Debate Transcripts

LB 840 (1995)

General File

March 23, 1995

SENATOR HALL: LB 860 is advanced to E & R Initial. Next item on the agenda, Mr. Clerk.

CLERK: Mr. President, LB 840 introduced by Senator Bohlke at the request of the Governor, also cosigned by Senators Wickersham and Withem. (Read title.) The bill was introduced on January 19, referred to the Education Committee for public hearing. The bill was advanced to General File. There are committee amendments pending, Mr. President.

SENATOR HALL: Thank you, Mr. Clerk. Senator Bohlke, on the committee amendments.

SENATOR BOHLKE: Yes, Mr. President and members, I open on the committee amendments to ask you to defeat the committee amendments and there will be explanations following. Currently, the bill has a couple of amendments that in the course of discussion, we have agreed to pull off of the bill in order to get it back into the original form that Senator Withem, Senator Wickersham and I have agreed to. We need to actually defeat the committee amendments and then we'll come back with a substitute amendment, so with that, I'll answer questions if you have them, but I guess I could just say "trust me". Thank you.

SENATOR HALL: Thank you, Senator Bohlke. Mr. Clerk, amendments to the committee amendments. Those go away? Is that the understanding, Senator Withem, both of them. Okay.

CLERK: I had two of them from you, Senator.

SPEAKER WITHEM: They will be pulled as ... there's one amendment up there I wanted to speak to but I think but we'll pull-them as amendments to the committee amendments and I'll ...

CLERK: Okay.

SENATOR HALL: Would you like them filed as amendments to the bill? Fine. Any discussion of the committee amendments? Seeing none, Senator Bohlke waives closing. Again, the request is that the committee amendments be defeated. All those in favor of the committee amendments vote aye, opposed nay. Have you all voted? Record, Mr. Clerk.

CLERK: 0 nays, 26 nays on the adoption of committee amendments, Mr. President,

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SENATOR HALL: The committee amendments are not adopted.

Senator Bohlke, would you care to open on the bill?

SENATOR BOHLKE: Yes, sorry, Mr. Speaker, members, if you think this is confusing now you should have seen it since the time it's come out of committee till we get to this point. But LB 840 is something that actually has been discussed for a number of years and is coming to a fruition this year. The problem arose when we began to realize that there were those schools who wanted to come together to merge and consolidate but when they would do that then, in effect, that year would lose a great amount of state aid. We've had examples such as Morrill, Nebraska who said, you know after they went through the trauma actually to the community of going ahead and deciding to merge or consolidate and then in the end they said, oh, by the way, because through the eyes of the formula we will look wealthier, we will lose about $300,000 in state aid. That, in fact, has bee- a barrier to a number of schools who may look to come together and make that merger or that consolidation. So in trying to solve that, there have been people who have worked on it over the years and actually more Senator Wickersham and Senator Withem and coming up with solutions to address that problem. This, in fact, does that. It does it by recognizing that when those school districts come together we look at the amount of state aid that they would normally get and for the first year they would get 100 percent of that, the new school district, the second year, 66 percent, and the third year 33 percent, the idea of that being that it would bridge that, over those three years, that amount of time as they were bringing more property into their school district and they would not take that-hit that they would initially take. Now when you do that, that money that would ... normally that you would be sending back out to those districts would go, if you did not do that, would go to the School Finance Equalization Fund. And so as our meeting we had with area superintendents yesterday from school districts the size of Hastings and Grand Island and Scottsbluff all said they recognize that that will be money out of the Equalization Fund but they also realize in the long term it will return more money to that fund. And so as you see, we have senators on the bill from three different areas of the state representing three different size school districts in an attempt to come together and say that we would like to try this this session, we would like to try what some people have termed the carrot rather than the stick in order to encourage school

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districts to come together and consolidate and not have to fight the battle of what they may lose in state aid as they try to convince the patrons in their communities to move ahead with the consolidation. I think that generally outlines it. The money that they are using comes from hold-harmless , will come off this July and that's about a $2.9 million fund and so the money that will be used is from that. It does have an emergency clause on it and with that at this point I will answer any questions.

SENATOR HALL: Thank you, Senator Bohlke. Mr. Clerk, amendments on the desk.

CLERK: Mr. President, Senator Bohlke would move to amend with AM01064.

SENATOR HALL: Senator Bohlke, to open on the amendment.

(Amendment appears on page 1280 of the Legislative Journal.)

SENATOR BOHLKE: Mr. President, the amendment you are being handed out now copies of the amendment. It's more technical in nature. When we defeated the last amendments this is what we will be substituting and actually this allows us to take off two bills that prior to this had been on LB 840. That was an incentive bill of Senator Wickersham's, an incentive bill of mine. When 840 came out of committee it came out with those two bills on it with the idea that probably someone would divide the question and we would discuss those three separately. Since that time there has been a decision made that in fact we would just take those off of this bill. This returns 840 to its original form what I have just discussed with you and allows us to proceed just debating the merits of 840 by itself without Senator Wickersham's- and without my incentive bills that have been put on as a package that we are bringing to the floor. Senator Wickersham's incentive and my incentive bill were put into another bill that became a committee priority, but are no longer, if we do this substitute amendment would be a part of this 840.

SENATOR HALL: Thank you, Senator Bohlke. Senator Withem, to the Bohlke amendment.

SPEAKER WITHEM: Yes, Mr. President, members of the body, just a question to Senator Bohlke about the impact of the amendment and the bill itself. I don't know... I think the amendment is clarifying, but as I read the bill school districts that take

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advantage of these, that decide to reorganize and find that their tier level changes and would otherwise have lost state aid will not lose that for a number of years And there are basically three years in which their state aid would stair step down until in the fourth year they were counted as if they were in the original tier. One thing I don't remember and if you've got the ready answer, that's great, if you need to check on it, that's fine too. But I know that... let's take for example the school districts in Senator Schrock's district, was that Orleans and Oxford and Beaver City got together and because we use the data in... and they do that in this year, there will be some time before the data catches up with them by which those kids will still be treated as if they had been in the previous districts anyway, this arrears sort of information, and then we get to the base year, there will be three more years, the first year it will be all that they would have gotten, the second year it will be two-thirds of what they have gotten or what they get otherwise. My question is, how many years in arrear do we have, how many total years will it be that these districts will be receiving state aid? Is it one year in addition to the three or is it two years in addition to the three?

