Blog for Rural America

The Center for Rural Affairs, a private, non-profit organization, is working to strengthen small businesses, family farms and ranches, and rural communities. Permission to reprint items from this web log is hereby granted, on the condition that clear credit is given to the original source of the material. If the blog provides information for a story, please let us know by sending an email to

Tuesday, February 15, 2005

Center for Rural Affairs February 15, 2005 Nebraska Legislative Update

-- from the desk of Jon Bailey, Director, Rural Research and Analysis Program
Center for Rural Affairs

February 15, 2005

LB 126: Class I Schools – Inefficient, Racist Enclaves or High-Performing, Necessary Institutions?

The first major legislative battle in the 2005 session is over LB 126, the bill that would require the “assimilation” of Nebraska’s Class I (elementary-only) schools into a K-12 school district. LB 126 has had three full days of debate and has been the only significant legislative action during those days. It appears that the debate will continue as there have been no votes on myriad substantive amendments and no move to cut off debate to advance the bill to the second round of debate.

The arguments in the debate are basically these:

Proponents of LB 126 (for assimilation of Class Is) – The state’s educational system will be more efficient if Class I schools are assimilated. Every child in a K-12 district will then have a coordinated curriculum. In addition, the state will save an estimated $12 million (according to an updated Fiscal Note provided the Senators during the first day of debate), though there is plenty of protection for necessary school buildings to remain open as attendance centers. Finally, and the most emotionally charged debating point, Class I schools (at least in the two examples used – Lexington and Schuyler) are essentially “white flight” opportunities for those parents who don’t want their kids attending school with an increasing Latino student body. Proponents point to extreme differences in per pupil spending between Class I schools and the K-12 district in these towns.

Opponents of LB 126 – The bill is nothing more than forced consolidation of rural schools, and the relatively large fiscal note is proof (how else to save that much money unless school buildings are to be closed and school staff terminated). The opponents point to the fact that Class I schools have been closing at their own pace for years, and local communities should be left to make the decision. The opponents also point to the performance of Class I schools and the recommendations of many educators for smaller schools. Finally, the opponents deny the racial implications – any student may option into a Class I school; the real issue is state aid and how it is distributed to all schools, particularly those in low-income communities; the local school board and community residents make spending decisions; other issues – particularly overcrowding and the failure of communities to pass bond issues are to blame; and why is the Legislature just picking on Class I schools when other, larger districts have similar (if not greater) issues – Omaha and its neighboring district of Westside is the prime example used in debate so far. Other issues of property taxation and the impact on rural communities are also being used as reasons against LB 126.

The Center for Rural Affairs opposes LB 126 because we believe it is ultimately about forced consolidation of rural schools and sets a bad precedent for future discussions of school structure – if the state (through the Legislature) can mandate that a certain type of school closes, then all other types and sizes of rural schools can be forced to close, merge, or consolidate. We believe it is a slippery slope when one class of school is terminated – where do the state mandates on school structure stop?

Obviously, there are some spending disparities between school systems and school buildings in many parts of the state. Those should be corrected through the state school aid formula and programs that would assist local communities in updating and modernizing school facilities. Assisting in the destruction of rural communities by closing their schools because of a few examples of funding disparities seems like the worst example of “throwing the baby out with the bath water.” The valid issues brought to the debate of LB 126 by its proponents can be resolved without inflicting wholesale destruction on rural Nebraska and its communities.

Action on LB 126 is likely to heat up this week – February 15 is “Rural Education Day” at the Legislature (with many Class I supporters present in Lincoln to watch and lobby) and there may be an attempt by LB 126’s supporters to end debate and advance the bill (which would require 33 votes).

Priority Bills

As we discussed last week, the new system of determining the line for floor debate gives more preference to Committee Priority Bills. Committee’s first choice Priority Bills will advance to the head of the line. In addition to LB 126 (the first choice Priority Bill of the Education Committee), the following bills are among those designated first choice committee Priority Bills:

LB 150, to establish a beef checkoff program (Agriculture Committee)

LB 242, concerning political accountability and disclosure provisions (Government, Military and Veterans Affairs Committee)

LB 162, changing hunting laws and fees (Natural Resources Committee)

LB 499, changing provisions related to the estate tax (Revenue Committee)

Legislative Lingo Update

A term you may hear or see used in this Update or other places is “Bracket.” This is a tactic used during debate to delay consideration of a bill – a Senator can move to “bracket” a bill to a certain date. This tactic can be used to essentially kill a bill – such as moving to “bracket” a bill to the last day of a session or until sometime in 2006. Or it can be used to delay consideration of a bill for few days to allow compromises to be worked on or to get to debate on other bills.

Bills Update

As in the past, we will divide the bills we are working on or tracking into categories. Any bill designated a Priority Bill will also have a “P” attached to its number (for example, LB 123P). The chief sponsor of the bill is listed in parentheses.

