Legislative Updates

NSEA Legislative Update - April 28, 2017

Today’s Message:

  1. NEXT WEEK: Oppose Draconian Retirement Bill
  2. Governor’s Tax Bill Returns to Agenda on Tuesday, May 2!
  3. Oppose Unfunded Mandate: Reading & Third Grade Students
  4. Fight Attempt to Cut Funding for School Retirement Plans
  5. Review of Education Related Priority Bills

NOTE: For a list of all introduced bills and resolutions introduced during the 2017 Legislative Session, click here.  For a list of all priority bills, click here.

 

Oppose Draconian Retirement Bill: LB415 Imposes Severe Return to Work Restrictions for School Retirees, Eliminates true Rule of 85 for future teachers & other public school employees

NSEA opposes LB415, introduced by Senator Mark Kolterman. The bill is scheduled for General File debate on Thursday, May4th. This proposal would:

  • Unfairly create a third tier of retirement benefits for plan members, effectively eliminating the Rule of 85 for future school employees;
  • Eliminate the ability of school districts to engage many retired school teachers as substitute employees following their retirement;
  • Place severe restrictions on a teacher’s ability to volunteer in schools after they end their employment with a district; and,
  • Prohibit a teacher who accepts an early retirement inducement from teaching for three years.

LB415 would change the current retirement “Rule of 85” for new employees hired after July 1, 2018.  The current rule allows school employees to retire at age 55 if their age and years of service total a minimum of 85.  Moving the retirement age to 60 effectively creates a “Rule of 95” or higher, as most educators have been in the classroom for 35 years – or more – by the time they reach age 60.

The bill eliminates the exception for substitute employment and volunteer services during the 180-day break in service period following retirement. By removing the exception, which currently permits such service following retirement on an intermittent basis, LB415 will make it impossible on any given school day for some school districts to fill vacancies with certificated teachers.  The School Plan is the only NPERS plan with a 180-day requirement.  The Judges, State Patrol, State and County plans all have 120 day requirements with no exceptions. If you eliminate the exceptions by adopting LB415, it is only logical to also set the period at 120 days to mirror the other NPERS’ plans. Having a 120-day period would still prohibit a newly retired teacher from signing a full year contract on September 1, but it would help ease the shortage for substitute teachers in the state, especially in rural areas during the late fall period, including November and December. The definitions on when a retiree may return to work on an occasional, part-time basis completely ignore the extremely high need of school districts to hire qualified substitute teachers from among the pool of retired teachers.  School districts cannot find sufficient subs now. The prohibition from providing occasional, part-time substitute teaching services only aggravates that problem.

Also, the bill stipulates that if a teacher accepts an early retirement incentive from a school district then the teacher is prohibited from working, substituting or volunteering in any public school in the State of Nebraska for THREE YEARS!  This provision is particularly unreasonable as it places an untenable burden on teachers accepting such inducements. The fact is that such agreements benefit taxpayers and school districts. Districts offer such incentives because they allow districts to replace long-time, higher paid teaching positions with entry level positions. This assists districts in balancing their budgets during revenue shortfalls. The fact that the return to work provisions now only affect school employees, and that similar provisions are absent from county workers, state workers, and the state patrol plans creates a bias against the teaching profession.

Opposing LB415 helps ensure that school districts across the state are provided a robust substitute pool of employees. Unlike other public sector jobs, if a front-line employee is sick and unable to work, the school district cannot simply leave the classroom of children unattended.

It is important to note that the statewide School Employees Retirement Plan is in great shape. No changes need to be made the pension plans and LB415 is completely unnecessary. Thanks to reforms made by the Legislature in 2013 in LB553, the plan is 90 percent funded and is projected to be 100 percent funded by 2040. An 80 percent funded ratio or higher is generally accepted as sufficient.

