BEATRICE – The Southeast Community College Board has given preliminary approval to a more than $358 million budget....a baseline as community colleges move to state funding next year.  The community colleges will lose the ability to levy property taxes for general operations but will see state revenue replace that through a community college future fund.

"This is historic legislation that I think will strengthen the community colleges while at the same time provide property tax relief....and give boards the chance to not only continue that local control, but to strengthen it."

SCC President Dr. Paul Illich says community colleges will retain the right to levy up to two cents for capital improvements. The changes made in LB 243 were the result of collaboration between the community colleges, state lawmakers and the governor. The future fund would provide an increase each year of at least 3.5%. If the state cannot maintain that level, community colleges would be able to levy a tax to return to their baseline budget.

"What this is really about is one issue that Nebraska has been working on for many, many years...decades...and that's a lack of skilled workforce. The community colleges are positioned to do that. This bill allows the colleges to concentrate on funding while at the same time, serving their taxpayers without creating a tax burden. I think one of the most positive things is that it was a collaborative effort between the senators, the community colleges and the governor's office. It was an example of where you can start at different places...and end in a place where everybody wins, in this particular situation."

The future fund replaces general fund property tax dollars….an addition to regular state aid. The level of future fund support is tied to community college enrollment but establishes a floor of at least a 3.5% increase.  Illich, who’s been President at SCC for eight years, has overseen a major upgrade of campus facilities, which made changing the funding arrangement a concern during the time the college is strategically planning for the future.

"That takes a lot of long-term planning, so anytime you come in and change the funding model within a short time cycle...within months or a always creates challenges. We worked really hard to make sure this new funding model wasn't a disruption....and I do not believe it was the intent of the creators and introducers of the bill in any way to disrupt what we're trying to do. I think they wanted to help us, and so we had to offer some different pieces, amendments to align with where we're headed. In the case of SCC, we've been really modernizing. We've been trying to grow out our capacity, to produce this kind of workforce and make sure we have affordable access."

The baseline budget that will move toward final approval would include an 11.25 cent property tax levy… increase from the current 9.37 cents and is the maximum levy community colleges can have. But the increase in property taxes is designed to be reimbursed to property taxpayers through a 100-percent credit on their state income taxes.

"We set the baseline, which the board is going to be setting this year, based on future needs....not past needs or current needs. I think it was so important to have some mechanisms in there. There's a one hundred percent tax credit to ensure that the taxpayer...wherever the rate is set this year....gets one hundred percent of that back on what they pay, and that's intentional. Everyone involved knew that we were going to have to think about our future needs and that might lead to additional funding...but we didn't want to harm the taxpayers, so that's why that one hundred percent tax credit is in there."

Illich says the funding change for community colleges recognizes the importance of the two-year schools in developing the state’s workforce. He said what he hears most from state senators is concern over the lack of a skilled workforce, which may require other steps beyond just the financing of higher education.