MINUTES OF THE MEETING OF
THE COMMITTEE TO STUDY THE FUNDING
OF HIGHER EDUCATION
A meeting of the Committee to Study the Funding of Higher Education (created as a result of Senate Bill 443 - 1999) was held at 9:45 a.m. on October 27, 1999, at the Legislative Building, 401 South Carson Street, Room 4100, Carson City, Nevada.
COMMITTEE MEMBERS PRESENT:
Senator William J. Raggio, Chairman
Senator Randolph Townsend
Senator Dina Titus
Assemblyman Richard Perkins
Assemblyman Bob Beers
Regent Jill Derby
Regent Doug Seastrand
Regent Steve Sisolak
Dr. James Richardson
John P. Comeaux
Dr. Carol Harter
Dr. Richard Moore
Assemblyman Joseph E. Dini (Excused)
Dixie May (Excused)
Dr. Joseph Crowley (Excused)
Brian Burke, Senior Program Analyst
Mark Stevens, Assembly Fiscal Analyst
Dan Miles, Senate Fiscal Analyst
Brenda J. Erdoes, Legislative Counsel
William B. R. Daines, Deputy Legislative Counsel
Joi Davis, Committee Secretary
GUESTS IN ATTENDANCE:
Fred Davis, Desert Research Institute
Marilou Jarvis, Desert Research Institute
Bob Dickens, University of Nevada, Reno
Kim Snow, University of Nevada, Reno
Sherry Blunt, University of Nevada, Reno
George C. Scaduto, University of Nevada, Las Vegas
Don Hataway, State Budget Office
Tom Anderes, University and Community College System of Nevada
Larry Eardley, University and Community College System of Nevada
Glenda Krietlow, University and Community College System of Nevada-SCS
Linda Pierson, University and Community College System of Nevada-SCS
Cindy Rossetti, Truckee Meadows Community College
David Keebler, Truckee Meadows Community College
Debbie Cahill, Nevada State Education Association
Rick Bennett, University of Nevada, Las Vegas
Gina B. Polovina, Boyd Gaming
Carol Lucey, Western Nevada Community College
Mike Sauer, University of Nevada, Las Vegas
Ashok Dhingra, University of Nevada, Reno
Sean Whaley, Las Vegas Review-Journal
Cy Ryan, Las Vegas Sun
Bill O’Driscoll, Reno-Gazette Journal
Geoff Dornan, Nevada Appeal
Exhibit A Meeting Notice and Agenda
Exhibit B Attendance Roster
Exhibit C Meeting Packet
Exhibit D Bulletin 87-30 Study of Funding of Higher Education in Nevada
Exhibit E Report by MGT of America, Inc. – A Study of Funding Equity
Within the University and Community College System of Nevada
Exhibit F Report by the University and Community College System of
Nevada – Formula Review: Strengths and Weaknesses
NOTE: All Exhibits are on file at the Research Library and Fiscal Analysis Division of the Legislative Counsel Bureau.
Chairman Raggio introduced staff from the Legislative Counsel Bureau who would be working with the Committee to Study the Funding of Higher Education: Joi Davis, Committee Secretary, Brian Burke, Senior Program Analyst, Mark Stevens, Assembly Fiscal Analyst, Dan Miles, Senate Fiscal Analyst, Brenda Erdoes, Legislative Counsel, Bruce Daines, Deputy Legislative Counsel. Chairman Raggio thanked staff for their willingness to work on the study, and commented that the study of the funding of higher education could prove to be one of the most important tasks performed by the Legislature during this interim.
Brian Burke, Legislative Counsel Bureau, Fiscal Analysis Division, stated that the Committee was formed pursuant to Senate Bill 443 of the 1999 Legislative Session, which states:
1. That the Committee shall compare the existing method of funding higher education in Nevada with the methods used in other states.
