The Effects of Equalization Funding on the Smallest School Districts in Nebraska

The purpose of the study was to determine if a significant shift in state equalization aid to public schools in Nebraska changed how the district taxed through the available funds. The most significant fund to tax local property is the General Fund which is used to fund instruction, administration, and operations of a local school district. Other taxable funds may include the Bond Fund, Special Building Fund and the Qualified Capital Purposes Undertaking Fund. The study focused on 207 of the 244 school districts in Nebraska with less than 1,100 students in grades PK-12 primarily considered rural. The reason for the focus on the smallest schools was to highlight the changes in property valuation that occurred with agriculture land. Property tax relief has been on the forefront with funding to school districts from state aid becoming a focus as education is a large percentage of the state’s budget. Data used in the study were compiled from the state aid distributions, enrollment data, and budgeting information including the levies assessed by each school district from the 2015-2016 school year to the 2019-2020 school year. Of the 207 school districts used in the study, each was further categorized as small and very small. A small school district had a student enrollment for the 2019-2020 school year between 300 and 1,100 in grades PK-12 and districts with student enrollments of less than 300 were deemed as very small. The valuation numbers were tested to determine if change in property valuation affected the General Fund levy, overall levy and equalization aid over a span of the last five budget years beginning with the 2015-2016 school year and concluding with the 2019-2020 school year. The results showed that there was a significant relation between property valuation changes and the amount a small and very small school district received in equalization aid. Additionally, property valuation changes shaped the General Fund, overall levy and equalization aid for small and very small school districts