MINUTES OF THE meeting
of the
ASSEMBLY committee on Ways and Means and
SENATE COMMITTEE ON FINANCE
JOINT SUBCOMMITTEE ON HIGHER EDUCATION/CIP
Seventy-First Session
May 11, 2001
The Subcommittee on Ways and Meanswas called to order at 9:15 a.m. on Friday, May 11, 2001. Senator William J. Raggio presided in Room 3137 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
SENATE COMMITTEE MEMBERS PRESENT
Senator William J. Raggio, Chairman
Senator Raymond D. Rawson
Senator Bob Coffin
Senator Bernice Mathews
ASSEMBLY COMMITTEE MEMBERS PRESENT:
Mr. Morse Arberry Jr.
Mrs. Barbara Cegavske
Mr. Joseph Dini, Jr.
Mr. David Goldwater
Mr. John Marvel
Mr. Richard D. Perkins
ASSEMBLY COMMITTEE MEMBERS EXCUSED:
Mr. Lynn Hettrick
STAFF MEMBERS PRESENT:
Mark Stevens, Fiscal Analyst
Brian Burke, Senior Program Analyst
Connie Davis, Subcommittee Secretary
UNIVERSITY AND COMMUNITY COLLEGE SYSTEM OF NEVADA (UCCSN) SYSTEM WIDE – BUDGET PAGES UCCSN 1-80
Chairman Raggio provided opening remarks and direction to the members of the subcommittee and indicated that he would defer to staff to review the closing items for which decisions were required. Chairman Raggio recognized Brian Burke.
Brian Burke, Senior Program Analyst, Fiscal Analysis Division, identified himself for the record and indicated that during the May 3, 2001, closing hearing he had described the adjusted base budget technical adjustments in the budgets for Western Nevada Community College (WNCC), Great Basin College (GBC), and the Systems Computing Services (SCS).
Mr. Burke also indicated that discussion took place at the May 3 closing hearing concerning the $5.88 million per year of estate tax funding approved for equity adjustments. Mr. Burke reported that the equity adjustments were now part of the base budgets of the affected institutions, and he asked that the members of the subcommittee consider moving the amounts in the Special Projects' budgets for equity into the campus' budgets.
Mr. Burke reiterated that the first decision point for the subcommittee's consideration was that the technical adjustments to the adjusted base reflect the former equity amounts in the campus' budgets. Additionally, Mr. Burke asked if the subcommittee wished to approve the adjusted base budgets with the corrections to the GBC, SCS, and the WNCC personnel shortfalls.
In response to a question from Chairman Raggio, Mr. Burke affirmed that the subcommittee's approval of the adjusted base budgets as outlined also adjusted the Special Projects' account to reflect the closing actions taken by the full committee on estate tax transfers. Chairman Raggio questioned whether there was any objection by the members of the subcommittee to the recommendation that the technical adjustments be made to reflect the former equity amounts in the campus' budgets rather than the Special Projects' budget.
SENATOR MATHEWS MOVED TO APPROVE THE TECHNICAL ADJUSTMENTS TO THE ADJUSTED BASE BUDGETS TO REFLECT THE FORMER EQUITY AMOUNTS IN THE CAMPUS' BUDGETS RATHER THAN IN THE SPECIAL PROJECTS' BUDGET.
MRS. CEGAVSKE SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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In response to a question from Chairman Raggio, Mr. Burke affirmed that the motion taken by the subcommittee included approval of the adjusted base budgets for the former equity amounts and the corrections to the GBC, WNCC, and SCS personnel shortfalls.
In response to Chairman Raggio's request, Mr. Burke provided the following report on the M‑100 Decision Unit.
M-100 Decision Unit - Inflation
Mr. Burke advised that the Governor recommended $2.1 million in FY2001-02 and $4.2 million in FY2002‑03. He recalled that the subcommittee had discussed on several occasions that the UCCSN estimated there would be a system‑wide shortfall in utilities of $5.57 million in the first year of the biennium and $6.68 million in the second year of the biennium. Chairman Raggio recalled previous subcommittee discussion concerning various proposals including one to utilize funding from the Rainy Day Fund; however, he indicated the issue would be deferred and an alternative method of funding discussed at a later time.
In response to Chairman Raggio's request, Mr. Burke provided the following report on the M-200, Formula Funding Decision Unit:
M-200 Decision Unit - Formula Funding
Mr. Burke reported that the subcommittee had reviewed the M-200 Formula Funding Decision Unit at the May 3, 2001, meeting; however, he said adjustments were necessary for student enrollments. System‑wide enrollment reductions were projected, and Mr. Burke provided a comparison of the Governor's recommended enrollments to the UCCSN's revised projections of 2,481 full-time equivalent (FTE) students in FY2002; and 3,384 in FY2003.
In reference to the formula calculations, Mr. Burke reported that the Governor‑recommended formula calculations of 85.75 percent and 84.59 percent would result in a system‑wide reduction of $24,812,880 for the biennium. The results for the UCCSN and General Fund revenues would be a reduction in the UCCSN revenue of $7,292,977 and a reduction in General Fund revenue of $17,519,903.
MRS. CEGAVSKE MOVED TO REDUCE THE GENERAL FUND APPROPRIATIONS BY $17,519,903 AND UCCSN REVENUES BY $7,292,977.
SENATOR MATHEWS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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In response to a question from Chairman Raggio concerning FTE position changes associated with the formula, Mr. Burke advised that, based on the actions that would be taken by the subcommittee during the hearing, staff would need to adjust the FTE positions that would be generated by the formula changes.
