The official site of the Nebraska Unicameral Legislature

LEGISLATURE OF NEBRASKA
ONE HUNDRED NINTH LEGISLATURE
SECOND SESSION
LEGISLATIVE BILL 1038

Introduced by Hughes, 24.
Read first time January 14, 2026
Committee: Revenue
A BILL FOR AN ACT relating to education; to amend sections 9-1204,1
77-4211, 79-1001, 79-1003, 79-1005, 79-1005.01, 79-1006, 79-1007.11,2
79-1007.18, 79-1008.01, 79-1009, 79-1016, 79-1017.01, 79-1021,3
79-1022, 79-1022.02, 79-1023, 79-1027, 79-1031.01, 79-10,120,4
79-3402, 79-3403, and 79-3406, Reissue Revised Statutes of Nebraska,5
sections 77-3012 and 77-4212, Revised Statutes Cumulative6
Supplement, 2024, and sections 77-3442, 77-4602, 77-7304, and7
77-7305, Revised Statutes Supplement, 2025; to change school8
district levy limitations and provide exceptions; to terminate9
funds; to eliminate certain property tax credits; to change10
provisions relating to the transfer of General Fund net receipts; to11
change the Tax Equity and Educational Opportunities Support Act as12
prescribed; to state intent regarding certain transfers; to provide13
levy authority to school districts as prescribed; to change14
provisions relating to special building fund levies and the School15
District Property Tax Limitation Act; to harmonize provisions; to16
repeal the original sections; and to declare an emergency.17
Be it enacted by the people of the State of Nebraska,18
LB1038
2026
LB1038
2026
-1-
Section 1. Section 9-1204, Reissue Revised Statutes of Nebraska, is1
amended to read: 2
9-1204 Of the tax imposed by section 9-1203, seventy-five percent3
shall be remitted to the State Treasurer for credit as follows: Two and4
one-half percent to the Compulsive Gamblers Assistance Fund, two and one-5
half percent to the General Fund, and seventy percent to the Education6
Future Property Tax Credit Cash Fund. The remaining twenty-five percent7
of the tax shall be remitted to the county treasurer of the county in8
which the licensed racetrack enclosure is located to be distributed as9
follows: (1) If the licensed racetrack enclosure is located completely10
within an unincorporated area of a county, the remaining twenty-five11
percent shall be distributed to the county in which such licensed12
racetrack enclosure is located; or (2) if the licensed racetrack13
enclosure is located at least partially within the limits of a city or14
village in such county, one-half of the remaining twenty-five percent15
shall be distributed to such county and one-half of the remaining twenty-16
five percent to the city or village in which such licensed racetrack17
enclosure is at least partially located. 18
Sec. 2. Section 77-3012, Revised Statutes Cumulative Supplement,19
2024, is amended to read: 20
77-3012 (1) Except as otherwise provided in subsection (5) of this21
section, a tax is hereby imposed and levied, in the amount and in22
accordance with this section, upon the net operating revenue of all cash23
devices operating within the State of Nebraska for profit or gain either24
directly or indirectly received. The tax shall be paid in the amount and25
manner specified in this section. 26
(2) Except as otherwise provided in subsection (5) of this section,27
beginning on and after July 1, 2025, any distributor of a cash device,28
and any operator of a cash device if the operator is not subject to a29
revenue-sharing or other agreement with a distributor who is paying the30
tax, shall pay a tax for each cash device in operation each calendar31
LB1038
2026
LB1038
2026
-2-
quarter during the taxable year. The tax shall be collected by the1
department and due and payable on January 1, April 1, July 1, and October2
1 of each year on each cash device in operation during the preceding3
calendar quarter. For each cash device put into operation on a date4
subsequent to a quarterly due date that has not been included in5
computing the tax imposed and levied by the Mechanical Amusement Device6
Tax Act, the tax shall be due and payable on the immediately succeeding7
quarterly due date. 8
(3) The amount of the tax imposed and levied under this section9
shall be five percent of the net operating revenue for each cash device.10
The quarterly tax shall be submitted on a form prescribed by the Tax11
Commissioner documenting the total gross and net operating revenue for12
that quarter. 13
(4) The Tax Commissioner shall remit the taxes collected pursuant to14
this section to the State Treasurer for credit as follows:15
(a) Twenty percent to the Charitable Gaming Operations Fund for16
enforcement of the act and maintenance of the central server;17
(b) Two and one-half percent to the Compulsive Gamblers Assistance18
Fund; 19
(c) Two and one-half percent to the General Fund;20
(d) Ten percent to the Nebraska Tourism Commission Promotional Cash21
Fund; 22
(e) Forty percent to the Education Future Property Tax Credit Cash23
Fund; and 24
(f) The remaining twenty-five percent to the county treasurer of the25
county in which the cash device is located to be distributed as follows:26
(i) If the cash device is located completely within an unincorporated27
area of a county, the remaining twenty-five percent shall be distributed28
to the county in which the cash device is located, or (ii) if the cash29
device is located within the limits of a city or village in such county,30
one-half of the remaining twenty-five percent shall be distributed to31
LB1038
2026
LB1038
2026
-3-
such county and one-half of the remaining twenty-five percent shall be1
distributed to the city or village in which such cash device is located.2
(5) This section does not apply to cash devices operated by a3
fraternal benefit society organized and licensed under sections 44-10724
to 44-10,109 or a recognized veterans organization as defined in section5
80-401.01. 6
Sec. 3. Section 77-3442, Revised Statutes Supplement, 2025, is7
amended to read: 8
77-3442 (1) Property tax levies for the support of local governments9
for fiscal years beginning on or after July 1, 1998, shall be limited to10
the amounts set forth in this section except as provided in section11
77-3444. 12
(2)(a) Except as provided in subdivisions (2)(b) and (2)(e) of this13
section, school districts and multiple-district school systems may levy a14
maximum levy of: 15
(i) For fiscal years prior to fiscal year 2026-27, one dollar and16
five cents per one hundred dollars of taxable valuation of property17
subject to the levy; and . 18
(ii) For fiscal year 2026-27 and each fiscal year thereafter, fifty19
cents per one hundred dollars of taxable valuation of property subject to20
the levy. 21
(b) For each fiscal year prior to fiscal year 2017-18, learning22
communities may levy a maximum levy for the general fund budgets of23
member school districts of ninety-five cents per one hundred dollars of24
taxable valuation of property subject to the levy. The proceeds from the25
levy pursuant to this subdivision shall be distributed pursuant to26
section 79-1073. 27
(c) Except as provided in subdivision (2)(e) of this section, for28
each fiscal year prior to fiscal year 2017-18, school districts that are29
members of learning communities may levy for purposes of such districts'30
general fund budget and special building funds a maximum combined levy of31
LB1038
2026
LB1038
2026
-4-
the difference of one dollar and five cents on each one hundred dollars1
of taxable property subject to the levy minus the learning community levy2
pursuant to subdivision (2)(b) of this section for such learning3
community. 4
(d) Excluded from the limitations in subdivisions (2)(a) and (2)(c)5
of this section are (i) amounts levied to pay for current and future sums6
agreed to be paid by a school district to certificated employees in7
exchange for a voluntary termination of employment occurring prior to8
September 1, 2017, (ii) amounts levied by a school district otherwise at9
the maximum levy pursuant to subdivision (2)(a) of this section to pay10
for current and future qualified voluntary termination incentives for11
certificated teachers pursuant to subsection (3) of section 79-8,142 that12
are not otherwise included in an exclusion pursuant to subdivision (2)(d)13
of this section, (iii) amounts levied by a school district otherwise at14
the maximum levy pursuant to subdivision (2)(a) of this section to pay15
for seventy-five percent of the current and future sums agreed to be paid16
to certificated employees in exchange for a voluntary termination of17
employment occurring between September 1, 2017, and August 31, 2018, as a18
result of a collective-bargaining agreement in force and effect on19
September 1, 2017, that are not otherwise included in an exclusion20
pursuant to subdivision (2)(d) of this section, (iv) amounts levied by a21
school district otherwise at the maximum levy pursuant to subdivision (2)22
(a) of this section to pay for fifty percent of the current and future23
sums agreed to be paid to certificated employees in exchange for a24
voluntary termination of employment occurring between September 1, 2018,25
and August 31, 2019, as a result of a collective-bargaining agreement in26
force and effect on September 1, 2017, that are not otherwise included in27
an exclusion pursuant to subdivision (2)(d) of this section, (v) amounts28
levied by a school district otherwise at the maximum levy pursuant to29
subdivision (2)(a) of this section to pay for twenty-five percent of the30
current and future sums agreed to be paid to certificated employees in31
LB1038
2026
LB1038
2026
-5-
exchange for a voluntary termination of employment occurring between1
September 1, 2019, and August 31, 2020, as a result of a collective-2
bargaining agreement in force and effect on September 1, 2017, that are3
not otherwise included in an exclusion pursuant to subdivision (2)(d) of4
this section, (vi) amounts levied in compliance with sections 79-10,1105
and 79-10,110.02, (vii) amounts levied pursuant to section 26 of this6
act, (viii) amounts levied pursuant to section 79-10,120, and (ix) (vii)7
amounts levied to pay for special building funds and sinking funds8
established for projects commenced prior to April 1, 1996, for9
construction, expansion, or alteration of school district buildings. For10
purposes of this subsection, commenced means any action taken by the11
school board on the record which commits the board to expend district12
funds in planning, constructing, or carrying out the project.13
(e) Federal aid school districts may exceed the maximum levy14
prescribed by subdivision (2)(a) or (2)(c) of this section only to the15
extent necessary to qualify to receive federal aid pursuant to Title VIII16
of Public Law 103-382, as such title existed on September 1, 2001. For17
purposes of this subdivision, federal aid school district means any18
school district which receives ten percent or more of the revenue for its19
general fund budget from federal government sources pursuant to Title20
VIII of Public Law 103-382, as such title existed on September 1, 2001.21
(f) For each fiscal year, learning communities may levy a maximum22
levy of one-half cent on each one hundred dollars of taxable property23
subject to the levy for elementary learning center facility leases, for24
remodeling of leased elementary learning center facilities, and for up to25
fifty percent of the estimated cost for focus school or program capital26
projects approved by the learning community coordinating council pursuant27
to section 79-2111. 28
(g) For each fiscal year, learning communities may levy a maximum29
levy of one and one-half cents on each one hundred dollars of taxable30
property subject to the levy for early childhood education programs for31
LB1038
2026
LB1038
2026
-6-
children in poverty, for elementary learning center employees, for1
contracts with other entities or individuals who are not employees of the2
learning community for elementary learning center programs and services,3
and for pilot projects, except that no more than ten percent of such levy4
may be used for elementary learning center employees.5
(3) For each fiscal year through fiscal year 2023-24, community6
college areas may levy the levies provided in subdivisions (2)(a) through7
(c) of section 85-1517, in accordance with the provisions of such8
subdivisions. For fiscal year 2024-25 and each fiscal year thereafter,9
community college areas may levy the levies provided in subdivisions (2)10
(a) and (b) of section 85-1517, in accordance with the provisions of such11
subdivisions. A community college area may exceed the levy provided in12
subdivision (2)(a) of section 85-1517 by the amount necessary to generate13
sufficient revenue as described in section 85-1543 or 85-2238. A14
community college area may exceed the levy provided in subdivision (2)(b)15
of section 85-1517 by the amount necessary to retire general obligation16
bonds assumed by the community college area or issued pursuant to section17
85-1515 according to the terms of such bonds or for any obligation18
pursuant to section 85-1535 entered into prior to January 1, 1997.19
(4)(a) Natural resources districts may levy a maximum levy of four20
and one-half cents per one hundred dollars of taxable valuation of21
property subject to the levy. 22
(b) Natural resources districts shall also have the power and23
authority to levy a tax equal to the dollar amount by which their24
restricted funds budgeted to administer and implement ground water25
management activities and integrated management activities under the26
Nebraska Ground Water Management and Protection Act exceed their27
restricted funds budgeted to administer and implement ground water28
management activities and integrated management activities for FY2003-04,29
not to exceed one cent on each one hundred dollars of taxable valuation30
annually on all of the taxable property within the district.31
LB1038
2026
LB1038
2026
-7-
(c) In addition, natural resources districts located in a river1
basin, subbasin, or reach that has been determined to be fully2
appropriated pursuant to section 46-714 or designated as overappropriated3
