State aid drops off as ag land values climb

McCOOK, Neb. -- With ag land valuations skyrocketing, property owners are picking up more and more of the bill for funding schools, something Nebraska State Sen. Dan Hughes of District. 44 would like to see changed.

State equalization aid payment figures were released in January, with aid cut to 12 out of 14 schools in Southwest Nebraska, including at McCook Public Schools.

In the past 10 to 15 years, the burden of educating students has shifted away from the state and onto the local taxpayer, especially in the rural areas, Hughes said via phone Thursday and whose district covers all of Southwest Nebraska.

In District 44, out of 16 school districts, Hughes said 11 have no equalization aid at all, because local property taxes, most notably from ag land, are providing enough revenue for the schools, with five districts that do receive aid.

But it doesn't have to be a rural versus urban battle, he continued. "For all of us newly elected senators, about half the Legislature, from Lincoln, to Omaha to McCook, the number one thing voters talked to us about was property tax relief. I hope we all remember what the taxpayers told us."

Two bills were heard in committee on Thursday to harmonize school aid. Both LB 293 and 350 lower ag and horticultural land valuations from 75 percent of its actual value to 65 percent. Hughes said he's waiting for the bills to get out of committee before signing on to either bill, to see exactly what is proposed.

Southwest Public Schools in Bartley and Indianola, Nebraska, is one of the districts that is a non-equalized district, "and we get so little anyway, so it's not affecting us like other schools," said Southwest Superintendent R. Todd Porter. The big question is whether the state will change the formula that allocates state aid, he said, and make it less reliant on property taxes. Porter pointed to other school districts, notably Gothenburg Schools in Dawson County, that is projected to lose over $1 million next year in state aid.

The basic formula for distributing equalization aid, according the to Nebraska Legislature, is based on needs (allowances for poverty students, English as a second language, teacher education, student enrollment adjustment and other factors) minus resources (property taxes, other receipts from the local system) equals the amount each district receives from the state. If there is more revenue than needs, there is less equalization aid.

The higher ag land valuations means schools get more revenue in property taxes and the state can allocate less in these school districts.

But it also means local property owners are bearing the lions' share of revenue for the school districts.

For the McCook Public School District, projected state equalization aid will decrease for the 2015-16 school year by more than $300,000. This year, MPS will receive $5,140,685.20, but aid is projected to shrink to $4,789,046.74 next year, a shortfall of $351,638.46.

The decrease is disconcerting but not surprising, said McCook Public Schools business manager Rick Haney.

"Traditionally, state aid fluctuates and we've seen bigger drops before," he said. "In our case, the biggest component is the increase in ag land valuations....when the formula was first designed, ag valuations were more stable. But with valuations jumping dramatically, it changes things.

"It will affect the budget planning, how can it not, but it's not something we haven't faced before," he said. Haney declined to say exactly how the budget would be affected, as the budget will not begin to take shape until June, when payment numbers are certified and he can put pencil to paper. Haney did add that the decrease "will definitely have a factor on how we tighten our belts."

State aid is the second largest revenue source for the McCook School District, at 45.89 percent, with property taxes the largest source, at 47.11 percent.

Hitchcock County Schools and Eustis-Farnam are the two school districts that will not see a decrease in state aid next year, according to projected figures released by the Nebraska Department of Education.

Current, projected aid to education

The following list 2014-15 state aid paid, compared to projected payments in 2015-16 (decreases in parenthesis):

RED WILLOW COUNTY

McCook Public Schools: this year, 5,140,685.20 projected for next year, $4,789,046.74 ($351,638.46)

Southwest Public Schools: this year, $34,792.93, projected for next year, $5,817.11 ($28,975.82)

CHASE COUNTY

Chase County Schools: $115,491.21; projected, $84,270.59, ($31,220.62)

Wauneta-Palisade Public Schools: $29,965.32; projected, $29,343.19 ($622.13)

DUNDY COUNTY

Dundy County Stratton Public Schools: $20,082.87; projected, $16,972.56 ($3,110.31)

FRONTIER COUNTY

Maywood Public Schools: $242,654.08; projected, $198,873.48 ($43,780.60)

Eustis-Farnum Public Schools: $200,210.83; projected, $251,769.47, $51,558.64

Medicine Valley Public Schools: $711,181.50; projected, 530,087.83 ($181,093.67)

FURNAS COUNTY:

Arapahoe Public Schools: $91,262.88; projected, $44,855.20 ($146,407.68)

Cambridge Public Schools: $1,564,600.54; projected, $1,025,617.25 ($538,983.29)

Southern Valley Schools: $66,046.64 projected, $6,555.87 ($59,490.77)

HAYES

Hayes Center Public Schools: $29,403.08 1,922.69 ($27,480.39)

HITCHCOCK

Hitchcock County School System: $9,242.23; projected, $22,475.18, $13,232.95

PERKINS

Perkins County Schools: $18,656.74; projected, $7,788.84 (10,867.90)