Senate Bill 439 (2021 Legislative Session)
Two years ago in 2019, SB543 was developed behind closed doors, wasn’t introduced until the 99th day of the session, and had but a single public hearing with the bill passing minutes before Sine Die. On the 99th day of this session, SB439 was introduced with less fanfare, but it was also developed behind closed doors, without even a preview of its content.
The new funding plan will fail because it was never built to succeed.
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 (read below for more detail)
SB439 fails to address a single issue raised by educators, showing its backers to be unserious about delivering a funding plan to benefit all Nevada students.
ZOOM AND VICTORY
Zoom and Victory Schools are located in Nevada’s poorest communities, serve the highest percentage of at-risk students, and are proven models of education equity. With the shift away from a school-based approach, Zoom and Victory schools will have their budgets reduced and lose significant momentum on school climate and culture, jeopardizing gains made for students in our most impacted schools and communities. The legislature decided to move forward with transferring Zoom and Victory funding into weights in the new funding formula. Weights were set at 0.24 for English Learners, 0.12 for gifted and talented, and .03 for at-risk pupils. The anemic weight for at-risk will provide only $209 additional dollars per student. This is not nearly enough money to serve students with Victory services outlined in SB543: prekindergarten, a summer academy, additional instruction, professional development for educators, hiring incentives, employment of additional support personnel, a reading skills center, and integrated student supports and wrap-around services. We did receive some good news during the session that CCSD is looking to backfill any shortfalls to these programs. This will give these model programs a short reprieve, but this issue could be back at the next legislative session.
Without the inclusion of new revenue, the new funding formula will create new winners and losers among school districts. Modeling of the new funding formula varied across the interim, showing different winners and losers at different times. However, the hold harmless provision as implemented will freeze 9 school district budgets in place for a number of years, squeezing those district’s operations over time as their costs increase. While the budget subcommittee did recommend adjusting for growth in student enrollment, school districts will still be impacted by increases in the cost of doing business. Increasing costs for things like utilities and healthcare will have a squeezing effect on school district budgets, effectively cutting most districts in inflation-adjusted dollars. This will make it even harder for these districts to attract and retain educators, maintain class sizes, and effectively operate their districts. While it has been pointed out this freeze only impacts 7% of Nevada students, the state is responsible to provide sufficient funding to educate every Nevada student. If a classroom teacher left 7% of their students behind, they would be rated “ineffective”. NSEA recommended adjusting the hold harmless provision by using the greater of 2020 total budget or per-pupil amount by district, adjusted by the inflationary costs of doing business. The legislature did take our recommendation of using the per-pupil number, which will help school districts under hold harmless with growth in enrollment.
ENDING FUND BALANCE
SB543 included language to increase district ending fund balance walled off from collective bargaining up to 16.6% of annual operating costs. Historically, for school districts, the Nevada Administrative Code provided for 8.3%. NSEA believes this historical language is appropriate, as school district budgets have a high level of predictability given state funding. SB543 also contains a provision which sweeps district ending fund balance over 16.6% and deposits those funds in the Education Stabilization Account. NSEA expressed our grave concern when taken together, there would be no room, and the ending fund balance will effectively be removed as a source of funds to justify any union proposal with a cost. This would fundamentally compromise the collective bargaining process, slanting bargaining entirely in favor of employers. Educators consistently raised this issue during the legislative session. Our pressure campaign succeeded in getting language added to the funding formula implementation bill (SB439) to lower ending fund balance walled off from collective bargaining to 12%, leaving some room on this important source of funds in the collective bargaining process.
The passage of AJR1 was a top priority of NSEA’s Grassroots Task Force, from the 32nd Special Session to the final days of the 81st Legislative Session. While AJR1 was not passed, a new tax on gross revenues of mining was adopted to generate an estimated $85M/year. The bill dedicates these funds along with another $70M/year in existing net proceeds from mining to the new education funding plan starting in 2023. The bill also makes $200M in American Rescue Plan dollars available to school districts to address issues related to the COVID-19 pandemic in the upcoming biennium.
In April of 2021, the Commission on School Funding (created by Senate Bill 543) issued its preliminary recommendations regarding optimal funding of public education in Nevada. While NSEA opposed SB543, we largely agreed with the funding targets set in the document. In order to just reach “adequate” education funding levels, the Commission recommended a 10-year plan for Nevada to increase education funding by $2B/year by 2030.
That’s why NSEA called for the passage of AJR1, the mining tax that would have generated over $400M. Instead, a new tax on gross revenues of mining was adopted to generate an estimated $85M/year. These monies will be added to the new education funding plan along with $70M/year in existing net proceeds starting in 2023. For the current biennium, while better-than-projected state revenue was used to backfill general fund cuts, total per-pupil funding actually decreased by $115 from FY21 to FY22. And since the end of the Legislative Session, inflation has been over 5%, further devaluing current education funding.
It is clear Nevada is falling short of what is needed to reach adequacy, especially with increased costs. It seems the Funding Commission not only has work to do to reconcile actual numbers against the April 2021 recommendations but also to make recommendations to get Nevada on track towards adequate funding moving forward and to have those recommendations seriously considered.
