Nevada work session reviews governor's pupil-centered funding plan; key funding choices left for closing

At a joint work session of the Assembly Committee on Ways and Means and the Senate Committee on Finance subcommittees on K-12, Legislative Council Bureau fiscal staff reviewed the governor's proposed Pupil-Centered Funding Plan and presented multiple spending and methodology options the subcommittees must resolve at budget closing.

The presentation, led by James Malone of the Legislative Council Bureau (LCB) Fiscal Analysis Division, summarized the governor's recommended increases in revenue and general fund appropriations, technical amendments submitted by the governor's office, and a series of decision points for the subcommittees to consider before finalizing the 2025-27 biennial budget.

Why it matters: The subcommittees' choices will shape the statewide base per-pupil amount, how transportation and salary-adjustment funds for charter schools are distributed, special-education funding and multipliers, and the degree of flexibility districts have to spend funds — all of which affect school budgets, educator pay and services for students statewide.

General fund totals and statutory requirement: LCB fiscal staff told the subcommittees the governor's original proposal would increase total revenue for the Pupil-Centered Funding Plan by about $692.6 million for the 2025-27 biennium, including a $504.3 million increase in general fund appropriations compared with the 2023-25 biennium. Two budget amendments submitted by the governor's finance office would reduce that increase: one lowers general fund appropriations by about $52.1 million to align with minimum increases required by statute, and a second removes $17.0 million for charter-school transportation from the formula and instead shifts it to a one-time general fund appropriation.

LCB fiscal analyst Liliana Camacho Polco told the committee that, under Nevada Revised Statutes cited in the presentation, the governor is required, "as practicable," to recommend general fund appropriations based on the economic forecast compared with the combined rate of inflation and enrollment growth. LCB presented the economic forum's December 2024 projection of 3.4% growth in general-fund revenues and the three-year average combined inflation rate of 5.61% used in that statutory calculation.

Statewide base per pupil and the 'not practicable' finding: The governor's amended recommendation raises the statewide base per pupil from the legislatively approved $9,414 in fiscal 2025 to $9,416 in fiscal 2026 and $9,486 in fiscal 2027. LCB calculated that applying the required combined inflation-plus-enrollment adjustment would produce a statewide base of roughly $9,942 in fiscal 2027, about $456 higher than the governor's amended figure. The governor's finance office has characterized that increase as "not practicable" and submitted draft legislation (a BDR) to change the statutory requirement; fiscal staff said roughly $240 million would be needed to meet the statutory adjustment in this biennium.

Enrollment projections, cost index and timing: LCB reported that the governor assumes flat enrollment for 2026 and 2027 based on October 1 audited counts (465,927 pupils in fiscal 2024) and that the Nevada Department of Education could not produce a forward forecast from consulted experts. Committee members generally asked fiscal staff to retain authority to update enrollment projections and other numbers at closing when the Economic Forum's updated forecast is available.

The Nevada Cost of Education Index (NCEI) also drew discussion. The governor's recommendation applies a cost-adjustment factor of 1.0 to all counties (as the 2023 Legislature and the Commission on School Funding recommended), which LCB said effectively eliminates county-by-county adjustments for cost-of-living and labor variations. Some members signaled support for keeping the 1.0 factor pending further study and discussion.

Baseline, tiering and methodology changes: LCB outlined several methodology changes in the governor's proposal affecting districts still on the fiscal-year-2020 baseline provision. The governor would incorporate tier and weighted add-ons (transportation, food services, local special education, English-learner and at-risk weights) into the adjusted base per pupil for those baseline districts, rather than distributing them separately. Presenters said the department's rationale is transparency and simplicity, but LCB noted the change departs from prior legislatively approved methodology and has implications for monthly distributions and categorical accountability. Several committee members voiced a preference for retaining the existing breakout of tiers and weights to preserve transparency and categorical tracking.

Model balancing and proportional reductions: Fiscal staff showed three balancing scenarios for a needed $7.9 million reduction in the governor's amended model. The governor's option would apply proportional reductions to adjusted base and weighted funding for recipients not on the 2020 baseline while protecting baseline districts and tier funding; other scenarios spread proportional reductions across all recipients or applied reductions to adjusted base and weights for all agencies. One committee member expressed a preference for the prior methodology that applies equitable proportional reductions to all local education agencies.

Charter-school transportation funding: The governor's amended recommendation would remove $17.0 million in charter transportation from the formula and instead propose a one-time general fund appropriation to the State Public Charter School Authority (SPCSA) for competitive distribution. The governor's office cited insufficient historical charter transportation data for the formula (which uses a four-year average). Several members, including Senator Dondero Loop, said they lean toward the one-time-appropriation approach and deferred further action pending closing.

Salary adjustment tier and charter-school allocations: The governor proposes making the interim IFC-approved salary increases permanent by funding a new salary-adjustment tier: $143.9 million in each year for school districts (the IFC previously allocated $249.9 million total in the 2023 cycle) and an additional $19.0 million each year for state-sponsored charter schools, for a biennial total the governor lists as $287.9 million. LCB noted distribution methodologies differ between districts (based on staff counts used by the IFC) and the governor's proposed per-pupil approach for charters; fiscal staff offered an alternate $32.0 million biennial figure for charters if distribution instead matched the IFC's staff-count approach. Committee members and public commenters urged clarity and accountability to ensure any salary dollars for charters actually support educator raises rather than being absorbed into other charter expenses.

Special education funding and multipliers: LCB presented the state special-education account (separate from the PCFP tiers) and a recommended statewide multiplier of 0.46 for pupils with disabilities. Because of differences in how funds are distributed, the effective multiplier for Clark County and for charter schools could fall below the English-learner weight (0.45), producing concerns about equity. Options included providing an additional roughly $25.8 million over the biennium targeted to Clark and charter schools, lowering the English-learner weight, or reallocating the $14.4 million the governor included for a 2% roll-up in that account; LCB said reallocation alone would still leave a shortfall of about $21.7 million to hit a 0.46 target. The subcommittee discussed, but did not resolve, whether to keep the 2% roll-up.

13% supplemental program and local special education tier: LCB reviewed a $1.5 million supplemental program that helps local agencies whose share of special-education pupils exceeds 13%. The governor's original submission inadvertently proposed eliminating that program, but a budget amendment restored it and rolled the $1.5 million into the base. Fiscal staff presented three options: (A) roll the one-time FY25 funds into the base and eliminate the program; (B) continue the program and roll the $1.5 million into base (creating a permanent $1.5M/year state obligation); or (C) maintain the prior practice of distributing $1.5M annually as a one-time, annually reallocated pool. Several members favored option C for flexibility in the current fiscal environment.

Local special-education tier methodology: LCB reported a new calculation the department provided for the local special-education tier produces lower allocations to many districts compared with the previously legislatively approved methodology. Fiscal staff estimated about $10 million per year would be needed to restore the prior methodology and recommended staff be authorized to present options at closing.

Public comment: Sarah Adler of Silver State Government Relations, representing a coalition of Northern Nevada public charter schools, thanked the committee for asking whether charter salary dollars include district-sponsored charter schools and offered cooperation on accountability mechanisms for ensuring salary dollars reach educators. Alexander Marks of the Nevada State Education Association criticized the governor's "not practicable to increase base per pupil funding" finding and warned, "If more is not done, this session will be about de facto education cuts."

Next steps: No formal votes were recorded during the work session. Committee members generally directed fiscal staff to return at closing with updated options reflecting the Economic Forum's forecast, refined enrollment data and distribution methodologies, and additional fiscal scenarios for the subcommittees to consider.