MINUTES OF THE meeting of the
joint SubCommittee on higher education/capital improvements
of the
senate committee on finance
and the
assembly committee on ways and means
Seventy-First Session
May 3, 2001
The Joint Subcommittee on Higher Education/Capital Improvements of the Senate Committee on Finance and the Assembly Committee on Ways and Meanswas called to order by Chairman William J. Raggio at 8:45 a.m., on May 3, 2001, in Room 3137 in the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
SENATE MEMBERS PRESENT:
Senator William J. Raggio, Chairman
Senator Raymond D. Rawson
Senator Bob Coffin
Senator Bernice Mathews
ASSEMBLY MEMBERS PRESENT:
Mr. Morse Arberry Jr., Chairman
Mrs. Barbara K. Cegavske
Mr. Joseph E. Dini, Jr.
Mr. David E. Goldwater
Mr. John W. Marvel (Sitting as alternate for Mr. Lynn C. Hettrick)
Mr. Richard D. Perkins
STAFF MEMBERS PRESENT:
Gary L. Ghiggeri, Senate Fiscal Analyst
Mark W. Stevens, Assembly Fiscal Analyst
Brian M. Burke, Senior Program Analyst
ELizaBeth Root, Committee Secretary
OTHERS PRESENT:
Daniel G. Miles, Vice Chancellor, Finance and Administration, System Administration Office, University and Community College System of Nevada
System of Nevada
Dr. Jane A. Nichols, Chancellor, System Administrative Office, University and Community College System of Nevada
Don Hataway, Budget Analyst, Budget Division, Department of Administration
UNIVERSITY AND COMMUNITY COLLEGE SYSTEM OF NEVADA
UCCSN System Administration – Budget Page UCCSN-1 (Volume 1)
Budget Account 101-2986
Chairman Raggio:
This is the time set for hearing the budgets for the University and Community College System of Nevada (UCCSN). We have had a number of hearings that have raised issues and we would like to go through the adjustments that apparently are necessary as a result of the previous discussions we have had on the proposed budget. I would first like to go through those budgets and see what adjustments are required under the proposed budget.
There have been discussions between staff and the Governor’s office on recommendations for adjustments over the budget. However, with respect to the UCCSN, I would like you, Mr. Hataway, to present the committee what recommendations appear to be forthcoming from the Governor so that we can look at them and give UCCSN an opportunity to respond to the recommendations.
I would like Mr. Burke to lead us through this budget account. We have before us Budget Closing List #2 (Exhibit C). Chancellor Nichols and Mr. Miles, if you would like to sit at the table and join us while we go through these accounts, you are welcome to do so. We are not going to make any decisions on these budgets today, but you may have some input if you feel there is an error in any of these budget accounts. Please call the chair’s attention if you have any comment.
Brian M. Burke, Senior Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau: (Mr. Burke’s brief overview of this agency is in Exhibit C, page 1.)
At the bottom of page 1, labeled “decision items,” is summarized some of the enrollment and technical adjustments that will be described in the closing packet. The bottom right-hand figure on page 1 reflects the technical and enrollment related adjustments that would result in General Fund savings of $9,476,228.
Chairman Raggio:
We will go through the enrollment reprojections and then look at the credits or debits that may require another review. As a result of that, Mr. Burke has indicated, an adjustment would be reflected in the $9,476,228 reduction in General Fund appropriations of the original proposed budget for the biennium. The breakdown of that is $3,688,559 in Fiscal Year (FY) 2002 and $5,787,668 for FY 2003.
Mr. Burke:
The adjusted base budget recommendations for all UCCSN budgets are totaled on page 2 (Exhibit C). Staff is recommending two adjustments. First, there are personnel related technical adjustments necessary in the Great Basin College (GCB), System Computing Services (SCS) and the Western Nevada Community College (WNCC) base budgets. Funding for merit salary adjustments for GBC positions that were not at or below the Assistant Dean level was erroneously omitted in The Executive Budget. Several SCS professional positions were excluded from the merit calculations.
At WNCC, two positions were funded at partial rather than full‑year salaries, while an additional professional position was omitted. In the table (Exhibit C), I show the WNCC, GBC and SCS technical adjustments that would be needed to correct merit increases for those positions, which are additions to this budget.
Chairman Raggio:
Chancellor Nichols, Mr. Miles, most of these, if not all, are matters you may not agree with. However, if there is any disagreement, at any point, please let the subcommittee know.
Mr. Burke:
There was $5.88 million per year of estate tax funding approved for equity adjustments by the 1999 Legislature. These equity adjustments are now part of the base budget of the affected institutions. Unfortunately, they are reflected in the Special Project account, rather than the institution budgets. Committee staff is, therefore, recommending those amounts be pulled out of the Special Projects account and put in the respective campus budgets.
Chairman Raggio:
Unless there are objections, the subcommittee is going to move ahead on that basis.
Mr. Burke:
UCCSN estimates there will be a system wide utility funding shortfall of approximately $5.57 million in the first year and $6.68 million in the second year of the biennium. Previous responses from UCCSN indicated they are relying on access to the “Rainy Day Fund” to alleviate the potential shortfall. At this point, there is no contingency plan should that access be denied.
ASSEMBLY BILL 556: Revises certain provisions governing authority of state board of examiners and requirements for certain agreements for interlocal cooperation between public agencies. (BDR 31-565)
There was a provision in Assembly Bill (A.B.) 556 that would have allowed access to the “Rainy Day Fund” (Fund to Stabilize Operation of State Government) by the Interim Finance Committee (IFC) in the event of a fiscal emergency. However, that provision has been deleted from the bill.
Chairman Raggio:
The decision regarding access to the “Rainy Day Fund” is one we cannot make today. I assume that provision in the bill was discussed in the Assembly and was apparently deleted. I have a question regarding the accuracy of the estimates for the utility shortfalls. They seem to be relatively high at $5.57 million in the first year of the biennium and $6.68 million in the second year. Can you comment on the basis for the computations? Secondly, without access to the “Rainy Day Fund,” what funding remedy might UCCSN anticipate?
