More than 150 years ago, U.S. leaders determined that the country had a duty to provide for the public education of children, and in 1861 school lands were set aside to help fund that education.
But how that money is distributed today is of concern to some counties and school districts, particularly in the more rural parts of the state that are seeing the funds generated from local land leases siphoned off to the eastern, more populous areas.
County attorneys and school boards in more than 50 counties have been asked to support an effort to change how the funds are distributed after Deputy Wheeler County Attorney James McNally studied the issue at the request of his county commissioners and the local superintendent.
Chadron’s school board expressed support for pursuing the issue at its April meeting after McNally contacted them.
The Wheeler County attorney determined that 52 of Nebraska’s counties are receiving less funding than they generate through leases on school lands.
“Most counties are affected by this disparity,” McNally said. After his research was complete, he contacted county attorneys in those counties to gauge interest in fighting to change the allocation formula. While many did express interest, he said, several said the issue is one that largely impacts school districts and suggested he contact school boards.
The Nebraska Board of Educational Lands and Funds was created under the Nebraska Constitution to accept the gift of land given to the state by the federal government for the purposes of supporting public education. Typically, Sections 16 and 36 in each township were granted to the trust. In Nebraska, that totaled 2.7 million acres at one point, said Kelly Sudbeck, the CEO/Executive Secretary of BELF.
Many counties in the eastern third of the state sold off its school land as population booms increased demand for property, but other counties retained the land and lease it on a long-term basis. The Legislature now requires that any sale of school lands take place at public auction in an effort to ensure that a fair market price is paid.
Income from the sale of school lands is placed in the Nebraska Investment Council, where it earns investment income.
“So technically that land is still returning income,” Sudbeck said, even though it has been sold.
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That investment income is added to the income from the long-term leases, and the entire total – about $45 million per year – is transferred to the Nebraska Department of Education for distribution to the school districts.
The issue has been raised previously in the Legislature, he continued, including a bill that this year that proposed districts be awarded funding on actual average enrollment instead of students residing in the district. That bill was pulled from consideration, however, Sudbeck said.
The original 1861 legislation that established school lands includes language that says “monies generated by the school land should be returned to the Townships from which it was generated.”
“That’s not, in my opinion, mandatory,” McNally said of the language but it could be argued that the allocation of funds today is contrary to the original intent of the law. To make that argument, he is suggesting school districts affected by the disparity band together and take the matter to the Legislature in 2020, arguing that point to convince them to change the funding formula.
“Just as a matter of fairness, they ought to look at that again. The schools that need the money the most aren’t getting it,” he said.
Sudbeck noted that the monies are distributed based on population. School districts must complete a K-12 census of students residing in the district, and NDE allocates $134 per child to each district, Sudbeck said. That’s why schools in the eastern part of the state see higher returns from BELF monies than those in rural areas.
“They don’t have a lot of kids in their counties,” he said.
The Board of Educational Lands and Funds puts an average of $45 million per year into public education across the state, and also pays real estate taxes in the amount of $13-14 million per year, Sudbeck said.
“Every county we have property in, we pay full real estate taxes,” he said, pointing out a change in the agency’s approach from when it was first established.
The school land leases are also a useful tool to encourage young farmers and ranchers to enter the business, he continued. The long-term leases range from five to seven years for farm ground and seven to 11 years for pasture, making it possible for an ag producer just starting out to purchase cattle or equipment knowing they have land available for several years.