The Senate Finance Committee took a step Tuesday night toward fully implementing the new K-12 education funding formula despite repeated concerns raised about the lack of additional revenue.

The committee held its first hearing on SB439 — a largely technical bill involving how money will be distributed through the new Pupil-Centered Funding Plan — and heard more than an hour of public testimony before immediately moving into a work session. Ultimately, lawmakers voted to approve an amended version of the bill, moving it forward in the legislative process toward a vote of the full Senate.

State Superintendent Jhone Ebert lauded the legislation as a critical step in the journey toward improving per-pupil funding in Nevada, which consistently ranks near the bottom among states when it comes to school finance. The Pupil-Centered Funding Plan replaces the 54-year-old Nevada Plan, and will dramatically change how money flows to schools. It sweeps more than 80 revenue streams into one giant education funding pot and establishes “weights” that will direct money to students based on their needs.

“This work is difficult, but it couldn't be more important than at this moment where we are currently redesigning the future of education,” Ebert said.

In the waning hours of the 2019 legislative session, lawmakers passed SB543, which created the Pupil-Centered Funding Plan. Since then, the 11-member Commission on School Funding has met nearly two dozen times to discuss how it should be implemented and funded. The advisory body recently issued funding recommendations, specifically targeting property and sales taxes as revenue generators that could help the state achieve per-pupil funding levels at least on par with the national average over the next decade.

But, as it stands now, no new revenue has been funneled toward education — a point that has frustrated the statewide teachers’ union and other education advocates. Multiple people affiliated with the Nevada State Education Association spoke in opposition to SB439 on Tuesday, describing it as legislation crafted behind closed doors that didn’t address the union’s concerns. 

For instance, the union wants Zoom and Victory schools, which receive more money to help students learning English as a second language or living in low-income households, grandfathered into state law rather than gradually phased out during the transition to weighted funding.

“Ever since the introduction of SB543 two years ago, NSEA has expressed policy concerns at every opportunity — the lack of educator voice, no new revenue, watering down Zoom and Victory schools, freezing and squeezing school district budgets .. a giveaway to charter schools and undoing the rules of collective bargaining,” NSEA’s executive director, Brian Lee, said during the hearing. “SB439 fails to adjust a single issue raised by educators showing its backers are unserious about developing and delivering a funding plan to benefit all Nevada students.”

Meanwhile, charter school leaders were pleased to hear charter schools would be added to the hold harmless clause of the new funding formula, but it didn’t ease all their concerns. 

Rebecca Feiden, executive director of the State Public Charter School Authority, testified in neutral and pointed out that charter schools would not be receiving district equity adjustments or auxiliary funding for transportation services under the new funding plan. She said that means charter schools would only bank approximately 93 percent of the funding the neighboring Clark County School District receives. In Washoe County, charter schools would receive 92 percent and, in Elko County, 76 percent.

The Washoe Education Association, Mi Familia Vota, the Charter School Association of Nevada and Battle Born Progress were among the organizations that opposed SB439.

Even those who voiced support, such as the Clark County Education Association, pushed for more education funding.

“No more excuses and no more delays. No more telling the nation that we enjoy a last place ranking on education,” said Karl Byrd, a social studies teacher at Knudson Middle School in Las Vegas. “It's time to fully fund our schools, and SB439 is a step in the right direction.”

Budget groundwork for transition

The SB439 hearing came hours after lawmakers took a preliminary vote to make a full transition to a new funding formula for schools for the next two years, instead of the phased approach the governor recommended — a move that opens up many more questions lawmakers will have to answer in the final three weeks of the session.

Gov. Steve Sisolak had recommended a phased implementation of the Pupil-Centered Funding Plan that would involve putting all state-level school funding ($2.7 billion) into the new formula in the coming biennium and not pulling locally generated funds into the formula until later.

But that arrangement drew legislative scrutiny because schools draw about 70 percent of their funding from local revenue sources. That means students in counties that have less ability to generate local funding would likely receive less funding than their counterparts in wealthier counties.

