Finding transparency in TEEOSA

As reliably as the Sandhill Cranes return each February, Nebraska lawmakers are poised to revisit the long-debated Tax Equity and Educational Opportunities Support Act (TEEOSA) in the 2025 session. Governor Jim Pillen recently shared the 2024 School Property Tax Collection Report with state senators, signaling a renewed focus on school funding reform. With property taxes an enduring concern for Nebraskans, the discussion promises to be both spirited and consequential.

Governor Pillen framed the report as a critical resource for understanding the state’s funding formula and its historical impact. “We have newly elected state senators who may not have a complete understanding of how the state’s funding formula has worked historically, nor the impact of recent legislative initiatives when it comes to setting caps and providing state funding to those districts,” he stated. The governor’s goal is clear: to address inconsistencies in state aid and provide property tax relief for Nebraskans.

The report highlights three key findings:

-Caps on property tax growth are having a measurable effect, with 2024’s projected 2.7% growth marking the smallest increase since 2018.

-Reductions in state aid have negatively impacted property tax relief.

-Stable and predictable state aid could decrease the need for local property tax increases.

The findings in Pillen’s report underscore the complexity and urgency of reforming TEEOSA, a formula that has been amended repeatedly since its creation in 1990. Each adjustment has introduced new layers of complexity, leaving taxpayers and school districts grappling with unpredictability and inequities. As the governor’s report concludes, “Providing certainty to school districts will allow Nebraska to have sustained property tax reductions for the first time in history.”

Jim Vokal of the Platte Institute commended Governor Pillen’s statement, saaying, “Improving the fairness, simplicity, and transparency of state aid is vital, but any changes must also deliver the property tax reform Nebraskans demand.” His remarks highlight the dual goals of reform: ensuring equitable school funding and fulfilling voters’ mandate for meaningful property tax relief.

However, achieving these goals requires more than just adjustments to TEEOSA. A hard cap on local property tax growth is essential. Nebraska’s current “soft” caps allow school boards to override limits without voter approval, resulting in inconsistent tax burdens across districts. The state can ensure uniformity and accountability by implementing a “hard” cap tied to the Consumer Price Index. Overrides should require voter approval, empowering taxpayers to have a direct say in funding decisions.

Transparency must also be at the heart of these reforms. Too often, taxpayers remain unaware of how state aid impacts their property tax bills. Expanding Truth-in-Taxation principles to apply to all levy increases—even the first dollar—would enhance public awareness and trust. Transparent reporting and clear communication are not just good policy; they’re good governance.

Reforming TEEOSA offers a unique opportunity to align school funding with property tax reform. But without tight controls on local property tax growth, new state funding could inadvertently fuel additional spending, driving up Nebraska’s combined tax burden–eroding the economic competitiveness the state has worked so hard to achieve.

Governor Pillen’s report and insights from leaders like Vokal set the stage for meaningful change. By pairing reforms to TEEOSA with hard caps and transparency measures, Nebraska can achieve a fairer, more predictable school funding system that will reduce property taxes and build trust between taxpayers and their government.