ACTION NEEDED: The bill is schedule for Thursday, May 4th -- Please contact your state senator to let them know that the return to work restrictions and Age 60 minimum retirement age change in LB415 is severe and unnecessary for the continued financial health of the school retirement plans. Tell senators to vote no on LB415! 

FIND AND EMAIL OR CALL YOUR SENATOR:

http://www.nebraskalegislature.gov/senators/senator_find.php

 

Governor’s $450 million Tax Cut Rescheduled for Debate

Legislative debate on LB461 is set for debate this Tuesday, May 2nd. The bill is on General File and would severely curtail the State’s ability to fully fund state aid to education under TEEOSA. 

LB 461 is bad for kids and bad for schools.  The State of Nebraska is already 49th in the Nation for providing state aid for K-12 Education.  Implementing a massive tax, such as is proposed in the bill will make it nearly impossible for the State to providing adequate and necessary funding for K-12 Education.  School districts would likely see drastic cuts in TEEOSA under LB461.

LB 461 is estimated to provide more than $400 million in individual and corporate tax relief, and around $46 million in property tax relief.  What does it do?

  • The Committee advanced version of LB 461 would reduce the four-existing individual income tax brackets to three by combining the first and second brackets into one tax bracket at 3.25%. The new top bracket rate would begin to decrease when projected rate of growth in state general fund receipts exceed 3.5%.
  • Reduces the top Corporate Income Tax rate from 7.81% to 7.59% using a similar mechanism of lowering the rate based on projected growth in state general fund receipts.
  • Value agricultural land using a formula where values would be based in both income potential and market value.
  • Prevent aggregate agricultural land valuation from increasing more than 3.5% from the prior year.

In times of a state budget shortfall such as now, the sheer volume of the income tax cuts proposed will put pressure on the Legislature to push more state funded responsibilities like education onto local property taxes to balance the state budget. The Legislature needs to ensure mandatory cuts in income taxes do not lead to increased pressure on property taxes by expanding the tax base.

LB 461 bases income tax cuts on projected, not real general fund revenue receipts. It is imperative the Legislature not budget mandatory income tax cuts on “projected” revenues. Doing so could again put more pressure on the Legislature to underfund state priorities like schools.

ACTION NEEDED: Please contact your state senator to let them know that Income Tax cuts for the highest income tax bracket while the state is already experiencing a $1.2 billion revenue shortfall is irresponsible!

FIND AND EMAIL OR CALL YOUR SENATOR:

http://www.nebraskalegislature.gov/senators/senator_find.php

 

LB651 Would Require Automatic Retention for Third Grade Students

There will be an attempt next week to pull a bill out of committee requiring schools to hold children back in third grade if they are not proficient in reading. This proposal is in LB651, introduced by Sen. Lou Ann Linehan, and is consistent with other national trends that have attempted to centralize education policy away from the classroom and local districts.

The practice of holding students back to repeat a grade, is not an evidence-based practice used to improve reading proficiency. Over the past decade, policy makers nationwide have been urged to abandon retention policies. For example, in 2015, the National Council of Teachers of English (NCTE) strongly opposed legislation mandating that children, in any grade level, who do not meet reading proficiency in reading be retained. The practice is strongly correlated with behavior problems and increased dropout rates.

Alternatives to grade retention in elementary grades include improving skilled teaching (i.e. providing additional support for teacher professional learning, instructional coaching, etc.), increasing instructional time, and providing key investments in early childhood education.

Also, there is no additional funding available to school districts to implement the requirements in LB651. The bill requires each school district to provide “summer reading camps to third-grade students scoring below grade level on the statewide reading assessment.” The reading camps require staffing, instructional resources, building resources, etc.  This would place additional pressure upon school districts already facing TEEOSA cuts this year.

The NSEA agrees that not reading at grade level in the third grade is very relevant.  However, we also must acknowledge that this is a symptom of a variety of issues going on in the child’s life.  We must empower local education professionals to collaborate with early childhood programs, parent engagement programs, mentoring programs, and others to address the causes to these problems.

