if residents of a school district vote to levy additional property taxes where the level of resources provided to that district under the bill are less than what's currently available to the district.

Bill:  LB 350	Introduced in:  2005
One-liner:  Provide for inclusion of prekindergarten programs in the state aid formula as prescribed
Introduced by:  Bourne	Committee:  Education
Disposition:  x	Introduced bill
Summary:  LB 350 creates a levy and spending lid exclusion for implementation of pre-kindergarten programs specifically for poverty students.  The bill also provides for a levy and spending lid exclusion for special building funds and sinking funds established for construction, expansion, or alteration of school buildings to facilitate provision of pre-kindergarten programs to pre-kindergarten poverty students. The measure requires each school district to include within its fall membership report the total number of children ages 3 or 4 who are free lunch and free milk students or who are classified as poverty students.  The bill defines "poverty student" as the number of low-income students or the number of students who are free lunch and free milk students in a local system, whichever is greater. LB 350 proposes to incorporate the number of pre-kindergarten poverty students within the school finance formula.  The bill would be assigned a weighting factor within the formula equivalent to what kindergarten students are assigned. The spending lid exclusion would be applicable to K-12 districts if the district projects an increase in pre-kindergarten poverty students within the district over the current school year greater than 15 students.  The spending lid exclusion would also apply to building projects necessary to accommodate pre-kindergarten programs.

Bill:  LB 358	Introduced in:  2005
One-liner:  Change tax levy provisions relating to judgments against unified school systems
Introduced by:  Raikes	Committee:  Revenue
Disposition:  x	Introduced bill
Summary:  LB 358 represents the companion piece of legislation to LB 357, both of which relate to unified systems. LB 358 creates a levy exclusion to pay for judgments or orders obtained against a unified system that require the taxpayers of a school district to pay such judgment, but only to the extent the judgment is not paid by liability insurance coverage.

Bill:  LB 378	Introduced in:  2005
One-liner:  Create the Commission on School Finance and require a study
Introduced by:  Howard	Committee:  Education
Disposition:  x	Introduced bill
Summary:  LB 378 would create the Commission on School Finance to conduct a study and determine the resources necessary to achieve Nebraska's educational goals and the cost of providing the resources to do so.  The commission would consist of 15 members as follows: The commission is required to contract for the performance of a cost study, to be replicated every four years, to ascertain the resources needed by Nebraska school districts so that they can fulfill their responsibility to fully implement all of the curriculum frameworks established by the State Board of Education to achieve the educational goals set by the Legislature. The cost study must employ at least two of the models described in the bill: (1) The professional judgment model, which uses the active involvement of panels of education professionals and, through a series of simulation exercises undertaken over a number of days, designs instructional programs that would meet the needs of hypothetical schools with varying numbers of students living in poverty, students with disabilities, gifted and talented students, and English language learning students.  The panel judgments are reviewed by experts and stakeholders and synthesized through regression analysis to determine the costs of providing the programs and services necessary for actual school districts with their unique student demographics; (2) The successful schools model, which seeks to identify those schools or school districts that have achieved a specified level of student performance, such as meeting state standards.  The average level of expenditures in such schools or school districts is then used to estimate the level of expenditure that would be required to achieve a similar level of student performance in other school districts throughout the state, taking into account the differences in cost of living and in the number of students with extraordinary needs in each school district; (3) The econometric model which estimates school or school district cost functions using econometric techniques to arrive at a mathematical equation that describes what is required to produce an average or acceptable level of educational achievement; and (4) The research-based model which identifies programs as effective based on recent educational research, determines the cost of the different aspects of the programs, and uses that cost figure to develop an adequate base of spending for every school, taking into account the unique demographics of each. The commission may require reasonable assistance from the Commissioner of Education and from the superintendent of any school district.  The commission may employ other professionals, consultants, and staff as it deems necessary to fulfill its responsibilities and may determine their salaries and duties.

