LINCOLN — Nebraska’s Education Future Fund (EFF), once pitched as a long-term solution to ease property taxes and provide consistent support for K-12 schools, is projected to run dry within five years of its creation.
The fund was launched in 2023 with $1 billion and a promise from lawmakers to contribute $250 million annually to keep it sustainable. Gov. Jim Pillen had envisioned the fund growing to $2.5 billion by 2029-30, but spending has outpaced contributions by more than $150 million each year.
EFF has since become a core part of the state’s school funding system, offering per-pupil “foundation aid” to non-equalized districts and increasing the state’s share of special education costs from 40% to 80%. While this support has been a lifeline for many rural districts, the rapid growth in expenses threatens the fund’s longevity.
Budget projections show that if lawmakers maintain the $250 million annual transfer, the fund won’t be able to meet obligations by fiscal year 2027-28. Several school board members said they doubted the fund’s sustainability from the start, likening the state’s shifting budget strategy to “moving deck chairs on the Titanic.”
Special education reimbursements have been the largest and fastest-growing expense, climbing from $246 million in the first year to a projected $309 million by 2026-27. The rising demand for services has far exceeded expectations, straining the fund further. Foundation aid, meanwhile, has provided smaller districts with significant boosts — in some cases increasing state support by hundreds of thousands or even millions of dollars, helping reduce reliance on property taxes and raise teacher pay.
Gov. Pillen has pledged to keep the fund alive, with state officials indicating that larger transfers may be necessary. Yet Nebraska faces financial headwinds, including projected deficits and proposed statewide budget cuts. Where additional revenue would come from remains uncertain.
For many districts, the stakes are high. Board members say that if EFF funding were to vanish, the consequences would be “catastrophic,” forcing levy hikes or staff cuts despite existing levy caps.
Education leaders warn that trust is wearing thin between schools and state government. While officials argue that Nebraska’s overall education funding continues to trend upward, many school boards remain skeptical that the state can keep its promises without new, reliable revenue sources.
“The writing is on the wall if they don’t come up with new ways of raising income,” said Steve Koch, board member for Hershey Public Schools.
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