NSEA Legislative Update

Legislative Updates

NSEA Legislative Update – Friday, April 20, 2018

In this Update:

  1. 2018 Sine Die Legislative Report
  2. Review of Education and School Finance Related Priority Bills


2018 Sine Die Legislative Final Report

The Nebraska Legislature adjourned its 2018 session on Wednesday, April 18, with senators failing to reach consensus on a viable solution for Nebraska’s property tax crisis.

Nebraska’s current tax structure relies too heavily on local property taxes to fund K-12 education. About 72 percent of Nebraska school districts do not receive any state equalization aid, leaving those school districts to rely solely on property taxes for funding.  Even state aid for equalized school districts fails to keep pace with the increasing costs related to rapid student population growth and poverty in larger districts.


Property Tax Reform Failed; Effort to Call a Special Session

After stakeholders were unable to reach an agreement regarding tax reform, 13 senators submitted a letter to the Secretary of State requesting a special session to address property tax relief. Under state law, such a request needs the support of 33 senators. Because supporters were unable to get 33 senators during the session to support any of the various property tax relief proposals, many believe that it will be hard to find sufficient support for the effort.

There were three competing proposals to resolve the property tax imbalance. All failed to advance:

LB1084 by Sen. Briese would have broadened the sales tax base, added a high-earner income tax and increased the sales tax by a half cent.  The increased state funding would have been directed to K-12 education and property tax relief.  This “Nebraskans United” plan was developed over more than a year of collaboration and discussion between dozens of organizations (including NSEA) representing the education and agricultural communities.

LB829 by Sen. Erdman would have created a refundable state income tax credit of 50 percent of property taxes paid to schools. The plan would have required the state to come up with more than $1.3 billion in property tax refunds – about one quarter of the entire state budget – even though it offered no revenue sources for those refunds. Plan supporters are currently collecting petition signatures for inclusion on the November election ballot.

LB640 by Sen. Groene would have permitted school districts to qualify for additional state aid when its general fund property tax receipts exceeded 60% of its total general fund revenue. This would have increased state aid to education by eliminating the property tax rebate program.


Governor’s Income Tax Plan Failed to Advance

While most senators tried to resolve the property tax issue, the governor and Sen. Jim Smith were pushing for corporate and individual income tax cuts.  LB947 would have cut taxes on the wealthy while doing little for average Nebraskans. Families making less than $73,840 would receive no tax cut at all. The governor’s proposal would have lowered the top individual income tax rate from the current 6.84 percent to 6.75 percent in 2019, and to 6.69 percent in 2020. Nebraska’s top corporate income tax rate would have been lowered from the current 7.81 percent to 6.75 percent in 2019, and to 6.69 percent in 2020.  The bill would have shorted the state treasury by almost $650 million a year once it was fully implemented.


State Budget and Cuts for Higher Education

At the onset of the session, Gov. Pete Ricketts unveiled his budget proposals and tax plans representing draconian cuts to higher education. He proposed across-the-board funding cuts involving hundreds of millions of dollars for most state agencies and targeted the University of Nebraska system for one-third of his cuts.

Under Ricketts’ proposal, the university, state and community colleges would take a 2 percent midyear cut this year. In 2018-19, the university and state colleges would take a 4 percent reduction from the original amount set last spring and community colleges a 3 percent cut. Higher education took a midyear cut last year as well. The university’s cut was about 2.3 percent and the state and community colleges were cut about 4 percent.

Following lengthy debate and the inclusion of further state policy restrictions on Title X funding for women’s health and abortion, the state budget was adopted. The Legislature mitigated the governor’s proposed reductions of funding for the university, state colleges and community colleges by reducing cuts to 1 percent, rather than 2 percent as the governor had proposed ($15.5 million in cuts to for FY2018-19). These further reductions are likely to force higher tuition increases for students, with no increases in state grant aid. NSEA strongly opposed these cuts.


Investing in Public Education and Student Behavioral Health

An alliance of education groups, including the NSEA, partnered to support a suite of bills.  The package represented an investment in Nebraska’s future and to help public schools perform even better.  Groups including NSEA, the Nebraska Association of School Boards (NASB), the Nebraska Council of School Administrators, Stand for Schools, and the Baptist Pastors and Ministers Conference of Omaha.