CHAIRMAN ARBERRY MOVED TO AUTHORIZE STAFF TO ADJUST THE FORMULA RELATED FULL-TIME EQUIVALENT POSITION COUNTS BASED UPON ANY CLOSING DECISIONS MADE BY THE SUBCOMMITTEE.
MRS. CEGAVSKE SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Formula Calculation Errors
Mr. Burke discussed formula calculation errors that had been made for the universities and community colleges and recalled that the subcommittee had previously discussed the issue at the May 3, 2001, hearing. Mr. Burke advised that a miscalculation of student credit hours into full-time equivalent students for UNR and UNLV resulted in an additional $1,849,048 that would be needed in FY2001-02 and $1,589,201 in FY2002-03 for a total of $3,438,249 for the biennium.
MRS. CEGAVSKE MOVED TO ADD $1,849,048 IN FY2001-02 AND $1,589,201 IN FY2002-03 TO CORRECT THE STUDENT CREDIT HOURS INTO A FULL-TIME EQUIVALENT CONVERSION.
SENATOR MATHEWS SECONDED THE MOTION.
THE MOTION CARRIED. (Mr. Perkins was not present for the vote.)
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Mr. Burke discussed the formula calculation errors for the community colleges and advised that the Committee to Study the Funding of Higher Education had recommended that equipment funding be included in the instructional budget on a continuing basis. Both the agency-requested budget and the Governor‑recommended budget excluded funding for existing part-time positions. Mr. Burke advised that to correct the omission, the community colleges would need an additional $2,121,336 in FY2001-02 and $2,092,665 in FY2002-03 for a biennium total of $4,214,001.
MR. MARVEL MOVED TO INCLUDE $2,121,336 in FY2001-02 and $2,092,665 in FY2002-03 for a biennium total of $4,214,001 TO CORRECT AN OMISSION IN THE EXECUTIVE BUDGET TO FUND EXISTING PART-TIME POSITIONS IN THE COMMUNITY COLLEGES.
CHAIRMAN ARBERRY SECONDED THE MOTION.
THE MOTION CARRIED. (Mr. Perkins was not present for the vote.)
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M-201 Decision Unit - New Space (Operations and Maintenance)
Mr. Burke reported that subsequent to the transmission of The Executive Budget, numerous changes to the schedules upon which the Governor-recommended new space recommendations were made. Mr. Burke indicated there were anticipated occupancy date delays and square footage reductions that resulted in potential new space cost savings. Additionally, there were new space errors and omissions that resulted in increases to M-201. Mr. Burke reported the net reduction, savings plus added costs, would be $1,438,564 for the biennium or a savings of $721,704 for FY2001-02 and $716,860 for FY2002-03.
Mr. Burke indicated that in addition to the new space adjustments, a $1,713,783 funding omission occurred in The Executive Budget for FY 2001‑03. The Governor's recommended budget did not include funding for Operations and Maintenance recharge revenues for the University of Nevada, Reno (UNR). Mr. Burke further explained that while the budget reflected recharge revenues at UNR for new space, General Fund appropriations were not recommended in the other UNR area budgets that supported the recharge distribution which resulted in a shortfall in the budgets for the University Press, School of Medicine, State Health Laboratory, System Computing Services, Statewide Programs, and Agriculture Experiment Station.
MR. DINI MOVED TO APPROVE NEW SPACE OPERATIONS AND MAINTENANCE FUNDING ADJUSTED FOR THE $1.44 MILLION IN SAVINGS AND $1.71 MILLION IN ADDITIONAL COSTS TO REFLECT CORRECTIONS TO RECHARGE FUNDING OMISSIONS.
SENATOR MATHEWS SECONDED THE MOTION.
THE MOTION CARRIED. (Mr. Perkins was not present for the vote.)
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M-202 Decision Unit - New Space Rentals
Mr. Burke pointed out that the Governor had recommended $647,026 in FY2001-02 and $653,110 in FY2002-03. Funding was included for leased space for System Administration in Las Vegas to provide offices for legal operations and for GBC and TMCC. A technical adjustment of $6,468 was required in FY2001-02 and $6,786 in FY2002-03 to correct the System Administration lease amount to reflect the current contractual agreement. Mr. Burke advised the members of the subcommittee their decision would be whether to approve the new space rental funding with the technical adjustments to correct the System Administration lease.
Chairman Raggio addressed a collateral issue on the proposal for authorizing bonds to acquire the Old Town Mall facility, and he indicated there were some legal problems related to the acquisition for which he wished to make the university aware.
CHAIRMAN ARBERRY MOVED TO APPROVE THE NEW SPACE RENTAL FUNDING WITH ADJUSTMENTS OF $6,468 IN FY2001-02 AND $6,786 IN FY2002-03 TO CORRECT THE SYSTEM ADMINISTRATION LEASE AMOUNT.
SENATOR MATHEWS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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M-203, M‑204, M-206, and E-300 Decision Units - System Computing Services (SCS),
During the presentation on decision units M-203, M‑204, M-206, and E-300, which impacted System Computing Services (SCS), Mr. Burke indicated a one‑shot appropriation that affected SCS was not a part of the subcommittee's consideration. In concert with the $2.6 million one-shot appropriation recommended by the Governor, Mr. Burke explained that decision units M-203 and M-204 addressed technology capacity system wide. The Executive Budget included ongoing funding of $1.23 million in FY2001-02 and $1.49 million in FY2002-03, which Mr. Burke said would accommodate growth in administrative processing and software applications, increased network capacity, improved reliability and security of the network, and investigation of new telecommunication technologies to ensure efficient system-wide implementation. Mr. Burke also mentioned that several positions were included in the modules.
