MINUTES 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
April 10, 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 8:19 a.m., on Tuesday, April 10, 2001, in Room 3137 of 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 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., Chairman
Mrs. Barbara K. Cegavske
Mr. Joseph E. Dini, Jr.
Mr. David E. Goldwater
Mr. John W. Marvel (Sitting in 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:
Dr. Jane A. Nichols, Chancellor, System Administrative Office, University and Community College System of Nevada
Daniel G. Miles, Vice Chancellor, Finance and Administration, System Administration Office, University and Community College System of Nevada
Dr. Richard Moore, Founding President, Nevada State College at Henderson, University and Community College System of Nevada
Dr. Jim Richardson, Nevada Faculty Alliance and University and Community College System of Nevada
Bruce L. Shively, Director, Planning, Budget and Analysis, University of Nevada, Reno, University and Community College System of Nevada
Dr. Carol C. Harter, President, University of Nevada, Las Vegas, University and Community College System of Nevada
Robert H. Miller, M.D., M.B.A., Dean, School of Medicine, University of Nevada, Reno, University and Community College System of Nevada
Dr. Stephen C. McFarlane, Interim President, University of Nevada, Reno, University and Community College System of Nevada
Dr. David P. Westfall, Vice President, Academic Affairs, University of Nevada, Reno, University and Community College System
Dr. Joseph N. Crowley, Assistant to Chancellor for Legislative Relations, University and Community College System of Nevada
UNIVERSITY AND COMMUNITY COLLEGE SYSTEM OF NEVADA
Chairman Raggio:
This is the time scheduled for higher education and we will continue our review as posted under the first revised agenda. It is not the Chairman’s intention to go through the budgets listed on the agenda. They are listed as part of the overall budget system. We have gone through most of those budgets. The Chairman, however, will entertain information from the University and Community College System of Nevada (UCCSN) representatives on issues pertinent to the decision process of the budget.
Dr. Jane A. Nichols, Chancellor, System Administrative Office, University and Community College System of Nevada:
Thank you Senator Raggio. I would like to make a few comments to give you the reasons that we are going to present to you some changes in the budget, and a bit of context behind that. I am going to speak, and then Vice Chancellor Daniel G. Miles will walk you through the exact changes and the reasons for those. It is my understanding that Professor Jim Richardson would also like to address the group this morning, if he might.
Chairman Raggio:
All right, we will accommodate that.
Dr. Nichols:
The primary reason we come before you today is that we have to review with you our actual enrollment for this academic year. As is normal, we submit the spring enrollment numbers as soon as they are available. These new numbers always require an adjustment of our actual projected budget for the next 2 years. Based upon the new formula a growth is projected. The formula is built on a 3‑year rolling, weighted average for full time equivalent (FTE) enrollment calculations, with weights of 20 percent, 30 percent, and 50 percent for the 3 years preceding the year funded. That formula was developed by the Committee to Study the Funding of Higher Education (study). This academic year for Fiscal Year (FY) 2001, FY 2002 and FY 2003, our system-wide enrollment growth is not as large system‑wide as we had anticipated it would be and as is reflected in The Executive Budget.
Chairman Raggio:
Are you referring to FTE enrollment?
Dr. Nichols:
We are talking about annual average FTE enrollment.
Chairman Raggio:
The actual for FY 2000 for the system was 47,055. Is the actual enrollment for FY 2001 48,101?
Dr. Nichols:
Yes, that is correct. This is a 2.2 percent growth over last year. I would remind you that on the national level, this system-wide growth would be considered a large growth rate, but it is less than that which we have grown accustomed to in Nevada. We have grown accustomed to about a 6 percent annual growth rate. The lower growth this year is driven primarily by the very low growth rate at Community College System of Nevada (CCSN), which is 0.6 percent. Although the regular enrollment growth rate at CCSN was 22.8 percent. All campuses except for University of Nevada, Reno (UNR) and Great Basin College (GBC) had growth rates below 3 percent. UNR had a growth rate of 6.2 percent and GBC had a growth rate of 6.9 percent. The universities had the highest growth rate in their lower division courses, driven by the millennium scholarship recipients. A bit of good news for Senator Mathews is the nursing enrollment increased across the system.
This decrease in the rate of growth overall means that our total budget for the biennium, generated by the formula at the same percentage of funding, can be expected to be less. Complicating this picture are certain formula corrections that need to be made. We are operating under a new formula created by the Interim Higher Education funding study and several corrections have been identified by Legislative Counsel Bureau (LCB) staff, as well as by our staff.
Chairman Raggio:
Before we leave this area of enrollment, let us understand what we are all talking about. The FTE enrollment, based on the percentage that you provided, would indicate that for FY 2002 the projection would be 2,481 less than what is in the budget. For FY 2003, that projection is 3,384 FTE less than what is in the budget. So, the revised enrollment projections would result in a reduction in what was recommended by the Governor. That would equate to a total reduction of $24.8 million when the funding formula is recalculated. It would also result in a loss of anticipated tuition of about $8.5 million, or a net General Fund reduction as a result of enrollment re-projection of $16.32 million.
Dr. Nichols:
All of that is correct, Mr. Chairman.
Chairman Raggio:
I want to make sure we agree on those statistics and the situation.
Dr. Nichols:
I would like to alert you to something you will not see in our budget and request we be allowed to pursue this with LCB staff. Within the formula there is a calculation of credit hours by high, medium and low cost, or categories. As we worked with the new formula, we found that we needed create a better taxonomy (or method to classify courses within the instructional formula matrix) for that high, medium and low that is consistent across the system, for both community colleges and universities. We have now created that new taxonomy and are in the process of modeling it and calculating the fiscal impact. We would ask your consideration to allow us to work with the LCB staff in the next week to look at the impact this taxonomy might have.
Chairman Raggio:
Are you saying that some classes in the community college might be low cost, but the same course in the university might be considered medium cost? Is that what you are saying?
Dr. Nichols:
In our original calculations that was the case. What we have now put together is a taxonomy where the English 101 course would be low cost at both the community colleges and the universities.
Chairman Raggio:
I think we would agree that making it uniform would seem appropriate. That has an impact on the faculty to student ratio. Are you suggesting you are going to augment all of them into some higher costs so we will have a higher ratio, because that will work to your disadvantage. What are you suggesting? How long is this going to take to reclassify all of these courses?
Dr. Nichols:
No, I would not imagine doing that, Chairman Raggio. We think we can do the basic work in about a week, two weeks at the maximum to look at what impact it might have. We are looking long term with this new formula to ensure we do it right the first time. We are asking that door be left open if the numbers are acceptable.
Chairman Raggio:
The door is open for 10 days. We had planned to commence closing university system budgets two weeks from today.
Dr. Nichols:
Also, you see if you are looking at the proposed solution that we are suggesting an increased revenue source in the amount of $1 million in nonresident fees. That would be available and go into effect the second year of the biennium. In order to increase those fees we looked at our position within the Western Interstate Commission for Higher Education (WICHE) states. Our university nonresident tuition is currently below the median for WICHE states. In the case of the universities this would mean an increase of 4.5 percent for the FY 2003 academic year. That would take it from $7,450 to $7,785. We can provide details on those numbers to your staff.
In the case of the community colleges, the discrepancy is not in the regular nonresident tuition, but rather it is in the part-time nonresident rate, which is too low. We are proposing an increase at the community college level of $25 per credit in the nonresident part-time student rate. This has to go to the Board of Regents for approval. It is on their agenda at the meeting in a week, and we anticipate that will be approved. It will generate $1 million in new revenue that we would like to have added to our budget.
Chairman Raggio:
So that is a combination of those two proposals, which is in the second year of the biennium.
Dr. Nichols:
Yes, Mr. Chairman. Finally, I have to say a few words about the urgency of a cost of living adjustment (COLA) for our professional employees that are equal to other state employees. Our faculty and staff did not receive a COLA last biennium while other state workers did.
Chairman Raggio:
They did get merit pay, however?
Dr. Nichols:
We do get merit pay just as other state workers get step increases. We have experienced a demoralizing effect on our faculty. We would ask that you work with us. We are going to put a suggestion on the table today that will help us get our workers to the same level as the rest of the state workers.
Chairman Raggio:
The rest of the state workers are not there, yet. We certainly are endeavoring to do that, but we are waiting for final numbers. We will not get those until the May 1 Economic Forum.