Of these LB998, by Fremont Sen. Lynne Walz advanced and will create the Collaborative School Behavioral and Mental Health Program in each of Nebraska’s 19 Educational Service Units. Under the new law, a social worker will staff each ESU and would connect students with local mental health and behavioral health services. The social worker would meet with families, assess needs, identify barriers to services, and assist with making connections between students/families and the resources that exist within the community.


School Retirement Funding Proposal

LB548, introduced by Sen. Brett Lindstrom and as amended by AM1529, would have allowed Omaha Public Schools to sell pension obligation bonds to cover its retirement plan obligations. The bill was supported by both OEA, NSEA and 22 senators, but Sen. Mark Kolterman led an effort to kill the bill.

If LB548 had passed, bonding authority would have enabled OPS to spread future required contributions to be funded over a longer period – which would have minimized the likely impact on classroom funding. Other states have experienced success using these bonds to meet ARC obligations.  The bill provided that these bonds would have been paid from within the current levy, thus there would have been no resulting tax increase. OPS is working to improve the plan’s financial standing. Bonding would have provided a workable, reasonable and stable solution for OSERS and Omaha taxpayers.


State Aid to Education Spared from Additional Cuts but receives Negligible Growth

Spending for TEEOSA totaled just over $1 billion for FY2018-19 (a 0.17 percent or $1.69 million increase from the prior year).  No changes were made to the TEEOSA formula during this session. However, the formula was modified last year to reduce aid and the resulting impact was to increase the property tax share of school funding and reduce state aid share of funding. Without the reductions in 2017, state aid had been scheduled to increase to $1.047 billion so state aid for 2018-19 is actually $46.6 million less than previously permitted by law. 


Both Private School Funding Proposals Failed

LB295 and LB804 were proposed by Sen. Jim Smith, Omaha, and Sen. Lydia Brasch, Tekamah, respectively. Both would have diverted public tax dollars from the state treasury and funneled those dollars to private and corporate schools. Diverting public tax dollars to private and corporate interests erodes funding for our public K-12 schools, as well as community colleges, state colleges and the University of Nebraska.

LB295’s voucher scheme was an undisguised, blatant tax credit for wealthy individuals and corporations that donate money to fund scholarships at private schools. This scheme will drain needed funding from Nebraska public schools.  Public tax dollars would have been used to provide a tax benefit to those who make donations to private school scholarship granting organizations, which in turn, provide scholarships to students in private K-12 schools.

LB804 would have expanded the state income tax deduction of 529 College Savings Plan contributions to include private, K-12 tuition. Before the 2017 federal tax rewrite, 529 College Savings Plans could only be used for college tuition/expenses.  LB804 would have allowed tuition to private K-12 institutions to qualify as a 529 expense – and would have cost the state an estimated $19.3 million decrease over the next four years.


Social Security Tax Reduction Advanced

LB738, by Sen. Brett Lindstrom, was passed by the Legislature. The bill provides for the indexing of the amounts used for the Social Security adjustments to income at the same rate used for the indexing of individual income tax brackets. The current threshold is $58,000 for married filing jointly returns and $43,000 for all other returns. It is estimated that the annual fiscal impact to the General Fund will be $3.9 million by 2021.


Two Reading Proposals Adopted into Law

An amended version of LB651 by Sen. Lou Ann Linehan providing best practices in reading instruction, was amended into LB1081, the Department of Education Technical Bill, and passed into law during the final weeks of the session.  The third-grade retention provision originally contained in LB651 was removed entirely.

In addition, LB1052, by Sen. Patty Pansing Brooks, recognized the complexity of dyslexia and offers families and educators tools to assist students with the skills they will need to be academically successful. NSEA is supportive of mandating dyslexia training in teacher education programs because every teacher will likely have a student with dyslexia in their career and teachers need to know how to help those students.