SENATOR HALL: Senator Bohlke.

SENATOR BOHLKE: It would be two years, Senator Withem.

SPEAKER WITHEM: So in effect then we'd be having five years where this is a... the bill says three years in effect, but the way the whole 1059 formula functions, it will be five years after they begin the reorganization that... and two of those are there now today.

SENATOR BOHLKE: That's true, but the change is only three years.

SPEAKER WITHEM: Right, right, yeah, I just wanted to make that point that... and it's...people that don't understand the 1059 formula, obviously I don't, because I didn't remember if it war one or two at this time. But they will then be receiving, this is a five-year sort of incentive as opposed to a three-year incentive. That's just a question I wanted clarified and a point I wanted to make.

SENATOR HALL: Thank you, Senator Withem, Senator Bohlke. Senator Schrock, your light is next to the Bohlke amendment.

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SENATOR SCHROCK: Mr. President, members of the body, I'd like to speak not only to the amendment, but to the bill and of course I am the senator that prioritized the bill and that's the reason it's on the docket today. I don't know how many of you represent large rural areas, I'm looking at Senator Jones over there, I know he does. There are 7 counties in my district and there are currently 17 high schools functioning and it's terrible disincentive for them to consolidate if they all of a sudden find out after they consolidate they will lose state funds or 1059 funds. Senator Withem, it is true that Beaver City, Oxford and Orleans will benefit, but they will not benefit any more than had they not consolidated so I think it's appropriate that they should participate and only fair. Another situation that took place in the district I represent, the schools of Blue Hill, Red Cloud, Guide Rock and Campbell tried to consolidate and three of the districts approved the plan, the Blue Hill district did not and the vote wasn't ... it wouldn't have taken too many more votes in Blue Hill for that to have taker. place. And I think it would have been progress, but one of the things I heard when this was taking place, and the vote did take place while I was campaigning so I'm very familiar with the issue, was that why should we consolidate, we're going to lose state aid if we consolidate. And so the three years that they would be allowed to participate in a hold-harmless manner at least the first year 100 percent, the second year at 66 percent and the third year at 33 percent, I think would provide a lot of incentives for school. consolidation out there. And if you represent a rural district, the last thing you want to talk about is mandatory consolidation and the body can talk about we need to consolidate county services, we need to consolidate schools and you know not too many of -us will disagree with you, but it's just a hornet's nest if you're a politician living in a rural area and you start bringing those issues up. How much nicer it would be for them to decide that upon themselves and for them to do it by their own actions and I think this will provide an incentive. I know I have talked to the school districts of Campbell, Blue Hill, Red Cloud and Guide Rock and they're looking at another proposal. This might be what gets them over the edge, I'm not sure of that. I think they need to be reminded also that somewhere down the road we're going to have to become more efficient in education, so this is the carrot approach. I think it's very fitting that Senator Bohlke introduced this bill on behalf of the Governor and looking at what it does for my district and what its potential

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is in the future, it became an issue I became very interested in. So if you have any technical questions, you might be smarter to ask Senator Bohlke than myself, but I would certainly be glad to answer any questions you may have. I know that one of the school districts that tried to consolidate has now gone to a K through 6 situation and they are now sending students to about five or six different high schools out of that district and I know if you catch them at the right time, there's four different school buses in Campbell, Nebraska on any given morning and that's not efficient education, it just really isn't. And if they would decide to try to do this again, why I think this type of legislation would be very, would assist them greatly and would help them maybe make that painful decision of consolidating their school districts.

SENATOR HALL: Thank you, Senator Schrock. Senator Vrtiska, your light is next to the Bohlke amendment.

SENATOR VRTISKA: Thank you, Mr. President, I would like to address the, not only the Bohlke amendment, but certainly the entire bill. Many of the points that Senator Schrock brought out are certainly appropriate in my particular part of the state because I know there are a number of small districts in southeast Nebraska that some of them are interested in consolidation and of course some of them are not. But for those districts who are interested, as Senator Schrock has said, they're certainly not going to support the proposal to consolidate if they can see that the impact that they're going to receive is going to be costly to the taxpayers because of the fact that they lose some of their incentive and this bill as I read it and as I understand it from what I've understood of it is it will in fact use that carrot approach as Senator Schrock has mentioned. Certainly providing a three year cushion is a way to at least let these school districts and school patrons get together and start to talk about the idea that maybe consolidation is a better way to go for the efficiency of the taxpayers in those districts. I still believe and have always believed and I think Senator Schrock also alluded to this, that using a fly swatter as opposed to a hammer is probably a better way to get people to listen about how to consolidate. For the state to come out and say we're going to mandate that you consolidate certain districts has always been a tough issue because people tend to resent any type of intrusion even though they are accepting state funds, but certainly when there is a disincentive thrown in on top of it where they lose funds, I

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have a letter and I think it was presented at the hearing from a superintendent who alludes to the fact that when they tried to consolidate and they found out how much money it was going 'to cost them in loss in state funds they obviously immediately decided it wasn't a very good idea. I think that there are some districts who would like to consolidate, as I said before, but again I don't think that it's going to work for everybody. There are certainly reasons, distance and other things, that make it sometimes very difficult. But I think that if we see an advantage, if they can see an advantage, certainly it will put a different light on the thing, on the whole issue. I believe that if something is in the best interest of the people, you take away the disincentives that have actually been there for anybody trying to merge or consolidate in the past number of years, I think in many cases the people will take action on their own because they think it's in their best interest and not because somebody told them that that's what they had to do. So with that idea, I support the idea of the bill that Senator Bohlke has put together and will support it. Thank you.

SENATOR HALL: Thank you, Senator Vrtiska. Senator Janssen, your light is next.

