Property Taxes & School Funding

Blue Hill Community Schools recognizes that there is an over-reliance on local property taxes to fund our annual operations. The State of Nebraska’s extreme reliance on property taxes to fund K-12 education is a serious issue.  Nebraska K-12 schools receive 49% of their funding from local property taxes while the national average is 29%. For the school year, 2016-17 Blue Hill Community Schools received 72% of funding from local property taxes!

Every year in September Blue Hill School’s sets a budget for a new school year.  This budget determines how much we will spend for the year to provide an education and to provide programs to benefit the students of the Blue Hill School District.  The 2017-2018 budget is very tight and we will try to get by with only asking taxpayers for what we need.  The amount that has been requested for operations has nearly been identical for 3 consecutive years.  This is done in spite of salary increases, insurance for employees increasing, transportation costs increasing and building utility rates increasing.  We have had to be very creative to cut costs while not cutting the quality of the education we provide.  To end the 2016-2017 Budget year there were no excess funds in the General Fund and we got by using available cash to finish the fiscal year.

BH Schools Expenditures and Property Values 2010-2018

Blue Hill Community Schools is not overspending and is not needlessly taxing the landowners of our district.  In fact, the Blue Hill School Board has been very emphatic about not raising the levy.  Everyone realizes that tax bills for property owners in Nebraska are excessive and continue going up.  This is related to the fact that property valuations increase.  We wish we could lower the tax rate as the valuations go up but the State of Nebraska's school funding formula TEEOSA, Tax Equity and Educational Opportunities Support Act, works in a way that as local property values go up then the amount of state equalization aid given to that local school district greatly decreases.

Since I arrived in Blue Hill for the 2010-2011 school year our revenue from state equalization aid has dropped from $2,049,448 in 2010-11 to $489,340 for 2017-18 causing an even larger over-reliance on local property taxes.  There is hope that the Nebraska Unicameral will pass legislation in this 2018 session to finally address how public schools are funded. We know that there is currently a very serious budget shortfall that the Legislature will have to address this session.  Unless the issue of how schools are funded and the great dependence on property taxes in Nebraska is addressed there will continue to be no relief for property owners.

Here are couple bills to consider

LB 829 – which proposes a refundable credit against state income taxes equal to fifty percent of property taxes paid to support schools.  The tax credit proposed by LB 829 — and a potential ballot initiative that may occur if the bill is not approved will reduce state revenue between $800 million and $1 billion. Senators could then face making massive cuts to education, public safety, and other vital services or will need to drastically increase sales taxes and fees to create other sources of revenue.

LB 1084 - this bill hopes to lessen property taxes while also generating $700 million in revenue.  This will be done by both imposing a cap on property taxes that are spent on education, by closing some tax “loopholes” especially for out of state landowners, by eliminating some sales tax exemptions, and by increasing cigarette taxes.  This is a bill supported by Nebraskans United for Property Tax Reform and Education a coalition of Farm and Ranch interests and Public Education interests united for property tax relief.

Locally, Blue Hill Community Schools wants to partner with property owners to find solutions to the Nebraska public schools over-reliance on property taxes for funding.  Blue Hill Schools will use the resources made available to continue to engage and empower students by instilling in them the desire to learn, take appropriate risks, and accept challenges in a safe learning environment.


Joél Ruybalid