pursuant to section 46-713 by the Chief Water Officer of the Department4
of Water, Energy, and Environment shall also have the power and authority5
to levy a tax equal to the dollar amount by which their restricted funds6
budgeted to administer and implement ground water management activities7
and integrated management activities under the Nebraska Ground Water8
Management and Protection Act exceed their restricted funds budgeted to9
administer and implement ground water management activities and10
integrated management activities for FY2005-06, not to exceed three cents11
on each one hundred dollars of taxable valuation on all of the taxable12
property within the district for fiscal year 2006-07 and each fiscal year13
thereafter through fiscal year 2017-18. 14
(5) Any educational service unit authorized to levy a property tax15
pursuant to section 79-1225 may levy a maximum levy of one and one-half16
cents per one hundred dollars of taxable valuation of property subject to17
the levy. 18
(6)(a) Incorporated cities and villages which are not within the19
boundaries of a municipal county may levy a maximum levy of forty-five20
cents per one hundred dollars of taxable valuation of property subject to21
the levy plus an additional five cents per one hundred dollars of taxable22
valuation to provide financing for the municipality's share of revenue23
required under an agreement or agreements executed pursuant to the24
Interlocal Cooperation Act or the Joint Public Agency Act. The maximum25
levy shall include amounts levied to pay for sums to support a library26
pursuant to section 51-201, museum pursuant to section 51-501, visiting27
community nurse, home health nurse, or home health agency pursuant to28
section 71-1637, or statue, memorial, or monument pursuant to section29
80-202. 30
(b) Incorporated cities and villages which are within the boundaries31
LB1038
2026
LB1038
2026
-8-
of a municipal county may levy a maximum levy of ninety cents per one1
hundred dollars of taxable valuation of property subject to the levy. The2
maximum levy shall include amounts paid to a municipal county for county3
services, amounts levied to pay for sums to support a library pursuant to4
section 51-201, a museum pursuant to section 51-501, a visiting community5
nurse, home health nurse, or home health agency pursuant to section6
71-1637, or a statue, memorial, or monument pursuant to section 80-202.7
(7) Sanitary and improvement districts which have been in existence8
for more than five years may levy a maximum levy of forty cents per one9
hundred dollars of taxable valuation of property subject to the levy, and10
sanitary and improvement districts which have been in existence for five11
years or less shall not have a maximum levy. Unconsolidated sanitary and12
improvement districts which have been in existence for more than five13
years and are located in a municipal county may levy a maximum of eighty-14
five cents per hundred dollars of taxable valuation of property subject15
to the levy. 16
(8) Counties may levy or authorize a maximum levy of fifty cents per17
one hundred dollars of taxable valuation of property subject to the levy,18
except that five cents per one hundred dollars of taxable valuation of19
property subject to the levy may only be levied to provide financing for20
the county's share of revenue required under an agreement or agreements21
executed pursuant to the Interlocal Cooperation Act or the Joint Public22
Agency Act. The maximum levy shall include amounts levied to pay for sums23
to support a library pursuant to section 51-201 or museum pursuant to24
section 51-501. The county may allocate up to fifteen cents of its25
authority to other political subdivisions subject to allocation of26
property tax authority under subsection (1) of section 77-3443 and not27
specifically covered in this section to levy taxes as authorized by law28
which do not collectively exceed fifteen cents per one hundred dollars of29
taxable valuation on any parcel or item of taxable property. The county30
may allocate to one or more other political subdivisions subject to31
LB1038
2026
LB1038
2026
-9-
allocation of property tax authority by the county under subsection (1)1
of section 77-3443 some or all of the county's five cents per one hundred2
dollars of valuation authorized for support of an agreement or agreements3
to be levied by the political subdivision for the purpose of supporting4
that political subdivision's share of revenue required under an agreement5
or agreements executed pursuant to the Interlocal Cooperation Act or the6
Joint Public Agency Act. If an allocation by a county would cause another7
county to exceed its levy authority under this section, the second county8
may exceed the levy authority in order to levy the amount allocated.9
(9) Municipal counties may levy or authorize a maximum levy of one10
dollar per one hundred dollars of taxable valuation of property subject11
to the levy. The municipal county may allocate levy authority to any12
political subdivision or entity subject to allocation under section13
77-3443. 14
(10) Beginning July 1, 2016, rural and suburban fire protection15
districts may levy a maximum levy of ten and one-half cents per one16
hundred dollars of taxable valuation of property subject to the levy if17
(a) such district is located in a county that had a levy pursuant to18
subsection (8) of this section in the previous year of at least forty19
cents per one hundred dollars of taxable valuation of property subject to20
the levy or (b) such district had a levy request pursuant to section21
77-3443 in any of the three previous years and the county board of the22
county in which the greatest portion of the valuation of such district is23
located did not authorize any levy authority to such district in such24
year. 25
(11) A regional metropolitan transit authority may levy a maximum26
levy of ten cents per one hundred dollars of taxable valuation of27
property subject to the levy for each fiscal year that commences on the28
January 1 that follows the effective date of the conversion of the29
transit authority established under the Transit Authority Law into the30
regional metropolitan transit authority. 31
LB1038
2026
LB1038
2026
-10-
(12) Property tax levies (a) for judgments, except judgments or1
orders from the Commission of Industrial Relations, obtained against a2
political subdivision which require or obligate a political subdivision3
to pay such judgment, to the extent such judgment is not paid by4
liability insurance coverage of a political subdivision, (b) for5
preexisting lease-purchase contracts approved prior to July 1, 1998, (c)6
for bonds as defined in section 10-134 approved according to law and7
secured by a levy on property except as provided in section 44-4317 for8
bonded indebtedness issued by educational service units and school9
districts, (d) for payments by a public airport to retire interest-free10
loans from the Division of Aeronautics of the Department of11
Transportation in lieu of bonded indebtedness at a lower cost to the12
public airport, and (e) to pay for cancer benefits provided on or after13
January 1, 2022, pursuant to the Firefighter Cancer Benefits Act are not14
included in the levy limits established by this section.15
(13) The limitations on tax levies provided in this section are to16
include all other general or special levies provided by law.17
Notwithstanding other provisions of law, the only exceptions to the18
limits in this section are those provided by or authorized by sections19
77-3442 to 77-3444. 20
(14) Tax levies in excess of the limitations in this section shall21
be considered unauthorized levies under section 77-1606 unless approved22
under section 77-3444. 23
(15) For purposes of sections 77-3442 to 77-3444, political24
subdivision means a political subdivision of this state and a county25
agricultural society. 26
(16) For school districts that file a binding resolution on or27
before May 9, 2008, with the county assessors, county clerks, and county28
treasurers for all counties in which the school district has territory29
pursuant to subsection (7) of section 79-458, if the combined levies,30
except levies for bonded indebtedness approved by the voters of the31
LB1038
2026
LB1038
2026
-11-
school district and levies for the refinancing of such bonded1
indebtedness, are in excess of the greater of (a) one dollar and twenty2
cents per one hundred dollars of taxable valuation of property subject to3
the levy or (b) the maximum levy authorized by a vote pursuant to section4
77-3444, all school district levies, except levies for bonded5
indebtedness approved by the voters of the school district and levies for6
the refinancing of such bonded indebtedness, shall be considered7
unauthorized levies under section 77-1606. 8
Sec. 4. Section 77-4211, Reissue Revised Statutes of Nebraska, is9
amended to read: 10
77-4211 The Property Tax Credit Cash Fund is created. The fund shall11
only be used pursuant to the Property Tax Credit Act. Any money in the12
fund available for investment shall be invested by the state investment13
officer pursuant to the Nebraska Capital Expansion Act and the Nebraska14
State Funds Investment Act. The fund terminates on the effective date of15
this act, and the State Treasurer shall transfer any money in the fund on16
such date to the Education Future Fund. 17
Sec. 5. Section 77-4212, Revised Statutes Cumulative Supplement,18
2024, is amended to read: 19
77-4212 (1) The Property Tax Credit Act shall apply to tax years20
2007 through 2025. For tax year 2007, the amount of relief granted under21
the act Property Tax Credit Act shall be one hundred five million22
dollars. For tax year 2008, the amount of relief granted under the act23
shall be one hundred fifteen million dollars. It is the intent of the24
Legislature to fund the Property Tax Credit Act for tax years after tax25
year 2008 using available revenue. For tax year 2017, the amount of26
relief granted under the act shall be two hundred twenty-four million27
dollars. For tax year 2020 through tax year 2022, the minimum amount of28
relief granted under the act shall be two hundred seventy-five million29
dollars. For tax year 2023, the minimum amount of relief granted under30
the act shall be three hundred sixty million dollars. For tax year 2024,31
LB1038
2026
LB1038
2026
-12-
the minimum amount of relief granted under the act shall be three hundred1
ninety-five million dollars. For tax year 2025, the minimum amount of2
relief granted under the act shall be four hundred thirty million3
dollars. For tax year 2026, the minimum amount of relief granted under4
the act shall be four hundred forty-five million dollars. For tax year5
2027, the minimum amount of relief granted under the act shall be four6
hundred sixty million dollars. For tax year 2028, the minimum amount of7
relief granted under the act shall be four hundred seventy-five million8
dollars. For tax year 2029, the minimum amount of relief granted under9
the act shall be the minimum amount from the prior tax year plus a10
percentage increase equal to the percentage increase, if any, in the11
total assessed value of all real property in the state from the prior12
year to the current year, as determined by the Department of Revenue,13
plus an additional seventy-five million dollars. For tax year 2030 and14
each tax year thereafter, the minimum amount of relief granted under the15
act shall be the minimum amount from the prior tax year plus a percentage16
increase equal to the percentage increase, if any, in the total assessed17
value of all real property in the state from the prior year to the18
current year, as determined by the Department of Revenue. If money is19
transferred or credited to the Property Tax Credit Cash Fund pursuant to20
any other state law, such amount shall be added to the minimum amount21
required under this subsection when determining the total amount of22
relief granted under the act. The relief shall be in the form of a23
property tax credit which appears on the property tax statement.24
(2)(a) For tax years prior to tax year 2017, to determine the amount25
of the property tax credit, the county treasurer shall multiply the26
amount disbursed to the county under subdivision (4)(a) of this section27
by the ratio of the real property valuation of the parcel to the total28
real property valuation in the county. The amount determined shall be the29
property tax credit for the property. 30
(b) Beginning with tax year 2017, to determine the amount of the31
LB1038
2026
LB1038
2026
-13-
property tax credit, the county treasurer shall multiply the amount1
disbursed to the county under subdivision (4)(b) of this section by the2
ratio of the credit allocation valuation of the parcel to the total3
credit allocation valuation in the county. The amount determined shall be4
the property tax credit for the property. 5
(3) If the real property owner qualifies for a homestead exemption6
under sections 77-3501 to 77-3529, the owner shall also be qualified for7
the relief provided in the act to the extent of any remaining liability8
after calculation of the relief provided by the homestead exemption. If9
the credit results in a property tax liability on the homestead that is10
less than zero, the amount of the credit which cannot be used by the11
taxpayer shall be returned to the Property Tax Administrator by July 1 of12
the year the amount disbursed to the county was disbursed. The Property13
Tax Administrator shall immediately credit any funds returned under this14
subsection to the Education Future Property Tax Credit Cash Fund. Upon15
the return of any funds under this subsection, the county treasurer shall16
electronically file a report with the Property Tax Administrator, on a17
form prescribed by the Tax Commissioner, indicating the amount of funds18
distributed to each taxing unit in the county in the year the funds were19
returned, any collection fee retained by the county in such year, and the20
amount of unused credits returned. 21
(4)(a) For tax years prior to tax year 2017, the amount disbursed to22