SENATOR JANSSEN: Mr. President, members, on the bill as we discussed it and in my district I have some Class I's now that are trying to merge and go into a, make it a Class III school within a Class VI or change a Class VI to a Class III. They have been meeting for quite some time and always this question would come up that we are going to lose some of the state aid by merging. And you have to remember that even though this is going to be over a three year period, if they don't do it it's going to be there until someone forces them to -do It and as Senator Vrtiska said with the hammer and the fly swatter, it's easier to lead a fly to sugar rather than vinegar and in this case, this is going to help these Class I's considerably. And you have to remember, you have to remember, if you don't do it, that money is still going to be going out to those Class I's. If we do do it, it's going to go away in three years and it will add more monies to the Equalization Fund and it also would give them a little time to do some things as, such as new facility construction and so on without losing this money all at once. Even that will not go towards it, it also gives them time to get their RIFF policies in order and start the reduction in force which we know that it's probably one of the biggest things in controlling the spending in any school are the staffs that are

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in the school. And I see no better way to start this than by enacting this legislation and it will continue. it has had my support and will continue to be supported by myself and my district. Thank you.

SENATOR HALL: Thank you, Senator Janssen. Senator Hartnett, followed by Senator Bernard-Stevens, Jones, Robinson, Withem and Hillman. Senator Hartnett.

SENATOR HARTNETT: Senator Hall, members of the body, Senator Bohlke or maybe Senator Schrock, could I ask a question? To me this seems like a reasonable solution to have some reorganization. What is the size of school districts that is going to come out of this or how much is the wave going down the road as far as this? Is it just starting?

SENATOR HALL: Senator Bohlke.

SENATOR BOHLKE: Senator Hartnett, of course we don't know which school districts, are you asking what size school districts or...

SENATOR HARTNETT: Yeah, what are we going to end up at the end? You know how big a school district, it's too early to tell, is that what you were going to answer me?

SENATOR BOHLKE: Well, you know, when you remove disincentives or offer an incentive, until someone takes you up on it, you have no way of projecting that.

SENATOR HARTNETT: But it's going to be mostly Class III's do you think, Senator Schrock?

SENATOR BOHLKE: Well you have...yeah, I would...Senator Schrock seems to...

SENATOR SCHROCK: I'll speak to you as it affects my district. Orleans is a community of 500 people. Beaver City is a community of 700 people. Oxford is a community of 900 people. Their consolidated district will have about 400 students.

SENATOR HARTNETT: Four hundred.

SENATOR SCHROCK: If Red Cloud, Blue Hill, Guide Rock and Campbell would get together, you're talking about a community,

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the largest one being 1,200 down to about 800 and then you have two rather small communities, runs in my mind their populations run two to 300, that school would be bigger, but it's hard to say. You know Hildreth is complaining loud to me about their high taxes and they're getting a lot of choice students in. I think there's people there that would look if there was financial incentives. Whether they would try to get together with Wilcox and Axtell, I don't know, but that has sure been kicked around and this might be the impetus that would get that started. If not, why those three districts may some day find themselves swallowed up by some of the larger districts around then or not. I don't know what will happen. I think it's tough to redict what is going to happen. But I think if consolidation is going to voluntarily--- take place, this will certainly enhance it. If it's not going to take place, if we don't pass this, why then it's an impediment towards them doing that.

SENATOR HARTNETT: Yeah, I guess My concern is that I think sometimes, you know, that maybe reorganization can be too small. You know I guess that's one of my concerns. I think Senator Janssen wants to give me some comments, Senator Hall, if...

SENATOR HALL: I apologize, Senator Hartnett.

SENATOR HARTNETT: Senator Janssen wants to respond to...

SENATOR HALL: Senator Janssen.

SENATOR JANSSEN: Senator Hartnett, in answer to your question, in Dodge County there are 11 Class I's still out there and I'm sure that with this legislation you would see those Class I's merge into a Class VI school where all the Class I's are at now and that would give you a total of 4 schools in Dodge County compared to 15 that are there now. So you see this would have...and those schools would range, and the smallest one would probably be about 300 students on up to the Fremont which is a very large district. So you're not going to see that big of a change, but you would still be eliminating a lot of those Class I districts and getting them more consolidated and less administration also.

SENATOR HARTNETT: Thank you, Senator Janssen.

SENATOR HALL: Thank you, Senator Hartnett, thank you, Senator

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Janssen. Senator Bernard-Stevens, your light is next.

SENATOR BERNARD-STEVENS: Thank you, Senator Hall, members of the body. Senator Bohlke, if you would answer a question for me or a couple of questions. The first one I guess I would have, we were just discussing it off the floor here for a second, I understand *Chat under the bill that we have and even with the amendment that's before us it would be $2.9 million and when that money was out that would be it. But is there a sunset on the statute that allows for the incentive either within the amendment that is pending or the green copy of the bill?

SENATOR HALL: Senator Bohlke.

SENATOR BOHLKE: No.

SENATOR BERNARD-STEVENS: Okay, so would you agree that, well would you support an amendment as I draft it a little bit and I need to work with you to find out what year would be the best, but if we're going to have a sunset or a time period on it, do you think there should be a sunset of a particular time period and if so, what time period do you think that should be?

SENATOR BOHLKE: As you know, Senator Bernard-Stevens, my incentive bill I did have a sunset on it for the very reason to get schools moving...

SENATOR BERNARD-STEVENS: Right.

SENATOR BOHLKE: ...and take advantage of it, that sunset was the year 2000, but because of what Senator Withem discussed about funding and the lapse that you can have as far as in arrears funding, I don't want to be held to 2000 right here on this issue, but, no, I don't think that would be the worst thing that could happen.

SENATOR BERNARD-STEVENS: Okay, and I won't rush to an amendment to put a sunset on until we've had a chance to get people together to talk about it, when that should be, but the one concern I do have again, it goes back on the fiscal side is that we have $2.9 million to offer. But if you have in the statute that if you consolidate or merge that you are entitled to the incentives, and it's an entitlement-, you're entitled to the incentives if, in fact, you are adversely hit on the state aid side, that without a sunset of the statute this goes on for

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whenever we, until we decide to stop it and there would be a lot more than $2.9 million potentially. It could be a lot more than that. So I don't think we can sit here and say when the $2.9 million is gone, that's it, because if the statute is still there you still will, by law, owe that school district the dollars that they would have lost if they are, in fact, adversely affected. So you know I want to make sure that we're clear that it's more than $2.9 million and I think we should be looking at a sunset and I'll work with Senator Withem and Senator Bohlke as to see when the proper sunset is. Senator Schrock, I also want to ask you a question and I ask this in all sincerity. I was the only senator who voted against the bill in committee and I did so reluctantly because I agree with the concept of what we're trying to do. But the one thing, the question that keeps coming to my mind, whether it's in my district or your district or others, if, in fact, there is deep emotional arguments on whether they should or should not consolidate or merge or reorganize together, two or three different school districts, how does it help the argument when a group of people say why should we merge because if we merge we'll lose state aid, how does this bill help that because doesn't the argument just change to the point that if we consolidate and merge, we won't get hurt for the first year, but the second year we're going to get hurt a third, the third year we're going to get hurt two-thirds and then we're going to get hurt all of it, why should we reorganize when we are going to lose state aid, but we just delay the period of which we're going to lose it? How does that help the argument?