State Board of Education’s New Assessment System

While the legislative session has ended, the State Board of Education is busy implementing the new state assessment system known as The Student-Centered Assessment System or (NSCAS). This includes new college, career, and civic life standards. The next student standards up for review will be the Social Studies Standards. Nebraska students continue to outscore peers in the National Math and Reading Assessments (NAEP).

The State Board continues to focus on its Strategic Plan “To lead and support the preparation of all Nebraskans for learning, earning and living. The strategic plan was developed in January 2016 and continues through 2026. LB1081, the State Board’s technical amendment bill passed this session and contained many technical amendments NDE needed. The State Board members continue to implement the strategic plan through work in committees.


Final Review of Education and School Finance Related Priority Bills

A number of bills were voted upon during the last day of the 2018 legislative session on Wednesday, April 18.  The Governor has up to five days to determine whether to sign or veto each bill.  If he vetoes a bill, the legislature will be unable to override it because it has now adjourned for the year.

The full list of senator, committee and speaker priority bills is available here.


LB953 (Albrecht) Change lump-sum settlements under Nebraska Workers' Compensation Act

NSEA Position: Monitor (Prioritized with AM1779, AM2742, AM2762 and AM2885, presented to Governor)

Portion of the settlement regarding medical expenses and Medicare's interests must be approved by the court if the employee's attorney affirms that the resolution of payment of disputed medical, surgical, or hospital services is in conformity with the compensation schedule and for the best interests of the employee or his or her dependents. The court would not be required to approve other areas of the settlement.

LB957 (Lowe) Provide procedures for payments under Nebraska Workers' Compensation Act

NSEA Position: Support (Prioritized with AM1952, AM2659, AM2673 and AM2818, presented to Governor)

Permits payment to be paid by check in addition to direct deposit, prepaid card, or similar electronic payment system. Payment by a method other than the method in which the employee was paid his or her wages can only be done upon agreement between the employee and the employer, workers' compensation insurer, or risk management pool.

LB998 (Walz) Create the Collaborative School Behavioral and Mental Health Program

NSEA Position: Support (Prioritized with AM2044, AM2572 and AM2713, presented to Governor)

Creates the Collaborative School Behavioral and Mental Health Program. The goal of the program is to provide a social worker in each educational service unit (ESU) to train school personnel and to work with parents, schools, behavioral and mental health care providers and other community resources to provide timely, effective and family-centered services. Establishes a Collaborative School Behavioral and Mental Health Fund which is to be administered by the ESU Coordinating Council. The fund is to consist of money transferred by the Legislature, donations, bequests, or other contributions from public or private entities or any federal funds. When the fund reaches a balance of at least $3.6 million, the ESU Coordinating Council is to begin implementing the program by employing a coordinator for the program and a social worker for each ESU.

LB1005 (Kolterman) Change county and school retirement provisions

NSEA Position: Support (Prioritized with AM2204 and AM2560, presented to Governor)

Changes county and school retirement provisions. Employers in the County and School Employees Retirement Plans are currently allowed to withdraw from the respective Plan.  However, there are no current statutory provisions that authorize the PERB to calculate the funding impact for the benefits of the affected terminated members, nor is there authority for PERB to assess that liability and related costs on the withdrawing employer. Establishes a process for County and School Plan employers that are contemplating business decisions that would result in withdrawal from the Plan.  Also, affected employees who are terminated from the Plan would be considered fully vested.  Within 90 days of the entity’s withdrawal, the affected members will be considered inactive. AM2204 incorporates LB698, LB699, LB700 and provisions of AM1758 to LB548 clarifying the OPS retirement required contribution amount.

LB1034 (Riepe) Change facility standards for school-age child care programs

NSEA Position: Support (Prioritized with AM2322, AM2573 and AM2676, presented to Governor)

Allows school-age child care programs operating in the same facility as an accredited or approved school under the Department of Education regulations that meet those standards for the care and protection of children to be deemed to meet licensing standards for licenses issued by the Department of Health and Human Services.



