School finance in Nebraska has been altered dramatically in recent years. School districts have been required to reduce their property tax levy to 1.10per100 in valuation this year. In addition, the formula for state aid has been changed. Many schools are scrambling to make changes to reach this levy lid. Some are considering cutting programs, cutting staff or even consolidation to deal with the limited funding. Many of these changes in school funding have resulted from a demand by Nebraskans for lower taxes and controlled government spending. Given these issues, how do rural Nebraskans feel about the current tax structure? What opinions do they hold about school finance? Do they support or oppose school consolidation, and how do they feel it would affect their community? This report details results of 4,196 responses to the 1998 Nebraska Rural Poll, the third annual effort to take the pulse of rural Nebraskans. Respondents were asked a series of questions about taxes, school finance and school consolidation. Comparisons have been made among different subgroups of the respondents, e.g., comparisons by community size, region, age, income, occupation, etc. Based on these analyses, some key findings emerged: • When asked about their recommended distribution of state and local taxes, rural Nebraskans would like to see less reliance placed on property taxes and individual income taxes and would place more reliance on sales tax and corporate income tax as compared to the current distribution. In the 1995-96 fiscal year, 39% of state and local taxes came from property taxes according to the Legislative Fiscal Office. However, respondents believed only 24% of state and local taxes should come from property taxes. Another major shift was suggested with regard to corporate income tax. While only 3% of the 1995-96 fiscal year distribution came from corporate income taxes, respondents felt that 13% should come from this type of tax. • At least one-half of rural Nebraskans feel that public services would not be greatly affected if property taxes are cut by 10% or less BUT the quality of education will be reduced as schools make the changes necessary to meet the levy limits. Fifty-one percent of the respondents strongly agreed or agreed that public services will not be greatly affected if property taxes are cut by 10% or less. Forty-nine percent strongly agreed or agreed that the quality of education will be reduced as schools make the changes needed to meet the property tax levy limits. • A majority of rural Nebraskans feel property tax rates for school districts should be capped, and considerable support exists for using state income taxes and local option sales taxes as needed alternative sources. Fifty-eight percent strongly agreed or agreed that property tax rates for school districts should be capped, just as they are for counties, cities, and other units of local government. Fifty-nine percent agreed or strongly agreed that more funding for schools should come from state income taxes as a way of leveling out differences among school districts. And, forty-eight percent agreed or strongly agreed that they would support a local option sales tax as an additional source of funds for their local school district. • Most rural Nebraskans disagree that schools should be a minimum size to be eligible for state aid and opinions were mixed on whether or not the quality of schools should be a factor in how much state aid they receive. Sixty-four percent of the respondents disagreed or strongly disagreed that schools should be a minimum size in order to be eligible for state aid. Forty-four percent agreed or strongly agreed that the quality of schools should be a factor in how much state aid they receive; however, thirty-eight percent disagreed or strongly disagreed with this statement and eighteen percent had no opinion. • The majority of rural Nebraskans are satisfied with their local school district’s allocation of funds, the overall quality of education it provides, and its level of participation in the community. Fifty-one percent were very or somewhat satisfied with their local school district’s allocation of funds, seventy-three percent were satisfied with the overall quality of education and fifty-seven percent were satisfied with their school’s level of participation in the community beyond traditional school activities. • Rural Nebraskans were more likely to support school consolidation if it lowered their taxes and enhanced the quality of education or if it didn’t cause the closure of any of the existing schools. Sixty-nine percent would support the consolidation of their school if it lowered taxes and enhanced the quality of education. Forty-six percent would support consolidation if it didn’t cause the closure of any of the existing schools. • The majority of rural Nebraskans believe school consolidation would reduce their community’s economy, its social life and its future prospects. Seventy-three percent believed school consolidation would reduce their community’s economy, seventy-one percent felt their community’s social life would be reduced as a result of consolidation and seventy-four percent felt it would reduce the future prospects of their community. When asked how school consolidation would affect the quality of education and student opportunities, opinions were not as strong as they were on the earlier items yet almost one-half thought both would be reduced. Forty-six percent of the respondents felt the quality of education would be reduced and fifty percent felt that student opportunities would decline