This committee favors agencies not having broad access to the “Rainy Day Fund” as it opens the fund to potential abuse. We may have to look at other remedies to cover shortages, rather than rely on this fund.
My first question is how accurate are the utility estimates? None of us know what the rates are going to be, but they do seem high.
Daniel G. Miles, Vice Chancellor, Finance and Administration, System Administration Office, University and Community College System of Nevada System of Nevada:
I agree with your last statement, Mr. Chairman. Nobody knows for sure what the rates will be, or what the Public Utilities Commission is going to end up doing, and what the affect of final legislation this body may pass to impact that factor.
Two months ago, we asked the campuses to forecast their future utility needs based upon information available and to compare that with the amounts budgeted in the Governor’s recommended budget. These are those figures from each campus. There are different issues on each campus. Of course, we have campuses in the north and south, as well as different square footages and capabilities in terms of energy conservation projects and energy retrofit.
In our discussions with the Budget Director in preparing this, the indication was the administration was going to rely on the “Rainy Day Fund” access as well as a major effort in energy retrofit. That will have mixed results within the UCCSN because some of our campuses have completed a major effort in that regard, and so the benefits to be derived might be less than what we could expect.
Chairman Raggio:
The subcommittee would like to see UCCSN’s computations. The computations as to how these figures were derived may be helpful to us.
Secondly, let me reemphasize that, if it is the will of this subcommittee not to allow the UCCSN, the DSA, or other state agencies access to the “Rainy Day Fund” then we will abide by those terms. The ability an agency had in the past to use available revenue for other purposes, then depend on the “Rainy Day Fund” will terminate. UCCSN will have to set up a mechanism to deal with this and use all other available revenue first.
Mr. Miles:
I agree, Mr. Chairman. It would be necessary in this case, only for this limited purpose, and then only if the amounts could be identified.
Chairman Raggio:
That is one decision we will have to make and it will have to be handled in a prudent manner, so that it does not open a wide door.
Mr. Burke:
The M-200 module covers the formula funding calculations. As the subcommittee may recall, General Fund appropriations of $26.9 million in FY 2002 and $37.8 million in FY 2003 were included to fund projected enrollments using the formulas recommended by the Committee to Study the Funding of Higher Education (CSFHE). The recommended budget funds the formulas at 85.75 percent in FY 2002 and 84.59 percent in FY 2003.
Chairman Raggio:
It is my understanding there may be a different recommendation coming in view of the reduction in available funding. We will take that up at a later time. Let us take up student enrollments.
Mr. Burke:
As recommended by the CSFHE, student full-time equivalent (FTE) enrollment projections are now based on a weighted 3-year rolling average, rather than system‑generated projections. The average annual enrollments were significantly lower than the amounts included in the Governor’s recommended budget. The chart entitled, “Projected Average Annual FTE Enrollments Using 3-Year Weighted Average” (Exhibit C, page 3), shows reprojected enrollments for the biennium are substantially lower than those calculated in the Governor’s recommended budget, with the exception of the University of Nevada, Reno (UNR) and GBC. The total difference is a reduction of 2,481 FTE students in FY 2002 and 3,384 students in FY 2003.
Moving on to formula calculations, based on the revised FTE and the headcount projections provided by the UCCSN, significant adjustments are necessary to the M-200 decision modules. Maintaining the Governor’s 85.75 percent and 84.59 percent formula distribution levels results in the formula calculations in the second table entitled, “UCCSN Formula Funding – Governor Recommended vs. Re‑Projected SFTE & Headcount” (Exhibit C, page 2). The total reduction related to the enrollment would be $24,812,880.
Chairman Raggio:
That is based on FY 2002 at $10,863,064 and FY 2003 at $13,949,816, based on both of the previously referenced formulas.
Mr. Burke:
The subcommittee should be aware that $24.8 million is not entirely General Fund revenue. There are also student fee revenues included, as well. When staff discusses the revenue reprojections and General Fund adjustments, using the formula methodology applied against the reduced enrollments, we use the chart on page 4 (Exhibit C). Please note the general reductions in both the General Fund and the revenue. However, this chart also recalculates the revenue based on the matrix agreed upon by committee staff and UCCSN.
The bottom line is the total revenues throughout UCCSN are decreased by $7,292,977 for the UCCSN revenue and General Fund revenue is decreased by $17,519,903.
When the subcommittee does ultimately make decisions on the funding levels for the UCCSN, staff will seek authority to make the FTE position modifications necessary. We will work closely with the Budget Division and UCCSN on that matter.
The next item is some formula calculation corrections that are needed.
Chairman Raggio:
For assistance to the subcommittee, Mr. Miles and Dr. Nichols, as we go through these, keep looking back to page 1 (Exhibit C) because that chart will reflect the changes, the additions and the subtractions, from the enrollment reprojection figure to arrive at the figure at the bottom of the chart.
Mr. Burke:
Referring to page 1 of Exhibit D, the UCCSN agency-requested budget has a miscalculation on the conversion of the student credit hours into student FTE counts for UNR and the University of Nevada, Las Vegas (UNLV). The credit hours were applied uniformly, rather than using the established conversion factors and that resulted in an overcount for the undergraduates and an undercount for the graduate students at the universities. The net result to correct the student credit hour issue is $3,438,249 for the biennium, which is $1,849,048 for FY 2002 and $1,589,201 for FY 2003.
Chairman Raggio:
So, that would be an “add back.”
Mr. Burke:
That is correct, Mr. Chairman. Referring to the community colleges, again based upon the recommendation of the CSFHE, there was a recommendation to include equipment funding for existing faulty FTE. Unfortunately, when the amounts were calculated, they excluded the part-time component in the FTE calculation. To correct the imbalance for the community colleges, the subcommittee would have to add $4,214,001 for the biennium.
Chairman Raggio:
That is itemized for the subcommittee in Exhibit D. The Community College of Southern Nevada (CCSN) would be $2,640,145; the Truckee Meadows Community College (TMCC) would be $798,341; Western Nevada Community College (WNCC) would be $475,719 and GBC would be $299,795. These are all “add backs.”
