����October 7, 2009 Dear Governor Heineman and Nebraska State Senators, As you prepare for a Special Session, we urge you to proceed with caution regarding any proposed cuts in state aid to education. Some may argue that state aid to education received the greatest increase in funding for the biennium and therefore should be first on the cutting block; however, all of the increase in state aid to education came by way of Federal Stimulus dollars. As you know, the $234 million in federal education stabilization funds was dedicated to state aid to education and is being distributed through the state aid formula. It is important to remember that when the Department of Education began releasing stimulus funds last April, it told states the money was to be used to boost funding for education and protect key programs and jobs. From very early on, the Obama administration’s message to states was that stimulus funds earmarked for education are to "supplement, not supplant" state funding for education. Nebraska submitted its plan for these funds and provided assurances that it would adhere to that plan as a condition of receiving the federal stabilization dollars for education. The state could face federal sanctions, as well as loss of that federal funding, if it begins to play a ‘shell game’ with those education stabilization funds and puts itself out of compliance with the approved plan. It is not okay to ‘shuffle’ these federal funds. In addition, using the stabilization funds according to the plan adopted by the state is a down payment on Nebraska’s ability to receive federal Race To The Top (RTTT) grant funds. The federal Department of Education Inspector General reports that some states are, indeed, inappropriately using stimulus dollars to replace the money they’re cutting from education. In at least one case, the federal Department of Education has blocked a state from drawing stimulus money because it was cutting school funding. As you know, cuts in the needs-based funding for schools will hurt students. Funding cuts will lead to course and program reductions or eliminations, teacher layoffs and unmanageable class size. Funding for education affects every community and every Main Street in Nebraska. Such funding is a key to economic vitality and growth. Funding for our schools truly does stimulate the economy and, particularly in these economic times, that is exactly what our state and nation need.

We commend you for making education a priority and ask that you continue to support that priority. It is the right thing to do for our state, our communities and our children. Sincerely, Jess Wolf Craig R. Christiansen President Executive Director cc: Commissioner Roger Breed State Board of Education Members Nebraska Congressional Delegation �

History of Certified State Aid and Special Education Appropriations

School Fiscal Year Certified State Aid Total K-12 Disbursements

1989-90 $133,616,100 $1,162,693,038

1990-91 $311,476,713 $1,237,691,767

1997-98 $465,944,483 $1,649,399,358

1998-99 $591,240,236 $1,728,889,710($1.10 levy limitation was implemented in 1998-99)

2000-01 $561,345,705 $1,928,410,090

2001-02 $644,988,575 $2,053,184,001($1.00 levy limitation was implemented in 2001-02)

2002-03 $661,928,207 $2,150,922,023($22M less than original certification of $684,151,367)

2003-04 $640,701,878 $2,238,430,248($81M less than original certification of $722,525,118; the $1.05 levy limitation implemented in 03-04;Reduced formula need through temporary aid adjustment, gave districts levy exclusion)

2004-05 $634,317,276 $2,330,513,549($25M cut - temporary aid adjustment, reduced formula needs, gave districts levy exclusion)

2005-06 $700,594,282 $2,470,097,701($27M cut - temporary aid adjustment, reduced formula needs, gave districts levy exclusion)

2006-07 $718,467,329 $2,618,547,219($28M cut - temporary aid adjustment, reduced formula needs, gave districts levy exclusion)

2007-08 $768,613,973 $2,760,440,532($30M cut - temporary aid adjustment, reduced formula needs, gave districts levy exclusion)

2008-09 $839,390,581 not available($61M less than original certification of $900,876,659; reduced allocated income tax by $20M)

2009-10 $933,850,727 not available($7.5M less than original certification of $941,355,204. Reduced: Allowable Growth Rate, AllocatedIncome Tax Rebate, Averaging Adjustment, and Teacher Education Adjustment)

2010-11 $981,275,343 not available($51.6M less than original certification of $1.032B - LB545 changes)

State aid to education ( )teeoSa Formula

needS – ReSouRceS = State aidSpecial Receipts Allowance•

Teacher Education Adjustment •Transportation Allowance•

Elementary Class Size •Allowance (ending 13-14)

Distance Education & •Telecommunications

AllowanceLimited English Proficiency •

Allowance

Property Tax•Option Funding•Federal Funds•

Allocated Income Tax Funds•Fines, Fees•

State General Fund Appropriation•

The State Aid to Education formula represents what resources are necessary to educate a group or groups of students in

school districts of Nebraska. It is based upon average spending by like schools in Nebraska. When state aid is not fully funded,

it means that we are not providing the dollars necessary to educate Nebraska students. Any formula shortfall means that we

have chosen to provide a lesser education than needed by these students with various, specific needs. State Aid is not a

“wish” number – it defines the average cost of educating a similar group of students with, not a blue ribbon education, not a

high quality education, but with an average education.