Mr. Burke indicated the members of the subcommittee would recall that during the previous hearing there was some adjustment to the SCS' plan, which resulted in reductions to the one-shot appropriation of $80,200 as well as a reduction in ongoing costs of $100,500 in FY2001-02 and an increase of $28,230 in FY2003-03, which resulted in a biennial reduction of $72,270.
Mr. Burke also advised that included under the SCS initiatives were $213,950 in FY2001-02 and $439,129 in FY2002-03 to fund the increased cost for software licensing agreements and hardware maintenance. Additionally, Mr. Burke reported that decision unit E‑300 recommended $614,347 per year 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 asked for a motion on decision units M-203 and M-204 that addressed technology capacity system wide and resulted in a biennial reduction of $72,270.
SENATOR MATHEWS MOVED TO APPROVE DECISION UNITS M-203 AND M‑204 THAT ADDRESSED SYSTEM-WIDE TECHNOLOGY CAPACITY WITH THE ADJUSTMENTS THAT REDUCED ONGOING COSTS BY $72,270 FOR THE BIENNIUM.
MRS. CEGAVSKE SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman Raggio asked for a motion on decision unit M-206 to fund increases for software licensing and hardware maintenance.
SENATOR MATHEWS MOVED TO APPROVE DECISION UNIT M‑206 TO FUND THE INCREASES FOR SOFTWARE LICENSING AND HARDWARE MAINTENANCE AGREEMENTS RECOMMENDED IN DECISION UNIT M-206.
SENATOR RAWSON SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman Raggio asked for a motion on decision unit E-300 to fund ongoing maintenance and connectivity costs.
CHAIRMAN ARBERRY MOVED TO APPROVE $614,347 PER YEAR TO FUND ONGOING MAINTENANCE AND CONNECTIVITY COSTS.
MRS. CEGAVSKE SECONDED THE MOTION.
THE MOTION WAS CARRIED UNANIMOUSLY.
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M-205 Decision Unit, Law School Growth
Mr. Burke advised the members of the subcommittee that the University of Nevada, Las Vegas (UNLV) Law School budget, decision unit M-205, included $841,262 and $1.06 million in FY2002-03 that would allow the Law School to add a total of nine professional faculty and classified support positions to respond to anticipated enrollment growth.
CHAIRMAN ARBERRY MOVED TO APPROVE THE FUNDING RECOMMENDED IN THE M-205 MODULE TO RESPOND TO ANTICIPATED LAW SCHOOL ENROLLMENT GROWTH.
SENATOR MATHEWS SECONDED THE MOTION.
THE MOTION WAS CARRIED UNANIMOUSLY.
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M-207 Decision Unit, Dental School
Mr. Burke advised the members of the subcommittee that The Executive Budget included $722,167 in FY2001-02 and $2.84 million in FY2002-03 to fund dental school initiatives. The dental school initiatives were funded in The Executive Budget with dental practice revenues in the first year of the biennium and second-year increases were funded with a combination of dental practice and tuition revenue.
Mr. Burke reported that the UCCSN's agency-requested budget included General Fund appropriations of $473,529 in FY2001-02 and $1.34 million in FY2002‑03; however, The Executive Budget did not include the General Fund appropriation. Mr. Burke indicated the subcommittee previously heard a request from UNLV for $3.0 million per year of General Fund support; however, subsequent to that hearing, UNLV submitted a revised response that indicated the minimum level of state support needed to operate the dental school was $1.41 million in FY2001-02 and $2.12 million in FY2002-03 for a total of $3.52 million for the biennium. Mr. Burke reported that the Board of Regents had approved a proposal to recommend an additional $3.52 million in estate tax funds to support the dental school operations.
Chancellor Nichols confirmed Chairman Raggio's understanding that there were other items for which the Board of Regents had also indicated their approval.
MRS. CEGAVSKE MOVED TO APPROVE DENTAL SCHOOL FUNDING IN THE AMOUNT OF $1.41 MILLION IN FY2001-02 AND $2.12 MILLION IN FY2002-03 FOR A TOTAL OF $3.52 MILLION FOR THE BIENNIUM AS RECOMMENDED BY THE BOARD OF REGENTS ON MAY 10, 2001.
SENATOR MATHEWS SECONDED THE MOTION.
THE MOTION CARRIED. (Mr. Goldwater voted no.)
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M-301 Decision Unit - Classified Cost of Living Adjustments and Addition of One Step to the Classified Pay Plan
Mr. Burke advised that decision unit M-301 identified the 4 percent per year classified cost-of-living adjustment (COLA) and the addition of one step to the classified pay plan. As discussed previously by the subcommittee, funding for the COLA and step increases recommended in the M-301 decision units throughout all the budgets would be "pooled" in the pay bill.
MR. GOLDWATER MOVED TO APPROVE FUNDING FOR THE COLA AND STEP INCREASES THAT WERE RECOMMENDED IN THE M-301 DECISION UNITS THROUGHOUT ALL THE BUDGETS. THE FUNDING WOULD BE "POOLED" IN THE PAY BILL IN AN AMOUNT SUFFICIENT TO FUND THE INCREASES DETERMINED BY THE LEGISLATURE.
MRS. CEGAVSKE SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman Raggio chose to defer decision unit M-305, which identified a cost‑of‑living adjustment for 2 percent of a 4 percent COLA for professional, part-time, graduate assistant, and teacher assistant positions in each year of the biennium.