Bill:  LB 502	Introduced in:  2005
One-liner:  Change provisions relating to average formula cost per student
Introduced by:  Stuhr	Committee:  Education
Disposition:  x	Introduced bill
Summary:  LB 502 addresses an issue first brought forward during the debate on LB 806, the comprehensive school finance bill passed in 1997.  Some of the opponents of LB 806 argued that the legislation did not adequately take into account the relative size differences among school districts. LB 502 would add a new factor to be used in the calculation of cost per student for each local system.  The "size adjustment factor" would be applicable to each local system having fewer than 900 adjusted formula students for the most recently available complete data year.  The result of the new factor would likely mean a shift of state aid to those local systems with less than 900 students. The size adjustment factor would be calculated as follows: > STEP 1 -- Determine the "minimum cost per adjusted formula student": Equal to the total estimated general fund operating expenditures per adjusted formula student for all local systems in the state having 900 or more adjusted formula students divided by the total number of adjusted formula students for all such systems. > STEP 2 -- Determine the "maximum cost per adjusted formula student": Equal to the total estimated general fund operating expenditures per adjusted formula student for all local systems in the state having 250 or more but not more than 350 adjusted formula students divided by the total number of adjusted formula students for all such systems. > STEP 3 -- Divide the maximum cost per adjusted formula student by the minimum cost per adjusted formula student to arrive a the "highest allowable cost factor." > STEP 4 -- Calculate a "straight-line adjustment" by: subtracting 1 from the highest allowable cost factor and dividing the sum by 600 > STEP 5 -- Multiply the straight-line adjustment factor by the number of weighted formula students in the local system subtracted from 900. > STEP 6 -- Add 1 to the resulting number from Step 5 to obtain the local system's size adjustment factor (which may not exceed the highest allowable cost factor). Standard Cost Grouping: For each local system in the state having fewer than 900 adjusted formula students, the average formula cost per student for the standard cost grouping would be multiplied by the size adjustment factor. Sparse and Very Sparse Cost Groupings: For each local system that qualifies for the sparse or very sparse cost grouping, the average formula cost per student would be calculated BOTH by the method proposed under LB 502 and by the method used under the existing formula.  The system's average formula cost per student would be the greater of the two results.

Bill:  LB 513	Introduced in:  2005
One-liner:  Change provisions relating to school building levies
Introduced by:  Thompson	Committee:  Revenue
Disposition:  IPP 2/14/2005	Introduced bill
Summary:  Upon the passage of the levy limitations under LB 1114 (1996), only building funds for projects commenced prior to April 1, 1996, for construction, expansion, or alteration of school district buildings were qualified for a levy exclusion.  School districts may levy up to 14¢ for building funds, but such funds for projects commenced after April 1, 1996 had to included within the statutory levy limitation (currently $1.05). LB 513 would eliminate the date restriction that has been in place since 1996.  School districts would have the authority to exclude from the levy limits up to 14¢ for building projects without regard to the date of commencement.

Bill:  LB 595	Introduced in:  2005
One-liner:  Change weighting of schools demographic factors within the state aid formula
Introduced by:  Kruse	Committee:  Education
Disposition:  x	Introduced bill
Summary:  LB 595 changes the factors used to compute adjusted formula students in the state aid formula.  The bill increases the weighting factors for full-day kindergarten, limited English proficiency, and poverty.  It also allows a school district to exceed its allowable growth rate in 2006-07 as a result of changes in the formula student count due to increased weighting for full-day kindergarten, limited English proficiency and the poverty factors.  The State Department of Education is to determine the amount by which a district may exceed its allowable growth rate pursuant to the bill. It is assumed the changes in the weighting factors will apply to state aid distributed beginning in 2006-07.  Using data from the state aid distribution for 2004-05, and increasing only the limited English proficiency and poverty factors as required by the bill, there would be over a $40 million shift in "needs" between individual school systems.  The change in needs for individual school systems will shift funding between school systems depending upon how the changes in weights impact the number of formula students calculated for each system.  School systems that are eligible for equalization aid and offer full-day kindergarten or have high numbers of limited English or poverty students will tend to receive increased state aid pursuant to the bill and other school districts will receive decreased state aid. The exclusion of increased spending as a result of changes in the adjusted formula student count from the spending lid will allow school systems to levy additional property taxes, within the existing levy limit.  Any increase in spending will increase "need" in the state aid formula which will result in additional state aid being paid two years after the spending increase is initiated.  It is assumed the bill could increase state aid paid to schools by up to $40 million in 2008-09, based upon preliminary calculations of the changes in the limited English and poverty weighting factors.  The actual amount will depend upon decisions by local school boards to exceed allowable growth rates by the amount spent as a result of changes in the factors, and the ability of districts to do so within levy limits.

