NEVADA DEPARTMENT OF EDUCATION

1. 8/29/2012 NEVADA DEPARTMENT OF EDUCATION 1 We use the phrases “Nevada Plan” and Distributive School Account almost interchangeably. However, there is an important distinction: the Nevada Plan is the mechanism the State has provided (NRS 387.121) to insure a reasonably equal educational opportunity. The actual contribution the State makes out of its coffers is the Distributive School Account. By using a series of egg-shaped forms, I want to show the relationship of the DSA to the other parts of school financing, and give you an overall understanding of the various segments of school financing. The first egg has a chunk taken out of it--I will explain that momentarily. The part you see, is the State’s contribution--it is the DSA funding, the amount the State actually transfers to the School Districts and charter schools. The money the State uses to fund the DSA comes from six sources: O/S LSST, Slot Machine Tax, Interest from the Permanent School Fund, the Federal Mineral Lease Revenue, the Estate tax--and, whatever is not available from these sources comes from the State’s General Fund--which in turn receives its money from primarily sales and gaming taxes. In FY2006, for example, $903.0 million was transferred to the School Districts and Charter Schools, $752.4 million from the State’s GF; $94.4, LSST; $36.8, Slot; $8.3, Interest; $7.6, Mineral Lease; and $3.3, Estate Tax; & Federal Migrant Aid payments related to Hurricanes Katrina and Rita (one-time federal receipts) $0.2 million. We use the phrases “Nevada Plan” and Distributive School Account almost interchangeably. However, there is an important distinction: the Nevada Plan is the mechanism the State has provided (NRS 387.121) to insure a reasonably equal educational opportunity. The actual contribution the State makes out of its coffers is the Distributive School Account. By using a series of egg-shaped forms, I want to show the relationship of the DSA to the other parts of school financing, and give you an overall understanding of the various segments of school financing. The first egg has a chunk taken out of it--I will explain that momentarily. The part you see, is the State’s contribution--it is the DSA funding, the amount the State actually transfers to the School Districts and charter schools. The money the State uses to fund the DSA comes from six sources: O/S LSST, Slot Machine Tax, Interest from the Permanent School Fund, the Federal Mineral Lease Revenue, the Estate tax--and, whatever is not available from these sources comes from the State’s General Fund--which in turn receives its money from primarily sales and gaming taxes. In FY2006, for example, $903.0 million was transferred to the School Districts and Charter Schools, $752.4 million from the State’s GF; $94.4, LSST; $36.8, Slot; $8.3, Interest; $7.6, Mineral Lease; and $3.3, Estate Tax; & Federal Migrant Aid payments related to Hurricanes Katrina and Rita (one-time federal receipts) $0.2 million.

2. 8/29/2012 NEVADA DEPARTMENT OF EDUCATION 2 The second egg shows the part of Nevada Plan that comes from mandatory taxes that are generated locally--the 2.25¢ local school support sales tax and 25¢ of the 75¢ Ad Valorem or property/mining tax. These two revenues are deducted from the total amount guaranteed to the school districts in the Nevada Plan to provide the amount of the state general fund obligation. To give you an idea of the amounts involved: in FY2006, the LSST deduction was $986.8 million (47.4% of the guarantee) and the 1/3rd Property tax (formerly 0.25/100 assessed valuation) amount was $193.7 million (9.3%)--the two together accounted for 56.7% of the total guarantee (of Nevada Plan Total). These two components make up the Nevada Plan funding. In FY2006 the total resources for the School Districts only were $2.566 billion (Copy of FY2006 Funding Sources Total). Their share of the Nevada Plan ($2.048 billion) is 79.8% of their total funding sources. (Copy of FY2006 Funding Sources Total Less Federal/Other / Total). Charter Schools do not have the authority to levy taxes, and therefore only participate in the DSA portion of the Nevada Plan. While some Charter Schools do have other outside funding sources, in FY 2006, the Nevada Plan contributed 82.5% of the Charter School General and Special Education funding (NRS 387.303 State Responsibility / Total Revenue for Gen/Spec Ed Funds for all Charter Schools). The second egg shows the part of Nevada Plan that comes from mandatory taxes that are generated locally--the 2.25¢ local school support sales tax and 25¢ of the 75¢ Ad Valorem or property/mining tax. These two revenues are deducted from the total amount guaranteed to the school districts in the Nevada Plan to provide the amount of the state general fund obligation. To give you an idea of the amounts involved: in FY2006, the LSST deduction was $986.8 million (47.4% of the guarantee) and the 1/3rd Property tax (formerly 0.25/100 assessed valuation) amount was $193.7 million (9.3%)--the two together accounted for 56.7% of the total guarantee (of Nevada Plan Total). These two components make up the Nevada Plan funding. In FY2006 the total resources for the School Districts only were $2.566 billion (Copy of FY2006 Funding Sources Total). Their share of the Nevada Plan ($2.048 billion) is 79.8% of their total funding sources. (Copy of FY2006 Funding Sources Total Less Federal/Other / Total). Charter Schools do not have the authority to levy taxes, and therefore only participate in the DSA portion of the Nevada Plan. While some Charter Schools do have other outside funding sources, in FY 2006, the Nevada Plan contributed 82.5% of the Charter School General and Special Education funding (NRS 387.303 State Responsibility / Total Revenue for Gen/Spec Ed Funds for all Charter Schools).

