New Releases Center for Rural Affairs Releases Analysis of Initiative 423 Impact on Education Funding Lyons, NE – The Center for Rural Affairs released a report today, entitled False Choices and Bad Choices: Initiative 423 and Public Education in Nebraska, that analyzes the effects of Initiative 423, a proposed initiative to the Nebraska Constitution that will be voted upon at the November 7th general election. “We estimate that had Initiative 423 existed for the 2006-07 school year, local school systems in Nebraska would have had their state aid reduced by 5.7 percent,” said Jon Bailey, Center for Rural Affairs Program Director and author of the report. Independent analyses (Center for Rural Affairs and Legislative Fiscal Office) reached the conclusion that if Initiative 423 had existed since 1996 General Fund appropriations in FY2006-07 would have been from $542 million less to $643 million less. The Center’s further analysis shows that such a reduction would likely have meant reductions in state aid to local school districts – with expenditures per student dropping from 8% to as much as 25% from current levels, which consequently would have dropped Nebraska’s ranking among other states from 21st in per student expenditures currently to 30th under the best case scenario to as low as 48th. Likewise, the percentage of school funding that local districts would have received from state aid would have dropped to 35% under the best case scenario to as low as 20%, driving Nebraska’s ranking among other states to as low as 47th or 50th. “It is important for Nebraskans to realize that Initiative 423 will be part of the Nebraska Constitution and will have real, long-term, cumulative effects. Over time, no matter the scenario, Initiative 423 would place Nebraska at or near the bottom of states in terms of state government support of K-12 public education. Adoption of Initiative 423 will start the slow, steady march of declining state investment in K-12 education that could land Nebraska at or near the bottom of national rankings,” Bailey explained. According to the Center’s report, negative impacts on public policy would likely include: increased school property taxes up to allowable levy limits; increased requests for school property tax override attempts; pressure to consolidate schools; downward pressure on academic performance; and pressure to reduce academic offerings, academic programs and extracurricular activities. “Initiative 423 has the potential to place school districts, communities, Nebraska families, and Nebraska children in a public financing box from which there appears to be limited escape routes - ask taxpayers to increase their school property taxes, adjust school property tax limits upward, or accept some of the more poorly funded public schools in the nation,” Bailey said. “Residents of school districts and local officials can, of course, accept their fate and take a significant decrease in state aid and make the best of it. This is precisely the choice Initiative 423 will force all school districts to consider: poorly funded schools or higher property taxes,” added Bailey. The appendix to the Center for Rural Affairs’ report includes the dollar value of the estimated 5.7% state aid reduction for the 2006-2007 school year in each school district in Nebraska if Initiative 423 had been implemented in 2006. To view a full copy or determine what your school could stand to lose, go to www.cfra.org or contact Kim Preston at the Center for Rural Affairs. Based on the report’s predicted spending lid of 3.8% growth (3.2% inflation and 0.6% population) that would exist if Initiative 423 became law and projected General Fund appropriations for the next two years, Initiative 423 would require that the General Fund budget be reduced by $60.4 million for FY07-08 (from FY06-07) and by another $115.7 million for FY08-09. That means adoption of Initiative 423 would require General Fund budget cuts totaling over $175 million over the next two years.