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April 16, 2014

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The stimulus chase

Millions in federal funding for K-12 and higher education is available, but Nevada risks losing it all for both if it won’t boost investment in one

Nevada’s public schools stand to lose hundreds of millions of dollars in federal stimulus money because of a largely overlooked twist in the funding guidelines.

A significant chunk of the stimulus money that would go to K-12 schools is tied to the fate of Nevada’s higher education system.

To qualify for about $325 million in “state stabilization funds” for the K-12 and higher education systems, Nevada must allocate at least as much state money for education as it did in 2006. State lawmakers expect they can meet that requirement for K-12, but not for higher education. That’s why Gov. Jim Gibbons has asked the Obama administration to waive the state funding requirement for higher education.

If the request is denied, the university system is not the only one that will lose out, state and federal officials said.

“If one side or the other doesn’t clear the bar, there’s no money for anybody,” said Jim Wells, deputy superintendent of administrative and fiscal services for the Nevada Education Department. “Everyone’s pretty desperate right now, trying to figure out how to make this work.”

Although Nevada is guaranteed extra federal money for special education programs and students from low-income households under other components of the stimulus plan, the Clark County School District is counting heavily on the big money of the state stabilization funding to help stanch its fiscal bleeding.

The School District has shed $133 million in programs and services, and expects to trim its annual operating budget by $120 million over the next biennium.

Without that stimulus money, the district’s workforce will have to be trimmed even more, said Joyce Haldeman, associate superintendent of community and government relations for the district.

As for Nevada’s best hope, the federal government said states that have experienced “a precipitous decline in financial resources” can apply for waivers. In March Gibbons wrote to U.S. Education Secretary Arne Duncan, spelling out Nevada’s dire fiscal straits, and its position as “the number one state in economic distress in the country.”

But at the time of the governor’s letter, the Education Department had not yet finalized the provisions of the waiver. And it turns out meeting those requirements might also be more than Nevada can manage.

To qualify, a state must show that the percentage of its budget that goes to education stays the same for the next two years. Currently K-12 and higher ed account for 53 percent of the state’s budget. Preliminary estimates show education’s share dropping to 50 percent next year. Making up and maintaining the difference, as the waiver would require, could cost “hundreds of millions” over the biennium, Wells said.

And there’s more at risk. Another $5 billion in education grants will be awarded later this year to states that show the most innovation and initiative in using the first-round stimulus money. If Nevada misses out on stabilization funding, its chances of qualifying for second-round grants are slim, Wells said.

The waiver’s requirements are steeper than many educators and state officials were expecting, including Clark County Schools Superintendent Walt Rulffes.

If Nevada were able to guarantee that education’s share of the budget wouldn’t drop for two years, “Why would we need a waiver in the first place?” Rulffes said.

Dan Klaich, the Nevada higher education system’s executive vice chancellor, said he believes many people are unaware of the potential pitfalls related to the stimulus money.

“People seem to think this is just about higher ed, and it’s absolutely not,” Klaich said. “Everything that happens with this decision impacts not just higher education, but our partners in K-12.”

Klaich added that the federal education department’s position — that K-12 and higher ed must sink or swim together — isn’t wrong.

“This is a message Jim Rogers has been shouting from every rooftop since the day he became chancellor,” Klaich said. “The most important thing we can do to improve the quality of higher education in Nevada is to improve the quality of our high school graduates. We have a vested interest in K-12 succeeding.”

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