Technical and Substantive Revisions to LB 806

 

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F.  Comprehensive Modifications to TEEOSA (1997) 
  1. Introduction
  2. LB 806
  3. Technical and Substantive Revisions to LB 806 
  4. Other Legislation Amending TEEOSA in 1997
  5. Review

 


Technical and Substantive Revisions to LB 806

LB 710 (1997) was originally introduced as a technical cleanup bill on behalf of the Department of Education.  It would eventually serve a vital role in the 1997 Session as the vehicle for last minute changes to LB 806 (1997).  The legislation had been referred to the Education Committee, advanced from committee, and had sailed through the legislative process.  By April 9th (the 54th day of the session) the bill had advanced to the third and final round of consideration.1  It was at this time that Speaker Withem, in collaboration with Senator Bohlke, requested to have the bill bracketed until June 1, 1997.2 The bracket motion, which was successfully passed, would literally shelve the bill for a later time.  It was believed, if LB 806 passed, such a vehicle might be necessary to correct or clarify various provisions of the comprehensive school finance bill.

As introduced, LB 710 contained purely technical-oriented provisions.  For instance, one section deleted obsolete language concerning county nonresident high school tuition funds.3  These funds ceased to exist on July 1, 1993 after the Class I affiliation legislation became operative.  Another example involved the calculation of each district's applicable allowable growth percentage (spending limit) and the number of digits this percentage was carried out beyond the decimal point.  Prior to 1997 this percentage was carried out eight digits beyond the decimal point in order to capture the most accurate growth rate for each district.  Under LB 710 the percentage would be carried out four digits beyond the decimal point, which according NDE would produce just as much accuracy and would be less cumbersome for agency personnel to manage.4

Table 80.  Original Provisions of LB 710 (1997)
Section 1 The definitions of base fiscal year and general fund operating expenditures is amended.  The base fiscal year will be the second year following a reorganization instead of the first year in which all data sources reflect the reorganized district.  The subtractions to arrive at general fund operating expenditures are expanded to include all categorical funds, not just federal categorical funds.  School lunch pass through is removed from that list.  School lunch funds would be categorical.  [amends §79-1003]
Section 2 Clarify provisions describing valuation for the purpose of dividing allocated income tax funds.  [amends §79-1005]
Section 3 Language regarding county nonresident high school tuition funds is deleted.  [amends §79-1015]
Section 4 Clarify provisions concerning other actual receipts in formula resources by specifying that the receipts must be available for the finding of general fund operating expenditures.  State receipts that are included are also clarified as being non-categorical.  Language regarding the textbook loan program is deleted.  The language is not necessary with the clarification for state receipts.  [amends §79-1018]
Section 5 A requirement is added for the Auditor to consult with the Department of Education before changing budget documents for districts to effectuate budget limitations.  Another provision is added to require state aid withheld from districts for noncompliance will revert to the General Fund prior to the and of the biennium following the biennium for which the aid was calculated.  [amends §79-1024]
Section 6 The required decimal places for allowable growth percentage calculations is reduced from 8 to 4.  [amends §79-1026]
Section 7 The requirements for the Department to provide information to the Governor for the preparation of legislation is modified to reflect that state aid may be returned to the General Fund from an earlier appropriation for reasons other than the repayment of funds by districts.  [amends §79-1031]
Section 8 The annual statistical summary is added to the reports school districts are required to submit.  Provisions are also added stating that if a school district does not submit the required reports prior to the end of the state's biennium following the biennium which included the year aid for which aid was calculated, the funds will revert to the General Fund and the amount of those funds will be provided to the Governor.
  The provisions allowing districts that receive more than 25% of their general fund budget from federal funds to apply for early payment of sate aid are expanded.  The expansion allows the 25% requirement to apply to the most recently available complete data year or in either of the two fiscal years preceding the most recently available complete data year.  [amends §79-1033]
Section 9 The deadline for the Commissioner of Education to apportion funds in the school fund is modified from 20 days following delivery from the State Treasurer to February 25th.  The State Treasurer's deadline is the third Monday in January.  [amends §79-1035]
Section 10 A provision is added allowing adjustments to be made in future years when the recalculation of state aid requires an adjustment that is more than the aid to be paid.  [amends §79-1065]
Section 11 The personal property tax reimbursement fund is added to the funds that school districts may borrow against.  [amends §79-1070]
Section 12 The changes will allow Class III districts to publish only the fund summary pages of the budget instead of the entire budget.  [amends §79-1084]
Section 13 Provisions are added to the school district audit requirements stating that if a school district does not comply prior to the end of the state's biennium following the biennium which included the year aid for which aid was calculated, the funds will revert to the General Fund and the amount of those funds will be provided to the Governor.  [amends §79-1089]
Section 14 The deadline for an itemized estimate of the amounts necessary for the abatement of environmental hazard or accessibility barrier elimination is changed from September 10 to the date provided in §13-508.  Section 13-508 provides a deadline of September 20 for budget statements.  [amends §79-10,110]
Source:  Committee on Education, Committee Statement, LB 710 (1997),
Nebraska Legislature, 95th Leg., 1st Sess., 1997, 1-2.

