Creation of a Commission

In 1988, Senator Withem introduced two important pieces of legislation.  Both bills were intended to carry forth the general objectives of the LR 180 study group, at least as Senator Withem believed them to be.  The more eye-catching of the two bills, LB 940, was a comprehensive reorganization bill.  As introduced, LB 940 required that all real property and all elementary and secondary students must be a part of school districts offering instruction in kindergarten through grade twelve.¹  All Class I districts were to be affiliated with a district offering high school instruction, either a Class VI district or a K-12 district.  This was to be accomplished by July 1, 1994.²  The bill proposed extensive changes to the procedures for approving reorganization agreements and permitted the county reorganization committees to give final approval, effectively bypassing the need for final approval by the state reorganization committee.³  It also changed provisions under the Industrial Relations Act to create a single bargaining unit for all teaching staff within an affiliated system.⁴

The original version of LB 940 proposed to change existing law with regard to the creation of new Class VI (high school only) districts.  Under the bill, a new Class VI district could be formed if the boundaries are not closer than ten miles of the boundaries of a city with a population of 3,500 (unless the city is within a school district that will be part of the Class VI) and if there will be an enrollment of at least 125 pupils in the new district.⁵ The purpose of placing restrictions on the creation of Class VI districts was two-fold.  First, the general idea behind reorganization was fewer districts, not more.  Second, some were concerned that residents of Class I districts might choose to form new Class VI districts rather than merge with a K-12 district.  LB 940 would permit the creation of such Class VI districts but only under certain circumstances.

Lastly, LB 940 proposed to require all school districts to be accredited, rather than merely approved, under the rules and regulations of the Department of Education.⁶ This was to be accomplished before the 1993-94 school year.  The vast majority of all Class I districts were approved but not accredited under existing rules, which meant that such districts met minimum standards of compliance but not what the State Board of Education considered ideal standards.  By requiring all districts to be accredited, Senator Withem believed, students would have the maximum educational opportunities and services availed to them.

The second major legislative measure in 1988 was much shorter in terms of length, but no less important in terms of the goals produced by the LR 180 ad hoc committee.  LB 916, also introduced by Senator Withem, would accomplish two objectives.  First, it would create the School Financing Review Commission to perform an in-depth study on school finance and produce recommendations for change.⁷  The second objective of LB 916 amounted to payback time, literally.  The bill required a sizable $13.8 million appropriation in order to return total state aid to the level it had been six years earlier.⁸ The Legislature had incrementally reduced the amount of aid due to budgetary considerations since 1982.

Among the major objectives between the two bills, LB 916 and LB 940, it was the creation of the commission that would win the easy support, perhaps in part because it was the cheapest both in terms of cost and political anguish.  As originally proposed, the commission would consist of twelve members:

• The chairperson of the Legislature's Education Committee;
• the chairperson of the Legislature's Appropriations Committee;
• the Commissioner of Education or his or her designee;
• a representative of the Governor;
• a member residing in a Class I school district;
• a member residing in Class II school district;
• a member residing in a Class III school district;
• a member residing in a Class IV school district;
• a member residing in a Class V school district;
• a member residing in a Class VI school district; and
• two members from the state at large.⁹

Conspicuous among the chosen membership was the inclusion of the Governor's representative, signaling the hope for support from the administration.  Also noteworthy was the exclusion of the chairperson of the Revenue Committee.

The commission would have a statutory deadline of June 30, 1989 to finish its work.  This meant the commission would have slightly over one year to tackle one of the more monumental goals ever assigned to such an ad hoc committee, before or since.  The principle objective of the commission was to "conduct an in-depth review of the financing of the public elementary and secondary schools."¹⁰  Specifically, the commission would:

1. Examine the option of using income as a component in the financing of schools;
2. Examine financing methods used in other states which offer alternatives to the current heavy reliance on property tax;
3. Examine financing issues as they relate to the quality and performance of the schools; and
4. Prepare a report with recommendations and a plan to implement the recommendations and shall be presented to the Legislature by March 1, 1989.¹¹

The commission was given the authority to hire staff, including consultants, to obtain assistance from the Department of Education and the Department of Revenue in acquiring data needed to carry out its duties, and to contract for any necessary facilities, equipment, and services, including computer services.¹²  The bill appropriated $100,000 to the commission to carry out its function.¹³ While not a tremendous sum, this appropriation would certainly permit the hiring of a consultant, and ultimately it did.