Mr. Burke:
Module M-201 is requested for new space for operations and maintenance. Anticipated occupancy dates were delayed and square footage estimates were reduced, which resulted in potential new space cost savings. Conversely, there were several new space omissions that would result in add backs. If all of the new space adjustments are made, there would be a net General Fund reduction of $721,704 for FY 2002 and $716,860 for FY 2003.
Chairman Raggio:
Mr. Miles, the subcommittee has the information that specifically concerns each institution, and I think you are also familiar with this information.
Mr. Miles:
Yes, I am.
Mr. Burke:
Regarding the recharge, there is a $1.71 million funding omission in The Executive Budget related to the recharge revenues for Operations and Maintenance at UNR. The UNR budget displays the recharge revenues coming into the UNR budget, but the General Fund appropriations that would fund those costs and supply the revenues to UNR were not included in the affected budget accounts.
Chairman Raggio:
Is that the only facility budget in which that omission occurred?
Mr. Burke:
That is the only recharge change that I am aware of, Mr. Chairman.
Chairman Raggio:
Is that your understanding, Mr. Miles?
Mr. Miles:
Yes, Sir.
Chairman Raggio:
What is the adjustment?
Mr. Burke:
This would be an “add back” of $844,776 in FY 2002 and $869,007 in FY 2003. As to new space rental, which is in module M-202, the Governor recommends a total of $647,026 in the first year of the biennium and $653,110 in the second year. This would fund new space rentals at System Administration, GBC and TMCC. For the System Administration that would include leased space in Las Vegas to provide 8 new offices for the UCCSN’s General Counsel and staff. GBC’s portion would house various programs and classes.
The bulk of the funding in this module of $567,450 per year is directed to TMCC to fund a temporary modular structure to house the facilities office during the construction of the Student Center. There would also be an additional classroom at the Incline Village Center, two classrooms and an office space on Neil Road for English as a Second Language (ESL) and technology instruction, and 30,000 square feet of additional space at the Edison Campus. They also have a recommendation for conversion of the Old Town Mall lease to a master lease purchase for the center portion of the mall.
SENATE BILL 497: Authorizes issuance of general obligation bonds by state for purchase of certain facilities. (BDR S-1475)
Mr. Burke:
S.B. 497 would authorize the issuance of general obligation bonds of not more than $8.5 million for the purpose of acquiring the Old Town Mall facility. The bill specifies that UCCSN would pay to the State Treasurer the lesser amount appropriated either for rent payments in this module, or the amount of principal and interest that accrues on the bonds. There would be one technical adjustment that would be an “add back” of $6,468 in FY 2002 and $6,786 in FY 2003 to reflect a change in the system administration lease.
Chairman Raggio:
Mr. Miles, you appeared before the Senate Committee on Finance on S.B. 497. Since that was heard, the Nevada Supreme Court has delivered the decision regarding the Employers Insurance Company of Nevada. The decision (EICON v. State Board of Examiners) reverses earlier decisions and indicates that, under certain circumstances, a long lease purchase agreement is not includable in the overall debt limit. I am not sure how that is being looked at currently and whether that decision accommodates the proposal to convert the Old Town Mall lease to a lease purchase agreement. The issue, of course, is whether that will be available or not, which does not necessarily affect this situation, but I bring it up because it was referenced here.
Mr. Miles:
Our counsel is looking into that issue, Mr. Chairman. We will provide the information to the subcommittee as quickly as possible.
SENATE BILL 461: Makes appropriation to University and Community College System of Nevada for new and replacement equipment in computing center. (BDR S-1428)
System Computing Center– Budget Page UCCSN-11 (Volume 1)
Budget Account 101-2991
Mr. Burke:
The next item is the system computing services (SCS) modules. There are a number of modules and, also, a “one-shot” appropriation that affects the SCS. The Governor recommends a $2.6 million “one-shot” appropriation in S.B. 461. The funding would provide hardware and software upgrades in support of the Student Information System (SIS) and the Human Resources/Financial System, replacement equipment to support telephone registration, and upgrades to network capacity.
In concert with the “one-shot” appropriation, modules (M-203 and M-204) address the technology capacity system-wide. The funding would support growth in administrative processing and software applications, increase network capacity, improve reliability and security of the network, and investigate new telecommunication technologies to ensure efficient system-wide implementation.
These modules include several positions, including 1 Database Administrator for administrative applications to address the Student Information and Human Resources/Financial Systems, 2 Digital Network Technicians for expansion of network data capacity, and 2 Digital Network Technicians and 1 Program Assistant to support expansion of video capacity.
There were some changes. I believe the Senate Committee on Finance heard the bill on the “one-shot,” about some reductions. Those reductions would reduce the cost both in the “one-shot” and the ongoing modules. In the “one-shot,” the cost would be reduced by $80,200 and the ongoing cost would be reduced by $72,270 for the biennium.
The other modules that affect the SCS are M-206, which recommends funding for anticipated cost increases for software licensing agreements and hardware maintenance. Also, there are General Fund appropriations of $614,347 per year (module E300) to fund ongoing maintenance and connectivity costs that were previously funded through National Science Foundation (NSF) and Computer Information Science and Engineering (CISE) grants.
Chairman Raggio:
Going back to page 1 (Exhibit C), what is the net change? I understand we are not making a decision whether to fund in this way, but if we accept those modules with these adjustments, is there a net change on page 1? Is that the $72,270 savings for the biennium?
Mr. Burke:
That is correct, Mr. Chairman, that is the ongoing savings.
Chairman Raggio:
Modules M-206 and M-300 would not change, is that correct? The question of whether they were previously funded should be considered.
Mr. Burke:
That is correct, there are no adjustments to those modules, Mr. Chairman.
Chairman Raggio:
Is there any comment on that, or the funding source through NSF and CISE grants?
Are those still available?
Dr. Nichols:
That was part of the “Internet 2” grant that was received by the state to get us online in a research capacity. There is no continued funding available from the NSF.
