MINUTES OF THE
JOINT Subcommittee on
Higher Education and Capital Improvements
of the
Senate Committee on Finance
AND THE
Assembly Committee on Ways and Means
Seventy-second Session
April 10, 2003
The Joint Subcommittee on Higher Education and Capital Improvements of the Senate Committee on Finance and the Assembly Committee on Ways and Means was called to order by Chairman William J. Raggio at 9:17 a.m. on Thursday, April 10, 2003, 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 Barbara Cegavske
Senator Bernice Mathews
Assembly COMMITTEE MEMBERS PRESENT:
Mr. Morse Arberry Jr., Chairman
Mr. Walter Andonov
Mrs. Vonne Stout Chowning
Mrs. Dawn Gibbons
Mr. David E. Goldwater
Mr. Richard D. Perkins
COMMITTEE MEMBERS ABSENT:
Senator Raymond D. Rawson, Vice Chairman (Excused)
STAFF MEMBERS PRESENT:
Gary L. Ghiggeri, Senate Fiscal Analyst
Mark W. Stevens, Assembly Fiscal Analyst
Brian M. Burke, Senior Program Analyst
Pamela Carter, Committee Secretary
OTHERS PRESENT:
Daniel G. Miles, Vice Chancellor, Finance and Administration, System Administration Office, University and Community College System of Nevada
James Manning, Budget Analyst V, Budget Division, Department of Administration
Dr. Jane A. Nichols, Chancellor, System Administration Office, University and Community College System of Nevada
Dr. Kerry Romesburg, President, Nevada State College at Henderson, University and Community College System of Nevada
Bill Welch, Lobbyist, Nevada Hospital Association
Dr. Carol C. Harter, President, University of Nevada, Las Vegas, University and Community College System of Nevada
Anthony Flores, Vice President, Finance, University of Nevada, Las Vegas, University and Community College System of Nevada
Patrick J. Ferrillo, Jr., D.D.S., Dean, School of Dentistry, University of Nevada, Las Vegas, University and Community College System of Nevada
Dr. John Lilley, President, University of Nevada, Reno, University, University and Community College System of Nevada
James Richardson, Lobbyist, Nevada Faculty Alliance
Robert E. Dickens, Lobbyist, University of Nevada, Reno
UNIVERSITY AND COMMUNITY COLLEGE SYSTEM OF NEVADA – OVERVIEW
Brian M. Burke, Senior Program Analyst, Fiscal Analysis Division, said the Executive Budget contains a number of errors and omissions requiring subcommittee attention. He indicated calculation errors would cost the General Fund an estimated $7.32 million over the biennium. He explained the most significant errors result from miscalculations of retirement and retired employee group insurance rate assessments.
Mr. Burke pointed out input and calculation errors have been discovered resulting in General Fund savings of $915,013 and estate tax savings of $2.55 million over the biennium. He said the most significant savings include duplication of input on Truckee Meadows Community College (TMCC) high technology center costs, merit calculation errors, and adjustments to the nonformula vacancy factor. He emphasized the net General Fund cost to correct the errors and omissions is estimated at $6.41 million during the next biennium.
Senator Raggio asked Mr. Miles if he was in agreement with the calculations.
Daniel G. Miles, Vice Chancellor, Finance and Administration, System Administration Office, University and Community College System of Nevada (UCCSN), replied UCCSN agrees with the numbers and calculations presented by Mr. Burke.
Senator Raggio asked whether the $6.4 million General Fund shortfall should be funded through formula reductions. James Manning, Budget Analyst, Budget Division, Department of Administration, replied yes, the General Fund shortfall should be funded through formula reductions.
Mr. Burke said UCCSN has requested a number of adjustments resulting in a net total General Fund savings of $1.1 million over the biennium. He explained the cost-savings requests include revenue adjustments and re-projections of new space costs. He added the cost increase items include utility adjustments at University of Nevada, Reno (UNR) and restoration of instructional and vacancy funding at TMCC.
Senator Raggio asked Mr. Miles if he was in agreement with the adjustments. Mr. Miles stated he agrees with the adjustments and savings.
Mr. Burke said the estate tax is being phased out as a revenue source. He noted the Governor’s budget currently reflects approximately $92.6 million in estate tax expenditures for the biennium. He pointed out several pending adjustments reducing estate tax expenditures to $89 million for the biennium. Mr. Burke explained one proposal transfers estate tax funds to the General Fund, enabling State monies to fund estate tax expenditures.
