February 2, 2026
Sen. Dave Murman, Chairperson
Sen. Jana Hughes, Vice Chairperson
Sen. Danielle Conrad
Sen. Megan Hunt
Sen. Margo Juarez
Sen. Dan Lonowski
Sen. Glen Meyer
Sen. Rita Sanders
The Lincoln Public School District offers this testimony in opposition of LB 1038. Senator Hughes’ commitment and engagement in the School Finance conversation is valued and respected. The school finance reform concepts offered by Senator Hughes redistribute state dollars through several mechanisms and the proposal must be modeled and studied to fully evaluate the changes proposed.
Elimination of the Averaging Adjustment
The TEEOSA formula averages together low-spending, high-levy, low-valuation school districts requiring an averaging adjustment to address the gap that occurs compared to school districts across the state. Diseconomies of scale can occur at both ends of the school-size spectrum. Small districts have high fixed costs per pupil and large districts must invest in district-wide systems. This is often represented by what is called a J-Curve. Two Hundred of the 245 school districts in Nebraska have fewer than 900 students and half of the districts in the state have fewer than 340 students. The formula recognizes small districts by averaging district cost instead of per pupil cost. On the other end of the spectrum, the averaging adjustment accounts for larger districts historically up against revenue lids as low-spending districts averaged with each other. The averaging adjustment is 1% of basic funding in Lincoln and for a good example of a large mid-sized, low-spending, low-valuation school district, it is 3% of basic funding in Fremont. Equalized school districts have experienced cuts in funding over the years further highlighting the need for the averaging adjustment.
Elimination of the Allocated Income Tax Provision
Significant analysis is necessary to fully understand the implications of redistributing income tax proceeds from local communities through the state aid formula. I expect this will drive up property taxes in communities with a high portion of income taxes paid, such as Lincoln,
Disparate Changes in Adjusted Valuation within the TEEOSA Formula
Significant analysis is necessary to study taxes levied versus valuation growth. From 2008 to 2015 the value of agricultural land went up 144% more than residential land and taxes levied went up 20% more.
| Land | Valuation Growth | Taxes Levied |
|---|---|---|
| Agriculture | 421% | 259% |
| Residential | 277% | 239% |
| Commercial | 231% | 202% |
Revenue Composition Matters
The recent School Finance Review Commission Report Key Findings include an emphasis on the fact that state funds are now the majority funding stream for Nebraska’s schools, making up 53% of revenue as a whole. National data sets are not available yet but if all other states stay the same, Nebraska would now rank in the top third of states for percent of funding coming from state sources.
Schools prioritize stable and predictable funding for future planning at the local level. Property taxes are transparent, creating accountability for local decision making. The Lincoln community values and invests in great public schools. The Lincoln community invested in a Career Academy, Early Childhood Education, Technology, School Counselors, and Focus Programs to name a few.
Sincerely,
Liz Standish
Associate Superintendent for Business Affairs
Lincoln Public Schools
lstandis@lps.org 402-436-1635
