Wednesday, May 18, 2011

NSHE budget closed with additional $80 million over Sandoval recommendation

Wednesday morning, in a lengthy hearing, the joint budget committees of the state legislature closed the Higher Education budget. Because this budget of course is dependent upon resolution of the revenue impasse, it is highly provisional and likely to be reopened.

For now, the latest understanding we have of the major developments is as follows:

  • The Democratic majority on the committees voted to increase in state support by $80 million over Governor Sandoval's revised budget (which itself increased state support by $20 million over his original executive budget recommendation.) So that amounts to an increase of $100 million in state support for higher education. Very good news.
  • The same majority voted to remove $120 million in property tax diversion from Clark and Washoe Counties which the Governor had allocated to UNLV and UNR, respectively, in his original budget. While there was some confusion over whether this money would be replaced by state general fund allocations, and this confusion is reflected in most of the press coverage (see below), we received this evening from highly reliable sources in Carson assurances that this money is still in the budget, so there is no net change for NSHE.
  • The Democratic majority, joined by one Republican, voted to issue a Letter of Intent to the Board of Regents instructing it to cap undergraduate student fee increases at 13% for the biennium. Since student fees are recorded by the state as "allowances", this amounts to a net loss of approximately $22 million for NSHE, which will not be filled by the state.
  • There remains no clear answer as to how NSHE will fill this money back into the budget, so that this reduces the net enhancement for the NSHE budget to just below $80 million for the biennium -- just less than half of the hole in Governor Sandoval's original recommendation. With the additional student fees added in, that still leaves an anticipated cut of about $60m from 2009 budget.
  • The cut curve will be smoothed -- ie, distributed more equally over the two years of the biennium rather than a decremental cut as the Governor had originally proposed. This will mean that in the more budgetarily important second year of the biennium, the cut target will be more reachable -- and the base budget going forward will be higher.
The committees also approved several important changes to how NSHE's funds are allocated :
  • The funding formula is suspended, pending an interim study and a new formula.
  • Tuition and fee revenues from students above the 2007 benchmark, at all seven teaching institutions, will be retained entirely on those campuses.
  • The NSHE state general fund allocations will be rolled into a total of 13 accounts, instead of 25 separate accounts. The 13 accounts are as follows : one for each of the eight institutions (putting to rest definitively any concern of campus consolidations or closures); three for professional schools (School of Medecine (UNR), Boyd Law (UNLV), and School of Dental Medecine (UNLV); one for System Administration, and one for System Computing. This will give greater budgetary authority to the campus presidents and the Chancellor, who will be expected to use that authority to prioritize instruction and academic mission over activities that had been budgeted autonomously such as athletics, statewide programs, and business operations. [In reality this change is not likely to make much difference for the coming biennium. In the future, it may have the salutory effect of focusing legislative and Regents budget discussions on academic programs rather than digressing into such minor entities as the UNR Agricultural Research Station which got disproportionate attention today!]
  • "Equity funding" was approved for CSN ($1.5 m) and TMCC, ($600K) paid from other state savings, though it was not clear what this means in the absence of funding formulas.
Here are several good stories on the day's events, which all must be read with an understanding that the hearing was difficult to follow and the confusion in the hours immediately after the hearings was significant. I add that caveat so that readers can understand why NFA leaders are quoted in these stories suggesting the outcome was very dire, when in fact the big news is that we received a significant add-back in state support.

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