Document Archive
LB 710: Technical and substantive changes to LB 806 (1997)
 
Bill Summary Statement of Intent
Chronology Hearing Transcripts
Com. Statement Exec. Session Votes
Slip Law  
 
Fiscal Note:   Feb. 10, 1997
  Jun. 11, 1997
 
Floor Transcripts:    
General File   Feb. 20, 1997
Select File   Apr. 9, 1997
Final Reading   Jun. 3, 1997
  Jun. 12, 1997

LB 710 (1997) was destined to be just another technical cleanup bill had it not been for the passage of LB 806, the comprehensive school finance bill.  LB 710 would effectively lose its technical status on June 3rd when the Speaker placed the bill back on the agenda.  The legislation appeared on the Final Reading agenda, but there were no less than six pending motions to return the bill for specific amendment.  Two of the motions to return would be withdrawn, but the other four motions would be passed.

In order to amend a bill currently on Final Reading, the sponsor of an amendment must first convince his/her colleagues to return the bill to Select File in order to debate the merits of the amendment.5 In essence, this means promoting the merits of the amendment in order to be in position to debate the merits of the amendment.  If the motion to return to Select File is passed by a majority of the body, the bill falls back to the second stage of debate, procedurally, and the amendment attached to the motion is then debated.  Whether or not the amendment is adopted, the body must then take action to re-advance the bill to Final Reading (usually by voice vote).  For the chief sponsor of the legislation, the act of returning a bill to Select File can at times be risky since the body is under no obligation to actually re-advance the bill to Final Reading.  The more controversial the amendment, the more risk involved in returning the bill to Select File.

The first successful motion to return for specific amendment came from Senator Bohlke.  The amendment she proposed would change various sections of LB 806 (1997) and also add a new weighting factor within the formula.

Concerning the poverty factor, the Bohlke amendment redefined "low-income child" as a child under the age of 19 years of age living in a household having an annual adjusted gross income of $15,000 or less for the second calendar year preceding the beginning of the school fiscal year in which state aid was being calculated.6  In essence, this would mean using data two years in arrears to calculate the poverty factor for each local system.  In addition, the amendment clarified that the department must calculate a ratio of the formula students to the total children under 19 years of age residing in the local system and apply the ratio to the low-income children within the local system, in order to determine the number of low-income students within such local system.7

The amendment specified that the data to be used in the poverty factor would be derived from the income tax information generated by the Department of Revenue.8  This had always been the underlying intent, but it was not expressly provided in LB 806.  Finally, relative to the poverty factor, the Bohlke amendment clarified that the poverty ratios must be applied to "qualified" students rather than merely students who qualify for free lunches or free milk, as had been originally proposed.9 If a student qualified under the definition of low-income, then the student must be counted for purposes of the poverty factor.

Concerning the Small School Adjustment, the Bohlke amendment stated that any funds not distributed through the adjustment must be funneled back through the equalization formula.10 The Small School Adjustment was created under LB 806 as part of the compromise package adopted on Select File debate.  The funding mechanism for the Small School Adjustment would derive from the lop-off calculation, and local systems would have to meet certain requirements before being eligible for funds from the adjustment.  The Bohlke amendment accounted for the potential that more funds would be generated through the lop-off calculation than might be necessary to meet the demand for funds under the Small School Adjustment in some fiscal years.  In other years, the demand for funds under the Small School Adjustment may require a distribution of funds on a proportionate basis if demand exceeds availability of funds.

One of the more controversial components of the Bohlke amendment concerned the addition of a new weighting factor (the "Extreme Remoteness" factor).11 Since the new factor would be listed in statute among the other major weighting factors (i.e., poverty, LEP, and Indian land), it might be falsely assumed that it had the potential to redistribute funds among all local systems.  This was not meant to be the case.  The extreme remoteness factor emerged after it was discovered that some local systems within the very sparse cost grouping would still be disproportionately impacted under the school finance formula, even with the additional state aid awarded to very sparse local systems.  Some of these local systems, explained Senator Bohlke, have much higher expenditures due to their extreme remoteness in relation to other school systems.  Senator Bohlke identified school districts in Arthur County and Sioux County as examples of local systems that would benefit from the new weighting factor.

The new weighting factor would simply redirect some of the state aid allocated under the very sparse cost grouping to those districts qualifying for the factor.  It would essentially draw funds away from some systems within the very sparse cost grouping in order to give to other systems within the very sparse cost grouping.  Bohlke explained:

This would just be money in the very sparse school districts that actually would allow some movement of some money in that very sparse category to address some of the real uniqueness of those schools that are so extremely remote that when we put them in the very sparse category their costs had to come down, because they were ... higher than the other very sparse schools, because of their extreme remoteness.12

Senator Bohlke believed some schools were so remotely situated that the formula had to somehow reflect that geographic factor.