Bill:  LB 628	Introduced in:  2005
One-liner:  Impose sales tax on snack foods and use the revenue for school facilities
Introduced by:  Howard	Committee:  Revenue
Disposition:  IPP 3/9/2005	Introduced bill
Summary:  LB 628 would set aside all state sales tax proceeds from snack foods and place the money in the Nebraska School Facilities Trust Fund, which would be created under the bill. School districts would receive a share of the funds based upon a formula established in the measure.  The formula would take into account the number of students in the district and weighted by a "capital needs" factor based on the age of existing buildings and a "cost-per-square foot" factor based on building enrollment capacity.  The bill deliberately leaves some of the variables in the formula open-ended (i.e., "XXX").  These variables would need to be completed in order to understand how the bill may assist each school district. LB 628 requires the State Treasurer to distribute the funds to each district based upon the prescribed formula by September 1st each year.  The funds would be counted as receipts for purposes of calculating formula resources under the state aid formula.  The funds would be in addition to any funds generated through a special building fund, and the funds may be used only for any of the purposes permitted for building funds. The bill defines "snack food" as (i) soft drinks, carbonated or noncarbonated but excluding water, which do not contain primary dairy product or dairy ingredient base or which contain less than fifteen percent natural fruit or vegetable juice, (ii) candy, (iii) chewing gum, and (iv) prepackaged snack foods in eight ounce packages (e.g., potato chips or sticks, corn chips or pretzels, cheese puffs and curls, pork rinds, popped popcorn, cookies, cakes, pies, donuts, and pastries).

Bill:  LB 635	Introduced in:  2005
One-liner:  Change tax levy provisions relating to schools
Introduced by:  Raikes	Committee:  Revenue
Disposition:  x	Introduced bill
Summary:  LB 635 changes tax levy requirements for schools.  The bill provides that the maximum amount of taxes that can be levied for schools will be based upon adjusted valuation rather than assessed valuation of property. Since adjusted valuation as computed for state aid purposes is greater than assessed valuation, school districts will be able to levy additional property taxes pursuant to the bill.  The State Department of Education indicates that adjusted valuation used in the 2005-06 state aid distribution is $113.1 billion and assessed valuation is $109.4 billion.  If the bill had been in effect and all schools were at the maximum $1.05 levy, then an additional $39.4 million of property taxes could have been levied in 2004.  Assuming a 5% increase in valuations, the bill could increase property tax levies by up to $41.4 million in tax year 2005. Any increase in spending by school districts as a result of increased property tax collections will result in an increase in state aid two years after the spending increase occurs.  So, the bill could have a maximum fiscal impact in terms of increased state aid of up to $41.4 million in 2007-08.

Bill:  LB 704	Introduced in:  2005
One-liner:  Change provisions relating to equalization aid to schools
Introduced by:  McDonald	Committee:  Education
Disposition:  x	Introduced bill
Summary:  LB 704 pertains to the calculation of the amount of stabilization aid received by school districts under the state aid formula.  The stabilization factor acts as a hold harmless provision to ensure at least a percentage of aid from the previous year. The bill excludes the net option funding received for converted contract option students from the calculation of the amount stabilization aid.  LB 704 would increase the amount of state aid received by local systems that have converted contract option students, if the system qualifies for stabilization aid.  NDE indicates the bill may have a minimal, if any, fiscal impact in terms of increased state aid in the future because of the few number of school districts with converted contract option students and the criteria to receive stabilization aid.