UNLV Law School– Budget Page UCCSN-52 (Volume 1)
Budget Account 101-2992
Mr. Burke:
In the middle of page 7 (Exhibit C), entitled “M-205 Law School Growth,” in The Executive Budget there is $841,262 in FY 2002 and $1.06 million in FY 2003 to add a total of 9 professional faculty and classified support positions to respond to the anticipated enrollment growth at the UNLV Law School. The funding would support 3 new faculty positions, 1 new reference librarian, 1 new faculty secretary and 1 audio-visual support position in the first year of the biennium. In the second year, there would be an additional faculty position along with a new circulation clerk and a technical clerk and a technical services aide.
Chairman Raggio:
So, there is no adjustment necessary to M-205?
Mr. Burke:
That is correct, Mr. Chairman, there is no recommended adjustment.
Dental School – UNLV– Budget Page UCCSN-55 (Volume 1)
Budget Account 101-3002
Mr. Burke:
In module M-207, related to the Dental School, the Governor recommends $722,167 in FY 2002 and $2.84 million in FY 2003 to fund dental school initiatives. In the first year of the biennium, the Governor funds the entire increase with dental practice revenue, while second-year increases are funded with a combination of dental practice and tuition revenues.
The subcommittee should note that UCCSN’s agency request budget included General Fund appropriations of $473,529 in FY 2002 and $1.34 million in FY 2003. At the April 10, 2001 subcommittee hearing, Dr. Carol C. Harter, President, UNLV, UCCSN, revised the amount of state support requested to $3 million per year. No General Fund is recommended in The Executive Budget.
In FY 2002, module M-207 includes the addition of 2 new professional positions and the elimination of 1 classified position in the dean’s office, the addition of 2 new student services positions, 2 new positions in the dental school business office, 1 professional and 1 classified position, to support the basic sciences instruction function, and funding for library operating costs. In FY 2003, an additional 13 new professional and 2 classified positions are recommended in the instruction function to support basic, clinical and patient care services.
Chairman Raggio:
One issue that has been discussed is the likelihood of the school being sustained with dental practice revenues or a combination of dental practice revenues and tuition, which is not realistic. Dr. Carol C. Harter, President, University of Nevada, Las Vegas, University and Community College System of Nevada, indicated there would have to be some General Fund appropriation. Module M-207 contains a number of new positions. We need to revisit this module to determine what is the minimum requirement to sustain the continuation of the dental school. We will need to have this information for the next hearing of the subcommittee.
Mr. Burke:
The M-301 module is the classified cost of living adjustment (COLA) and addition of one step to the Classified Pay Plan. The Governor recommends General Fund appropriation of $5.3 million in FY 2002 and $9.09 million in FY 2003 to provide classified COLA increases of 4 percent in each year of the biennium, and to fund the costs associated with adding one step to the classified pay plan effective FY 2002.
Chairman Raggio:
This is the same as the Classified Pay Plan that is being proposed for all state employees?
Mr. Burke:
Yes, Mr. Chairman, it is the same general plan being proposed for classified state employees throughout the state.
Chairman Raggio:
The committees have tentatively agreed, and it would apply here, that all of the COLA money required for the state workers pay would be pooled in a pay bill and the bill would be utilized in one format. This would more effectively control the usage of these funds.
Mr. Burke:
M-305 is the COLA recommended by the Governor. The module includes appropriations of $5.09 million in FY 2002 and $10.49 million in FY 2003 to provide funding for a 2 percent COLA for professional, part-time and graduate assistant positions within the UCCSN. The Governor recommends expenditure flexibility when using formula funding in order to fund an additional 2 percent of the recommended 4 percent COLA.
Chairman Raggio:
We discussed this item at great length, so I do not know whether we should revisit it again. We have been dealing with the issue as to whether UCCSN is capable of augmenting the funding to reach a desirable 4 percent for each year. We are going to talk about it when we hear the latest recommendations from the Governor, but at this point, is there any discussion?
Dr. Jane A. Nichols, Chancellor, System Administrative Office, University and Community College System of Nevada:
No, Mr. Chairman, and I believe 2 percent would have to come out of the nonformula budgets, as well as the formula budgets. The nonformula budgets include the School of Medicine, the School of Law, the System Computing Services, and the Agriculture Extension and so forth.
Chairman Raggio:
Dr. Nichols, is your point that it is difficult for those nonformula budgets to accommodate this 2 percent enhancement?
Dr. Nichols:
Yes. The nonformula budgets are not getting any enhancement in this budget. So, it will be difficult for them to accommodate the additional 2 percent. The other statement is as our formula percentage goes down, if it does, it then becomes difficult or impossible for us to accommodate the 2 percent.
Chairman Raggio:
Dr. Nichols, as you know the Governor originally included the additional 2 percent enhancement in this budget. UCCSN was invited by the Governor in the preparation of the budget to determine whether, in fact, it could augment the Governor’s proposal, with the additional 2 percent COLA.
Dr. Nichols:
The Governor’s 2 percent is in our 85 percent of the formula. Now, with the 85 percent funded, yes, we were certainly going to try to come up with a match.
Chairman Raggio:
Dr. Nichols, you have not reached a final decision as to your capability to match the 2 percent enhancement even at that level?
Dr. Nichols:
It was very difficult even at that level because when we talked to the Governor we were talking about the 3 percent, which was on the table at that time. That was the amount recommended by the Board of Regents. As that percentage of the formula funded, if it were to go down, then that possibility disappears.
Chairman Raggio:
All right, we will discuss the additional 2 percent at another hearing. We need not discuss that at further length today. Let us go to the issue of gender equity.
Intercollegiate Athletics – UNR Budget Page UCCSN-21 (Volume 1)
Budget Account 101-2983
Mr. Burke:
At the bottom of page 8 (Exhibit C) is module M-594, which is the gender equity discussion. The Governor recommended General Fund appropriations of approximately $1.08 million in the first and second year of the biennium. That would improve Title IX Education Amendments of 1972 compliance in support of female athletes. The Executive Budget reflects a distribution of $725,000 in FY 2002 and $732,876 in FY 2003 to UNLV’s intercollegiate athletics program and $350,000 per year to UNR’s intercollegiate athletics program.