Perhaps the most far-reaching provision of the Bohlke amendment to LB 710 was a seemingly innocuous re-wording of a section of LB 806 added during second-round debate.  At issue was the section of LB 806 that created intent language for the Legislature to ensure "sufficient appropriations" for the operation of the state aid formula.13  The intent language required the Appropriations Committee to annually recommend an appropriation level to result in a local effort rate for the state aid formula that is less than the statutory maximum school tax levy after total statewide formula need is inflated by the Consumer Price Index (CPI) for the most recent two years.14

The Bohlke amendment to LB 710 proposed to slightly alter the wording of the intent language as follows:

It is the intent of the Legislature to ensure sufficient appropriations to the School District Income Tax Fund and to the Tax Equity and Educational Opportunities Fund to result in a statewide tax levy for each year's state aid calculation that would be less than the maximum tax levy specified in section 77-3442.  To carry out the intent of this provision, the Legislative Fiscal Analyst shall calculate an amount which most accurately accounts for the growth in school district budgets.  The Appropriations Committee of the Legislature shall annually include such amounts in its recommendations to the Legislature to carry out the requirements of this section.15

The purpose of the proposed change was to encourage the Legislature to account, as close as possible, the actual growth in school districts budgets statewide.  However, the use of the phrase, "statewide tax levy," had some analysts wondering what the state was committing itself.  "[T]the reference to 'statewide tax levy' is unclear as is the requirement to accurately account for the growth in school district budgets, so the fiscal impact of this section is unknown," wrote fiscal analyst Sandy Sostad.16

During debate of the amendment on June 3, 1997, Senator Bob Wickersham defended the proposed change.  "We must do that, we will have no choice," he said, referring to the limitation on property tax revenue for schools.  Wickersham added:

I think, quite frankly, that the expression that you see in the amendment before you does not go far enough because it says that we will have a statewide tax levy, in other words a yield rate that is only ... it just says it's going to be less than the maximum levy.  There's a problem with that.  The statewide levy is calculated on adjusted valuations.  The actual levies are calculated on assessed valuations.  The adjusted valuations are typically higher.17

Senator Wickersham said he would prefer the Legislature set the appropriation at a level that would guarantee a statewide tax levy or a yield rate 10¢ less than the maximum levy in order to account for the difference in valuation and the effect that it would have on schools.  The language contained in the Bohlke amendment, however, was at least a step in the right direction as far as Senator Wickersham was concerned.

After a relatively short debate, the Bohlke amendment to LB 710 was adopted by a 26-6 vote after a successful motion to return the bill to Select File for specific amendment.18  The Legislature took action to pass LB 710 on June 12, 1997 by a 37-7 vote.19  Governor Nelson signed the bill into law on June 16th.20

Table 81.  Summary of Modifications to TEEOSA
as per LB 710 (1997)

Click to view file

Source:  Legislative Bill 710, in Laws of Nebraska, Ninety-Fifth Legislature, First Session, 1997, Session Laws, comp. Patrick J. O'Donnell, Clerk of the Legislature (Lincoln, Nebr.: by authority of Scott Moore, Secretary of State), §§ 5-18, pp. 6-16 (1302-12).



1 Neb. Legis. Journal, 9 April 1997, 1441.
2 Id., 1451.
3 Legislative Bill 710, Change provisions relating to school finance, sponsored by Sen. Ardyce Bohlke, Nebraska Legislature, 95th Leg., 1st Sess., 1997, 22 January 1997, § 3, pp. 9-12.
4 Id., § 6, p. 15.
5 Rules of the Neb. Leg., Rule 6, § 6.
6 Neb. Legis. Journal, Bohlke AM2635, printed separate, 3 June 1997, 2557; Amendment to LB 710 (1997), Bohlke 2653, § 7, p. 18.
7 Amendment to LB 710 (1997), Bohlke 2653, § 8, p. 21.
8 Id., pp. 21-22.
9 Id., pp. 22-23.
10 Id., § 10, p. 29.
11 Id., § 8, p. 23.
12 Legislative Records Historian, Floor Transcripts, LB 710 (1997), prepared by the Legislative Transcribers' Office, Nebraska Legislature, 95th Leg., 1st Sess., 1997, 3 June 1997, 9285-86.
13 LB 806, Session Laws, 1997, § 54, p. 34 (1560).
14 Id.
15 Amendment to LB 710 (1997), Bohlke 2653, § 15, p. 33.
16 Nebraska Legislative Fiscal Office, Fiscal Impact Statement, LB 710 (1997), prepared by Sandy Sostad, Nebraska Legislature, 95th Leg., 1st Sess., 1997, 11 June 1997, 1.
17Floor Transcripts, LB 710 (1997), 3 June 1997, 9287.
18 Neb. Legis. Journal, 3 June 1997, 2557.
19 Id., 12 June 1997, 2745.
20 Id., 18 June 1997, 2759.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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