LB 149 (1999) - Recertification and Recalculation of State Aid to Schools

LB 149 was introduced because of an unexpected shortfall in state aid to schools of approximately $19.4 million. Prior to LB 149's passage, the calculation of state aid to schools used both estimates and actual data. The state aid calculation was first based on an estimate using a three-year average growth trend. Then, when actual data were available, the data replaced the estimate, and any increases or decreases in state aid resulting from the use of actual data were subsequently reflected in the amount of state aid paid out to school systems the following year. In FY1998-99, the substantial disparity between the estimate and the actual data resulted in the $19.4 million shortfall and the introduction of LB 149. Supporters of LB 149 indicated that one of the reasons for the great disparity between the estimated figures and the actual data was that school systems had already substantially reduced their budgets at the request of the Legislature.

LB 149 declares the state aid amount certified by the State Department of Education for the 199899 school year null and void and allows the department to recertify the aid in order to correct the shortfall. Additionally, the bill changes the annual state aid certification date from December 1 of each year to February 1. This change allows state aid amounts to be based on actual data rather than estimates. Supporters of LB 149 believe the changes prescribed by the bill will bring needed predictability to the state aid formula, while opponents of the measure feel that the statutorily prescribed formula is actually an entitlement over which the Legislature has no control.

Additionally, LB 149 changes the state aid calculation process. The bill provides that total aid is the amount deemed necessary to meet school needs after subtracting the revenue raised from local property taxes. The bill also fixes the local effort rate, a factor that is multiplied by a school system's adjusted valuation to predict property tax revenue, at 10 cents below the maximum property tax levy. Currently, the maximum property tax levy is $1.10 per $100 of valuation; however, beginning in 2001, the maximum levy will be $1.00 per $100 of valuation.

LB 149 passed with the emergency clause 43-3; however, the Governor vetoed the bill on March 18, 1999. The Legislature overrode the veto, 39-7, on March 22, 1999.