With fewer than 10 months until Nevada must allocate all funding received through the American Rescue Plan (ARP), state legislators on Wednesday agreed to pull more than $23 million in previously approved funding from various health projects unlikely to meet federal deadlines. 

Scraped funding included four state health projects and personnel in the agency responsible for children and family mental health amid hiring challenges. The de-obligations also included cost-cutting measures in certain ARP-funded projects, but also mean the state now has $47 million in unused ARP funds.

President Joe Biden signed the American Rescue Plan Act in 2021, delivering Nevada $2.7 billion in flexible state aid. The law requires the aid to be assigned by the end of this year and spent by the end of 2026, forcing state agencies to abandon projects that have little chance of meeting those deadlines. There will be additional de-obligation requests presented to lawmakers in April and June, said Amy Stephenson, the director of the Governor’s Finance Office.

At Wednesday’s meeting of the Interim Finance Committee (IFC), a group of lawmakers that makes state spending decisions while the Legislature is out of session, several lawmakers said they were frustrated that the de-obligations have primarily affected health initiatives and implored agency leaders to ensure that the re-obligated funds are earmarked toward health and mental health.

“It's somewhat disheartening to see that a lot of the de-obligation is coming from [the state health agency] given the needs that we have in our community,” said Assembly Speaker Steve Yeager (D-Las Vegas).

The decisions come one week after Gov. Joe Lombardo said at a Nevada Independent event that mental health is the “first priority” for allocating unused ARP funds. But some of the de-obligations approved Wednesday directly relate to the state’s mental health services.

Legislators approved the deletion of $4.8 million in funds from an effort to create crisis stabilization centers in rural areas. These centers are designed to provide short-term psychiatric stabilization and medical detoxification services for adults.

The state had previously allocated $20 million in ARP funds to build crisis stabilization centers statewide, but the program failed to get off the ground in rural areas. Cody Phinney, the administrator for the Division of Public and Behavioral Health, said that the organization the state was working with for the program determined that other groundwork needed to be put in place before starting that initiative.

“We want to de-obligate this money … so that it can be used in the necessary time frame for a service, hopefully a mental health service,” Phinney said.

Legislators also agreed to de-obligate nearly $5 million across three other scrapped projects. Those projects include:

• $1.8 million from a pilot program to provide mobile respite care, which was ended because of an inability to sustain services.
• $2 million from the Nevada Resilience Project, a pandemic-era program to support Nevadans experiencing mental and behavioral health challenges.
• $960,000 from a project to expand newborn screening panels to include a test for opioid exposure. The project is not moving forward because of issues with storage of testing equipment, hiring and federal certification.

The state will also pull $1.8 million in personnel funding from the Division of Child and Family Services. The positions that would have been supported by that money included roles to provide crisis response to Washoe County and Clark County students, daytime support to children with severe emotional disturbance and workforce development support. 

Marla McDade Williams, the agency’s director, said the de-obligation came because of hiring challenges. The division had a vacancy rate of more than 35 percent in mid-January.

Amid the de-obligations, legislators questioned state agency health leaders about plans to re-obligate the money for health initiatives.

“I'm just concerned about what the impacts are going to be to health care when we look at moving things away from these programs into other areas,” said Assemblyman Howard Watts (D-Las Vegas).

Lombardo’s administration is bringing a handful of projects funded by freed up ARP dollars that will be discussed at next month’s IFC meeting, including $3 million to create a mental health and addiction treatment campus in Carson City, according to Stephenson from the Governor’s Finance Office.

Wednesday’s de-obligations follow similar moves in October that pulled funding from two canceled state health projects related to jail-based mental health care and women’s health programs.

New funding allocations

After approving the de-obligations, legislators approved $2.6 million in ARP funds for additional contract security staffing in Southern Nevada colleges, three months after a shooting at UNLV left three employees dead. 

The contract calls for eight additional officers at UNLV’s main campus and Desert Research Institute, and seven more officers to the College of Southern Nevada and Nevada State University. As of February, more than half of positions with University Police — which maintains law enforcement arms in the north and south — were vacant, with the southern command struggling to fill vacancies.

The IFC also approved $870,000 in ARP funds to upgrade security cameras at the Summit View Youth Center and Northern Nevada Youth Training Center — both correctional facilities — and $150,000 for a statewide study on housing affordability conducted by the Guinn Center, a think tank.