LB738 (Lindstrom) Change taxation provisions relating to income for social security benefits

NSEA Position: Support (Prioritized with AM1789 – Approved by Governor)

Provides for the indexing of the amounts used for the social security adjustments to income at the same rate used for the indexing of individual income tax brackets. The current threshold is $58,000 for married filing jointly returns and $43,000 for all other returns. By FY2021-22, it would eliminate $3.937 million annually in state revenue. AM1789 extends the effective date from tax year 2019 to tax year 2020.

LB874 (Urban Affairs) Change the Community Development Law

NSEA Position: Support (Prioritized with AM1823 and AM2057 – Approved by Governor)

Makes a number of changes to provisions in the Community Development Law related to tax-increment financing (TIF), including changes to record keeping, annual reporting of TIF projects to the Department of Revenue, cost reimbursements, substandard and blighted designations, cost-benefit analyses, auditing of TIF projects, and public notices and public hearings for TIF projects.

LB803 (Stinner) Change provisions for kindergarten, Step Up to Quality Childcare Act

NSEA Position: Oppose (Prioritized with AM1719 – Approved by Governor)

Changes provisions related to pre-kindergarten and kindergarten programs. The bill provides that pre-kindergarten programs may serve children until enrollment in kindergarten. Currently, they may offer services until the child reaches age 5. LB 803 also requires school districts to provide full-day kindergarten beginning with the 2019-20 school year.

LB931 (Howard) Provide requirements for opiate and controlled substance prescriptions

NSEA Position: Monitor (Prioritized with AM1849 and AM2228 – Approved by Governor)

Would generally prohibit medical practitioners prescribing opioid pain relievers for a patient younger than nineteen from prescribing more than a "seven-day supply" for such patients. A practitioner desiring to prescribe opioids to such a patient for the first time would also be required to discuss with reason for the prescription and the risks associated with opioid use to the patient's parent or guardian.

LB1078 (Crawford) Require reporting of sexual abuse allegations as prescribed

NSEA Position: Support (Prioritized with AM2318 and AM2434 – adds LB411 – Approved by Governor)

Extends this reporting requirement to all allegations of sexual abuse of a state ward, juvenile on probation, juvenile in a detention facility, and juvenile in a residential child-caring agency. Requires DHHS to include the following additional information in its annual report to the Health & Human Services Committee: The number of sexual abuse allegations that occurred for children being served by the Division of Children & Family Services and placed at a residential child-caring agency.

LB1081 (Education Committee) Nebraska Department of Education Technical Bill

NSEA Position: Support (Prioritized with AM2593 and AM2823 – adds LB651 – Approved by Governor)

Requires a learning community coordinating council to submit an annual financial report to NDE on or before January 31 of each year. Requires a learning community to have an annual audit but authorizes the State Auditor to determine if a less frequent audit is appropriate, but not less than once every three years. Eliminates requirements for schools to submit poverty and limited English proficiency plans beginning in FY2018-19. Eliminates the cap on the number of priority schools which may be designated by the State Board of Education at any one time. Removes the cap and states that no less than three schools may be designated at any one time.

LB1090 (Smith) Change provisions relating to inflation adjustments, and deductions

NSEA Position: Neutral (Prioritized – Approved by Governor)

Beginning with tax year 2018, that the personal exemption credit shall be multiplied by the total of the child credits and dependent credits taken on the federal return, plus two for those taxpayers filing a married filing jointly tax return and plus one for other returns. For tax year 2018, the credit amount is $134. For tax year 2019 and thereafter, the credit amount is to be adjusted for inflation based on the percentage change in CPI-U. The credit is available for any person who cannot be claimed as a dependent on another taxpayer’s return. Would increase state revenue by $326 million in FY2018, and $257 million in FY2019.



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

NSEA Position: Support (Prioritized on Final Reading – Failed to advance)

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.

LB295 (Smith) Adopt the Opportunity Scholarships Act and provide tax credits

NSEA Position: Oppose (Prioritized on General File – Failed to advance)

Creates nonrefundable income tax credits for contributions to a scholarship-granting organization that provides education scholarships to eligible students to attend a private school in Nebraska. The same basic credits would be available to individuals (resident and non-resident), pass-through entities, estates or trusts, and corporations. AM1418 imposes limits on the amount of the credit for various taxpayers as follows for tax year 2019. The total amount of credits for tax year 2019 is capped at $2 million. Each subsequent tax year the amount of the cap is indexed for inflation and may also be increased by 20 percent if the prior year's intended tax credits exceed 95 percent of the prior year's annual limit. The annual limit may not exceed $10 million in any tax year.