Reve

nue

Sour

ces

Div

erte

d fr

om

K-12

Edu

catio

n

Tax Incremental •FinancingInsurance Premium •TaxPro Rate Motor •Vehicle TaxNebraska Super •Advantage ActNebraska Option •EnrollmentNebraska Income •Tax AllocationCarline Tax•

Public Power District •Tax - 5%Traffic Fines •and License Fee Decrease (Diversion Programs)School Land •DecreaseLottery Money•Business Inventory, •Farm Machinery/Personal Property Tax DecreaseGreenbelt•

History of Certified State Aid and AppropriationsSchool Fiscal Year State Aid Appropriation Total Disbursement

1998-1999 $591,240,236 $1,728,889,710($1.10 levy limitation was implemented in 1998-99)

2000-01 $561,345,705 $1,928,410,0902001-02 $644,988,575 $2,053,184,001

($1.00 levy limitation was implemented in 2001-02)

2002-03 $661,928,207 $2,150,922,023($22M less than original certification of $684,151,367)

2003-04 $640,701,878 $2,238,430,248($81M less than original certification of $722,525,118; the $1.05 levy limitation was implemented in 03-04; Reduced formula need through temporary aid adjustment,

gave districts levy exclusion)

2004-05 $634,317,276 $2,330,513,549($25M cut- temporary aid adjustment, reduced formula needs, gave districts levy exclusion)

2005-06 $700,594,282 $2,470,097,701($27M cut- temporary aid adjustment, reduced formula needs, gave districts levy exclusion)

2006-07 $718,467,329 $2,618,547,219($28M cut- temporary aid adjustment, reduced formula needs, gave districts levy exclusion)

2007-08 $768,613,973 $2,760,440,532($30M cut- temporary aid adjustment, reduced formula needs, gave districts levy exclusion)

2008-09 $839,390,581 n/a($61M less than original certification of $900,876,659; reduced allocated income tax by $20M)

2009-10 $933,850,727 n/a($7.5M less than original certification of $941,355,204; Reduced: growth rate, allocated income tax

rebate, cost averaging and teacher education adjustments.)

Public schools took a big budget hit from 2001-06. More than $432 million was cut from promised state aid during those budget years - and the dollars have never been made up. And

from 2006-09, the Legislature cut another $165 million from promised and needed state aid to education.

Protecting state aid to education protects not only Nebraska’s quality schools and our children, it also protects property tax relief. A cut in state aid to local school districts would simply push the problem onto property owners. The alternative is teacher layoffs, larger class size and complete elimination of programs.

The state has tied school districts’ hands with spending lids and levy caps. In fact, much of the state aid K-12 schools receive is appropriated to fund property tax relief — to make up for the revenue schools lost due to the state-imposed property tax levy cap. To emphasize: additional state aid was not and is not a windfall to schools, but a long-planned formula to replace lost property tax revenues.

K-12 education is not a “little extra” we can afford to cut. Nebraska has a constitutional obligation to provide for public education. Few other programs rise to the level of a constitutional obligation. We also have a moral obligation to provide our children with a quality education.

Yes, we need to balance the budget — but not on the backs of children.

TEEOSA CHANGES UNDER LB545*

2008-09 2009-10 2010-11 2011-12 2012-13(actual)

Current Law – Est. State Aid Total 839,390,579 941,380,498 1,032,918,967 1,140,052,416 1,219,030,929

Cost Growth Factor -9,404,320 -19,796,023 -31,004,336 -32,551,038

Averaging Adjustment 916,657 -32,671,330 -34,304,896 -36,016,251

Allowable Growth Rate (est. -.5%) -14,372,520 -30,278,154

Retirement Assistance 823,728 823,728 823,728 823,728

Learning Community Hold-Harmless 159,455

LB 545 Fiscal Impact -7,504,480 -51,643,625 -78,858,024 -98,021,715

Funding Components of LB545 Aid

General Funds 839,390,579 840,207,268 840,988,167 1,061,194,392 1,121,009,214

Federal (ARRA) Funds 93,668,750 140,287,176

Total Sate Aid 839,390,579 933,876,018 981,275,343 1,061,194,392 1,121,009,214

Percentage Increase over Prior Year 11.3% 5.1% 8.2% 5.6%

General Fund Percentage Increase overPrior Year 0.0% 0.0% 26.2% 5.6%

*Source-Legislative Fiscal Office, Fiscal Note LB545, totals include Insurance Premium Tax

NSEA Bargaining and Research, Larry Scherer