M-594 Decision Unit, Gender Equity
Mr. Burke noted that gender equity was recommended in The Executive Budget to be funded with General Fund appropriations of $1.075 million in FY2001-02 and $1.083 million in FY2002‑03 to improve Title IX compliance in support of female athletes. The Executive Budget reflected a distribution of $725,000 in FY2001-02 and $732,876 in FY2002-03 to University of Nevada, Las Vegas' (UNLV's) intercollegiate athletics' program and $350,000 per year to University of Nevada, Reno's (UNR's) intercollegiate athletics' program.
As previously discussed by the subcommittee, the University and Community College System of Nevada (UCCSN) transmitted an amended request that proposed to redistribute the recommended gender equity funding to reflect equal funding allocations for UNR and UNLV. Under the revised distribution plan, Mr. Burke said that each campus would receive $537,500 in FY2001-02 and $541,438 in FY2002-03. Mr. Burke explained that the additional funds for UNR would be used to augment the existing recommendation for a new softball program, increased scholarships for current women's sports and additional support positions for women's athletics. The funding for UNLV would allow the athletic department to add women's golf during FY2001‑03 and would also provide for additional support for athletic training, sports information, medical relations, and clerical assistance. It was Chairman Raggio's understanding the funding, as outlined in decision unit M-594, was in addition to the base funding recommended in The Executive Budget, which was confirmed by Mr. Burke. Mr. Burke further explained that the total amount of the funding for the biennium was about $2.2 million for the two institutions and the amounts requested in decision unit M‑594 would supplement the $2.2 million base amount.
SENATOR MATHEWS MOVED TO APPROVE THE AMENDED GENDER EQUITY RECOMMENDATION THAT WOULD APPROPRIATE $537,500 TO UNR AND UNLV IN FY2001‑02, $1.075 MILLION TOTAL, AND $541,438 TO UNR AND UNLV IN FY2002-03, $1.083 MILLION TOTAL.
MR. DINI SECONDED THE MOTION.
Mr. Goldwater discussed the difficulty involved in the development of a women's golf program at UNLV and was optimistic that in the future the "funding would follow the need."
THE MOTION ON THE FLOOR CARRIED. (Mr. Perkins was not present for the vote.)
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E-225 Decision Unit - Performance Funding
Mr. Burke advised that the Committee to Study the Funding of Higher Education recommended that performance funding be included in The Executive Budget as part of the formula component. Mr. Burke pointed out that The Executive Budget included $3 million of estate tax revenue in FY2002-03 for performance funding. Mr. Burke recalled that during previous hearings, the subcommittee discussed the general concepts upon which UCCSN proposed to distribute the performance funding, and the subcommittee had noted that a comprehensive performance-funding plan had not been developed at the time. Subsequent to the hearings, UCCSN indicated that the Board of Regents requested the previous $3 million performance-funding allocation be reduced to $1 million and a new request for $3 million for an Experimental Program to Stimulate Competitive Research (EPSCoR) match, which Mr. Burke explained would increase the total estate tax funding in decision unit E-225 from $3 million to $4 million.
Chairman Raggio advised that, over the course of the hearings, the joint committees had indicated that until there was a specific plan that described the proposed allocation of performance funding, they were not prepared to authorize the funding. While the committees recognized the importance of the EPSCoR funding, Chairman Raggio questioned the university representatives' preference concerning the funding.
Chancellor Nichols responded that the university believed performance funding was an important concept and that they would return in the next biennium with a specific plan.
MR. DINI MOVED TO APPROVE THAT $3 MILLION BE REMOVED FROM THE E-225 PERFORMANCE FUNDING DECISION UNIT AND REDIRECTED TO EPSCoR FUNDING.
MR. MARVEL SECONDED THE MOTION.
THE MOTION CARRIED. (Mr. Perkins was not present for the vote.)
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Student Fees
Mr. Burke noted that UCCSN's proposal to increase fees by more than 3 percent per year had been discussed at an earlier meeting, and he referred to a summary of the recommended student fee increases (Exhibit C). The subcommittee had also previously discussed the allocations to the capital and general improvement budgets at each of the institutions and the supplemental Good Neighbor Fee information (Exhibit D).
Chairman Raggio indicated the subcommittee had reviewed student fees a number of times and did not want to micro-manage how the tuition increases would be used. However, Chairman Raggio expressed the subcommittee's concern that student fees would be used in a way that did not distort the equity situation on salaries.
SENATOR MATHEWS MOVED TO APPROVE AN INCREASE IN RESIDENT FEES AND NON-RESIDENT TUITION FEES OF MORE THAN 3 PERCENT PER YEAR AT EACH INSTITUTION AND THE AUTHORITY TO USE THE FEES AS INDICATED.
MR. DINI SECONDED THE MOTION.
Mr. Goldwater asked if the increases affected the Millennium Scholarship Program. Chancellor Nichols responded that the increase in the resident and non-resident tuition would have no impact on the Millennium Scholarship Program.
THE MOTION ON THE FLOOR CARRIED UNANIMOUSLY.
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Interim Revenue Augmentations
Mr. Burke advised the members of the subcommittee that The Executive Budget maintained the policy that authorized campuses that exceeded legislatively approved student enrollment revenues to approach the Interim Finance Committee (IFC) for authority to use the excess revenues to address the higher‑than-budgeted enrollment.
