Nevada Governor Joe Lombardo takes questions from reporters after a ceremonial signing of Senate Bill 189, the Keeping Kids in School Act, at Ronnow Elementary School Thursday, July 6, 2023. The bill includes a $2 million appropriation for Communities In Schools of Nevada.
Published Wednesday, Aug. 9, 2023 | 2 a.m.
Updated Wednesday, Aug. 9, 2023 | 11:13 p.m.
Nevada lawmakers on Wednesday denied Gov. Joe Lombardo’s request to use pandemic relief funds to help backfill a shortfall in the state’s school voucher fund, but through hours of testimony also uncovered a loophole that allowed a third-party sponsor of the program to apply for the entirety of eligible scholarship funds.
In a statement after the marathon hearing, Lombardo accused legislative Democrats of callousness.
“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. “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.”
The party-line vote by the 22-member panel, consisting of 15 Democrats and seven Republicans, came after more than two and a half hours of public comment and several more hours of back-and-forth between the committee’s top Democrats and Ben Kieckhefer, Lombardo’s chief of staff. Lombardo needed the authorization of the Nevada Legislature’s Interim Finance Committee to allocate $3.2 million in unused American Rescue Plan dollars to fund the state’s so-called Opportunity Scholarship program that began in 2015 for low-income families.
“I was looking for every chance to have the governor use purely executive authority to raise funding that was available to these SGOs” Kieckhefer said, emphasizing estimates showed 350 children could lose private school funding due to a $4.7 million shortfall he said was caused by the Opportunity Scholarship program becoming reliant on one-time stopgaps.
That, however, was followed by an intense line of questioning into whether one of the program’s Scholarship Granting Organizations (SGO), AAA Scholarship Foundation, Inc., applied for the vast majority of the pool — approximately $8 million out of the $11.4 million available — for the six SGOs authorized, to sell tax credits usable against a company’s modified business tax in exchange for collecting donations that are used to fund private school tuition.
The program provides need-based scholarships for students who live in households earning less than 300% of the federal poverty level, which this year amounts to about $90,000 for a family of four. The scholarships can then be used to cover tuition at religious, private and charter schools.
Statutorily, the amount of money that can be sold as tax credits and used as scholarships is capped at $6.7 million annually but had a total funding of $11.4 million last year after an additional $4.7 million was reallocated to the program through a sunsetting mining tax.
Last year, AAA raised $7.7 million in donations sold as tax credits — more than double the next highest SGO, Silver States Scholarships, which raised $3.2 million, followed by the Education Fund of Northern Nevada, which solicited $1.3 million, according to the most recent Opportunity Scholarship report from the Nevada Department of Education. The remaining three SGOs raised a combined $365,000.
Further, lawmakers pointed to AAA reporting $13.4 million in reserve funds from unused scholarships from the last school year — information volunteered by AAA when the committee inquired Aug. 2. That compares to $4.2 million in reserves for the Education Fund of Northern Nevada, $343,000 for the Student Choice Fund of Nevada and the $16,830 for the Injured Police Officers Fund. Another SGO, America’s Scholarship Konnection, only reported it could fund its scholarship obligations, while Silver State Scholarships warned it was in need of $2.3 million to avoid some 350 students from losing their Opportunity Scholarships.
In total, Assemblywoman Sandra Jauregui, D-Las Vegas, estimated AAA likely had more than $20 million it could use to fund Opportunity scholarships, and others on the committee pressed the Tampa, Fla.-based nonprofit to collaborate with the other SGOs to ensure students are made whole.
That, she said, amounted to the ordeal being a “manufactured crisis.”
“This one organization came to the Department of Taxation with $11 million worth of requests and applications,” Jauregui said. “It was a governor's consistent message that we could not use one-time money and we should not use one-time money to fund ongoing requests. And that's exactly what this is doing.“
But Denise Lasher, a government affairs advisor who testified on behalf of AAA, maintained AAA wants to “help as many students as they can, within the parameters of how they operate and the stability of this program.” She repeatedly told lawmakers AAA kept so much cash in its reserves if a disruptive event similar to the pandemic were to happen.
The governor initially had sought $50 million across the 2023-25 biennium to expand the Opportunity Scholarships program, and to grow funding for the program continually until it reached $500 million by 2032. He also wanted to raise the cap for eligible households to within 500% of the poverty line.
Democrats, however, have maintained that public tax dollars should be used solely for public education, and they amended the program’s expansion out of the state’s $12 billion education budget that eventually was signed into law days before the end of the legislative session.
While Republicans agreed AAA appears to have taken advantage of the law’s existing structure, it had the right to do so.
But what was paramount, Republicans argued, was preventing the possible disruption of the families whose children may have to find a new school to attend just as the new school year begins. In the moments leading up to the vote, each of the committee’s seven conservatives lamented that without the infusion of pandemic relief funding, there’s no guarantee families will be made whole.
“We had a chance to make a difference today, and I’m disappointed in our actions as a whole,” said Assemblyman P.K. O’Neill, R-Carson City. “We have problems with statute, but it’s been around long enough. We’re willing to change. It’s just disappointing.”