2. The Committee shall determine whether other methods would be appropriate and useful in Nevada.
3. The Committee may hold public hearings at such times and places as necessary.
4. The Committee may employ educational and financial consultants as necessary.
5. The Committee may accept and use gifts and grants to further its work.
6. The Legislature appropriated $150,000 to the Legislative Commission for the study.
Mr. Burke pointed out that a copy of the bill was included in the Meeting Packet (Exhibit C), beginning at Page 4. Continuing, Mr. Burke outlined the membership of the Committee:
I. Voting Members
Three members of the Senate, appointed by the Majority Leader
Three members of the Assembly, appointed by the Speaker
Three members of the Board of Regents (appointed by the Board Chairman)
Three members appointed by the Governor
II. Non-voting Members – appointed by the Governor
John P. Comeaux, Director of the Department of Administration
Three persons employed by the University and Community College System
Chairman Raggio indicated that future meetings of the Committee could be held elsewhere in the state and Committee meetings could be video-conferenced to outside locations. However, he encouraged Committee members to attend the meeting at the posted site.
Mr. Perkins asked if the non-voting members had the same rights as voting members in terms of requesting information and/or obtaining answers. Chairman Raggio confirmed that non-voting members could request information from staff and ask questions in the same fashion as voting members. He noted that the make-up of the Committee was expanded from the previous study of higher education funding which was conducted in 1986 (Exhibit D, Bulletin 87-30).
Chairman Raggio stated that the University and Community College System of Nevada (UCCSN) funding formulas developed in 1986 served their purpose well. He noted that, as witnessed by the spirited debate during the 1999 legislative session, funding methodologies have not adapted well to the explosive growth witnessed primarily on the southern Nevada campuses. The equity funding study that was prepared by MGT of America, Inc., in May 1999, at the request of the UCCSN, reported funding inequities among the campuses. (Exhibit E, A Study of Funding Equity Within the University and Community College System, prepared by MGT of America, Inc.)
Chairman Raggio stated that UCCSN representatives, during the 1999 legislative session, noted that the MGT equity study was distinct from the current funding study in that the equity study looked at what happened in the past and where the system is currently. Whereas, the focus of this Committee is to define and/or redefine the funding formulas necessary to guide UCCSN in the future – while building upon the results of the previous equity study. The chairman pointed out that the new formulas developed as a result of the Committee’s endeavor should be both flexible and equitable to all institutions involved.
Chairman Raggio stated that the higher education funding study is not intended to increase general fund appropriations for the University and Community College System of Nevada relative to other state needs such as K-12 education, prisons, human resources and other vital programs. UCCSN’s share of general fund appropriations for the most recent ten (10) biennial legislative sessions ranged from approximately 18 to 20 percent (Exhibit C, page 8). The system’s piece of the pie will not necessarily grow beyond 20 percent because of the work done by this committee. Rather, it will be up to the Committee to develop formulas that equitably distribute available funding.
Chairman Raggio continued stating that new funding formulas must consider numerous factors including growth in southern Nevada; cost differentials associated with various disciplines, types of courses and levels of instruction; recognition of the increased use of technology in the instructional setting; economies of scale; potential new campuses and hybrid programs such as the Redfield and Henderson campuses; and quantifiable methods to determine funding levels for scholarships, and statewide programs. Because of the limited availability of general fund dollars, new and expanded programs may either have to be funded by new sources of revenue or a reallocation of existing UCCSN funding through functional or institutional shifts. Chairman Raggio mentioned the new millennium scholarships would also impact growth and UCCSN institutions.
Continuing, Chairman Raggio said it was important to note that the Legislature has consistently stepped up to the plate in support of higher education in Nevada. This assertion is borne out by data extracted from the recent MGT study. Pages nine through eleven of the meeting packet provide comparisons of Nevada to other states on per-student support of higher education. Nevada ranks seventh (7th) nationally with $6,346 net appropriations per FTE student. It is telling that Nevada drops to twenty-second (22nd) when net appropriations and tuition combined per FTE are considered. Further, Nevada ranks forty-seventh (47th) in the nation in tuition at $1,466 per FTE compared to number one ranking Vermont at $8,283 per FTE.
Chairman Raggio noted that as a member of the Senate Committee on Finance for a number of years, he knows the Legislature has consistently attempted to fund 100 percent of the instructional formula recommendations while also funding a percentage of the difference between base support funding and formula recommendations (usually around 20 percent of the gap). Further, he pointed out that the Legislature consistently grants the UCCSN flexibility to shift resources among the non-instructional functions to address emergent needs during the interim.
