Public Expenditures in Nebraska
Total State and Local Spending Overview
In FY 1999-2000, total state and local spending in the State of Nebraska from all sources amounted to over $5.8 billion dollars. Of that $5.8 billion dollars, approximately $1.5 billion was federal money and $2.344 billion from the state general fund. The remainding expenses of $1.96 billion were paid out of cash and local (property) tax funds.
As mentioned earlier, certain major entities such as K-12 Education and Postsecondary education receive funds from multiple sources. This dramatically increases the difficulty by the taxpayer determining whether or not spending in general or after the affect of tax lids has stabilized. Many Nebraska taxpayers do not realize that shortfalls in funding by property tax lids were made up by subsidies from the general fund. In these cases, it is more convenient to examine the budgets of the individual entities.
Appropriations become expenditures once the money has been spent. Evaluation of public expenditures is more difficult than revenues. A comprehensive evaluation of public expenditures makes it "necessary to examine all types of financial reports...to establish with any certainty how local tax dollars are spent."2 Most appropriations are recorded or tracked in certain funds or accounts as opposed to"purpose". Each of these funds may have combined or more often a separate state, local, or federal component. Many states are working towards a unified accounting system to more easily compare costs. This will be very beneficial or detrimental to those organizations that receive a greater or lesser portion of tax funds. Nebraska public expenditures may most easily viewed by their revenue sources and will be compared with other budget data that describes funding sources. For example, General Funds account for 40-50% of the total expenditures and are listed below in General Fund Appropriations where actual data is available. State records will list budgets in actual, appropriated, or governor's recommendation.
Author's Comment: Regarding Tax Policy in Nebraska, searching for its most glaring deficiency, I see there is no impetus to determine whether the Nebraska Tax System delivers services at lowest cost. By definition, i.e., more tax efficient.
As with revenues, one must examine both state and local tax expenditures combined under the Nebraska State Tax System, to make a meaningful evaluation. However, this evaluation is limited since it does not include spending or expenditures "where funded by user fees or patient care revenues at health care facilities."2
Author's Comment: In my opinion, these revenues should be included since these public facilities are supported by tax subsidies. This information will be included when it becomes available.
Most of these reports will focus on the major categories of schools, county, city, and other local spending. "State aid provided to local governments is the major use of state tax revenue. State aid to local governments is shown as local spending in this analysis."2 General Fund expenditures
represent the largest single source of funds and are most often referred to in newspaper reports. Keep in mind, however, that general funds represent on 40% all funds being spent.
Where the Nebraska State Tax Dollar Goes....
Graph1.0 Nebraska General Fund Appropriations for FY 1999-2000.
FY99-01 General Fund Appropriations
| Category |
FY99-00
(Actual) |
Percent (%) of Gen. Fund |
FY01-02
(Gov. Rec.) |
Percent (%) of Gen. Fund |
| Local Tax Relief |
$878,031,000 |
37.5% |
$1,003,400,000 |
37.6% |
| Aid to Individuals |
$445,973,000 |
19.0% |
562,600,000 |
21.1% |
| Government Operations |
$457,960,000 |
19.5% |
541,500,000 |
20.3% |
| Postsecondary Education |
$403,091,000 |
17.2% |
$449,000,000 |
16.8% |
| Other State Aid |
$86,000,000 |
3.7% |
$99.800,000 |
3.7% |
| Capital Construction |
$73,328,000 |
3.1% |
$11,700,000 |
0.5% |
| Total |
$2,344,084,000 |
100.0% |
$2,668,000,000 |
100.0% |
Table 1.0 Nebraska General Fund Appropriations for FY00-021,9
Note: The above table from the Governor Johann's website only breaks down expenditures out of the General Fund. It does not include expenditure out of local taxation funds and the Cash Fund. Some reasons for this may be listed below.
Local Accountability for Public Expenditures
Nebraska ranks very high for being fiscally accountable to taxpayers. One report notes that 70.6% of local spending in Nebraska is funded by local level taxation. The state has developed accountability measures for local governments which include audits and filing of reports with the Nebraska State Auditor. Special focus has been placed on "the amount and percentage of local government spending which is funded by local taxation." 4
"Some taxpayer groups and public finance observers suggest that governments are more accountable to taxpayers for their levels of spending if the taxes to support that spending are locally generated. If taxes are collected by one level of government (the state), and forwarded to local governments as aid, local citizens may request more services than they otherwise would be willing to fund with local taxes." 3
School Taxation and Spending
In 1997, there were 640 public school districts. Since then, there have been a few consolidations of school districts (1998, 604) and fiscal linkage of districts in the form of "school systems". School systems with primary education only may link with another district where secondary education is available. There are 284 school systems in Nebraska.
