State aid to education has become the monster that ate the budget surplus.

State leaders announced Friday that mushrooming state aid to public schools will gobble up much of the $52 million state surplus.

Calling for an overhaul of the state aid formula, Gov. Dave Heineman said the 17.5 percent increase in aid to schools is “a financial bombshell.”

“I am a strong supporter of state aid to education,” Heineman said in a news release. “But this extraordinary increase” — plus 11 percent increases predicted for each of the next two years — “are simply unsustainable.”

State leaders had expected some increase in aid to schools, which is driven by a formula in state law. But the new aid estimate is much higher than earlier predicted.

The state likely will send about $885.5 million in general fund tax dollars to public school districts next year — about $53 million more than expected when senators approved the two-year budget last spring.

The unexpected increase doesn’t leave the state in the poorhouse. But it does put a big crimp in the extra money some senators had hoped to use for other needs.

The surplus for this budget period — money above already budgeted amounts — is down to about $12.9 million after accounting for the extra in state aid to education, according to the Legislature’s fiscal office.

And senators already were looking at ways to spend that money.

The University of Nebraska, for instance, is seeking about $16 million for a new student services computer system.

But the rapidly growing state aid will create even more severe problems in future years, threatening to cut into funding for other state services.

“If I were the university, I’d be worried,” said Appropriations Committee Chairman Lavon Heidemann of Elk Creek.

There’s enough money to cover state aid in this two-year budget cycle. But in the future, state leaders will have to either raise taxes or cut spending of other agencies to keep up with state aid growth, he said.

Heidemann said he expects some senators may want to tinker with the aid formula, but that wasn’t his reason for sending a warning letter about the issue to them this week.

In his response, the governor recommended eliminating the automatic nature of state aid.

“The amount of state aid to education should be a policy decision for the Legislature and the governor, not a computer in the Department of Education,” he said in the news release.

“The current state aid formula is unpredictable and unsustainable. Long term, the state of Nebraska needs a simplified and understandable state aid formula for education,” he said.

Several factors are responsible for this increase, from flat federal education funding to a decision by senators to pay for more of the summer school programs, according to an analysis by the fiscal office.

Nearly two-thirds of the unexpected growth is due to legislation passed over the past few years, said Tom Bergquist, an analyst with the Legislature. 

State aid to schools historically has had funding swings, from actual decreases to large increases, he said. The average increase over the past 10 years has been about 4.3 percent, he said.

The current state aid number is still an estimate and could change before the Feb. 1 deadline for finalizing state aid.

Reach Nancy Hicks at 473-7250 or nhicks@journalstar.com.