SENATOR HALL: Senator Schrock.

SENATOR SCHROCK: Well I suppose the only way I can answer that is through first-hand experience with this new school district taking place in south central Nebraska. When they consolidate and are building new facilities, there's a tremendous amount of start-up charge. Lights...

SENATOR HALL: One minute.

SENATOR SCHROCK: ... for a football field can be tremendously expensive and so I think they incur a lot of start-up expenses that they won't have two and three years into their consolidation and, therefore, they can see that maybe two or three years from now they're going to be more efficient and in the long run they're going to be better as a consolidated

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district than they would have been separate.

SENATOR BERNARD-STEVENS: But the start-up costs would have nothing to do with... I mean what they're going to do to, if they're building a new school or if they're building a new stadium whatever the case may be, that will have nothing to do with their state aid.

SENATOR SCHROCK: You're correct, but there are certainly painful hills that have to be paid by that school district.

SENATOR BERNARD-STEVENS: Right. So regardless of whether this bill passes, those bills would have to be paid and I guess my question still is, if a district is going to get hurt in state aid and we're saying that's an incentive for them not to reorganize, how will help when they still know the fact that they're going to lose state aid within three years unless there is some sense out there that we're going to continue the hold harmless and we'll come back in a couple of years and say, no, we don't they should lose...

SENATOR HALL: Time.

SENATOR BERNARD-STEVENS: ... any. And I'll try to get back to that when we have more time.

SENATOR HALL: Thank you, Senator Bernard-Stevens, Senator Schrock. Senator Jones, your light is next followed by Senator Robinson, Withem, Hillman, Lynch, Schrock and Bernard-Stevens. Senator Jones.

SENATOR JONES: Mr. Chairman, members of the body,* I. rise to support this bill and I think that's one way that should really do it because I can give you a little example. I went up in my community in Loup County just to visit with them about property tax one day and that school district thought I was up there to close their school and I had a lot of explaining to do after that because they... so some incentive like this I think is good, but my district, I don't know how much they will use it because the schools are just not very close together up there anyway. This one school I'm talking about, they're coming 30 miles to it and if they have to go to another town, that would be another 30 or 40 miles maybe to some of them other towns. I do have 103 school districts in My legislative school district, but, legislative district, but that... a lot of them are Class I

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schools under the Class VI umbrella. I think I need a hold-harmless for the repeal of the common levy. I think that's where I need the hold-harmless in my district, but I'd like to ask Senator Bohlke one question if I could.

SENATOR HALL: Senator Bohlke.

SENATOR BOHLKE: Yes.

SENATOR JONES: This two years in arrear, okay, if three schools would consolidate, would state aid come for each one of them three schools, all to the one school they would be consolidating in for two years before you started on your three year hold-harmless?

SENATOR BOHLKE: It would be the amount of the three that combined, consolidated.

SENATOR JONES: That's what I wanted to know.

SENATOR BOHLKE: And that... it would Le that amount that they would receive in state aid.

SENATOR JONES: The amount from each school would all go to the one then for the first two years?

SENATOR BOHLKE: Correct.

SENATOR JONES: Okay, and then you'd start in on the three year program, graduating it down.

SENATOR BOHLKE: Yes.

SENATOR JONES: Okay, well that's what I wanted to kind of get clear because... if it's in the two years in arrear, well they would still get the same so we're talking about a five year program here and I think that's real good and they're talking about a sunset so you might go two, three years before they would want to start on this and then they would start on it, so it could be down the road more than just five years to eve...

SENATOR BOHLKE: Senator Jones, that's why in response to Senator Bernard-Stevens' question, I said before naming a sunset date, that I would want to look at that exact thing and I think that was the agreement from Senator Bernard-Stevens that we

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would discuss taking that into consideration what then would be the appropriate time frame for school districts to go through whatever they need to in their communities to get the discussion going, then have the two years, then the three years and still have time to react to the bill.

SENATOR JONES: That's the reason I was talking against a sunset. Now maybe there is a spot for it, but I think that we've got to consider that when we talk about that. Thank you.

SENATOR HALL: Thank you, Senator Jones. Senator Withem, your light is next.

SPEAKER WITHEM: Yes, members of the body, I do support the bill as written. The thing that people need to realize is that LB 1059, as it is currently written, organizes school districts into various tiers. The rationale for that was when we drafted LB 1059 we did not want to make 1059 itself be a tool that would force school districts to reorganize or discriminate against school districts based upon their size. So we realized that certain sized school districts were more expensive to operate than were others. We ended up with a tier system. What we're finding is that, I'm going to make up some hypothetical numbers, I could get you the accurate ones if you're interested, but we do have some school districts are in a tier where they are compared to schools that are spending on the average of approximately say $8,000 per student per high school and that's how all of their kids are counted. in terms of their needs for state aid. When they reorganize and become a larger district then they get compared to another group of schools whose spending needs might be, again hypothetically $6,000. So in that case for that school district to reorganize for each of those students they would lose $2,000 in state aid because they would have $2,000 fewer in needs. So what we're finding is what we originally tried to do, make a bill neutral on the issue of reorganization, we ended up with a bill that in fact, may in fact, inhibit some reorganization. That's what this bill does in its very simplest form. It removes that inhibition for at least three additional years more than we would have otherwise so that school districts will not lose money when they do in fact reorganize. People have talked about this as a carrot approach as opposed to a stick approach, as interested in fly swatters, flies, vinegar, sugar and hammers. I don't know quite how they tie in with carrots or not, but I'm thinking there must be an interesting grocery store to shop in some place in this

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state that has all of those products, particularly the fly part of it intrigued me considerably. I did pass out for you though just so you get an indication and a bigger picture because I think this issue of efficiency in operation of K through 12 school districts is much bigger than we're dealing with in LB 840. LB 840 is a bill that removes the inhibitions that may exist in the formula for school district reorganization but I think as we go down this path toward looking at property tax reform, reduction of property taxes, we look at the large number of school districts we have, we currently have about 296 K through 12 school districts in the state. The smallest one of those has 24 students, 24.06 average daily membership for whatever year this was and I don't see...'92-93, the Milligan School District. Guide Rock had 25 students in the high school all the way up to Omaha Public Schools that has 10,000 in the high school. Since the time that we've been talking about this issue I think there have only been about three K through 12 reorganizations. The one that Senator Schrock references, Cambell and Marquette have joined together for a school district that is barely over 50 in its high school and currently there is a school district reorganization...

