A phased in approach to Nevada’s planned pupil-centered funding model may present challenges for the Washoe County School District.
The new funding model for school districts in Nevada—which is planned to replace the current, more than half-century old funding plan—was set to take effect in July of this year. However, Nevada Governor Steve Sisolak announced during his 2021 State of the State address that he was recommending a phased-in approach to it. The details of the governor’s proposal are yet to be set in stone, as the Nevada Legislature will have a significant say in how the governor’s proposal is carried out.
The Washoe County School District Board of Trustees met early Tuesday afternoon, prior to its regular board meeting, for the first of what will be monthly budget sessions before its final fiscal year 2022 budget is due in June. During the meeting, board members—among whom three are newly elected—were reminded of basics about the school district’s budget. This includes the need for the budget to be structurally balanced, meaning expenditures must meet revenues.
Reviewing federal relief funds
Ben Hayes, WCSD chief accountability officer, walked trustees through how the district spent its initial $9.9 million in federal CARES Act Elementary and Secondary School Emergency Relief (ESSER) Fund spending. The bulk of these funds were spent on staffing, but other expenditures included support for disadvantaged students and WiFi hotspots to facilitate distance learning.
WCSD Chief Financial Officer Mark Mathers discussed relief funds expected from the federal government for school districts across the county, including a nationwide total of $54.3 billion for a second round of ESSER funds for public K-12 schools.
The State of Nevada is expected to receive $477 million of these funds. According to district staff, “Based on total funding and federal Title I allocations, WCSD’s share is estimated to be between $31 and $35 million,” depending on how much the State retains for itself in order to fund competitive grants for school districts. The state may—and, according to Mathers, likely will—retain a total of 10% of these funds to dole out in the form of grants.
Still, the money will make a significant difference in the school district’s ability to prop up its programs and provide for its staff and students in the coming year, Mathers said.
“This is the largest K-12 relief fund in history,” Mathers said, noting that these funds given to WCSD are technically supposed to be spent by September 2022 but will, in all likelihood and thanks to federal rules governing their spending, not need to be spent until September 2023—which is three months into the district’s 2024 fiscal year.
Mathers said school district staff is still “digging through” Sisolak’s recommended state budget and will be looking closely to make sure K-12 funding isn’t cut more significantly than other areas in the budget or during the upcoming legislative session, which kicks off on Feb. 1.
Mathers also explained that the allowable uses for the second round of ESSER funds are broad and include COVID-19 preparedness and response. He said new uses that are allowable under the second round include addressing learning loss, school facilities repairs and “legalese” he said indicates that the funds can be used in most any way to maintain districts’ operations.
“It’s very broad parameters we can use,” he said.
Mathers, however, also stressed that in spending its expected one-time infusion ESSER funds the district should not be reliant upon them to “kick the can down the road.” Because school districts in Nevada are required to present structurally balanced budgets, he said, WCSD should work toward balancing the budget it expects to be under three years from now when the full new pupil-centered funding model for education comes into place.
“We need to set the budget, and it could be phased over time, but eventually set the budget” to be balanced under expectations of revenue under the new model, he said.
“I think we’ve all heard the term ‘a funding cliff,’” McNeill said, saying she wanted to avoid using one-time federal funds in a way that could lead the district to such a situation.
Phasing in of new funding model may pose challenges
Nevada’s new pupil-centered funding model was set to take effect only months from now. Instead, school districts can expect to have the next two biennia, or four years, to prepare for its complete implementation. However, its phased in approach may create other complications for WCSD, staff said. As yet, however, these possible complications remain unknown, and will, until such as time as the Nevada Legislature takes time to hammer out some of the details during the upcoming session.
Staff told the board of trustees that some of the answers they’ve received in talks with legislators and state staff “were not helpful at this point to help us divine what’s going on.”
When the new funding model is fully implemented, WCSD will no longer have its distributive school account—which is funded based on the number of students it has enrolled. In the meantime, though, the district will maintain under its controls sales, government and property taxes that are currently allocated to it. Under the new funding model, these will be under state control.
Mathers noted that sales and property taxes have not seen a decline in Washoe County during the COVID-19 pandemic and remain up, for the time being.
For now, WCSD staff added that they’d been told that the state will match what was received by the school district for fiscal year 2020 funding during this budget cycle “in terms of State funding, but we will need to verify that on a district-by-district basis.”
When the new funding model is implemented, not only will it do away with distributive school accounts and funnel funding mechanisms like taxes into state control, it will also do away with funding allocated to many different “buckets” for programs like “Read by Grade 3” and “class size reduction,” transitioning them into the districts’ base funding under the pupil-centered model.
Under the pupil-centered model, money will first go to fund the Nevada Department of Education for administrative oversight. From there, it will fund services like transportation. Afterward, the per-pupil base is funded. Finally, the additional “weighted” funds go toward programs for students with more needs—like English Language Learners and Gifted and Talented students. Any unspent money is intended to go into an educational stabilization fund that could be used during future economic downturns.
District staff also noted that calculations concerning the cost of living in school funding under the new plan remain problematic, as WCSD disagrees with evaluations of the county’s cost of living as compared to other parts of the state.
Nevada school district budgets are due this year on June 8, though the districts will have 30 days after the Nevada Legislature’s session adjourns to submit amendments to them—and a bill introduced for this session seeks to further change the deadlines for school district budgets to be finalized.
When the Nevada Legislature convenes, it is expected to take up a measure that could change the deadlines for school district budget reporting.
Senate Bill 2, pre-filed in November 2020 on behalf of the Clark County School District, would, among other things, push back the dates by which school districts are expected to submit their budgets.
According to a draft of the bill, the measure would make June 8 of each year the required date for tentative budgets to be submitted but would allow until Dec. 31 of each year for final budgets.
Beleaguered Nutrition Services Fund expected to see some relief
There was bright news in the budget meeting concerning the district’s Nutrition Services Fund, which took a huge hit during the pandemic as fewer and fewer students were relying upon the district to be able to purchase at-school meals.
The Nutrition Services Fund is an enterprise fund. These are defined by Nevada Regulatory Statute 354.517. Basically, the statute defines how these funds operate—which is much like a private business enterprise, wherein the expenses of business operations are recovered primarily through charges to users. However, through the end of the school year, students in Washoe County and across the nation won’t have to pay for school breakfasts and lunches. That’s thanks to a waiver issued by the United States Department of Agriculture (USDA), which oversees school meal programs.
USDA photo by Tom Witham
Nonetheless, even if meals are free, the school district hasn’t been able to be reimbursed for them by the federal government unless they’re served.
In the fall, district staff projected that, if no action was taken to curtail expenses, the fund could lose a projected $7.7 million for fiscal year 2021. The fund’s cash position was projected to fall below zero before the end of the calendar year—meaning it could might have reached an approximated deficit of $4 million by the end of the fiscal year.
“It was nice to see some specific relief for our nutrition services fund, and that was not in the CARES Act,” Mathers said.
The provisions under the new federal stimulus bill set a 55% floor for revenues expected in the fund that will be applied retroactively going backward to the second half of March and then April through June. This means the school district can expect to receive 55% of what it would usually have expected in the fund in the form of federal reimbursement.
According to district staff, “based on furloughs of staff put into place in November 2020 and the expected return to full in-person learning during 2022, at latest, it is expected the Nutrition Services Fund will be in a positive situation during fiscal year 2022.
The school district expects to receive $2.3 million in revenues to account for March through June of 2020, which staff said will help restore the fund’s net position.