each county shall be equal to the amount available for disbursement23
determined under subsection (1) of this section multiplied by the ratio24
of the real property valuation in the county to the real property25
valuation in the state. By September 15, the Property Tax Administrator26
shall determine the amount to be disbursed under this subdivision to each27
county and certify such amounts to the State Treasurer and to each28
county. The disbursements to the counties shall occur in two equal29
payments, the first on or before January 31 and the second on or before30
April 1. After retaining one percent of the receipts for costs, the31
LB1038
2026
LB1038
2026
-14-
county treasurer shall allocate the remaining receipts to each taxing1
unit levying taxes on taxable property in the tax district in which the2
real property is located in the same proportion that the levy of such3
taxing unit bears to the total levy on taxable property of all the taxing4
units in the tax district in which the real property is located.5
(b) Beginning with tax year 2017, the amount disbursed to each6
county shall be equal to the amount available for disbursement determined7
under subsection (1) of this section multiplied by the ratio of the8
credit allocation valuation in the county to the credit allocation9
valuation in the state. By September 15, the Property Tax Administrator10
shall determine the amount to be disbursed under this subdivision to each11
county and certify such amounts to the State Treasurer and to each12
county. The disbursements to the counties shall occur in two equal13
payments, the first on or before January 31 and the second on or before14
April 1. After retaining one percent of the receipts for costs, the15
county treasurer shall allocate the remaining receipts to each taxing16
unit based on its share of the credits granted to all taxpayers in the17
taxing unit. 18
(5) For purposes of this section, credit allocation valuation means19
the taxable value for all real property except agricultural land and20
horticultural land, one hundred twenty percent of taxable value for21
agricultural land and horticultural land that is not subject to special22
valuation, and one hundred twenty percent of taxable value for23
agricultural land and horticultural land that is subject to special24
valuation. 25
(6) The State Treasurer shall transfer from the General Fund to the26
Property Tax Credit Cash Fund one hundred five million dollars by August27
1, 2007, and one hundred fifteen million dollars by August 1, 2008.28
(7) The Legislature shall have the power to transfer funds from the29
Property Tax Credit Cash Fund to the General Fund.30
Sec. 6. Section 77-4602, Revised Statutes Supplement, 2025, is31
LB1038
2026
LB1038
2026
-15-
amended to read: 1
77-4602 (1) Within fifteen days after the end of each month, the Tax2
Commissioner shall provide a public statement of actual General Fund net3
receipts, a comparison of such actual net receipts to the monthly4
estimated net receipts from the most recent forecast provided by the5
Nebraska Economic Forecasting Advisory Board pursuant to section6
77-27,158, and a comparison of such actual net receipts to the monthly7
actual net receipts for the same month of the previous fiscal year.8
(2) Within fifteen days after the end of each fiscal year, the9
public statement shall also include (a) a summary of actual General Fund10
net receipts and estimated General Fund net receipts for the fiscal year11
as certified pursuant to sections 77-4601 and 77-4603 and (b) a12
comparison of the actual General Fund net receipts for the fiscal year to13
the actual General Fund net receipts for the previous fiscal year.14
(3)(a) Within fifteen days after the end of each fiscal year15
2024-25, the Tax Commissioner shall determine: 16
(i) Actual General Fund net receipts for such the most recently17
completed fiscal year minus estimated General Fund net receipts for such18
fiscal year as certified pursuant to sections 77-4601 and 77-4603; and19
(ii) Actual General Fund net receipts for such the most recently20
completed fiscal year minus one hundred three percent of actual General21
Fund net receipts for the prior fiscal year. 22
(b) If the amount calculated in subdivision (3)(a)(i) of this23
section is a positive number and the amount calculated in subdivision (3)24
(a)(ii) of this section is a negative number, the Tax Commissioner shall25
certify the amount calculated in subdivision (3)(a)(i) of this section to26
the State Treasurer. The State Treasurer shall transfer such certified27
amount to the Cash Reserve Fund. 28
(c) If the amounts calculated in subdivisions (3)(a)(i) and (3)(a)29
(ii) of this section are both positive numbers and the amount calculated30
in subdivision (3)(a)(i) of this section exceeds the amount calculated in31
LB1038
2026
LB1038
2026
-16-
subdivision (3)(a)(ii) of this section, the Tax Commissioner shall1
certify the amounts calculated in subdivisions (3)(a)(i) and (3)(a)(ii)2
of this section to the State Treasurer. The State Treasurer shall3
transfer the difference between the two certified numbers to the Cash4
Reserve Fund. The State Treasurer shall transfer the amount certified for5
subdivision (3)(a)(ii) of this section to the School District Property6
Tax Relief Credit Fund. 7
(d) If the amounts calculated in subdivisions (3)(a)(i) and (3)(a)8
(ii) of this section are both positive numbers and the amount calculated9
in subdivision (3)(a)(i) of this section is less than the amount10
calculated in subdivision (3)(a)(ii) of this section, the Tax11
Commissioner shall certify the amount calculated in subdivision (3)(a)(i)12
of this section to the State Treasurer. The State Treasurer shall13
transfer such certified amount to the School District Property Tax Relief14
Credit Fund. 15
(4) Within fifteen days after the end of fiscal year 2025-26 and16
each fiscal year thereafter, the Tax Commissioner shall determine actual17
General Fund net receipts for the most recently completed fiscal year18
minus estimated General Fund net receipts for such fiscal year as19
certified pursuant to sections 77-4601 and 77-4603. If the actual General20
Fund net receipts exceed the estimated General Fund net receipts for the21
fiscal year, the Tax Commissioner shall certify the excess amount to the22
State Treasurer. The State Treasurer shall transfer such certified amount23
to the Cash Reserve Fund. 24
Sec. 7. Section 77-7304, Revised Statutes Supplement, 2025, is25
amended to read: 26
77-7304 (1) The School District Property Tax Relief Credit Fund is27
created. The fund shall only be used pursuant to the School District28
Property Tax Relief Act. Any money in the fund available for investment29
shall be invested by the state investment officer pursuant to the30
Nebraska Capital Expansion Act and the Nebraska State Funds Investment31
LB1038
2026
LB1038
2026
-17-
Act. 1
(2)(a) The State Treasurer shall transfer seven hundred fifty2
million dollars from the General Fund to the School District Property Tax3
Relief Credit Fund in fiscal year 2024-25, on such dates and in such4
amounts as directed by the budget administrator of the budget division of5
the Department of Administrative Services. 6
(b) In Beginning in fiscal year 2025-26, it is the intent of the7
Legislature that an amount sufficient to provide the amount of property8
tax relief required by subdivision (1)(a) of section 77-7305 for each tax9
year 2025 be transferred from the General Fund to the School District10
Property Tax Relief Credit Fund. 11
(3) The School District Property Tax Relief Credit Fund terminates12
on the effective date of this act, and the State Treasurer shall transfer13
any money in the fund on such date to the Education Future Fund.14
Sec. 8. Section 77-7305, Revised Statutes Supplement, 2025, is15
amended to read: 16
77-7305 (1) The School District Property Tax Relief Act shall apply17
to tax years year 2024 and 2025 each tax year thereafter. The property18
tax relief shall be in the form of property tax credits which appear on19
property tax statements. Property tax credits granted under the act shall20
be credited against the amount of property taxes owed to school21
districts. The total amount of property tax relief granted under the act22
shall be determined as follows: 23
(a) For tax year 2024, the minimum amount of relief granted under24
the act shall be seven hundred fifty million dollars. For tax year 2025,25
the minimum amount of relief granted under the act shall be seven hundred26
eighty million dollars . For tax year 2026, the minimum amount of relief27
granted under the act shall be eight hundred eight million dollars. For28
tax year 2027, the minimum amount of relief granted under the act shall29
be eight hundred thirty-eight million dollars. For tax year 2028, the30
minimum amount of relief granted under the act shall be eight hundred31
LB1038
2026
LB1038
2026
-18-
seventy million dollars. For tax year 2029, the minimum amount of relief1
granted under the act shall be nine hundred two million dollars. For tax2
year 2030 and each tax year thereafter, the minimum amount of relief3
granted under the act shall be the minimum amount of relief from the4
prior year, excluding any additional relief provided pursuant to5
subdivision (1)(b) of this section, with such amount then increased by6
three percent; and 7
(b) If money is transferred to the School District Property Tax8
Relief Credit Fund pursuant to section 77-4602, such amount shall be9
added to the minimum amount required under subdivision (1)(a) of this10
section when determining the total amount of relief granted under the act11
for the tax year in which the transfer occurs. If no such transfer occurs12
in a given tax year, the minimum amount required under subdivision (1)(a)13
of this section shall be the total amount of relief granted under the act14
for such tax year. 15
(2) To determine the amount of the property tax credit for each16
parcel, the county treasurer shall multiply the amount disbursed to the17
county under subsection (4) of this section by the ratio of the school18
district taxes levied in the current year on the parcel to the school19
district taxes levied in the current year on all real property in the20
county. The amount so determined shall be the property tax credit for21
that parcel. 22
(3) If the real property owner qualifies for a homestead exemption23
under sections 77-3501 to 77-3529, the owner shall also be qualified for24
the property tax credit provided in this section to the extent of any25
remaining liability after calculation of the homestead exemption. If the26
property tax credit provided in this section results in a property tax27
liability on the homestead that is less than zero, the amount of the28
credit which cannot be used by the taxpayer shall be returned to the29
Property Tax Administrator by July 1 of the year the amount disbursed to30
the county was disbursed. The Property Tax Administrator shall31
LB1038
2026
LB1038
2026
-19-
immediately credit any funds returned under this subsection to the1
Education Future School District Property Tax Relief Credit Fund. Upon2
the return of any funds under this subsection, the county treasurer shall3
electronically file a report with the Property Tax Administrator, on a4
form prescribed by the Tax Commissioner, indicating the amount of funds5
distributed to each school district in the county in the year the funds6
were returned and the amount of unused credits returned.7
(4) The amount disbursed to each county under this section shall be8
equal to the amount available for disbursement under subsection (1) of9
this section multiplied by the ratio of the school district taxes levied10
in the prior year on all real property in the county to the school11
district taxes levied in the prior year on all real property in the12
state. By September 15, 2024, and by September 15 , 2025 of each year13
thereafter, the Property Tax Administrator shall determine the amount to14
be disbursed under this subsection to each county and shall certify such15
amounts to the State Treasurer and to each county. The disbursements to16
the counties shall occur in two equal payments, the first on or before17
January 31 and the second on or before April 1. 18
(5) After retaining one percent of the amount received under19
subsection (4) of this section for costs, the county treasurer shall20
disburse the remaining funds, which are credited against the amount of21
property taxes owed to school districts, in the same manner as if such22
funds had been received in the form of property tax payments for property23
taxes owed to school districts, meaning any amounts attributable to24
divided taxes pursuant to section 18-2147 of the Community Development25
Law shall be remitted to the applicable authority for which such taxes26
were divided. 27
(6) The School District Property Tax Relief Credit Fund shall be28
used for purposes of making the disbursements to counties required under29
subsection (4) of this section. 30
Sec. 9. Section 79-1001, Reissue Revised Statutes of Nebraska, is31
LB1038
2026
LB1038
2026
-20-
amended to read: 1
79-1001 Sections 79-1001 to 79-1033 and section 26 of this act shall2
be known and may be cited as the Tax Equity and Educational Opportunities3
Support Act. 4
Sec. 10. Section 79-1003, Reissue Revised Statutes of Nebraska, is5
amended to read: 6
79-1003 For purposes of the Tax Equity and Educational Opportunities7
Support Act: 8
(1) Adjusted general fund operating expenditures means (a) for9
school fiscal years prior to school fiscal year 2026-27, the difference10
of the general fund operating expenditures increased by the cost growth11
factor calculated pursuant to section 79-1007.10, minus the12
transportation allowance, special receipts allowance, poverty allowance,13
limited English proficiency allowance, distance education and14
telecommunications allowance, elementary site allowance, summer school15
allowance, community achievement plan allowance, and focus school and16