UCCSN transmitted an amended request that proposes to redistribute the recommended gender equity funding to reflect equal funding allocations for UNR and UNLV. Under the new distribution, each campus would receive $537,500 in FY 2002 and $541,438 in FY 2003.
Chairman Raggio:
Regarding gender equity, the base budget currently contained, in addition to the amount in decision unit M-594, $500,000 in estate tax allocations per year per institution, with $50,000 of General Fund appropriations per year per institution. Is the biennium total amount of $2.2 million included in the base budget?
Mr. Burke:
Yes, it represents the total for the biennium, Mr. Chairman.
Chairman Raggio:
So, in the base budget there is $2.2 million for gender equity, and this would be a new augmentation in the amounts of $537,500 for each institution in the first year and $541,000 in the second year?
Mr. Burke:
Yes.
Senator Coffin:
I query the Chancellor that if the two institutions got together and decided that they could help each other, would they? In other words, if UNLV would reduce its allocation and UNR would increase its allocation, did they negotiate that to help each other?
Dr. Nichols:
When the original budget request came from UCCSN, it came with a larger amount for UNLV and a smaller amount for UNR. Historically the two institutions have worked together on gender equity issues and had identified similar compliance requests with the Title IX requirements. When it was brought to our attention, we asked the two campuses to work together for a similar amount for each, which we considered appropriate and UNLV did that, arriving at a similar amount.
Senator Coffin:
Noting that UNLV is substantially larger than UNR, are they offering to include the same number of women in athletic sports?
Dr. Nichols:
There are larger numbers of women at UNLV. The problem that we face is the compliance requirements are still there and we are still below them. Each institution is trying to reach the level of full funding. At some point, UNLV may be requesting revenue and UNR will not because further funding will be needed for UNLV. But at this point, we are trying to catch up.
Senator Coffin:
I do not mind playing catch up with UNR if they are below required levels. If they need an extra $200,000 I would not mind increasing that amount for them, but I am curious as to the rationale reached for reducing the amount for UNLV, which has the greater need, and raising the amount for UNR, and then arriving at equal levels for the two campuses.
Dr. Nichols:
That is the rationale. They are both behind required federal levels. Both UNLV and UNR have greater needs than this request reflects. Until we can build them up to the required level they need to be, it seems appropriate to keep equal to maintain progress in gender equity levels.
Senator Coffin:
Did the Board of Regents vote to make this reallocation?
Dr. Nichols:
No, the Board of Regents did not vote to make this reallocation.
Mr. Perkins:
Did you say that you expect at some point UNR may find itself in compliance and UNLV will possibly be coming back for additional funds?
Dr. Nichols:
It seems logical the demands on the larger school will be greater than the demands on the smaller school. I would anticipate that would be happening in the future.
Mr. Perkins:
I echo the concerns of Senator Coffin in that, if we are redistributing equally and one is going to attain compliance quicker than the other institution, it flies against what the original recommendation was. Would that not be the case?
Dr. Nichols:
I look at the perspective of the needs of both institutions, which are severe. The history of UCCSN requesting revenue from the Legislature for gender equity, which has been a joint effort on part of both institutions, it appears this solution is a fair one.
Mr. Perkins:
Dr. Nichols, your presentation regarding gender equity for UNLV and UNR does not reconcile with your previous statements to me that one institution would attain compliance quicker than the other. We should bring both institutions in line equally regarding gender equity levels and, even though they were disparate, equal allocations would bring them along more uniformly than the recommendation you have submitted today for these two institutions.
Mr. Burke:
The next item is module E-225, the performance funding. Consistent with the recommendation of the CSFHE, the Governor recommends an allocation of $3 million of estate tax revenues in FY 2003 for performance funding. During previous budget hearings, the subcommittee discussed the general concepts upon which the UCCSN proposed to distribute the performance funding and noted that a comprehensive performance-funding plan has not been developed.
On April 10, 2001, Chancellor Nichols testified that, given the inability to fund essential programs, she recommends redirecting the $3 million of performance funding for other purposes. Subsequent to the hearing, UCCSN wrote that the Board of Regents requests the previous $3 million performance funding allocation would be reduced to $1 million and a new request for $3 million be added for Experimental Program to Stimulate Competitive Research match. This would increase the total estate tax funding in module E-225 from $3 million to $4 million.
Chairman Raggio:
Is there any discussion on this issue? If there is no discussion, please continue, Mr. Burke.
Mr. Burke:
Regarding student fees, the Governor recommends resident fee and nonresident tuition increases of more than 3 percent per year at each institution as proposed by the UCCSN Board of Regents. A summary of the recommended student fees is on the bottom of page 9 (Exhibit C).
UCCSN proposes to allocate $1 of each university increase ($2 for the biennium) to the capital improvement budgets and 50 cents of each community college increase ($1 for the biennium) to the general improvement budget. As requested by the subcommittee, Good Neighbor Enrollment Fee information is provided under Tab 1 of the UCCSN’s April 19, 2001 response packet (Exhibit D).
Senator Coffin:
I would like to talk about the GNF. We have received information from Mr. Burke, which indicated that there were 1,164 students that are taking advantage of the Good Neighbor program (GN program). The GN program has a substantial cost. That program was started in the mid-1980s when the state and UCCSN had a lot of revenues and we were feeling generous toward neighboring counties. It appears to me that, if we terminated that program or began to phase that program out, we could save more than $2 million a year. My calculations indicate that UCCSN would save $1.9 million just at the two universities.
I am not saying this forum is the place to make a final decision today on the GN policy. However, today we ought to place this question before the chancellor as to whether UCCSN can afford this program. It is a good program, but we have students traveling from all over California to attend our universities. Presently, we have students from Arizona, Utah, and the balance are from eastern Sierra and northern California. There are a number of students coming into this program at UNLV from San Bernardino County, California. But the issue is, the fee is so low, it is a magnet to these students and there are institutions in those areas.
Chancellor, do you feel you can justify continuing the GN program in view of the shortfall in revenue for UCCSN this biennium?
