Statutes

Section.
79-3801.   Act, how cited.
79-3802.   Legislative findings and intent.
79-3803.   Terms, defined.
79-3804.   Income tax receipts; use and allocation for public school system.
79-3805.   Tiered cost per student; general fund operating expenditures; calculations.
79-3806.   State aid; amount.
79-3807.   Total formula need; computation.
79-3808.   District formula resources; local effort rate; determination.
79-3809.   Adjusted valuation; adjustment factors established.
79-3810.   District formula resources; income tax liability allocation.
79-3811.   District formula resources; other receipts included.
79-3812.   School District Income Tax Fund; Tax Equity and Educational Opportunities Fund; created; investment.
79-3813.   Distribution of income tax receipts and state aid; effect on budget.
79-3814.   General fund budget of expenditures; allowable growth limitation; Legislature; duties.
79-3815.   Budget statement; submitted to department; Auditor of Public Accounts; duties.
79-3816.   Basic allowable growth rate; allowable growth range.
79-3817.   Applicable allowable growth percentage; determination.
79-3818.   Budget; restrictions.
79-3819.   Applicable allowable growth rate; district may exceed; situations enumerated.
79-3820.   Applicable allowable growth percentage; district may exceed; vote required.
79-3821.   Unused budget authority; carried forward.
79-3822.   Department; provide data to Governor; Governor; duties.
79-3823.   School Finance Review Committee; created; members; duties.
79-3824.   State assistance; payments; reports; use; requirements; early payments.

79-3801.  Act, how cited.  Sections 79-3801 to 79-3824 shall be known and may be cited as the Tax Equity and Educational Opportunities Support Act.

79-3802.  Legislative findings and intent.  (1) The Legislature hereby finds and declares that:
       (a)  Nebraska currently finances over seventy percent of the costs of operating its public school system from the property tax and other local sources while nationally only forty-three percent of the costs are supported by property taxes and other local sources;
       (b)  State support for the public school system has not kept pace with the increased costs of operating such system;
       (c)  Nebraska has a higher per capita property tax burden than most other states while the overall state and local per capita tax burden in the state is below the national average;
       (d)  The cost of operating the public school system is near the national average in per pupil cost as well as per capita spending;
       (e)  The overreliance on the property tax for the support of the public school system has resulted in great disparities in local property tax rates; and
       (f)  The overreliance on the property tax for the support of the public school system has created inequitable educational fiscal resources for students.
       (2)  It is the intent, purpose, and goal of the Legislature to create a system of financing the public school system which will:
       (a)  Provide state support from all sources of state funding for forty-five percent of the aggregate general fund operating expenditures of school districts;
       (b)  Reduce the reliance on the property tax for the support of the public school system;
       (c)  Broaden financial support for the public school system by dedicating a portion of the revenue received from the state income tax for support of the system;
       (d)  Keep pace with the increasing cost of operating the public school system;
       (e)  Assure each district a foundation support level for the operation of schools within each district taking into consideration the taxable wealth and other accessible resources of the district;
       (f)  Assure a greater level of equity of educational opportunities for students in all districts;
       (g)  Assure a greater level of equity in property tax rates for the support of the public school system; and
       (h)  Assure that there is a shift to sustainable revenue sources, other than the property tax, for the support of the public school system through the establishment of limits on the growth of general fund budgets of districts.
       (3)  The Legislature further finds and declares that all funds to be distributed pursuant to section 79-3813 shall be used specifically for the purpose of reducing property taxes in the district to which they are distributed.