program allowance and (b) for school fiscal year 2026-27 and each school17
fiscal year thereafter, the difference of the general fund operating18
expenditures increased by the cost growth factor calculated pursuant to19
section 79-1007.10, minus the transportation allowance, special receipts20
allowance, poverty allowance, limited English proficiency allowance,21
distance education and telecommunications allowance, elementary site22
allowance, summer school allowance, and focus school and program23
allowance; 24
(2) Adjusted valuation means the assessed valuation of taxable25
property of each local system in the state, adjusted pursuant to the26
adjustment factors described in section 79-1016. Adjusted valuation means27
the adjusted valuation for the property tax year ending during the school28
fiscal year immediately preceding the school fiscal year in which the aid29
based upon that value is to be paid. For purposes of determining the30
local effort rate yield pursuant to section 79-1015.01, adjusted31
LB1038
2026
LB1038
2026
-21-
valuation does not include the value of any property which a court, by a1
final judgment from which no appeal is taken, has declared to be2
nontaxable or exempt from taxation; 3
(3) Allocated income tax funds means the amount of assistance paid4
to a local system pursuant to section 79-1005.01; 5
(4) Average daily membership means the average daily membership for6
grades kindergarten through twelve attributable to the local system, as7
provided in each district's annual statistical summary, and includes the8
proportionate share of students enrolled in a public school instructional9
program on less than a full-time basis; 10
(5) Base fiscal year means the first school fiscal year following11
the school fiscal year in which the reorganization or unification12
occurred; 13
(6) Board means the school board of each school district;14
(7) Categorical funds means funds limited to a specific purpose by15
federal or state law, including, but not limited to, Title I funds, Title16
VI funds, federal career and technical education funds, federal school17
lunch funds, Indian education funds, Head Start funds, and funds received18
prior to July 1, 2022, from the Nebraska Education Improvement Fund;19
(8) Consolidate means to voluntarily reduce the number of school20
districts providing education to a grade group and does not include21
dissolution pursuant to section 79-498; 22
(9) Converted contract means an expired contract that was in effect23
for at least fifteen school years beginning prior to school year 2012-1324
for the education of students in a nonresident district in exchange for25
tuition from the resident district when the expiration of such contract26
results in the nonresident district educating students, who would have27
been covered by the contract if the contract were still in effect, as28
option students pursuant to the enrollment option program established in29
section 79-234; 30
(10) Converted contract option student means a student who will be31
LB1038
2026
LB1038
2026
-22-
an option student pursuant to the enrollment option program established1
in section 79-234 for the school fiscal year for which aid is being2
calculated and who would have been covered by a converted contract if the3
contract were still in effect and such school fiscal year is the first4
school fiscal year for which such contract is not in effect;5
(11) Department means the State Department of Education;6
(12) District means any school district or unified system as defined7
in section 79-4,108; 8
(13) Ensuing school fiscal year means the school fiscal year9
following the current school fiscal year; 10
(14) Equalization aid means the amount of assistance calculated to11
be paid to a local system pursuant to section 79-1008.01;12
(15) Fall membership means the total membership in kindergarten13
through grade twelve attributable to the local system as reported on the14
fall school district membership reports for each district pursuant to15
section 79-528; 16
(16) Fiscal year means the state fiscal year which is the period17
from July 1 to the following June 30; 18
(17) Formula students means: 19
(a) For state aid certified pursuant to section 79-1022, the sum of20
the product of fall membership from the school fiscal year immediately21
preceding the school fiscal year in which the aid is to be paid22
multiplied by the average ratio of average daily membership to fall23
membership for the second school fiscal year immediately preceding the24
school fiscal year in which the aid is to be paid and the prior two25
school fiscal years plus sixty percent of the qualified early childhood26
education fall membership plus tuitioned students from the school fiscal27
year immediately preceding the school fiscal year in which aid is to be28
paid minus the product of the number of students enrolled in kindergarten29
that is not full-day kindergarten from the fall membership multiplied by30
0.5; and 31
LB1038
2026
LB1038
2026
-23-
(b) For the final calculation of state aid pursuant to section1
79-1065, the sum of average daily membership plus sixty percent of the2
qualified early childhood education average daily membership plus3
tuitioned students minus the product of the number of students enrolled4
in kindergarten that is not full-day kindergarten from the average daily5
membership multiplied by 0.5 from the school fiscal year immediately6
preceding the school fiscal year in which aid was paid;7
(18) Free lunch and free milk calculated students means, using the8
most recent data available on November 1 of the school fiscal year9
immediately preceding the school fiscal year in which aid is to be paid,10
(a) for schools that did not provide free meals to all students pursuant11
to the community eligibility provision, students who individually12
qualified for free lunches or free milk pursuant to the federal Richard13
B. Russell National School Lunch Act, 42 U.S.C. 1751 et seq., and the14
federal Child Nutrition Act of 1966, 42 U.S.C. 1771 et seq., as such acts15
and sections existed on January 1, 2021, and rules and regulations16
adopted thereunder, plus (b) for schools that provided free meals to all17
students pursuant to the community eligibility provision, the greater of18
the number of students in such school who individually qualified for free19
lunch or free milk using the most recent school fiscal year for which the20
school did not provide free meals to all students pursuant to the21
community eligibility provision or one hundred ten percent of the product22
of the students who qualified for free meals at such school pursuant to23
the community eligibility provision multiplied by the identified student24
percentage calculated pursuant to such federal provision, except that the25
free lunch and free milk calculated students for any school pursuant to26
subdivision (18)(b) of this section shall not exceed one hundred percent27
of the students qualified for free meals at such school pursuant to the28
community eligibility provision; 29
(19) Full-day kindergarten means kindergarten offered by a district30
for at least one thousand thirty-two instructional hours;31
LB1038
2026
LB1038
2026
-24-
(20) General fund budget of expenditures means the total budget of1
disbursements and transfers for general fund purposes as certified in the2
budget statement adopted pursuant to the Nebraska Budget Act, except that3
for purposes of the limitation imposed in section 79-1023, the general4
fund budget of expenditures does not include any special grant funds,5
exclusive of local matching funds, received by a district;6
(21) General fund expenditures means all expenditures from the7
general fund; 8
(22) General fund operating expenditures means, for state aid9
calculated for each school fiscal year, as reported on the annual10
financial report for the second school fiscal year immediately preceding11
the school fiscal year in which aid is to be paid, the total general fund12
expenditures minus (a) the amount of all receipts to the general fund, to13
the extent that such receipts are not included in local system formula14
resources, from early childhood education tuition, summer school tuition,15
educational entities as defined in section 79-1201.01 for providing16
distance education courses through the Educational Service Unit17
Coordinating Council to such educational entities, private foundations,18
individuals, associations, charitable organizations, the textbook loan19
program authorized by section 79-734, federal impact aid, and levy20
override elections pursuant to section 77-3444, (b) the amount of21
expenditures for categorical funds, tuition paid to other school22
districts, tuition paid to postsecondary institutions for college credit,23
transportation fees paid to other districts, adult education, community24
services, redemption of the principal portion of general fund debt25
service, retirement incentive plans authorized by section 79-855, and26
staff development assistance authorized by section 79-856, (c) the amount27
of any transfers from the general fund to any bond fund and transfers28
from other funds into the general fund, (d) any legal expenses in excess29
of fifteen-hundredths of one percent of the formula need for the school30
fiscal year in which the expenses occurred, (e) expenditures to pay for31
LB1038
2026
LB1038
2026
-25-
incentives agreed to be paid by a school district to certificated1
employees in exchange for a voluntary termination of employment for which2
the State Board of Education approved an exclusion pursuant to3
subdivision (1)(h), (i), (j), or (k) of section 79-1028.01, (f)(i)4
expenditures to pay for employer contributions pursuant to subsection (2)5
of section 79-958 to the School Employees Retirement System of the State6
of Nebraska to the extent that such expenditures exceed the employer7
contributions under such subsection that would have been made at a8
contribution rate of seven and thirty-five hundredths percent or (ii)9
expenditures to pay for school district contributions pursuant to10
subdivision (1)(c)(i) or (1)(d)(i) of section 79-9,113 to the retirement11
system established pursuant to the Class V School Employees Retirement12
Act to the extent that such expenditures exceed the school district13
contributions under such subdivision that would have been made at a14
contribution rate of seven and thirty-seven hundredths percent, and (g)15
any amounts paid by the district for lobbyist fees and expenses reported16
to the Clerk of the Legislature pursuant to section 49-1483.17
For purposes of this subdivision (22) of this section, receipts from18
levy override elections shall equal ninety-nine percent of the difference19
of the total general fund levy minus a levy of one dollar and five cents20
per one hundred dollars of taxable valuation multiplied by the assessed21
valuation for school districts that have voted pursuant to section22
77-3444 to override the maximum levy provided pursuant to section23
77-3442; 24
(23) Income tax liability means the amount of the reported income25
tax liability for resident individuals pursuant to the Nebraska Revenue26
Act of 1967 less all nonrefundable credits earned and refunds made;27
(24) Income tax receipts means the amount of income tax collected28
pursuant to the Nebraska Revenue Act of 1967 less all nonrefundable29
credits earned and refunds made; 30
(25) Limited English proficiency students means the number of31
LB1038
2026
LB1038
2026
-26-
students with limited English proficiency in a district from the most1
recent data available on November 1 of the school fiscal year preceding2
the school fiscal year in which aid is to be paid plus the difference of3
such students with limited English proficiency minus the average number4
of limited English proficiency students for such district, prior to such5
addition, for the three immediately preceding school fiscal years if such6
difference is greater than zero; 7
(26) Local system means a unified system or a school district;8
(27) Low-income child means a child under nineteen years of age9
living in a household having an annual adjusted gross income for the10
second calendar year preceding the beginning of the school fiscal year11
for which aid is being calculated equal to or less than the maximum12
household income pursuant to sections 9(b)(1) and 17(c)(4) of the Richard13
B. Russell National School Lunch Act, 42 U.S.C. 1758(b)(1) and 42 U.S.C.14
1766(c)(4), respectively, and sections 3(a)(6) and 4(e)(1)(A) of the15
Child Nutrition Act of 1966, 42 U.S.C. 1772(a)(6) and 42 U.S.C. 1773(e)16
(1)(A), respectively, as such acts and sections existed on January 1,17
2021, for a household of that size that would have allowed the child to18
meet the income qualifications for free meals during the school fiscal19
year immediately preceding the school fiscal year for which aid is being20
calculated; 21
(28) Low-income students means the number of low-income children22
within the district multiplied by the ratio of the formula students in23
the district divided by the total children under nineteen years of age24
residing in the district as derived from income tax information;25
(29) Most recently available complete data year means the most26
recent single school fiscal year for which the annual financial report,27
fall school district membership report, annual statistical summary,28
Nebraska income tax liability by school district for the calendar year in29
which the majority of the school fiscal year falls, and adjusted30
valuation data are available; 31
LB1038
2026
LB1038
2026
-27-
(30) Poverty students means the unadjusted poverty students plus the1
difference of such unadjusted poverty students minus the average number2
of poverty students for such district, prior to such addition, for the3
three immediately preceding school fiscal years if such difference is4
greater than zero; 5
(31) Qualified early childhood education average daily membership6
means the product of the average daily membership of students who will be7
eligible or required to attend kindergarten the following school year and8