3. 8/29/2012 NEVADA DEPARTMENT OF EDUCATION 3 The remaining 20.2% of the local school districts’ general fund/special education fund operating revenue comes from a variety of locally generated sources. The most significant is the 2/3rd public schools operating property tax (Formerly the 50¢ portion of the 75¢ Property/mining tax). The other elements are The Government Services Tax (Formerly, Motor Vehicle Privilege tax), Franchise taxes, federal impact aid, Interest, rent, student fees, and opening fund balance. In FY2006, the 2/3rd public schools operating property tax (50¢ property/mining tax) yielded $388.2 million. These two over-lapping eggs represent the total combined general fund and special education fund for Nevada’s public schools. The top egg represents the Nevada Plan, the bottom egg the locally generated revenue. The overlapping area is the locally generated state mandated revenue that is the offset against the guaranteed basic support. The remaining 20.2% of the local school districts’ general fund/special education fund operating revenue comes from a variety of locally generated sources. The most significant is the 2/3rd public schools operating property tax (Formerly the 50¢ portion of the 75¢ Property/mining tax). The other elements are The Government Services Tax (Formerly, Motor Vehicle Privilege tax), Franchise taxes, federal impact aid, Interest, rent, student fees, and opening fund balance. In FY2006, the 2/3rd public schools operating property tax (50¢ property/mining tax) yielded $388.2 million. These two over-lapping eggs represent the total combined general fund and special education fund for Nevada’s public schools. The top egg represents the Nevada Plan, the bottom egg the locally generated revenue. The overlapping area is the locally generated state mandated revenue that is the offset against the guaranteed basic support.

4. 8/29/2012 NEVADA DEPARTMENT OF EDUCATION 4 Another very important element for the School Districts is the construction and major improvements of their facilitates. With the exception of legislation four sessions ago to use state bond proceeds up to $16 million to help hardship districts with their capital needs, the State’s position has been that this is strictly a local responsibility. The primary source for the Debt Service funding is an assessment against property and mining. Additionally some of the Governmental Service taxes can be used for Debt Service. The debt service fund pays the obligations incurred by the issuance of General Obligation Bonds, which, of course, require the approval of the voters. The “Pay as you Go” programs also require voter approval, and are a method of accumulating the necessary funding prior to the construction of facilities. In FY2006 the total Outlay for capital projects by Nevada’s School Districts was $679.3 million. The Debt Service total was $440.7 million (Interest: $210.4; Principal: $230.3). Capital Projects (including Building & Sites); “Pay as you Go,” and Debt Service constitute this egg.Another very important element for the School Districts is the construction and major improvements of their facilitates. With the exception of legislation four sessions ago to use state bond proceeds up to $16 million to help hardship districts with their capital needs, the State’s position has been that this is strictly a local responsibility. The primary source for the Debt Service funding is an assessment against property and mining. Additionally some of the Governmental Service taxes can be used for Debt Service. The debt service fund pays the obligations incurred by the issuance of General Obligation Bonds, which, of course, require the approval of the voters. The “Pay as you Go” programs also require voter approval, and are a method of accumulating the necessary funding prior to the construction of facilities. In FY2006 the total Outlay for capital projects by Nevada’s School Districts was $679.3 million. The Debt Service total was $440.7 million (Interest: $210.4; Principal: $230.3). Capital Projects (including Building & Sites); “Pay as you Go,” and Debt Service constitute this egg.

