It is important to know how schools are funded in Nebraska.  Schools receive the majority of their funding in basically two areas.  One is property tax and the other is state aid.  The state aid comes from the Tax Equity and Educational Opportunities Support Act.  LB 988 was a bill that changes the Tax Equity and Educational Opportunities Support Act.  LB 988 was passed this legislative session by the unicameral.  It was signed into law by the Governor.  Obviously the passage of LB 988 effects school funding.  LB 988 requires the recertification of state aid.  Aid to schools was certified February 1^st.  Kimball received $1,566,706.21 in state aid for 2007-2008.  Our certified state aid for next year under the formula was to be $2,224,304.42.  This would have been an increase of $657,597.80. 

     Here is what LB 988 does to the Kimball school district.  LB 988 changed the computation of the needs formula.  This means instead of being in a cost group with other schools in a sparse area we are put into a comparison group of the next five larger schools and the next five smaller schools.  The sparse and very sparse categories which helped even the playing field for rural schools were thrown out.  A recent letter to the editor in the Star Herald shared the fact that LB 988 increased aid to South Sioux City by over $1 million, Lexington by over $2 million, Grand Island by over $4 million, Omaha by over $21 million, and to Lincoln by over $11 million.  LB 988 also changes the computation for the resource formula.  The local effort rate was changed from the maximum levy less $0.10 to the maximum levy less $0.05.  First we need to translate what the local effort rate is-PROPERTY TAX.  The maximum levy in Nebraska is $1.05.  Under the old formula the minimum levy if you wanted to maintain state aid was $0.95.  Kimball Public Schools in the 2007-2008 year taxed at 0.996.  Under LB 988 we are under the now required $1.00 to maintain state aid.  It is projected under LB 988 that property taxes state wide will increase at least $7.8 million.  LB 988 penalizes any district who does not maintain their effort rate (property tax) at $1.05.    

     What does this all mean for Kimball?  First of all it means we are forced to raise our property tax request or we will take another reduction in our state aid the following year.  It also means when the new state aid figures come out we are projected to receive $1,652,152.58.  This is an $85,445.96 increase from last year but a loss of $572,151.84 from the aid that was certified to us February 1^st.  The $572,151.84 projected loss covers almost 1% of the entire projected budget shortfall for the entire state.  We are also projected to lose another $95,000 from the previous year’s state aid.  So the sum effect is Kimball Public Schools will receive state aid of approximately $10,000 less than the previous year.  With this decrease we will deal with the cost increases which affect us all.  Gas prices, food prices, cost of living are just a few examples.

     The Kimball Board of Education will not be able to do much to support our local tax payers.  The Board will be forced to submit a property tax request as close as possible to $1.05 so the $1.6 million dollar state aid is not put into jeopardy.  I am sure there will be criticism of being progressive and constructing an addition at the high school and then raising property taxes.  It is important to note that even if the construction was not taking place, LB988 would force the raise in the property tax request.  The construction project will have no bearing on the upcoming tax request.  The Board of Education has worked very hard over the years to keep property tax down.  I felt it was important to share with the taxpayers what was going on at the state level.