79-3803.  Terms, defined.  For purposes of the Tax Equity and Educational Opportunities Support Act:
       (1)  Adjusted valuation shall mean the assessed valuation of taxable property of each district in the state adjusted pursuant to the adjustment factors described in section 79-3809, except that for purposes of determining the local effort rate yield pursuant to section 79-3808, adjusted valuation shall not include the value of any property which a court, by a final judgment from which no appeal is taken, has declared to be nontaxable or exempt from taxation;
       (2)  Average daily membership shall mean the average daily membership as provided in each district's annual financial report and annual statistical summary;
       (3)  Average daily membership tiers shall mean groupings of districts by the number of students comprising a district's average daily membership in a specified grade range;
       (4)  Board shall mean the school board or board of education of each district;
       (5)  Categorical federal funds shall mean federal funds limited to a specific purpose by federal law.  Such funds shall include, but not be limited to, Chapter 1 funds, Chapter 2 funds, Title VI funds, federal vocational education funds, federal school lunch funds, Indian education funds, and Head Start funds;
       (6)  Current school year shall mean the current school fiscal year;
       (7)  Department shall mean the State Department of Education;
       (8)  District shall mean any Class I, II, III, IV, V, or VI district, and, for purposes of sections 79-3801 to 79-3813, the nonresident high school tuition fund of each county;
       (9)  Ensuing school year shall mean the school year following the current school year;
       (10)  Fiscal year shall mean the state fiscal year which is the period from July 1 to the following June 30;
       (11)  Formula students shall mean the sum of average daily membership and tuitioned resident students;
       (12)  Full-day kindergarten shall mean kindergarten offered by a district for at least one thousand thirty-two instructional hours;
       (13)  General fund budget of expenditures shall mean the total budgeted expenditures for general fund purposes as certified in the budget statement adopted pursuant to the Nebraska Budget Act, except that for purposes of the limitation imposed in section 79-3814, the general fund budget of expenditures shall not include any special grant funds received by a district subject to the approval of the department;
       (14)  General fund expenditures shall mean all expenditures from the general fund;
       (15)  General fund operating expenditures shall mean the total general fund expenditures minus categorical federal funds, tuition paid, transportation fees paid to other districts, adult education, summer school, school lunch pass-through, community services, redemption of the principal portion of general fund debt service, and transfers from other funds into the general fund;
       (16)  Income tax liability shall mean the amount of the reported income tax liability for resident individuals pursuant to the Nebraska Revenue Act of 1967 less all nonrefundable credits earned and refunds made;
       (17)  Income tax receipts shall mean the amount of income tax collected pursuant to the Nebraska Revenue Act of 1967 less all nonrefundable credits earned and refunds made;
       (18)  Most recently available complete data year shall mean the most recent single school fiscal year for which the annual financial report, fall school district membership report, annual statistical summary report, Nebraska income tax liability by school district, and adjusted valuation data are available;
       (19)  State aid shall mean the amount of assistance paid to a district pursuant to sections 79-3806 to 79-3813;
       (20)  State board shall mean the State Board of Education;
       (21)  State support shall mean all funds provided to districts by the State of Nebraska for the general fund support of elementary and secondary education; and
       (22)  Tuitioned resident students shall mean resident students of the district whose tuition is paid by the district to some other district or education agency.