5. 8/29/2012 NEVADA DEPARTMENT OF EDUCATION 5 The final source of funding for the School Districts are monies received from the Federal or State government that must be segregated from other monies. There are a variety of Federal programs: No Child Left Behind (NCLB)--Titles I, II, IV, V, VI; the Carl Perkins programs for occupational education; Federal Special Education; Nutrition Education programs--including the School Lunch/Breakfast programs; Comprehensive Health program; Adult basic education, Federal Class Size Reduction (which has been discontinued), etc. In addition the State requires that the Class Size Reduction program be accounted for separately and is therefore included in this “egg.” In 2006 CSR totaled $125.5 million; & in 2007, $137. million. The State Special Education Fund, although required to be accounted for separately, does not appear here, because it is an integral part of the Nevada Plan, and is therefore combined with the S/D’s general fund for the purposes of determining the Nevada Plan support.The final source of funding for the School Districts are monies received from the Federal or State government that must be segregated from other monies. There are a variety of Federal programs: No Child Left Behind (NCLB)--Titles I, II, IV, V, VI; the Carl Perkins programs for occupational education; Federal Special Education; Nutrition Education programs--including the School Lunch/Breakfast programs; Comprehensive Health program; Adult basic education, Federal Class Size Reduction (which has been discontinued), etc. In addition the State requires that the Class Size Reduction program be accounted for separately and is therefore included in this “egg.” In 2006 CSR totaled $125.5 million; & in 2007, $137. million. The State Special Education Fund, although required to be accounted for separately, does not appear here, because it is an integral part of the Nevada Plan, and is therefore combined with the S/D’s general fund for the purposes of determining the Nevada Plan support.

6. 8/29/2012 NEVADA DEPARTMENT OF EDUCATION 6 There, for the most part you have the funding picture for the School Districts. Some districts may have internal service funds, trust and agency funds, enterprise funds, that have not been specifically mentioned. In general they would be treated much the same way as the Special Revenue Funds. There, for the most part you have the funding picture for the School Districts. Some districts may have internal service funds, trust and agency funds, enterprise funds, that have not been specifically mentioned. In general they would be treated much the same way as the Special Revenue Funds.

7. 8/29/2012 NEVADA DEPARTMENT OF EDUCATION 7 Segregation by Category--FY2006 To give you an idea of the sources of all revenue, I have prepared this chart. It includes all funding from the local, state, federal, and other sources. I have broken out the state general fund contribution into the sources of its revenue. You will note that over all, property taxes account for about 20% of the funding for the states schools, and sales taxes account for about 47%. The table on the next slide shows the detail upon which this chart is based. To give you an idea of the sources of all revenue, I have prepared this chart. It includes all funding from the local, state, federal, and other sources. I have broken out the state general fund contribution into the sources of its revenue. You will note that over all, property taxes account for about 20% of the funding for the states schools, and sales taxes account for about 47%. The table on the next slide shows the detail upon which this chart is based.

8. 8/29/2012 NEVADA DEPARTMENT OF EDUCATION 8 Segregation by Category--FY2006

9. 8/29/2012 NEVADA DEPARTMENT OF EDUCATION 9 NEVADA - ALL SCHOOL DISTRICTSFY2006 Primary Sources of K-12 Education Funds The next two slides show the sources of funding for the school districts of Nevada. This chart shows the combined totals for all of the districts. The information on this chart is for the 2005-2006 school year. We have the charts available for each of the 17 school districts as well. If you are interested in them, we can certainly provide some or all of them for you. These graphs exclude charter schools because they do not have the ability to levy taxes and therefore would serve only to increase the State and Other/Federal portions of this pie.The next two slides show the sources of funding for the school districts of Nevada. This chart shows the combined totals for all of the districts. The information on this chart is for the 2005-2006 school year. We have the charts available for each of the 17 school districts as well. If you are interested in them, we can certainly provide some or all of them for you. These graphs exclude charter schools because they do not have the ability to levy taxes and therefore would serve only to increase the State and Other/Federal portions of this pie.

10. 8/29/2012 NEVADA DEPARTMENT OF EDUCATION 10 FY2006 State and Selected School District Relative Sources of Funds This stack chart shows the state wide percentages and four representative districts for general comparison. Blue represents state funding; yellow, the Local School Support Sales tax; the green the two components of the property tax (25¢/50¢); and the purple, the Other & Federal funding. This stack chart shows the state wide percentages and four representative districts for general comparison. Blue represents state funding; yellow, the Local School Support Sales tax; the green the two components of the property tax (25¢/50¢); and the purple, the Other & Federal funding.

11. 8/29/2012 NEVADA DEPARTMENT OF EDUCATION 11 Segregation by State, Local, Federal--FY2006

12. 8/29/2012 NEVADA DEPARTMENT OF EDUCATION 12 Segregation by State, Local, Federal--FY2006