October 7, 2009 Dear Governor Heineman and Nebraska State Senators, As you prepare for a Special Session, we urge you to proceed with caution regarding any proposed cuts in state aid to education. Some may argue that state aid to education received the greatest increase in funding for the biennium and therefore should be first on the cutting block; however, all of the increase in state aid to education came by way of Federal Stimulus dollars. As you know, the $234 million in federal education stabilization funds was dedicated to state aid to education and is being distributed through the state aid formula. It is important to remember that when the Department of Education began releasing stimulus funds last April, it told states the money was to be used to boost funding for education and protect key programs and jobs. From very early on, the Obama administration’s message to states was that stimulus funds earmarked for education are to "supplement, not supplant" state funding for education. Nebraska submitted its plan for these funds and provided assurances that it would adhere to that plan as a condition of receiving the federal stabilization dollars for education. The state could face federal sanctions, as well as loss of that federal funding, if it begins to play a ‘shell game’ with those education stabilization funds and puts itself out of compliance with the approved plan. It is not okay to ‘shuffle’ these federal funds. In addition, using the stabilization funds according to the plan adopted by the state is a down payment on Nebraska’s ability to receive federal Race To The Top (RTTT) grant funds. The federal Department of Education Inspector General reports that some states are, indeed, inappropriately using stimulus dollars to replace the money they’re cutting from education. In at least one case, the federal Department of Education has blocked a state from drawing stimulus money because it was cutting school funding. As you know, cuts in the needs-based funding for schools will hurt students. Funding cuts will lead to course and program reductions or eliminations, teacher layoffs and unmanageable class size. Funding for education affects every community and every Main Street in Nebraska. Such funding is a key to economic vitality and growth. Funding for our schools truly does stimulate the economy and, particularly in these economic times, that is exactly what our state and nation need.
We commend you for making education a priority and ask that you continue to support that priority. It is the right thing to do for our state, our communities and our children. Sincerely,
Jess Wolf President cc: Commissioner Roger Breed State Board of Education Members Nebraska Congressional Delegation
Craig R. Christiansen Executive Director
History of Certified State Aid and Special Education Appropriations School Fiscal Year
Certified State Aid
1989-90
$133,616,100
$1,162,693,038
1990-91
$311,476,713
$1,237,691,767
1997-98
$465,944,483
$1,649,399,358
$591,240,236
$1,728,889,710
1998-99
Total K-12 Disbursements
($1.10 levy limitation was implemented in 1998-99)
2000-01 2001-02
$561,345,705
$1,928,410,090
$644,988,575
$2,053,184,001
($1.00 levy limitation was implemented in 2001-02)
2002-03
$661,928,207
$2,150,922,023
($22M less than original certification of $684,151,367)
2003-04
$640,701,878
$2,238,430,248
($81M less than original certification of $722,525,118; the $1.05 levy limitation implemented in 03-04; Reduced formula need through temporary aid adjustment, gave districts levy exclusion)
2004-05
$634,317,276
$2,330,513,549
($25M cut - temporary aid adjustment, reduced formula needs, gave districts levy exclusion)
2005-06
$700,594,282
$2,470,097,701
($27M cut - temporary aid adjustment, reduced formula needs, gave districts levy exclusion)
2006-07
$718,467,329
$2,618,547,219
($28M cut - temporary aid adjustment, reduced formula needs, gave districts levy exclusion)
2007-08
$768,613,973
$2,760,440,532
($30M cut - temporary aid adjustment, reduced formula needs, gave districts levy exclusion)
2008-09
$839,390,581
not available
($61M less than original certification of $900,876,659; reduced allocated income tax by $20M)
2009-10
$933,850,727
not available
($7.5M less than original certification of $941,355,204. Reduced: Allowable Growth Rate, Allocated Income Tax Rebate, Averaging Adjustment, and Teacher Education Adjustment)
2010-11
$981,275,343
not available
($51.6M less than original certification of $1.032B - LB545 changes)
State Aid to Education (
)
TEEOSA Formula
NEEDS – RESOURCES = STATE AID • Special Receipts Allowance • Teacher Education Adjustment • Transportation Allowance • Elementary Class Size Allowance (ending 13-14) • Distance Education & Telecommunications Allowance • Limited English Proficiency Allowance
• Property Tax • Option Funding • Federal Funds • Allocated Income Tax Funds • Fines, Fees
The State Aid to Education formula represents what resources are necessary to educate a group or groups of students in school districts of Nebraska. It is based upon average spending by like schools in Nebraska. When state aid is not fully funded, it means that we are not providing the dollars necessary to educate Nebraska students. Any formula shortfall means that we have chosen to provide a lesser education than needed by these students with various, specific needs. State Aid is not a “wish” number – it defines the average cost of educating a similar group of students with, not a blue ribbon education, not a high quality education, but with an average education.
• State General Fund Appropriation
P
ublic schools took a big budget hit from 2001-06. More than $432 million was cut from promised state aid during those budget years - and the dollars have never been made up. And from 2006-09, the Legislature cut another $165 million from promised and needed state aid to education. Protecting state aid to education protects not only Nebraska’s quality schools and our children, it also protects property tax relief. A cut in state aid to local school districts would simply push the problem onto property owners. The alternative is teacher layoffs, larger class size and complete elimination of programs. The state has tied school districts’ hands with spending lids and levy caps. In fact, much of the state aid K-12 schools receive is appropriated to fund property tax relief — to make up for the revenue schools lost due to the state-imposed property tax levy cap. To emphasize: additional state aid was not and is not a windfall to schools, but a long-planned formula to replace lost property tax revenues. K-12 education is not a “little extra” we can afford to cut. Nebraska has a constitutional obligation to provide for public education. Few other programs rise to the level of a constitutional obligation. We also have a moral obligation to provide our children with a quality education.
History of Certified State Aid and Appropriations School Fiscal Year
State Aid Appropriation
Total Disbursement
1998-1999
$591,240,236
$1,728,889,710
($1.10 levy limitation was implemented in 1998-99)
2000-01 2001-02
$561,345,705 $644,988,575
$1,928,410,090 $2,053,184,001
($1.00 levy limitation was implemented in 2001-02)
2002-03
$661,928,207
$2,150,922,023
($22M less than original certification of $684,151,367)
2003-04
$640,701,878
$2,238,430,248
($81M less than original certification of $722,525,118; the $1.05 levy limitation was implemented in 03-04; Reduced formula need through temporary aid adjustment, gave districts levy exclusion)
2004-05
$634,317,276
$2,330,513,549
($25M cut- temporary aid adjustment, reduced formula needs, gave districts levy exclusion)
2005-06
$700,594,282
$2,470,097,701
($27M cut- temporary aid adjustment, reduced formula needs, gave districts levy exclusion)
2006-07
$718,467,329
$2,618,547,219
($28M cut- temporary aid adjustment, reduced formula needs, gave districts levy exclusion)
Revenue Sources Diverted from K-12 Education
Yes, we need to balance the budget — but not on the backs of children.
• Tax Incremental Financing • Insurance Premium Tax • Pro Rate Motor Vehicle Tax • Nebraska Super Advantage Act • Nebraska Option Enrollment • Nebraska Income Tax Allocation • Carline Tax
• Public Power District Tax - 5% • Traffic Fines and License Fee Decrease (Diversion Programs) • School Land Decrease • Lottery Money • Business Inventory, Farm Machinery/ Personal Property Tax Decrease • Greenbelt
2007-08
$768,613,973
$2,760,440,532
($30M cut- temporary aid adjustment, reduced formula needs, gave districts levy exclusion)
2008-09
$839,390,581
n/a
($61M less than original certification of $900,876,659; reduced allocated income tax by $20M)
2009-10
$933,850,727
n/a
($7.5M less than original certification of $941,355,204; Reduced: growth rate, allocated income tax rebate, cost averaging and teacher education adjustments.)
TEEOSA CHANGES UNDER LB545*
Current Law – Est. State Aid Total
2008-09 (actual)
2009-10
2010-11
2011-12
839,390,579
941,380,498
1,032,918,967
1,140,052,416
1,219,030,929
-9,404,320 916,657
-19,796,023 -32,671,330
823,728 159,455 -7,504,480
823,728
-31,004,336 -34,304,896 -14,372,520 823,728
-32,551,038 -36,016,251 -30,278,154 823,728
-51,643,625
-78,858,024
-98,021,715
Cost Growth Factor Averaging Adjustment Allowable Growth Rate (est. -.5%) Retirement Assistance Learning Community Hold-Harmless LB 545 Fiscal Impact
2012-13
Funding Components of LB545 Aid General Funds Federal (ARRA) Funds
Total Sate Aid
839,390,579
840,207,268 93,668,750
840,988,167 140,287,176
1,061,194,392
1,121,009,214
839,390,579
933,876,018
981,275,343
1,061,194,392
1,121,009,214
Percentage Increase over Prior Year General Fund Percentage Increase over Prior Year
11.3%
5.1%
8.2%
5.6%
0.0%
0.0%
26.2%
5.6%
*Source-Legislative Fiscal Office, Fiscal Note LB545, totals include Insurance Premium Tax
NSEA Bargaining and Research, Larry Scherer