LB548 (Lindstrom) Changes to funding mechanisms of OSERS

NSEA Position: Support if amended (Prioritized on General File – Failed to advance)

Two amendments to the bill are being considered. Both amendments would replace the underlying bill. AM1758 would require that if OPS fails to pay their statutorily required actuarial retirement plan contribution, then their state aid funds would be withheld until payment is made. AM2595 has also been filed permitting OPS to utilize pension obligation bonding to fund required contributions over a longer funding period.

LB640 (Groene) Change provisions of the Property Tax Credit Act

NSEA Position: Oppose (Prioritized on General File – Failed to advance)

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.

LB778 (Groene) Require voter approval for school district building fund

NSEA Position: Oppose (Prioritized on General File – Failed to advance)

Requires that the authorization to impose a property tax levy to build a school building, addition or improvement to a school building must be voted on by school district patrons at a special election or general election. A majority of those voting is needed to approve the levy. Eliminates provisions allowing school boards to transfer to the general fund of the district any portion of the funds derived from the levy that are not required for the purposes for which it was voted. AM2098 provides that funds established from the special tax levied prior to the effective date of this act cannot exceed 14 cents and that after the effective date of this act the amount levied cannot exceed 5 cents unless the project falls under the grandfather clause.

LB791 (Ebke) Change Nebraska State Patrol employees' bargaining rights

NSEA Position: Oppose (Prioritized on General File – Failed to advance)

Makes changes to the State Employees Collective Bargaining Act regarding the Nebraska State Patrol (NSP) to eliminate certain conflicts of interest and to provide for accountability and transparency in NSP investigations. Removes NSP sergeants from the collective bargaining unit and places them in the supervisors unit. Removes disciplinary and investigative procedures of the NSP from the scope of collective bargaining.

LB838 (Wishart) Change provisions relating to the Indoor Tanning Facility Act

NSEA Position: Neutral (Prioritized on General File – Failed to advance)

Prohibits an operator, an owner of a tanning facility or a lessee of a tanning facility from allowing any person less than eighteen years of age to use tanning equipment at a tanning facility.

LB935 (Performance Audit) Change reporting under the Nebraska Advantage Act

NSEA Position: Support (Prioritized on Select File with AM1888 – Failed to advance)

Amends a number of Nebraska statutes regarding tax incentive programs to allow the sharing of confidential information between state agencies and require detailed reporting and data retention for purposes of performance audits. Provides that the Department of Revenue and the Department of Economic Development may disclose to the other agency identification information about taxpayers participating in tax incentive programs. The information received is to be considered confidential and any employee who discloses such information other than what is specifically allowed shall be subject to the appropriate penalties.

LB947 (Smith) Adopt the Nebraska Property Tax Cuts and Opportunities Act

NSEA Position: Oppose (Prioritized on General File – Failed to advance)

Changes income tax rates and eliminate certain exemptions and credits; repurposes property tax credit and the personal property tax relief (exemption) funds for income tax deductions and for property taxes paid by Nebraska residents of up to $230 per homestead that the taxpayer is living on.  The amount of the credit may be increased based upon the state revenue targets in future years. Similarly, a credit of 10% of property taxes paid on agricultural land is available to resident Nebraska taxpayers, increasing up to 30% of property tax paid if state revenue targets are met (essentially, starting in 2019, if actual state tax receipts come in at 100% of projected). Reduces the state income tax top rate from 6.84% to 6.75% for FY 2019 and to 6.69% for FY 2020. Reduces corporate income tax top rate by the same percentages.

LB1015 (Briese) Allow withholding from public of reports of injury for employee's identity

NSEA Position: Support (Prioritized on General File – Failed to advance)

Would allow any government entity to withhold information regarding reports filed which reveal the identity of the employee who is the subject of the report. These are reports of injuries arising out of the course of employment filed with the Nebraska Workers' Compensation Court.