Dr. Nichols:
We are aiming for that possible number that the rest of the state workers might get. At this point in time, that appears to be 4 percent. We understand that if that shifts, then too we would anticipate our pay increase will shift. We would love for our workers to get more, but we would not be asking for that.
Chairman Raggio:
Let me interject the understanding presented to these committees when the budget was presented here. That is, the Governor was including in the budget and recommending a 2 percent increase and that UCCSN would be able to provide an equal amount. I believe that is the way the Governor presented it. The Governor also indicated that the budget was based upon a higher than anticipated percentage of formula funding, something in excess of 84 percent. The implication was, if there was some lack of funding availability, that it had to be found somewhere within UCCSN. So, I just want to make sure we do not lose sight of what was presented to these committees.
Dr. Nichols:
Thank you. Any answer I give will sound defensive. I would like to put in a couple of words of explanation of what we have encountered as we have moved forward on that. We did say to the Governor, and we think we have kept our promise on that, that we would find a match on that COLA. What we were thinking was the 3 percent. From the beginning of our discussions, that was what we were looking at. That was what the Board of Regents originally approved. When we saw the Governor’s final budget, we recognized that we had a problem. The problem was in the fact that the growth in our budget is in the formula areas. We had a number of areas in the budget that are nonformula. There is no enhancement or growth in those areas of the budget. Those areas, such as the School of Medicine, the School of Law and Cooperative Extension, have posed some difficulty for us. You are going to see a proposal today that is a sharing proposal. We still come up with approximately half of the needed amount, the remaining 2 percent and we are asking for some assistance with the 1-1/2 percent of the nonformula budgets and one percent of the formula budgets.
Chairman Raggio:
These committees want to work with you to try to accommodate that within the available revenue that you would receive under the formula and under the percentage the Governor has suggested would be appropriate from the General Fund. It may take some reallocation within your budgets. I think we all have the same goal.
Daniel G. Miles, Vice Chancellor, Finance and Administration, System Administration Office, University and Community College System of Nevada:
We have distributed a handout entitled, “University and Community College System of Nevada Joint Budget Hearing April 10, 2001” (Exhibit C). I would like to go through this document with the subcommittee.
The first page is a schedule that compares our initial request to what the Governor has recommended. That page is in the packet for reference. The second page is the same display, but it is the revenue side and it indicates the amounts of state funding, university revenue and state tax revenues that are within the Governor’s recommended budget. The third page is a portion of our original request, which is a list of special priorities. We have included that in case anyone needs to look back to see what some of those were.
Chairman Raggio:
We went over that list rather extensively and determined that a number of those priorities presently are being funded by sources other than the General Fund.
Mr. Miles:
That was one of the questions you had asked at the last hearing. We replied in this other booklet you were supplied earlier entitled, “UCCSN Responses to LCB Memorandum Dated March 1, 2001, Questions in Preparation for Joint Subcommittee Hearing” (Exhibit D).
Mr. Miles:
The third page indicates the Governor recommended a $250,000 “one-shot” appropriation for the Harry Reid Research Center. The Senate Finance Committee heard a bill yesterday for that purpose.
SENATE BILL 460: Makes appropriation to University of Community College System of Nevada for operation of Harry Reid Center for Environmental Studies at University of Nevada, Las Vegas (BDR S-1427)
Chairman Raggio:
Since that is a “one-shot” appropriation, is there any reason that could not be funded from the estate tax?
Mr. Miles:
In our opinion, the estate tax under the Governor’s recommended budget is maximized in terms of trying to preserve the principal or corpus portion of the endowment.
Chairman Raggio:
There is a question regarding how much is reasonable and necessary to preserve, but that would be a potential source of funding.
Mr. Miles:
If you made that decision, yes.
Chairman Raggio:
No one has made the decision. I am indicating that to be a potential source of funding.
Mr. Miles:
It is a “one-shot” appropriation under the Governor’s proposed budget. The proposal was for ongoing state funds to support that center.
On page 4 is the list of the original “one-shot” appropriations. Number 2, the system computing services, was recommended in the Governor’s budget. The Senate Committee on Finance has had a hearing on that budget, at which time we requested a reduction of about $80,000.
Nevada State College at Henderson – Budget Page UCCSN-80 (Volume 1)
Budget Account 101-3005
Mr. Miles:
Also, on that list is number 9, the Nevada State College startup costs, for which the request was $3 million. The Governor has recommended $1 million for start up costs for Nevada State College.
Chairman Raggio:
What would the $1 million cover?
Mr. Miles:
That was one of the requests that you had made that we responded to in our last hearing. I believe that was question 3 on page 44 (Exhibit D). There is a display there from the Nevada State College.
Chairman Raggio:
In essence, that would cover 5 positions, the president and 4 vice presidents, as well as contracted faculty consultants.
Dr. Nichols:
As a result of the Board of Regents meeting last Friday, we will be submitting to you an amendment on that budget. The new budget will involve potential faculty hires in the second part of the biennium to be ready to accept students the next fall. You will see some shifts in the number of administrators and the administrative costs in that $1 million. I apologize for not having submitted that change in budget. It was just approved by the Board of Regents last Friday.
Chairman Raggio:
Is someone prepared to speak to the status of that situation. As we understand it, the land that was contemplated within the city is not available, and there is a new site proposed.
Dr. Nichols:
I will be happy to speak to that issue, and then I will turn it over to Dr. Moore. The first site that was going to be offered to UCCSN by the city of Henderson did not work out. Henderson withdrew from that possibility. They are now working on a second site. It is a site that would involve the acquisition of Bureau of Land Management (BLM) land as well as a donation to the UCCSN system by the city of Henderson. We are working with the city of Henderson determining whether that site is going to be appropriate. We do not yet know exactly what that package from the city might look like. We do not yet know if that package will be acceptable. We anticipate that it will be. It is a beautiful site. It would lend itself very well to a state college, we believe. So, we are proceeding in negotiations with the city of Henderson on that gift. We anticipate having a proposal before the Board of Regents for their review and, we hope, approval on May 10.
Chairman Raggio:
Is the land and the building on the land available without any acquisition costs?
Dr. Nichols:
The building is located on a parcel of land that cannot be given to the UCCSN because of the cost that the city has in acquiring that land. We do believe that the building will be available to us on a lease at a nominal cost so that we can use it for start-up purposes. It will not be available to use long term as part of the college permanent structure; but, it will be available to us if where we are headed now comes together. It will available to us on a lease basis, and with some remodeling, it would give us a place to start classes.
Chairman Raggio:
We will need more specific information regarding potential costs and lease costs. We will discuss it when we address capital improvement projects (CIP), but I am primarily interested in the funding for the $1 million proposed here for start-up costs.
Dr. Richard Moore, Founding President, Nevada State College at Henderson, University and Community College System of Nevada:
The plan for the $1 million would accomplish three things. One would be to have a small core administrative team on board for 6 months; a team of faculty members for academic planning on board for six months; and money for a small publication so we could have a schedule in the hands of students during the year.
Chairman Raggio:
If the response has been changed, we need you to submit updated information to us.
Dr Moore:
We have a task force advisory committee that looked at the $1 million and $3 million requests. They rank ordered the priorities for which those funds should be used. They suggested a plan as to how the revenue should be used.
Chairman Raggio:
What I am directing your attention to is the $1 million proposal before us for start‑up costs. I thought we heard the chancellor say the response we have is going to be revised. I am suggesting you give us the new revision so we will understand your current proposal.
Dr. Nichols:
Senator, we will have that in your hands tomorrow.
Mr. Miles:
I am going back to Exhibit C. Page 5 and page 6 are the new student FTE enrollments for this year, which show the annualized numbers of this current school year compared to last year. These are the numbers that have now been inserted into the formula funding calculation. This sums to the 48,101 FTE you had mentioned earlier in the meeting, Mr. Chairman. This is a 2.8 percent growth rate from the previous year.
Page 7 of Exhibit C is an informational page showing student FTE enrollments from the 1986-1987 school year, or over a 14-year period. At the bottom of that page, it shows the number of student FTE growth over that period of time for each of the institutions, as well as the percentage increase over that 14-year period. You can see, regardless of the enrollment picture for the current year, the system as a whole has enjoyed strong growth over the last couple of decades.
