Education observers find some things to love, some to fear in funding formula bill
If a bill designed to overhaul Nevada’s school funding formula moves forward, the state would transition to a student-centered approach that sends extra money toward children with specific education needs.
The concept is what education advocates have been championing for years. After all, the state’s existing funding formula, known as the Nevada Plan, is 52 years old and uniformly panned as being too complicated and inadequate to address the needs of today’s students.
“Hurray for Nevada. The time is here,” said Deborah Verstegen, a policy and finance expert in UNR’s College of Education. “We have a horse-and-buggy system for a horse-and-buggy time.”
But even among those celebrating the giant bill’s debut — which happened just three weeks before the legislative session ends — there’s caution surrounding what the proposed law doesn’t include. It’s unclear how much base per-pupil funding each school district would receive as well as what the weights — or multipliers of base funding — would be for certain student groups.
The proposal also doesn’t inject any new funding into the equation. It simply reorganizes how existing revenue would be funneled to K-12 public schools.
This was the approach described all along by Democratic Sen. Mo Denis, who chairs the education committee and helped craft the bill. Denis said fixing the funding formula — or allocation method — is the first step toward repairing Nevada’s broken school finance system.
Money, or lack thereof, has emerged as a sharp criticism of the proposed law. State lawmakers will discuss SB543, as the bill is formally known, for the first time Tuesday during a joint meeting of the Senate Committee on Finance and the Assembly Committee on Ways and Means.
“Everybody is very apprehensive about moving forward with a funding formula that will potentially shift money from some school districts to other school districts without any guarantee that the funding formula will be marching toward adequacy,” said Paul Johnson, chief financial officer of the White Pine County School District.
Some groups, including the Nevada State Education Association, are outright against the formula, saying ground-level educators weren’t sufficiently involved in its development and that the way it freezes funding for many rural districts could be harmful.
“You’re going to have to make decisions that are not student-friendly to balance budgets if you get no additional funding and you’re expected to keep the same salary or the same funding six, seven, eight years down the road,” said NSEA President Ruben Murrillo.
As it stands now, the Nevada Plan leads to wide disparities in how much state funding each school district receives. A multi-page Excel workbook known as the “Equity Allocation Model” determines those amounts.
SB543 could move the state toward a simpler, more transparent allocation method, said Zahava Stadler, director of policy for EdBuild, a nonprofit focused on state funding for public education. The goal is to provide a funding formula that allows community members, parents and teachers to see exactly how much money each student is supposed to receive.
Stadler said the core principle of the bill — doling out state dollars based on student needs — shouldn’t be controversial. SB543 proposes weighted funds for students who are learning English, living in low-income households, have a disability or are gifted and talented.
But, as the old cliché goes, the devil is in the details. And some key details, such as how much extra money students in those groups would receive, aren’t in the bill language.
That’s why Stadler said it’s too early to tell how the formula will function in practice.
“The reason I expected to see more detail is simply because there has been so much advance talk about this bill,” she said. “If it was necessary to keep it quiet in the sense of hashing out details behind closed doors, then I would have expected to see the details. The bill we see here does leave me wondering why that was necessary.”
Amanda Morgan, a lawyer with advocacy group Educate Nevada Now, said she worries that the vagueness about how much is needed for weights could signal a lack of commitment to mustering the funds needed to carry them out.
“Are we really going to take this seriously and start infusing dollars into these weights or are we just going to kind of, you know, see what we can handle without adding new revenue?” she said. “So that's a big concern and we're still pushing for them to be a little more firm on what this actually means.”
Despite lacking detail about the dollar amounts, the bill does lay out some procedural rules. For instance, it states that students would receive only the largest weight for which they qualify. In other words, if a child has a disability and is also an English language learner, he or she would receive the extra weighted funding for whatever category has the larger multiplier.
Without knowing the values of the weights, Stadler said it’s unclear whether applying one weight per student would be enough. But she cautioned that the resources needed to address a disability versus language acquisition can be very different.
“As a matter of education theory here, I don’t see why there would be a reason to have those cancel each other out,” she said.
Verstegen, the UNR professor who studies school finance, said SB543 appears to build on legislation during the 2015 session that called for weighted funding by the 2021-2022 fiscal year. It also follows a nationwide trend to allot state dollars based on a child’s needs rather than a one-size-fits-all approach.
Weights can vary within categories. Verstegen said Hawaii has three different weights for English language learners — one for students who speak no English, one for students who are almost proficient in English and one for students who fall somewhere in the middle.
Under Nevada’s proposed legislation, a Commission on School Finance would set the weights and monitor overall funding levels. The bill does not mention the possibility of scaled weights, but Verstegen said it’s something that should be considered as Nevada revamps its formula.
“A weight doesn’t mean that you’re going to provide the same funding for all kids in that category of need,” she said. “They can vary within categories.”
Sylvia Lazos, a UNLV law professor and education advocate, said the Nevada Immigrant Coalition is concerned about the equity implications of the bill. She is a member of the coalition’s legislative advocacy committee.
A student who receives free or reduced-price lunch at a Summerlin elementary school, she said, isn’t the same as one who does so at Peterson Elementary School, which sits across from Boulevard Mall and serves a high rate of impoverished students.
Lazos said she has spoken with Denis about implementing an additional weight — or some sort of variable weight — to ensure that schools with large numbers of at-risk or English language learner students receive more support. Some of those buildings are Zoom or Victory schools, which receive categorical funding through a program implemented by former Gov. Brian Sandoval that directs more state dollars toward schools serving large populations of low-income students or those learning English.
“It’s an equity issue,” she said.
Funding tied to inflation, economic trends
Educate Nevada Now, which has made the funding formula its top legislative priority this session, found a lot to love in the bill.
A key element of the formula is “maintenance of effort,” which pegs the growth or reduction in education funding to growth in overall state revenues. If the Economic Forum projects Nevada’s revenue will grow by 4 percent in the coming biennium, for example, the state will have to contribute at least an additional 4 percent to its education fund.
“It's really kind of making sure that hey, we need to start prioritizing education,” Morgan said.
If there’s an economic downturn, the bill specifies education funding can decrease no more than the economy overall. And it calls for an education-specific “stabilization fund” similar to the state’s overall Rainy Day Fund that would help ease the pain of downturns. Money would flow into the fund if districts have more than two months’ worth of operating reserves.
The bill also addresses the concern of new education funding “supplanting” contributions the state would otherwise make to education, rather than “supplementing” general fund school spending. The result of the supplanting phenomenon is that overall education funding does not rise.
“We saw this with marijuana, we saw it with IP1 room tax,” Morgan said, referring to a hotel tax that in the past decade has supplanted $1.6 billion in education spending. “And now we're seeing that in the formula that really will be difficult to do because the governor is required to propose funding that would match or be higher than it was the previous year. So that's something that's really positive in this bill.”
The group also likes the level of reporting the bill requires.
“It looks like it's going to create a lot of different levels of transparency on that funding. So not just at the state level to the districts, but the district to the schools and a lot of reporting back on what the money's used for,” Morgan said.
But Educate Nevada Now says that the lack of targets that would show how close the state is to reaching adequate funding levels is a “glaring omission” in the bill.
“We were kind of hoping for a down payment on that, or at least a commitment like a lot of states do,” said Michelle Booth, a spokeswoman for the group. “They say, all right … every year we're going to get to 10% or whatever. So they had this goal and plan to meet the resources that their students need and deserve.”
Johnson, the CFO for the White Pine County School District, agreed. He’s worried the adequacy and funding formula conversations seem to be taking separate paths.
Any formula absent additional revenue just redistributes existing money and “basically brings everyone down to the same level of inadequacy,” he said. Instead, would like to see “scaled funding” attached to the law, giving some assurance that money would increase over time.
“Without that it’s a huge leap of faith and pinning your hopes on some uncertainty,” he said.
Still, Johnson commended certain aspects of SB543 — namely, an allowance for school districts to reserve their ending-fund balances up to 16.6 percent and a hold-harmless provision for rural districts that would soften any immediate blows to their budgets.
Tuesday’s hearing could shed light on what lawmakers may be willing to tweak to garner deeper support for the legislation. As someone who closely monitors efforts to redo school funding formulas across the country, Vertsegen refrained from offering any harsh criticism of Nevada’s process so far. She said each state has its own culture, needs and legislative process.
"The important thing is that it’s here,” she said, “and we should embrace it but fund it fully.”