LB1069 (Brasch) Change provisions related to the Committee on Americanism

NSEA Position: Oppose (Prioritized on General File – Failed to advance)

Changes the responsibilities of a committee on Americanism which school districts are currently required to appoint consisting of three members of the school board. Requires the committee to hold at least three meetings each school year, with at least one meeting to include public testimony. Various responsibilities of the committee with regard to the social studies curriculum are changed. Requires school districts to administer the one-hundred question civics portion of the naturalization examination administered by the United States Citizenship and immigration Services. The test shall be administered to students no later than the eighth and eleventh grades. Scores shall be reported to parents or guardians and aggregate scores for the district shall be reported to NDE.

LB1103 (Friesen) Provide a minimum amount of state aid for each school district

NSEA Position: Support if amended (Prioritized on General File – Failed to advance)

Changes the amount of state aid provided to schools through TEEOSA beginning in FY2019-20. Provides that the amount of aid distributed to each school district is to be the greater of 25% of the basic funding calculated for the school district or the total amount calculated pursuant to the act. If the bill was in effect in FY2018-19, an additional $197,435,000 of general funds would be needed to provide a minimum funding level equal to 25% of basic funding. Based upon estimated state aid to be paid in FY2019-20, the estimated fiscal impact of the bill is an additional $192,240,000 of general funds. AM2808 filed replacing the bill and incorporating provisions of LB1084.



LB801 (Stinner) Adopt Panhandle Beginnings Act to provide services to school-age children

NSEA Position: Support (Prioritized in Education – Held in committee)

Creates the Panhandle Beginnings Act. Establishes a pilot project to provide therapeutic school, day treatment and intensive outpatient services for school-age children in a therapeutic facility in the Panhandle of Nebraska. Provides intent language to fund the project in FY2018-19 through FY2022-23 with the expectation it will reach self-sufficiency and be replicated in other areas of the state. Provides services to enrollees through the end of the school year when they reach age 21 with preference given to those residing within Region I Behavioral Health Authority or Educational Service Unit #13 service areas. An enrollee must meet prescribed requirements to be admitted to the program and must be verified as a student with a disability. The program is to be collaborative with other governmental agencies and private mental health and behavioral health providers.

LB829 (Erdman) Adopt the Property Tax Relief Act

NSEA Position: Oppose (Prioritized in Revenue – Held in committee)

Provides, for tax years on or after January 1, 2019, a refundable credit against Nebraska income tax in the amount of fifty percent of school district taxes levied on the taxpayer’s property and paid by the taxpayer during such taxable year. School district taxes are defined as property taxes levied on property in Nebraska by a school district or multiple-district school system, excluding any property taxes levied for bonded indebtedness and any property taxes levied as a result of an override of limits on property tax levies approved by voters. Beginning in FY2019-20, it would eliminate between $636.9 and $720.3 million annually in state revenue.

LB1084 (Briese) Adopt the Property Tax Request Limitation Act

NSEA Position: Support – Nebraskans United Coalition Bill (Prioritized in Revenue – Held in committee)

Provides sunset dates for certain tax exemptions and incentives, changes other revenue and taxation provisions. Generates new revenue by closing some tax exemptions and bringing our state more in line with our neighbors. It will fund certain components of K-12 education in Nebraska to reduce reliance on property taxes. In consideration of this, the bill will enact a soft property tax asking limitation with provisions for high-cost circumstances and the ability of the voters to surpass it. Would increase the Property Tax Credit Cash Fund by $234.1 million in FY2018, and $418 million in FY2019.  Parts to be amended into LB1103.

LB1108 (Harr) Authorize tax credits, change sales tax rate, and provide for foundation aid

NSEA Position: Support (Prioritized in Revenue – Held in committee)

Authorize certain tax credits, change the sales tax rate, and provide for school foundation aid and certain grant programs. Dedicates revenue from a half cent increase in the state sales tax to a variety of tax credits for investment in job training, internships, childcare and childcare employees, light rail, transportation infrastructure and also a foundation aid program (an equal amount for each student).