Public Hearing

The Education Committee met in the afternoon of January 26, 1988, in the East Chamber at the State Capitol, to hold a joint public hearing on LB 916 and LB 940.  The East Chamber is often used for public settings and meetings, but seldom used for purposes of a public hearing on legislation.  It was anticipated, however, that the normal hearing rooms in the lower floor of the Capitol would be unable to hold the number of observers and testifiers likely to attend.

Senator Ron Withem, chairman of the committee, both presided at the meeting and delivered the introductory remarks concerning the history of the issue to be addressed.  Withem used a cartoon on an overhead to illustrate the need to move forward on the controversial issue of consolidation and to break the palpable tension in the chamber that day.  Not since three years earlier, in 1985, had there existed the political alignment necessary to make a consolidation bill even remotely possible.  And even with this political alignment, due ostensibly to the work of the LR 180 study group, the prospects of a consolidation bill appeared tentative at best.  Withem alluded to the uphill battle ahead, but said he thought the legislation represented a "workable solution to the problem."¹⁴

Withem first addressed LB 916 to create a commission on school finance.  He said the LR 180 study group attempted to examine the issue but found that the issues were far too complex to address without the assistance of experts in that area.  Said Withem:

[W]e're saying that a thorough independent look at our state aid distribution and school financing in the state needs to be done through a study.  We are suggesting that a commission be appointed by the governor for the purpose of thorough examination of school finance, funds be made available for the type of expertise that we may need to carry this forth and that they be charged with the responsibility of reporting back to us.¹⁵

He publicly offered the suggestion of the LR 180 group that the commission seriously examine the state income tax and using "income as a factor" in the distribution of state aid.¹⁶ Withem also discussed the other major component of LB 916 to restore state aid funds to the 1982-83 level of appropriation.

Having addressed what he regarded as the less controversial of the measures, Withem then turned his attention to the legislation that most were anxious to discuss, LB 940.  He labeled the bill the "reorganization slash accreditation proposal," referring to two of the major components of the measure.¹⁷  Withem mentioned the failure of LB 662 (1985) but suggested LB 940 was more of a compromise on the issue of affiliation.  To illustrate how long the issue of school organization had existed in Nebraska, he paraphrased a quotation from William K. Fowler, elected Commissioner of Education in 1900, who emphasized the need for Nebraska to seriously address the reorganization of schools.¹⁸  In 1900 there were 6,708 public school districts, only 448 of which were K-12 districts.¹⁹

The issue of reorganization, Withem said, was such an old and divisive issue in Nebraska that it impeded if not prevented discussion on other educational issues.  Said Withem:

It's been my experience both as an observer of the history of the public policy of education in this state and as a participant in it that this issue permeates all other issues that we discuss.  We really don't get to the key issues in Nebraska.  Key issues that we don't address are quality of teachers, and quality of teacher preparation.  Do we have enough teachers coming in?  Are we paying teachers enough?  We really don't discuss those issues?  What is quality education?  What do we need the schools to be presenting?  Are they doing a good job or are they not doing a good job?  We really don't discuss that.  How should we fund our schools?  Is the property tax a fair method or should we look at other methods?  We really don't discuss those types of issues because everyone of them when we begin to discuss them get dissected based on which side of the reorganization issue you fall upon.²⁰

Withem encouraged all present at the hearing to look at the future of education in Nebraska and "rise above the politics in this particular case."²¹ But as happens at most hearings, individuals set to testify are predisposed to their opinions or the opinions of the organizations they represent.  This hearing was no exception.  Nevertheless, some interesting discussion points were raised that day.

Not the least of these points concerned the constitutionality of requiring all real property to be a part of school districts offering instruction in kindergarten through grade twelve as outlined in the bill.  In essence, a given Class I district would be subjected to taxation by a governing body of another school district, a governing body other than its own.  This brought about talk that LB 940 would violate the often-used maxim "no taxation without representation."²²  Asked by a fellow committee member to address the issue, Withem responded, "We've got a court case that has indicated that that concept taxation without representation may be a nice maxim of government, but there really isn't that constitutionally protected right that we all think we do have."²³ In addition, he said, Class I districts do have the option to merge with a K-12 system.  Although to most Class I supporters, this was not an option at all.