Senate Bill 543 (2019 Legislative Session)
NSEA strongly believes the Nevada Plan needs to be updated to reflect the changing needs of Nevada. NSEA has consistently advocated moving towards greater equity in education, ensuring all school districts, including Clark County, have the resources necessary to provide a high-quality education for every Nevada student. We agree our school funding system should be transparent and based on the needs of our student and communities. We also believe it is only fair for all education stakeholders to be included in any serious effort to improve our state’s public schools. NSEA looks forward to being a part of the process to strengthen the new school funding formula which will accomplish these goals from this point forward.
NSEA opposed SB543 (2019) and the trailing legislation SB439 (2021), as introduced, to institute a new school funding formula due to serious policy concerns, including no new revenue for schools, a rural “freeze and squeeze”, watering down of Zoom and Victory Schools, a multi-million-dollar charter school giveaway, anti-union end fund balance provisions, possible exclusion of educator voice on the Commission on School Funding, and a fundamentally flawed legislative process.
NO NEW SCHOOL FUNDING
Given the chronic underfunding of public education in Nevada, no new funding model will work without new and additional revenue.
In February, hundreds of educators from across Nevada rallied under the banner of Red for Ed to draw attention to chronic underfunding of public education. Despite recent efforts, Nevada continues to rank near the bottom of states in most metrics. In the 2018 Quality Counts report from Education Week, Nevada ranked 47th in per-pupil funding and dead last in both class size and overall education quality.
After a 2017 legislative session with modest increases to public education funding, school districts across the state continue to struggle with serious budget deficits. School districts are projecting shortfalls for the upcoming biennium. There are discussions of possible educator layoffs, a risk of moving to even larger class sizes and higher ratios for our other licensed education personnel.
The Guinn Center recently released a report showing a $107.5M combined budget shortfall for school districts in FY19-20. This is due in large part to per-pupil base funding increases that are outpaced by increases in annual operating costs. SB545 which would move marijuana excise tax to increase school funding is desperately needed to address these shortfalls. Movement of this money to fund our schools continues to be a top priority of NSEA for this session (as it was in the 2017 session), and we applaud its introduction. While SB545 helps to cover the cost of educator raises next year, it will only temporarily stop the bleeding. Nevada schools will remain chronically underfunded.
The Nevada Constitution requires all public schools receive adequate funding to fulfill their duty to educate every Nevada student. NSEA will continue our work to make sure Nevada moves the needle to provide adequate funding for the basic operation of public schools, ensuring every Nevada student has access to a high-quality public education. We are sorry to say there is no new revenue included in SB543.
A FREEZE AND SQUEEZE OF MOST DISTRICTS
With no new revenue contemplated in SB543, the proposed shift in funding formula would harm most school districts in the state by freezing their revenues at current levels, creating new winners and losers across the state. This freeze would start on July 1, 2021 and continue for a various number of years, depending on the district. Data included in the presentation made by Jeremy Aguero on SB543 (along with assumed constant K12 revenue increases from 2020 onward) was used to complete the chart to the right. While budgets in Clark, Mineral, and Washoe would not be frozen, all other school district budgets are estimated to be frozen from less than a year to nearly 62 years.
While proponents of SB543 call this a “hold-harmless” mechanism, saying no district revenues would be reduced, a great deal of harm will be inflicted on these districts. During the freezes, SB543 contemplates no revenue increases to cover increases in cost of doing business or increases in enrollment.
This would squeeze many rural school districts and leave them to wither on the vine.
Take, for example, the Nye County School District. Under SB543, the NCSD budget would be frozen from July 1, 2021 and would not receive an increase until 2027. Nye County is not only the fastest-growing county in Nevada, it is also one of the poorest. Nearly 2/3 of students in NCSD qualify for free and reduced lunch. During their current budget process (which is based on increased revenue as recommended by Governor Sisolak’s 2019-2021 budget) NCSD issued a reduction in force impacting 49 positions. A budget freeze for 6 or more years would decimate this district.
SUCCESSFUL ZOOM AND VICTORY SCHOOLS COMPROMISED
SB543 would eliminate current “categorical” expenditures, including those funding Nevada’s Zoom and Victory School programs. Instead funding will flow through the State Education Fund and then a portion will go to address the additional education needs of English learners and at-risk pupils. While a menu of services related to current Zoom and Victory programs are to be made available to all English learners and at-risk students, it seems unlikely that existing Zoom and Victory Schools will be able to maintain the current level of services for these students to continue their success. With reduced funding, the current model will be watered-down and compromised.
SB543 threatens Nevada’s two most important education equity programs that have been proven effective though state evaluations.