SENATOR HALL: One minute.

SPEAKER WITHEM: ... going in Big Springs with Brule, I believe. There's not a lot of movement going on. I think that the issue ... there are a lot of other more difficult issues to deal with when we talk about school district reorganization. My sense is this is something we all agree needs to be done. I don't think people should get the idea that this solves the problem. There are lots of other issues that need to be addressed. I'll be continuing to approach those.* I, know Senator Lynch in the past, Senator Will in the past have had perhaps more Draconian methods than even I've been supporting, but we do have a problem with the efficiency of the organization of our school districts. We need to take this step. It sounds like there's a lot of agreement that we need to do this but this does not ultimately solve the problem. But I would urge you at this point to endorse LB 840 the way it's drafted and endorse the Bohlke amendment also.

SENATOR HALL: Thank you, Senator Withem. Before we move to the next speaker I'd like to introduce guests of Senator Matzke under the south balcony, from Sidney High School John Herd who is the teacher as well as students, Tricia Rexroth, Michael

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Stevens, Tim Narges and Kristine Armstrong. Would you please stand and be recognized by the Legislature. (Names are phonetic.) Thank you for joining us today. Senator Hillman, you're next, speaking to the Bohlke amendment to LB 840.

SENATOR HILLMAN: Yes, Mr. Speaker, members, I guess one of the things I would like to clarify is that we talk a lot about Class I schools and there is some counties, and I'm going to give an example of Scotts Bluff County, that has started a dialogue that could look at perhaps in the future having a county system. You're looking to the cities of Gering and Scottsbluff which have, you know or rank 278th and 282nd according to Senator Withem's handout here because of their close proximity geographically that have also had discussions of merger off and on and have also looked at the disincentive as far as what that might mean in state aid and it has slowed down I think. It's an assumption on my part, but it has slowed down somewhat the discussion. So this being an incentive I think would be and for that reason I will support the bill but one of the things I wanted to clarify, it's not always necessarily your smaller schools that are looking at consolidating. The other thing I was just curious about, Senator Bohlke, perhaps if you could answer a question or it's in Senator Wickersham's district, he is right there so he might be able to answer this also, I'm sure he could and that is on the area of Morrill which is in Scotts Bluff County and looking at when they reorganized, can you opt into this formula at any time or do you have to be starting from the very first? In other words, if they were still within that total five year period that we talked about earlier, could they come in like the third year or fourth year since they have already reorganized?

SENATOR HALL: Senator Bohlke.

SENATOR BOHLKE: They could if they're in that first five years, but in the case of Morrill I don't think that that's the case, is it? When did theirs, and Senator Wickersham would... Senator Wickersham...

SENATOR HALL: Senator Wickersham.

SENATOR BOHLKE: ... the year that Morrill went through that consolidation was what year?

SENATOR HALL: Senator Wickersham.

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SENATOR WICKERSHAM: It became effective this year and they lost a little over $297,000.

SENATOR HILLMAN: So my question, Senator Wickersham, is, could they participate in this program like the second or third year?

SENATOR WICKERSHAM: No, I'm getting conflicting answers from legal counsel from both sides of the room. Perhaps we ought to answer that later, Senator Hillman.

SENATOR HILLMAN: Thank you.

SENATOR HALL: Thank you, Senator Hillman. Thank you, Senator Wickersham, Senator Bohlke. Senator Lynch, your light is next.

SENATOR LYNCH: Mr. Chairman and members, I just want to stand up and say something because we just ran our survey and for your information, to be completely frank, seven senators have spoken more than 50 percent of the time on the floor. I want to congratulate Senator Schrock and Senator Bohlke and a couple of you others, Senator Jones who stood up on this issue because I think it's important that Lome people out there, somebody out there knows there's more than just a few that seem to be on the floor the most. But, yeah, Wickersham does ask good questions though, I do want to mention it. It's because he's got good counsel I think actually. But seriously, I thought you ought to hear from a Draconian at least on this issue. I'm the guy that introduced the bill that said we should have one school district per county and I did it with a tongue in cheek because I knew in my own county where we had 14 school districts and four or five of-the biggest in the state, it probably didn't go over very well but the same principle applies there as it applies all over the state. I don't want to close schools down at all. I keep remembering the Syracuse report that said we could save 150 million bucks if we did a better job managing, not the teachers, not the schools themselves as far removed as they can be from anyplace, but we could do a better job administering the programs and I think that's the reason all of this took place. I'm not sure if it's fruit or vegetables that we're talking about here. And all I want to say is that even in Omaha our taxes went up with 1059. We paid more. We share but we provide in taxes with everybody and that's the way it should be and I have no problem with that at- all. And I have support, I support this if it will help. But just so we all understand that we're

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not getting another break, we're in some cases continuing the break that already existed in some of these smaller school districts where if they were paying in proportion to some of us, for example like the Omaha School District, the margin of difference between the breaks and what is fair, obviously would be appropriate discussion for today. That's behind us. We don't want to talk about that anymore, but please remember that when we do this and I support phasing this in, we will continue those breaks. That means that some of the people in these school districts never had paid their fair share. Let me just ... I'll share this one example, in Sarpy County if I can ... can you guys hold it down just a little bit so I can hear myself, if you don't mind. You don't have to do that for me, see I can take care of myself, Mr. Speakar.

SENATOR HALL: Thank you, Senator Lynch.