 

Linehan Attempts to Cut Funding for the School Retirement Plans

This week, Senator Linehan introduced an amendment (AM1150) to LB327 that would have cut state aid amount to the school retirement plans in half.  Currently, the State of Nebraska contributes two percent of all school employee salaries into both the NPERS and OSERS school retirement plans.  This would have reduced funding to both plans by about $23 million.  Fortunately, Linehan was forced to withdraw her amendment after debate on her proposal.

Prior to 2014, the contribution was one percent.  This amount was increased because of LB553, passed by the Legislature in 2013. The bill represents an ongoing agreement between the Legislature and school employee groups.  Prior to 2013, there was a projected shortfall in the state school retirement plan of roughly $100 million a year, continuing for several years going forward.

LB553 made foundational changes to the school retirement plans to cover this shortfall, and provided additional funding to ensure that both retirement plans were financially sound going forward. Primarily, it eliminated a contribution increase sunset for all school employees, setting it at 9.78 percent of pay.  The previous contribution rate was 7.35 percent of pay.  This lower employee contribution rate was supposed to resume beginning in 2017.  Now, school employees are contributing an additional 2.43 percent of pay annually because of LB553.

The agreement consisted of substantial gives on the part of school employees, where about 80 percent of the projected annual shortfall was covered by increased contribution rates and a reduction in school employee retirement benefits. In exchange, the Legislature agreed to cover the remaining 20% of the shortfall by increasing the State’s contribution rate from 1 percent to 2 percent.

Today, the NPERS school employee retirement plan is financially sound after pension reforms were made by LB553.  Currently, the plan is 90 percent funded and is projected to being 100 percent funded by 2040.  An 80 percent funded ratio or higher is generally accepted as a preferred benchmark.  In 2016, a reduced benefit tier was added to the OSERS plan benefit by LB447 to further improve its position.

The “two percent” amount contributed by the State of Nebraska helps cover a portion of the retirement benefit for every school district in the state.  It covers all K-12 public schools, regardless of whether the school is equalized or non-equalized.  This is not the case with funding for state aid in TEEOSA.

If there is a shortfall in funding for the NPERS administered school plan, then the State of Nebraska is required to fund 100% of the shortfall.  The annual two percent state contribution is a hedge against that requirement.  The State is the guarantor of state retirement plan assets and must pay any actuarial required contributions, as required by law in Neb. Rev. Stat. sec. 79-966.01.

 

Review of Education Related Priority Bills

For a list of all priority bills, click here.

LB44 (Watermeier) Adopt the Remote Seller Sales Tax Collection Act

NSEA Position: Support (Prioritized and on Select File)

Provides that a remote seller shall be subject to Nebraska sales tax and shall remit the sales tax due if they meet either of the following conditions: (1) their gross revenue from the sale of tangible personal property, products delivered electronically, and services delivered into Nebraska exceeds $100,000 in the current or previous calendar year; or (2) Their sales transactions equaled or exceeded 200 separate transactions in the current or previous calendar year. A remote seller is defined as any person who sells tangible personal property, products delivered electronically, or services for delivery into Nebraska and who does not have a physical presence in this state.

LB265 (Friesen) Provide for minimum amount of state aid based on number of students in local system

NSEA Position: Monitor (Prioritized and in Education Committee)

Changes the amount of state aid allocated per TEEOSA. The bill provides that each school district will receive at least a specified minimum amount of state aid per formula student beginning in FY2018-19. Based upon the calculation of state aid per the formula for the FY2017-18 school year, LB 265 will increase state aid allocated to schools by an estimated $71.8 million in FY19 and $152.6 million in FY20.