Dr. Nichols:
Senator Coffin, we have agreed to take a look at this program as part of our overall study of tuition and fees. The savings you indicate would be less than you stated because the number of students who would come into this program would be less. We will be able to arrive at an estimated percentage of what we believe will happen without the GN policy. We have to look at the public policy issue of serving students who live and work in our state and live on the border between Nevada and another state. Also to be considered is how expansive the definition of the GN policy should be and whether to limit this policy more carefully in some manner in the future.
Senator Coffin:
Dr. Nichols, when you say you are going to take a look at this program, what do you mean in terms of time? The subcommittee obviously needs to make a decision on the UCCSN budgets.
Dr. Nichols:
Senator Coffin, we are launching the RAND Corporation report. Part of that report is a complete study of UCCSN’s tuition and fees, including special fees and whether we need to completely restructure our policy in those areas. We will have that report prepared for the next biennial budget. Certainly we are cognizant of the need to find revenue sources.
Senator Coffin:
This is my opinion, but in a period of a few hours you have been given a huge cut in your budgets. It does not seem to me that it should take 2 years to figure out how to cope with the loss of revenue relative to the potential impact of changing the GN policy now.
The point is that decisions have been made within a few hours to cut substantial sums from UCCSN’s budget. I do not believe you need to wait 2 years to decide how to counteract them. This is a place to serve Nevada students. Why should we be doing a favor to California and other states at the expense of Nevada students?
Dr. Nichols:
Senator, we will certainly consider your suggestion. Today, if you will give us time to review the emergency measures we must take to address these budget shortfalls, we will place your suggestion on the list to review. Any changes made to the GN program require a phasing in process.
Senator Coffin:
I understand that we have an obligation to the students who may be in the program currently. The issue is how long we could continue the GN program in light of UCCSN’s needs, and UCCSN’s budget emergency.
Dr. Nichols:
Thank you, Senator. We will add this issue to the list of matters to be addressed.
Mr. Burke:
The next item on the top of page 10 (Exhibit C) is interim revenue augmentations. UCCSN has written two follow-up responses that argue against restricting interim revenue augmentations. In an April 19, 2001 letter, UCCSN wrote that, rather than tighten the permissible augmentations available to UCCSN when revenues exceed budgeted levels, the subcommittee might consider expanding those opportunities. In a subsequent April 23, 2001 letter to committee staff, the UCCSN Vice Chancellor of Finance stated that the Board of Regents proposes to allow funds that represent receipts in excess of the budgeted level that would normally revert to the General Fund to be directed instead to the current and future energy cost crisis.
The Board of Regents propose to extend the authority to expend excess revenues beyond student fee revenues to other sources of revenue, such as indirect cost recovery and investment income. They are not talking about expanding the 75:25 indirect cost recovery. They are talking about budgeted indirect cost recovery that, if the amount that comes in that exceeds the budgeted amount, they would not be allowed to use those. The UCCSN proposes this action as a possible alternative to seeking supplemental appropriations or other funding sources for these added utility costs.
The Vice Chancellor indicated UNR will revert in excess of $500,000 during FY 2001 and face possible budget shortfalls in energy costs of approximately $1 million. UCCSN’s proposed action would allow UNR to direct the excess funds to the energy cost overrun. To achieve the requested results, the Vice Chancellor proposed to include the following language in the General Authorizations Act to expand allowable revenues that the IFC can augment to include all others for the limited purpose of addressing the energy cost:
Notwithstanding the provisions of Section 5 of this act, the University and Community College System of Nevada may expend, with the approval of the Interim Finance Committee, any revenues that exceed the level set in the Legislatively approved budget for that revenue source to meet the cost of energy that exceeds the amount set for that purpose in the Legislatively approved budget.
The UCCSN proposes this section would need to be effective upon passage and approval for it to be used this fiscal year. The Vice Chancellor indicates the UCCSN still supports the Budget Director’s efforts to gain access to the “Rainy Day Fund” for energy cost overruns.
Chairman Raggio:
That is a decision we will have to review.
ASSEMBLY BILL 220 0F THE SEVENTIETH SESSION: Makes appropriation to advisory committee for needs assessment and implementation plan for 4‑year state college in Henderson, Nevada. (BDR S-1231)
Nevada State College at Henderson – Budget Page UCCSN-80 (Volume 1)
Budget Account 101-3005
Mr. Burke:
Next is the policy decision for the Nevada State College at Henderson (NSC), which is included in A.B. 220. To examine locating a four-year college in Henderson, an advisory committee was appointed and given an appropriation of $500,000 for a needs assessment and implementation plan. From its study, UCCSN estimates a total of 1,000 FTE students would enroll at NSC at Henderson during the first year of operation.
Under other decision items, the first topic is nonresident fee increases. UCCSN proposed additional nonresident fee increases beyond the amount recommended by the Governor for the second year of the upcoming biennium. At the universities, the proposed increase is $335 per year and at the community colleges, the increase is $25 per credit for part-time nonresident students. That would generate an additional $1,506,741 million in nonresident revenues, which would offset General Fund revenue.
Under item number 2 on page 11 (Exhibit C) is the Law School tuition increase. The subcommittee previously discussed the law school has not had a fee increase since its inception. The subcommittee noted that if the law school increased tuition by 3.5 percent that would be commensurate with other recommended UCCSN fee increases. With this increase, approximately $87,088 and $177,352 in additional fee revenues would be generated in FY 2002 and FY 2003, respectively.
Subsequent to that budget hearing, UNLV reported it does not believe the Law School can implement a tuition increase in time for the next academic year in FY 2002 because current tuition schedules have been published and made available to both the prospective law school applicants and the school’s continuing students. So, the increase would likely only be practical in the second year.
UNLV also noted that comparative nonresident tuition data for neighboring states indicated that, with the exception of New Mexico and Colorado, nonresident rates are significantly lower than UNLV’s Law School.
