Nebraska Cuts Likely to Hit Rural Districts Harder

Last Updated: December 29, 2009

This article appeared in the December 2009 Rural Policy Matters.

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Nebraska Cuts Likely to Hit Rural Districts Harder 

In Nebraska, budget shortfalls will likely fall harder on rural districts under a funding cut approved in a special legislative session in November when legislators approved Governor Dave Heineman’s proposed freeze on state aid for school districts for next year.

The legislature also approved changes to the aid formula that affect how state aid is distributed to districts. Specifically, the changes restrict school spending increases in districts with stagnant or declining enrollment. The arrangement will shift some state spending from rural districts to urban districts and will make it harder for rural districts, many of which already have very high local tax rates for schools, to address increases in operating costs that occur despite stable or decreasing enrollment.

The appropriations session was called to deal with an anticipated $335 million shortfall in the state budget covering the fiscal year that ended in July and the next two years. Alterations to the formula resulted in $47 million in cuts from next year’s total state education contribution, a gap that will be filled by stimulus funds. Total education contributions will remain level the following year, keeping total funding above the 2006–07 level and maintaining the state’s eligibility for stimulus funding. However, distributions to districts will vary and rural districts are expected to absorb the brunt of the impact.

School leaders in small rural districts have warned policymakers that there is little room to make adjustments without cutting personnel. Legislators will revisit the budget issues for the upcoming biennium when they return for their regular session in January.

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Read more from the December 2009 
Rural Policy Matters.