As the Nebraska Legislature considers a variety of options for re-imaginging school funding in the state, it is important to consider the impact of additional investments in K-12 public education, independent of any corresponding property tax relief.

California rebuilt their funding formula in 2013, launching the Local Control Funding Formula (LCFF), which committed $18 billion over 8 years, apportioned with the goal of closing the socioeconomic achievement gap, and deferring the majority of spending decisions to local districts. The long-term funding commitment allowed districts to plan long-term initiatives rather than fund short-term or one-time expenditures due to the volatile nature of school funding. A study found that for every $1,000 increase in per pupil spending:

• Over three consecutive years, a full grade-level improvement in math and reading achievement was noted across all grades.

• Across all four years of high school, a $1,000 per-pupil increase improved graduation rates for low-income students by 5 percentage points.

• Between 9th and 11th grade, a $1,000 per-pupil increase improved the probability of meeting college readiness standards for mathematics by 9.8 percentage points and 14.7 percentage points in reading.

• Combined with legal and policy shifts, a $1,000 increase across three consecutive years reduced the likelihood of suspension and expulsion among 3-10th grade boys by 5 percentage points and 11-12 percentage points among 8-10th grade Black boys.

Nebraska has several options to consider, including two bills to create a commission to perform the deliberate and informed work of crafting a new funding formula in LB 303 and LB 500.

25%

The Trump administration announced 25% tariffs on steel and aluminum imports coming into the United States earlier this week, with more details forthcoming. This is after a false start of a 25% tariff on all goods imported from Canada and Mexico, which were paused prior to enactment. A tariff is a tax levied on imported goods. Tariffs are paid by the business importing the goods. Most economists find the cost of tariffs are passed on to consumers. Steel and aluminum tariffs, specifically, could increase the cost of Nebraska’s booming manufacturing sector and drive up the cost of key agricultural equipment manufacturing and sales, including irrigation, a key industry in Nebraska and a lifeline for agricultural producers amid weather extremes.

The Tax Foundation analyzed the potential economic impact of such tariffs and concluded that they stand to be economically catastrophic for American businesses and for taxpayers. Over the next decade, they estimate that the tariffs will decrease economic output by 0.4%, amounting to $1.1 trillion in new taxes on American consumers, with an average tax increase of $800 for households in 2025 alone.

In addition to the tariffs being passed on to American consumers in the form of higher taxes, there are other costs associated, including under the previous Trump administration’s tariffs, where the administration implemented a “Market Facilitation Program,” providing payments to farmers in response to a loss of export markets. These payments totaled more than $14.5 billion in 2019, with nearly $1 billion of that total flowing to Nebraska farmers. While these payments helped close the gap for many growers, benefits were capped and scaled based on income.

#11

House Republicans are reportedly considering major cuts to sustainable energy investments made by the Infrastructure Investment and Jobs Act, and President Trump’s flurry of executive orders in the early days of his term targeted several clean energy programs, with a preference for maintaining reliance on fossil fuels.

Nebraska ranks #11 in the county for the percentage of energy coming from wind and solar, according to a report by RMI, a renewable energy think tank. Our neighbors in Iowa and South Dakota top the list, coming in at #1 and #2, respectively. Other nearby states rounding out the top 10 include Kansas at #4, Colorado at #8 and North Dakota at #9.

Clean energy is an economic boon for many Midwestern states, where abundant sunshine and windswept prairie can be converted to energy more cost efficiently than constructing new plants for fossil fuels. Accordingly, some of the lowest electricity prices in the country are concentrated in the Midwest. In Nebraska, the agricultural industry is the largest consumer of electricity, using about 45% of the state’s total energy. Manufacturing and transportation also consume large amounts of electricity, meaning Nebraska’s economic drivers are reliant on reliable, affordable energy options. Additionally, tech giants like Meta and Google have identified Nebraska as home to their large data center projects, which are significant consumers of energy, especially with the proliferation of new Artificial Intelligence projects.

Keeping energy costs affordable with clean energy investments will be critical to Nebraska’s economic success as well as remaining an affordable place to live and do business.

WEBINAR

OpenSky will be joined by Legislative Fiscal Analyst Keisha Patent and Senator Myron Dorn, a member of the Legislature’s Appropriations Committee, to take a deep dive into the process of creating the state’s biennium budget on February 18, 2025 at 12:00 noon. They will share perspectives on how priorities come together, key moments for engagement by the Second House and the economic factors that impact available funds. Join us! Click here to register.