The words Support or Oppose after a bill description indicate where the Center for Rural Affairs has taken a position on the bill. If neither word is indicated, the Center has not taken a position at this time.

Rural Development

LB 28 (Connealy) – The “Endow Nebraska Act.” The bill would provide a tax credit for a contribution to a qualified charitable organization. The primary purpose is to provide an incentive for contributions to local and community endowments and foundations, thus providing greater resources for rural economic and community development. The bill sits on Select File. Support

LB 59 (Mines) – Would change the provision in the Microenterprise Development Act defining “microenterprise to allow for microenterprise loans up to $35,000 (from $25,000). The bill sits on Select File. Support

LB 273 (Cunningham) – Would create the “Building Entrepreneurial Communities” program through a $1 million grant program for each of the next two years. Communities and neighborhoods in “chronic economic distress” (high unemployment, low income or population loss) would be eligible for grants up to $75,000 for projects that seek to build entrepreneurial communities. The bill awaits action in the Government, Military and Veterans Affairs Committee. Support


LB 71 (Stuhr) – Would re-authorize the Agricultural Opportunities and Value-Added Partnership Act (formerly the LB 1348 grant program). This program was terminated through budget cuts in 2001 and 2002. This bill would reauthorize the program through 2009. The bill was advanced by the Agriculture Committee to General File on February 10. The Agriculture Committee amended the bill to provide more authority to the Department of Agriculture and expressed its intent that the program receive $1 million annually in funding. Support

LB 132 (Cunningham) – This bill modifies the Nebraska Pasteurized Milk Law by providing exemptions to small-scale dairies and processors to the often-expensive bottling and processing requirements, and by allowing dairies and farmers to advertise on-farm sales of non-pasteurized milk (currently, the sale of non-pasteurized milk cannot be advertised). The bill was advanced by the Agriculture Committee to General File on February 10. Support

LB 191 (Preister) – Would permit local requirements for environmental protection and financial assurance under the state’s environmental laws (including the Livestock Waste Management Act). A hearing is scheduled before the Natural Resources Committee on February 23.

LB 346 (Agriculture Committee) – Would modify several provisions of the Beginning Farmer Tax Credit Act all with the goal to increase utilization of the tax credit. The bill was advanced by the Agriculture Committee to General File on February 10. Support


LB 126P (Raikes) – Would mandate the “assimilation” of Class I schools (elementary-only schools) into K-12 school districts for the 2006-07 school year. See the discussion above. Oppose

LB 129 (Education Committee) – An overhaul of the formula for state aid to schools. The bill is pending in the Education Committee.


LB 133 (Connealy) – Would provide a renewable energy sales tax credit, and would provide any generator of electricity from a renewable resource a credit against any sales and use tax. A hearing is scheduled before the Revenue Committee on February 16.

LB 309 (Connealy) – Would establish the Small Business Rural Microenterprise Tax Credit. The bill would provide for $2 million worth of tax credits annually for small business (with five or fewer employees or beginning farmers/ranchers) in areas with declining population or low incomes or federal enterprise zones. A hearing was held before the Revenue Committee on February 9; the Center for Rural Affairs provided testimony in support of the bill. Support

LB 404 (Wehrbein) – Would create a tax credit for modernization and expansion of livestock facilities. The goal of the bill is to “attract and retain investment in Nebraska’s livestock industry.” The bill is pending in the Agriculture Committee.

Business Tax Incentives

In this year’s session there are numerous bills relating to amending Nebraska’s business tax incentive laws or creating new tax incentive programs. The primary bill is LB 646, the Advantage Nebraska Act, which would create a new, more generous tax incentive program to take the place of LB 775. A hearing was held before the Revenue Committee on February 9. The Fiscal Note for LB 646 estimated a revenue impact of the new incentive program of $61 million by 2011 (in addition to the ongoing LB 775 revenue impact).


LB 189 (Preister) – Would mandate an electricity portfolio from renewable sources of 1% in 2007 and increasing 1% every year until it reaches 10% in 2017. This would apply to all electricity produced in the state. The bill also creates a mechanism for the buying and selling of credits to meet the portfolio standard. The bill awaits action by the Natural Resources Committee.

LB 208 (Stuthman) – Provides for the appropriation of $1.75 million annually for the next two years to the state’s five federally qualified health clinics to provide services to the uninsured (the clinics are in Omaha, Lincoln and Scottsbluff). Support

LB 550 (Jensen) – Requires a plan to be submitted by December 1, 2005, for the financial support of community health centers and emergency medical services in the state. The bill awaits action by the Health and Human Services Committee.

LB 655 (Beutler) – Would create the Task Force on Small Employers Health Plans that would review data and policy ideas concerning health care plans for small employers and recommend policy steps for the state on this issue. The bill is scheduled for hearing before the Banking, Commerce and Insurance Committee on February 22. Support.


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