Lawmakers began appropriating the state’s share of $2.7 billion in federal American Rescue Plan (ARP) general aid on Wednesday, approving disbursements totaling more than $600 million to pay back unemployment loans, bolster K-12 education funding and upgrade the state’s unemployment system.

They also learned that an additional $1.1 billion of unallocated ARP funds will need to be appropriated by the Legislature in the regular legislative session in 2023 or a special session.

During a Wednesday meeting of the Interim Finance Committee, representatives of the Governor’s Office of Finance told legislators that the state transferred more than $1 billion in ARP funds — roughly 16 percent of the ARP dollars received by Nevada — to the state general fund last week to backfill revenue lost as a result of the COVID-19 pandemic.

Prompted by a question from Sen. Ben Kieckhefer (R-Reno), budget analyst Tiffany Greenameyer confirmed that any allocations of those funds will have to be approved by the full Legislature and cannot be approved by the interim committee alone, because the money is unappropriated within the state’s general fund.

That means any spending of those $1.1 billion in general fund dollars will need to happen through a special session or in the next regular legislative session in 2023. In June, Assembly Speaker Jason Frierson (D-Las Vegas) told The Nevada Independent he was “not entirely sure” lawmakers would be able to spend the federal relief dollars without a special session. Lawmakers already expect a special session this fall to complete the redistricting process ahead of the 2022 elections. 

The money from the ARP transfer to the general fund is less restricted than the roughly $900 million to $1 billion remaining in the coffers of the governor’s office. However, the money has restrictions that other general fund dollars do not, including that it cannot be placed into the state’s so-called Rainy Day Fund, according to guidance from the U.S. Treasury.

The news came as members of the committee approved the first major spending of the state’s $2.7 billion in ARP general aid, including allocating $66.3 million for job restorations, more than $300 million to repay federal loans tapped to sustain unemployment benefits, $200 million to address learning loss in K-12 schools and $54 million to modernize the state unemployment system. Most of those spending decisions were approved by legislators at the end of the 120-day legislative session, which adjourned in June.

Initial spending of the federal dollars comes after the group accepted the state’s full $2.7 billion share of ARP funds at its last meeting in June. The $1.9 trillion American Rescue Plan signed into law by President Joe Biden in March actually allocated $6.7 billion to Nevada, but set aside some of those dollars for the state and large municipalities for broader use. 

Other dollars coming to the state have more restrictive purposes, such as a $164,000 allocation for paratransit, which is a public transit service for people who have disabilities, and those dollars are granted to specific agencies, such as the Department of Health and Human Services.

State leaders, including Treasurer Zach Conine and Gov. Steve Sisolak, are embarking on a listening tour over the next two months to gather input on spending the state’s share of funding. Lawmakers nonetheless allocated roughly a quarter of that money at Wednesday’s meeting.

Members of the committee also approved a nearly $800,000 contract with Las Vegas-based public relations firm Purdue Marion, which is helping gather information and assist with community engagement on the state’s listening tour.

As the state continues to receive ideas for spending federal relief dollars, Sen. Chris Brooks (D-Las Vegas), who chairs the interim committee, said lawmakers will be closely following the conversations that happen on the tour.

“This committee is going to be very, very interested in keeping an eye on and understanding and participating in that process as we move forward,” Brooks said.

During Wednesday’s meeting, lawmakers also moved to fulfill several spending requirements established by bills passed during the 2021 legislative session.

The committee approved $373 million in spending to address the priorities listed in SB461, including:

• $335 million to repay loans borrowed from the federal government to sustain the state’s unemployment fund
• $15.8 million to address the COVID-19 public health emergency, including bolstering mental health and substance abuse treatment services
• $7.6 million to combat food insecurity
• $6 million to augment health care services
• $5 million for the Nevada ABLE Savings Program
• $4 million for a statewide expansion of the Dean’s Future Scholars Program at the University of Nevada, Reno.