The next decision unit is the “hold harmless” provision, stating when institutions are funded at less than 100 percent of the formula, they would be allowed to retain their base funding levels when the formula recommendations fall below the base amount. Using the UCCSN’s definition of the “hold harmless” clause, the revised enrollment figures generate the hold harmless amounts for TMCC and WNCC at the 85.75 percent and 84.59 percent formula levels on page 12 (Exhibit C). That would be an “add on” of $1,626,851. If the subcommittee chooses to fund the “hold harmless” provision, committee staff recommends it be funded with estate tax as a “one-shot” type appropriation and subject to the two biennia provision.
Senator Coffin:
Mr. Chairman, I want to ask the chancellor how the new recast budgets affect other institutions relative to the “hold harmless,” such as UNLV and CCSN?
Chairman Raggio:
This is the “hold harmless” under the proposed budget originally submitted. We have not yet heard any of the new recommendations. Senator Coffin’s question would be appropriate when we hear from the Governor regarding his recommendations for change. That has not been communicated yet. Mr. Hataway is here today to give us those recommendations.
UCCSN – Special Projects– Budget Page UCCSN-6 (Volume 1)
Budget Account 101-2977
Mr. Burke:
Item 4 is special project COLA on page 12 (Exhibit C). There are a number of UCCSN employees assigned to the Special Projects account that were omitted from the merit and COLA in the Governor’s recommended budget. UCCSN is seeking consideration for General Fund appropriations of $13,219 in FY 2002 and $27,039 in FY 2003 to support merit and COLA for the Manufacturing Assistance Program positions assigned to the Special Projects budget. UCCSN also requests additional estate tax funds of $356,415 in FY 2002 and $731,850 in FY 2003 for estate tax funded positions assigned to the Special Projects budget.
The final decision unit issue is taxonomy on page 13 (Exhibit C). There are some inconsistencies among the UCCSN institutions in terms of the taxonomy or method employed to classify courses within the instructional formula matrix. The student‑to-faculty ratios are driven in part by the cost classifications. UCCSN has provided under tab 2 (Exhibit D) a response that the system has participated in an analysis of the distribution of student credit hours using the recommended course classification. UCCSN’s position is to prudently implement changes to the funding mechanism only after substantive research has been completed and the financial implications are thoroughly understood.
The UCCSN suggests that, to facilitate the timely closing of UCCSN’s budgets, the UCCSN would support a recommendation to close the institutional budgets with a Letter of Intent requesting further analysis be completed during the interim to address formula ratio adjustments, including the cost classification.
Chairman Raggio:
That completes the non-budget issues. The subcommittee would now like to hear from the Governor’s representative on recommended changes. Everyone in this room is aware of the report from the Economic Forum and I would like to hear from the Governor’s office regarding any recommendations that pertain to the UCCSN budgets.
Don Hataway, Budget Analyst, Budget Division, Department of Administration:
Thank you for allowing me to give you what the Governor is recommending in his modifications. Let me start by saying that when The Executive Budget was originally submitted to you for consideration, it was done with a commitment that if there were any changes from the Economic Forum decisions in December 2000 and May 2001, we would provide this subcommittee with our recommended changes. On the basis of past fiscal years, we were anticipating that would be positive. However, the Governor is not stepping back from that offer because we are in a negative situation.
So, with that in mind, I would like to go through a series of issues. The main issue is the budget reductions or budget modifications because they do contain a series of both pluses and minuses. I draw your attention back to Mr. Burke’s page 1 summary at the bottom (Exhibit C). With a couple of exceptions, we are recommending support of all of those adjustments. I was not aware of the SCS Merit Correction and, I am sure once I have an opportunity to review it, we will agree to that entry.
Our overall recommended adjustment to the UCCSN budget including the items you see on page 1 (Exhibit C) for FY 2002 is a total of $18,806,970.
Chairman Raggio:
Is that all General Fund appropriation?
Mr. Hataway:
Yes. That includes the pluses and minuses that are on the page. That includes reducing the formulas from what was in The Executive Budget to approximately 82.49 percent, which would be a $15,435,000 savings.
Chairman Raggio:
The 82.49 percent would essentially be a further reduction across the UCCSN budget.
Mr. Hataway:
Yes, that is correct, Mr. Chairman. In FY 2003, we are recommending a reduction to approximately 82.04 percent, which represents a savings of $12,559,418. So, if you take those two figures, plus the adjustments that Mr. Burke outlined on page 1 (Exhibit C), we come up with $18,806,970 and $19,574,695. Those figures would be adjusted with the SCS Merit corrections. That, in essence, is what is reflected on the page 1 summary (Exhibit C) Mr. Burke previously presented, plus $12,559,418 adjustment in the formulas.
In regard to the “hold harmless” issue, we are recommending that any “hold harmless” revenue come from estate tax revenues. We recognize the difference in definition. Our original projection was based upon what the formula report indicated to use the base budget. But, I recognize that things that are done in a study scenario versus real life scenario are not necessarily the same.
Using the UCCSN definition, we project that the “hold harmless” would be $3,876,000 in the first year and $2,390,000 in the second year. Those would involve the institutions of TMCC, WNCC, Community College System of Nevada (CCSN) and UNLV. The further down the formulas are reduced, the more schools that are eligible. Reducing it to that level, initially as Mr. Burke indicated, reported it was TMCC and WNCC. By going down to this level, CCSN and UNLV are added.
As to the COLA, we have no recommended modifications. This goes beyond the UCCSN budget, but it involves the university budget. There are no recommended changes to COLA for any employed group in the state, which would include classified employees, step 9, COLA and the professional class at the university. Then there are a myriad of special adjustments for parole and probation officers, etc. that there is no change recommended for any of those salary adjustments within the budget.
The Governor stands by his original support. It is more difficult, obviously, as time goes on, to UCCSN if they can find through fundamental review or formula dollars or any other sources for COLAs beyond the 2 percent that is built into the budget. The Governor would still support that effort, but there are no recommended changes related to the 2 percent each year of the biennium that is built in for UCCSN professionals.
