Consolidation, choice and tax relief

At this writing, the Nebraska Legislature is nearing a conclusion to its special session addressing Nebraska’s property taxes, among the highest of the fifty states. As they grapple with the delicate balance of trimming expenses and finding alternative sources of revenue at the state level, it’s interesting to look at how we fit into the national tax landscape and the educational framework that drives much of our local property tax burden.

At one end of the spectrum are states like New Jersey, Illinois, and New Hampshire, where property taxes are higher than ours. Those states consistently rank at the top due to their reliance on property taxes to fund more extensive local services in addition to education. For instance, New Jersey homeowners can expect to pay around 2.49% of their home’s value in property taxes each year with the justification of highway systems, public transportation, and well-heeled public safety.

Conversely, states like Hawaii, Alabama, and Louisiana boast some of the lowest property tax rates in the country. In Hawaii, where taxes on tourism play a significant role, the average effective property tax rate is a mere 0.28%. Absent of that tourism advantage, lower property taxes in other states often correlate with less funding for public services, including schools. In states with lower property taxes, funding for education typically relies more heavily on state and federal sources, which can also lead to disparities in the quality of education.

School consolidation is an often-used strategy to lower property taxes. When smaller school districts merge, administrative costs are reduced and lead to overall savings. In states where school consolidation has been implemented, there have been notable decreases in property tax rates. For example, Maine’s efforts to consolidate its numerous small school districts streamlined operations, and the resulting efficiencies allowed property tax reductions in many districts (but not all).

The relationship between school consolidation and educational outcomes is nonetheless complex. When consolidation creates financial efficiencies, it can also positively impact the quality of education. Larger school districts can offer more diverse programs and extracurricular activities due to a larger pool of resources.

There are, however, potential downsides to consolidation. It leads to longer travel times for students and, to some extent, a loss of community identity. When I was publishing in the early 2000s, I found myself in the middle of the Twin Valley/Republican Valley merger, and I will never again underestimate the passion that communities have for their local schools. Consolidation carries an emotional cost.

The availability of school choice is also a consideration. School choice programs like our limited, yet contested LB 1402 can offer an alternative means of providing quality education without relying heavily on local funding. Programs that include charter schools, voucher systems, or in our case, scholarships, increase consumer demand and competitive energies that drive all schools to improve.

That’s how it is supposed to work, but detractors will remind us that real-world results of school choice efforts are mixed. They have led to improved educational outcomes for students who might otherwise be stuck in underperforming schools, but invariably result in resource diversion from traditional public schools. The success of those programs largely depends on their design and implementation, ensuring that they complement rather than undermine the existing public education system. Although our state has passed a very modest scholarship system, the NSEA, our ever-powerful teachers’ union, is treating it as a full frontal attack, and the issue is far from decided.

Considering those factors, examining how school consolidation and choice collectively align to impact educational quality and its associated tax burden is essential. School consolidation lowers costs and spreads resources more evenly across larger districts by reducing redundancies and administrative expenses. On the other hand, school choice programs offer a pathway to quality education by driving innovation and improvement–but their success in enhancing educational outcomes hinges on individual choice and thoughtful implementation.

The interplay between those factors, property taxes, school consolidation, and school choice, significantly affects the quality of education, as well as economic development throughout the state. While school consolidation offers a way to reduce costs and potentially lower taxes, it must be carefully managed to avoid negative impacts on students and smaller communities. School choice, on the other hand, can drive improvements and provide alternatives, but only when educators recognize the rights of parents and students as consumers. Balancing those factors is crucial for developing policies that promote equitable, high-quality education for all students and provide the most effective use of our property taxes.