Several opponents of the bill, including the Nebraska School Improvement Association (NSIA), provided testimony on the issue of constitutionality.  Three of the thirteen opponents at the hearing were representatives from the NSIA, including its field service director and two attorneys.  One of the attorneys, John Recknor, said LB 940 would fail on constitutional grounds due, in part, to a "disparity in franchise" (relating to voter rights).²⁴  "[T]he Supreme Court of this country has said time and time again, if you're part of a common enterprise, you cannot be artificially divided into classes with some parts of the class having a vote and some parts of the class not having a vote," Recknor said.²⁵

Sieg Brauer, the other attorney representing the NSIA, admitted his organization's concurrence with the objectives outlined by the LR 180 study group "in the sense that we agree with the desire to get all the land in Nebraska into a taxing district for high school purposes."²⁶  At the same time, Brauer said, his organization adhered to its own objective to maintain autonomy of Class I school districts even under a system of affiliation, as proposed by LB 940.  Brauer agreed with Recknor's analysis of the bill's unconstitutionality, saying, "The [U.S.] Supreme Court has left no doubt, no room for interpretation that when a political subdivision involves the school district, all resident electors must have equal voice in the government and representation in that school district."²⁷  In addition, Brauer noted, the bill would violate the contract clauses of both the U.S. and state constitutions by imposing one taxpayer's indebtedness on another.²⁸

Rick Baum, NSIA Field Service Director, also testified in opposition to LB 940.  While he recognized the "helpful" discussions of the LR 180 study group, Baum said the legislation failed to address the concerns of rural Nebraska and that the bill was "skewed" more towards K-12 schools than Class I districts.²⁹  Baum said the bill "severely cheats Class I patrons of their constitutional rights" and "unconscionably disenfranchises" the voters of Class I districts.³⁰  "We also feel that LB 940 in its language ruthlessly would steal from Class I taxpayers by placing them in the position to pay for preexisting bond issues which they had not vote," said Baum.³¹  Nevertheless, Baum said, the NSIA was committed to a workable solution.  "We'd like to see affiliation work if it can, but there has been some of those political factors that have prevented that," he said.³²

While NSIA may have spoken on behalf of Class I districts, it certainly did not speak on behalf of rural Nebraska generally.  Bryce Neidig of the Nebraska Farm Bureau, Steve Houtwed of the Nebraska Farmers Union, Eugene Krabel of the Nebraska Livestock Feeders Association, and Duane Stehlik of the Nebraska Rural Community Schools Association all offered general support for LB 940 and the concepts it promoted.  Said Neidig:

We believe the time has come for Nebraskans to set aside their parochial ideals and work together on educational issues.  LB 940, while not perfect, is a basically fair, realistic and equitable approach to school reorganization.  It does not ruin the future existence of Class I school districts.³³

Most of these proponents did offer suggestions to improve the bill.  Neidig, for instance, said his organization could not abide the requirement to make all school districts accredited rather than merely approved.  He said the accreditation provision fails to specify the standards that would be expected of schools for compliance.³⁴

In general, the proponents of LB 940 mentioned their strong support of LB 916, the commission bill, and tended to reinforce the goals of the LR 180 study group.  Interestingly, three of the major education groups each took different positions on the affiliation bill.  The Nebraska Council of School Administrators (NCSA) strongly supported both bills, while the Nebraska Association of School Boards (NASB) opposed LB 940 but supported LB 916.  The Nebraska State Education Association (NSEA) testified in a neutral position on LB 940 and supported LB 916.³⁵

The number of proponents and opponents of LB 940 was relatively even and there was no major concern expressed about LB 916 throughout the hearing.  It was clear, however, that the politics of consolidation had not dissipated.  The NSIA was still the lead critic of consolidation efforts just as it was in 1985 concerning LB 662.

Floor Debate

Whatever beneficial impact the LR 180 study may have had to bring the parties together and to generally agree upon certain goals, the outcome of the hearing on LB 940 and LB 916 left the Education Committee in a difficult situation.  It was clear that the original version of LB 940, if advanced from committee, would cause yet another major controversy during floor debate.  The committee chose instead to drastically water-down the bill in the hope of at least securing a general direction from the Legislature on the issue of reorganization.  The goals of the LR 180 study group would simply have to be accomplished piecemeal rather than in one whole bite.

During executive session on February 1, 1988, the Education Committee voted 5-1 to advance LB 940 with committee amendments attached.³⁶  The amendments would strike the requirement that all Class I districts affiliate or merge with a K-12 district, or join a Class VI district by 1994.  In its place would be intent language "to encourage an orderly and appropriate reorganization of school districts."³⁷  The amendments would also establish four goals toward the reorganization of school districts:

(1) ... [A]ll real property and all elementary and secondary students should be within school systems which offer education in grades kindergarten through twelve.  For purposes of meeting this goal, class I and Class VI school district combinations shall be considered as including all real property and all elementary and secondary students within a school district which offers education in kindergarten through grade twelve;
(2) School districts offering education in kindergarten through grade twelve should be encouraged, when possible, to consider cooperative programs in order to enhance educational opportunities to students;
(3) County reorganization committees should make a renewed effort to consider and plan for reorganization of schools at the local level; and
(4) The State Department of Education it conjunction with the University of Nebraska should be encouraged to offer greater technical assistance to school districts which are considering reorganization options.³⁸

The idea behind the stated goals was to at least establish the direction the Legislature shouldpursue in subsequent legislative sessions.