LB337 (Smith) Change income tax rates and provide deferrals of rate changes

NSEA Position: Oppose (Prioritized and in Revenue Committee; amended into LB461)

Cuts the top income tax rate from 6.84% to 5.99% depending on forecasted growth. If forecasted growth for upcoming year is greater than 3.5%, a reduction in the top rate is “triggered.” the wealthiest Nebraskans and offers little to no tax cut for middle-class Nebraskans. The average nominal tax cut for the middle class would be $39, while the average tax cut for wealthiest one percent of Nebraskans would be $5,810.  By FY27-28, the tax cuts are projected annually to be over $287.9 million.

LB338 (Brasch) Adopt the Agricultural Valuation Fairness Act

NSEA Position: Oppose (Prioritized and in Revenue Committee; amended into LB461)

Provides that agricultural land and horticultural land shall be valued at its agricultural use value regardless of any value which such land might have for other purposes. Requires that agricultural use value be used for purposes of TEEOSA. Agricultural use value is defined as the value of land for agricultural or horticultural purposes or uses without regard to the value of such land for other purposes or uses and that this value shall be determined by the county assessor using an income-approach calculation.

LB409 (Groene) Change the base limitation and local effort rate for school districts

NSEA Position: Oppose (Prioritized and on Final Reading)

Changes the formula which provides state aid to schools pursuant to TEEOSA. The base limitation rate or allowable growth rate in the aid formula is decreased by 2.5% from 2.5% to 0% for FY2017-18 and FY2018-19. Thechangeintheratedecreasesthecostgrowthfactorintheformulawhichisusedto inflate school district expenditures for purposes of calculating aid. increases the local effort rate to $1.01 in each fiscal year.  The local effort rate in the formula is currently set at $1.00 for FY18 and FY19.  AM955 and AM474 filed.

LB415 (Kolterman) Changes benefits for certain retirement system members

NSEA Position: Oppose (Prioritized and on General File with AM923; for debate on May 4th)

Provides that an employee who is a member of the School or Class V School Retirement Plans and retires may not be re-employed by an employer associated with any of the retirement plans cited within 180 days with no exceptions. Currently, there are exceptions for intermittent employment during the 180-day period. Provides that a member receiving a voluntary separation agreement would be prohibited from employment within three years following retirement.  Members who return to work following retirement would have a ten-year vesting period rather than the current five-year period. Also, provides that for members of the School and Class V Plans hired on or after July 1, 2017, the retirement age with full benefits will be 60 with 30 years of service, under the Rule of 90. Currently, members can retire with full benefits at 55 with 30 years of service, under the Rule of 85.

LB427 (Vargas) Require breastfeeding accommodations for student-parents

NSEA Position: Support (Prioritized and on Final Reading; includes LB428)

Requires public, private, denominational or parochial schools to provide for private or appropriate facilities or accommodation for milk expression and storage for students attending such schools who are mothers.

The federal Fair Labor Standards Act requires employers to provide a place, other than a bathroom, for employees to express breast milk which is shielded from view and free from intrusion from coworkers and the public. Employers with less than 50 employees are not subject to the requirements, if the employer would have significant difficulty or expense. Amended by AM908 to clarify staff authority to regulate student behavior to prevent interference with the educational process. AM987 filed.

LB461 (Smith) Correct references to a federal act in the revenue state (Now Governor’s Tax Cut Plan)

NSEA Position: Oppose (Prioritized and on General File; w/ LB337 and LB338; for debate on May 2nd)

As amended cuts the top income tax rate from 6.84% to 5.99% depending on forecasted growth. If forecasted growth for upcoming year is greater than 3.5%, a reduction in the top rate is “triggered.” the wealthiest Nebraskans and offers little to no tax cut for middle-class Nebraskans. Cuts the corporate income tax rate from 7.81% to 5.99%. Provides that agricultural land and horticultural land shall be valued at its agricultural use value regardless of any value which such land might have for other purposes. Requires that agricultural use value be used for purposes of TEEOSA. When fully implemented, the bill will cut revenue to state government by $439.5 million annually.