79-3804.  Income tax receipts; use and allocation for public school system.  (1) Beginning in fiscal year 1990-91, twenty percent of the projected state income tax receipts shall be dedicated to the use and support of the public school system to provide support for the distribution of aid to districts as determined in subsections (2) through (4) of this section and sections 79-3806 to 79-3813.
       (2)  Not later than January 1 of each year, the Tax Commissioner shall certify to the department for the second preceding tax year (a) twenty percent of the income tax liability of resident individuals for each Class I, Class II, Class III, Class IV, and Class V district in the state in which ten or more resident individual income tax returns were filed and (b) twenty percent of the income tax liability of resident individuals of all Class I, Class II, Class III, Class IV, and Class V districts in which less than ten resident individual income tax returns were filed, together with a list of such districts and funds.
       (3)  Utilizing the data certified by the Tax Commissioner pursuant to subsection (2) of this section, the department shall, on or before March 1 of each year, calculate each district's allocable income tax liability as follows: (a) Each district identified in subdivision (2)(b) of this section shall be preliminarily allocated a share of the sum total income tax liability certified pursuant to such subdivision based on its pro rata share of the total adjusted valuation of all such districts; and (b) each district identified in subdivision (2)(a) shall receive the following allocations of certified income tax liability:
       (i)  For each Class II, Class III, Class IV, and Class V district, the allocated income tax liability shall be the certified income tax liability;
       (ii)  For each Class I district which is not part of a Class VI district, 61.3793 percent of the certified income tax liability shall be allocated to such Class I district, with the remainder allocated to the nonresident high school tuition fund to which the Class I district belongs.  When the Class I district is a joint district, such remainder shall be allocated to the nonresident high school tuition fund of each county in which the Class I district has property based on each county's pro rata share of the Class I district's total adjusted valuation;
       (iii)  For each Class I district which is part of a Class VI district which offers instruction in grades seven through twelve, 44.8276 percent of the certified income tax liability shall be allocated to such Class I district, and the remainder shall be allocated to the Class VI district; and
       (iv)  For each Class I district which is part of a Class VI district which offers instruction in grades nine through twelve, 61.3793 percent of the certified income tax liability shall be allocated to such Class I district, and the remainder shall be allocated to the Class VI district.
       (4)  The remainder of the amount dedicated pursuant to subsection (1) of this section, which includes income tax receipts from all other entities and individual income tax liability which cannot be reasonably identified as payments from residents of specific districts, shall be determined by the Tax Commissioner for the second preceding calendar year.  The Legislature shall annually appropriate an amount equal to the total income tax liability allowable to districts based on the certification of the Tax Commissioner provided pursuant to subsection (2) of this section.  Based on income tax projections provided by the Nebraska Economic Forecasting Advisory Board, the Legislative Fiscal Analyst, and the Department of Revenue, the Legislature shall annually appropriate an amount approximating the remainder of such dedicated income tax receipts for the ensuing school year.  The State Treasurer shall transfer such appropriated amounts to the School District Income Tax Fund for distribution pursuant to this section and to the Tax Equity and Educational Opportunities Fund for distribution to districts pursuant to the distribution prescribed in sections 79-3806 to 79-3813.  Within fifteen working days following the adjournment sine die of the regular session of the Legislature, the State Department of Education shall notify each district of the amount of individual income tax funds it will receive pursuant to this section.

79-3805.  Tiered cost per student; general fund operating expenditures; calculations.  (1) Using data from the annual financial reports and the annual statistical summary reports for the most recently available complete data year, the department shall calculate the tiered cost per student for grades kindergarten, one through six, including full-day kindergarten, seven and eight, and nine through twelve for each district as described in subsections (2) through (8) of this section.
       (2)  Each district's general fund operating expenditures for grades kindergarten, one through six, including full-day kindergarten, seven and eight, and nine through twelve shall be computed as follows: (a) The weighted average daily membership for kindergarten shall equal the average daily membership for kindergarten multiplied by five-tenths; (b) the weighted average daily membership for grades one through six, including full-day kindergarten, shall equal the average daily membership for such grades multiplied by one; (c) the weighted average daily membership for grades seven and eight shall equal the average daily membership for such grades multiplied by one and two-tenths; (d) the weighted average daily membership for grades nine through twelve shall equal the average daily membership for such grades multiplied by one and four-tenths; and (e) the total weighted average daily membership shall equal the sum of grades kindergarten, one through six, including full-day kindergarten, seven and eight, and nine through twelve weighted average daily membership values.  Each district's general fund operating expenditures for each grade group shall be calculated by dividing that grade group's weighted average daily membership by the total weighted average daily membership in the district and multiplying the result by the district's total general fund operating expenditures.
       (3)  Each district with general fund operating expenditures in grades one through six, including full-day kindergarten, shall be placed into a' tier based on the following schedule.

The average general fund operating expenditures per student for grades one through six, including full-day kindergarten, shall be calculated for each tier by adding the total general fund operating expenditures for such grades for all districts in the tier and dividing by the total average daily membership for such grades for all districts in the tier.
       (4)  Each district with general fund operating expenditures in grades nine through twelve shall be placed in a tier based on the following schedule.

