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OPS warns of $49.8M state-aid shortfall; board hears commission work on poverty allowance and formula changes
Summary
The board heard that a $49.8 million reduction in state aid is driving preliminary budget changes; the school finance review commission is considering simplifying the poverty allowance and moving to more contemporaneous Community Eligibility Provision data for school funding calculations.
Omaha Public Schools trustees were briefed Monday on a preliminary 2026–27 budget that reflects a $49.8 million drop in state aid and on state-level work to change how poverty is counted in the school funding formula.
Miss Magnus, reporting for the budget and audit committee, said the preliminary budget includes a $28.1 million increase in expenses largely tied to state and staff wages and special education services, offset in part by $18.1 million in reductions to contracted services and contingency reserves. She said a five‑year forecast projects the district’s general fund reserve will decline but remain above the board’s 10% minimum required by district policy.
“Path forward will not be easy, but we do have a disciplined approach to future spending in order to manage through the significant reduction in state funding,” Magnus told the board.
Board members then heard a detailed update on the state School Finance Review Commission from Dr. Holman. Committee A — focusing on needs in the formula — has prioritized revising the poverty allowance to fewer tiers, removing antiquated components, and using more contemporaneous data. Dr. Holman described two methods currently used by the Nebraska Department of Education (NDE): lagged IRS-based poverty estimates derived from tax returns and school-reported free and reduced-price lunch counts. The commission is considering relying on Community Eligibility Provision (CEP) rosters because that data is more current.
“NDE is proposing to...use community eligibility provision data because that will be more contemporaneous with when they perform the calculation,” Dr. Holman said, summarizing commission discussion. She added the commission has modeled several alternatives and many would raise the poverty allowance nationally but yield varying state-aid impacts depending on equalization rules.
Committee B reviewed spending patterns and found Nebraska’s per‑pupil calculations differ materially from other states, complicating cross‑state comparisons. The commission’s next steps include modeling options with NDE, refining tier structures, and assessing the revenue-cap conversation.
No formal board action was taken; trustees were informed that staff will continue to work with NDE and that the budget committee will meet again before final adoption in September after the public budget hearings.