are enrolled in an early childhood education program approved by the9
department pursuant to section 79-1103 for such school district for such10
school year multiplied by the ratio of the actual instructional hours of11
the program divided by one thousand thirty-two if: (a) The program is12
receiving a grant pursuant to such section for the third year; (b) the13
program has already received grants pursuant to such section for three14
years; or (c) the program has been approved pursuant to subsection (5) of15
section 79-1103 for such school year and the two preceding school years,16
including any such students in portions of any of such programs receiving17
an expansion grant; 18
(32) Qualified early childhood education fall membership means the19
product of membership on October 1 of each school year of students who20
will be eligible or required to attend kindergarten the following school21
year and are enrolled in an early childhood education program approved by22
the department pursuant to section 79-1103 for such school district for23
such school year multiplied by the ratio of the planned instructional24
hours of the program divided by one thousand thirty-two if: (a) The25
program is receiving a grant pursuant to such section for the third year;26
(b) the program has already received grants pursuant to such section for27
three years; or (c) the program has been approved pursuant to subsection28
(5) of section 79-1103 for such school year and the two preceding school29
years, including any such students in portions of any of such programs30
receiving an expansion grant; 31
LB1038
2026
LB1038
2026
-28-
(33) Regular route transportation means the transportation of1
students on regularly scheduled daily routes to and from the schools such2
students attend; 3
(34) Reorganized district means any district involved in a4
consolidation and currently educating students following consolidation;5
(35) School year or school fiscal year means the fiscal year of a6
school district as defined in section 79-1091; 7
(36) Sparse local system means a local system that is not a very8
sparse local system but which meets the following criteria:9
(a)(i) Less than two students per square mile in the county in which10
each high school is located, based on the school district census, (ii)11
less than one formula student per square mile in the local system, and12
(iii) more than ten miles between each high school and the next closest13
high school on paved roads; 14
(b)(i) Less than one and one-half formula students per square mile15
in the local system and (ii) more than fifteen miles between each high16
school and the next closest high school on paved roads;17
(c)(i) Less than one and one-half formula students per square mile18
in the local system and (ii) more than two hundred seventy-five square19
miles in the local system; or 20
(d)(i) Less than two formula students per square mile in the local21
system and (ii) the local system includes an area equal to ninety-five22
percent or more of the square miles in the largest county in which a high23
school is located in the local system; 24
(37) Special education means specially designed kindergarten through25
grade twelve instruction pursuant to section 79-1125, and includes26
special education transportation; 27
(38) Special grant funds means the budgeted receipts for grants,28
including, but not limited to, categorical funds, reimbursements for29
wards of the court, short-term borrowings including, but not limited to,30
registered warrants and tax anticipation notes, interfund loans,31
LB1038
2026
LB1038
2026
-29-
insurance settlements, and reimbursements to county government for1
previous overpayment. The state board shall approve a listing of grants2
that qualify as special grant funds; 3
(39) State aid means the amount of assistance paid to a district4
pursuant to the Tax Equity and Educational Opportunities Support Act;5
(40) State board means the State Board of Education;6
(41) State support means all funds provided to districts by the7
State of Nebraska for the general fund support of elementary and8
secondary education; 9
(42) Statewide average basic funding per formula student means the10
statewide total basic funding for all districts divided by the statewide11
total formula students for all districts; 12
(43) Statewide average general fund operating expenditures per13
formula student means the statewide total general fund operating14
expenditures for all districts divided by the statewide total formula15
students for all districts; 16
(44) Teacher has the definition found in section 79-101;17
(45) Tuition receipts from converted contracts means tuition18
receipts received by a district from another district in the most19
recently available complete data year pursuant to a converted contract20
prior to the expiration of the contract; 21
(46) Tuitioned students means students in kindergarten through grade22
twelve of the district whose tuition is paid by the district to some23
other district or education agency; 24
(47) Unadjusted poverty students means the greater of the number of25
low-income students or the free lunch and free milk calculated students26
in a district; and 27
(48) Very sparse local system means a local system that has:28
(a)(i) Less than one-half student per square mile in each county in29
which each high school is located based on the school district census,30
(ii) less than one formula student per square mile in the local system,31
LB1038
2026
LB1038
2026
-30-
and (iii) more than fifteen miles between the high school and the next1
closest high school on paved roads; or 2
(b)(i) More than four hundred fifty square miles in the local3
system, (ii) less than one-half student per square mile in the local4
system, and (iii) more than fifteen miles between each high school and5
the next closest high school on paved roads. 6
Sec. 11. Section 79-1005, Reissue Revised Statutes of Nebraska, is7
amended to read: 8
79-1005 (1) For school fiscal years year 2017-18 through 2025-26 and9
each school fiscal year thereafter, the department shall determine the10
community achievement plan aid to be paid to each school district that11
will participate in a community achievement plan approved by the State12
Board of Education pursuant to section 79-2122 for such school fiscal13
year. For the first two school fiscal years a school district will14
participate in such plan, a new community achievement plan adjustment15
equal to the community achievement aid shall be included in the16
calculation of formula need for such school district. For all other17
school fiscal years, a community achievement plan allowance equal to the18
community achievement aid shall be included in the calculation of formula19
need for school districts qualifying for community achievement plan aid.20
Community achievement plan aid shall be included as a formula resource21
pursuant to section 79-1017.01. 22
(2) Community achievement plan aid shall equal 0.4643 percent of the23
product of the statewide average general fund operating expenditures per24
formula student multiplied by the total formula students for all of the25
member school districts in such learning community. The community26
achievement plan aid for each learning community shall be divided27
proportionally among the member school districts based on the sum of two28
percent of the poverty allowance calculated pursuant to section29
79-1007.06, two percent of the limited English proficiency allowance30
calculated pursuant to section 79-1007.08, and, for school districts with31
LB1038
2026
LB1038
2026
-31-
poverty students greater than forty percent of the formula students,1
except as otherwise provided in this section, three percent of the2
product of the statewide average general fund operating expenditures per3
formula student multiplied by the difference of the poverty students4
minus forty percent of the formula students for such school district.5
(3) For school fiscal year 2017-18, community achievement plan aid6
and a new community achievement plan adjustment shall be calculated for7
school districts that are members of a learning community and shall be8
included in formula resources pursuant to section 79-1017.01 in such9
amount regardless of the status of the approval of a community10
achievement plan, but community achievement plan aid shall not be paid to11
such school districts until a community achievement plan for such12
learning community is approved by the state board. If a community13
achievement plan is not approved for such learning community prior to14
September 1, 2017, the adjustment and aid calculated pursuant to this15
section shall be removed for the final calculation of state aid pursuant16
to section 79-1065 for school fiscal year 2017-18 and such amount shall17
be subtracted from the state aid appropriated by the Legislature for the18
determination of the local effort rate pursuant to section 79-1015.01 for19
the final calculation of state aid for school fiscal year 2017-18.20
(4) This section shall not apply to school fiscal year 2026-27 or21
any school fiscal year thereafter. 22
Sec. 12. Section 79-1005.01, Reissue Revised Statutes of Nebraska,23
is amended to read: 24
79-1005.01 (1) Not later than November 15 of each year through 2025,25
the Tax Commissioner shall certify to the department for the preceding26
tax year the income tax liability of resident individuals for each local27
system. 28
(2) For school fiscal years prior to 2017-18, one hundred two29
million two hundred eighty-nine thousand eight hundred seventeen dollars30
which is equal to the amount appropriated to the School District Income31
LB1038
2026
LB1038
2026
-32-
Tax Fund for distribution in school fiscal year 1992-93 shall be1
disbursed as option payments as determined under section 79-1009 and as2
allocated income tax funds as determined in this section and sections3
79-1008.01, 79-1015.01, 79-1017.01, and 79-1018.01. For school fiscal4
years prior to school fiscal year 2017-18, funds not distributed as5
allocated income tax funds due to minimum levy adjustments shall not6
increase the amount available to local systems for distribution as7
allocated income tax funds. 8
(3) Using the data certified by the Tax Commissioner pursuant to9
subsection (1) of this section, the department shall calculate the10
allocation percentage and each local system's allocated income tax funds.11
The allocation percentage shall be the amount stated in subsection (2) of12
this section minus the total amount paid for option students pursuant to13
section 79-1009, with the difference divided by the aggregate statewide14
income tax liability of all resident individuals certified pursuant to15
subsection (1) of this section. Each local system's allocated income tax16
funds shall be calculated by multiplying the allocation percentage times17
the local system's income tax liability certified pursuant to subsection18
(1) of this section. 19
(4) For school fiscal years year 2017-18 through 2025-26 and each20
school fiscal year thereafter, each local system’s allocated income tax21
funds shall be calculated by multiplying the local system’s income tax22
liability certified pursuant to subsection (1) of this section by two and23
twenty-three hundredths percent. 24
(5) This section shall not apply to school fiscal year 2026-27 or25
any school fiscal year thereafter. 26
Sec. 13. Section 79-1006, Reissue Revised Statutes of Nebraska, is27
amended to read: 28
79-1006 (1) For school fiscal years year 2023-24 through 2025-26 and29
each school fiscal year thereafter, the department shall determine the30
foundation aid to be paid to each school district in accordance with31
LB1038
2026
LB1038
2026
-33-
subsection (2) of this section. 1
(2) The foundation aid to be paid to each school district in each2
school fiscal year shall equal one thousand five hundred dollars3
multiplied by the number of formula students for such school district.4
(3) Twenty-four percent of the total amount of foundation aid paid5
each school fiscal year shall be paid from money appropriated from the6
Education Future Fund. 7
(4) For school fiscal years 2023-24 and 2024-25, one hundred percent8
of foundation aid shall be included as a formula resource pursuant to9
section 79-1017.01. For school fiscal year 2025-26 and each school fiscal10
year thereafter, sixty percent of foundation aid shall be included as a11
formula resource pursuant to section 79-1017.01. 12
(5) This section shall not apply to school fiscal year 2026-27 or13
any school fiscal year thereafter. 14
Sec. 14. Section 79-1007.11, Reissue Revised Statutes of Nebraska,15
is amended to read: 16
79-1007.11 (1) Except as otherwise provided in this section: ,17
(a) For school fiscal years prior to school fiscal year 2026-27,18
each school district's formula need shall equal the difference of the sum19
of the school district's basic funding, poverty allowance, limited20
English proficiency allowance, focus school and program allowance, summer21
school allowance, special receipts allowance, transportation allowance,22
elementary site allowance, distance education and telecommunications23
allowance, community achievement plan allowance, averaging adjustment,24
new community achievement plan adjustment, student growth adjustment, any25
positive student growth adjustment correction, and new school adjustment26
minus the sum of the limited English proficiency allowance correction,27
poverty allowance correction, and any negative student growth adjustment28
correction; and . 29
(b) For school fiscal year 2026-27 and each school fiscal year30
thereafter, each school district's formula need shall equal the31
LB1038
2026
LB1038
2026
-34-
difference of the sum of the school district's basic funding, poverty1
allowance, limited English proficiency allowance, focus school and2
program allowance, summer school allowance, special receipts allowance,3
transportation allowance, elementary site allowance, distance education4
and telecommunications allowance, student growth adjustment, any positive5
