Gov. Joe Lombardo announced late Friday that AAA Scholarship Foundation has "volunteered to utilize reserve funds to ensure that no students who qualify under Nevada law lose access to their scholarship this year."

“I’m grateful to AAA Scholarship Foundation for their eagerness to create a short-term solution for this crisis. Together, we will be able to ensure that no student currently receiving an Opportunity Scholarship will be removed from their chosen school this school year,” Lombardo said in a statement.

Eligible parents must apply with the foundation by Sept. 11 in order to obtain a scholarship for the coming school year.

Lawmakers reject Lombardo plan to boost Opportunity Scholarships

An interim legislative panel voted along party lines on Wednesday to reject a proposal from Gov. Joe Lombardo to fund a school choice scholarship program with federal COVID aid dollars, effectively keeping program funding at its lowest level since 2017 in a move that school choice advocates have argued could risk scholarships for hundreds of students.

In a meeting that drew hours of public comment and stretched into the evening, members of the Interim Finance Committee — which makes state spending decisions when the Legislature is out of session and is split 15-7 between Democrats and Republicans — pressed scholarship groups and the governor’s office on the underlying financials of the request to send $3.2 million from the American Rescue Plan (ARP) to bolster the program. 

Democrats, who all voted against the funding, repeatedly questioned Lombardo’s Chief of Staff Ben Kieckhefer on whether the money would go to keeping students on existing scholarships or if it would serve as a backdoor expansion for new students and new scholarships.

“I don’t think you’d find a member of this committee who’s trying to kick a kid out of school,” Senate Majority Leader Nicole Cannizzaro (D-Las Vegas) said. “The work program as detailed does not simply provide funding for students to continue on scholarships, it actually expands those programs to include additional students.”

Sen. Rochelle Nguyen (D-Las Vegas) said it looked a lot like “a manufactured crisis that was created to expand this program.”

Kieckhefer bristled at the suggestion and downplayed the potential for new students to utilize the proposed one-shot funding, arguing instead that any “expansion” would be minimal, largely including relatives of existing recipients. 

“The information submitted to us [by one of the six scholarship groups] is that if they do not receive additional funding, 350 students will get kicked out of their schools, plain and simple,” Kieckhefer said. “It is not some tragedy of education that their siblings get to go to school, in our opinion.”

In a statement released shortly after the vote, Lombardo called the move “an act of callous partisanship.”

“Forcibly removing hundreds of low-income students from their schools after the school year has already begun is devastating and simply incomprehensible,” Lombardo’s statement said. “My administration grieves with the hundreds of students who will be crushed by Democrats removing them from their friends, teachers, and schools, and my administration remains more committed than ever to fighting for all Nevada students.”

Opportunity Scholarships — formally the Nevada Educational Choice Scholarship — provide funds for students who live in households whose income level does not exceed 300 percent of federal poverty guidelines to subsidize the cost of attending private schools in Nevada. About 1,400 students received an Opportunity Scholarship last school year. 

Funded by tax credits exchanged for corporate donations, the program has long seen its allocation of available tax credits fluctuate from legislative session to legislative session. 

Lombardo had championed a massive expansion of Opportunity Scholarship tax credits ahead of this year’s legislative session, seeking to increase tax credit availability to $500 million by 2032. The bill, AB400, would have also raised the qualifying threshold to 500 percent of the poverty line, or about $150,000 for a family of four. 

But Democrats called the proposal a non-starter, and later cut the language from the governor’s education omnibus bill during a broader budget stalemate in exchange for concessions on certain charter school proposals. 

Throughout the process, lawmakers did not approve any additional one-time funding for Opportunity Scholarships before the Legislature’s biennial session adjourned in June — leaving the program with its lowest funding level since 2017. 

As a result, Lombardo, school choice advocates and the scholarship grant organizations (SGOs) that administer the program have argued in the last few weeks that a combination of factors — including how early different SGOs got in line for tax credits — have created the potential crunch that could lead to hundreds of students losing their scholarships.

“Parents and families have made up their minds about school choice and they like it,” Kieckhefer said. “I'm not gonna try to convince you to like it … What I'm here to ask is whether you’ll allow the families and the students to continue attending the schools that they've already chosen.”

SGOs take center stage

Complicating Wednesday’s vote was the dynamics of the funding, which was requested by only three of the six state-recognized SGOs — Silver State Scholarships, the Injured Police Officers Fund and the Student Choice Fund of Nevada. 

That’s because one SGO — AAA — was awarded the entire $6.6 million in tax credits available this year in the state’s first-come, first-served process despite another SGO submitting their application moments later, and a third SGO submitting their application via mail postmarked by the date the application opened. Last school year, AAA awarded scholarships to 885 students, more than half of all students receiving Opportunity Scholarships. 

SGO representatives told lawmakers this has never happened before. 

But numbers on precisely how many students would lose scholarships amid both the funding drop and the allocation of all money to one group differed greatly.

The largest SGO to request additional funding, Silver State Scholarships, told the committee it will only be able to fund about 50 students this year using funds left over from last year, and approximately 350 students would not receive a scholarship. 

“I could not understand how all of a sudden now one organization could go and get all the [tax] credit funding,” said Silver State Administrator Dana Stern. “And that's obviously a problem that has to be addressed because this is wrong. This is completely wrong.” 

