Confusion is the Plan

How much do Nevada taxpayers spend to educate every child in the state's K-12 education system?

The question is straightforward and objective. Yet the answers to it vary greatly, depending upon the speaker.

School administrators, politicians, union bosses and federal and state bureaucrats all answer this question differently — while looking at the same figures. All of their answers also differ from what might be expected from a private-sector accountant or entrepreneur.

The chief culprit in this confusion is the complexity of the Silver State's school finance mechanism. The "Nevada Plan," as it's called, requires state lawmakers to determine what will be the "basic support per pupil" amount that will be guaranteed to school districts each year. This "basic support per pupil" amount — which will rise to $5,263 in the 2011-12 school year — is often cited by tax-increase advocates who complain that Silver State schools are drastically underfunded compared to other states.

"Basic support," however, should not be confused with "total support." "Basic support" includes only a portion of revenues that accrue directly to local school districts — namely, a 25-cent property-tax assessment and a statewide sales tax of 2.25 percent (2.6 percent in the current biennium) — and a supplement from the state's General Fund.

Outside of the "basic support" calculation are many locally assessed taxes, including an additional 50-cent property-tax assessment, taxes on vehicular registration and taxes on slot machines. Hundreds of millions of tax dollars flow to school districts through these local taxes, which are regularly ignored by many commentators. "Basic support" figures also exclude roughly $150 million in state General Fund resources that are spent each year on class-size reduction.

When all of these revenues are accounted for, per-pupil spending figures begin to escalate dramatically. The U.S. Department of Education reports that Nevada spent $8,187 per pupil in FY08 on "current expenditures" — a 35 percent increase from six years earlier. Even this, however, accounts for only a subset of school expenditures.

Government school administrators often reference "current expenditures" as the amount of spending that actually occurs in the classroom in a given year, even though the category excludes many areas of spending necessary for a school to function. These include employee benefits, the amortized cost of school construction and the interest paid on school bonds.

The U.S. Department of Education does report the per-pupil costs of school building and financing, which combined with "current expenditures" show a total per-pupil funding level in Nevada of $10,378 for the 2007-08 school year.

However, even this federal database does not completely account for all expenditures. For that, one must drill down to the district level and review official budget documents — then total the expenditures made through various accounts, while carefully excluding expenditures on adult education and community-outreach programs.

A review of budget documents from Nevada's two largest school districts reveals that Clark and Washoe counties spend far more to educate each child than taxpayers are often led to believe. For the 2011-12 school year, the Clark County School District plans to spend a total of $12,369 per pupil ($9,152 on current expenditures), while the Washoe County School District plans to spend $11,390 per pupil ($10,441 on current expenditures).

Unfortunately, there is an amazing lack of uniformity in Nevada school district financial reporting. That makes a systematic review of school district spending difficult — requiring a detailed and laborious review of budget documents for each individual district. For most people, these differences render the real spending amounts opaque and sow further confusion about true levels of per-pupil funding.

To make informed public-policy decisions, taxpayers and policymakers should be aware of what they are really spending to educate children in the Silver State. Nevada's largest school districts have been spending between $11,000 and $14,000 per pupil, while graduating only half of their students.

By contrast, 84 percent of private schools nationwide charge tuition rates of less than $10,000, while offering smaller class sizes and vastly better outcomes, according to data from the U.S. Department of Education. This reality naturally forces the question: Is public education a task better performed by the government or the private sector?

The Nevada Policy Research Institute has proposed a scholarship program, to be funded through tax-credit-eligible corporate donations. Such a program would encourage a shift toward greater private-sector involvement in the provision of public education. That shift would not only facilitate a profound saving of public moneys, but would also dramatically increase the quality of educational opportunities available to the next generation of Nevadans.

If policymakers allow themselves to face the true costs and dismal performance of the current government monopoly on public education, they will be forced to foster such alternatives.

Geoffrey Lawrence is deputy director of policy at the Nevada Policy Research Institute. For more, visit http://npri.org.