Mr. Burke noted UCCSN’s projected $10.6 million shortfall in the next biennium and expressed concern about whether shifting the risk to the State would create a $10.6 million deficit in the General Fund. He explained the proposed expenditure plan would leave UCCSN’s estate tax endowment short of the principal required to generate $2.5 million per year in interest revenues.
Mr. Burke said Nevada Revised Statutes (NRS) 375A.705 states UCCSN may spend excess money in the estate tax account over and above the principal to yield an annual income of $2.5 million. He explained Senate Bill (S.B.) 415 would eliminate the interest generation requirement associated with estate tax revenues.
SENATE BILL 415: Removes certain restrictions on use of money in Estate Tax Account in Endowment Fund of University and Community College System of Nevada. (BDR 32-1264)
Mr. Burke pointed out passage of S.B. 415 is required to process the estate tax spending plan recommended by the Governor.
Senator Raggio responded S.B. 415 has passed the Senate. He said the bill is in the Assembly. He asked whether UCCSN has any options other than shifting the risk to the General Fund. Mr. Miles replied shifting the risk will save the critical programs currently funded from estate tax funds in the UCCSN budget.
Mr. Burke said the total General Fund base corrections and adjustments for fiscal year (FY) 2004 and FY 2005 is $1.38 million.
UCCSN System Administration – Budget Page UCCSN-1 (Volume 1)
Budget Account 101-2986
Mr. Burke pointed out the Governor recommends a total of $1.76 million in FY 2003-2004 and $2.37 million in FY 2004-2005 to fund inflationary increases for software and hardware maintenance agreements; independent audit cost increases; property, bond, tort and vehicle insurance; medical malpractice insurance premiums; printing raw materials; and shipping costs.
Mr. Burke said the Governor recommends $54.2 million in FY 2003-2004 and $68 million in FY 2004-2005 to fund UCCSN functional formulas. He noted decision unit M-200 uniformly distributes available formula funding and reflects the differences between the total formula recommendations and the amounts provided in the base and maintenance modules.
Senator Raggio stated the committee should look at updated enrollment projections. Mr. Burke explained student full time equivalent (FTE) projections have been updated based on actual FY 2002-2003 counts. He noted there have been significant projected increases in enrollments at Nevada’s universities and community colleges, with the exception of Western Nevada Community College (WNCC). He said new projections result in increased enrollments of 1661 more FTEs in FY 2003-2004 and 2294 more FTEs in FY 2004-2005.
Senator Cegavske asked how calculations are performed at Nevada State College (NSC) at Henderson and whether enrollments are based on full-time or part-time students.
Dr. Jane A. Nichols, Chancellor, System Administration Office, University and Community College System of Nevada, referenced the University and Community College System of Nevada Responses to LCB Memorandum Dated March 3, 2003 Questions in Preparation for Joint Subcommittee Hearing (Exhibit C. Original is on file in the Research Library.), and replied projected enrollments at NSC for FY 2004 and FY 2005 are annualized FTEs and not actual student count. She explained one semester FTE is calculated by dividing undergraduate student credit hours by 15. She noted NSC is not funded under the Governor’s 86 percent formula recommendation.
Senator Raggio asked whether actual FY 2003 numbers were used to project increased enrollment. Dr. Nichols replied UCCSN experienced an 8.2 percent growth between FY 2003 and FY 2002. She explained projections are driven by a 3-year weighted average.
Senator Raggio cited the University and Community College System of Nevada summary (Exhibit D), and said if the Governor’s recommended 86 percent formula was applied to UCCSN revised enrollments, costs would increase by $9.1 million in FY 2003-2004 and $11.8 million in FY 2004-2005. He noted the $20.9 million cost increase for the biennium is more than the amounts reflected in the Executive Budget. He explained approximately $13.2 million in additional General Fund appropriations would be needed over the biennium if $7.7 million was generated by additional fees due to increased enrollments.
Dr. Nichols replied if UCCS was funded under the 86 percent formula, it would hope to double nursing student enrollment within the next 2 years through the nursing initiative. She explained the university and community college presidents could begin increasing part-time faculty salaries, athletic fee waivers could be implemented over the next 4 years, TMCC could fund its veterinary technician program, and UCCSN could support the P-16 Council comprised of educational, business, and political leaders addressing educational goals and objectives and planning joint initiatives.
Senator Raggio asked whether program costs have been estimated. Dr. Nichols replied total program costs on the priority list for special consideration have been estimated at $8.8 million in the UCCSN summary. She said the priority list does not include the nursing initiative.