SENATOR LYNCH: Very good. You know how some people talk so loud around here. You can sit underneath here and you can't hear yourself think. Can you all hear me all right if I talk rather quietly? Fine. All I'd like to say is in Bellevue there were two brothers who lived in different school districts,. one was a Class I school district. This was a long time ago, by the way, about four, five, six years ago. The one who lived in the Class I school district had three kids in the high school district in Bellevue. The brother across the road from him had no kids. They had been both willed, Lord have mercy and we're happy for them, about the same kind of farms, same kind of buildings except that the valuation, because of the difference in the school districts they lived in was three times higher for the brother with no kids living in the Bellevue School District and the brother who lived in the Class I school district was complaining because the tuition was so high, but it didn't cost him any more because his taxes, the free school tax of course provided that cost. It's an old issue, but I want to just mention that now because we're removed from that to some degree. But those are the things some of us remember here and we do want to be fair. We know what a terrible issue it is in some of your districts. I can imagine in Senator Jones' districts how many school districts you have and...

SENATOR HALL: One minute.

SENATOR LYNCH: ...how tough an issue it is. So that's the reason I'm going to support this. I know in Saunders County

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we've got ... we had at one time 45 school districts. I think they're down to 33 or 34 now and I support one of those, by the way, with some stuff I got out there in that school district, but I just wanted to mention that just in case we forgot. Some of us are going to support this but we know when we do this we protect, in some cases, the breaks that some people have had for a long time as compared to some of the rest of us. Thank you.

SENATOR HALL: Thank you, Senator Lynch. Senator Schrock, followed by Senator Bernard-Stevens and Senator Robinson. Senator Schrock.

SENATOR SCHROCK: Senator Lynch, you may find this odd, but I use you when I campaign and talk about school consolidation. I say that if you, if the people in rural Nebraska don't take some action on their own, there's always Senator Lynch with his one school district per county bill and I think it behooves rural Nebraska to listen because we all know there's fewer rural senators in the body and the fear out there that the urban Nebraska Legislature will do something in the area of forced consolidation I think is a powerful mechanism to provide incentives for these people to consolidate. I hate to say that because I hope that isn't used. Senator Bernard-Stevens, I appreciate your comments on the sunset. That may be the most powerful. thing we could do to encourage some of these schools to consolidate, and so at this time I see no problem with offering a sunset on this bill because these small schools will then find out that if they don't consolidate, then they will be left out there all alone with no financial incentives and eventually probably their 1059 funds would dwindle and so there should be some powerful incentives here and I think this could be the carrot, if you don't mind using the vegetable, if you'd rather use a parsnip or a watermelon, I don't care, it doesn't really matter to me. This could be the tool that would get a lot of school districts talking and property taxes are a big issue in rural Nebraska. I think they're bigger in rural Nebraska than urban Nebraska, but Senator Brown disagrees with me. And I think eventually people can see that there's going to be efficiencies involved if they do consolidate. I think there's about 11 teachers looking for jobs in that new consolidated district of Beaver City, Orleans and Oxford because they know that they're not going to have a job because they don't need as many teachers. Obviously with one facility versus three you can eliminate some teachers and instead of teachers teaching four or five students in a selective class or an' elective classroom,

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they can teach ten or 15 or 20 even and also instead of needing one ninth grade English teacher, you can get, or three ninth grade English teachers, you can have one. And so I think there's powerful incentives out there already and this just might be the ball that we need to get started rolling to get some momentum out there to get the thing started. And so, Senator Lynch, I appreciate your comments. Senator Bernard-Stevens, I think your idea of a sunset is constructive and I will accept, I would accept that as being given in that manner and will not debate this any longer unless there's questions.

SENATOR HALL: Thank you, Senator Schrock. Senator Bernard-Stevens.

SENATOR BERNARD-STEVENS: Thank you, Mr. President, members of the body, Senator Schrock, I appreciate the comments and I suspect on Select File I'll ... between now and Select File I'll sit down with Senator Bohlke and Senator Jones and yourself and Senator Withem and whomever else wants to and try to find, make sure that it does make sense to do that and if so, if it does make sense, put a sunset to make sure that we put the right time period in that sunset and I think that's the key. Senator Bohlke, I just wanted, I guess more for the record because I want to make sure school districts and members of the Legislature do not misunderstand what we have here. And before I do that I want to... I will be supporting to, voting to advance the bill and it's actually something Senator Wickersham said in the discussion we had with superintendents a few days ago that changed my way of thinking that made me look at this as a ... it will be an advantage to have this bill out so I wanted to mention that, Senator Wickersham, see I do listen from time to time but don't get too big-headed about that. Senator Bohlke, if I can ask you a question. As we have the $2.9 million and in the bill it's prorated out and I wanted to verify with you in a little short dialogue that if school districts wait to the very end, it is Possible that there would not be that much money left and so it's very possible that there would not be hardly any dollars at all for them to be held at a hold-harmless level. Would that be correct?

SENATOR BOHLKE: Senator Bernard-Stevens, I don't know if any hardly any dollars at all would be correct, but yes, there would be less likelihood that that amount of money would be there if you were one of the first schools in in that time frame with

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that 2.9 million when you're going to prorate it.

SENATOR BERNARD-STEVENS: Okay, so basically there is a potential if school districts wait too long and if other school districts have in fact reorganized, that there at some point may come a tire when there would not be the dollars for to keep them at actual hold-harmless area. Would that be correct?

SENATOR BOHLKE: That would be correct and in case this were wildly popular and there was a huge rush right at the beginning, that same type of scenario could take place.

SENATOR BERNARD-STEVENS: Yes, and I just want... I think everyone needs to know so when they talk to the schools that are considering it or so they can put in their short or long-range thinking, that those school .... the incentive here is those school districts that are thinking about it that want to be held a- a hold-harmless at the rate that this bill would allow, that the sooner that it is done the more guarantee there would be that all the dollars would be there to actually keep that at a hold harmless. But as ... and if there are districts that begin using the fund and as the fund dwindles down, there is not a mechanism to add more dollars so the potential towards the end would be there for a school district to reorganize thinking that they're going to be held harmless, but when they actually apply that there may not be actually the dollars that would keep them there because it would be prorated to that point and I think we want to be sure and be fair that that process is out there, and that circumstance may present itself at a later time. So the incentive would be the sooner they would organize the better and, -Senator Bohlke, I will be supporting the bill and I'll yield whatever of my time I have to use because I know you have a comment that you'd like to make.

