Nevada’s K-12 funding: A deeper look

In the Controller’s Monthly Report No. 4, Assistant Controller Geoff Lawrence and I address K-12 education. Last time, I reviewed some of its highlights, and this time some others.

First, Nevada’s K-12 funding mechanism is convoluted, confusing parents and taxpayers and reducing accountability. It uses a complex mix of state and local taxes and appropriations unlike any other in the nation. Created in 1967, this “Nevada Plan” has grown increasingly opaque as new taxes have been added to the mix.

A state-guaranteed “Basic Support Per Pupil” amount is paid from state funds to local school districts. That’s added to local sales taxes that have been increased during most economic recessions, growing from 1.0 percent originally to 2.6 percent in 2009. School districts further receive property and hotel room taxes, plus other local tax dollars.

Besides the per-pupil support and outside funds received directly by the districts, the state provides many “categorical” grants to county school districts to support specific programs, such as full-day kindergarten. These funds must be spent on specified programs or returned to the state.

There are some large loopholes, however. Districts can accept the funds and then seek waivers from the state Department of Education (DOE) on requirements to meet class-size or other standards. Or they can simply take the chance the state will not verify their compliance.

A 2014 legislative audit revealed districts have regularly accepted categorical funds for class-size reduction without actually reducing class sizes. It found DOE “did not effectively monitor quarterly class-size reduction reports and variance requests submitted by school districts.” Also, “none of the 17 school districts demonstrated how pupil-teacher ratios would be reduced within the limits of available funding,” as required.

DOE had “no written policies or procedures to determine” how the $381-million in class-size reduction funds would be distributed to school districts during the current budget cycle. A single employee was responsible for making these determinations with no oversight, and the employee didn’t keep supporting documentation.

Due to the many loopholes, there’s no assurance these monies were used for their intended purposes and not simply diverted to finance spending on district-level administrators. Although the academic literature casts doubt on the effectiveness of class-size reduction as a policy tool, the audit highlights the ability of districts to improperly use categorical funding streams for general purposes.

So, complaints teachers must purchase supplies for their classrooms from their own funds or class sizes are extensively much greater in Clark and Washoe Counties than the prescribed sizes are true. However, they are not attributable to any failure by the state to adequately fund K-12 education. Instead, they should be directed at the mismanagement by local school districts that produces such outcomes despite state standards and funding.

Also, true K-12 spending totals are easily misrepresented to the public. For instance, some cite the Basic Support Per Pupil amount of around $5,700 without mentioning the thousands per student that are spent in addition to this figure. U.S. Department of Education databases count all spending and use a uniform methodology for all states. They showed Nevada actually spent $9,650 per pupil in 2011.

Improving Nevada’s schools need not cost more. We should re-allocate existing dollars to more effective programs and implement reforms with low or no cost. Some may even generate savings. In a future column, I’ll discuss three broad strategies to boost student achievement we should pursue:

Improving talent levels and effectiveness of educators; exposing schools to market forces to improve resource allocation; and better using technological resources to improve student outcomes.

Ron Knecht is Nevada State Controller.