The bill listed backfilling lost revenue as the first priority for spending general aid dollars from the ARP, a condition that was addressed through last week’s transfer.

The committee also allocated funds to fulfill the provisions of AB495, which called for $200 million in ARP funds for the Department of Education to address learning loss in K-12 schools and $15 million to support charter schools, and AB484, which authorizes the Department of Employment, Training and Rehabilitation (DETR) to use $54 million in federal ARP funds to modernize the state’s outdated unemployment insurance system.

The group of lawmakers also approved a series of other allocations and federal grant applications that total roughly $350 million in ARP funds, including $222 million in ARP Child Care Stabilization grant funds to support families and child care providers and more than $17 million in block grant funds to address the effects of the pandemic on mental illness and substance abuse disorders.

Funding for education

Members of the committee approved several allocations of ARP funds for K-12 education totaling nearly $300 million, including $200 million in state general aid dollars for the Department of Education to address learning loss experienced as a result of the COVID-19 pandemic, in accordance with AB495.

Other approved allocations provide the department with ARP funds directly from the federal government, including $18.6 million to support the Individuals with Disabilities Act.

“These funds are intended to support early intervention and special education services for infants, toddlers, children and youth with disabilities and their families,” Nevada Superintendent Jhone Ebert told lawmakers on Wednesday.

The committee also held extended discussions on an allocation of $8 million in ARP Elementary and Secondary School Emergency Relief (ESSER) funds to support teacher projects submitted through the DonorsChoose website. DonorsChoose is a nonprofit that allows people to donate directly to classroom projects that are requested by public school teachers.

After multiple members of the committee asked questions about how the department will ensure teachers are aware of the program, Ebert noted some of the ongoing discussions around the program and said that nine Nevada school districts already have staff that support DonorsChoose by helping teachers create their project requests.

“All of [the] 17 superintendents, as well as the State Public Charter School Authority, are well aware of this program,” Ebert said. “We were talking about this project and … getting these funds directly to classroom teachers who have endured so much with this shift. And they know what their students need. They're the ones that are closest to our students.”

The state charter school authority also received a significant boost from Wednesday’s meeting. As part of AB495, the agency was allocated $15 million to address learning loss from the pandemic, a provision that was requested by Republican lawmakers, and the agency will receive an additional $53.5 million to address pandemic-related learning disruptions, through a transfer of ARP funds from the Department of Education.

Funding for child care

As Nevada child care providers deal with staffing shortages and a lack of child care options remains a barrier to economic recovery, lawmakers approved an allocation of $222.4 million in ARP Child Care Stabilization grant funds to provide help to families and care providers in Nevada, by expanding the state’s child care capacity and supporting the industry’s workforce.

“One of the biggest roadblocks to recovery and expansion of our economy is child care,” Brooks said. “I do not see how we make a recovery, unless we really look at child care, and what that does to Nevada working families.”

The majority of the funds (roughly $201 million) will be administered through grants directly given to care providers, such as The Children’s Cabinet, a nonprofit based in Northern Nevada that provides free services to children and youth. Solicitation of applications for those grants will begin within the next couple of months.

“We're utilizing our child care resource and referral partners, The Children's Cabinet and the Urban League, to disseminate the funds directly to eligible child care providers,” Social Services Chief Christell Askew told lawmakers. “As we continue to develop our capacity building projects, our plan is to target underserved populations and childcare deserts.”

The grant funds also include nearly $13 million for workforce recruitment and retention and more than $4 million for family support resources. During the meeting, Brooks noted that the recruitment and retention strategies will involve direct payments to registered child care staff as an incentive for their work.

With the program set to send hundreds of millions out the door to aid the state’s child care providers, Brooks raised questions about ensuring there is accountability and transparency with the program’s spending.

And though discussions about transparency were limited, the funding allocation was passed with a requirement for the welfare division to provide quarterly status reports to the committee on the expenditures of the grant funds.