Nevada lawmakers may have to add nearly $200 million to the proposed budgets for public schools to replace lost property taxes and fix errors by school districts and the state.
The education subcommittee of Senate Finance and Assembly Ways and Means was told Wednesday the biggest error is an accounting error by Washoe and Clark school officials when they reported fiscal 2005 salary expenditures. As a result the state will have to add $34.5 million a year to their base budgets.
Lawmakers were also told they will need to add $44 million that school districts will lose in the next two years because of property-tax reform legislation and about $55 million to cover rising group-insurance costs not included in the proposed budget. That is in addition to the estimated $6.94 million to cover rising utility costs and $10.43 million to fund the quarter percent increase in the Public Employee Retirement System rate.
Altogether, those items total more than $185 million.
"The governor is not prepared to recommend that over $100 million in expenditures be eliminated to accommodate this," said State Director of Administration Perry Comeaux. "However, he believes that when the Economic Forum meets May 1, it's very likely their forecasts will increase to an extent that we'll be able to cover most, if not all, of this."
Sen. Bill Raggio, R-Reno, said that would probably consume almost all the money added to the state's revenue projections by the forum. "It could utilize all of this money for this purpose alone and not for other purposes that are needed."
Ways and Means Vice Chairwoman Chris Giunchigliani, D-Las Vegas, said she had hoped to use the anticipated extra money in the general fund to pay for new programs like all-day kindergarten - estimated to cost $70 million or more - and providing districts enough money to get rid of team teaching in first and second grades.
"Those shortfalls will eat up what's in the general fund," she said. "Now we've got to hope the Economic Forum covers what we need."
The forum is the independent body which projects the revenues the state will have over the next two years. Those projections must be used by the governor and Legislature in building the budget.
This year, all sides are expecting a significant increase in the total revenue projections because sales and gaming-tax revenues have been growing at twice the rate they were projected so far this year.
Subcommittee Chairwoman Sen. Barbara Cegavske, R-Las Vegas, said the changes will force lawmakers to recalculate a large part of the budget.
"We're here prepared to do the business of the people and then we keep finding out there are these holes," she said. "And they're huge holes."
She agreed with Giunchigliani that they had been hoping to talk about using that money to expand or create new programs that would improve education for Nevada public school pupils but, instead, they'll have to use a large amount of money just to maintain current programs.
And both said it's very likely these aren't the last of the additions they'll have to make to the state's school account.
"There's more to come," Giunchigliani said.
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Additions needed to the Distributive School Account:
• $69 million because of an accounting error primarily by Clark County. The district neglected to include in its ending fund balance some $31 million in salary savings it had used instead to pay for a new financial computer system.
State Director of Administration Perry Comeaux said that along with a similar, but much smaller, error by Washoe County, it artificially decreased the totals his office uses to calculate the base budgets for public school districts by $34.5 million a year.
He said the state will have to add that much each year - a total of $69 million over the biennium to "make them whole."
• $44 million because of the property tax signed into law by Gov. Kenny Guinn Wednesday. Lawmakers were advised of that effect to the school account before they passed AB489.
• $55 million to cover rising group-insurance costs for the school districts. Comeaux said the budget for group insurance was based on what the state will have to contribute for its employees in the Public Employee Benefits Program budget, which had a projected rate increase of 2 percent next year and 2.25 percent the following year. Doug Thunder of the Department of Education said current estimates of the increases for programs serving school district employees are 11 percent next year and 13 percent the following year.
• $6.94 million to cover inflation in the cost of gas and electric bills for school districts. The original budget didn't include any inflation factor. The estimate calls for 4 percent each year for electric power and 8 percent for gas.
• $10.43 million to cover the increased cost of the state's contribution to the Public Employee Retirement System. That cost has been increased gradually on a schedule over the years to cover the unfunded liability of the PERS system.
• Total: More than $185 million in additions to the school budget over the coming two fiscal years and lawmakers say they expect more changes in the next week or two.