The bill's fiscal note indicates that LB 988 will reduce the total amount of state aid distributed in fiscal year 2008-09 by $61.9 million. This represents a 9 percent increase over the previous year's allocation, rather than a 17 percent increase, as would have occurred without legislative changes to the funding formula.

The new needs calculation compares school districts of similar size to arrive at a basic funding level. Consideration will be given for remote elementary sites, elementary class sizes, poverty, limited English proficiency, focus schools and programs, special receipts, transportation, distance education and telecommunications, teacher education levels, new school buildings, student growth, instructional time, summer school, new learning community transportation increases, size ranges with below-average costs and cost sharing between the state and school districts with fewer than 390 students which are not in sparsely populated areas.

The current method for calculating budget authority was scaled back and a new alternative method is available based on 120 percent of the new needs calculation.

LB 988 adjusted valuations to 96 percent of actual value for residential and commercial property and 72 percent for agricultural and horticultural land for the calculation of state aid to school districts and educational service units. Local effort rates will increase in response to the valuation changes.

Raikes explained that the amount of state aid each school district receives is based on a measure of a district's need minus their local resources, which are comprised of local receipts and property taxes.

Calling the bill a significant modification of the way state aid is calculated, Raikes said the bill makes the calculation of a school district's state aid needs more accurately reflect its actual costs.

If a school district's need exceeds its resources, state aid is allocated to make up the difference.

LB 988 passed on a 33-14 vote.