State aid is not provided to schools for building, bond, or capital facilities use. For that reason, most state comparative information on schools shows only general fund operating cost and tax data. See Table 1.0 above. Taxes collected for payment of bonds and building funds to the statewide total shown.
| School Funding Source |
FY 96-97 |
(%) |
FY 00-01 |
(%) |
| Local Source
| $1,069,081,216 |
60.6% |
| State Source
| $620,365,878 |
35.2% |
$711,342,487 |
|
Federal Source
| $74,131,946 |
4.2% |
$166,743,184 |
| Total School Funding
| $1,763,579,039 |
100% |
Table 2.0 School Use of Major State and Local Taxes - FY 1996-975
With the changing emphasis away from property taxes and capping of property taxes for schools which has been offset by state aid of from other revenue sources, the Nebraska Department of Revenue estimate the mix of sources as 56% local source, and 44% state and federal sources.5
School use of state and local taxes excluding federal aid is estimated at $1,025 per capita in 1996-97. However, this contrasts with School Spending figures including Bond and Building Fund Tax Funding which indicates the total expenditure per student for FY96-97 to be $6,049 per student.6 See Table 3.0 below.
Comparing the actual revenue sources which fund education is difficult. By going to the Nebraska Dept. of Education, one is able to see the various funds that flow through the education system. See the links below under School Funding.
Sources of School Funding
School Spending Including Bond & Building Fund Tax Funding
(FY 1996-1997)
| Fiscal Year |
General Fund Disbursements |
Taxes for Bonds & Bldgs. |
Total Gen. Fund, Bond & Bldg. |
Total Expenditure per Student |
Percent Increase |
Total Students |
| 1996-1997 |
$1,602,000,000 |
$120,500,000 |
$1,722,200,000 |
$6,049 |
3.1% |
284,719 |
Table 3.0 School Spending Including Bond and Building Fund Tax Funding - FY 1996-19976
From 1977-1997, the demographic shift from rural to urban schools was significant. As a result, the total physical capacity needs of schools expanded dramatically faster than the statewide student enrollment.
"Bonds and building funds' use has grown dramatically in the decade of the 1990's as schools face aging facilities, and in a few [urban] communities, dramatic student growth. Many schools deferred spending on physical facilities in the decade of the 1980's as student populations declined, and the weak state economy resulted in restrained public spending."
If we exclude the bricks and mortar of the school system, schools spend most of their funds on teacher salaries, librarians, bus drivers, janitors, and administrators. They buy books, computers, utilities, and transportation services. School expenditures for general fund operations described above are listed by percentage in Table 4.0 below.
School Operating Expenses by Percentage
| Category |
Percentage |
| Classroom Instruction |
75% |
| Administration/Financial Support Services |
11% |
| Transportation/ All activities | 3.5% |
| Community Service | 1% |
| Debt Service | 0.1% |
| Building Maintenance | 10% |
Table 4.0 School Operating Expenses by Percentage7
Between 1990 and 1996, with the imposition of property tax lids in the form of levy limits, a lid was placed on operational expenses; however, there was no limit on building fund levies which are approved by school boards and do not require voter approval. School boards apparently did not receive state funding for the expenditure. In 1996, state legislators further restrained local school board authority on school property tax levies. 8 Comparisons of school financial information on a district by district basis may contact the Nebraska Department of Education.
Omaha World Herald Articles
- Rural-School Funding Urged Testimony Offers Preview of Likely Hot Topics for the Nebraska Legislature
[Bulldog Edition] Omaha World - Herald, Omaha, Neb.Sep 25, 1999
References:
- Highlights of the 2000 Legislative Session, The State of Nebraska, April 2000
- 1998 Comprehensive Guide to the Nebraska State & Local Tax System, December, 1998, p. 180
- Ibid, p. 181.
- Noted in Reference 3: See Table D-16, p. 109, Congressional Quarterly, State Fact Finder, Hovey and Hovey, Editors.
- Ibid, p. 182-3.
- Ibid, p. 184.
- Ibid, p. 186.
- Ibid, p. 187.
- State of Nebraska, Executive Budget Summary, 2001-2003 Biennium, January 11, 2001
Posted: January 2, 2001
Updated: February 10, 2001