by April Corbin Girnus, Nevada Current

The inner mechanics of Nevada’s quasi-private school voucher program came under intense scrutiny Wednesday during a nearly 12-hour meeting that ended with Democrats rejecting Gov. Joe Lombardo’s $3.2 million funding request.

In a party line vote, the Interim Finance Committee rejected the governor’s emergency request to allocate $3.2 million of federal covid relief funds to Nevada’s Opportunity Scholarship program. Democrats accused the governor of manufacturing the program’s alleged budget shortfall and placed much of the blame at the feet of AAA Scholarship Foundation — the Florida-based nonprofit that claimed all of the Opportunity Scholarship money available for the 2023-24 school year, leaving nothing for the five other nonprofits authorized by the state to accept donations in exchange for tax credits.

“We, as a legislative body, are not pulling the rug from under these students,” said Assemblywoman Danielle Monroe Moreno (D-Las Vegas), who chairs the powerful committee. “There is a failure in the process, which we must fix.”

Each year, Nevada’s six approved scholarship granting organizations (SGOs) are able to submit to the Department of Taxation applications from businesses who have committed to donating money to the scholarship program in exchange for a credit on their modified business tax. The Department of Taxation approves them on a first come, first serve basis up to a $6.66 million annual cap set in statute.

This year, representatives from AAA Scholarship Foundation were at the taxation department in Carson City when it opened the first day of the submission window. Their applications alone maxed out the program, meaning there was nothing left for the five remaining SGOs to claim.

Three of those SGOs worked with Lombardo’s office to request $3.2 million in covid relief money be reallocated to the program, arguing that the funding was needed or hundreds of students would lose scholarships and potentially be forced to leave the private schools they love but cannot afford without financial assistance.

Democrats expressed sympathy for students potentially in that position but rallied around the fact that AAA, in addition to the $6.6 million in funding received last month, has $13 million in its reserves.

When combined with reserves at the other SGOs, the total amount still in the program creeps up to $18 million.

Several Democratic lawmakers pressed AAA to commit to using part of those reserves to cover the returning students at other SGOs, though most acknowledged they have no authority to force one nonprofit to help another.

“You can easily take out $3 million plus the (money you earn off interest) and fix the situation,” said Assemblywoman Michelle Gorelow (D-Las Vegas). “I don’t understand why you’re coming to the state and asking our taxpayers to fund your greed. Because that’s what this is. Your organization knew you didn’t need that much money based on previous budgets.”

Representatives from AAA contended they were simply following good accounting practices.

In a letter responding to questions sent by Democratic lawmakers last week, AAA CEO Kimberly Dyson wrote, “The [Nevada Department of Education] was very clear to the SGOs about the dangers of oversubscribing the Scholarship Program with contributions from one-time bonus credits. Subsequently, AAA has worked to reserve sufficient funding to allow our student population to remain relatively stable once the one-time bonus credits ended.”

Denise Lasher, a volunteer consultant for AAA who appeared at the IFC meeting, told lawmakers the nonprofit expects to be able to fund 850 scholarships this year. An estimated 700 returning students will be prioritized first. Then, the siblings of those students will be considered. If there is money after those two groups, she added, AAA may be able to help students who have previously received money from other SGOs

But Lasher made no actual commitment. And she suggested legislators were making AAA a scapegoat when the real problem is a lack of overall funding.

“They can’t keep kicking the can down the road,” she told the Current.

Lasher added that AAA didn’t know that some of the SGOs wouldn’t have enough saved for a budget emergency.

Chris Benna of the Education Fund of Northern Nevada in a letter to the committee noted, “EFNN does not need additional funding for the 2023-2024 school year. We kept a reserve because we saw this shortfall coming.”

Dana Stern of Silver State Scholarship (formerly Dinosaur & Roses), the second largest SGO in Nevada, told lawmakers she was not expecting the entirety of the $6.6 million in funding this year to be gone so quickly. It had never been a problem in previous years because there had been more money in the program overall.

Stern said Silver State Scholarships has enough reserves to cover around 50 of its 398 returning students, meaning about 350 kids will lose their scholarships.

Minddie Lloyd of the Injured Police Officer’s Fund told lawmakers her nonprofit was under the impression it was supposed to spend every dollar of the money it receives and not carryover money into future years. IPOF’s only reserves come from money it was refunded by private schools after students received more scholarships that the state allows.

One of the smaller and newer SGOs, IPOF provided 30 scholarships last year.

SGOs were also questioned on whether securing donations is possible without the tax credit component of the Opportunity Scholarship program.

“I’m not aware of people who just want to give millions of dollars and not get any type of tax credit,” said Rabbi Nachum Meth, director of the Student Choice Fund, the third SGO that was seeking money. “That’s their incentive. Once that’s exhausted, there’s not much more that we can do.”

Lombardo responds

“In an act of callous partisanship, today Democrats turned their backs on hundreds of low-income students that our traditional school system has failed or left behind,”  Lombardo said in a statement released late Wednesday after the IFC vote. “Forcibly removing hundreds of low-income students from their schools after the school year has already begun is devastating and simply incomprehensible.

“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. Our fight continues.”