Senator Raggio asked how the $8.8 million was computed. Dr. Nichols replied part-time faculty salaries will increase to $4,849,321 over the biennium, athletic fee waivers total $3,542,849, TMCC’s Veterinary Technician Program is estimated at $425,000, and P-16 council support will be approximately $80,000 over the biennium.
Senator Raggio asked Dr. Nichols her understanding of a long-term agreement with the State on athletic fee waivers. Dr. Nichols replied the athletic fee waivers would be handled like other state fee waivers. She said the waivers would result in a reduction of fee revenue, and funds would be redirected to cover the waivers.
Assemblywoman Gibbons asked whether there would be an increase in the number of classes available to students if UCCSN was funded under the 86 percent formula. Dr. Nichols replied UCCSN is currently experiencing increased part-time faculty and less class availability. She said at 86 percent funding UCCSN will be able to hire full-time faculty and increase availability of classes to students.
Senator Raggio asked for an explanation of the nursing initiative.
Richard D. Perkins, Clark County Assembly, District No. 23, referenced “Addressing Nevada’s Nursing Shortage: A Legislative Initiative to Increase Nursing School Enrollment” (Exhibit E), citing A.B. 378 of the 71st Session requiring UCCSN to prepare a plan to double its capacity to train nurses in Nevada. He commented approximately 5000 trained nurses will be needed by the year 2010.
Assemblyman Perkins pointed out Nevada hospitals are contributing funding to UCCSN for nursing scholarships, nursing training at clinical sites, and other direct overhead costs related to the nursing program. He said the nursing initiative assumes the Nevada Hospital Association will purchase laboratory equipment and continue its support of existing nursing school programs such as nursing scholarships and clinical rotations in Nevada hospitals.
Assemblyman Perkins emphasized the nursing initiative program cost is estimated at $2.3 million in FY 2004 and $3.7 million in FY 2005.
Senator Raggio asked whether the proposal considers additional enrollment growth expense. Assemblyman Perkins replied yes, there are a number of ways to offset enrollment costs. Senator Raggio commented new enrollment growth would have to be capped at 86 percent to maintain initiative assumptions. He asked whether the proposal includes the new taxonomy course cost classification system. Dr. Nichols replied UCCSN is asking that the taxonomy not be funded at this time. Senator Raggio asked whether the numbers in the proposal recognize maintaining enrollment growth at 86 percent. Dr. Nichols replied the initiative proposal is built on the 86 percent formula.
Assemblyman Perkins said funding for the nursing initiative proposal would come from UCCSN formula funds, increased student enrollment fees, and savings generated from reduced workers compensation rates. Senator Raggio asked for an explanation of how reduced workers compensation rates affect this budget.
Mr. Miles explained an assessment rate is applied against salaries to establish a workers compensation reserve. He said the reserve pays for insurance and deductibles. He noted the amount of the assessment has generated a surplus in the reserve account over the past several years. He indicated the workers compensation rate could be reduced throughout UCCSN.
Senator Raggio asked what savings would result in future biennia. Mr. Miles replied the assessment rate would be examined every 2 years to determine whether savings could be realized. He said a lower rate could be determined based on past years of experience and probability of future claims.
Dr. Nichols said over the next 4 years, UCCSN plans to double its nursing enrollment. She said its impact will affect the base budget, and there is no indication the nursing program will need continued funding through worker compensation reserves.
Senator Cegavske asked whether nursing instructors would be hired to meet increased enrollment. She asked the funding source in the revolving nursing loan program of $150,000, and what future costs are anticipated in this program.
Dr. Nichols replied there are very few available nursing instructors. She said Nevada’s universities are hoping to offer a doctorate program in nursing.
Senator Cegavske asked whether monies should be directed to colleges having a lower cost-per-student count. Dr. Kerry Romesburg, President, Nevada State College at Henderson, University and Community College System of Nevada, replied enrollment projections at NSC were not based on factual data because NSC is newly opened. He said there are 65 new students in the pre-nursing program at NSC, and 40 students have applied to the nursing program for the fall semester, 2003.
Assemblywoman Chowning thanked Lake Mead Hospital in Las Vegas for its participation in the nursing programs. She said Lake Mead Hospital pays tuition costs for its employees enrolled in the nursing programs. She asked how long it will take Nevada to reach the national nursing shortage average.
Bill Welch, Lobbyist, Nevada Hospital Association, thanked Speaker Perkins, the Nevada hospitals, and all legislators who worked on the nursing initiative. He said the nursing shortage is a nationwide problem, and it will take a minimum of 3 years for Nevada to realize a difference in the recruitment and employment of licensed nurses. He noted it might take 8 to 10 years to reach the national average.
Senator Mathews commented minority participation in the nursing programs is increasing, and minorities do not have to begin their education at the community colleges. She said any student can begin their nursing education at the universities, and future nursing instructors should begin their education at the university level.
Dr. Nichols thanked Senator Mathews for her support of the nursing programs. She said the university and college presidents and their faculties have made the nursing programs work.
Senator Raggio stated UCCSN funding is dependent on available state revenues in the next biennium.
Mr. Burke said the Governor recommends General Fund appropriations totaling $4.5 million in FY 2003-2004 and $5.9 million in FY 2004-2005 to support operating and position costs for new space added or anticipated to be added at the various campuses during the next biennium. He noted the Governor recommends state support for the UNR Fire Science Academy in Carlin.
Mr. Burke cited the UCCSN summary and said the Governor supports funding in the amount of $1.2 million in FY 2004 and $1.4 million in FY 2005 for operations and maintenance support at the dental school located in the Shadow Lane Complex in Las Vegas. He cited UCCSN adjustments in this module result in savings of $360,000 in FY 2004 and $427,000 in FY 2005.
Senator Raggio asked when UCCSN will have the lease agreements negotiated and signed at the Shadow Lane Complex for the dental school.
Dr. Carol C. Harter, President, University of Nevada, Las Vegas UNLV, University and Community College System of Nevada, replied UCCSN has no agreed-upon or signed leases at this time.
Senator Raggio asked Mr. Miles whether a reserve can be set up for the dental school lease agreements. Mr. Miles replied yes, a reserve can be set up now for later reversion.
Mr. Burke said the Governor’s recommended budget prorates operations and maintenance costs to UNR budgets through a recharge distribution. He noted UNR’s utility expenditures are not accurately reported. He explained UCCSN requests a restoration of expenditure reductions of $467,971 in FY 2004 and $524,430 in FY 2005.
Mr. Miles responded UCCSN will work with staff on the recharge mechanism.
Senator Raggio asked why University of Nevada, Las Vegas does not utilize a recharge mechanism.
Anthony Flores, Vice President, Finance, University of Nevada, Las Vegas, replied prior to the opening of UNLV’s dental and law schools there was no need for a recharge mechanism because utility bills were sent directly to UNLV’s self-supporting units such as dormitories and the Thomas and Mack arena. He said since UNLV currently has both a dental and a law school, it can implement a recharge system.
Senator Mathews commented on the dental school enrollment growth. She asked why the purchase of dental school equipment was attached to an enhancement and not included in a maintenance budget.
Dr. Nichols replied UCCSN had planned to put dental school equipment in a maintenance budget as a part of caseload growth. She said under a directive from the Governor on the budget, it had to be attached to an enhancement.
Senator Mathews asked what would happen to the 75 dental school students currently enrolled in the program if there is no dental equipment to use.
Patrick J. Ferrillo, Jr., D.D.S., Dean, School of Dentistry, University of Nevada, Las Vegas, University and Community College System of Nevada, responded the 75 dental school students would be offered no further opportunity to continue their dental studies at UNLV.
Senator Mathews asked whether staff could find a way to fund the dental school equipment. She said she was disappointed the Board of Regents of UCCSN did not fight harder for dental school funding.
Senator Raggio commented there is an error in student fees and tuition revenue. He asked what adjustments are made for the error. Mr. Burke confirmed there is an error. He said there is a $2.3 million adjustment to add missing revenues and re-project student fee revenues in the amount of $1.02 million.
Assemblyman Goldwater commented everything Assemblywoman Jan Evans said would happen with the dental school has happened. He asked whether tuition levels were adequate.
Dr. Ferrillo replied yes, tuition levels are adequate. He said the tuition levels are some of the highest for a public institution. He added the budget is adequate to meet the needs of the program.
Assemblywoman Chowning asked whether there have been more diverse applicants seeking admission to the dental school.
Dr. Ferrillo replied one goal of the dental school is achieving a more diverse student body. He said the dental school has already begun working with the public school system in developing a pipeline for recruiting potential applicants. He noted there is an approximate 5 percent minority population in the dental school student body.
Assemblyman Arberry commented UNLV’s dental school is essential in a large metropolitan area like Las Vegas, and the committee should fund the dental school.
Mr. Burke said the Governor recommends $5.27 million in additional estate tax funding in the biennium for enrollment growth at UNLV’s dental school. He indicated UNLV anticipates dental school enrollments will double in FY 2004. He noted UNLV’s optimal enrollment goal is 300 students.