Chairman Raggio:
Give us the conclusions on that again?
Mr. Miles:
If you look down on the bottom of page 7, under the categorization change 1986‑1987 to 2000-2001, over the system total, the student FTE has increased 25,946 students for a 117.1 percent increase. We are just showing you this because we believe the FTE enrollment in the current year, which is now being used in the formula, is not a normal growth pattern. It is a “blip on the screen,” and we will return to normal growth in the future.
Chairman Raggio:
The problem is we have to fund the “blips” as they occur.
Mr. Miles:
That is correct, and on the next page, I will demonstrate to you the effect on the formula of the new enrollments. At the top of page 8, Exhibit C, the schedule shows the actual enrollments, which are now incorporated into the formula funding calculation. They include the annualized enrollments for FY 2001 and the last two years, FY 2000 and FY 1999. Down on the bottom are the three years that were included in the enrollment projections for the Governor’s recommended budget, because, at that time, there were no annualized FTE numbers available for the current year. Those 3 years were FY 2000, FY 1999 and FY 1998. In this new enrollment projection FY 1998 is dropped out and FY 2001 has been inserted. The most recent year is weighted 50 percent; the second most recent year is weighted 30 percent, and the oldest year is weighted 20 percent within the funding formula. The way it actually works is you take those numbers and develop the growth rate you will use for the upcoming biennium to project out what enrollments would be. That means they are based on actual experience over the last three years. What happens in this case is you drop out the FY 1998 year, which was a strong growth year at 6.1 percent growth overall, and replace it with the new year at 2.8 percent growth, which is less strong. So, the overall system-wide growth rate in the Governor’s recommended budget was 5.8 percent growth for FY 2002 and FY 2003. In the new formula funding it will be 4.3 percent growth rate for FY 2002 and FY 2003, or about a 1.5 percent reduction.
So, as a result that recalculation has resulted in a lesser cost in the FTE formula funding.
Chairman Raggio:
Do you agree we have to be consistent? We cannot use one method one time because it is better and use another method the next time because it is better. We have to be consistent if we are going to do this process.
Mr. Miles:
Through the formula funding study process, the system agreed, and the study committee agreed, that this is a good way to develop the FTEs based upon actual experience.
On page 9 of Exhibit C, there is a summarization of the formula funding calculation and what we are proposing needs to be taken care of with the funding freed up through that FTE formula funding reduction. The first line is the enrollment reprojection of the state fiscal year enrollment numbers and the head count numbers. In addition to the FTE count going down, the head count goes down. This is a factor in the middle of the formula, specifically in student services calculations. So, there is a reduction in the head count numbers as well, which also impacts or reduces the amount of money calculated by the formula. That first line is a combination of the reductions from the FTE and the head count.
Chairman Raggio:
We went over that previously. We understand that.
Mr. Miles:
The next line is the one you already alluded to, which is the revenue reprojection, and it is projected using the revenue model mutually agreed to by our staffs as the model to use to calculate those revenues. This reflects the reduction in the expected FTE. As a footnote to that, we are reviewing investment income at our various campuses to ensure that number is also in line, or that the projections are valid.
That nets out, after the enrollment decrease and the revenue decrease, to about $16.3 million in savings through this calculation. In addition, we are proposing an increase in nonresident fees, which will produce approximately $1 million that would be available in this equation. In addition, we are proposing a technical adjustment in the system computing services budget.
Senator Coffin:
I would like to go back to Dr. Nichols opening comments on nonresident fees. To raise that $1 million in the second year, what is the per-credit-hour cost?
Dr. Nichols:
For the regular tuition, there is no per-credit charge for the full-time student. It is a set amount, which at the universities is an increase of $335. At the community colleges, we think our nonresident tuition rate is appropriate, but we want to address the part-time student who is a nonresident. Right now that is someone who takes 6 or fewer credits at the community college. That would increase $25 per credit.
Senator Coffin:
Would you refresh my memory on what the out-of-state tuition is per semester.
Dr. Nichols:
I do not have that figure. I only have the out-of-state tuition proposed for FY 2002 and FY 2003. In the current year, tuition for the universities for nonresident tuition is $6,980. The proposal, which has been approved by the Board of Regents, would take that to $7,450 in the second year of the biennium. We are suggesting that instead of it going to $7,450, it go to $7,785.
Senator Coffin:
That makes greater sense. I appreciate that information. That figure is artificially low. In fact, even if it were higher than $7,785, you would have my support. That boils down to about a 6 percent increase.
Dr. Nichols:
In the last biennium, we raised that rate about 10 percent each year.
Senator Coffin:
How many students did you lose?
Dr. Nichols:
We always lose some students when we do that. I do not know the exact number, but we catch up.
Senator Coffin:
We do benefit from having a mix of people from out of state. There is always a value to a university for that. I do not want to drive students away, but we do want to make sure that we try to recoup some of our expenses if we are attracting students here. It is still a deal at that price, and a better deal than the state college system in California.
Dr. Nichols:
I believe that is correct. We are aiming for the median of the WICHE states. That is what we are trying to get to, and we are below that median right now. This rate will take us to the median in that second year of the biennium.
Senator Coffin:
There is a reason for that. I am trying to help you find ways to help pay your part‑time instructors, who seem to get left out. I can see them getting left out this session as well. I noticed in all the answers, I cannot find an answer to the questions that I have asked about your projections or commitments from these universities and colleges about part-time instructors. I still cannot find a guaranteed increase of any kind for those people.
Dr. Nichols:
In one of the answers we provided (Exhibit D) we did describe plans and the history of what we pay our part-time instructors. The presidents are all going to attempt to increase those salaries. That will depend on the availability of the COLA increase.
Senator Coffin:
If you got a 3 percent COLA, would you raise the part-time teachers 3 percent?
Dr. Nichols:
That would be our intent to try to do that. Keep in mind that every campus sets its own rates for part-time instructors; so, it would be up to the campus to decide whether it can do that. We have two campuses that will have a difficult time, because, even with the COLA increase, we have a problem with the 1 percent match on the COLA. That is at Western Nevada Community College and Truckee Meadows Community College.
Mr. Miles:
On page 9 in Exhibit C, near the top, there is an item called system computing adjustment. The Governor’s recommended “one-shot” appropriation was heard by the Senate Committee on Finance in the previous week. We came forward with a recommendation to reduce that appropriation because the system computing services department wants to take a slightly different direction in terms of future acquisitions. There is a corresponding reduction in the operating budget of about $70,000 for the biennium. We have provided the details of that information to LCB staff. That frees up more money in the system’s budget.
The new space adjustments that we traditionally make during the budget process and the legislative hearing process, nets a reduction of $1.44 million over the system, which frees up additional funds. So, the new total of money available for correcting the formula problems we have discovered and technical adjustments is $18.8 million.
I should mention that in that space adjustment, the recent changes we have agreed to with LCB staff would remove the athletic facilities at CCSN from the calculation. Also, it would standardize the parking structure allocation at 10 percent of square footage for computation through the Operations and Maintenance (O&M) formula. These items contributed to the reduction that you see before you.
Now that we have $18.8 million net from those items I have just listed, there are some technical adjustments we would like to address in formula corrections. The first one on your list is the O&M recharge correction in UNR’s budget. There they provide O&M services to a number of related budget centers on the campus. They charge them for it, and those funds come back as a credit to the UNR budget. The revenue side of that equation is included in the Governor’s recommended budget, but parts of the expenditure side, particularly in the School of Medicine are absent. To correct that and keep UNR whole, we would need to add $1.7 million as a technical adjustment.
The second matter is the university student credit hour formula correction. It was discovered in reviewing and calculating the new formula, it was not giving full credit to graduate FTEs of the two universities. It was a problem in the distribution of credit hours that has been corrected in formula recalculations. It adds $3.4 million over the biennium to those two universities to correct that particular problem.
Chairman Raggio:
I believe LCB staff has reviewed that and agrees. There was an undercount of undergraduate and graduate students. That equates to an additional amount of $3.4 million over the biennium.
Mr. Miles:
The third is the college part-time faculty equipment formula correction. There is an amount of money allocated annually per faculty for equipment and equipment replacement. In the original formula calculations there was none allocated to the part‑time faculty at the community colleges, and that was an oversight.
Chairman Raggio:
Why is that amount so much? How was that correction calculated?
Mr. Miles:
It equates out in the formula to $3,500 per FTE. This is only the part-time portion of that.
Chairman Raggio:
So, were the part-time faculty left out entirely from the budget allocation?
Mr. Miles:
Yes, the faculty working part-time at the community colleges were left out entirely in the original calculation, but reinstated after the oversight was discovered.
Western Nevada Community College– Budget Page UCCSN-68 (Volume 1)
Budget Account 101-3012
Mr. Miles:
We are requesting a technical correction in the Western Nevada Community College (WNCC) positions. There were two positions for which the salaries need to be annualized. Those positions are only in the budget for part of a year. Also, there was a position that had been transferred from classified to professional in the work program and the transfer back was lost. So, that correction would just restore that position. That was a small correction for the WNCC budget of about $130,000 over the biennium.
Great Basin College– Budget Page UCCSN-64 (Volume 1)
Budget Account 101-2994
A correction is needed in the Great Basin College (GBC) budget in merit calculations. Certain administrative positions are excluded from the calculations. In the case of GBC, too many positions were excluded, or several salaries of what were supposedly higher-level positions were excluded in error. We are asking to restore that, which means about $2,500 more per year for GBC for merit calculations.
UCCSN System Administration– Budget Page UCCSN-1 (Volume 1)
Budget Account 101-2986
The last correction is in the system administrative lease space. We have a new lease for space in Las Vegas. When the original budget request was prepared, the lease was not finalized. The square footage rate is slightly higher in the finalized lease, and we are asking for an adjustment of about $6,000 a year to cover that lease for the Las Vegas office.
So, those are the technical and formula corrections that we would request.
Chairman Raggio:
At that point that would result in a net savings in General Funds of $9.5 million. That still funds the budget in excess of 84 percent in General Funds.
Truckee Meadows Community College– Budget Page UCCSN-76 (Volume 1)
Budget Account 101-3018
Western Nevada Community College– Budget Page UCCSN-68 (Volume 1)
Budget Account 101-3012
Mr. Miles:
That keeps the budget within the amount of money allocated by the Governor. So, there are two items we would like to keep and use some of those additional funds for. One is the “hold harmless,” which represents a new funding formula activity. Under this formula calculation, we now calculate there would be a hold harmless situation at Truckee Meadows Community College (TMCC) in both years of the biennium and at WNCC in the second year of the biennium. The “hold harmless,” as we would like it to be defined here, is the comparison of what the formula produces to the base budget with necessary and required adjustments. When the study committee considered this, it had not thought through the entire hold harmless process.
It was simply stated that we would compare the formula calculations to the existing budget; that if the formula produced less money than in the existing budget that campus would be held harmless for up to two biennia, so that they could ease out of a tough situation. In this case, now that we have had an opportunity to rerun the formulas and see what happens, we believe the test should be comparing the formula calculation to the budget as amended for necessary adjustments that are normal for all state agencies. That would include movement on pay scales for classified positions, the taking on of additional buildings or space, and merit increase costs. If you compared it to the adjusted base budget we do have a hold harmless situation at TMCC and also at WNCC. So, we would propose to keep those campuses whole through this biennia so that the formula calculation does not actually reduce their budget.
The other issue we would like to address is directing the balance of the funds available towards the COLA match, which would be about $7.69 million over the biennia. That is about half of the COLA. The COLA match for professional positions is about $16 million over the biennium. If we did that, the total of those corrections and other issues we would like addressed is $18.83 million, which is the calculated amount of savings that we currently have through the formula recalculations.
Chairman Raggio:
The issue there is this: what amount is necessary for the 2 percent match? How far does this $7.7 million go towards meeting that need, and even if we concurred in this, have you then solved your problem on the 2 percent match?
Dr. Nichols:
The exact amount that is needed for our match is $16 million. The amount needed for our proposal for assistance with a 1.5 percent on the nonformula and 1 percent on the formula is actually $8.5 million. This does not quite get there. It is obviously about $900,000 short of that amount. We would like to get that much additional assistance. That was our proposal on the table that we get some assistance with that 1 percent and the 1.5 percent, but we felt it prudent to come to you today with an amount that is within the freed-up amount resulting from lower enrollment. We would like to have the ability, as inevitable corrections are made in the figures above and if there is additional money, to place that in the COLA match to get us closer to the $8.5 million. I also have to give you a “heads up” that two of our campuses are going to have a very difficult problem with the 1 percent match on the formula. Those are obviously the ones that are not getting additional money and are being held constant. That is TMCC and WNCC.
We believe it is important to keep the integrity of the formula and to do otherwise may jeopardize adhering to that formula. That is the reason we cannot give TMCC and WNCC extra money.
So, the amount is $8.5 million to fund our proposal and the total amount, if you saw fit to fund that, would be $16 million.
Chairman Raggio:
There are a number of issues here. If the enrollment had come in higher, you would be here asking us to augment the funding for it. Correct?
Mr. Miles:
That would probably be our proposal.
Chairman Raggio:
The issue is, since you do not meet the enrollment projections, you require $16.3 million less than is in the Governor’s recommended budget, which would revert to the General Fund. If we do this in your situation, how do we respond to the Kindergarten through grade 12 (K-12) budgets when they have a reversion because of enrollment or some other situation?
Mr. Miles:
I do not believe you are setting a precedent. Historically, when errors and corrections or formula adjustments are found through the budget review process, they have normally been taken care of in the closing of the higher education budgets. In this case, we have a number of items we are bringing to your attention, which we feel, in order to keep the formula intact, need to be addressed.
Chairman Raggio:
We would agree with the $9.5 million adjustments. That would still leave $9 million that would otherwise not be expended from the General Fund. So, your proposal is that we add that to the UCCSN budgets.
Mr. Miles:
Our proposal is that we stay within the amount of money that the Governor has allocated.
Chairman Raggio:
That is one way to look at it. But, in essence, that increases the percentage of General Fund from 84 percent to something higher.
Dr. Nichols:
One thing I might add, while Dan is thinking of the perfect answer for your comment, is often when we are looking at a percentage of the formula that is funded, the COLA is not added into that percentage as we are coming through this stage. Often COLA is added at the end. We came in with the percentage looking good, but it also came in with a 2 percent COLA already added into that, which makes a difference.
Chairman Raggio:
I am not going to belabor it. That was evidently some understanding between the system and the Governor. So, we have already talked about that.
Dr. Jim Richardson, Nevada Faculty Alliance and University and Community College System of Nevada:
I would like to comment on the question of the Governor’s budget and the Governor’s understanding of this situation. Before I do, I want to say, for the record, that I am extremely grateful for your comment earlier regarding the commitment from the two subcommittees to work with us to resolve this problem because it is a large problem for the faculty. I was present at the meeting at which the 2 percent match was first discussed. Dr. Nichols and I were meeting with the Governor during which meeting we were briefing him and his staff on what the formula study committee had accomplished. We urged him to incorporate that as the funding mechanism for this biennial budget. The Governor broached that subject at the end of our discussion after entreaties from us about the importance of a good COLA, since we have gone this biennium without one. The Governor put it on the table as a proposal and we certainly at that point said we would consider it.
What I want to do in a sense is bring the two subcommittees up to date. I have had two interesting conversations with the Governor since the enrollment figures became known. The Governor came over 3 or 4 weeks ago to the legislative halls, and took me aside and explained to me that he had heard about the enrollment figures being lower, and that he wished he had known that before the budget was finalized. Of course, we did not know the figures at that point. But, the Governor told me something that he has told me twice, so I do not mind saying it on the record. He said if I had known those enrollment figures were going to be lower and you would have less money to work with, I would have found another way to put more of the COLA money in the budget. In other words, he said he would have injected the formula money even more.
The Governor understands now that we have a severe problem with the nonformula budgets finding a COLA match. He said some things that made me think he understood that problem and would have found ways to help us. The Governor said that to me twice, and he may have said things similar to other representatives from the system since then. It is worth noting, for the record, he did make an effort to help us with this problem and we deeply appreciate that. We then had the unexpected downturn in enrollment, which is a severe problem. It takes money away that we could have used in various ways, given the flexibility that is part of the new formula system. But, now we are handicapped and we urge you to look with favor on the proposal that is before you. I believe it fits within the Governor’s intentions to try to assist us as much as possible. I do not think I am talking out of turn to recount the conversation that I had with him. I would simply urge very strongly you look with favor on this proposal. It will mean so much to a hard-working faculty that has been very patient this biennium. That is what I wanted to say and I appreciate the opportunity to say it.