Members of a joint Senate-Assembly budget subcommittee also took another key step toward launching into the new paradigm when they voted to set the “average base per-pupil amount” the new formula will provide to $6,954 per student in the fiscal year 2022 and $7,090 in fiscal year 2023. Further adjustments, such as ones meant to account for variance in wages and the cost of living in state’s 17 counties, would stem from the base the Legislature sets.

Weights — which are extra allotments of funding to address students with extra needs — will be multipliers calculated off the base. They will go toward students learning English as a second language; students defined as “at-risk”; and students who are gifted and talented. 

On Tuesday, subcommittee members also gave their approval to many of the governor’s recommended education budget cuts and changes. While the votes help move the budget closing process along, lawmakers expect to revisit many of their decisions in coming days, likely to restore funding for programs using some of the $910 million more the state has to work with because of new, higher-than-expected revenue projections

Groups including Educate Nevada Now also want lawmakers to use some of the nearly $3 billion it will receive in flexible federal COVID relief funds to help boost funding to schools and facilitate the transition from the antiquated funding formula to a new model.

The subcommittee’s work will then move to the full Senate Finance and Assembly Ways and Means committees for further review. Those committees are set to take up the matter on Friday.

Cuts to class size reduction

Lawmakers on the subcommittee approved a recommendation in the governor’s budget that cuts class size reduction funding in the coming biennium, then transfers what is left to a general State Education Funding Account that will be redistributed through the Pupil-Centered Funding Plan.

Meeting class size requirements, which limit first and second grade classes to a 17:1 ratio and third grade classes to a 20:1 ratio, would cost an estimated $314 million over the biennium.

But Sisolak has called for cutting funding levels by $156 million in an effort to balance the budget and still maintain base per-pupil funding levels. The remaining money would be incorporated into the Pupil-Centered Funding Plan but would not be restricted to class size reduction and would be available for collective bargaining.

The state remains far from class size targets, with districts frequently requesting “variances” that allow them an exception to the rule. A state-commissioned study from Data Insight Partners found that 87 percent of students are in class sizes larger than the non-binding recommendations from the state, which called for a 15:1 student-teacher ratio for grades 1 through 3 and 25:1 in all other grades. Meeting that would require an additional 3,000 teachers in the state.

Sen. Ben Kieckhefer (R-Reno) said the cut would make it impossible for districts to meet class size goals, and he added that the cut needs to be reevaluated in the future.

“It's nonsensical to think that they would be able to meet those targets when we provide them less funding to do so,” Kieckhefer said. “And not having enough money is a perfectly adequate reason for not complying. So I would expect every school and every district to submit that form to the district to justify their inability to meet those targets.”

Zoom, Victory and Nevada Ready 21 programs moved

Lawmakers took the governor’s recommendation to fold $165.2 million designated to support English learners, at-risk students and those who need personal computers into the new Pupil-Centered Funding Plan. Instead of having Zoom Schools, Victory Schools and English learner grants, that money would be converted into a weight (an additional sum of money) that flows to students who have those special needs.

The goal is to serve a wider group of students with the kinds of services available through the programs — such as pre-K programs, professional development and wrap-around services. Victory School grants support 35 of the lowest-performing schools in the state and 21,730 students within them, but there are more than 247,000 students in the state who are considered “at-risk.”

Zoom Schools and the English Learner Grant program serve nearly 44,000 students in the state, although nearly 52,000 students are considered eligible for English learner weighted funding.

The Nevada Ready 21 program offered grants to help connect students to computing devices — a goal accelerated when the COVID-19 pandemic hit and districts used funds including federal aid to obtain devices for distance learning. State education officials said funds would still be needed to maintain and replace those devices as they reach the end of their life cycle.

The Nevada Ready 21 funding would be reshuffled into “base” per-pupil funding within the new formula.

Weights for underperforming students restored

Members of the budget subcommittees gave preliminary approval to transferring about $140 million from the New Nevada Education Funding Plan into the account funding the new Pupil-Centered Funding Plan. The program, authorized through SB178 of the 2017 session, allotted $1,200 for every low-income or English learner student who was scoring in the lowest quartile on proficiency tests and was not enrolled at a school receiving Zoom or Victory program funding. The program served more than 58,000 children.