student growth adjustment correction, and new school adjustment minus the6
sum of the limited English proficiency allowance correction, poverty7
allowance correction, and any negative student growth adjustment8
correction. 9
(2) If the formula need calculated for a school district pursuant to10
subsection (1) of this section is less than one hundred percent of the11
formula need for such district for the school fiscal year immediately12
preceding the school fiscal year for which aid is being calculated, the13
formula need for such district shall equal one hundred percent of the14
formula need for such district for the school fiscal year immediately15
preceding the school fiscal year for which aid is being calculated.16
(3) If the formula need calculated for a school district pursuant to17
subsection (1) of this section is more than one hundred twelve percent of18
the formula need for such district for the school fiscal year immediately19
preceding the school fiscal year for which aid is being calculated, the20
formula need for such district shall equal one hundred twelve percent of21
the formula need for such district for the school fiscal year immediately22
preceding the school fiscal year for which aid is being calculated,23
except that the formula need shall not be reduced pursuant to this24
subsection for any district receiving a student growth adjustment for the25
school fiscal year for which aid is being calculated.26
(4) For purposes of subsections (2) and (3) of this section, the27
formula need for the school fiscal year immediately preceding the school28
fiscal year for which aid is being calculated shall be the formula need29
used in the final calculation of aid pursuant to section 79-1065 and for30
districts that were affected by a reorganization with an effective date31
LB1038
2026
LB1038
2026
-35-
in the calendar year preceding the calendar year in which aid is1
certified for the school fiscal year for which aid is being calculated,2
the formula need for the school fiscal year immediately preceding the3
school fiscal year for which aid is being calculated shall be attributed4
to the affected school districts based on information provided to the5
department by the school districts or proportionally based on the6
adjusted valuation transferred if sufficient information has not been7
provided to the department. 8
Sec. 15. Section 79-1007.18, Reissue Revised Statutes of Nebraska,9
is amended to read: 10
79-1007.18 (1) For school fiscal years prior to school fiscal year11
2017-18: 12
(a) The department shall calculate an averaging adjustment for13
districts if the basic funding per formula student is less than the14
averaging adjustment threshold and the general fund levy for the school15
fiscal year immediately preceding the school fiscal year for which aid is16
being calculated was at least one dollar per one hundred dollars of17
taxable valuation. For the calculation of aid for school fiscal years18
prior to school fiscal year 2018-19, the general fund levy for school19
districts that are members of a learning community for purposes of this20
section includes both the common general fund levy and the school21
district general fund levy authorized pursuant to subdivisions (2)(b) and22
(2)(c) of section 77-3442. The averaging adjustment shall equal the23
district's formula students multiplied by the percentage specified in24
this subsection for such district of the difference between the averaging25
adjustment threshold minus such district's basic funding per formula26
student; 27
(b) The averaging adjustment threshold shall equal the aggregate28
basic funding for all districts with nine hundred or more formula29
students divided by the aggregate formula students for all districts with30
nine hundred or more formula students for the school fiscal year for31
LB1038
2026
LB1038
2026
-36-
which aid is being calculated; and 1
(c) The percentage to be used in the calculation of an averaging2
adjustment shall be based on the general fund levy for the school fiscal3
year immediately preceding the school fiscal year for which aid is being4
calculated and shall be as follows: 5
(i) If such levy was at least one dollar per one hundred dollars of6
taxable valuation but less than one dollar and one cent per one hundred7
dollars of taxable valuation, the percentage shall be fifty percent;8
(ii) If such levy was at least one dollar and one cent per one9
hundred dollars of taxable valuation but less than one dollar and two10
cents per one hundred dollars of taxable valuation, the percentage shall11
be sixty percent; 12
(iii) If such levy was at least one dollar and two cents per one13
hundred dollars of taxable valuation but less than one dollar and three14
cents per one hundred dollars of taxable valuation, the percentage shall15
be seventy percent; 16
(iv) If such levy was at least one dollar and three cents per one17
hundred dollars of taxable valuation but less than one dollar and four18
cents per one hundred dollars of taxable valuation, the percentage shall19
be eighty percent; and 20
(v) If such levy was at least one dollar and four cents per one21
hundred dollars of taxable valuation, the percentage shall be ninety22
percent. 23
(2) For school fiscal years year 2017-18 through 2025-26 and each24
school fiscal year thereafter, the department shall calculate an25
averaging adjustment for districts with at least nine hundred formula26
students if the basic funding per formula student is less than the27
averaging adjustment threshold. The averaging adjustment shall equal the28
district's formula students multiplied by ninety percent of the29
difference of the averaging adjustment threshold minus such district's30
basic funding per formula student. The averaging adjustment threshold31
LB1038
2026
LB1038
2026
-37-
shall equal the aggregate basic funding for all districts with nine1
hundred or more formula students divided by the aggregate formula2
students for all districts with nine hundred or more formula students for3
the school fiscal year for which aid is being calculated.4
(3) This section shall not apply to school fiscal year 2026-27 or5
any school fiscal year thereafter. 6
Sec. 16. Section 79-1008.01, Reissue Revised Statutes of Nebraska,7
is amended to read: 8
79-1008.01 (1) Each local system shall receive equalization aid in9
an amount equal to the preliminary equalization aid amount for the local10
system, as determined pursuant to subsection (2) of this section, minus11
the base levy adjustment for such local system, as determined pursuant to12
subsection (3) of this section. 13
(2) The local system's preliminary equalization aid amount shall be14
the greater of: 15
(a) The local system's total formula need, as determined pursuant to16
section 79-1007.11, minus its total formula resources, as determined17
pursuant to section 79-1017.01; or 18
(b) The local system's basic funding, as determined pursuant to19
section 79-1007.16, multiplied by thirty percent. 20
(3)(a) For purposes of this subsection: 21
(i) The base levy shall be equal to thirty cents per one hundred22
dollars of taxable valuation; 23
(ii) The potential general fund levy for the ensuing school fiscal24
year shall be equal to the general fund levy for the school fiscal year25
immediately preceding the school fiscal year for which equalization aid26
is being calculated plus the potential general fund levy change27
calculated in subdivision (3)(a)(iii) of this section; and28
(iii) The potential general fund levy change shall be equal to:29
(A) For school fiscal year 2026-27, the difference between the30
amount of state aid certified pursuant to section 79-1022 for the school31
LB1038
2026
LB1038
2026
-38-
fiscal year immediately preceding the school fiscal year for which1
equalization aid is being calculated and the preliminary equalization aid2
amount calculated pursuant to subsection (2) of this section for the3
ensuing school fiscal year divided by the total taxable value of the4
local system and multiplied by one hundred; and 5
(B) For school fiscal year 2027-28 and each school fiscal year6
thereafter, the difference between the amount of equalization aid for the7
school fiscal year immediately preceding the school fiscal year for which8
equalization aid is being calculated and the preliminary equalization aid9
amount calculated pursuant to subsection (2) of this section for the10
ensuing school fiscal year divided by the total taxable value of the11
local system and multiplied by one hundred. 12
(b) The local system's base levy adjustment shall be equal to the13
base levy minus the potential general fund levy for the ensuing school14
fiscal year, with the difference then multiplied by the total taxable15
value of the local system and divided by one hundred. If the amount16
calculated for a local system under this subsection is a negative number,17
the base levy adjustment for such local system shall be zero. in the18
amount that the total formula need, as determined pursuant to section19
79-1007.11, exceeds its total formula resources, as determined pursuant20
to section 79-1017.01. The equalization aid for a local system shall be21
zero if the total formula resources equals or exceeds the total formula22
need for such local system. 23
Sec. 17. Section 79-1009, Reissue Revised Statutes of Nebraska, is24
amended to read: 25
79-1009 (1)(a) A district shall receive net option funding if (i)26
option students as defined in section 79-233 were actually enrolled in27
the school year immediately preceding the school year in which the aid is28
to be paid, (ii) option students as defined in such section will be29
enrolled in the school year in which the aid is to be paid as converted30
contract option students, or (iii) for the calculation of aid for school31
LB1038
2026
LB1038
2026
-39-
fiscal year 2017-18 for school districts that are members of a learning1
community, open enrollment students were actually enrolled for school2
year 2016-17 pursuant to section 79-2110. 3
(b) The determination of the net number of option students shall be4
based on (i) the number of students enrolled in the district as option5
students and the number of students residing in the district but enrolled6
in another district as option students as of the day of the fall7
membership count pursuant to section 79-528, for the school fiscal year8
immediately preceding the school fiscal year in which aid is to be paid,9
(ii) the number of option students that will be enrolled in the district10
or enrolled in another district as converted contract option students for11
the fiscal year in which the aid is to be paid, and (iii) for the12
calculation of aid for school fiscal year 2017-18 for school districts13
that are members of a learning community, the number of students enrolled14
in the district as open enrollment students and the number of students15
residing in the district but enrolled in another district as open16
enrollment students as of the day of the fall membership count pursuant17
to section 79-528 for school fiscal year 2016-17. 18
(c) Except as otherwise provided in this subsection, net number of19
option students means the difference of the number of option students20
enrolled in the district minus the number of students residing in the21
district but enrolled in another district as option students. For22
purposes of the calculation of aid for school fiscal year 2017-18 for23
school districts that are members of a learning community, net number of24
option students means the difference of the number of students residing25
in another school district who are option students or open enrollment26
students enrolled in the district minus the number of students residing27
in the district but enrolled in another district as option students or28
open enrollment students. 29
(2)(a) For school fiscal years prior to school fiscal year 2023-24,30
net option funding shall be the product of the net number of option31
LB1038
2026
LB1038
2026
-40-
students multiplied by the statewide average basic funding per formula1
student. 2
(b) For school fiscal years year 2023-24 through 2025-26 and each3
school fiscal year thereafter, net option funding shall be the product of4
the net number of option students multiplied by the difference of the5
statewide average basic funding per formula student minus the amount of6
foundation aid paid per formula student pursuant to section 79-1006.7
(c) For school fiscal year 2026-27 and each school fiscal year8
thereafter, net option funding shall be the product of the net number of9
option students multiplied by the statewide average basic funding per10
formula student. 11
(3) A district's net option funding shall be zero if the calculation12
produces a negative result. 13
Payments made under this section for school fiscal years prior to14
school fiscal year 2017-18 shall be made from the funds to be disbursed15
under section 79-1005.01. 16
Such payments shall go directly to the option school district but17
shall count as a formula resource for the local system.18
Sec. 18. Section 79-1016, Reissue Revised Statutes of Nebraska, is19
amended to read: 20
79-1016 (1) On or before August 20, the county assessor shall21
certify to the Property Tax Administrator the total taxable value by22
school district in the county for the current assessment year on forms23
prescribed by the Tax Commissioner. The county assessor may amend the24
filing for changes made to the taxable valuation of the school district25
in the county if corrections or errors on the original certification are26
discovered. Amendments shall be certified to the Property Tax27
Administrator on or before August 31. 28
(2) On or before October 10, the Property Tax Administrator shall29
compute and certify to the State Department of Education the adjusted30
valuation for the current assessment year for each class of property in31
LB1038
2026
LB1038
2026
-41-
each school district and each local system. The adjusted valuation of1
property for each school district and each local system, for purposes of2
determining state aid pursuant to the Tax Equity and Educational3
