Nebraska senators debate expansion of 529 plans to include K-12 education funding

The Nebraska Legislature's recent session on April 30, 2025, saw significant debate surrounding LB 131, a bill aimed at expanding the use of 529 plans to cover K-12 private school tuition. This proposal, introduced by Senator Sorrentino, seeks to allow families to use their after-tax dollars for private education expenses while receiving a state tax deduction.

Senator Sorrentino emphasized that this bill is distinct from previous proposals that had been rejected by voters, clarifying that it does not involve public funding for private institutions but rather allows families to utilize their own funds. He argued that many Nebraskans have expressed a desire for such options, noting that 44 other states have already adopted similar measures.

However, the bill faced strong opposition from several senators, including Senator Duncan, who raised concerns about the implications of diverting public tax dollars to private education. He highlighted that the majority of Nebraskans had previously rejected the idea of using public funds for private schooling, citing polling data that reflected widespread disapproval of such measures. Duncan warned that the proposed tax deductions could lead to a loss of approximately $4 million annually in state revenue, which could otherwise support public education and other essential services.

Senator Greco echoed these concerns, emphasizing the need to prioritize public education funding, especially in light of the state's current budget shortfall. He argued that the bill could set a precedent for further privatization of education, which has historically faced backlash in Nebraska.

The discussion also touched on the potential fiscal impact of the bill, with senators questioning the assumptions behind the projected increase in 529 accounts and contributions. Some senators expressed skepticism about whether the expansion would genuinely benefit low-income families seeking educational alternatives, as data suggested that those who typically utilize 529 plans are often from higher-income brackets.

As the session progressed, the debate highlighted the broader implications of educational funding in Nebraska, with senators grappling with the balance between supporting school choice and ensuring robust public education. The outcome of LB 131 remains uncertain, as legislators continue to weigh the potential benefits against the fiscal realities facing the state.