An outcome of the 2023 Nebraska Legislative Session was the passing of Legislative Bill (LB) 243, also known as the School District Property Tax Limitation Act, which instituted a 3% soft cap on revenue growth for public school districts. A cap limits the amount of revenue a school district can receive from their funding sources, e.g. state aid and local property taxes. Currently, school districts, with a supermajority approval from their local board of education, are permitted to exceed the 3% cap (with the ability to go up an additional 5%). As school districts across Nebraska approved their 2023-24 budgets, despite discouragement from the Governor, 188 of Nebraska’s 244 school districts approved a resolution permitting them to go above the 3% revenue threshold. The Scottsbluff Public Schools Board of Education did not approve the resolution allowing it to go above the 3% cap in growth which resulted in an 11-cent reduction in the levy and a tax asking that was less than the year prior. In short, this is a game changer for school financing.
According to Marianne Carlson, Executive Director of Finance for Scottsbluff Schools, “This is my tenth year putting together a school district budget, and due to recent legislative changes, it has altered how the budget is looked at and put together. In addition, there are current legislative bills being proposed at the state level that could alter this more. With this uncertainty of what could come, the District is being cautious during this unpredictable time.”
State Senators appear to be disappointed in the fact that 188 of Nebraska’s 244 school districts approved the resolution. As a result, Senator Linehan of Elkhorn introduced LB 1316, which currently sits in the Revenue Committee. LB 1316 proposes capping revenue for school districts at 3% and eliminating the ability for local school boards to access the additional tax-asking cap space above this threshold. The passage of LB 1316 would immediately reduce $1.8M in revenue for Scottsbluff Public Schools, at a time when school districts across the country are experiencing an educator shortage like we have never seen before. Fewer and fewer individuals are pursuing the profession of teaching for a variety of reasons. In order for school districts to remain competitive in the job market, we need to have the ability to increase educator compensation by at least 3%, while other expenses required to run a school district, such as transportation, food service, utilities, insurance, curriculum, and technology, etc. are increasing at a rate higher than 3%. As one small example of the unintended consequences of a statewide decision, the mandatory increase of minimum wage to $15/hour will require Scottsbluff Schools to increase the wages of some positions by more than 3% in order to remain competitive.
In 2019-20, SBPS K-5 enrollment was 1,463 students; in 2023-24, K-5 enrollment is 1,340 students, a decrease of 123 students at the elementary level. It is safe to assume that, as long as the 3% revenue growth limitation is in place, salaries and other expenses increase by approximately 3% (or more), and our enrollment declines, Scottsbluff Public Schools will be forced to make budget reductions every year. Fortunately, the Board of Education provides close, thoughtful oversight of our school budget, resulting in strong cash reserves, which has positioned the District to implement a quality, comprehensive, future-focused PK-12 education that best meets the needs of our community. For example, the recent preschool expansion, which has the potential to attract additional students, is not only a strategy for increasing student enrollment but also providing much-needed early childhood education opportunities for those we serve. In addition, the District’s net number of option students from other school districts requesting to attend Scottsbluff Schools has more than doubled in the last three years.
With the passage of LB 243, and most certainly if LB 1316 passes, Scottsbluff Schools may be forced with the decision to consider the cost and benefit of a number of programs and services throughout the District. Amongst those decisions may be some of our unparalleled student opportunities at the high school level that may have lower numbers of participation, Lake Minatare School (which is one of the last remaining original Class I Schools in Nebraska), in-town bussing, digital curriculum materials for students at the secondary level, district funded meals for activity trips and elementary school supplies, as well as a reduction in non-classroom-based services. Additionally, the passage of LB 1316 would strip local control from board members and the taxpayers they represent; communities would have very limited ability to decide what school programs are of the greatest importance. With that being said, at Scottsbluff Schools, we value and believe in shared governance. As we have with other tough issues, we will listen to parents, staff, teachers, and the public, but the decisions at the end of the process will have to take into account the financial impact on the District.
Scottsbluff Schools has been and will remain committed to working within the parameters of Governor Pillen’s educational funding and property tax cap bills that were passed in 2023. The Board of Education approved a budget that resulted in a historic lowering of our levy in September of 2023. We are grateful for the support Governor Pillen and State Senators have provided through increased special education reimbursements; this singular funding change has had the greatest impact on our revenue. Should LB 1316 make its way out of the Revenue Committee, we encourage our local Senators to vote against LB 1316.