By shifting funds away from our schools to a “pupil-centered” approach, Zoom and Victory schools lose significant momentum on school climate and culture, jeopardizing the gains they have made in our most impacted schools. Meanwhile, language in SB543 limiting the application of student weights to an either/or approach runs counter to educational best practice that recognizes our most impacted students fall into multiple categories of weights and require much greater investment than provided by any single weight in SB543. This need is greater for students in communities that are beset with serious, intractable social and economic issues. Ironically, the weighted funding formula under SB543, will be a step backward on education equity for Nevada students currently in Zoom and Victory Schools
MULTI-MILLION-DOLLAR GIVEAWAY TO CHARTER SCHOOLS
One of the biggest projected beneficiaries of SB543 are Nevada’s charter schools. According to data included in Mr. Aguero’s presentation to NSEA on May 6 on SB543, charter schools would be the recipients of a multi-million-dollar giveaway, receiving a projected $28M increase when the new funding formula is activated. This is an even larger increase than would be received by the much- larger Washoe County School District. While freezing funding for most Nevada school districts, the windfall for charter schools in this plan is movement of precious resources from traditional public schools to charter schools.
Charter schools were initially promoted by educators who sought to innovate within the local public school system to better meet the needs of their students. Over the last 22 years, charter schools have grown dramatically to include large numbers of charters that are privately managed, largely unaccountable, and not transparent as to their operations or performance. Many charter schools have devolved far from the original concept as small incubators of education innovation.
The explosive growth of charters has been driven, in part, by deliberate and well-funded efforts to ensure that charters are exempt from the basic safeguards and standards that apply to public schools.
This growth has undermined local public schools and communities, without producing any overall increase in student learning and growth.
It is important to note, that most recent studies have shown that public schools outperform charter schools when accounting for student demographics, and public schools educate every student, including English learners, students in poverty, and students with individualized education plans.
While charters are prohibited from discriminating, they serve far fewer students in poverty, English language learners, and students with disabilities.
During this session, there has been a great deal of focus on the lack of accountability of charter schools in the state. AB462 was introduced as a moratorium on charter school expansion but was amended to require the State Public Charter School Authority to develop and implement a 5-year growth plan for charter schools. Moving precious dollars from traditional public schools to charter schools, especially without ensuring appropriate controls and accountability of these schools, is foolhardy and the wrong message to be sending.
ANTI-UNION END FUND BALANCE PROVISIONS
During this legislative session, there has been significant contemplation of how to treat end fund balance that is not subject to collective bargaining. Currently, this is set for school districts in the Nevada Administrative Code at not more than 8.3%. Senate Bill 26 would have put this language in the NRS, however it did not come out of the Senate Committee on Government Affairs. If passed, Senate Bill 111 clarifies that any monies from the state intended for salary or benefits for the employees of the school district is subject to negotiations with an employee organization.
Language in SB543 to set the end fund balance for school districts not subject to collective bargaining at 16.6% is a gross departure from current practice, policy, and direction of this legislative session. We believe that this is an anti-union and anti-collective bargaining provision that could wall off as much as $740M from collective bargaining processes with school over districts in FY21.
A significant role NSEA plays is to elevate the voice of educators from around the state in decisions impacting schools and the education profession. SB543 creates the Commission on Education Funding and gives this Commission significant powers and responsibilities.
While SB543 does require relevant experience in public education, it does not require any educator representation on this Commission.
There are many technical aspects to the duties of the Commission, however, there are also critical policy responsibilities that would greatly impact public education in our state. This includes: recommending to the Governor an optimal level of funding education; making recommendations to improve the implementation of the new funding formula; recommending weights for English Learners, at-risk students, and student with disabilities or recommending new categories of student weights; making recommendations about laws and regulations impacting public education; and adopting regulations prescribing administrative expenses allowed by school districts.
A Commission with such a profound impact on public education in our state should be representative of key education stakeholders. Educators who are on the front lines at our school sites need to be included on such an important body.
A FUNDAMENTALLY FLAWED LEGISLATIVE & COMMISSION PROCESS
NSEA was a vocal and active participant in the development of SB178 during the 79th Legislative Session. We participated on the Funding Study Work Group during the interim.
Despite frequent entreaties, NSEA and most other education stakeholders were shut out of the process to develop SB543 for over 6 months, from November through the first week of May.
On May 6th, NSEA received an overview presentation of the bill from Jeremy Aguero. On May 13, the 99th day of the session, NSEA finally got our first chance to review the massive overhaul of Nevada’s school funding formula and the language in SB543. This legislative process was fundamentally flawed, as the inclusion of educator and community voice is necessary to strengthen legislation and avoid many of the pitfalls included in SB543.
The process during the Commission on School Funding was just as flawed. Time and time again, the voices of educators were ignored and shut out. Even after the COVID-19 pandemic wreaked havoc on the economy, the Commission on School funding continured on as business as usual. This is despite $156 million in painful K12 education cuts in the summer of 2020. With an anticpated additional cut of 12% from the Department of Education, this plan will not work and it is unclear where new revenue will come from. Despite the economic realities, the Commission jammed through a recommendation to implement this funding plan.
As we said, the fix has been in throughout the entire process. If implemented in July of 2021, without the changes above and no new funding, this plan will fail to the detriment of our kids, educators, and State.