Education advocacy groups and major rural organizations in Nebraska have largely voiced their support for a proposed overhaul of the state’s school finance system, which aims to address long-standing funding challenges.
On Monday, State Senator Jana Hughes of Seward introduced Legislative Bill 303, a proposal designed to reform Nebraska’s school finance formula. The bill, requested by Governor Jim Pillen, would reduce the maximum school property tax rate by 3 cents—from $1.05 to $1.02—while increasing the state’s investment in school districts.
The bill seeks to boost funding for Nebraska’s 245 school districts through the Tax Equity and Educational Opportunities Support Act (TEEOSA), a state aid formula enacted in 1990. TEEOSA includes equalization aid, which is distributed based on a district’s “needs” minus its available “resources.” Currently, 75% of Nebraska’s school districts do not receive equalization aid. The proposal aims to expand the number of districts that benefit from this funding.
Additionally, the bill proposes a 6% increase in foundation aid—raising the per-student allocation from $1,500 to $1,590 for the 2024-25 school year.
Governor Pillen has recommended nearly $120 million in new state funding for education over the next two years, despite facing a projected $432 million budget deficit. This funding is part of a strategic investment to support the bill’s reforms.
LB 303 also includes the establishment of a 15-member School Finance Reform Commission, which will include superintendents, lawmakers, the state education commissioner, and representatives from the Nebraska Department of Education. The commission’s goal is to identify long-term solutions to the state’s school finance challenges.
“This is just a small step, but I hope we keep making progress as we move forward,” Hughes told the Education Committee, where she serves as vice chair.
A Push for Change in School Finance
Hughes, a former member of the Seward Public Schools board, has been a strong advocate for reforming school finance, which she describes as having been on “auto steer” for decades. She expressed appreciation for Governor Pillen’s willingness to make changes to the current funding formula.
Hughes has long pushed for changes to the state’s approach to funding schools. In the previous year, she proposed a 10-year plan to lower maximum property tax rates, with the ultimate goal of reducing school districts’ dependence on property taxes for operational funding.
Pillen, who shares a similar vision, has emphasized the need for the state to take on a larger share of school funding. His earlier plan sought to eliminate property taxes entirely for school operations, though this approach was not pursued in the special legislative session. Pillen reiterated his stance on Monday, stating that the state should provide funding for schools without directly managing them.
“School districts often face uncertain budget circumstances,” Pillen said. “That’s not the way to effectively educate and focus on our kids.”
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