In regard to the “Rainy Day Fund”, the Governor has empathy for those individuals that are concerned about opening the door by any means to that source. However, the Governor has authorized me to submit to you a very tightly worded section that we would propose adding to the Appropriations Bill in this regard. Basically, what we propose, not only for UCCSN but other state agencies, is to apply the same COLAs for FY 2001 that was applied for FY 2000. The impact of energy was just starting to appear in FY 2000 and when we were completing The Executive Budget, we had no anticipation of what could happen in 2001. Therefore, the percentage of COLA increases for electricity and natural gas was applied to the most recent numbers in FY 2002.
We also propose, once the actual costs are known for FY 2001, applying those same inflationary increases and whatever the difference is between what is in the legislatively approved budgets for natural gas and electricity and the new calculations, that is the only amount taken from the “Rainy Day Fund” with the approval of the IFC. We will be happy to work with committee staff on wording if you would embrace that recommendation.
In regard to the use of 2001 excess dollars, the funding flexibility that UCCSN has requested, we have not talked to the Governor about that issue. However, I can tell you that in our projections for reversions, we did not anticipate any reversions from the UCCSN. That is primarily based upon history. UCCSN has not reverted many dollars over the past few biennia.
Chairman Raggio:
First, we will need committee staff to work with you and UCCSN on what the specific amounts would be with reference to the “hold harmless” if that recommendation is going to be followed.
Mr. Hataway:
It would require a work program in a bill draft request and for UCCSN to submit a work program, just like they have done in the past for excess student fees to the IFC for approval.
Chairman Raggio:
You are talking about the utility costs. I am talking about the “hold harmless” provision. We will need those figures.
Mr. Hataway:
Our calculations are based upon what we think the UCCSN definition is at the 82.49 percent and 82.04 percent would be $3.9 million in the first year of the biennium and almost $2.4 million in the second year. But, we will work with committee staff.
Chairman Raggio:
There is disagreement as to exactly how that “hold harmless” applies to whatever base calculation we are talking about.
SENATE BILL 460: Makes appropriation to University and Community College System of Nevada for operation of Harry Reid Center for Environmental Studies at University of Nevada, Las Vegas (BDR S-1427)
SENATE BILL 461: Makes appropriation to University and Community College System of Nevada for new and replacement equipment in computing center. (BDR S-1428)
Mr. Hataway:
My only other comment, in addition to the FY 2002 and FY 2003 recommendations, is there were two recommendations for the “one-shot” appropriations in FY 2001. Mr. Burke has already mentioned one, being the $80,200 adjustment to S.B. 461 that has already been testified to based upon revised estimates. The only other one is the withdrawal of support for S.B. 460.
Chairman Raggio:
Those are further recommendations for FY 2001 for withdrawals of support from the “one-shot” list?
Mr. Hataway:
Yes.
Chairman Raggio:
First, I would like to hear from the UCCSN on any response they might have on these recommendations.
Dr. Nichols:
This is the first opportunity we have had to hear exactly what this recommendation is and we certainly need some time to respond.
Chairman Raggio:
In view of the changes in the proposed budget and the recommendations that we have heard today, we are not going to close UCCSN budgets today. Tentatively, we will schedule closure for UCCSN budget accounts on Friday, May 11, 2001. This will give everyone an opportunity to cope with the proposed recommendations. This subcommittee invites any comments you may have at this point. Certainly you are invited to present any further information next week. However, this might be an appropriate time to hear your initial comments.
Dr. Nichols:
The information regarding recommendations to the budget is a severe blow to UCCSN. We would like time to try to find strategies to allow us to cope with this. This places institutions in a situation where they basically are getting no new funding. They are getting what they have this year plus the maintenance, whatever we agree that is. Basically, that is what it takes to keep doing business the way they are.
At the same time we are facing the issue that all of those institutions have significant enrollment growths projected for the next year. It is, therefore, essential we have time to come up with strategies we can present to this subcommittee.
The other issue is the 2 percent COLA. This subcommittee cannot expect an institution to lay off faculty and staff to give a pay raise and, that is what we are looking at. So, we have to have time to come back to the subcommittee.
Senator Coffin:
You have a Board of Regents meeting scheduled for a week from today. Does that interfere with your ability to be able to prepare not only for the subcommittee’s meeting next Friday, but the Board of Regents meeting? What I am suggesting is you accelerate or recommend to the Board of Regents they reschedule their meeting so they might also be able to participate in this subcommittee meeting next Friday. It appears as elected officials they have a right to have a say in this budget process.
Dr. Nichols:
I do not believe it is possible with public notice for us to move that meeting, but we certainly will take a look at that option. We will have a plan put together with the presidents’ input, and then consultation with the Board of Regents that they could sign off on. In the interim, we can be working with committee staff in preparation for UCCSN’s next hearing on these issues. We do need the Board of Regents to take action and give us direction on these budget issues. This is potentially a situation as serious as financial exigency on some of our campuses. We are going to have to look very carefully at what the Board of Regents want us to do.
Senator Coffin:
My suggestion would be to give the Board of Regents notice today. Advise them they would be better served to schedule a meeting for earlier in the week because the subcommittee wants the Board of Regents to be in on your solution. Otherwise, they will have the right to reverse your action, as well as any action the subcommittee endorses.
Dr. Nichols:
They are going to be in shock, as I am. Together, we all have to find solutions. We will move that meeting up, if possible. We certainly will keep the Board of Regents informed as we look at potential options. I cannot promise we can move that meeting date, although we will do the best we can.
Chairman Raggio:
Do these modifications represent a substantial increase in the UCCSN budget?
Mr. Hataway:
There are additional increases in the UCCSN budget. The Governor’s office and this subcommittee have been primarily concentrating on how we balance this budget more than potential impacts of limited revenue on various campuses. There were certain priorities the Governor had, one of which was to maintain the salary adjustments that were built into the budget, maintain the K-12 situation, although there are recommended modifications there, and to maintain the human resource recommendations that are in the budget. This is not an easy situation, but based upon the priorities that the Governor was working with, this is what we had to recommend.
Chairman Raggio adjourned the hearing at 10:28 a.m.
RESPECTFULLY SUBMITTED:
ElizaBeth Root
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE:
Mr. Morse Arberry Jr., Chairman
DATE: