Nebraska

FUNDING PRIORITIES FOR P-12 AND/OR HIGHER EDUCATION

Of high priority for the 105^th Legislature was a response to the nearly $900 million shortfall in revenue for the 2017-19 biennium. The shortfall equals 6.6% of budgeted and projected state spending through June 30, 2019.

Governor Ricketts requested a two-step solution in his annual address to the legislature. He outlined measures for reducing spending in the current 2016-17 budget. He further asked that measures for handling the revenue gap projected for 2017-19 biennium must (1) have no increase in taxes, (2) balance the budget, (3) reduce government expenditures and (4) retain $500 million in cash reserves (NCSA Jan 12, 2017.). Governor Ricketts prioritized state aid for P-12 schools to an annual growth rate of 2.7% for each of the two years, with a special education funding annual growth rate of 1.5% (Governor's State of State Address, 2017).

The legislature's first response was to introduce and pass LB 119 that delayed the deadlines for 2017-2019 P-12 certification of (a) state aid, (2) budget authority, and (3) school district applicable certification of allowable reserve percentages under the TEEOSA funding formula until June 1, 2017. The bill provided a cushion of time for the Legislature to "sort through its options on the shortfall and determine the amount of appropriations for the state aid formula" for the 2017-19 biennium (personal communication, M. Delaney, NCSA, 2017).

LB122 is the deficit appropriation bill for the current year and was promoted in Governor Ricketts' overall plan for addressing the shortfall. The Legislature rejected the Governor's expenditure reductions of $276.3 million and offered instead reduced expenditures of $137.1 million--less than half the amount requested for the current year; this would leave a larger deficit ($758.2 million) to be addressed in the 2017-2019 biennium budget. This Bill passed in early spring.

In higher education, the Nebraska University system faced a reduction of $17 million dollars in the current budget; a portion of that is addressed by the flagship institution, the University of Nebraska at Lincoln; the remainder is being addressed by the entire NU system. Projections of a $50 million deficit for the 2017-19 biennium have been offered (Ruggles, 2017). During the close of the current biennium, NU sought to reduce expenditures by 8%. Other higher education entities were slated to receive fairly flat levels of funding under the budget-setting committee's proposals. The state's six community colleges will take a small cut in the Appropriations Committee's recommendations; the three state colleges expect the same amount of state money over each of the next two years that was received this year.

CHANGES TO P-12 FUNDING FORMULA (TEEOSA) AND POLICY

The budget includes funding for state aid to schools (TEEOSA) based on changes contained in LB409 enacted in the 2017 session. This bill included increasing the local effort rate from $1.00 to $1.023 and reducing the allowable growth rate from 2.5% to 1.5% for FY 2018 and FY 2019 only (affecting the cost growth factor used to inflate prior year data). The overall net change in total TEEOSA aid is an increase of $19.4 million (2%) in FY2017-18 followed by a $27 million (2.7%) increase in FY 2018-19. The General Fund amounts (excluding the amount financed by allocated Insurance Premium Tax monies and lottery funds for reorganization incentives) reflect a $17.9 million (1.9%) increase in FY 2017-18 followed by a $26.7 million (2.8%) increase in FY 2018-19. (State of Nebraska, FY 2017-18 / FY 2018-19 Biennial budget, Nebraska Legislative Fiscal Office, August 2017, p 5.) In addition, the Budget for P-12 programs for the 17/18 – 18/19 biennium includes continued funding at the FY 2017 level for 13 programs, reduced funding of 4% for one, and cancellation of the Master Teacher Program. (Nebraska Legislative Fiscal Office, August 2017, p. 35).

In addition, two bills to accommodate student mothers and expectant mothers were passed. LB 427 requires public and private schools to...