The amendments also modified the proposed requirements to establish new Class VI districts, and eliminated the LR 180 goal to require all districts to be accredited rather than merely approved.³⁹  Instead, the legislation would state a legislative goal that, by 1993-94, all public schools "should" be accredited.⁴⁰  The Department of Education would be required to review and revise existing accreditation rules to assure flexibility for districts in order to meet the standards through alternative service delivery mechanisms.  Finally, the committee amendments imposed a two-year sunset provision on the non-resident high school tuition statutes.⁴¹ At the time, Class I districts paid tuition to a high school district when a student moved on to the high school level.  By placing a sunset on these statutes, it effectively forced a resolution to the affiliation issue before the sunset date.  This became the only real "hammer" within the bill on the issue of school reorganization.

Overall, the advanced version of LB 940 had much less punch than that originally introduced.  Several weeks after it was advanced from committee, Senator Arlene Nelson of Grand Island said of the bill, "LB 940 is a nice little bill and says nice little things, but it doesn't have a lot of teeth left."⁴² With or without teeth, the committee amendments actually represented a proffered compromise, a compromise that would win its first battle even before LB 940 was debated on the floor.

The battle occurred on February 22, 1988.  The Legislature was taking up carry-over bills from the 1987 Session, including LB 726 introduced by Senator Vard Johnson of Omaha.  Johnson, a member of the Education Committee, had introduced LB 726 the year before with the express intent to force all Class I districts to merge by 1990.⁴³  The bill was advanced by the Education Committee and carried over to the 1988 Session.  But while Johnson remained intent on merging Class I districts, the majority of the Legislature had a different disposition on the issue.  Senator Withem's LB 940 appeared to most as a fair compromise to Johnson's more draconian LB 726.  Even if Withem may have personally approved of Johnson's idea, he also knew LB 726 would simply lead to the same level of controversy as LB 662 in 1985.  Withem, therefore, was among those voting to indefinitely postpone (kill) LB 726 on February 22nd during floor action.⁴⁴

The result of the successful kill motion to LB 726 left LB 940 as the only viable option for addressing the issue of consolidation in 1988.  The only other bill even remotely related to consolidation was Senator Howard Lamb's LB 1225, which provided for a system of affiliation of Class I districts and gave automatic accreditation to elementary-only districts that affiliate with a high school district.⁴⁵ Lamb's LB 1225 was indefinitely postponed by the Education Committee shortly after its public hearing, much to the anger of the NSIA and Class I supporters generally.

As the first stage of debate on LB 940 was set to begin, the NSIA was already speaking critically of the proposed version of the bill, principally due to the sunset provision on non-resident high school tuition laws.  Rick Baum of the NSIA said the latest version of the bill was "even more horrifying" than the original version of the bill.⁴⁶  Withem fired back at the association saying he had "bent over backwards" to amend the bill and make it acceptable to the NSIA.⁴⁷  "If lobbying organizations carried the same responsibility to their clients as lawyers do to their clients, the NSIA would be sued for malpractice," Withem said, adding that the NSIA had failed to represent the majority of Class I residents.⁴⁸ And it was under this cloud of controversy that debate began on LB 940 on March 2, 1988.

In his opening remarks on the bill during first-round floor debate, Withem called the committee version of LB 940 a "road to accommodation," referring to the elimination of several major components of the original bill.⁴⁹  Withem proceeded to outline the amendments while saving the real bite of the bill for last.  He said the sunset provision concerning the non-resident tuition laws puts "a gun to all of our heads" to force a resolution on the issues surrounding Class I districts, in essence, the issue of school reorganization.⁵⁰  Said Withem:

I believe what you have here with the Education Committee amendments is a statement by a group of people that say, number one, they endorse all of the hard work that the citizens of the state put into LR 180 this summer, all of the countless meetings, and discussions, and compromise, and give and take.  They recognize that such a controversial issue as school district reorganization probably is not going to get solved in an amicable, conciliatory fashion in one year.  What we want to do is solidify those gains into the statute that were made through the 180 process and put in place those sort of things that will assure that this process will continue on, that we don't just pass 940 and forget about the issue.⁵¹

Following his opening remarks, the first item of business was an amendment to the committee amendments, which had been filed by Withem a few days earlier.