Mr. Burke recalled that the subcommittee had previously discussed whether the revenues generated by the non-resident tuition premium were needed to address the incremental cost of providing additional services. Subsequently, the UCCSN provided written communication that urged the subcommittee to consider not restricting interim revenue augmentations, and in a letter dated April 19, 2001, UCCSN wrote that rather than tighten down the permissible augmentations available to UCCSN when revenues exceeded the budgeted levels, the subcommittee might consider expanding those opportunities. In a letter dated April 23, 2001, the Vice Chancellor of Finance wrote that the Regents proposed to allow funds in excess of the budgeted level that normally reverted to the state General Fund be directed to current and future energy cost crises. Mr. Burke indicated the Regents proposed to extend the authority to expend the excess revenues to other sources of revenue such as indirect cost recoveries and investment income. Mr. Burke advised that the UCCSN proposed the action as a possible alternative to seeking supplemental appropriations or other funding sources for those added costs.
Mr. Burke noted that the Vice Chancellor of Finance pointed out that UNR would revert in excess of $500,000 during FY2001, and, at the same time, UNR faced a budget shortfall in energy costs of approximately $1 million. The current action proposed by the UCCSN would allow UNR to direct the excess funds to the energy cost overrun. Mr. Burke explained that to achieve the results, the Vice Chancellor proposed to include the following language in the General Authorizations using the 1999 Act as an example:
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.
Mr. Burke advised that the UCCSN proposed that the language to be included in the General Authorizations Act would need to be effective upon passage and approval of the act.
Chairman Raggio addressed the concern regarding higher-than-anticipated utility costs and the projected shortfall, which he indicated affected all state budgets and was not singular to the UCCSN. Chairman Raggio suggested that the subcommittee defer a portion of the consideration for interim revenue augmentation since the utility shortfall situation would be considered in the overall budget. Chairman Raggio further suggested maintaining the current policy of authorizing the campuses to use the excess revenues to address higher‑than‑budgeted student enrollment.
MR. MARVEL MOVED TO DEFER A PORTION OF THE CONSIDERATION FOR INTERIM REVENUE AUGMENTATION AND THAT THE CURRENT POLICY OF AUTHORIZING THE CAMPUSES TO USE EXCESS REVENUES TO ADDRESS THE COSTS ASSOCIATED WITH HIGHER-THAN-BUDGETED STUDENT ENROLLMENT BE MAINTAINED.
CHAIRMAN ARBERRY SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman Raggio advised that any expansion of the authority for other sources of revenue including indirect costs would be deferred and that, before budgets were closed, there would be a decision on how the potential shortfall in utilities would be addressed.
Additionally, Chairman Raggio asked if the subcommittee wished to approve the UCCSN's non-formula accounts and the non-formula components of the formula accounts, as recommended by the Governor.
MRS. CEGAVSKE MOVED TO APPROVE THE UCCSN'S NON‑FORMULA ACCOUNTS AND THE NON-FORMULA COMPONENTS OF THE FORMULA ACCOUNTS, AS RECOMMENDED BY THE GOVERNOR.
SENATOR MATHEWS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Nevada State College at Henderson
Mr. Burke reported that Assembly Bill 220 of the 70th Legislative Session established an advisory committee to examine locating a four-year state college in Henderson. The advisory committee met nine times and ultimately concluded that the Nevada State College at Henderson was recommended. The Executive Budget recommended the following funding in support of the new campus:
Both Chancellor Nichols and Speaker Perkins confirmed Chairman Raggio's understanding that the proposed budget could be adjusted to recognize 500 full‑time equivalent (FTE) positions, which would require approximately $3.75 million from the General Fund, and $693,000 in tuition fees, for a total of $4.4 million in authorization. Chairman Raggio indicated that a motion to approve the funding should include an authorization to allow staff to adjust the numbers, which were currently approximations.
MR. DINI MOVED TO APPROVE INSTRUCTIONAL AND RELATED COSTS FOR THE NEVADA STATE COLLEGE IN HENDERSON AND TO PROVIDE STAFF THE AUTHORIZATION TO ADJUST THE PROPOSED BUDGET TO RECOGNIZE 500 FTE POSITIONS, WHICH WOULD REQUIRE APPROXIMATELY $3.75 MILLION IN THE GENERAL FUND, AND $693,000 IN TUITION FEES, FOR A TOTAL OF $4.4 MILLION.
MR. GOLDWATER SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Mr. Burke moved to decisions that were not in the Governor recommended budget but had been previously discussed by the subcommittee.
Non-Resident Fee Increases
Mr. Burke noted that at the April 10, 2001, subcommittee hearing, the UCCSN proposed additional non-resident fee increases beyond the amounts included in the Governor recommended budget. The proposed increase for the universities was $335 and a $25 per credit increase for part-time non‑resident students. The resulting increase in non-resident revenues would be $1,506,741 in FY2003.
MR. DINI MOVED TO APPROVE UCCSN'S PROPOSAL TO INCREASE NON‑RESIDENT FEES AT THE UNIVERSITIES AND COMMUNITY COLLEGES BEYOND THE AMOUNTS RECOMMENDED IN THE EXECUTIVE BUDGET WITH A CORRESPONDING REDUCTION IN GENERAL FUND APPROPRIATIONS.
CHAIRMAN ARBERRY SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Tuition Increase for the Law School
Mr. Burke noted, that as previously discussed by the subcommittee, the law school had not had a fee increase since its establishment. During the April 10, 2001, budget hearing, the subcommittee discussed fee increases commensurate with the increases for the universities and community colleges. Mr. Burke reported that the University of Nevada, Las Vegas (UNLV) wrote that it would not be possible to initiate a two-year increase since fee schedules had already been mailed to prospective and continuing students. However, tuition rate increases of 3.5 percent in the second year of the biennium would result in an increase in revenues of $87,088.
