Bill Summary, LB 839 (1993)

LB 839 requires that all Class I school districts or portions thereof which are part of a Class VI school district will have a "common levy" for the operation of the K-12 school system in these districts beginning with the 1995-96 school year. The bill provided that the amount of state aid allocated to these districts through the equalization component of the formula will be determined based upon the formula needs of the entire Class VI system.

The common levy provisions will impact the property tax levy of approximately 174 Class I school districts (using 1991-92 data) within Class VI systems beginning in 1995-96. The exact fiscal impact of the bill on the expenditures and revenues of individual school districts is not able to be determined. A printout prepared by the State Department of Education is available in the Legislative Fiscal Office (LFO) to show the derived General Fund levies for Class VI systems pursuant to the bill based on 1991-92 data. LB 839 changed the computation of equalization aid on a system-vide basis rather than by school district and resulted in a shift of equalization aid between school districts beginning in 1995-96.

The bill also reduced the rate used to calculate the in-lieu-of school land tax reimbursement from 143% to the same percent of the appraised value as the percent of the assessed value is of market value in 77-1360.01, which will be 80% for agricultural land. The State Department of Education made the payment of in-lieu-of school land taxes at 100% of appraised value in 1990-1991 and 1991-92 based on an Attorney General's opinion. This shifted an estimated $1,796,000 from the in-lieu-of tax payment to state apportionment. Beginning with the 1992-93 payment, the in-lieu-of reimbursement will be based on 80% of appraised values. If the lover rate had been in effect for 1991-92, an additional $948,000 would have been shifted from the in-lieu tax payment to state apportionment. The fiscal impact of the change varies by school district depending upon whether an in-lieu-of tax payment is received and will have an impact on state aid received two years later.

LB 839 addressed the interaction of the Class VI system-wide levy with the in-lieu-of tax payments to school districts. It provides that a specified percentage of the in-lieu-of payment based upon the new "common levy" will be provided to the Class VI district and the remainder will be distributed to the Class I school district.