SENATOR HALL: Senator Bohlke.

SENATOR BOHLKE: Just a clarification, that I want to make sure that you understand that that 2.9 million is each year.

SENATOR BERNARD-STEVENS: Correct.

SENATOR BOHLKE: Okay.

SENATOR BERNARD-STEVENS: Now let me ask you then a further question, if I may. Each year of each of the bienniums that

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we're going to so it would be 2.9 the first year of the biennium, 2.9 second year biennium, 2.9 the next year and the next year and the next year?

SENATOR BOHLKE: Correct. Wait, I believe that's ...

SENATOR BERNARD-STEVENS: When you add all of that up I'm afraid to ask this next question. How much (inaudible) can we actually have in there, five total?

SENATOR BOHLKE: Yes. Okay, all right, thank you very much.

SENATOR HALL: Thank you, Senator Bernard-Stevens, thank you, Senator Bohlke. Senator Robinson, your light is next.

SENATOR ROBINSON: Mr. President, members of the body, Senator Lynch, I guess he's sitting over there, but he spoke the term "protected class" and, Senator Withem, I have a question for you.

SENATOR HALL: Senator Withem.

SENATOR ROBINSON: You like that ... no, I just about said, I was just about ready to say Internet, but I caught myself, I'm sorry. But Senator Lynch said the protected class, we really don't have the protected class like we used to have, would you agree with that since the affiliation bill, as far as state aid goes?

SPEAKER WITHEM: I think when we did the affiliation bill we dealt with probably the more extreme sorts of what Senator Lynch had referred to as a protected class. I haven't looked at the differentiation between property tax levies with some of these smaller K through 12 districts. I would guess it's there, but probably to a lesser extent than it used to be.

SENATOR ROBINSON: Of course, they pay through the nose, I mean, you can't say they're efficient school districts, but as far as ...

SPEAKER WITHEM: Well they pay a lot to educate each pupil but that doesn't necessarily mean their property tax rates are terribly high.

SENATOR ROBINSON: Okay, thank you.

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SENATOR BALL: Thank you, Senator Robinson, thank you, Senator Withem. Senator Jones, your light is next.

SENATOR JONES: Mr. Chairman and members of the body, the question that Senator Bernard-Stevens asked, I'd like to go a little bit farther on it to let Senator Bohlke explain it just a little bit more, just bow many dollars we're talking about per year and per biennium, so maybe I could get her to explain that Just a little farther.

SENATOR HALL: Senator Bohlke.

SENATOR BOHLKE: Two point nine million per school year, so that would be 5.8 per biennium.

SENATOR JONES: Okay. And how long would that go then?

SENATOR BOHLKE: The 2.9 is each year it goes on.

SENATOR JONES: It goes on until we sunset it.

SENATOR BOHLKE: If we sunset it.

SENATOR JONES: If we sunset it.

SENATOR BOHLKE: If we add a sunset on, then it would end at that sunset year and that's what Senator Bernard-Stevens was saying.

SENATOR JONES: Okay.

SENATOR BOHLKE: I think that was one of his concerns.

SENATOR JONES: I can understand where he's coming from now, but I do want to not shut it off too quick because of the time that they might decide. You might have to talk this up in a community a little while, maybe a year or two before they say, well let's do it. So then we want to get down the line a little farther so I think we've got five years there. So that's the point I want to bring out, so if I've got any time left I'll 'Let Senator Bernard-Stevens have it.

SENATOR HALL: Senator Bernard-Stevens, you have approximately three and a half minutes.

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SENATOR BERNARD-STEVENS: Thank you, Senator Hall, thank you, Senator Jones, and I appreciate, Senator Jones, that is where I'm coming from on the sunset because we need to have some type where we say there's not going to be 5.8 in the next biennium, you know, add ... whatever the word is for infinity, infinitum or ad nauseam, I'm not sure which one I wanted to use. The other thing I want to make sure that everyone is aware of is that this is not, and I don't want to say the word General Fund money because that's not accurate as well, but this money comes from the Equalization Fund. So when we look at the fund that we, when we're all talking about we need to fund at 45, try to get up to 45 percent or we're trying to get the dollars so that we have better equalization, this monies is about $3 million, 5.8 million each biennium that's coming out of the equalization if, in fact, school districts choose to do this, will be coming out of Equalization Fund into the coffers of those districts that have applied for it. And in discussions we've had with the superintendents, they're obviously, they were aware that that's dollars that they would not receive, but they were willing to go along with that. They were willing to say we understand it means we may get less, but we think the effort to consolidate or to reorganize is well worth the cost of doing so. So I don't want people to get concerned that if it's coming out of equalization that there might be a lot of school districts against it, there may be some, but those that we have talked to and they've been basically statewide, that we have, have been very supportive of that concept and I appreciate, Senator Jones, your time.

SENATOR HALL: Thank you, Senator Bernard-Stevens. Senator Withem, your light is next.

SPEAKER WITHEM: Yeah, I'm going to add, try to add either more clarification or confusion, depending on which way I feel like going as I get through my remarks here. Senator Bernard-Stevens I think is appropriately raising the cost issue, but I'm afraid there might be an inaccurate picture painted here that somehow this is $2.9 million that is going to be expended each year. It's $2.9 million that's part of the overall equalization pool. It is money that would have gone to these school districts had they not reorganized. We're just saying it's going to continue to go to them for a number of years after they have reorganized. So it's not necessarily taking money out of equalization and doing something 'else with it, it's going to be distributed

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through equalization and it's going to go to those districts as if they had not reorganized because, and this is the policy rationale of the bill, if we didn't have this, they probably wouldn't have reorganized anyway. So it's probably not going to have, unlike some of the other things that are being proposed that take a minor little shot at Senator Bohlke's idea that's part of the bill that she will be bringing forward later on which genuinely would take money out of equalization. I don't see this as a drain on equalization at all. As a matter of fact in the long run, it's going to support more equalization because after these districts have made the tough decision to reorganize, have gone through their first three or four years of being a reorganized district, in all likelihood they're going to become a more efficient operation. They will need fewer administrators, fewer teachers, other things that go with efficiency of size so they will be down in a lower district. They won't, be receiving as much equalization money. That money then will be at that time free to be recirculated within the equalization pot. Secondly, I think, you know we're talking about this money being used up. As I pointed out over the last three or four years there. have only been three of these reorganizations take place. The way I have been calculating, $2.9 million, if it would have $1,000 impact per student on their needs, it would take 2,900 students in our state being involved in a reorganization effort to use up all of that money. If it would be an average of $2,000 per student, it would be 1,450 students. The likelihood of that many school districts in the state rushing to reorganize at any one time to have that many students involved, I don't think is that likely. I didn't realize until a few moments ago that there was this proration in here and I appreciate that it's there to protect the Equalization Fund, but I don't know, I suspect we'll never get to that particular point anyway in any given year where more than $2.9 million are being expended so I don't think...either of those issues are good as far as making people better understand the bill and what it does, but I don't think that they're likely to happen. If they do, I don't think the impact will be that great. So with that I again support the bill in it's green copy form and have even, even sat here and talked myself, Senator Bohlke, out of even offering either of those amendments that are up there, so we'll just get on with the bill when the time comes.