Funding was eliminated in a round of budget cuts during the 2020 special session, but lawmakers on the subcommittee supported the governor’s recommendation to restore it and then transfer it this session to the larger pot of general education money. State officials acknowledged they missed a Feb. 1 deadline for getting an independent analysis of the programs’ effectiveness to the Legislature, saying they faced challenges choosing a vendor and following through with the assessment because of the pandemic.

Instead of funding $1,200 weights, the money would be redistributed, with 50 percent contributing to weights for English learners and 50 percent supporting weights for at-risk students.

Read by Grade 3 funding reduced

Lawmakers approved the governor’s recommended cut of $50 million over the biennium to a handful of education programs, primarily Read by Grade 3 and college (cut by $33 million) and career readiness initiatives (cut by $10 million).

Several lawmakers who voted for the cuts said they wanted to prioritize the accounts when the state decides later how to redistribute money gained because the Economic Forum has projected more tax revenue than previously expected in the coming biennium.

“This is a motion that I would prefer to vote against. But I will vote for because of the process that we're working through here,” Kieckhefer said. “I think these cuts need to be restored. And I sure have them on the tops of our list along with some others as we move forward in the session.”

Lawmakers voted to transfer the remaining funding for the initiatives to the Pupil-Centered Funding Plan. Read by Grade 3 laws developed over the past six years would remain, including the requirements that schools submit a literacy plan for approval by the Department of Education and that schools designate a licensed teacher as the campus literacy specialist.

Sen. Heidi Seevers Gansert (R-Reno) opposed the transfer, saying that she likes the current arrangement through which the literacy money is budgeted separately and subject to separate accountability. She also floated the idea that in the future, there could be a new weight for students who cannot read at grade level.

GATE programs funded at higher level

Experts have differed on how much should be spent on the 2-4 percent of students identified as gifted, but the subcommittees ended up approving a more generous amount for GATE. The state’s Commission on School Funding recommended a target weight of 0.14, while the consulting firm Augenblick, Palaich and Associates recommended the more modest weight of 0.05.

Assembly Ways and Means Chairwoman Maggie Carlton (D-Las Vegas) said she was comfortable funding the services at a lower level.

“Even around that conversation of 0.05, we weren't talking about taking your money out of education and putting it someplace else,” she said. “All the money in the education universe that we have been talking about, for over 100 days now, is staying in the education universe. It's just how the pie is sliced.”

But she said members of the Senate wanted a weight of 0.12, which is what was ultimately approved, for $10.4 million over the biennium. Several members expressed thanks for that action.

“We don't have that many students. And I think that funding is critically important,” said Seevers Gansert.

Teacher incentives melded into general education account

Lawmakers on the subcommittees voted to restore a cut to a program that offered incentives to teachers in low-income and underperforming schools, but rolled the $5 million into the larger fund for paying for education.

The program allows bonuses that would increase a teacher’s base salary by up to $5,000 a year. But fiscal staff said the typical bonus was closer to $1,000 per teacher, and the Nevada Department of Education could not provide data about how effective the incentives were to recruit and retain teachers.

General fund spending reduced, marijuana revenue up

In the governor’s recommended budget, the amount of money the general fund is contributing to the “Nevada Plan” to support education is $1.5 billion in the coming biennium, down 2.2 percent from the levels in the current biennium. But the overall amount the state is contributing to the plan is up because of increases in non-general fund revenue sources in the state that support schools, such as an annual tax on slot machines and a 10 percent excise tax on retail sales of marijuana.

When local revenues are added into the mix, there will be about $9 billion directed toward education through the Nevada Plan in the coming biennium, which equates to average per-pupil spending of $9,149 in the fiscal year that starts in July and $9,292 in the following fiscal year. State support accounts for about 30 percent of that.

Part of that state support is ever-increasing revenue collections from a tax on marijuana. Although the state has the option to use marijuana money to “supplant” the general funds it contributes to education, lawmakers voted to add the $62 million in incremental marijuana money expected in the coming two years on top of what they have budgeted to give schools from the general fund.

In total, the state expects the marijuana tax will generate about $185 million for education over the next two years.