The Withem amendment effectively merged the contents of LB 916, the commission bill, into LB 940.  The amendment offered the same provisions and duties for the commission, except that the membership had increased to thirteen by adding a second representative from a Class III district.⁵² The idea was that the majority of K-12 districts were Class III districts and that these schools should have a weighted representation on the commission.

Withem noted that the amendment was actually introduced as a separate bill, which was unopposed at the hearing and was advanced to General File by a unanimous vote of the Education Committee.⁵³  He described the amendment to his colleagues as a reflection of the "work of the finance portion of our work on the LR 180 task force."⁵⁴  He added:

First of all, the task force said that in order to achieve meaningful school district reorganization, to solve the problem, you can't view it in a vacuum, that the underlying pressures behind reorganization are financial and you have got to address the financial components.  So we did. ... We had, the folks from Kansas come up and visited us and talked about their program, the one I think is a good method of distributing state aid.  We found as a committee, though, that we did not feel that we had adequate knowledge about the Kansas plan or other alternatives so we chose not to adopt that.⁵⁵

The proper solution, Withem said, was the creation of a separate commission on the issue of school finance with the appropriate funding and staff resources to accomplish a thorough study.

The second major goal of the Withem amendment also was a goal of LB 916 as originally introduced.  This goal concerned the reinstatement of state aid funds to bring the total state aid appropriation back to the level appropriated for the 1982-83 school year.  Over the years, the Legislature had incrementally whittled away state aid funds in order to address other state budget issues.  Withem said it was time to restore these funds and acknowledged that the Appropriations Committee had included that same recommendation in the 1988 budget revision bill.

The only senator to rise and speak on Withem's amendment was Senator Chris Abboud of Omaha.  Abboud criticized the $100,000 expenditure for a commission, which, he thought, would produce nothing more than a recommendation for the Legislature to invest heavily in public education.  Abboud expressed doubt that the commission would provide a "pivotal decision-making point" to the Legislature.⁵⁶  He added:

We seem to put off the question in dealing with commissions or dealing with particularly tough issues by forming a commission, having the commission make a recommendation to the Legislature, and then after they make that recommendation to the Legislature, for the most part we reject it or vote for it, but it rarely provides a pivotal decision-making point to the members of this body.  I guess I would like to not see us waste the money on the commission because the recommendation, I believe, is already well-established prior to the meeting, and I don't believe that the Legislature will probably follow their recommendation.⁵⁷

Withem did not disagree with Abboud's comment about the commission's likely recommendation for additional dollars for education.  At the same time, however, Withem attempted to remind Abboud, and the body as a whole, that the overall objective of the commission would be to study "how we distribute those dollars, how we finance education in the overall."⁵⁸

Following the brief exchange between Senators Abboud and Withem, the body voted to adopt the Withem amendment on a 16-2 vote.⁵⁹  After further debate, the Legislature voted to advance LB 940 by a 28-6 vote.⁶⁰ But Withem would need to guide the legislation through a somewhat contentious second-stage debate in order to achieve final passage.

On Select File debate, on March 30, 1988, Senator Withem proposed an additional amendment concerning the membership of the commission.  The amendment stated that three members of the Legislature would be appointed to the commission, rather than naming specific members by position.  The amendment also added two members from higher education with expertise in the area of school finance.⁶¹ With the adoption of the amendment, the commission would consist of sixteen members most of whom would be appointed by the Governor.

On April 7, 1988 the Legislature voted 35-12 to pass LB 940.⁶²  Interestingly, Senator Lamb, a chief critic of the bill ultimately voted in favor of it.  Three of the eight members of the Education Committee (Peterson, McFarland, and Dierks) voted against the bill.  On the following day, April 8th, Governor Orr issued a letter to the Legislature, which read in part:

Today I signed and delivered to the Secretary of State LB 940 and LB 940A, a compromise measure that will continue the discussions regarding the structure of elementary-secondary education in Nebraska.  The bill preserves the right of elementary-only school districts to exist.

I remain committed to helping our lawmakers develop a fair, effective and constitutional affiliation mechanism.  Such a procedure would allow Class I schools to retain their structure, identity and local control, while tying their tax base to a receiving K-12 district for high school purposes.  Once that is achieved, Nebraska will have the best of both worlds: sufficient uniformity and tax equity to support a sound K-12 sequence for all students, and, at the same time, the broad flexibility in school structure that is needed to meet the needs of our diverse communities.

Everything from our own heritage to the advice of national experts tells us we need to nurture our rural schools.  Together we can develop an educational system that is a model of effectiveness and accountability, and that preserves the high quality of education throughout our state for which Nebraskans are justifiably proud.⁶³