SENATOR HALL: Thank you, Senator Withem. Seeing no other lights to discuss the Bohlke amendment, Senator Bohlke, to close

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on the amendment.

SENATOR BOHLKE: Mr. Speaker and members, I think you've heard a really good discussion on this issue and I think probably as Senator Lynch indicated, it's a much different discussion that we've heard in the past as far as when we've talked about school consolidation. I think that, as I indicated, this is something that has, that Senator Wickersham and Senator Withem have both worked on for a number of years and one that I think really does hold out an opportunity for schools to remove one of the barriers or disincentives for not looking at consolidation. You've heard the arguments and the examples from many people on the floor. I would just say to you that certainly looking that you have Senator Wickersham on the bill from Harrison, Senator Withem from Papillion and myself from Hastings, is clearly representative of I think the type of support you've heard from school districts across the state and certainly on the floor of the Legislature. And lastly, you heard Senator Withem hint at bills that may come later, talking about what would actually be incentives for school and how we will have further discussion on what other bills are out there that may get schools moving forward in the direction of consolidation. And lastly, I would say that working with Senator Wickersham and Senator Withem at the request of the Governor and carrying the bill has indeed been a thrill. And so I'm happy that we are now at this point with everyone standing up and saying that they support the bill and will be supporting to move it forward and I also thank Senator Schrock for prioritizing the bill because I think it was very important to get to it this session. One thing that is also important is it does have the emergency clause and that is very necessary for some of the school districts that are looking towards this Consolidation. So with that I urge your support of the bill. Thank you.

SENATOR HALL: Thank you, Senator Bohlke. You've heard the close on the amendment. The question is, shall the amendment be adopted? All those in favor vote aye, opposed nay. Have you all voted? Record, Mr. Clerk.

CLERK: 29 ayes, 0 nays, Mr. President, on adoption of Senator Bohlke's amendment.

SENATOR HALL: The Bohlke amendment is adopted. Before we move on, Senator Wickersham has guests in the north balcony, ten eighth graders from Harrison Grade School and four adults who

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are with them as well as their teacher. Would you please stand and be recognized by the Legislature. Thank you very much for joining us today. Mr. Clerk, next item on the bill.

CLERK: Senator Withem, pull your amendments, Senator?

SENATOR HALL: His amendment is withdrawn.

CLERK: That's all that I have to the bill at this time, Mr. President.

SENATOR HALL: We are back on debating the bill. Senator Withem, your light is on.

SPEAKER WITHEM: Only for a question that just came to my mind here when Senator Bernard-Stevens and I have been visiting about sunsets and all that other sort of thing. Let me ask Senator Bohlke as the principal introducer of this, is it your intention, is it your understanding that this bill applies only to prospective reorganizations or would, like the one that is going on with Beaver City and Oxford, would it in fact be, depending upon where it is or, this five year scheme, would it be eligible to apply for at least, or be eligible for at least part of these benefits?

SENATOR HALL: Senator Bohlke.

SENATOR BOHLKE: Senator Withem, Oxford and those school districts would be eligible. The question from Senator Hillman like Morrill, Nebraska, in '95-96 they could be eligible for 66 percent, in '96-97 for 33.

SPEAKER WITHEM: I'm sorry, I didn't hear her question, but I'll try to listen more carefully next time.

SENATOR BOHLKE: That was all right because we didn't know how to answer it.

SPEAKER WITHEM: But now you do, so I gave you a second shot at it.

SENATOR BOHLKE: Right.

SPEAKER WITHEM: You did very well this time.

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SENATOR HALL: Thank you, Senator Withem, Senator Bohlke. Any other discussion on the advancement to E & R Initial of LB 840? Seeing none, Senator Bohlke, to close on the bill.

SENATOR BOHLKE: Mr. President, members, the close on the amendments I think serves as the close on the bill, and I thank you for your attention, and I urge you to support passage of the bill.

SENATOR HALL: Thank you, Senator Bohlke. The question is the advancement of to E & R Initial of LB 840. All those in favor vote aye, opposed nay. Have you all voted? Record, Mr. Clerk.

CLERK: 30 ayes, 0 nays, Mr. President, on the advancement of LB 840.

SENATOR HALL: The bill is advanced. Next item on the agenda, Mr. Clerk.

CLERK: Mr. President, LB 548 introduced by Senator Beutler. (Read title.) The bill was introduced on January 18, referred to the Revenue Committee for public hearing. The bill was advanced to General File. There are committee amendments pending by the Revenue Committee.

SENATOR HALL: Senator Warner, on the committee amendments.

SENATOR WARNER: Mr. President, members of the Legislature, LB 548 is described in the title, introduced by Senator Beutler, deals with the candidates campaign committee income tax. I won't go into the bill, but the committee -amendment is essentially technical in nature. It provides a definition of in-kind contribution which is consistent with the sections of law that currently define in-kind contributions and expenditures and it makes no change, other than that clarification, and I would move adoption of the committee amendment.

SENATOR HALL: Thank you, Senator Warner. Is there any discussion of the committee amendments? Seeing none, Senator Warner waives closing. The question is adoption of committee amendments to LB 548. All those in favor vote aye, opposed nay. Have you all voted? We're voting on adoption of the committee amendments to LB 548. Have you all voted? Record, Mr. Clerk.

ASSISTANT CLERK: 26 ayes, 0 nays, on the adoption of committee

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