Mr. Goldwater:
I appreciate the staff and everyone at the University and Community College System of Nevada, but the chairman’s analogy between this budget and the K-12 budget is perfect. We have been struggling in that budget subcommittee also. They also create a surplus based on local support and state taxes, among other things. If it makes you feel any better, they have not gotten a COLA in quite some time. The chairman’s observation that this is precedent-setting is as important to note as Gubernatorial intent. If it was the Governor’s intent to fund that, I would like to hear that from someone from the Executive Branch and make sure we get that on the record before we do anything in this budget relative to K-12 or anything else.
Mrs. Cegavske:
I would like information on the COLA increase for the part-time faculty. How will that be inserted in with the full-time faculty for the 2001-2003 biennium?
Dr. Nichols:
We do not get specific COLA for our part-time faculty. What I referred to earlier to Senator Coffin was a commitment that the presidents of the institutions have made that they will do everything they can to apply that cost of living to the part-time faculty. I do not want to be on the record as making that commitment on their behalf for each campus, because many of your campuses have less money with the enrollment shift than they thought they would have. They now have to go looking for that money. There is not a specific allocation for that purpose. I know their commitment is strong and I know they will do everything they can to do that.
Mrs. Cegavske:
Do you know the last time raises were provided for part-time faculty?
Dr. Nichols:
We gave you a table that shows the history of the part-time faculty salaries over a period of years. I do not recall the changes that were made last time. The presidents have tried consistently to raise those over the years. Obviously not enough. The Board of Regents has named a study committee on part-time faculty, which will include a review of salary and issues related to that, such as benefits. I would anticipate that information to be presented in the next session of the Legislature. The good news is we are going to do something about it.
Chairman Raggio:
I would like to ask about the utility situation. The outlook is that utilities may cost much more than was anticipated in the budget. Would you like to address that issue? The estimates from you state there would be $5.5 million and $6.7 million shortfall in utilities. Am I on track there? I believe it is $2.1 million and $4.2 million for inflationary costs, part of which were utilities. Apparently, you have estimated that that is the shortfall attributable to potential utility costs.
Mr. Miles:
Yes, Mr. Chairman you are. Because of the situation with natural gas and electricity in this state, we asked each of the campuses, based upon the information available to them, to try to project into the future what they thought those utility costs would be, and then compare them to the levels that are included in the Governor’s recommended budget. The Governor’s recommended budget does recognize there is going to be inflation. One of those items is adjusted at 15 percent a year, and the other is 16 percent a year. Those are unusually high inflation factors for the Governor’s budget. As you all know, there are increases that have been tentatively approved. Those inflation factors will be outstripped over the next two years. The unfortunate thing is there is no way to really tell, because the rate increase is unsettled at this point in time. There are lawsuits involved. The Public Utilities Commission is reviewing and adjustments have already taken place.
My conversations with the budget director are they are proposing a significant energy retrofit and that a conservation program be employed. The effect of that is unknown at this point in time. The budget office has indicated their proposal would be to allow, by special consideration through executive order from the Governor and approval from the Interim Finance Committee (IFC), the ability for the IFC, to allocate funds from the “rainy day” fund when it can be proved what those exact cost overruns are. The position of the system at the moment is to support that as a reasonable process to take care of this problem, primarily because of the unknown amounts or issues out there.
Chairman Raggio:
In the event the “rainy day” fund, or the Fund to Stabilize Operation of State Government as it is correctly known, is not available for that purpose, what backup plan would the system have to deal with the projected shortfall? Do you have hidden cash somewhere?
Mr. Miles:
We do not have hidden cash that I am aware of. Each of the campuses was also requested, in compliance with the request from the administration, to take a look at energy conservation plans and to report back to the state energy office. The report would include their current conservation plans and those plans they are going to implement, as well as what they have been doing in terms of energy conservation or energy retrofit. I would say, by and large, the system has been fairly proactive in that regard. UNR is an example of a campus that has already retrofitted 40 or 41 buildings over the last few years.
Chairman Raggio:
Have they a record of the savings resulting from those efforts?
Mr. Miles:
I am informed they do have such information. Normally, on those projects a consultant reviews a building and determines what savings can be made and then guarantees those if that project goes forward.
Bruce L. Shively, Director, Planning, Budget and Analyses, University of Nevada, Reno, University and Community College System of Nevada:
While I cannot speak in tremendous detail in regard to actual savings, I can certainly get that information for you. I have been at the UNR for about 8 years and we have had an aggressive program of energy retrofit. This has been an ongoing program for many years. My concern is that, at this juncture, is there is not that much more we can do through energy savings or conservation measures.
Chairman Raggio:
Can you turn the computers off at night?
Mr. Shively:
We could do that, but it takes more energy to reboot those computers.
Mr. Goldwater:
Mr. Miles, is the university system using a different model to estimate utility costs and cost increases than is used for the rest of state government and throughout the budget?
Mr. Miles:
I cannot answer that because I do not know what the rest of state government is doing. But, each of our campuses has staff on board that is responsible for this area, and we rely on them to make those calculations.
Mr. Goldwater:
In your experience, would you say your estimates are better than the rest of state government?
Mr. Miles:
I believe our staff has taken a hard look at these calculations. They spent about six weeks doing this, which tells me they went over their calculations to refine these figures.
Mr. Goldwater:
So, in your experience, is that more than the budget office or the legislative staff does in trying to estimate what the growth in utility costs would be?
Mr. Miles:
Each of our campuses has facilities staff, who are not only responsible for the facilities of their particular campus, but things like energy and energy resources. There are a number of proposals in these energy conservation plans that come from the same group of staff.
Mr. Goldwater:
A noteworthy item is you are more sophisticated in modeling and projecting in this particular area. It has popped up as a red flag in your budget. If we are mindful of your budgets and the remaining state budgets, it is going to be a bigger component in all the M-100 decision units throughout the entire state budgets.
Mr. Miles:
As a final comment, the State Public Works Board did a survey of energy conservation costs for electricity and natural gas for FY 2000. In the statewide summarization, we find that our energy costs are about 50 percent of the state’s total energy costs because we are institutions and have buildings that need to be taken care of.
UNLV Law School– Budget Page UCCSN-52 (Volume 1)
Budget Account 101-2992
Chairman Raggio:
We would like to ask you about the law school growth and that funding. Can you indicate to us your projections on the law school? Currently, you have a total of 424 students for FY 2000. What is the actual enrollment for FY 2001?
Dr. Carol C. Harter, President, University of Nevada, Las Vegas, University and Community College System of Nevada:
On page 7 of the enrollment display (Exhibit C) we have an enrollment of 402 law school students in the year 2001.
Chairman Raggio:
Staff, why do our numbers not correspond?
Brian M. Burke, Senior Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau:
As it was explained to me, the head count will not match the FTE. The FTE will actually be higher because of the number of credits that the law students take.
Dr. Harter:
They take an incredible number of credits per semester, about 16 to 18 credits.
Chairman Raggio:
The number 402 is the head count for FY 2001. Does that equate to the FTE number 635 for FY 2001? Do you have the projections for the law school for FY 2002 and FY 2003, including the FTE projections?
Dr. Harter:
No, I am sorry I do not.
Chairman Raggio:
Committee staff is projecting that at 655 for both years.
Dr. Harter:
We are fully enrolled at this point. So, that should be a basically stable number.
Chairman Raggio:
You have all three years fully enrolled with law students?
Dr. Harter:
Yes, and we have our first graduating class this May.
Chairman Raggio:
Is any tuition increase contemplated at the law school?
Dr. Harter:
Not at this time, Mr. Chairman.
Chairman Raggio:
The clinic is one of your priority areas. That is a very high-cost item and even if it were phased in, it would seem to me there is some potential for revenue increase at the law school. If the tuition were increased by 3.5 percent per year, which is the same as the other recommended fee increases at the other institutions, staff has indicated that would generate approximately $88,000 and $177,000 in FY 2002 and FY 2003, respectively. Maybe that is something you should look at.
Dr. Harter:
We will certainly look at that, Senator Raggio.
Chairman Raggio:
The committee would like to address an issue of nonresident tuition. The issue is whether, when you approach the IFC for authority to utilize higher-than-anticipated revenues, that should be limited to just the in-state tuition, rather than the out‑of‑state tuition as well. The out-of-state tuition that we just discussed is rather significant. The theory is that the purpose of out-of-state fees is to pay the cost of additional class sections and faculty and whatever else is necessary for nonresident students. Again, the committee wants to revisit whether to authorize just the in‑state fees and exclude the out-of-state tuition that is collected over the budgeted level. Do you understand what I am saying?
Dr. Nichols:
I do understand, Senator. I am puzzled by it.
Chairman Raggio:
The issue is whether those fees are really needed to generate the incremental cost of providing the additional faculty positions. We understand when you request to use additional in-state tuition and there is a need to do that. However, the nonresident tuition is supposed to generate revenue to cover the additional costs and not be used for other purposes. We know, historically, it has occurred and has been used for salary increases in some situations.
Dr. Nichols:
We would much prefer to have an agreement with you on how that might be used. Remember that our nonresident fees are established to, theoretically, cover the full cost of education so the state does not support nonresidents’ education. If we are not able to use the additional fee revenue for that purpose, it is a breaking of the contract on the purpose of those fees. I believe that those additional fees are essential as we see the amount of work that it takes to enroll those extra students. We can plan as we get into the biennium for that purpose, but I would be reluctant to so segregate the nonresident fees to indicate that they are not required for the purpose of instruction.
Chairman Raggio:
All right, it is an issue that should be thought about. At one point in time, the Budget Division indicated that, if there were errors or omission or there needed to be some funding adjustment, funding should be provided through reductions in the M-200 formula module. Therefore, if that were true and we followed that suggestion, there would be a 1 percent reduction. I am just following up on what the budget division had indicated.
Mr. Miles:
Our staff and your staff have been looking at what that number is.
Chairman Raggio:
I am just alerting you that was a suggestion from the Budget Division and committee staff did some calculations on it. We are looking for ways to reach the goal you are suggesting.
Senator Coffin:
The good neighbor policy has not been addressed. The good neighbor tuition policy surfaced during my tenure within the last 18 years. It was an attempt to cooperate with neighboring states, and in some cases, to help people in rural areas that may live near our borders and are closer to our campuses than theirs. I am wondering whether you have given thought to increasing or doing away with that program because it is a drain on our resources.
Dr. Nichols:
We are taking a look at whether to increase that good neighbor policy. We are taking a look at all of those similar kinds of fees. The numbers are relatively small, but we are looking at whether they should also be increased as we look at increasing the nonresident fees. We are trying to put a total package together on that for consideration by the Board of Regents. I only brought the big one for today’s meeting, the one that generates enough money to make a difference. That is the nonresident tuition, but we are looking at the good neighbor policy to see whether adjustments need to be made to that as well.
Senator Coffin:
We do not know how many students are in the system on the good neighbor policy. Can you tell me?
Dr. Nichols:
No I cannot, but I will get that information to you.
Senator Coffin:
What are we charging them for tuition?
Dr. Nichols:
The good neighbor policy is one and one-half times our instate cost of tuition. We have handled that to try to keep it competitive for students who live right on our borders, who work in Nevada in many cases, or whose family primarily lives in Nevada and this is their natural place to do business. We do charge, and we do not give them the in-state rate.
Senator Coffin:
I would like to see a breakout on that if I could, Mr. Chairman. The actual residence of people whose families may be working or living in Nevada and paying some taxes, versus people living in communities far away and not working in this state and not paying any taxes. This may be an opening here.
Chairman Raggio:
Please provide that information.
Senator Rawson:
It is important to stay in the formulas and not get into extra adjustments. I do see problems with the School of Medicine. In the normal budget process, some things do not surface to the top. We have a number of residency programs that are on probation or proposed probation at this time. That is a serious step. We had a hearing in the Senate Committee on Human Resources and addressed all of the residency programs and their status. At some point we need to determine what it takes to maintain, or not lose those residency programs.
Chairman Raggio:
Can someone address what is being done to deal with that situation?
Dr. Robert H. Miller, Dean, School of Medicine, University of Nevada, Reno, University and Community College System of Nevada (UNSOM):
At the current time the residency program in Las Vegas, the Family Medicine Program has been on probation. The program is on probation because of educational flaws that, for the most part, have been corrected. We brought in a new program director to correct those educational flaws. They are also having a financial problem relative to a relationship with a Quick Care Center. This relationship was established 2 or 3 years ago with the best of intentions by both the University Medical Center (UMC) and the school. Unfortunately, because of the nature of the patients seen in the Quick Care Center, it actually did not help the program educationally. The reduction in size of the faculty in that program and the requirements for the faculty to work in the Quick Care Center have affected the amount of time faculty can spend with the residents. We are exploring ways to try and correct this relationship. UMC has been very helpful in doing that, but it is a serious problem and it is going to take some money to fix it.
Chairman Raggio:
Are there other programs on probation?
Dr. Miller:
We do not have any others on probation; however, the program in obstetrics/gynecology (OBGYN) and the program in internal medicine in Las Vegas are on proposed probation, primarily related to educational issues, which for the most part, we have addressed. OBGYN has been particularly vexing for me. Because of administrative changes we have had to make there has been a problem in maintaining a stable faculty in that program. We have a search in process for a new chairman, but that program, prior to my arriving here, had run into a significant debt that I have to address as we recruit the new chairman.
Chairman Raggio:
What about tuition fees at the medical school?
Dr. Miller:
I do not have the exact numbers, but our in-state tuition is about $6,000 or $7,000 a year. Our out-of-state tuition is about $22,000 a year.
Chairman Raggio:
Have those been reviewed for potential increases? How do they compare with other medical schools?
Dr. Miller:
As far as state schools are concerned, I believe our in-state tuition is right at the average, or maybe slightly below it. The out-of-state tuition is quite high, but other states have high tuitions for out-of-state students. One thing you have to plug into the formula when considering increasing medical school tuition is that about 80 percent of our students graduate with debt. Some of that debt is accumulated during college, but most of it is incurred during medical school. The average level of indebtedness for medical students that graduate from our school is about $85,000.
Senator Rawson has brought up a good point with the residency issue. I did inherit some departments that are in the red. We have taken care of many of the financial issues, but we do have debt that needs to be addressed. It is affecting the residencies, and one of the matters we have looked at in training doctors for Nevada is that the payback on residency is quite good. If you look at our last graduating class of residents, those finishing their training in 2000, about 76 percent stayed in Nevada. To recruit doctors for Nevada, it is a wise investment to place money and resources into developing residency.
Senator Rawson:
The dean is a good team player and he does not want to break out of the corral. He inherited debt in the dean’s office and it hampers every activity he is involved in because he carries that debt. There is no line source take care of that debt. I think we should look at this budget. I do not know that we can handle all of the problems, but I do believe this a worthy budget to look at.
Chairman Raggio:
We are willing to consider anything you would like to present.
Dr. Miller:
My biggest concern is recruiting a new chairman for obstetrics and gynecology because that department has a $600,000 debt. The significant nature of rebuilding the department means it will take a new chairman and the entire faculty to succeed. I am hoping to have an attractive recruitment package put together, of at least $1 million, to attract that caliber of chairman.
Chairman Raggio:
Have you discussed this with the Board of Regents?
Dr. Miller:
No, and the reason is that much of this has come forward since we put together the budget. The budget was basically put together when I was new to the department.
Chairman Raggio:
I believe the Board of Regents would be a good place to start.
Dr. Miller:
We have three items that have been considered by the Board of Regents, which they consider relatively high priority. First, because of the situation I found within the school, I felt it was important we hire professional management. One of the requests I presented to the Board of Regents was the hiring of a chief financial officer (CFO). That is one of our recommended enhancements that have a high priority.
Chairman Raggio:
In the absence of a CFO, is there assistance that can come from within the system? You are not a stepchild to the university system.
Dr. Miller:
No, the system has been very helpful. The University has been helpful in providing this assistance. I have hired the CFO with the special tax on the faculty practice plan because I feel that it is important we have this position filled. However, it is taking resources from other areas. This person has been on board since August 2000.
The second area that is important is that Nevada has a valuable resource in the base science program in Reno. They are researching genomics and “proteomics” (broadly defined as the genetic material of an organism), which are “cutting edge” aspects of science at this time. This requires a great deal of sophisticated instrumentation. We get that instrumentation for a core facility so that we do not have the same instruments for every lab. There is a sharing that takes place. It would be helpful to have 3 Research Technician positions to maintain this equipment, which is very delicate and expensive. Our research effort is very productive. The state General Fund gets 25 percent of every indirect cost dollar that comes in from that research program. So, there is a return to the state as we expand our research program.
Finally, we have requested permanent funding for the Pediatric Diabetes Endocrinology Center. We did receive a small amount of funding in the last legislative session. Frankly, with that amount of funding we are not able to provide the services that you would like us to provide. That is why we have requested the increase to $380,000 per year.
Chairman Raggio:
Are any of those items being funded at the present time?
Dr. Miller:
The diabetes program is currently funded by an allocation made by the legislature in the last session. It was at a much lower funding level. The funding was initially established for one center in Las Vegas. However, as the bill went through the legislative process, it was expanded into a statewide program. Frankly, my concern is the level of funding at this time is inadequate to provide the full amount of services that you would like to see across the state.
Mr. Goldwater:
You indicated you have hired a CFO. Management of the program’s funding is important, but do we not receive sufficient funds from Medicaid graduate medical education (GME) to assist in the program’s needs?
Dr. Miller:
The GME funding generally goes through the hospitals. The medical school itself has a yearly budget of $70 million. I do not think anyone here would run a $70 million company without a CFO.
Mr. Goldwater:
Are you comfortable with the federal allocations and the funding that is supposed to be enhancing your activity?
Dr. Miller:
There is revenue from the federal government through our faculty practice plan from Medicare and Medicaid. There is clearly money that comes into the school from the National Institute of Health (NIH) funding. That is handled primarily through the university’s grants system.
Dental School – UNLV– Budget Page UCCSN-55 (Volume 1)
Budget Account 101-3002
Chairman Raggio:
Can you enlighten us as to the status of the Dental School and the School of Pharmacy?
Dr. Harter:
Dr. McFarlane and Dr. Westfall can enlighten you as to the pharmacy school. Regarding the Dental School, two of the clinics are operative, each at a different location on Sahara Avenue in Las Vegas. We anticipate future Medicaid contracts and patients, but getting the process completed is slower than we expected. We now expect it to begin on June 1, 2001, and then we will be fully ready to serve that group of patients. Again, two are located on Sahara Avenue, and the third we call the “Enterprise” site on Martin Luther King Boulevard. We have some other on the Nevada Check-Up Plan and the dental enterprise. We have other revenues coming into the clinic, but not at the level we will have when Medicaid starts to flow on June 1, 2001. We had anticipated that earlier, but apparently the state bureaucracy that deals with this has been slower than we had hoped.
We also have a visit scheduled in mid-May from the federal regional Health Care Financing Administration in San Francisco. Their visit is to ensure we are ready to take on the various extensive practice that serving the Medicaid population will involve. As for the school itself, we have a small core of administrators, the dean, an academic associate dean, and two other administrative people, who are all readying the school for the first students to be enrolled in August 2002. We are hopeful that we will be able to begin the school with students at that time. We still have clear needs for state support to fund the operation and the students that we hope to enroll at that time.
Chairman Raggio:
Have you submitted to us the most recent, revised cost to that, so that we know what state support is necessary?
Dr. Harter:
Currently, we are trying to get to a better number. Part of our problem is based on the failure of the Medicaid revenues to materialize during the months that we hoped they would.
Chairman Raggio:
What is the ballpark amount of the state support that would be required to implement the school on the schedule you have indicated?
Dr. Harter:
In the next biennium, it is $3 million in each of the two years of the biennium. I will provide that information to committee staff.
Chairman Raggio:
Tell us about the School of Pharmacy.
Dr. Stephen C. McFarlane, Interim President, University of Nevada, Reno, University and Community College System of Nevada
I think it is fair to say that the School of Pharmacy represents a proposal that brings together all of the best of the system in the manner it should function. The reason I say that is there is a tremendous need nationwide and in Nevada for training more pharmacists. This affects everyone who takes medication at any time. It is a program that we developed to be as low cost as possible, yet has high quality. It involves all of the institutions in the system. Each is fully articulated and each school in the community colleges and universities would contribute feeder students to this school. It builds on a joint relationship between the University of Nevada, Las Vegas, (UNLV) and UNR in that we would actually be in both institutions answering to both presidents of the respective universities.
Also, it builds on the fact that we have some very talented faculty in the School of Medicine that can contribute to the teaching in that area, and that keeps the costs down. We have a proposal before you that has received a very high priority from the Board of Regents. I would be happy to speak to any specific aspects.
Chairman Raggio:
Is the estimated cost of that still $2.8 million over the biennium?
Dr. McFarlane:
Yes, it is. We have a couple of outside agencies that we have been working with. The national organization has set aside some funds, and if we were to identify some state funds into that, we would be able to bring some of those funds into the program.
Chairman Raggio:
What does the $2.8 million provide? The $805,000 in the first year and $2 million in the second year.
Dr. McFarlane:
The initial $805,000 is to bring on board a dean and staff for planning that school.
Dr. David P. Westfall, Vice President for Academic Affairs, University and Community College System:
Dr. McFarlane is correct. The start up funds are primarily for faculty. We need a dean and an associate dean to handle the Las Vegas component of the program and to begin to hire appropriate faculty for that school. There are some operating dollars built into that.
The $2 million in the second year represents a ramping up of the faculty. We would start in the first year with fewer faculty than would be necessary when the school opens. That would be increased in preparation for professional students who would come two years from now.
Chairman Raggio:
Where would the school be located?
Dr. Westfall:
The school was to be located in Las Vegas and Reno. The plan at the moment is to have the preclinical years be in Reno. So, the students would be at UNR. We are hoping to squeeze those students into the existing space at this time. There is an expansion of the medical school, and we are hoping that will free some space for pharmacy students that is currently occupied by medical students. The medical students will be relocating into the new Pennington Medical Education Building.
Dr. Mcfarlane:
Again, that is excellent use of the facility and faculty that are in the School of Medicine and the basic scientists who would be contributing to this. The building of the Pennington Medical Education building will bring that curriculum of the School of Medicine into alignment with the goals of the school and free up the old classrooms for teaching in graduate education, as well as in pharmacy.
Senator Coffin:
There is a private school of pharmacy that has started in Nevada. Representatives of that school have stated the school has received preliminary accreditation from a post-secondary commission, and the school is currently pursuing accreditation with the American Council on Pharmaceutical Education. Everybody on these committees has received a letter from the person who has started this school. It is underway and the school is not asking for state funds. Apparently, there is a reason for starting these schools, which is a need for pharmacists. What would be the difference in quality between the schools? Is this just something we want to have? Is there a true need for the state to have a school when there is a private organization that would accomplish the same thing?
Dr. Westfall:
It is a private school, and it is not part of the UCCSN. So, it is not part of our effort. We began planning for this school long before there were plans for a private school of pharmacy in Las Vegas. That program grew out of an effort by the university in southern California to open a branch campus in Las Vegas because of the need for pharmacists. That program did not work out, but the person who was hired to do that is a well-known pharmacy educator and he decided to launch his own school of pharmacy.
Hopefully without insulting anybody, I would mention that the cost to our Nevada students to go to a private pharmacy school will be very high relative to what the UCCSN can provide. So, there is a huge differential in terms of what it would cost privately relative to public education supported by the state.
Senator Coffin:
So you are saying that huge differential is money that we could use for other programs rather than starting a new program.
Dr. McFarlane:
Dr. Westfall is being very careful in his comments. One would need to look at the proposed curriculum and faculty of that school and what would be offered in a school within the state system. There is a reason to say there is a difference in the quality and planning of the education. I will be the one that goes out on the limb in saying that.
Senator Coffin:
You are saying that your product, or our product, would be better. Can we not let the market decide that point? If people in the business world are willing to hire graduates from this pharmacy school, why not let them?
Dr. McFarlane:
The system is in a pinch with a shortage of pharmacists and there are a variety of ways that might be economically advantageous and feasible to fill a need for qualified people. What is at stake is the health of the citizenry, the importance of managing medications that have potential interactions and other kinds of complications, and the newness of the drugs coming on line. An education is best when based on the kinds of things we can uniquely offer with well-trained basic scientists already on board in the School of Medicine.
Senator Coffin:
We would already be at risk. While we have waited for the university to plan, think, decide, and finally come up with this plan, other schools that have existed for many years have provided those pharmacists. Granted, Nevada may have a shortage, but we also have a greater shortage of dentists. We have a greater need of people in the dentistry profession. If I were to allocate my money, I would put it there, rather than trying to start a new pharmacy school simply because we know that those people pay their way and they get the corporate dollars to pay their way. I am not sure whether what you say is true in the sense that it is a risky proposition for our citizen’s formularies to be administered by someone who may come from a school that is unknown. I will not say you are impugning them. I do not think you are. But, if we followed that line of reasoning, then our citizens are in danger by all pharmacists because we do not know where they were trained.
Dr. McFarlane:
What I am saying is the quality of school that we could implement is going to be very high. It will be comparable with other reputable schools throughout the nation. There have been other ideas about bringing people from offshore and bringing in certain kinds of aides with minimal training, for example. All of those are somewhat risky. We are looking at something that is worthwhile; and dentists will have a need for pharmacists, as well. That just increases the needs and there is also a nationwide shortage of pharmacists.
Dr. Nichols:
What you are alluding to, Senator Coffin, is exactly the dilemma that we are facing in higher education. We are expected to produce the workforce needed by Nevada and we are particularly short in teachers in all the health related fields. What you have before you is a budget that addresses the pharmacy school in advance, before the session of the legislature at which we are directed to double or to go into the pharmacy business. We think it is good planning. We think this is the right time to proceed with the School of Pharmacy, to meet the needs of the state for manpower, and to meet the needs of our young people to go into this profession.
Are there private entities out there that might come in? We have certainly seen them in teacher education. We have seen them in nursing, but do you know what? They take the cream of the crop that can afford to pay the high amounts and they never end up meeting the needs of this state. We see this over and over again. So, maybe we cannot afford this school this session, but our job is to tell you that we think this is good planning and that it will be just a matter of time until Nevada needs its pharmacy school.
Chairman Raggio:
Are there any others who wish to present any matters before the committee this morning?
Dr. Joseph N. Crowley, Assistant to Chancellor for Legislative Relations, University and Community College System of Nevada:
I would like to offer a few comments, mainly of a historical nature, that may help the committee deal with these difficult issues, particularly the $16 million issue that was so well presented by the chancellor. It has been observed that to allow the system to retain the nearly $8 million left after the technical adjustments would be precedent‑setting. I think that is an accurate observation, but we are in a precedent‑setting situation. We are dealing with an entirely new set of formulas that offers a great promise for the long term. However, in the short term, we have to deal with the difficulties such a dramatic change presents to us. The technical adjustments, of course, are part of that. The notion of “hold harmless” is part of that. That is precedent-setting. The way that we count enrollments is precedent‑setting. It has not worked to our favor this time. We are not asking for a change in that.
It is important to keep in mind that, underlying the discussion of the Interim Committee as I recall it, studying the funding of higher education was a consideration of the share of the General Fund, to which the higher education system in this state should be entitled. When the 1991 session of the Legislature concluded with a generous appropriation for UCCSN, that share stood at a little above 20 percent. In about two months, we gave that funding and all the additional dollars we had received back because of the state’s financial pinch. Over the course of two years, we returned almost $40 million to the state treasury. Again, if my memory serves correctly, our share of the General Fund went to 17.5 percent. That is about a 13 percent reduction in our share of the General Fund. Since that time, we have been laboring to get back up to where we were 10 years ago, having undergone, in that period of time, approximately a 57 percent increase in the FTE population that we serve.
We were in the neighborhood last biennium with a 19.5 percent share of the General Fund. The Executive Budget is in that neighborhood, as well. In the end, all we are asking for is to retain the share of The Executive Budget that the Governor has proposed for us. We are aware that in the event of a shortfall we need to do our share, and we would simply like to start from the same place that others do in the calculation of what our share ought to be.
If I may, Mr. Chairman, I would like to make one more comment. I believe that during the course of the current biennium, UCCSN professionals are the only group of state employees that has not received a COLA increase one way or the other. I am aware that we have a merit system. State classified employees have a merit system of sorts. Indeed, our merit program, when it was conceived in 1985, was based on the state classified employees merit system. There are step systems in other state employee categories. There are longevity systems in other state employee categories. This biennium, of those four possible ways of enhancing salary, UCCSN professionals had only merit increases. I think that is an important consideration. Not a complaint, but simply a consideration for the committee to incorporate as it looks at our request for retaining that $7.7 million for the 2 percent match. Thank you, Mr. Chairman.
Mr. Marvel:
Great Basin College is close to my heart. Are the baccalaureate programs going to be funded in this budget?
Dr. Nichols:
We have a situation that has arisen because of the nature of the way we had to put our budget together under the Governor’s instructions. In our list of priorities for enhancement funding there is an amount under the Great Basin College for $600,000 for the biennium. Actually, we had to put that in that category. That is actually two different pots of money for two different purposes. $130,000 a year of that is for the continuation of the already operating baccalaureate programs. So, $260,000 for the biennium is required for the continuation of those programs. The remainder of that money is needed for the proposed new nursing program. That is, indeed, an enhancement, but the Great Basin College baccalaureate programs continuation money is folded into that.
Mr. Marvel:
We do have such a shortage in the state of Nevada that I would like to see this program continue on.
Chairman Raggio:
Are there any other questions or comments?
Mr. Miles:
One last item. This is for your information. One of the questions directed to the system after our last hearing, which is included in our response at question 11, deals with COLA and merit costs for positions currently funded through the estate tax. There is no provision in those funding levels for the cost of the merit increases or COLAs. We just wanted to alert you to that fact. We are trying to come up with a solution for that problem internally. We may be bringing a proposal on that forward during your closing.
Chairman Raggio:
I believe committee staff is aware of that issue.
Dr. Nichols:
In our current estate tax allocation recommended by the Governor, there are $3 million for performance funding as a result of the IFC study on the new formula. We think that is a good idea and are most anxious to do that. You have some material on the ways we propose to do that. However, given our inability to fund some programs that are absolutely essential, I will be taking to the next meeting of the Board of Regents, a recommendation they consider whether to recommend to you taking that $3 million currently set aside for performance funding and using it in a different way for some of our “one-shot” appropriations. That would probably be the Experimental Program for the Stimulation of Competitive Research (EPSCoR) funding, but it will be up to them to make that final decision.
Chairman Raggio:
We welcome that information.
NOTE: The following budgets were on the agenda, but not specifically addressed.
UCCSN System Administration – Budget Page UCCSN (Volume 1)
Budget Account 101-2986
UCCSN – Special Projects– Budget Page UCCSN-6 (Volume 1)
Budget Account 101-2977
University Press– Budget Page UCCSN-8 (Volume 1)
Budget Account 101-2996
System Computing Center– Budget Page UCCSN-11 (Volume 1)
Budget Account 101-2991
University of Nevada – Reno– Budget Page UCCSN-17 (Volume 1)
Budget Account 101-2980
Intercollegiate Athletics – UNR Budget Page UCCSN-21 (Volume 1)
Budget Account 101-2983
Statewide Programs – UNR Budget Page UCCSN-24 (Volume 1)
Budget Account 101-2985
UCCSN Health Laboratory and Research – Budget Page UCCSN-30 (Volume 1)
Budget Account 101-3221
Agriculture Experiment Station– Budget Page UCCSN-33 (Volume 1)
Budget Account 101-2989
University of Nevada – Las Vegas– Budget Page UCCSN-42 (Volume 1)
Budget Account 101-2987
Intercollegiate Athletics – UNLV– Budget Page UCCSN-46 (Volume 1)
Budget Account 101-2988
Statewide Programs – UNLV– Budget Page UCCSN-49 (Volume 1)
Budget Account 101-3001
Desert Research Institute– Budget Page UCCSN-60 (Volume 1)
Budget Account 101-3010
Community College of Southern Nevada– Budget Page UCCSN-72 (Volume 1)
Budget Account 101-3011
Chairman Raggio adjourned the meeting at 10:24 a.m.
RESPECTFULLY SUBMITTED:
ElizaBeth Root
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE:
________________________________________
Mr. Morse Arberry Jr., Chairman
DATE: