Nebraska’s education funding has historically been heavily weighted on the property tax, but that is beginning to change. Through new sources of funding and property tax offsets, the implicit state funding of education is growing rapidly.
Over the last decade, state aid through the TEEOSA formula has increased by $200 million. Meanwhile, property tax funding for K-12 education has gone up faster. On the face of it, this looks like the property tax is still doing the overwhelming work of funding education, covering 70 cents on the dollar or more through this period.
| Year | TEEOSA | Property Tax |
| 2015-2016 | $ 973,036,624 | $ 2,280,200,000 |
| 2016-2017 | $ 979,316,960 | $ 2,353,500,000 |
| 2017-2018 | $ 998,737,763 | $ 2,436,700,000 |
| 2018-2019 | $ 1,000,414,197 | $ 2,506,600,000 |
| 2019-2020 | $ 1,065,912,849 | $ 2,606,900,000 |
| 2020-2021 | $ 1,053,175,257 | $ 2,701,600,000 |
| 2021-2022 | $ 1,047,006,027 | $ 2,817,300,000 |
| 2022-2023 | $ 1,071,386,232 | $ 2,985,400,000 |
| 2023-2024 | $ 1,180,044,834 | $ 3,090,300,000 |
| 2024-2025 | $ 1,163,444,825 | $ 3,182,900,000 |
But look below the surface, and this weighting has rapidly changed over the last five years. In fact, the effective state funding of education has doubled since 2020 when you account for tax credits to offset school property taxes and the annual allocation from the Education Future Fund.
State aid for school funding and to offset school property taxes has soared from just over $1 billion to just over $2 billion.
| Year | TEEOSA | Property Tax | 1107 Credits | Education Future Fund | Total State |
| 2019-2020 | $ 1,065,912,849 | $ 2,606,900,000 | $0 | $0 | $ 1,065,912,849 |
| 2024-2025 | $ 1,163,444,825 | $ 3,182,900,000 | $750,000,000 | $250,000,000 | $ 2,163,444,825 |
While tax credits that offset property taxes are not traditional state funding of education, consider what the allocations would look like if those tax credits simply bought down property taxes.
State aid combined with the Education Future Fund and school district tax credits add up to $2.2 billion in the most recent school year. If the tax credits were applied directly to school levies to eliminate a proportionate value of property taxes, there would be $2.4 billion of school property tax collections, bring Nebraska school property tax collections back to 2017-2018 levels.
While the TEEOSA school aid formula is a core form of state aid to account, the entire picture must also be considered. The state’s total contribution to K-12 education has doubled since 2020, growing by more than $1 billion. In fact, the new forms of state support, which include the tax credits and Education Future Fund are the fastest-growing parts of the budget.
All factors should be considered as Nebraska lawmakers consider reforms to the TEEOSA school aid formula, the school property tax system, property tax credit offsets, and the Education Future Fund. These factors all impact school support, and an integrated approach that accounts for all of these resources is necessary to strike the proper balance in reform.
