Pillen promotes property tax plan to Nebraska school leaders

Nebraska Gov. Jim Pillen addresses a conference of school administrators in Kearney on Wednesday, July 24, 2024, the day before a special session on property tax relief. (Aaron Sanderford/Nebraska Examiner)

KEARNEY — Nebraska Gov. Jim Pillen spent the morning before his special session on property tax relief pitching his proposal for the state takeover of K-12 funding to an audience that might not embrace it: school administrators.

District superintendents and school leaders gathered in Kearney this week for an administrators conference. Wednesday focused on the Nebraska Department of Education’s goals for the coming school year, including improving reading instruction.

State Education Commissioner Brian Maher said he shortened his speech to make room for Pillen’s pitch, a last-minute change the governor requested. Pillen spent the half-hour touting the proposal’s benefits for the group, emphasizing budget stability.

He said superintendents and school board members have told him about their difficulties planning school budgets based on how much property valuations change year-to-year and how those changes shift what the state aid funding formula provides.

“Let’s take the funding equation and the nonsense that is going on with how we’re doing it, and let’s fix it now,” Pillen said, drawing polite applause. “So that education, so that we never have to worry about where we’re at and what we’re doing.”

Pillen talks spending lids

Pillen said his proposal and its spending caps, which have yet to be released in bill form, would fund districts at the level local school boards lock in this year. He said the state would fund annual spending increases of 3%, plus more if the district shows population growth.

His pitch reached back to his discussions with superintendents during the 2023 formation of the state’s $1 billion Education Future Fund. He said many superintendents told him they could meet the needs of Nebraska students better if they could plan on 3% increases.

“Our commitment for education is 3 percent growth every year,” Pillen said.

In an interview after the speech, Pillen said his goal was to communicate the importance of property tax relief and show that it can be provided without risking school resources. He wants school supporters to know “nothing goes backwards.”

Maher, in his speech, said he and the governor talked Tuesday and the governor asked him what he was hearing from people in education. He said he offered Pillen the chance to speak, not to sway them but because he had “1,200 very interested educators.”

Should state be trusted?

Several of those attending declined to comment after the speech, citing fears of angering the governor and their school boards.

Some said they didn’t know whether to trust the state. Two pointed to the Education Future Fund as an example. Pillen has said he proposed the fund to offset property taxes by providing a baseline of state aid for school districts that received little or no state aid and by helping fund more of special education costs.

The state teachers union and others have argued that the state would raid the fund as soon as it needed money. In his talk Wednesday, Pillen did not mention that his proposal to offset property taxes relies on draining the Future Fund.

Asked this week about that choice, he said the state would commit instead to spending $200 million to $250 million a year to cover the baseline aid and special ed costs in a direct appropriation. He also said the state would be a more reliable partner to schools and local governments.

He repeated a line he has said often during the town halls he hosted on property taxes, that he won’t let the state “quit on kids.” He said it was unacceptable that the state portion of school funding in Nebraska ranked 49th out of 50 states.

Higher bar for bond issues

His speech took direct aim at school boards and school spending decisions being made at the local level, saying the votes of three and six people on local boards “don’t work in Nebraska.” He said “votes of the people” are the “greatest form of local control.”

It was his only reference to the most controversial part of his proposal among school leaders, the idea that passage of any bond issue for building repairs and new school buildings might require the approval of 60% of the district’s voters instead of 50%.

School administrators have argued that requiring such a high bar means more of their buildings will fall into disrepair, risks increasing the long-term local costs of maintenance and makes it much more difficult for growing districts to meet space demands.

Under Pillen’s proposal, the state would take over most school funding, leaving building and bond costs to be paid for using property taxes. He called his approach a 25-year plan. He hasn’t said how the state aid formula would change, but said it would be addressed in a later legislative session.

Fight over who should pay more

Much of his plan would be paid for by redirecting funds earmarked for existing property tax relief programs and by expanding the number of purchased goods and services subject to the state sales tax.

The Nebraska Association of School Boards has declined to comment on Pillen’s proposal until it can read it. It has argued the need for budget stability and local control, saying that its members will be held accountable for local schools.

Many of the proposal’s detractors have argued that all but the state’s largest business owners and land barons risk paying more in new sales taxes than they would save on their homes. Renters could be hit especially hard, advocates say.

Proponents of Pillen’s proposal have scoffed at calling his plan a tax shift, pointing to staff-built charts that show the state would eventually collect less in combined taxes once the measures are fully implemented, three years later.

Questions about local control

The Nebraska State Education Association, which represents the state’s public school teachers, has argued that a state takeover of K-12 funding poses risks to local control, including how much communities choose to spend on their schools and teachers.

Tim Royers, incoming president of the NSEA, said there is no way the state can assume more control of school finance without also assuming more influence over contract negotiations with local teachers and ultimately their pay. He said teacher retention could suffer.

“We certainly have talked in the past about rebalancing the percentage of school funding between the state and local level, but this is throwing the baby out with the bathwater,” Royers said. “This isn’t rebalancing. This is just … the leap.”

Nebraska Examiner reporter Zach Wendling contributed to this report.

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