Lawmakers OK startup funds for Education Savings Accounts, raise concerns about IT contractor

Nevada lawmakers voted along party lines Wednesday to approve $116,000 in startup funds for the state's Education Savings Account program, but they said they were concerned that the contractor likely to build the online system had a revoked state business license.

Grant Hewitt of the state treasurer's office said the issues with the potential contractor, i2Net, stemmed from the company reorganizing under a different name after a divorce. He said the company's owner has a license and vowed to have the situation sorted out by Thursday.

That didn't stop Democrats from voting against the spending during a meeting of the legislative Interim Finance Committee.

"When I looked at the way the state treasurer's moving through the process, I see tons of red flags," said Democratic Assemblywoman Teresa Benitez Thompson. "Talking to vendors who may or may not have actual business licenses ... they're rushing into partnerships that seem, right now, dubious."

"Ultimately, I think it's going to end up costing the taxpayers more by rushing through this process and having to come back and revisit and fix these things," she added.

The final contract will go before the state Board of Examiners for approval in September. Hewitt said the $116,000 is expected to cover costs until April, when the program is expected to start taking in user fees, but the contract up for consideration next month will be longer and larger than that, Hewitt said.

The Education Savings Account program, which was created this spring and has garnered national attention for its wide scope, allows parents to claim much of their child's per-pupil state education funding and use it toward private school tuition or other qualified expenses.

Democrats have been critical of the idea from its inception.

Republicans have praised the program as a breakthrough for school choice, but said they didn't want a repeat of past large-scale IT failures that have plagued other state programs. Nevada cut off an agreement with Xerox Corp. amid failures with the state's online health insurance exchange and cut off a contract this spring with vendor Measured Progress after outages hampered standardized testing aligned with the Common Core.

"If you're saying that these folks are going to be able to do the job, I hope they can. Because we're going to be ones that are going to be taking the heat if it's not," Republican Assemblyman James Oscarson said Wednesday. "This program is far too important to have a failure right out of the gate."