Mr. Burke said the Executive Budget includes $9.5 million in FY 2004 and $15 million in FY 2005 to fund fringe benefit cost increases in retirement group health insurance, retired employees group insurance, and personnel assessments. He noted there are significant errors in the calculation of various assessments within the fringe benefit adjustments. He emphasized an additional $5.99 million in General Fund appropriations would be needed to correct the assessment calculation errors in the Executive Budget.
Mr. Burke said proposed student fees include increases in the range of between 1.7 percent and 9.4 percent per year at each institution for residents, nonresidents, graduates, and undergraduates.
Assemblyman Arberry cited the UCCSN summary and commented adjustments to merit pay calculations include reductions to professional positions at the dental, medical, and law schools in Nevada. He asked how Dr. Nichols feels about the reduction in merit pay.
Dr. Nichols replied she is aware of the reductions and the State’s position. She said she would hope all state workers receive the same reduction in merit pay.
Senator Raggio asked whether soft money can continue to partially fund the associate director position in laboratory animal medicine. Dr. Nichols replied the money is available, and the position is full time with associate director responsibilities and added responsibilities mandated by the federal government.
Senator Raggio asked what the most critical unmet need is for the medical school.
Dr. John Lilley, President, University of Nevada, Reno, University and Community College System of Nevada, replied the School of Medicine accepts 52 students each year and is not meeting the physician need in Nevada. He said the medical building on the Reno campus was built to house 100 students. He explained with proper funding, the medical school hopes to achieve an enrollment of 100 students in future years.
Senator Raggio noted UCCSN requests language in the Student Fee Authorization Act be addressed. Mr. Burke said UCCSN is proposing the following language be added to the Student Fee Authorization Act:
The UCCSN may expend any additional registration fees collected of students, resident or nonresident, for the purposes of meeting the salaries and related benefits for incremental instructional faculty necessary as a result of registering additional students beyond the budgeted enrollments. The UCCSN may also expend, with the approval of the Interim Finance Committee, any additional nonresident tuition fees and any additional registration fees in addition to the authorized amounts for the respective years.
Senator Raggio said UCCSN would be able to use additional fees for instructional purposes.
Senator Cegavske asked for the cost-information of transferring a student from NSC to UNLV or UNR. Mr. Burke replied he would obtain the cost information on transfers.
Dr. Lilley said there is $500,000 available for research technicians at the School of Medicine. He explained space is needed at the School of Medicine, and a new research building should be built. He indicated the School of Medicine would need to realize full recovery of indirect costs to fund the building.
Dr. Lilley added the research building would enable UNR to invest in research and receive an even greater return on research. He noted the research building would support biology and agriculture programs.
Senator Raggio asked what amount is estimated as the proposed cost of the new research building. Dr. Lilley replied approximately $15 million for the entire building.
Senator Raggio asked whether there is difficulty in funding endocrinology. Dr. Lilley replied yes, endocrinology is expensive, and there is a strong need for services. Senator Raggio requested information on the endocrinology program.
Senator Mathews commented the UNR School of Medicine research building is not on the list for special consideration. Dr. Lilley replied the enhancement for indirect cost-recovery is included on the enhancements list.
Dr. James Richardson, Lobbyist, Nevada Faculty Alliance, urged the committee to fund enrollment growth under the proposed 86 percent formula. He said the committee has heard some wonderful initiatives, including planning for the recruitment of full-time UCCSN faculty. He indicated estate tax revenues could support critical programs and faculty positions. He commented merit pay increases are vital since cost-of-living increases are not being granted.
Dr. Robert Dickens, Lobbyist, Director of Government Relations, University of Nevada, Reno, said the Mineral County extension educator position is needed. He explained the position works in consultation with production agriculture, family development programs, youth at risk, recruitment of youth to 4-H camps, and nutrition programs.
Senator Raggio asked whether this position is funded without matching funds from Mineral County. Dr. Dickens replied Mineral County has already provided its match and UCCSN has already provided federal funds.
Assemblywoman Chowning said the extension program in southern Nevada provides assistance to many citizens. She asked whether southern Nevada’s program would be kept intact. Dr. Dickens replied yes, Mineral County’s extension program would provide statewide coverage, and southern Nevada’s program would be kept intact.
There being no further questions, the Chairman adjourned the meeting at 11:15 a.m.
RESPECTFULLY SUBMITTED:
Pamela Carter,
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE:
Assemblyman Morse Arberry Jr., Chairman
DATE: