Legislature oversight costs rural Nevada schools millions

A bill passed by the Nevada legislature—Senate Bill 543—during the 2019 legislative session, has caused major upset amongst many rural school districts as a result of the new education funding formula, which sweeps the Net Proceeds of Minerals (NPM) from individual school districts to the state. 

Humboldt County used to see the proceeds from mining that came directly out of the County locally, but now, the tax revenues from mining go directly to the State Education Fund to be dispersed to all 17 counties and the Charter Authority. An unanticipated change to the application of this new funding formula during the 2021  legislative session has cost Humboldt County alone just under $5 million, with other counties also losing millions, according to Humboldt County School District (HCSD) Superintendent, Dr. Dave Jensen.  

“It is certainly concerning to rural school districts that there was a failure to communicate what was legislatively passed… [The community] needs to understand the decisions our legislators make have an impact on our rural communities,” said Jensen.

Thanks to a subsection referred to within Sect. 16 of Senate Bill 458 from the 2021 session, which was reportedly overlooked by many Nevada legislators, money allocated to county school districts for purposes other than debt services or capital projects in the fiscal year 2021-2022 is deemed revenue for the state and not individual districts as was provided in the past. Thus, the money that HCSD received from mining tax revenues at the conclusion of the 2020-2021school year and put into use during the 2021-2022 school year was owed to the State Treasurer to be put in the State Education Fund. For HCSD that money totaled just over $4.9 million.

According to Jensen, HCSD was not alerted of the loss of these funds until May of 2022, after HCSD approved their tentative budget as final and funds were committed for use last school year. The budget was approved in May of 2021, with the understanding that it was the final allotment of NPM revenues to rural school districts and future NPM revenues would be swept to the state the following school year. The $4,975,431 that was originally a part of the district’s ending fund balance was a basis for negotiations with staff, according to Jensen, so the loss of funds had a tremendous impact on the fiscal standing of the HCSD.  

“To have this happen to us out of the blue is very upsetting because it actually flies in the face of everything we’ve held sacred and that’s to be responsible with taxpayer dollars,” explained Jensen. 

Many school districts, including Humboldt, prefer to have a minimum of one month’s worth of operating expenditures, which is about 8 percent of budgeted expenditures, as an ending fund balance, with 16 percent being the maximum the state allows a district to carry and 4 percent being the minimum. Before the new legislation passed, HCSD sat at 8.3 percent, but after the sweep of the NPM allocation, HCSD now sits with an ending fund balance of 4 percent—only enough to cover two weeks of operating expenses. According to Jensen, the ending fund balance for HCSD would be much lower without federal stimulus money. 

“Our long standing fiscal stability is in question unless the legislature takes dramatic steps to increase public education funding,” said Jensen. 

Although HCSD took a big hit, Jensen assured that students should not feel any major impact as a result of the loss of funds. 

“Our number one goal is to protect our students, so our students should see no impact. If there’s anything, over time we are likely to see class sizes increase as we compress our number of teaching units,” explained Jensen. 

Other counties, like Clark County, have seen a significant increase in allocations as a result of the new legislation while the rural communities have seen a dramatic decrease. Senate Bill 439, which implemented the Pupil Centered Funding Plan, does not take into consideration economies of scale, according to Jensen. Economies of scale indicate that the more dense the student population, the cheaper it is to educate students and the more rural, the more expensive it is. With the cards stacked against rural communities for funding education, it is vital that parents take a stand to support their children and educators. Being conscious of what is happening during legislative sessions and how it affects rural communities is essential to the education of NV students. 

“Be aware… We have to have parent voices in our legislative sessions saying that the current funding mechanism that favors Clark County to the detriment of the rural communities is not acceptable…Legislators don’t listen to [superintendents],” said Jensen, and clarified, “Who impacts the legislators? The voting public.”