School bond reserve shrinks
Lawmakers were told Thursday the amount of money the state can get from school bond reserve accounts is now $106 million less than what the governor put in his proposed budget.
Director of Administration Andrew Clinger told the Senate Revenue Committee he and his staff now believe the most they can get from those accounts is $319 million.
Sen. Steven Horsford, D-Las Vegas, quickly pointed out that puts the governor’s budget $100 million out of balance, a violation of the law requiring the governor to submit a balanced budget to the Legislature.
The amount available in bond reserves, according to documentation provided by Clinger, is actually more than $250 million less than the original $425 million figure. The new plan makes up $124 million of that gap by sweeping the Clark County School District’s Governmental Services Tax fund over the next four years and $6.7 million by doing the same with Washoe’s fund. Those sweeps were not included in the original plan and school districts protested saying that money is what they use for emergency repairs such as a leaky roof or boiler failure.
“Boilers are going to go out, HVAC is going to go out and there are roofs that are going to need to be replaced,” said Craig Hulse of Washoe school district.
Clark County School District Chief Financial Officer Jeff Weiler said they use the money for the same things and, if it is taken, won’t have any way to respond to an emergency.
Weiler and other school officials are even more pessimistic than that, estimating the amount available from the bond reserves may be as little as $90 million.
Lawmakers asked Clinger to work with their staff and the districts to firm up exactly how much is available.
Clinger told the committee he believes the $106 million shortfall will be either erased or greatly reduced by the time the Economic Forum makes projections in May. He said $66.3 million could be covered by the provision in President Obama’s budget excusing states from interest on their unemployment insurance loans. Gov. Brian Sandoval budgeted that amount to cover that interest on hundreds of millions borrowed to cover unemployment checks over the past 18 months.
Clinger said he also is expecting some improvement in revenues and lower than projected Medicaid and other human services caseloads by May that would further reduce the gap.
But Horsford protested saying the federal budget won’t be finalized until Sept. 30 – three months after the 2011 Nevada Legislature adjourns. He said he doesn’t think the state should count on that funding because it’s “based on the Congress elected kicking the can down the road.”
He said lawmakers can’t wait until the May forum for answers.
“A $106 million hole in the (K-12 Distributive School Account) is not minor,” Horsford said. “Constitutionally we have to move the DSA first and I cannot do that with a $106 million hole” he said referring to the requirement that education be funded first in Nevada.
Clinger’s new plan anticipates getting $232.2 million in bond reserves from Clark and $60.6 million from Washoe. Another $26.5 million would come form the other eight school districts with bond reserve accounts.
Horsford and committee chair Sheila Leslie, D-Reno, asked budget officials to come up with a plan that covers the hole much sooner than the May forum.