MR. DINI MOVED TO INCREASE THE UNLV LAW SCHOOL TUITION BY 3.5 PERCENT IN FY2002-03 COMMENSURATE WITH OTHER UCCSN FEE INCREASES, RESULTING IN ADDITIONAL FEE REVENUES OF $87,088 AND A CORRESPONDING REDUCTION IN GENERAL FUND APPROPRIATIONS.
CHAIRMAN ARBERRY SECONDED THE MOTION.
THE MOTION WAS UNANIMOUSLY APPROVED.
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Hold Harmless
Mr. Burke indicated the subcommittee had previously discussed the hold harmless provision recommended by the Committee to Study the Funding of Higher Education. The provision would allow individual institutions to retain their base funding levels when the formula recommendations fell below the base amount. Using the UCCSN's definition of the hold harmless provision and at the current formula levels of 85.75 percent and 84.59 percent recommended in The Executive Budget, Mr. Burke indicated there would be a hold harmless need of approximately $1.6 million for the biennium for Truckee Meadows Community College and Western Nevada Community College.
Chairman Raggio indicated a discussion was necessary on the agreement between the UCCSN and the Governor's Office concerning the revision of the formula -funding scenario.
Formula Reduction Scenario
Mr. Burke recalled that at the May 3 meeting of the subcommittee, there was a proposal to reduce the Governor's formula funding amounts from 85.75 percent to 82.49 percent in FY2001-02 and from 84.59 percent to 82.04 percent in FY2002-03. After a review of the proposal and discussions with the Governor's Office, a revised proposal would result in a reduction of 4.2 percent in formula funding in FY2001-02 and 4.3 percent in FY2002-03. Mr. Burke explained the proposal would also add a General Fund appropriation needed to match the unfunded 2 percent of the 4 percent COLA's for professional positions.
Mr. Burke noted that the revised proposal would reduce formula funding by $19.6 million in FY2001-02 and $21.8 million in FY2002-03, for a total reduction of $41.4 million, and would add General Fund appropriations of $5.1 million in FY2001-02 and $10.5 million in FY2002-03, for a total biennial cost of $15.6 million which was for "the add back for the COLA." Mr. Burke advised that the net General Fund reduction associated with the revised proposal was $14.5 million in FY2001-02 and $11.3 million in FY2002-03. Additionally, Mr. Burke indicated the hold harmless amounts for the new scenario amounted to $6.92 million in FY2001-02 and $6.76 million in FY2002-03.
Mr. Burke confirmed Chairman Raggio's understanding that, as a result of reduction of the formula funding percentages, Truckee Meadows Community College and Western Nevada Community College would receive hold harmless funding. Additionally, Mr. Burke advised that UNLV and CCSN would also fall subject to the hold harmless provision.
Mr. Burke reported that the Governor's staff and the UCCSN worked jointly to develop the revised reduction scenario, and the Board of Regents approved the use of the additional estate tax necessary to fund the hold harmless provisions associated with the formula reduction. Mr. Burke referred to a summary of potential adjustments (Exhibit E) that reflected the net impact of all the technical adjustments, the revised reduction scenario, and the COLA add that would require system-wide reductions of $18.1 million in FY2001-02 and $18.6 million in FY2002-03.
In response to a question from Chairman Raggio, Mr. Burke advised that General Fund allocations to the UCCSN could not be compared against the total appropriations because of the numerous revisions through legislative action. Alternatively, the General Fund allocations were compared against the revised Economic Forum revenue projections. Mr. Burke indicated that the revised scenario with all the technical and other adjustments would result in General Fund allocations to the UCCSN of approximately 19.0 percent during FY2001‑02 and 19.1 percent in the FY2002-03, which was about 19.04 percent for the biennium. Mr. Burke pointed out that for the last ten biennia, 18 to 20 percent was allocated to the UCCSN.
Mr. Burke confirmed Chairman Raggio's understanding that the funding reduction scenario still represented a 15 percent General Fund increase over the last biennium and utilization of additional estate tax funding which was acceptable to the UCCSN.
Chairman Raggio asked if the subcommittee was in favor of endorsing the Governor's revised reduction scenario, which would result in system-wide reductions of $18.1 million in FY2001-02 and $18.6 million in FY2002-03 with the understanding the state would fully fund the cost-of-living adjustments.
CHAIRMAN ARBERRY MOVED TO APPROVE THE GOVERNOR'S REVISED REDUCTION SCENARIO THAT WOULD RESULT IN SYSTEM-WIDE REDUCTIONS OF $18.1 MILLION IN FY2001-02 AND $18.6 MILLION IN FY2002-03.
MRS. CEGAVSKE SECONDED THE MOTION.
THE MOTION CARRIED. (Mr. Marvel was not present for the vote.)
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Chairman Raggio indicated that the budgets would be recommended for closure on the basis of the subcommittee's decision to approve the Governor's revised reduction scenario. Staff advised Chairman Raggio that the motion to approve the Governor's revised reduction scenario covered the hold harmless re‑projections. For the record, Chairman Raggio indicated that it became "a total necessity" to hold WNCC, TMCC, CCSN, and UNLV at $6.9 million in FY2001‑02, and $6.7 million in FY2002‑03, for a total of $13.7 million for the biennium. In response to a question from Chairman Raggio, Chancellor Nichols agreed with the calculations on the hold harmless provision.
