LINCOLN - A bill that would change the formula for state aid to schools pitted senators representing smaller, mostly rural school districts against those representing larger districts.
Lawmakers began debate Monday on LB 407, introduced by Sen. Kate Sullivan of Cedar Rapids.
The bill would slow the growth rate of state aid to schools to 6.3 percent for the upcoming school year, down from the current projected rate of 10.3 percent. The following year the growth rate would slow further to 5.1 percent.
State aid to schools currently makes up about one-third of the state budget, or just under $1 billion a year.
The aid formula calculates a school district’s needs and subtracts its resources -- revenue from property taxes and other sources -- to determine how much state funds the district should receive.
Four percent of the state’s school districts educate about 50 percent of the state’s students and receive 60 percent of the aid, according to Sullivan.
About 100 of the state’s 249 school districts receive no state aid because they are believed to have enough resources to cover their needs.
About half of school funding comes from property tax dollars. Under current law, school districts cannot raise more than $1.05 for every $100 of property value without voter approval.
Several of the larger school districts in the state -- like Lincoln and Omaha -- have already met or exceeded this limit and must rely on increased state aid for their financial needs.
Senators representing these districts do not believe the slower growth rate is adequate to accommodate the increase in student population and the resulting costs.
Sen. Colby Coash of Lincoln cited an increase of 2,600 students over five years in Lincoln Public Schools.
“I’m not sure (LB) 407 quite gets us where we need to be,” he said.
Senators opposed to the bill argue that rural districts should have to raise their property tax levies before being eligible to receive state aid and that more of the aid should go to larger districts with already high levies and low per-student costs.
Senators representing rural districts counter by saying that as the value of agricultural land continues to rise, ranchers and farmers are forced to pay higher percentages of their income in property taxes. Any increase in levies in these areas would place a disproportionate burden on rural land owners.
Sen. Al Davis of Hyannis said rural landowners are already paying as much as 10 percent of their gross income in property taxes.
“If you’re going to penalize rural districts for their low levy, I hope you realize what you’re doing,” he said.
Debate on LB 407 is expected to continue into Tuesday.