Everything You Need to Know About Nevada’s Universal ESA Bill

BY Michael Chartier

Published May 29, 2015

At the start of 2015, our team voted Nevada the state most likely to succeed that session, and it blew away our expectations. In April 2015, the state enacted its first school choice program, a tax-credit scholarship for low- and middle-income families. On May 29, the Nevada Assembly passed Senate Bill 302, a universal education savings account (ESA) bill, sending it to Gov. Brian Sandoval’s desk for signature.

Nevada is the first state to send two school choice bills to the governor in one legislative session. The tax-credit scholarship program was an excellent bill and SB 302 is an even better companion

With Gov. Sandoval’s signature, Nevada then became the fifth ESA state after Arizona, Florida, Mississippi, and Tennessee. Notably, the bill, authored by Sen. Scott Hammond, is by far the broadest ESA as it allows every public school student to access an account.

All Nevada public school students who have been enrolled for at least 100 days prior are eligible to receive an ESA. That translates to roughly 93 percent of all Nevada school-aged children or 453,024 K–12 students.

Funds in the ESA can cover:

Tuition and fees at an approved private school
Textbooks required for a student at an approved private school
Tutoring or other services provided by a tutor or tutoring facility that is a participating entity
Tuition and fees for a distance learning program
Fees for any national norm-referenced achievement examination, advanced placement or similar examination or standardized examination required for admission to college or university.
Fees for any special instruction or special services if the child is a pupil with a disability
Fees and tuition for a college or university in Nevada if that student utilizes those expenses for dual credit
Textbooks for a college or university in Nevada, also if that student utilizes those expenses for dual credit
Transportation to school up to $750
Purchases of curriculum or any supplemental materials
Management fees

The Nevada Treasurer will oversee the program and is able to deduct up to 3 percent from the appropriated ESA funds to cover the costs of the administration of the program.

Nevada Senate and Assembly

This ESA bill’s journey was an interesting one. It began in the Nevada Senate and was introduced on the very last day the legislature allowed bills to be introduced. It was assigned to the Senate Education Committee where the bill was passed as amended. Later and approaching another deadline, the bill was assigned to the Senate Finance Committee, where it was declared exempt from the deadlines. It idled there for two weeks until it was granted a hearing, and later that week the Senate voted to pass it by a 11-8 vote. With only a week left in the session, the bill made its way to the Assembly Education Committee. Because of the short timeframe, the 24-hour rule was suspended for all bills, and the ESA bill was given a hearing and voted out of committee that same day. Then, the bill was read a second time and assigned to the general file for final passage. And finally, the Assembly voted 25-17 to send the bill to Gov. Sandoval for signature.

Student Funding

The Nevada Treasurer’s office will disburse payments to the students’ ESAs on a quarterly basis as determined by the department. For those children with disabilities or students from families with incomes less than 185 percent of the federal poverty level ($44,863 for a family of four), students will receive 100 percent of the statewide average basic support per-pupil, or around $5,700. For families with incomes exceeding 185 percent of the federal poverty level, the funding amount is 90 percent of the statewide average basic support per pupil, or around $5,100. If a child utilizes public school classes, the pro rata share will be withheld for those classes. Any funds that are not spent will be allowed to roll over year to year until a student is no longer eligible to be enrolled in a public school. If an account is closed for any reason, those funds will be distributed back into the general fund.

Student Eligibility

All Nevada public school students who have been enrolled for at least 100 days prior are eligible to receive an account under Nevada’s universal ESA. That translates to roughly 93 percent of all Nevada school-aged children or 453,024 K–12 students. Children who received an ESA in the previous year are allowed continuing eligibility. Private and homeschool students are not eligible for the program.

Regulations on Providers

Existing licensed or exempt private schools are allowed to participate. Distance learning programs that are not offered by the public school, a tutor or tutoring agency, a university, state college or community college within the Nevada system of Higher Education, or a parent who has submitted an application to the state treasurer are also allowed to participate. The treasurer may request additional information to demonstrate that each may serve as a participating entity. The treasurer will establish those rules. From there, each entity can be approved or denied by the treasurer.
If any entity receives more than $50,000 in ESA funds during any school year, the entity must post a surety bond equal to the amount received, or it must demonstrate to the treasurer the ability to pay with unencumbered funds. Receipts must be given for payment for all services rendered to the child.
No entity will be allowed to refund or rebate any payment back to a parent.
All children must complete a nationally norm-referenced test yearly in mathematics and English and report the results to the Nevada Department of Education (DOE). The DOE will then aggregate the data according to grade level, gender, race, and family income level. After three years, the DOE will report ESA student graduation rates.
The treasurer may refuse to allow any entity to continue to participate in the program if they determine that the entity has failed to comply with any provision of the legislation.
The treasurer’s office will make a list of participating entities annually. Additionally, the treasurer will be allowed to freeze or dissolve any accounts for noncompliance by any parent and may give notice for any account of fraud to the Attorney General or district attorney.
Unless otherwise stated in the legislation, nothing in the legislation will be deemed to limit the independence or autonomy of any participating entity.
The treasurer shall adopt any regulations necessary to carry out provisions of this act.

Next Steps

The ESA bill will head to Gov. Sandoval for his signature or veto. The governor has been an avowed proponent of school choice, and earlier in the session signed Nevada’s first tax credit scholarship program.

UPDATE – December 11, 2015

On June 2, 2015, Gov. Brian Sandoval signed Nevada’s groundbreaking, nearly universal school choice bill into law. The treasurer’s office is currently working out the program’s rules.

In August, the American Civil Liberties Union of Nevada filed a lawsuit against the program. To learn more about the lawsuit, click here.

For the most up-to-date information on the program, including rules and regulations, eligibility, and more, visit the program page here.

UPDATE – September 29, 2016

The Nevada Supreme Court issued its consolidated ruling in the two lawsuits against the state’s ESA program today, affirming the constitutionality of the program but calling for a new funding source.

Learn more about the history and details of these lawsuits here.