Education waiver may be costly proposition

Lawmakers who have been counting on a waiver of strings attached to education money in the stimulus package were told Friday it may actually cost more to get the money with a waiver than without.

Nevada qualifies for $396 million under the federal stabilization bill to fund the university system and K-12 schools. But the funding has strings attached. Unless those requirements are met, neither Higher Education nor K-12 gets stimulus money.

Under the first scenario, the state would have to restore university funding to at least 2006 levels. That would require adding $249.5 million to the budget recommended by Gov. Jim Gibbons.

So the state has been looking at asking the federal government to waive that requirement.

But at Friday's budget hearing, a joint subcommittee of Senate Finance and Assembly Ways and Means was told a waiver doesn't escape Maintenance of Effort Requirements, which dictate that certain levels of funding be maintained. With a waiver, the state must ensure that the percentage of total funding the state provides for education doesn't go below what it was in Fiscal 2009.

Although legislative analysts declined to put a dollar figure on the difference, they said education must get at least 4 percent more than the governor's proposed budget in Fiscal 2010 and 6 percent more in Fiscal 2011 to reach the 55.78 percent of state revenues received in Fiscal 2009.

Based on the total state funding in the proposed budget, that would require adding a total of $315.6 million to the university system's budgets over the biennium " $66.3 million more than the cost without a waiver.

But that doesn't answer the question of where Nevada will get the extra money it needs under either scenario.

"If we're going to be pledging more money, you've got to come up with that money," Chief of Staff Josh Hicks said.

Assembly Speaker Barbara Buckley, D-Las Vegas, said in the Friday morning hearing the governor's budget needs more funding to fix the problem.

"Regardless of whether we get a waiver or not, the Department of Education is requiring that education is funded at a certain level and the governor's budget does not do that," she said.

Director of Administration Andrew Clinger said late Friday his office is still committed to using the large increase in federal Medicaid matching money to beef up the Higher Education budgets. Using the increased federal money to free up state money could make up to $250 million available for the university system.

He said he believes there are other ways to calculate the Maintenance of Effort amounts and that "I believe there's a scenario where the waiver would be less expensive."

Clinger said federal education officials gave him good news Friday, saying Nevada can apply immediately for the stimulus money and decide later whether it wants to seek a waiver or not, that the two applications don't have to be filed together. He said the state can't file for a waiver yet because the federal government hasn't issued the final rules for doing so yet.

Clinger said that gives his office and LCB time to determine which is the best way to go.

Hicks said the governor will file for the stimulus money early next week. The state could receive anywhere from two-thirds to 90 percent of that $396 million within two weeks.

In order to file for the money, Hicks said Gibbons will have to assure the federal government Nevada will meet Maintenance of Effort requirements one way or another.

Fiscal staff was instructed to meet this weekend with both university analysts and Clinger's office to try resolve some of the issues.

Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.