LB484 (Kolowski) Create the School Financing Review Commission

NSEA Position: Support (Prioritized and in Education Committee)

Establishes the School Financing Review Commission consisting of twenty members. The Commission is to conduct an in- depth review of the financing of public elementary and secondary schools which includes specified areas for review that are identified in the bill. Members of the Commission are eligible for the reimbursement of actual and necessary expenses. The Commission ceases to exist on December 31, 2026. A progress report is required by December 31, 2017 and a final report is to be presented by December 1, 2018. Thereafter, reports are required in each even-numbered year regarding the adequacy of school funding sources beginning in July of 2020.

LB512 (Educ Cmmt) Change provisions related to education

NSEA Position: Oppose (Prioritized and on Final Reading; includes LB457, LB175, LB398, LB235, LB123)

NDE Technically Bill. Eliminates outdated language and limitation of a specific fiscal year that NDE may use improvement funds for the ACT, permits “current year” application for Enrollment Option Program, extends the date for completion of the assessment of every public school building by the NDE state school security director by 2 years to reflect budget cuts, include language required under current federal law for Perkins career and technical education, permits a school board to designate someone else to carry out the duties set forth in that section of statute for the secretary of the school board, permits NDE to utilize state funds for special education for a specific school district to repay the US Dept. of Education for that school district's failure to meet federal maintenance of effort requirements for IDEA instead of the school district having to send state funds to NDE and then NDE having to send those state funds to US Dept. of Education, and other provisions. An amendment has been added that will permit voluntary separation agreements outside of the lids specifically for teachers that do not exceed $35,000.

LB595 (Groene) Provide for the use of physical force, restraint or removal in response to student behavior

NSEA Position: Support (Prioritized and on General File with AM581)

Allows teachers and administrators to use necessary force or physical restraint to subdue the student until such student no longer presents a danger to him or herself, the teacher or administrator, or other students. Allows the teacher or administrator to use physical restraint to protect school property. Allows teachers to remove a student who repeatedly interfered with the teacher’s ability to teach, or whose behavior is so disruptive that it seriously interferes with the class' ability to learn, or who commits other disruptive acts, punishable in the Student Discipline Act. The administration can then place the student in another classroom, in-school suspension or into alternative education programs. The student cannot be returned to the original classroom without the teacher’s permission. NSEA will work with the Committee and school administrators on further study and action on the serious issue of violence in our schools.

LB640 (Groene) Change provisions of the Property Tax Credit Act and provide school dist. tax relief

NSEA Position: Oppose (Prioritized and on General File)

Changes the maximum levy for school districts from $1.05 per one-hundred dollars of taxable valuation to $1.00. Dept. of Revenue is to calculate and distribute school district property tax relief aid to each local system that qualifies. A local system qualifies for such aid when its general fund property tax receipts exceed 60% of its total general fund revenue. Requires that the property tax gap for each local system that qualifies for school district property tax relief shall equal the general fund property tax receipts minus 60% of the total general fund revenue for the system. AM752 and AM992 filed.

LB651 (Linehan) Adopt the Nebraska Reading Improvement Act

NSEA Position: Oppose (Prioritized and in Education Committee; motion filed to pull out of Cmmt.)

Requires school districts to develop individual reading improvement plans for students in kindergarten through grade three no later than 30 days after a deficiency in reading is identified based upon state-approved local or statewide assessments. The plan is to be created by the teacher, principal, other pertinent school personnel and the parents of the student. Students with a plan are to receive intensive reading intervention services until the student no longer has a reading deficiency. Beginning 2019, if a student’s reading deficiency is not remedied by the end of grade three, the student must be retained in that grade. Schools are required to provide summer reading camps for all grade three students scoring below grade level on the grade three statewide reading assessment. Schools also must provide retained students with intensive reading intervention programs. Intensive acceleration classes must also be provided for students who are retained in the third grade and who were also retained in an earlier grade.