The Seed Corn Crisis

When the Budget Gets Tight, the Trust Gets Targeted: Protecting Nebraska’s 159-Year Promise

In Nebraska, farmers understand a fundamental truth about stewardship: You don’t eat your seed corn today if you want a harvest tomorrow.

Yet, as the Unicameral enters the final stages of the 2026 session, a dangerous proposal in LB1072 threatens to do exactly that. The bill seeks to sweep $40 million from the Permanent School Fund, a perpetual endowment established at Statehood, to fill a one-time hole in the state budget.

A Breach of the "Sacred Compact"

For 159 years, Nebraska has honored a "Sacred Compact" with its schoolchildren. The 1.25 million acres of school trust lands and the resulting Permanent Fund were never intended to be a rainy-day fund for the Legislature. They are a perpetual asset, mandated by our Constitution to remain inviolate so they can support every generation of Nebraska students.

Governor Pillen’s administration has characterized this $40 million as "excess" earnings. But in the world of fiduciary duty, there is no such thing as "excess" in a perpetual trust. Interest is the engine of the fund. When you raid the engine, you stall the growth.

The Lessons of History: 1897 and Arizona

We have been here before. In the late 1800s, political raids nearly bankrupted Nebraska’s school trust through "fire-sale" land liquidations. It took the 1897 Sheldon Act to restore integrity to the system and protect the trust from short-term political pressures. LB1072 threatens to drag us back to that era of instability.

We also have a modern warning. A decade ago, Arizona raided its trust to solve a budget crisis. Today, their Permanent Fund is $1.4 billion smaller than it should be, and their schools face a $285 million annual shortfall. Nebraska is currently standing on the edge of that same cliff.

More Than Just a School Issue

The raid on the School Trust is part of a broader, troubling pattern in LB1072, which also targets a $5 million sweep from the Nebraska Veterans’ Aid Fund. When a state begins raiding the funds promised to its children and its veterans to balance a ledger, it isn't just a budget crisis—it’s a crisis of values.

As ASTL leadership has noted, the Governor has responded to these constitutional concerns with a dismissive "so sue me." This is an invitation to a costly, avoidable legal battle that Nebraska taxpayers will ultimately fund.

What’s Next?

The "Final Reading" of LB1072 is imminent. We are calling on the Unicameral to stand by the "Founding Fathers" of this state and strike the $40 million sweep from the bill.

Don't let them eat the seed corn. Protect the harvest. Protect the Trust.