Special Projects COLAs
Mr. Burke moved to the next item, Special Projects COLAs, and he recalled that the subcommittee had previously discussed the UCCSN employees assigned to the Special Projects' account that had not been included in the calculations for merit and cost-of-living adjustments in The Executive Budget. Mr. Burke advised that the UCCSN was requesting consideration for General Fund appropriations of $13,219 in FY2001-02 and $27,039 in FY2002-03 to support merit and cost‑of‑living adjustments for the Manufacturing Assistance Program (MAP) positions assigned to the Special Projects' budget. Additionally, Mr. Burke indicated that the UCCSN requested additional estate tax funds of $356,415 in FY2001-02 and $731,850 in FY2002-03 for estate tax-funded positions assigned to the Special Projects' budget. The additional amounts were calculated at 4 percent per year for classified positions and 2 percent per year for professional positions.
MR. DINI MOVED TO APPROVE THE ADDITION OF GENERAL FUND APPROPRIATIONS OF $13,219 IN FY2001-02 and $27,039 IN FY2002-03 FOR MERIT ADJUSTMENTS AND COLAS FOR THE MANUFACTURING ASSISTANCE PROGRAM POSITIONS ASSIGNED TO THE SPECIAL PROJECTS' BUDGET AND THE AUTHORIZATION OF ADDITIONAL ESTATE TAX FUNDS OF $356,415 IN FY2001-02 AND $731,850 IN FY2002‑03 FOR ESTATE TAX-FUNDED POSITIONS ASSIGNED TO THE SPECIAL PROJECTS' BUDGET.
MR. GOLDWATER SECONDED THE MOTION.
THE MOTION CARRIED. (Mr. Perkins and Mr. Marvel were not present for the vote.)
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Taxonomy
Mr. Burke moved to the next item, taxonomy, and he recalled that as the subcommittee had previously discussed, there had been some inconsistency among the UCCSN institutions in the taxonomy, or the method employed to classify courses within the instructional formula matrix. Mr. Burke advised that the example previously used was that the community colleges classified 100‑level English courses as low cost while the universities classified the same course as medium cost, which had an impact on the student-to-faculty ratios used in the formula.
Mr. Burke indicated the UCCSN had requested consideration to further review the taxonomy issue rather than attempt to revise the formulas during the legislative session. Therefore, staff suggested that the subcommittee issue a Letter of Intent to the UCCSN to develop a consistent course classification system during the interim. Mr. Burke indicated that if the subcommittee agreed to issue the Letter of Intent, the UCCSN should report quarterly to the IFC commencing January 2002 on the progress of developing a consistent course classification system. In response to a question from Chairman Raggio, Chancellor Nichols was in agreement with the Letter of Intent and reporting to the Interim Finance Committee on a quarterly basis.
MR. DINI MOVED TO APPROVE A LETTER OF INTENT DIRECTING THE UCCSN TO DEVELOP A CONSISTENT COURSE COST CLASSIFICATION SYSTEM OR TAXONOMY DURING THE INTERIM AND THAT THE UCCSN ISSUE QUARTERLY REPORTS TO THE IFC COMMENCING JANUARY 2002 ON THE PROGRESS OF DEVELOPMENT OF THE SYSTEM.
CHAIRMAN ARBERRY SECONDED THE MOTION.
THE MOTION CARRIED. (Mr. Perkins and Mr. Marvel were not present for the vote.)
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Board of Regents' Proposals
Mr. Burke moved to the next item, Board of Regents Proposals, and advised the members of the subcommittee that the Board of Regents met on May 10, 2001, and approved the following estate tax funding proposals totaling $6,182,052 for the biennium.
Mr. Burke called attention to the fact that a call received the previous afternoon from the UCCSN representatives reported a difference in the additional estate tax expenditures. The revised figures were listed on a document (Exhibit F) provided by the UCCSN and distributed to the members of the subcommittee. Mr. Burke reported the subcommittee had previously discussed several of the items as unfunded enhancements; however, the use of estate tax as the funding source was a new proposal.
Emergency Financial Exigency Fund
In response to a question from Chairman Raggio, Chancellor Nichols explained that the Exigency Fund was an emergency type funding designed to avoid a financial exigency situation for hold harmless institutions, particularly WNCC and TMCC, which had less flexibility in their budget and revenue sources. Chancellor Nichols indicated that the UCCSN was requesting the authority to expend funding only if necessary and described a four-page process in the Board of Regents' handbook that had to be followed in order to use the funding. Chancellor Nichols stated that the UCCSN would use those criteria as a requirement to consider a special grant from the funding, only if needed. While it was anticipated that the funding would remain in the estate tax and would not be expended, Chancellor Nichols said the Financial Exigency Fund could prevent a crisis situation if the smaller campuses ran into a situation where a small amount of funding could provide relief.
It was Chairman Raggio's wish that since the proposal was new and should be monitored that any request for funding from the Exigency Fund be approved by the Interim Finance Committee. That request met with Chancellor Nichols' approval.
In response to a question from Chairman Raggio, Chancellor Nichols explained that the $260,000 for the Great Basin College was a continuation of a baccalaureate program already in place.
Chancellor Nichols confirmed Chairman Raggio's understanding that the $1.4 million needed for the UNLV Law School Clinic was vital to accreditation.
