Information on LB 1316 and LB 1241 and the potential impact on Lincoln Public Schools

Lincoln Public School Associate Superintendent for Business Affairs Liz Standish provided an informational update on proposed Nebraska Legislative Bills 1316 and 1241 during the regular Lincoln Board of Education meeting on Tuesday, Feb. 27.

During the 2023 legislative session, three bills were introduced on behalf of Governor Jim Pillen that created a school finance package. This package was carefully crafted in collaboration with educators and state senators from across Nebraska. Included in the package was a continued focus on local control - allowing locally elected school boards to make decisions based on their community’s feedback and input on priorities. 

During the 2023-2024 budget process, the Lincoln Board of Education adopted a 14 cent drop in the total levy from $1.21 to $1.07 per 100 of valuation in response to the new school finance package approved by the state.

Standish told the Board that the way LB1316 is currently written would have short and long-term implications on the LPS budget and operations. 

The short-term impact would be approximately a three percent revenue loss for the 2024-2025 school year based on state models, coupled with an increase in the cost of labor and inflation. The new three percent hard cap calculation does not include the additional Special Education reimbursement, and won’t be included until the 2024-2025 cap calculation. This would decrease the revenue to LPS approximately $14 million from $541,254,913 to $527,401,376.

In the long-term, Standish told the Board this reduction in revenue would result in LPS’s inability to recruit and retain a quality workforce during a nation-wide labor shortage. This would result in unfilled teaching positions, larger class sizes and classes taught by staff outside of their endorsement areas. It would also lead to even more unfilled support staff positions (paraeducators, transportation, custodial) that serve students and schools. This would make it difficult for the local Board of Education to add programming and services based on community identified priorities, and the school district would have a diminishing ability to address ongoing or new student needs because of program and service cuts due to the drop in revenue.

LPS prudently builds its annual budget using a three-year forecast to minimize the negative impact of volatile swings in revenue. A hard three percent cap on revenue growth would make it difficult for LPS to manage these drastic fluctuations. One example is in Lancaster County where residential property is reassessed on a rotating basis. In the year that property valuation increases it is a year that LPS has higher state aid. The following year when the valuation doesn’t grow at all, the state aid drops because the valuation increased the previous year. For the 2024-25 school year, LPS expects the State Equalization Aid to drop in excess of $30 million dollars. 

Standish also informed the Board that LB 1241 introduced to the Nebraska Legislature this year would provide zero growth for a school district property tax request and does not take into account the role of the equalization aid in the Nebraska school finance system. Nebraska State Senator Brad von Gillern who introduced the bill recognized during the hearing that his bill would need changes.  

The community can find the proposed legislation on the Unicameral’s website. Anyone wishing to learn more about the impact of the proposed legislation on Lincoln Public Schools can reach out to Standish’s office at (402)436-1635.

Published: March 5, 2024, Updated: March 5, 2024