It is budget season, which means business managers, administrators, and boards have been putting in extra hours to attempt to figure out how much money they are going to need to be able to operate effectively for the next year. That also means figuring out where that money will come from.

As we all know, the lion's share of funding for our public schools in Nebraska comes from property taxes. Therefore, the school districts not only have to come up with a budget plan for the year but must also determine how much tax money they need to request to meet that budget. There is a caveat to that, however, as the state legislature places a maximum amount, or lid, on the property tax that can be collected. If a district needs to go over that lid, there are a number of hoops they must jump through, including a county public hearing.

Two school districts within Custer County were requesting to go over the lid, Callaway and Sargent, and had to go before the County Board of Supervisors for a public hearing on Sept. 22. At that hearing, Callaway Public Schools Superintendent JD Furrow provided a handout providing the financial background of the district and explained the reason for the requested increase.

Furrow shared that the district has actually been operating at a deficit, with a reduction over 10 years in the district’s general fund from around $1.3 million to a starting fund this year of $800,000. He stated that part of the need to increase the tax levy is to create a plan to accomplish projects in the school in a fiduciary and patient fashion, while trying to undo that deficit.

The Courier sat down one-on-one with Furrow for a more detailed explanation of what that all means.

“The state sets a limit that if you go up more than 2 percent plus the real growth of the district, which is really confusing, that you must have a joint public hearing. Our original valuation was $497 million going into last year, and they determined that in our district there was $5.699 million worth of new growth,” Furrow explained. “That means new buildings in our district were built that were worth that much. That translates into new growth of 1.15 percent.”

He talked about all of the people who came to the county hearing with their pink slips from the assessor to address how much their taxes went up this year.

“That goes into our total valuation, but it doesn’t count in this real growth number. This had to be a new house, a new building, a new feedlot. That is what allowed us to be able to raise how much we taxed. So the state is saying we could have taxed $103,000 more this year than we did last year, and we wouldn’t have to go to a meeting because we would be under their limit,” said Furrow.

In looking at future plans for the district, Furrow stated that a large portion of the special building fund has been used to make the school's restrooms and locker rooms ADA compliant. “Also, in our previous school year our payroll went up about $220,000.

And we anticipate an additional $200,000 this year.

When we add $1,000 to our base salary that turns into an extra $46,000 expense to our school district,” Furrow said. “Those are known numbers going into next year. On top of that we hope to spend about the same amount on curriculum supplies, materials and transportation expenses which just naturally goes up a little bit.”

Furrow said the real story when it comes to the district, however, is the tax history. The tax asking for 2025-26 is $3.68 million. That is about $400,000 more than last year. “What you will notice is that every year we taxed a little bit less money since 2021-22.

People say they don’t understand how we can say this because their taxes have gone up every year. But what I would tell them is that the school itself asked less. So the only way you would pay more to the school in one year than another is if your property was worth more in comparison to everybody else,” he explained.

In looking back through the taxing history of the district it is interesting to note that what is being requested this year is actually only $40,000 more than the tax amount from 2018-19. “We had that downward trend, and now we are kind of just re-establishing a baseline,” said Furrow. “The questions people are asking are, ‘Why did they cut during those years?’ and ‘Why do we need more this year?’ The obvious thing that happened between there is the Covid pandemic.”

During those years school districts were the beneficiaries of several special federal funding programs, primarily ESSER funding, or the Elementary and Secondary School Emergency Relief Fund. The funds were distributed to state education agencies and then sub-awarded to local school districts based on the proportion of Title I funds each received in the prior fiscal year.

“We had two separate ESSER payments, and one is in addition to what every other school in the state got. It helped to pay for our summer school program.

I’m going to say it is between $600,000 and $1 million that we got through those years to help fund the school,” said Furrow. “At that same time, there was a narrative of not knowing what was happening in the world, and a feeling that we needed to give our taxpayers some relief because of what they might be dealing with economically outside of the school. So, the trend was to give tax relief.”

This year the district started the school year with $800,000 in the general fund, compared to just over $1 million in 2023-24 and $1.2 million the year before that. Furrow said money doesn’t come into the district the same each month, and school districts are also subject to whatever is going on at the state level.

“One of Gov. Pillen’s big initiatives was that state government has to take more of the burden for educating our kids than they have in the past. We have got to find a way to give our property taxpayers a tax credit. It’s been a long, long time since we have had somebody with political power that has made the decisions that favored anything but Lincoln and Omaha,” Furrow shared. “Last school year we received pretty close to $1 million that was tax credit. So our taxpayers actually paid $1 million less of the $3.2 million that we taxed for. But that doesn’t go in our account right away. All of those years that we started out with more money in our account was when we had a huge September tax draw to start our year. This year, our September tax draw is about $240,000 less than last year.”

The tax and budget issue is a complicated one, and something that affects all taxpayers within the district. Furrow and the school board believe strongly in keeping district patrons informed. We will conclude our report on the 2025-26 school budget in the Oct. 9 issue of the Courier.