However, if it received the additional funding, the SGO said it could fund about 500 students, 398 of whom would be returning students with another 27 scholarships going to siblings of returning students. The SGO would also take the allowable administration fee of 5 percent which would equal about $110,000.  

The Injured Police Officers Fund is planning on awarding 216 partial scholarships this school year. When asked by Sen. Dallas Harris (D-Las Vegas) how many of the 216 applications were returning, Minddie Lloyd, the group’s project director, said she could not say because those applications had not been processed — though she later clarified that the applications only came from students “double-dipping” with other SGOs, and would not technically qualify as “new.”

“We just stopped processing because we don't know how to answer families,” Lloyd said. “Why process something that, you know, we're gonna have to tell you, ‘I'm so sorry.’” 

Last year, the Student Choice Fund of Nevada awarded scholarships to 76 students. 

Student Choice Fund of Nevada Executive Director Rabbi Nachum Meth also struggled to answer how many of the approximately 100 applications it received for this school year came from returning students. 

“I just don't know how how we figure out if there's an actual need and what that need is without anybody knowing who's applied, who's been denied, how much they've applied for, … whether they've applied with other schools, how much funding they've gotten from the other SGOs,” Harris said. “Without any of that information, it just doesn't seem to me we can conclude really much.” 

Lawmakers also questioned the Department of Taxation on why it didn’t give consideration to other SGOs who also submitted their application on the same day. Deputy Director Jeff Mitchell said applications are approved and denied in the order in which they are received.

“It is received upon the timestamp and the date stamp of which that application comes in,” he said. “If they’re all there at (8 a.m.), we can't all timestamp and date stamp those right at 8. We have to receive them in line and process them in line.”

AAA comes under fire 

None of the six SGOs received as much direct attention as AAA, whose lobbyist, Denise Lasher, testified on Wednesday. 

At the top of a half-dozen Democrats’ list of questions for her: If AAA knew the funding levels would decrease this year — and maintained $13 million in reserves to maintain scholarship continuity — why did it still apply for all available credits this year?  

“We have three organizations that will have students that cannot return because you are also funding your current applicants and new applicants,” Assemblywoman Daniele Monroe-Moreno (D-North Las Vegas) told Lasher, who’s also affiliated with the American Federation for Children, a school choice advocacy organization founded by former Education Secretary Betsy DeVos. “You took all the money, you left everyone else out. And I believe you knew exactly what you were doing when you did it. ”

Lawmakers also questioned if AAA is legally allowed, and has offered to, support the existing students under other SGOs that are at risk of losing their scholarship, especially when close to 200 of its students have already dropped out from the program since last school year and it is now considering taking on new students — siblings of existing awardees. 

“The other scholarship organizations that have been around for a while, they’re given the same direction,” Lasher said. “I can't help it if they gave out all their money.”

That answer did not appear to satisfy Harris, who again asked Lasher a yes or no question — could the $13 million in reserves held by AAA be used to cover the $3.2 million being requested by other SGOs now? 

“You have the reserves, you have more than sufficient reserves, to cover, at least for this school year, every student that the other SGOs [are requesting],” Harris said.

Lasher said the group’s large reserves have been built over years in order to preserve a financial cushion for students already on scholarships in future school years and cautioned a potential fiscal cliff. 

“What's going to happen two or three years down the road, when there are no reserves for anybody?” Lasher said. “And then we're in the same boat.”

But Monroe-Moreno also appeared skeptical, arguing that every other SGO maintained significantly smaller reserves. 

“To have one organization have a three-year reserve — three years — none of the other organizations have that,” Monroe-Moreno said. “So I fail to believe that they mismanaged their money if they're all in the same position.”

Families left with question marks 

Before the vote, families and students in the program pleaded with lawmakers over a three-hour public comment period to support the funding proposal. 

Siblings Julia, 17, Estella, 14, and Cesar Manzano, 11, all attend Mountain View Christian Schools, a K-12 school near downtown Las Vegas, with the help of the scholarships. They told lawmakers that attending their schools had helped them academically and emotionally. 

“The private school I go to has helped me understand math much better and helped me with my grades. I have made good friends there and have tried new things I enjoy doing,” Estella Manzano said. 

“I attended public school until the sixth grade. I didn’t do well,” said Julia Manzano. “Now my grades are better. I’ve been able to grow relationships with teachers and classmates.”

The students have already been awarded scholarships for this school year, but asked lawmakers to allocate additional funding to support future students. 

Itaybe Arias’s 11-year-old son, William, has attended Mountain View Christian Schools since pre-K. She said in an interview in Spanish that she applied to renew his scholarships with AAA and Silver State Scholarships, but less than a week before the start of the school year, she had not heard back. 

“I’m waiting to hear what happens today,” she said. “If not, my plan B is to look for another school option because we don’t have the means to pay (for the school’s tuition),” Arias said.

Arias said she’s not considering schools in the Clark County School District due to student violence at his zoned school.

Update: 8/9/23 at 10:13 p.m. — This story was updated to include a statement released after the vote from Gov. Joe Lombardo.

Update 9/12/23 at 9:30 a.m. — This story was updated to include a statement from Gov. Joe Lombardo about AAA Scholarship Foundation using its reserves to fund Opportunity Scholarships for current recipients.