A sweeping state review of existing K-12 school district audits released Wednesday raised the prospect that more than half of third graders could be held back in coming years, and elicited questions from top state leaders over just how effective a $2.6 billion boost in state funding for education will be. 

The 154-page report, made public during a Wednesday meeting of the Executive Branch Audit Committee, also raised concerns about funding for free lunches lapsing and a state education agency lacking power to command accountability. It comes after Republican Gov. Joe Lombardo and Democratic lawmakers spent much of the 2023 legislative feuding over education policy, including how best to track how districts will spend the largest K-12 budget in state history. 

No single part of the audit was more contentious than a finding by auditors that “student achievement [is] not necessarily dependent on dollars spent” — a point that stirred sharp debate among the committee, which includes Lombardo, the state’s five executive officers and one member of the public. 

Auditors found that the Clark County School District (CCSD) had underspent compared to the similarly sized districts in Miami, Chicago and Los Angeles — but nonetheless, trailed only Miami in fourth grade math and reading achievement, and narrowly exceeded student achievement rates in better-funded Los Angeles and Chicago school districts. 

Lombardo called the section of the audit “a little disturbing,” adding that “$2.6 billion put into the education program for the state of Nevada, but yet this audit says that's, for lack of a better term, a waste of money.”

Responding to Lombardo’s question, Chief Auditor Craig Stevenson cautioned that the lack of a correlation between investment and achievement noted in the report “is not to say that more money invested doesn’t necessarily lead to better outcomes.” 

“It really has to do with how you invest that money,” Stevenson said. 

But the issue still struck a partisan chord. Attorney General Aaron Ford, a Democrat, called the phrasing “misleading” and pressed Stevenson on why, if funding and achievement were not correlated, that funding and graduation rates were still correlated in the audit report. 

“I see those as somewhat contradictory,” Ford said. “And I wonder how the report juxtaposes these two contradictory statements within these three pages.”

Controller Andy Matthews, a Republican, asked auditors how the state could even know if changes in student achievement outcomes had any relationship to funding, “as opposed to merely coincidental.” 

“How could we know that absent that established correlation?” Matthews said. 

Stevenson later clarified that he did not believe the audit report was implying the $2.6 billion “won’t move the needle.”

“I think it's saying that we need to make sure that we are targeting this investment towards certain things,” Stevenson said, singling out reading and mathematics as “critical performance elements.” 

Stemming from an executive order issued last February, the state’s umbrella audit was tasked with reviewing existing third-party audits from the 2022 calendar year in each of the state’s 17 school districts, as well as the Nevada State Public Charter School Authority. 

In a statement, Lombardo said Thursday that his administration would use the findings to shape the “Acing Accountability” initiative, as well as new education reforms. 

“I firmly believe that our unprecedented investment into K-12 education warrants unprecedented accountability and fiscal responsibility,” Lombardo said. 

Auditors found that most rural school districts routinely failed to comply with state auditing requirements. By law, districts are required to report spending every quarter, but only four counties — Clark, Washoe, Humboldt and Nye counties — did so in 2022. 

District financial managers told auditors they were either unaware of the requirements or thought they were no longer necessary. In either case, “compliance with this statutory requirement is not monitored,” auditors said. 

Read by Grade 3 retentions loom

In summarizing their findings during a meeting of the audit committee Wednesday, auditors also found the Read by 3 program was underperforming statewide and that new literacy targets were likely not ambitious enough.

As Lombardo’s office and lawmakers have sought to rebuild the state’s Read by Grade 3 program — including appropriating $140 million in new funding last year — auditors found less than half of Nevada third graders were proficient in reading, with reading scores on a steady decline since the 2018-2019 school year. 

With the revival of a measure in 2023 that would hold back students who are not proficient beginning in 2028, auditors said a majority of students could be held back in the third grade — “potentially resulting in unrealistic class sizes.” 

At the same time, auditors said, the Nevada Department of Education’s new literacy goals — to boost literacy proficiency rates by 10 percent by 2025, from roughly 33 percent proficient to 43 percent — were likely too low. Other states, they said, have set goals twice as high or higher, such as 88 percent by 2027 in Virginia or 100 percent in Ohio. 

Still, they also cited a widespread exacerbation of literacy issues by existing teacher shortages, and called on new laws that would allow the state education department to better coordinate licensed teachers as dedicated literacy specialists. 

To that end, Lombardo’s office announced a $6 million allocation of leftover federal COVID aid dollars on Thursday aimed at supporting Read by Grade 3 infrastructure, including two programs designed to train Nevada teachers on reading science and reading instruction. 

Even as new state initiatives have sought to streamline and update K-12 accountability measures, auditors broadly dinged the new initiatives as “siloed,” lacking either an understanding of how new results will be evaluated or who is responsible for implementing new changes. 

To that end, the audit called on the creation of a host of new legislation widening the powers of the Nevada Department of Education (NDE) and increasing its funding, including a measure that would allow the NDE to directly intervene “chronically underperforming schools” and give the agency new enforcement tools — tools Lombardo likened to “a hammer.” 

“I think that when we talked about some of the intervention tools … that's really what we're referring to is giving them the authority to have a hammer and enforce these things,” Stevenson said. “And not just get a letter that says yeah, we'll take some corrective actions, but then there's no impact if they don't take those corrective actions.”

Free lunches set to lapse

Separately, auditors called on local lawmakers to consider “all options” to extend or expand the availability of free school breakfast and lunches once the federal America Rescue Plan Act (ARPA) money funding universal free school lunch expires in July. 

The recommendation comes in part, auditors said, because research has shown access to “nutritious meals” lowers health issues and decreases the likelihood that students drop out of school. Widespread free school meals, they said, “has been shown to reduce child food insecurity, eliminate social stigma associated with free meals, and benefit families most in need through savings on groceries."

Democratic lawmakers had sought to approve $43 million in new funding to continue the program during the 2023 legislative session, but Lombardo vetoed the measure, citing potential food waste and a need to return to the “normalcy” of the pre-pandemic period.

With the expiration of COVID-era meal subsidies looming, auditors called on schools to tap other federal aid programs that provide students meals at no cost — a move already taken by CCSD during the 2022-2023 school year, which used a U.S. Department of Agriculture reimbursement program to cover all of its more-than 300,000 students. 

“I know it’s not why we’re here, but this is one of the first times I’ve ever seen CCSD do something that was legitimately really, really clever,” said Treasurer Zach Conine, a Democrat.