The average general fund operating expenditures per student for grades nine through twelve shall be calculated for each tier by adding the total general fund operating expenditures for such grades for all districts in the tier and dividing such sum by the total average daily membership for such grades for all districts in the tier.
       (5)  Tiered cost per student values shall be computed for grades one through six, including full-day kindergarten, for each district as follows:
       (a)  For districts with average daily memberships for grades one through six, including full-day kindergarten, which are less than the midpoint of tier I for such grades, the tiered cost per student shall equal the average general fund operating expenditures per student for tier 1;
       (b)  For districts with average daily memberships for grades one through six, including full-day kindergarten, which are greater than the midpoint of tier 7 for such grades, the tiered cost per student for such grades shall equal the average general fund operating expenditures per student for tier 7; and
       (c)  For districts with average daily memberships for grades one through six, including full-day kindergarten, which fall on or between the midpoints of any two tiers, the tiered cost per student for such grades shall be calculated by means of a linear transition between the average general fund operating expenditures per student of the two tiers between whose midpoints the districts' average daily memberships for such grades fall.
       (6)  Tiered cost per student values shall be computed for grades nine through twelve for each district as follows:
       (a)  For districts with average daily memberships for grades nine through twelve which are less than the midpoint of tier 1 for such grades, the tiered cost per student shall equal the average general fund operating expenditures per student for tier 1;
       (b)  For districts with average daily memberships for grades nine through twelve which are greater than the midpoint of tier 9 for such grades, the tiered cost per student for such grades shall equal the average general fund operating expenditures per student for tier 9; and
       (c)  For districts with average daily memberships for grades nine through twelve which fall on or between the midpoints of any two tiers, the tiered cost per student for such grades shall be calculated by means of a linear transition between the average general fund operating expenditures per student of the two tiers between whose midpoints the districts' average daily memberships for such grades fall.
       (7)  The tiered cost per student for kindergarten shall be calculated by multiplying each district's tiered cost per student for grades one through six, including full-day kindergarten, by five-tenths.
       (8)  The tiered cost per student for grades seven and eight shall be calculated as follows: For Class II, Class III, Class IV, and Class V districts, the tiered cost per student shall be the calculated mean of the district's tiered cost per student for grades one through six, including full-day kindergarten, and for grades nine through twelve; for Class I districts, the tiered cost per student shall be the district's tiered cost per student for grades one through six, including full-day kindergarten, multiplied by one and two-tenths; and for Class VI districts providing instruction in grades seven and eight as authorized by section 79-1109, the tiered cost per student shall be the district's tiered cost per student for grades nine through twelve multiplied by one and two-tenths and the result divided by one and four-tenths.
       (9)  The tiered cost per student for nonresident high school tuition funds shall be the average general fund operating expenditures per student for grades nine through twelve for all districts included in subsection (4) of this section.
       (10)  In districts where more than seventy-five percent of the students enrolled reside on Indian land, as defined under regulations of the United States Department of Education in effect on July 10, 1990, promulgated pursuant to Public Law 81-874, the tiered cost per student for each grade level, as calculated pursuant to subsections (5) through (8) of this section, shall be increased by a factor of twenty-five percent.

79-3806.  State aid; amount.  (1) Except as provided in subsections (2) and (3) of this section, each district shall receive state aid in the amount that the total formula need of each such district, as determined pursuant to sections 79-3805 and 79-3807, exceeds its total formula resources as determined pursuant to sections 79-3808 to 79-3811.  The department shall annually compute state aid entitlements and notify all districts of such state aid entitlements within fifteen working days following the adjournment sine die of the regular session of the Legislature.
       (2)  A district shall not receive state aid for each of the school years 1990-91, 1991-92, and 1992-93 which is less than one hundred percent of the amount of aid received pursuant to the School Foundation and Equalization Act for school year 1989-90.
       (3)  No district shall receive state aid in an amount which would result in such district having a general fund tax levy of less than sixty percent of the local effort rate as computed pursuant to section 79-3808.  The calculation shall be based on valuation, state aid, and levy data from the current school year.

79-3807.  Total formula need; computation.  Utilizing each district's tiered cost per student as determined in section 79-3805, total formula need for each district shall be computed as follows: Formula students in each grade grouping of kindergarten, one through six, including full-day kindergarten, seven and eight, and nine through twelve shall be multiplied by each such district's corresponding tiered cost per student in each grade grouping.  The sum of such products shall be the district's total formula need.

