In fiscal year 2025, Nebraska changed the way community colleges in the state receive public funding for operations. Historically, community colleges levied local property taxes and received state aid to support operations at two-year institutions. In FY24, two-year institutions received $224.0 million in local property tax support for operations, or $9,675 per FTE. This accounted for almost 65% of all public higher education appropriations for two-year institutions in the state. State operating support for two-year institutions in FY24 was $4,985 per FTE, or roughly one-third of total education appropriations.
In 2023, the Nebraska unicameral legislature passed Legislative Bill 243, which phased in elimination of the community college property tax for operations as part of a broader shift to lower local property taxes. To replace the local taxes, the Nebraska legislature created the Community College Future Fund. Beginning in FY25, local tax appropriations for operations at two-year institutions in Nebraska dropped to $0, while state support from the Community College Future Fund and state operating aid increased to $367.4 million, or $14,797 per FTE. State operating support now accounts for over 97% of all public higher education appropriations for two-year institutions in Nebraska.
While the state intends to maintain the Community College Future Fund through transfers from the state’s General Fund and grow it based on a formula that applies the greater of 3.5% annual increases or program-weighted enrollment growth, LB243 also permits the community colleges to again levy local property taxes for operations, limited to the amount equal to lost funding, if state aid is reduced from the previous or base year or the calculated amount due from the Community College Future Fund is not provided to them.