Other Issues
Chairman Raggio discussed the End-of-Life Program that was no longer being funded by the Robert Wood Johnson Foundation. It was the Chairman's recommendation that the subcommittee add $253,500 in FY2001-02 and $498,200 in FY2002-03 in estate tax expenditures to continue the End-of-Life Program.
Senator Rawson brought up an oversight issue concerning the University of Nevada School of Medicine General Practice Residency program. He explained that there were eight residents currently in the program and the second year of the program was not funded. Senator Rawson recommended an addition of $334,417 a year in estate tax expenditures for the second year of the University of Nevada School of Medicine General Practice Residency program.
CHAIRMAN ARBERRY MOVED TO APPROVE ADDITIONAL ESTATE TAX EXPENDITURES SUGGESTED BY THE BOARD OF REGENTS WITH ADDITIONAL EXPENDITURES TO CONTINUE THE END-OF-LIFE PROGRAM AND TO FUND THE SECOND YEAR OF THE UNIVERSITY OF NEVADA SCHOOL OF MEDICINE GENERAL PRACTICE RESIDENCY PROGRAM. ADDITIONALLY, ANY FUNDING REQUEST FROM THE EXIGENCY FUND WOULD REQUIRE APPROVAL BY THE INTERIM FINANCE COMMITTEE.
MRS. CEGAVSKE SECONDED THE MOTION.
THE MOTION CARRIED. (Mr. Perkins and Mr. Marvel were not present for the vote.)
Chairman Raggio announced that potential utility increases would be reviewed and adjustments would be considered in the overall budget.
Chancellor Nichols expressed her appreciation to the subcommittee and staff for their assistance in presenting the UCCSN budget, and in turn, Chairman Raggio extended his appreciation to the UCCSN representatives for their patience in going through the process.
Chairman Raggio announced that Chairman Arberry wished to propose an addition to the Special Projects' budget, which would allocate approximately $100,000 currently in the base budget to UNLV's radio station. In order not to disturb the funding formula, the additional funding was recommended in the Special Projects' budget with the understanding that in the next budget cycle, the funding must be incorporated into a base in order to be continued.
CHAIRMAN ARBERRY MOVED TO APPROVE AN ADDITION OF APPROXIMATELY $100,000 TO THE SPECIAL PROJECTS' BUDGET FOR UNLV'S RADIO STATION WITH THE UNDERSTANDING THAT IN THE NEXT BUDGET CYCLE, THE FUNDING WOULD BE INCORPORATED INTO THE BASE IN ORDER TO BE CONTINUED.
MR. DINI SECONDED THE MOTION.
A QUORUM OF THE ASSEMBLY WAS NOT AVAILABLE.
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Chairman Raggio discussed Item 10-D on the Priority List that requested funding in the amount of $152,158 in FY2002-03 for Statewide Basque Studies. Chairman Raggio indicated the recommendation was that the Statewide Basque Studies' program be placed in the Statewide Programs' budget with the subcommittee's understanding that some programs were being funded because of a reduction in the proposed funding for the Nevada State College.
MR. DINI MOVED TO APPROVE THE ADDITION OF $152,158 PLACED IN THE STATEWIDE PROGRAMS' BUDGET IN FY2002‑03 FOR STATEWIDE BASQUE STUDIES.
CHAIRMAN ARBERRY SECONDED THE MOTION.
A QUORUM OF THE ASSEMBLY WAS NOT AVAILABLE.
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For the record, Senator Coffin clarified that the last items discussed by the subcommittee did not in any way affect the formula.
Senator Rawson disclosed that he was an employee of the UCCSN and for the record indicated he perceived that there were no items being discussed that affected him.
Senator Coffin disclosed that his wife, for the tenth straight year, was on a one‑year contract as a half-time teacher at UNLV.
Chairman Raggio indicated that the committees had not yet reviewed all the proposed budget cuts that might be necessary in view of limited revenues; however, one of the items proposed for reduction was the appropriation of $250,000 to the Harry Reid Center. It was Chairman Raggio's understanding that while the Governor's proposed list of reductions did include the Harry Reid Center, the $250,000 appropriation would be funded from indirect cost recovery. Chancellor Nichols confirmed Chairman Raggio's understanding.
Senator Rawson commented on issues that were of concern such as the funding of the Pediatric Diabetes Program and some of the residency programs in the School of Medicine that were in jeopardy. Senator Rawson expressed hope that as the session approached its end, any revenue that could be utilized could be targeted for those types of life-sustaining programs important to the state.
A final vote was taken on the two outstanding motions on the floor.
CHAIRMAN ARBERRY MOVED TO APPROVE AN ADDITION OF APPROXIMATELY $100,000 TO THE SPECIAL PROJECTS' BUDGET FOR UNLV'S RADIO STATION WITH THE UNDERSTANDING THAT IN THE NEXT BUDGET CYCLE, THE FUNDING WOULD BE INCORPORATED INTO THE BASE IN ORDER TO BE CONTINUED.
MR. DINI SECONDED THE MOTION.
THE MOTION CARRIED. (Mr. Perkins was not present for the vote.)
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MR. DINI MOVED TO APPROVE THE ADDITION OF $152,158 PLACED IN THE STATEWIDE PROGRAMS' BUDGET IN FY2002‑03 FOR STATEWIDE BASQUE STUDIES.
CHAIRMAN ARBERRY SECONDED THE MOTION.
THE MOTION CARRIED. (Mr. Perkins was not present for the vote.)
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The meeting was adjourned at 10:39 a.m.
RESPECTFULLY SUBMITTED:
Connie Davis
Committee Secretary
APPROVED BY:
Senator William J. Raggio
DATE: