Fragile compromise on Education Savings Accounts seems further off after Democrats call surprise hearing
For the first time in the two years since Nevada’s sweeping Education Savings Accounts program passed, lawmakers dealt head-on and publicly with the voucher-style policy that has divided them on deep ideological fault lines and threatens to snarl their final decisions about the $8.1 billion budget.
The hearing on a policy that’s loomed large over the session came just a week before it adjourns and with only hours of advance notice, following weeks of delicate backroom negotiations between a veto-wielding Republican governor and Democrat-controlled Legislature. Democrats surprised their GOP counterparts by putting forward an amendment already discussed behind closed doors including many points Republicans had already negotiated on and agreed to — but one that also spoke to their angst over the wide berth the program gives recipients.
“It’s difficult to justify being behind Mississippi in per-pupil spending, and then find a creative way to provide public money for folks that are not struggling,” said Democratic Assembly Speaker Jason Frierson.
When Sandoval’s deputies presented the bill, they argued ESAs were the natural progression of his “all of the above” strategy to improve education that included raising taxes in 2015, investing in public school programs targeting at the most at-risk students and launching a business-funded Opportunity Scholarship program geared toward low- and middle-income families. Sandoval specifically wanted a program that brought choice to all, not just low-income families, they said.
Republican lawmakers — caught off guard by the scheduled hearing — championed the idea that parents know better than any other individual or institution in what will help their child succeed, and that even the best schools aren’t going to be right for every student zoned to attend them.
“Somehow we’ve lost this trust in their parents,” said Republican Assembly Minority Leader Paul Anderson. “Those parents ultimately should be the decision factor as to what’s good for their kids … we all take that as a precious responsibility, and when we start as a governmental entity or a bureaucracy start taking that choice away, we lose the foundation of what we’re trying to build.”
Democratic Senate Majority Leader Aaron Ford pushed back, saying lawmakers’ duty is ensuring the public school system is adequately managed.
“This isn’t an issue of distrust or mistrust of parents,” he said. “I think it’s fidelity to our duty to be providing an appropriate public education for our students.”
But with just a handful of days left to work out their disagreements — and with Republicans threatening to torpedo a $70 million section of the budget supported by marijuana taxes if Democrats don’t fall in line with ESAs — Democratic leaders made a last-ditch effort to extract further concessions in the program many of them loathe. They chose an unlikely messenger to present their vision — Assemblyman Justin Watkins, the lone Democratic lawmaker who openly supports the program.
All Republicans need to support the bill, and seven Assembly Democrats and two members of the Senate Democratic caucus need to join for it to pass. Consensus appears to have fizzled, with Republicans immediately panning the hearing as a break in ongoing negotiations.
“To me it’s a clear indication that it’s gone south and they don’t want to discuss it,” Republican Senator Scott Hammond said. “I hope I’m wrong, but I’m picking up that flavor from them.”
THE ORIGINAL BILL
Lawmakers first authorized Education Savings Accounts in 2015, when Republicans controlled the Legislature. The program, which allows parents to use public school funding for private school tuition or other qualified educational expenses, is considered the least restrictive of its kind in the country.
The program attracted two lawsuits from groups that argued it would unlawfully drain money from the public school system and that it unconstitutionally authorized funds for religious schools. The Nevada Supreme Court upheld the program in part but ruled that the funding mechanism was unconstitutional; no money has ever flowed into the accounts.
In January, Sandoval proposed fixing the constitutional flaws and applying $60 million to the program, which had attracted more than 10,000 applications over the past two years with more than 2,600 processed and ready to start receiving money from the program immediately. The $60 million is enough to fund 4,100 to 4,500 accounts, according to the Legislative Counsel Bureau’s Fiscal Analysis Division.
Sandoval’s bill to revive the program, SB506, does not restrict recipients by income and accepts applicant on a first-come, first-served basis. Children must be enrolled in public school for two semesters to be eligible, but kindergartners and children from military families are exempt from the public school requirement.
Democrats wondered aloud why Sandoval is proposing such a large investment in the non-restricted ESA program, while another one of his initiatives — the need-based Opportunity Scholarship program that allows businesses a payroll tax credit if they donate to scholarships — is allocated only about $10 million over the biennium.
“The governor’s position is that he’d like to have as much choice as possible in letting them direct their children’s education,” said Mike Willden, Sandoval’s chief of staff. “I know that this is pretty aggressive and bold … but maybe as Speaker Frierson said — another step toward beating Mississippi.”
The bill would allocate 100 percent of per-pupil funding to students under 185 percent of the federal poverty level, roughly $5,900, and 90 percent to all other students. The legislation would also cap the number of ESA applicants from any given district to 5 percent of their average daily enrollment.
The $60 million Sandoval requested in his budget includes roughly $1.6 million over the biennium for administrative expenses and salaries for officials to carry out the program.
Democratic lawmakers raised concerns about the flexibility of the program, asking what protections were in place to block misuse of public funds. The bill calls for random audits and proposes freezing or dissolving accounts when officials find inappropriate spending.
Democratic Assemblyman Nelson Araujo took issue with the program capping transportation costs at $750, saying it wouldn’t cover monthly bus fare in Las Vegas, and said he was concerned that the bill didn’t require schools to have explicit non-discrimination language or rules before accepting ESA-funded students.
Willden said the governor’s office would be willing to look into those issues.
“We do not, would not, want to have children going into the situation you described,” he said.
Democratic Assemblywoman Heidi Swank also asked what would happen to children who paid tuition for a quarter but were expelled or otherwise found that the school was not a good fit for them and left. She said her interpretation of the bill is that students would be unable to attend public school and simply out of school for the rest of the quarter, an issue that Willden said he would look into.
Democratic Sen. Mo Denis questioned whether the program was more interested in offering parents a choice or in “moving the needle” on student achievement in Nevada. While the bill requires recipients to take an annual standardized test, he asked if there was enough accountability language in the measure to ensure student performance is improving and the program is effective.
Willden, who noted that many of the concerns brought forward by Democrats had been discussed in recent negotiations, at one point noted his frustration with lawmakers scheduling the hearing so late in the session. Sandoval had announced his intentions with the program in January and the bill had been introduced more than two months ago in March.
“I wish we had more input earlier on,” Willden said. “We could’ve had a better bill draft potentially.”
THE PROPOSED AMENDMENT
Negotiations over the past few days were largely in the hands of Anderson and Assembly Speaker Jason Frierson, who were reportedly close to reaching a compromise Monday morning before Democrats abruptly scheduled the hearing in the early afternoon. Sandoval’s chief of staff Mike Willden said before the hearing that they had received no advance notice of what amendment Democrats planned to propose.
The proposed conceptual amendment, presented by Watkins but discussed behind the scenes in recent days between leadership, would substantially alter the original bill.
“This isn’t about my personal beliefs,” Watkins said. “This is about the beliefs that I think can be supported on both sides of the aisle and actually make it to the governor’s desk.”
Key points include:
- Creating a tax credit structure for ESAs similar to the system in place for Opportunity Scholarships, a scholarship program approved in 2015 that gives businesses tax breaks on their Modified Business Tax (on payroll) for donating money to scholarship programs.
- Capping tax credits at $15 million per year for a total of $30 million over the two years of the budget.
- Starting the program in January 2018.
- Determining eligibility based on a sliding scale based on parental income — families at 185 percent of the federal poverty line would receive $7,000, more than the per pupil spending that exists now, and families at 10 times the poverty line would receive about $600.
- Gives priority to 1 and 2 star schools, Title 1, students who need special education, foster kids, reservations, military kids and other students with learning disabilities.
- Require schools be in operation for at least a year, accredited by the state or independent accrediting agency, located in Nevada, have a licensed administrator on staff and adopt non-discriminatory language in their bylaws.
- Allows additional uses for funds including internet service provider expenses, computer purchase and uniforms, if required by the school.
- Prohibits schools from charging ESA students more than non-ESA students
- Implement an undefined “funding cap” based on a proportional share of students in the school district.
Republicans were amenable to some of the items contained in the proposal during negotiations and only had a few key sticking points — namely, the amount of funding for the program and how the ESAs would be doled out over time.
Watkins said he thought the concepts behind the amendment were the only way to obtain a pathway forward on any ESA bill and that there were enough Democratic votes to pass it out as long as Republicans were on board.
“My hope is that this framework can provide a bridge between the two sides,” he said. “I do not think this should be a partisan issue. I do think that we can find a solution.”
While Watkins was the face of the amendment, Frierson noted that he is the sole “shepherd” of his caucus and said questions about votes among Assembly Democrats should be directed toward him.
“I thank you for being there. I thank you for taking these questions, but you are one person in a caucus that I think folks know I have an obligation to shepherd,” Frierson said. “And I welcome that opportunity and that conversation.”
Watkins said that while he personally supported the concept of universal school choice, the idea of a sliding scale with more funds going to those with the greatest need made sense to him.
“It does not offend my sensibilities that if I were to apply to this program that I would get a fraction of the dollars,” he said.
Republicans were generally upset that Democrats brought into the open what had previously been a hushed policy discussion with only a few sticking points to figure out — the amount of the tax credits and potential growth of the program over future budgets.
Hammond said that he left a Monday morning meeting with stakeholders close to a deal and agreeing to a meeting later in the day — something that never happened after Democrats scheduled the bill for a hearing with little notice. He said the Democratic amendment presented by Watkins contained many of the points agreed upon in negotiations.
“What you saw tonight was an indication of where the Democrats want to go with this,” Hammond said. “And they don’t want to go anywhere with it.”
Frierson said that there was “no way” for him to know when a vote on the bill would be heard and pushed back on the notion that the hearing came suddenly.
“We’ve been talking about SB506 all session,” Frierson said. “It wasn’t that sudden.”
Ford said he thought the hearing was fair and congratulated Watkins for “bringing for something that seeks to find a middle ground.” The next steps will be to get more feedback from both Democrats and Republicans.
“This is not something that is perfect for anyone but it’s a conversation that’s important to have,” he said.
Anderson in a statement said that he was upset by the timing of the hearing.
“We have had months to discuss the subject of tonight’s hearing, and that we get to it with only 8 days left in this session shows a lack of prioritization,” he said in a statement. “We had hoped to come to a fruitful bipartisan agreement before a public hearing, and we hope that this chamber will come together for the sake of Nevada families. Political sacrifices that are deaf to the voices of more than ten thousand families are unacceptable to me and to my caucus.”
Republican Senate leader Michael Roberson, who does not sit on either of the Legislature’s money committees that met Monday night, tweeted his dissatisfaction with holding a hearing on the bill so late in the 120-day session.
“Tonight was the culmination of four months of bad faith and feckless leadership by the majority party,” Roberson said in the tweet. “No one should expect a pretty ending.”
Feature photo: Hundreds of students, with parents and teachers, braved temperatures in the 20's Wednesday morning to show their support for school choice, part of National School Choice Week, at the capital. Kindergartner Reagan Langtimm, Imagination Station School. January 25, 2017. Photo by Tim Dunn/Special to the Nevada Independent.