Opportunities Support Act, shall reflect as nearly as possible state aid4
value as defined in subsection (3) of this section. The Property Tax5
Administrator shall notify each school district and each local system of6
its adjusted valuation for the current assessment year by class of7
property on or before October 10. Establishment of the adjusted valuation8
shall be based on the taxable value certified by the county assessor for9
each school district in the county adjusted by the determination of the10
level of value for each school district from an analysis of the11
comprehensive assessment ratio study or other studies developed by the12
Property Tax Administrator, in compliance with professionally accepted13
mass appraisal techniques, as required by section 77-1327. The Tax14
Commissioner shall adopt and promulgate rules and regulations setting15
forth standards for the determination of level of value for state aid16
purposes. 17
(3) For purposes of this section, state aid value means:18
(a) For the calculation of state aid to be paid in school fiscal19
years prior to school fiscal year 2026-27: 20
(i) Ninety-six percent of actual value for real property other than21
agricultural and horticultural land; 22
(ii) Seventy-two percent of actual value as provided in sections23
77-1359 and 77-1363 for agricultural and horticultural land;24
(iii) Seventy-two percent of special valuation as defined in section25
77-1343 for agricultural and horticultural land that receives special26
valuation pursuant to section 77-1344; and 27
(iv) The net book value as defined in section 77-120 for personal28
property; and 29
(b) For the calculation of state aid to be paid in school fiscal30
year 2026-27 and each school fiscal year thereafter:31
LB1038
2026
LB1038
2026
-42-
(i) Eighty-six percent of actual value for real property other than1
agricultural and horticultural land; 2
(ii) Forty-two percent of actual value as provided in sections3
77-1359 and 77-1363 for agricultural and horticultural land;4
(iii) Forty-two percent of special valuation as defined in section5
77-1343 for agricultural and horticultural land that receives special6
valuation pursuant to section 77-1344; and 7
(iv) The net book value as defined in section 77-120 for personal8
property. 9
(a) For real property other than agricultural and horticultural10
land, ninety-six percent of actual value; 11
(b) For agricultural and horticultural land, seventy-two percent of12
actual value as provided in sections 77-1359 to 77-1363. For agricultural13
and horticultural land that receives special valuation pursuant to14
section 77-1344, seventy-two percent of special valuation as defined in15
section 77-1343; and 16
(c) For personal property, the net book value as defined in section17
77-120. 18
(4) On or before November 10, any local system may file with the Tax19
Commissioner written objections to the adjusted valuations prepared by20
the Property Tax Administrator, stating the reasons why such adjusted21
valuations are not the valuations required by subsection (3) of this22
section. The Tax Commissioner shall fix a time for a hearing. Either23
party shall be permitted to introduce any evidence in reference thereto.24
On or before January 1, the Tax Commissioner shall enter a written order25
modifying or declining to modify, in whole or in part, the adjusted26
valuations and shall certify the order to the State Department of27
Education. Modification by the Tax Commissioner shall be based upon the28
evidence introduced at hearing and shall not be limited to the29
modification requested in the written objections or at hearing. A copy of30
the written order shall be mailed to the local system within seven days31
LB1038
2026
LB1038
2026
-43-
after the date of the order. The written order of the Tax Commissioner1
may be appealed within thirty days after the date of the order to the Tax2
Equalization and Review Commission in accordance with section 77-5013.3
(5) On or before November 10, any local system or county official4
may file with the Tax Commissioner a written request for a nonappealable5
correction of the adjusted valuation due to clerical error as defined in6
section 77-128 or, for agricultural and horticultural land, assessed7
value changes by reason of land qualified or disqualified for special use8
valuation pursuant to sections 77-1343 to 77-1347.01. On or before the9
following January 1, the Tax Commissioner shall approve or deny the10
request and, if approved, certify the corrected adjusted valuations11
resulting from such action to the State Department of Education.12
(6) On or before May 31 of the year following the certification of13
adjusted valuation pursuant to subsection (2) of this section, any local14
system or county official may file with the Tax Commissioner a written15
request for a nonappealable correction of the adjusted valuation due to16
changes to the tax list that change the assessed value of taxable17
property. Upon the filing of the written request, the Tax Commissioner18
shall require the county assessor to recertify the taxable valuation by19
school district in the county on forms prescribed by the Tax20
Commissioner. The recertified valuation shall be the valuation that was21
certified on the tax list, pursuant to section 77-1613, increased or22
decreased by changes to the tax list that change the assessed value of23
taxable property in the school district in the county in the prior24
assessment year. On or before the following July 31, the Tax Commissioner25
shall approve or deny the request and, if approved, certify the corrected26
adjusted valuations resulting from such action to the State Department of27
Education. 28
(7) No injunction shall be granted restraining the distribution of29
state aid based upon the adjusted valuations pursuant to this section.30
(8) A school district whose state aid is to be calculated pursuant31
LB1038
2026
LB1038
2026
-44-
to subsection (5) of this section and whose state aid payment is1
postponed as a result of failure to calculate state aid pursuant to such2
subsection may apply to the state board for lump-sum payment of such3
postponed state aid. Such application may be for any amount up to one4
hundred percent of the postponed state aid. The state board may grant the5
entire amount applied for or any portion of such amount. The state board6
shall notify the Director of Administrative Services of the amount of7
funds to be paid in a lump sum and the reduced amount of the monthly8
payments. The Director of Administrative Services shall, at the time of9
the next state aid payment made pursuant to section 79-1022, draw a10
warrant for the lump-sum amount from appropriated funds and forward such11
warrant to the district. 12
Sec. 19. Section 79-1017.01, Reissue Revised Statutes of Nebraska,13
is amended to read: 14
79-1017.01 (1) For state aid calculated for each school fiscal year15
prior to school fiscal year 2023-24, local system formula resources16
includes other actual receipts determined pursuant to section 79-1018.01,17
net option funding determined pursuant to section 79-1009, allocated18
income tax funds determined pursuant to section 79-1005.01, and community19
achievement plan aid determined pursuant to section 79-1005, and is20
reduced by amounts paid by the district in the most recently available21
complete data year as property tax refunds pursuant to or in the manner22
prescribed by section 77-1736.06. 23
(2) For state aid calculated for school fiscal years year 2023-2424
through 2025-26 and each school fiscal year thereafter, local system25
formula resources includes other actual receipts determined pursuant to26
section 79-1018.01, net option funding determined pursuant to section27
79-1009, allocated income tax funds determined pursuant to section28
79-1005.01, community achievement plan aid determined pursuant to section29
79-1005, and a percentage of foundation aid determined pursuant to30
section 79-1006, and is reduced by amounts paid by the district in the31
LB1038
2026
LB1038
2026
-45-
most recently available complete data year as property tax refunds1
pursuant to or in the manner prescribed by section 77-1736.06.2
(3) For state aid calculated for school fiscal year 2026-27 and each3
school fiscal year thereafter, local system formula resources includes4
other actual receipts determined pursuant to section 79-1018.01 and net5
option funding determined pursuant to section 79-1009, and is reduced by6
amounts paid by the district in the most recently available complete data7
year as property tax refunds pursuant to or in the manner prescribed by8
section 77-1736.06. 9
Sec. 20. Section 79-1021, Reissue Revised Statutes of Nebraska, is10
amended to read: 11
79-1021 (1) The Education Future Fund is created. The fund shall be12
administered by the department and shall consist of money transferred to13
the fund by the Legislature. Transfers may be made from the Education14
Future Fund to the Computer Science and Technology Education Fund at the15
direction of the Legislature. Any money in the Education Future Fund16
available for investment shall be invested by the state investment17
officer pursuant to the Nebraska Capital Expansion Act and the Nebraska18
State Funds Investment Act. 19
(2) The fund shall be used only for the following purposes, in order20
of priority: 21
(a) To fully fund equalization aid under the Tax Equity and22
Educational Opportunities Support Act; 23
(b) To fund reimbursements related to special education under24
section 79-1142; 25
(c) To fund foundation aid under the Tax Equity and Educational26
Opportunities Support Act for school fiscal years 2023-24 through27
2025-26; 28
(d) To increase funding for school districts in a way that results29
in direct property tax relief, which means a dollar-for-dollar30
replacement of property taxes by a state funding source;31
LB1038
2026
LB1038
2026
-46-
(e) To provide funding for a grant program created by the1
Legislature to address teacher turnover rates and keep existing teachers2
in classrooms; 3
(f) To provide funding to increase career and technical educational4
classroom opportunities for students, including, but not limited to,5
computer science education. Such funding must provide students with the6
academic and technical skills, knowledge, and training necessary to7
succeed in future careers; 8
(g) To provide funding for a grant program created by the9
Legislature to provide students the opportunity to have a mentor who will10
continuously engage with the student directly to aid in the student's11
professional growth and give ongoing support and encouragement to the12
student; 13
(h) To provide funding for extraordinary increases in special14
education expenditures to allow school districts with large, unexpected15
special education expenditures to more easily meet the needs of all16
students; 17
(i) To provide funding to help recruit teachers throughout the state18
by utilizing apprenticeships through a teacher apprenticeship program and19
an alternative certification process; 20
(j) To provide funding to develop and implement a professional21
learning system to help provide sustained professional learning and22
training regarding evidence-based reading instruction and for a grant23
program relating to dyslexia research; and 24
(k) To provide funding for a pilot project administered by the State25
Department of Education to provide menstrual products to school26
districts. 27
(3)(a) The State Treasurer shall transfer one billion dollars from28
the General Fund to the Education Future Fund in fiscal year 2023-24, on29
such dates and in such amounts as directed by the budget administrator of30
the budget division of the Department of Administrative Services.31
LB1038
2026
LB1038
2026
-47-
(b) The State Treasurer shall transfer two hundred fifty million1
dollars from the General Fund to the Education Future Fund in fiscal year2
2024-25, on such dates and in such amounts as directed by the budget3
administrator of the budget division of the Department of Administrative4
Services. 5
(c) It is the intent of the Legislature that two hundred fifty6
million dollars be transferred from the General Fund to the Education7
Future Fund in fiscal year 2025-26 and each fiscal year thereafter.8
(d) It is the intent of the Legislature that: 9
(i) XX billion XX million dollars be transferred from the General10
Fund to the Education Future Fund in fiscal year 2026-27;11
(ii) XX billion XX million dollars be transferred from the General12
Fund to the Education Future Fund in fiscal year 2027-28;13
(iii) XX billion XX million dollars be transferred from the General14
Fund to the Education Future Fund in fiscal year 2028-29; and15
(iv) XX billion XX million dollars be transferred from the General16
Fund to the Education Future Fund in fiscal year 2029-30.17
Sec. 21. Section 79-1022, Reissue Revised Statutes of Nebraska, is18
amended to read: 19
79-1022 (1) On or before June 15, 2026 2023, and on or before March20
1 of each year thereafter, the department shall determine the amounts to21
be distributed to each local system for the ensuing school fiscal year22
pursuant to the Tax Equity and Educational Opportunities Support Act and23
shall certify the amounts to the Director of Administrative Services, the24
Auditor of Public Accounts, and each local system. On or before June 15,25
2026 2023, and on or before March 1 of each year thereafter, the26
department shall report the necessary funding level for the ensuing27
school fiscal year to the Governor, the Appropriations Committee of the28
Legislature, and the Education Committee of the Legislature. The report29
submitted to the committees of the Legislature shall be submitted30
electronically. Except as otherwise provided in this subsection,31
LB1038
2026
LB1038
2026
-48-
certified state aid amounts, including adjustments pursuant to section1
79-1065.02, shall be shown as budgeted non-property-tax receipts and2
deducted prior to calculating the property tax request in the local3
system's general fund budget statement as provided to the Auditor of4