79-3808.  District formula resources; local effort rate; determination.  District formula resources shall include local effort rate yield which shall be determined by multiplying each district's total adjusted valuation by the local effort rate.  The local effort rate shall be determined by the department annually within fifteen working days following the adjournment sine die of the regular session of the Legislature.  The local effort rate shall be the rate which, when multiplied by the total adjusted valuation of all taxable property in districts receiving equalization aid pursuant to the Tax Equity and Educational Opportunities Support Act, will produce the amount needed to support the total formula need of such districts when added to state aid appropriated by the Legislature for the ensuing school year, income tax funds appropriated by the Legislature for allocation to districts for the ensuing school year, and other actual receipts of districts described in section 79-3811.  The local effort rate for Class I districts, Class VI districts, and county nonresident high school tuition funds shall be based on the following schedule.

79-3809.  Adjusted valuation; adjustment factors established.  On or before March 1 of each year the Department of Revenue shall compute and certify to the State Department of Education the adjusted valuation of each district for the second preceding tax year by application of an adjustment factor for each class of property in each such district so that the valuation of property for each district, for purposes of determining state aid pursuant to the Tax Equity and Educational Opportunities Support Act, shall reflect as nearly as possible actual value as required by law and the Constitution of Nebraska.  Establishment of the adjustment factors shall be based on the best available assessment practices.

79-3810.  District formula resources; income tax liability allocation.  District formula resources shall include that portion of income tax liability allocated to each such district pursuant to section 79-3804.

79-3811.  District formula resources; other receipts included.  District formula resources shall include other actual receipts as determined by the department for the most recently available complete data year, except that receipts from the Community Improvements Cash Fund and any receipts acquired pursuant to the Low-Level Radioactive Waste Disposal Act shall not be included.  Other actual receipts shall include:
       (1)  Public power district sales tax revenue;
       (2)  Fines and license fees;
       (3)  Nonresident high school tuition receipts;
       (4)  Tuition receipts from individuals, other districts, or any other, source except those derived from adult education;
       (5)  Transportation receipts;
       (6)  Interest on investments;
       (7)  Other miscellaneous local receipts, not including receipts from private foundations, individuals, associations, or charitable organizations;
       (8)  Special education receipts;
       (9)  Receipts from the state for wards of the court and wards of the state;
       (10)  All receipts from the temporary school fund;
       (11)  Receipts from the Insurance Tax Fund;
       (12)  Pro rata motor vehicle license fee receipts;
       (13)  Help Education Lead to Prosperity Act funds; (14) Other miscellaneous state receipts;
       (15)  Impact aid receipts to the extent allowed by federal law;
       (16)  Johnson O'Malley receipts;
       (17)  All other noncategorical federal receipts; and
       (18)  All receipts pursuant to Chapter 79, article 34.

79-3812.  School District Income Tax Fund; Tax Equity and Educational Opportunities Fund; created; investment.  There are hereby created the School District Income Tax Fund and the Tax Equity and Educational Opportunities Fund, each of which shall consist of such sums as the Legislature may appropriate and be administered by the state board.  The School District Income Tax Fund shall receive resident individual income tax appropriations made by the Legislature to make payments to districts of allocable income tax funds.  The Tax Equity and Educational Opportunities Fund shall receive dedicated income tax appropriations and appropriations made by the Legislature to fund sections 79-3806 to 79-3811.  Any money in such funds available for investment shall be invested by the state investment officer pursuant to sections 72-1237 to 72-1276.

79-3813.  Distribution of income tax receipts and state aid; effect on budget.  On or before July 1 of each year the department shall determine the amounts to be distributed to each district pursuant to sections 79-3804 and 79-3806 to 79-3811 and shall certify such amounts to the Director of Administrative Services.  Such amounts shall be distributed in ten as nearly as possible equal payments on the last business day of each month beginning in September of each year and ending in June of the following year pursuant to warrants drawn against the School District Income Tax Fund and the Tax Equity and Educational Opportunities Fund.  Such certified amounts shall be shown as budgeted non-property-tax receipts and deducted prior to calculating the property tax request in the district's general fund budget statement as provided to the Auditor of Public Accounts and the department pursuant to section 79-3815.

79-3814.  General fund budget of expenditures; allowable growth limitation; Legislature; duties.  Beginning with budgets adopted for school year 1990-91, no district shall increase its general fund budget of expenditures more than the applicable allowable growth percentage.  The Legislature shall annually establish an allowable growth range which shall be expressed as basic allowable growth rates plus a specified number of percentage points.  The Legislature shall set the basic allowable growth rates based on projections of available state revenue and the cost of living and cost of education from nationally accepted cost indexes which shall be provided by the Nebraska Economic Forecasting Advisory Board, the Legislative Fiscal Analyst, the Department of Revenue, and the State Department of Education.

79-3815.  Budget statement; submitted to department; Auditor of Public Accounts; duties.  Beginning with the budget adopted for school year 1990-91, each district shall submit a duplicate copy of its budget statement to the department.  The department may verify any data used to meet the requirements of the Tax Equity and Educational Opportunities Support Act.  The Auditor of Public Accounts shall make necessary changes in the budget documents for districts to effectuate the budget limitations imposed pursuant to sections 79-3814 to 79-3821.  The budget statement shall be designed to clearly segregate expenditures for special education from other general fund expenditures.

79-3816.  Basic allowable growth rate; allowable growth range.  Beginning with school year 1990-91 and each school year thereafter, the basic allowable growth rate for general fund expenditures other than expenditures for special education shall be four percent and the allowable growth range shall be from four percent to six and one-half percent.  The basic allowable growth rate for budgeted general fund expenditures for special education shall be the average of each district's growth in actual expenditures for special education for the most recently available two-year period.

79-3817.  Applicable allowable growth percentage; determination.  The department shall, within fifteen working days of the adjournment sine die of the regular session of the Legislature, determine an applicable allowable growth percentage carried out at least eight decimal places for each district as follows:
       (1)  For each district the department shall determine a target budget level by multiplying the average daily membership for the most recently available complete data year of each district in grades kindergarten, one through six, including full-day kindergarten, seven and eight, and nine through twelve by the tiered cost per student as determined in section 79-3805 for each grade grouping.  The sum of such products shall be each district's target budget level;
       (2)  The department shall establish a target budget level range of general fund operating expenditure levels for each district which shall begin at twenty percent less than the target budget level and end at the target budget level.  The beginning point of the range shall be assigned a number equal to the maximum allowable growth rate established in section 79-3816, and the end point of the range shall be assigned a number equal to the basic allowable growth rate as prescribed in section 79-3816 such that the lower end of the range shall be assigned the maximum allowable growth rate and the higher end of the range shall be assigned the basic allowable growth rate; and
       (3)  Each district's actual general fund operating expenditures shall be compared to its target budget level along the range described in subdivision (2) of this section to arrive at an applicable allowable growth rate as follows: If the district's actual general fund operating expenditures fall below the lower end of the range, the applicable allowable growth rate shall be the maximum growth rate identified in section 79-3816.  If the district's actual general fund operating expenditures are greater than the higher end of the range, the district's allowable growth rate shall be the basic growth rate identified in section 79-3816.  If the district's actual general fund operating expenditures fall between the lower end and the higher end of the range, the department shall use a linear transition calculation between the end points of the range to arrive at the applicable allowable growth rate for the district.

79-3818.  Budget; restrictions.  Beginning with the budget adopted for the 1990-91 school year, no district shall adopt a budget, which includes contingency funds, depreciation funds, and necessary cash reserves, exceeding the applicable allowable reserve percentages of total general fund budget of expenditures as specified in the following schedule.

       Within fifteen working days following adjournment sine die of the regular session of the Legislature, the department shall determine each district's applicable allowable reserve percentage.
       Each district with combined necessary cash reserves, depreciation funds, and contingency funds less than the applicable allowable reserve percentage specified in this section may, notwithstanding the district's applicable allowable growth percentage, increase its necessary cash reserves by an amount which will increase its combined cash reserves, depreciation funds, and contingency funds by two percent of its total general fund budget of expenditures, except that (1) a district shall not increase such necessary cash reserves when such increase will result in total necessary cash reserves, depreciation funds, and contingency funds which exceed the applicable allowable reserve percentage and (2) a district may increase such necessary cash reserves in excess of such two percent limitation due to projected increases in federal funds.

79-3819.  Applicable allowable growth rate; district may exceed; situations enumerated.  A district may exceed its applicable allowable growth rate by a specific dollar amount in the situations described in this section.
       (1)  A district can demonstrate to the satisfaction of the state board that a new program is required by state or federal law or an existing program mandated by state or federal law has been expanded as a result of changes in such state or federal law.  For purposes of this subdivision, a final order of a court from which no appeal is taken which requires reimbursement by a district of property taxes to a taxpayer shall be considered a new program required by state or federal law.
       (2)  The district projects an increase in formula students in the district over the current school year.  Districts may project increases in formula students on forms prescribed by the department.  The state board shall approve, deny, or modify any projected increases greater than those listed in the following schedule.

       The department shall compute the district's estimated allowable budget per pupil using the budgeted general fund expenditures found on the budget statement for the current school year multiplied by the district's applicable allowable growth rate.  The resulting allowable budget per pupil shall be multiplied by the projected formula students to arrive at the estimated budget needs for the ensuing year.  The department shall allow the district to increase its general fund budget of expenditures for the ensuing school year by the amount necessary to fund the estimated budget needs of the district as computed pursuant to this subdivision.  Within fifteen working days following adjournment sine die of the next regular session of the Legislature, the department shall make needed revisions in the applicable allowable growth rate of districts which have been allowed additional growth pursuant to this subdivision to reflect the actual formula students of such district.
       (3)  Construction, expansion, or alteration of district buildings will cause an increase in building operation and maintenance costs of at least five percent.  The department shall document the projected increase in building operation and maintenance costs and may allow a district to exceed its applicable allowable growth percentage by the amount necessary to fund such increased costs.  Within fifteen working days following adjournment sine die of the next regular session of the Legislature, the department shall compute the actual increased costs for the school year and shall, if needed, modify the district's applicable allowable growth rate for the ensuing school year.
       (4)  A district demonstrates to the satisfaction of the state board that additional special education students will enroll in the district for the ensuing school year and will result in an increase in budgeted general fund expenditures for special education.  The department shall determine the district's allowable growth rate for special education expenditures based on projected additional special education costs to the district.
       (5)  For the ensuing school year a district is bound by the terms of a long-term collective bargaining contract negotiated prior to July 10, 1990, and during a preceding school year to raise employee salaries by a percentage greater than such district's applicable allowable growth rate.  The department shall compute the amount by which the increase in employee salaries exceeds the district's applicable allowable growth rate and shall allow the district to increase its general fund budget of expenditures by such amount.

79-3820.  Applicable allowable growth percentage; district may exceed; vote required.  (1) A district may exceed by an additional one percent the applicable allowable growth percentage prescribed in section 79-3817 upon an affirmative vote of at least seventy-five percent of the board.  Such vote shall be taken at a public meeting of the board following a special public hearing called for the purpose of receiving testimony on such proposed increase.  The board shall give at least seven calendar days' notice of such public hearing and shall publish such notice at least once in a newspaper of general circulation in the district.
       (2)  A district may exceed the applicable allowable growth percentage prescribed in section 79-3817 by an amount approved by a majority of registered voters voting on the issue at a special election called for such purpose upon the recommendation of the board or upon the receipt by the county clerk or election commissioner of a petition requesting an election signed by five percent of the registered voters of the district.  The recommendation of the board or the petition of the voters shall include the amount by which the board would increase its general fund budget of expenditures for the ensuing school year over and above the applicable allowable growth rate.  The county clerk or election commissioner shall call for a special election on the issue within fifteen days of the receipt of such board recommendation or voter petition.  The election shall be held pursuant to the provisions of Chapter 32 governing special elections, and all costs shall be paid by the district.

79-3821.  Unused budget authority; carried forward.  A district may choose not to increase its general fund budget of expenditures by the full amount of its applicable allowable growth rate.  In such cases, the department shall calculate the amount of unused budget authority which shall be carried forward to future budget years so a district may increase its general fund budget of expenditures in future years by the amount of such total unused budget authority in addition to the district's applicable allowable growth rate for the specific budget year.

