School aid outlook bleak

Nebraska state budget forecasts are starting to paint a clear and dark picture of what could happen to school funding when the federal stimulus money runs out.

The next school year looks like the calm before the storm.

The state's 253 school districts will see an overall 1.75 percent increase in state aid next year, made possible by $140 million in federal stimulus funds. The Omaha area's 11 learning community districts will see their aid, as a whole, jump 6.7 percent.

The increase in aid, several school officials said, may be enough to forestall for one year the kind of drastic school budget actions taking place in other states. But as Iowa districts contemplate teacher layoffs for next year and Kansas City, Mo., closes schools, Nebraska district officials are looking at the 2011-12 school year with an uneasy feeling.

“The forecast just doesn't look good,” Bellevue school board member John Hansen said. “The stimulus dollars really helped last year and this coming year, but it all goes away.”

Last year, the Nebraska Legislature put $94 million of stimulus money into state aid for the 2009-10 budget.

Nebraska's school aid formula calculates how much money each district needs to educate its children, then subtracts what the district can get from property taxes and other funding sources. State aid helps fill the gap.

Thursday, state aid to Nebraska schools was certified by the state at $950 million for the 2010-11 school year. About 15 percent of that aid comes from the American Recovery and Reinvestment Act, or ARRA — the stimulus money.

Individual school districts will get their share of that amount, barring any state legislative action to change it. No bills are pending to do that.

In the Omaha metropolitan area, districts in the Douglas-Sarpy County learning community will receive a total of $408.3 million, up $25.6 million from this year.

That figure could have been almost $1 million higher, but aid now is calculated differently under the learning community law. Instead of calculating aid for individual districts, as in prior years, the law calls for lumping all 11 districts together.

By including suburban, property-rich districts with urban ones in the calculation, aid was reduced by about $944,000 — or about $9 per student — compared with if the districts' aid had been calculated separately.

Statewide, the Nebraska Legislature's fiscal office estimates, school districts will need more than $1 billion in state aid in 2011-12. That same school year, the stimulus money runs out, creating what has been called “the cliff effect.” If state officials hope to fully fund state aid at the estimated level, they will have to make up the difference with state funds.

Greg Adams, chairman of the Legislature's Education Committee, said state officials made a “conscious trade-off” to accept stimulus money to avoid cuts to schools or other state programs, knowing that a day of reckoning would come.

“The ARRA money's gone,” Adams said. “We know that. How much we can grow aid, if at all, to accommodate some of that loss is really all going to be based on the revenue picture and what the body's willing to do.”

Lawmakers have reduced school aid before, cutting back significantly during the economic recession of 2001. At that time, lawmakers slowed the growth of aid more than they have so far during the current slowdown, Adams said.

Over the past 10 years, lawmakers have cut state aid to Nebraska schools three times, the largest drop 5.5 percent in 2000-01. Overall, however, aid grew during the decade from $561.3 million to $933.8 million.

Ken Fossen, chief financial officer for the Millard Public Schools, said school boards will have to account for the looming gap this spring and summer as they draw up next year's budget.

“We will need to start positioning ourselves for the following year, when that $140 million in stimulus money is pulled from the Nebraska formula,” Fossen said.

In the short term, districts might dip into reserves to cover some operating costs, but that can't be sustained and creates its own cliff effect when the money runs out.

Several districts, including Millard, approved two-year contracts with teachers unions last year, which will be up for negotiation at the same time school boards will be contemplating how to deal with the “cliff.”

Hansen said Bellevue school board members do not anticipate requiring furloughs or layoffs in the coming year. If cuts are needed, the board wants to make them “as far away from students as possible,” he said.

Hansen said he is concerned that the economy eventually will affect property taxes, the other major source of school funding.

Property valuations, which are determined based on two-year-old property sales data, could show some erosion this year after holding relatively steady, he said.

Iowa school districts, meantime, are dealing with a midyear 10 percent state budget cut as they head into the budget season.

Ordered last fall by Gov. Chet Culver, the cutback cost Council Bluffs Community Schools $4.5 million and will probably lead to teacher and staff layoffs, district spokeswoman Diane Ostrowski said.

Several employee groups already have agreed to wage freezes for next year.

The Council Bluffs school board will meet later this month or next to consider its options, which also include increasing class sizes, delaying textbook purchases and streamlining business operations, Ostrowski said.

“What we're presenting to the board are some scenarios that have a combination of teacher and other staff layoffs as well as a likely property tax increase,” she said.

Contact the writer:

444-1077, joe.dejka@owh.com

« Metro/Region

Share