ELKO – Elko County School District reduced the final 2022-2023 budget by $4.1 million because of a loss of net proceeds of mines revenue that was swept up by the state, and Lander County’s school budget also is out a big chunk of money, along with two other rural districts.
“It’s $6.5 million for us,” said the superintendent of the Lander County School District, Russell Klein. He said that 10 months into the current fiscal year, the state wanted the money based on a short paragraph in state statute that says the net proceeds of mines paid in fiscal 2022 “is the state’s money, not the district.”
Klein said on March 25 that Elko, Lander, Eureka and Humboldt are the four counties most affected by the state’s decision, and “it’s huge numbers.” He said Eureka’s was more than $8 million. Eureka County School District officials weren’t available for comment.
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Humboldt County School District suffered a $4.975 million loss with the state’s sweep, and Superintendent Dave Jensen said most of that was used in the current fiscal year so the district had to cut expenses. The carry-over into the 2022-2033 fiscal year will be down to the state’s 4% minimum.
“We weren’t anticipating this at all,” he said, stating that the district believed the state wouldn’t begin the sweep as soon.
Jensen said the rural districts are looking at potential litigation, with Eureka County as the primary catalyst.
The four counties the Lander County superintendent mentioned are where the largest gold mines operate, and those mines pay the net proceeds tax.
At the Elko County school board’s March 24 meeting, Chief Financial Officer Julie Davis warned that beyond the cut to the final budget for the 2022-2023 fiscal year, the district will need to cut $10 million from the 2023-2024 budget year’s budget to balance revenues and expenditures.
“We won’t have a fund balance left,” she said.
The losses will come from the net proceeds of mines tax that the state will collect beginning in August for even distribution to all the school districts in Nevada, and from changes in the state’s school funding programs.
Elko County School District’s final general fund budget shows a nearly $4.1 million decrease in the estimated beginning fund balance for the 2022-2023 fiscal year because the state took back that amount of mine taxes the district expected to use in the new budget, Davis said in a presentation to the school board.
The budget changes that she spoke about at a recent budget forum were finalized for May 24 board action, and that general fund budget shows estimated revenues of $96.25 million, budgeted expenditures of nearly $106.57 million and a beginning balance of $17.09 million.
“This is a 19% decrease in the opening fund balance,” Davis said in her presentation to the board, explaining that the drop is due to the deduction of net proceeds of mines out of May, June and July Pupil Centered Funding Plan funding. The opening fund balance was originally $21.18 million.
The ending fund balance for the 2022-2023 final budget is $6.42 million.
“The beginning and ending balances are a bummer,” Davis said.
School districts that have been receiving net proceeds of mines tax revenue had expected the revenue from 2021 taxes to go to the districts for the 2022-2023 fiscal year and then all net proceeds of mines tax revenue would go to the state to be evenly distributed throughout Nevada school districts.
Davis said the districts don’t spend the tax revenue until the following year per state statute rather than in the year they receive it, which is why they thought the cut would come later.
“We fully anticipate going to the state to say this isn’t sustainable,” Davis said.
Superintendent Clayton Anderson said the state’s decision to grab the money now is “affecting all the rural districts pretty significantly.”
Anderson said the Elko district and others consulted with lawyers but the Nevada Department of Education’s action doesn’t appear to be unconstitutional.
“You can say it is unfair, if you want,” he told the school board.
Anderson additionally said that the board’s recent approval of pay hikes for school employees was negotiated before the state’s action on net proceeds, “so we don’t feel we were negligent.” The new contracts provide 2% pay hikes this year and 1% hikes the following year.
Jensen in Humboldt County said his district also approved raises of 2% for this year and for next year before learning of the state’s action.
The net proceeds tax money that now goes straight to the Nevada Education Fund will be distributed as part of the new Pupil Centered Funding Plan that Davis said will impact the Elko County School District, with funding for the upcoming fiscal year at $9,267 per pupil, compared with $9,279 per pupil in the current fiscal year.
At the same time, she said in her presentation that the consumer price index increased 8.5% for the year ended March 2022, the highest since 1981.
Davis also reported that the final budget includes money to buy three school buses instead of five in the preliminary budget. She said bus purchases could have to go down even more next year.
The district has a fleet of 80 buses.