79-3822.  Department; provide data to Governor; Governor; duties.  The department shall annually provide data to the Governor to enable him or her to prepare the necessary legislation to:
       (1)  Appropriate an amount which will provide financial support from all state sources to districts equal to forty-five percent of the estimated general fund operating expenditures of districts for the ensuing school year;
       (2)  Appropriate an amount of income tax revenue received to insure that twenty percent of all income tax receipts are dedicated to the support of districts throughout the state; and
       (3)  Establish and implement a basic allowable growth rate and an allowable growth range for district budgets for the ensuing school year.
       The Governor shall submit such legislation, along with any modifications made by the Governor as part of his or her annual budget request, to the Legislature.

79-3823.  School Finance Review Committee; created; members; duties.  There is hereby created the School Finance Review Committee which shall be composed of representatives of the State Department of Education, the Department of Revenue, the Legislative Council, and each class of district, an expert in school finance, and a member of the general public.  Except for the representative of the Legislative Council, who shall be selected by the Executive Board of the Legislative Council, and the representative of the State Department of Education, who shall be appointed by the State Board of Education, the committee members shall be appointed by the Governor.  Committee members shall serve staggered three-year terms as the Governor shall designate, and committee members may be reappointed for one additional term.  The committee shall monitor the operation of the school finance provisions of the Tax Equity and Educational Opportunities Support Act and suggest needed revisions in the act.  In particular, the committee shall review the implementation and operation of the average daily membership tiers, budget growth limitations, the need for a continuing hold-harmless provision for state aid, and expenditures of districts pursuant to the act.  The committee shall study and make specific recommendations for harmonizing the provisions of the act with the provisions of Laws 1990, LB 259, and the provisions of Chapter 79, article 34.
       The committee shall annually make a report to the Governor, Legislature, and State Board of Education on the progress of the act in effectuating property tax relief, broadening the tax base for the support of the public school system, equalization of the tax burden for the support of the public school system, equalization of educational opportunities for students, and the effects of budget limitations on district spending patterns.

79-3824.  State assistance; payments; reports; use; requirements; early payments.  (1) State assistance payable pursuant to the Tax Equity and Educational Opportunities Support Act for each school year shall be based upon data found in applicable reports for the most recently available complete data year.  The annual financial reports shall be submitted to the Commissioner of Education by county superintendents for Class I districts on or before the first day of October of each year and shall be submitted to the commissioner by Class II, III, IV, V, and VI districts on or before the first day of November of each year.  When any Class I district's annual financial report has not been received by the commissioner by the first day of October, any state assistance granted pursuant to the act shall be based on the amount granted for the previous fiscal year and shall be reduced by ten percent of that amount, and when any such report has not been received by the first day of November, the district shall forfeit all state assistance pursuant to such act for that year.  When any Class II, III, IV, V, or VI district fails to submit its report to the commissioner by the first day of November, any state assistance granted pursuant to such act shall be based on the amount granted for the previous fiscal year and shall be reduced by ten percent of that amount, and when any such district fails to submit its report by the fifteenth day of November, it shall forfeit all state assistance pursuant to such act for that year.
       (2)  A district which receives federal funds in excess of twenty-five percent of its general fund budget of expenditures may apply for early payment of state assistance paid pursuant to the Tax Equity and Educational Opportunities Support Act when such federal funds are not received in a timely manner.  Such application may be made at any time by a district suffering such financial hardship and may be for any amount up to fifty percent of the remaining amount to which the district is entitled during the current fiscal year.  The state board may grant the entire amount applied for or any portion of such amount if, after a hearing, the state board finds that a financial hardship exists in the district.  The state board shall notify the Director of Administrative Services of the amount of funds to be paid in lump sum and the reduced amount of the monthly payments.  The Director of Administrative Services shall, within five days after such notification, draw a warrant for the lump-sum amount from appropriated funds and forward such warrant to the district.  For purposes of this subsection, financial hardship shall mean a situation in which income to a district is exceeded by liabilities to such a degree that if early payment is not received it will be necessary for the district to discontinue vital services or functions.