State education department faces $1.15 million shortfall

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BY KEVIN ABOUREZK / Lincoln Journal Star

The Nebraska Board of Education has submitted a budget deficit request to the Legislature that calls for an additional $1.53 million for schools.

Most of that money — $1.15 million — would go to fill a shortfall in insurance premium taxes the state received. Those taxes help fund schools, and as they figure their budget each year, state education officials estimate how much they expect to get from those taxes before the taxes actually arrive.

This school year, the taxes didn’t meet the state’s October 2007 budget estimate.

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The state Board of Education approved the budget deficit request Thursday during its monthly meeting.

The board also asked for $296,000 for transportation of option enrollment students and $191,000 for other unbudgeted costs, including payments to terminated employees for unused sick and vacation leave and funding for analysis of state assessments.

Now, the request goes to the Legislature.

Education Board member Joe Higgins said he’s hopeful the Legislature will approve at least a portion of the $1.15 million request to make up for the insurance premium tax shortfall.

“Everyone kind of believes this is something that needs to be done,” he said.

The Legislature could simply reduce the amount of state aid to schools for this school year by $1.15 million, or by the entire $1.53 million requested by the Education Department.

“If they have to make adjustments, as they most always do, they will,” Higgins said.

Russ Inbody, administrator of school finance and organizational services for the Education Department, said the governor’s budget office requested that the department submit the deficit request for the tax shortfall.

He said the budget office hoped that submitting a formal request to make up the insurance premium tax shortfall would effectively put it before the Legislature to be considered during its next session.

Inbody can’t remember ever trying to make up a tax shortfall with a deficit budget request.

“We’ve never done this before,” he said.

State Sen. Ron Raikes of Lincoln said he expects the Education Committee, which he chairs, will seriously consider the budget deficit request. He said he expects the shortfall in insurance premium taxes comes partly as a result of a weakened economy.

“Insurance premiums are relatively sensitive to the rate of the economy,” he said.

Ann Frohman, director of the Nebraska Department of Insurance, agreed the premium tax shortfall came partly as a result of a slow economy, which sometimes leads people to reduce their insurance coverage.

“Like with anything, the business ebbs and flows,” she said.

Another factor that cut the amount of insurance premium taxes the state received, she said, was greater demand of those taxes for a program that provides health benefits to those in need.

Reach Kevin Abourezk at 473-7225 or kabourezk@journalstar.com.