Education Legislature Nebraska Politics

The Rural School Funding Crisis in Nebraska

I’m here to tell you this: Do not let anyone tell you there is a property-tax crisis in out-state Nebraska. There is an income tax on the rich crisis leaving rural, especially agricultural, communities in Nebraska holding the bag for one of the most important things a state can do: educate its children.

And I’m here to give you the receipts on why the property-tax crisis rhetoric is a hot, steaming pile.

The receipts come from the Why Rural Matters (WRM) report, which is biannual pulse on the condition of rural education across every state in the U.S, put together by the Rural School and Community Trust. You can read about them here. This series of reports uses public data sources from the National Center of Educational Statistics, the U.S. Department of Education, and the Census Bureau. In world of education research, where I live during the day, these are considered reputable, neutral sources of information about the educational landscape in the U.S.


The most recent report, the 2018-19 report, released in November of 2019, ranks states on a variety of factors. You can read the whole thing here, but I’m going to cut to the chase below.

  • Nebraska is one of 12 states in which half or more public schools (51.8%) are in a rural area (as defined by the Census Bureau).
  • Nebraska ranks 13/50 in the importance of rural education to the state. WRM identifies rural education as CRUCIAL
  • While most states provide disproportionately MORE money to rural schools (which are more expensive to operate) Nebraska provides disproportionately less funding to rural districts. In fact, Nebraska ranks WORST of the 50 states on this measure, with rural school districts in Nebraska receiving only 27 cents of state funding for every dollar of local revenue (i.e. property taxes)
    they raise.
  • Despite 23.4% of the state’s students attending a rural district, only 18.9% of the state’s funds are directed to these districts; nowhere in the U.S. is the funding gap as large as this.
  • For every $4 raised in local revenue, the rural districts receive a mere $1 from the state—also the most inequitable distribution in the nation.
  • The state funding gap to rural schools has only grown in the last six years. In 2011-12, rural schools in Nebraska received $0.45 in state funding for each dollar they raised in local property taxes. In 2013-14, they received $0.41, and 2015-16 represented a 24% reduction in state funding to rural schools, resulting in rural schools getting only $0.30 in state aid per local dollar.
  • The average per-pupil INSTRUCTIONAL spending across the country is $6,367. In Nebraska, this number is $8,818. Rural districts that enroll smaller numbers of students spend more to educate them since teachers with 12 students cost roughly the same as teachers with 22 students, which drives up this number (for consideration, the upper end is over $14,000 per pupil just on instructional costs).
  • Economies of scale also make it more expensive to purchase materials and services in rural districts.
  • Transportation (read school buses to get kids to and from schools) also drives up costs. Nebraska does ok on this measure, spending over $17.00 on instruction per every $1 spent on transportation, up from $16.21 in the 2015-16 report.

The bright spots

  • Overall, the education policy climate for rural education is pretty good in Nebraska.
  • There are some achievement gaps between rural and urban students, but they’re also relatively small compared to other states.
  • Rural students in Nebraska achieve around the nation’s average on NAEP and measures of college readiness.
  • Although smaller districts can cost more to operate, keeping more smaller districts open allows money to be spent on the core activities of teaching and learning, rather than busing: ” A small catchment area means lower transportation spending, even in geographically large districts” (WRM, 2014).
  • Smaller schools are also good for kids.

Overall, Nebraska’s rural schools do pretty well with limited resources. But that is no reason to ask them to continue to do more with less. Particularly, as I have repeatedly heard doing research in districts across the state that kids come to school with more complex needs than they are currently equipped to deal with. In many rural communities, preschool, healthcare, and mental healthcare is hard to come by, making schools even more important in meeting the needs of Nebraska’s children.

More Receipts

Nebraska is NOT a high tax state, as perhaps you may have heard. According to the OpenSky Policy Institute, Nebraska’s very own “non-partisan organization that advocates for a strong Nebraska through clear fiscal research and analysis,” using US Census and other Federal data, Nebraska ranks in the middle of the pack. What Nebraska is, is out of wack in which sources of taxation they rely on most heavily, with property taxes being relied on most heavily. This, of course, places most of the onus on farmers who own a lot of land, but who may not have a great deal of income. Income taxes account for a smaller proportion of taxes, despite being the fairest and progressive type of taxation. Now is also a good time to mention that sales tax is also REGRESSIVE and that low-income people spend a greater proportion of their earning just trying to get by than the wealthy, who sock away money without getting taxed (This also would apply to the three stooges plus one consumption tax. You and I consume a great deal of our income just doing our thing than rich people sticking money in savings and investments).

Overall, Nebraska’s taxation system is regressive, which means that lower-income folks pay a greater proportion of their income than wealthy folks. The lowest 20% of incomes pay 11.1% of their income in taxes, compared to the top 20%, which pay 9.8%. AND the top 1% in Nebraska, looking at you Warren Buffett, pays only 8.7% of their salary to support the services that could make this the Good Life State for more people with just a little bit of political will.

As you can see in the table above, Nebraska relies much more heavily on property taxes than the average of all states. Other states rely on state income taxes and other sources to provide aid to schools. In Nebraska, local communities are paying well over half of the costs to educate their children, compared to less than half on average. What that means is other states pool their resources and disperse them for more equitable school funding.

This is key. Kids from all over Nebraska come to our institutions of higher education and hopefully will stay here and contribute to the economy of the state. It is in all of our best interests to invest in every child, no matter where they live, in Nebraska so they can grow, learn, and succeed.

What can you do?

  1. Check out the excellent PowerPoint from OpenSky.
  2. Do not sign the property tax ballot initiative petition. OpenSky predicts that if passed, it would reduce the general fund budget by approximately $1.5B or 32%. They predict sharp reductions in education and other services, or the need to raise other taxes. Since no one is talking about income tax reform to create a more progressive tax system, raiding education and health and human services is probably a safer bet.
  3. Do not let your friends or family sign the initiative. I want farmers to have tax relief as much as anyone, but it needs to be done by rebalancing the three-legged stool of taxation and shifting towards a progressive income-based system.
  4. Write your state senator and say no to the consumption tax. Replacing one regressive tax with another is not going to fix the state.
  5. I would say don’t Kansas Nebraska, but after having driven their state into the ground, they have elected a Democratic governor. Let’s bypass the part where we gouge education and go straight to a Democratic governor!