Public Accounts pursuant to section 79-1024. 5
(2) Except as provided in this subsection, subsection (8) of section6
79-1016, and sections 79-1005, 79-1033, and 79-1065.02, the amounts7
certified pursuant to subsection (1) of this section shall be distributed8
in ten as nearly as possible equal payments on the last business day of9
each month beginning in September of each ensuing school fiscal year and10
ending in June of the following year, except that when a local system is11
to receive a monthly payment of less than one thousand dollars, such12
payment shall be one lump-sum payment on the last business day of13
December during the ensuing school fiscal year. 14
Sec. 22. Section 79-1022.02, Reissue Revised Statutes of Nebraska,15
is amended to read: 16
79-1022.02 Notwithstanding any other provision of law, any17
certification of state aid pursuant to section 79-1022, certification of18
budget authority pursuant to section 79-1023, and certification of19
applicable allowable reserve percentages pursuant to section 79-102720
completed prior to the effective date of this act June 1, 2023, for21
school fiscal year 2026-27 2023-24 are null and void.22
Sec. 23. Section 79-1023, Reissue Revised Statutes of Nebraska, is23
amended to read: 24
79-1023 (1) On or before June 15, 2026 2023, and on or before March25
1 of each year thereafter, the department shall determine and certify to26
each school district budget authority for the general fund budget of27
expenditures for the ensuing school fiscal year. 28
(2) Except as provided in sections 79-1028.01, 79-1029, 79-1030, and29
81-829.51, each school district shall have budget authority for the30
general fund budget of expenditures equal to the greater of (a) the31
LB1038
2026
LB1038
2026
-49-
general fund budget of expenditures for the immediately preceding school1
fiscal year minus exclusions pursuant to subsection (1) of section2
79-1028.01 for such school fiscal year with the difference increased by3
the basic allowable growth rate for the school fiscal year for which4
budget authority is being calculated, (b) the general fund budget of5
expenditures for the immediately preceding school fiscal year minus6
exclusions pursuant to subsection (1) of section 79-1028.01 for such7
school fiscal year with the difference increased by an amount equal to8
any student growth adjustment calculated for the school fiscal year for9
which budget authority is being calculated, or (c) one hundred ten10
percent of formula need for the school fiscal year for which budget11
authority is being calculated minus the special education budget of12
expenditures as filed on the school district budget statement on or13
before September 30 for the immediately preceding school fiscal year,14
which special education budget of expenditures is increased by the basic15
allowable growth rate for the school fiscal year for which budget16
authority is being calculated. 17
(3) For any school fiscal year for which the budget authority for18
the general fund budget of expenditures for a school district is based on19
a student growth adjustment, the budget authority for the general fund20
budget of expenditures for such school district shall be adjusted in21
future years to reflect any student growth adjustment corrections related22
to such student growth adjustment. 23
Sec. 24. Section 79-1027, Reissue Revised Statutes of Nebraska, is24
amended to read: 25
79-1027 No district shall adopt a budget, which includes total26
requirements of depreciation funds, necessary employee benefit fund cash27
reserves, and necessary general fund cash reserves, exceeding the28
applicable allowable reserve percentages of total general fund budget of29
expenditures as specified in the schedule set forth in this section.30
Average daily 31 Allowable
LB1038
2026
LB1038
2026
-50-
membership of 1 reserve
district 2 percentage
0 - 471 3 45
471.01 - 3,044 4 35
3,044.01 - 10,000 5 25
10,000.01 and over 6 20
On or before June 15, 2026 2023, and on or before March 1 each year7
thereafter, the department shall determine and certify each district's8
applicable allowable reserve percentage for the ensuing school fiscal9
year. 10
Each district with combined necessary general fund cash reserves,11
total requirements of depreciation funds, and necessary employee benefit12
fund cash reserves less than the applicable allowable reserve percentage13
specified in this section may, notwithstanding the district's applicable14
allowable growth rate, increase its necessary general fund cash reserves15
such that the total necessary general fund cash reserves, total16
requirements of depreciation funds, and necessary employee benefit fund17
cash reserves do not exceed such applicable allowable reserve percentage.18
Sec. 25. Section 79-1031.01, Reissue Revised Statutes of Nebraska,19
is amended to read: 20
79-1031.01 The Appropriations Committee of the Legislature shall21
annually include the amount necessary to fund the state aid that will be22
certified to school districts on or before June 15, 2026 2023, and on or23
before March 1 of each year thereafter for each ensuing school fiscal24
year in its recommendations to the Legislature to carry out the25
requirements of the Tax Equity and Educational Opportunities Support Act.26
Sec. 26. For fiscal year 2026-27 and each fiscal year thereafter,27
if the amount of money transferred from the General Fund to the Education28
Future Fund does not equal the amounts described in subdivision (3)(d) of29
section 79-1021 and is insufficient for any fiscal year to fully fund30
equalization aid under the Tax Equity and Educational Opportunities31
LB1038
2026
LB1038
2026
-51-
Support Act, each school district may, if approved by a majority vote of1
the school board, levy an amount for such fiscal year sufficient to2
generate revenue equal to the amount of equalization aid that should have3
been provided to the school district for such fiscal year. The property4
tax levy provided in this section is in addition to the maximum allowable5
property tax levy described in subdivision (2)(a) of section 77-3442.6
Sec. 27. Section 79-10,120, Reissue Revised Statutes of Nebraska, is7
amended to read: 8
79-10,120 (1) The school board or board of education of any school9
district may establish a special fund for purposes of acquiring sites for10
school buildings or teacherages, purchasing existing buildings for use as11
school buildings or teacherages, including the sites upon which such12
buildings are located, and the erection, alteration, equipping, and13
furnishing of school buildings or teacherages and additions to school14
buildings for elementary and high school grades and for no other purpose.15
The fund shall be established from the proceeds of an annual levy, to be16
determined by the board. The maximum levy under this section shall be:17
(a) For fiscal years prior to fiscal year 2026-27, fourteen cents18
per one hundred dollars of taxable valuation of property subject to the19
levy; and 20
(b) For fiscal year 2026-27 and each fiscal year thereafter, ten21
cents per one hundred dollars of taxable valuation of property subject to22
the levy, except that the maximum levy shall be fourteen cents per one23
hundred dollars of taxable valuation of property subject to the levy for24
any project commenced prior to the effective date of this act.25
(2) The tax authorized in this section , of not to exceed fourteen26
cents on each one hundred dollars upon the taxable value of all taxable27
property in the district which shall be in addition to any other taxes28
authorized to be levied for school purposes. Such tax shall be levied and29
collected as are other taxes for school purposes. For fiscal year 2026-2730
and each fiscal year thereafter, such tax shall not be subject to the31
LB1038
2026
LB1038
2026
-52-
levy limitation provided in subdivision (2)(a) of section 77-3442.1
Sec. 28. Section 79-3402, Reissue Revised Statutes of Nebraska, is2
amended to read: 3
79-3402 For purposes of the School District Property Tax Limitation4
Act, unless the context otherwise requires: 5
(1) Approved bonds means (a) bonds that are issued by a school6
district after the question of issuing such bonds has been approved by7
the voters of such school district and (b) bonds that are issued by a8
school district pursuant to section 79-10,110, 79-10,110.01, or9
79-10,110.02; 10
(2) Average daily membership has the same meaning as in section11
79-1003; 12
(3) Base growth percentage means the sum of: 13
(a) Three percent; 14
(b) The annual percentage increase in the student enrollment of the15
school district multiplied by: 16
(i) One if the school district's student enrollment has grown by an17
average of at least three percent and by at least one hundred fifty18
students over the preceding three years; 19
(ii) Seven-tenths if the school district's student enrollment has20
grown by an average of at least three percent over the preceding three21
years; or 22
(iii) Four-tenths if subdivisions (3)(b)(i) and (3)(b)(ii) of this23
section do not apply; 24
(c) The percentage obtained by first dividing the annual increase in25
the total number of limited English proficiency students in the school26
district by the student enrollment of the school district and then27
multiplying the quotient by fifteen hundredths; and28
(d) The percentage obtained by first dividing the annual increase in29
the total number of poverty students in the school district by the30
student enrollment of the school district and then multiplying the31
LB1038
2026
LB1038
2026
-53-
quotient by fifteen hundredths; 1
(4) Department means the State Department of Education;2
(5) Non-property-tax revenue means revenue of a school district from3
all state and local sources other than real and personal property taxes.4
Non-property-tax revenue does not include grants, donations, bonds, all5
revenue from a school district that has been merged into another school6
district or dissolved, activity funds, bond funds, cooperative funds,7
depreciation funds, employee benefit funds, nutrition funds, qualified8
capital purpose undertaking funds, or student fee funds, insurance9
proceeds, proceeds from the sale of property including land, buildings,10
or capital assets in special building funds, or proceeds of financing;11
(6) Property tax request means the total amount of property taxes12
for the general fund and special building funds requested to be raised13
for a school district through the levy imposed pursuant to section14
77-1601; 15
(7) Property tax request authority means the amount that may be16
included in a property tax request for the general fund or special17
building funds of the school district as determined pursuant to the18
School District Property Tax Limitation Act; 19
(8) School board has the same meaning as in section 79-101;20
(9) School district has the same meaning as in section 79-101; and21
(10) Student enrollment means the total number of students in the22
school district according to the fall school district membership report23
described in subsection (4) of section 79-528. 24
Sec. 29. Section 79-3403, Reissue Revised Statutes of Nebraska, is25
amended to read: 26
79-3403 (1) Except as provided in sections 79-3404 and 79-3405, a27
school district's property tax request for any year shall not exceed the28
school district's property tax request authority. 29
(2) The department shall calculate each school district's property30
tax request authority on an annual basis as follows:31
LB1038
2026
LB1038
2026
-54-
(a) The school district's property tax request from the prior year1
shall be added to the non-property-tax revenue from the prior year minus2
any investment income from special building funds from the prior year ,3
and the total shall be increased by the school district's base growth4
percentage; and 5
(b) The amount determined under subdivision (2)(a) of this section6
shall then be decreased by the amount of total non-property-tax revenue7
for the current year and adjusted for any known or documented errors in8
documentation received by the department from the school district. In9
determining the total non-property-tax revenue for the current year, any10
category of non-property-tax revenue for which there is insufficient data11
as of June 1 to make an accurate determination shall be deemed to be12
equal to the prior year's amount. 13
(3) The department shall certify the amount determined for each14
school district under this section to the school board of such school15
district. Such certified amount shall be the school district's property16
tax request authority. 17
Sec. 30. Section 79-3406, Reissue Revised Statutes of Nebraska, is18
amended to read: 19
79-3406 A school district may choose not to increase its property20
tax request by the full amount allowed by the school district's property21
tax request authority in a particular year. In such cases, the school22
district may carry forward to future years the amount of unused property23
tax request authority , excluding any unused amounts obtained pursuant to24
subsection (2) of section 79-3405. The department shall calculate each25
school district's unused property tax request authority and shall submit26
an accounting of such amount to the school board of the school district.27
Such unused property tax request authority may then be used in later28
years for increases in the school district's property tax request.29
Sec. 31. Original sections 9-1204, 77-4211, 79-1001, 79-1003,30
79-1005, 79-1005.01, 79-1006, 79-1007.11, 79-1007.18, 79-1008.01,31
LB1038
2026
LB1038
2026
-55-
79-1009, 79-1016, 79-1017.01, 79-1021, 79-1022, 79-1022.02, 79-1023,1
79-1027, 79-1031.01, 79-10,120, 79-3402, 79-3403, and 79-3406, Reissue2
Revised Statutes of Nebraska, sections 77-3012 and 77-4212, Revised3
Statutes Cumulative Supplement, 2024, and sections 77-3442, 77-4602,4
77-7304, and 77-7305, Revised Statutes Supplement, 2025, are repealed.5
Sec. 32. Since an emergency exists, this act takes effect when6
passed and approved according to law. 7
LB1038
2026
LB1038
2026
-56-