OPS takes hit in property taxes

The new learning community property tax system set up by the Nebraska Legislature to help fund the Omaha Public Schools produced surprising results the first year in operation, taking $400,000 from OPS and distributing it to other school districts.

OPS was one of eight districts that poured more local property taxes into the system than it got back, according to a World-Herald analysis. Because of its high percentage of children in poverty and learning English, OPS had been expected to be a big gainer from the new system of shared resources.

Educators say the OPS revenue dip was an anomaly that did not hurt the district financially, and they're confident it won't be repeated next year. An increase in state aid was the reason for — and offset — the loss, officials said.

Overall, the controversial new funding system performed as intended, taking local property tax dollars from the outlying, property-rich suburban districts in Sarpy and Douglas Counties and redistributing them to districts identified by a state formula as having high needs.

Nearly $1.5 million in local property tax dollars moved out of Sarpy County and into Douglas County.

The Elkhorn Public Schools lost $1.07 million in property tax revenue, the most of any district, in dollar terms.

The Millard Public Schools district was the big gainer, dollar-wise. It received nearly $2.66 million more in property tax revenue than it would have gotten without the common levy system. The Westside Community Schools and Ralston Public Schools also were gainers.

Ken Fossen, assistant superintendent of the Millard Public schools, said the common levy system misfired for OPS this year primarily because of an oversight by state officials who calculated how much state aid should go to the 11 member school districts.

State aid, funded by state sales and income taxes, is supposed to close the gap between a district's funding needs for educating children and its available resources, primarily property taxes.

State officials calculated each district's aid individually, rather than for the learning community as a whole, which was called for by state law, Fossen said.

When that was done, he said, OPS for this year got more state aid directly to the district than it would have gotten sharing through the learning community.

OPS's state aid went up $12 million, nearly 7 percent over last year, which triggered a reduction in the district's share of property taxes distributed through the learning community, he said.

“That's why it threw in a year here that people are scratching their heads saying ‘Well, how did that happen?'” he said.

Rather than recalculate the aid, senators amended the learning community law to delay by one year the start of calculating the aid for the learning community as a whole, Fossen said.

Next year, Fossen said, when aid is calculated as a whole, OPS will probably not see the big boost it got this year, and its share of property taxes through the learning community's common general fund levy should go up to compensate.

Several officials said the unexpected result may also reflect changes senators have made over the past year two years in the state formula that determines how much money each district needs to operate. By adjusting the formula to recognize greater education needs in other learning community districts — like rapid enrollment growth and the need to build new schools — other districts were entitled to a bigger share of the learning community's pot of local property tax dollars.

Those changes have softened the financial blow of substantial property tax losses that some districts had predicted several years ago, officials said.

Both Fossen and OPS Assistant Superintendent Dennis Pool said that next year's property tax distribution should look more like officials anticipated when the learning community was created.

“It's not something you can look at one year and say, ‘This is bad,'” Pool said.

Omaha school board President Sandra Jensen said the glitch did not hurt her district.

“Even though it was calculated differently than the way it's going to be done in the future, we actually received our revenue target,” Jensen said.

Overall, Jensen said, the common levy system did “exactly what it's supposed to do” with the aid calculations provided by the state. When properly implemented in the future, she said, it should provide a stable funding system for the member districts.

Fossen said Millard won't see such a big boost next year.

“Next year's finances are going to reflect what people were thinking it was supposed to do,” he said. “And in fact, in the end, if you total up property tax and state aid, it's doing today what it was supposed to do.”

Of course, the $32 million cut in state aid for 2010-11 contemplated in the Legislature's special budget-cutting session will affect learning community schools next year, as it will most of the state's school districts. But Fossen said he's confident that the common levy will work as designed no matter what aid levels senators set.

Elkhorn Superintendent Steve Baker said he anticipated his district's property tax loss, though he was surprised to see Omaha Public Schools joining his district on the losing side of the ledger.

Baker said the learning community took away the stability his district used to enjoy when it could count on steady growth in property values to help pay for a growing district.

“What's tough right now is the unknown, and then throw into that I'm opening two schools next year, and that's frightening,” he said.

Douglas County West lost the most property tax revenue as a percent of what it put in, putting in $6.26 million and getting back $5.82 million, a loss of $440,000 or 7 percent.

Education officials throughout the metro area are waiting to see if the Nebraska Supreme Court will agree to hear a lawsuit filed by the Sarpy County Farm Bureau and eight individuals challenging the common levies as unconstitutional. If so, the future of the common levy system could be uncertain for months until the court rules.

Contact the writer:

444-1077, joe.dejka@owh.com

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