Chairman Raggio stated that because the instructional formulas have been routinely funded at 100 percent, the Legislature has repeatedly expressed concern about the UCCSN’s ability to expand support funding through instructional funding transfers and subsequently replenishing instructional funding in the next biennium. To address this concern, Senator Raggio said he would like to encourage consideration of a uniform application of the funding formulas ultimately developed by the Committee. Accordingly, if the new formulas are equitable to begin with, equity will be maintained by uniform application.
Senator Raggio went on to state that the use of a uniform formula application approach would not allow inequities to perpetuate. The Legislature would fund all functions, including instruction, at equal percentages. Functional shifts during the interim would still be allowed, however, functional funding would be restored to the formula recommendation during the subsequent biennium. Hopefully, the formulas developed by this Committee will reasonably fit the available funding so as not to require allocations of percentages of the recommended formula amounts. Chairman Raggio stressed that it is the Committee’s job to develop formulas that are not only equitable and flexible but that are fundable.
In conclusion, Chairman Raggio stated that the MGT equity study (Exhibit E) points to the need to address the evolution that has occurred within the system over the last 13 years. He said the Committee’s efforts today would concentrate on a review of the existing formulas, a brief discussion of the MGT findings, a discussion of the role of a consultant, and laying the groundwork for the efforts needed to formulate higher education funding recommendations. He thanked the Committee for their willingness to participate in this process.
IV. Discussion of Existing Formula for Funding of Higher Education
Dr. Tom Anderes, Interim Chancellor, University and Community College System of Nevada (UCCSN) provided the Committee with a report, Formula Review: Strengths and Weaknesses (Exhibit F) prepared by the UCCSN. In addition, he said the institution presidents developed a list of issues and principles and, if directed, he would share that with the Committee today as well. Dr. Anderes provided a brief overview of the system:
· Board of Regents – The UCCSN consists of seven academic and related support units governed by an elected eleven-member Board.
· Institutions – Desert Research Institute (DRI), University of Nevada, Las Vegas (UNLV), University of Nevada, Reno (UNR), Community College of Southern Nevada (CCSN), Great Basin College (GBC), Truckee Meadows Community College (TMCC), and Western Nevada Community College (WNCC).
· Board Authority – The Board of Regents has authority over certain actions of the seven institutions pursuant to Nevada Constitution Article 11, Section 4, and the UCCSN Code.
· Coordination of System Activities – The activities of the Board and the System are coordinated through a system office. Such activities include, but are not limited to, academic and research program and planning, financial/budget planning, development and monitoring; capital budget and facilities planning, legal oversight; audit; operating and endowment investments.
· Multiple Missions – The diversity of missions is broad based and therefore influences program and budget decision-making processes. For instance, Great Basin College offers an array of community college programs and limited 4-year programs; UNR is a land grant institution with particular emphasis on statewide outreach services, including a medical school; UNLV supports the state law and dental schools, and each community college connects with its community to provided needed vocational, degree track, certification and service programs. DRI supports extensive state and federal research while contributing to student learning.
· Location of Public Higher Education Programs – Direct instruction and distance education programming has provided options to Nevada communities. Providing access to Nevada citizens continues to be a major objective of the Board. A review of enrollment concentration reveals that the majority is in Las Vegas, approximately 60 percent.
· Funding Support – The state of Nevada has been the primary provider of funding for all institutions except the Desert Research Institute, which receives most of its funding through federal grants and contracts. Dr. Anderes stated that the higher education operating budget has grown from $117.0 million in 1986 to $435.2 million for 2000. In addition, state appropriations in 2000 comprise 70.3 percent of the operating budget, with student tuition and fees 20 percent, estate tax at 6.2 percent, and remaining sources at 3.5 percent.
Dr. Anderes directed the Committee to a chart (Exhibit F, page 2) depicting substantial changes in the sizes of our institutions since 1987:
*Annualized full time equivalent (FTE) based on thirty undergraduate student credit hours or 16 graduate student hours annually.
Dr. Anderes went on to explain that the UCCSN uses five functional formulas: Instruction, Academic Support, Student Services, Institutional Support, and Operations and Maintenance of Plant. In addition, the UCCSN uses four other formulas, Graduate Assistants, Equipment Maintenance, Equipment Replacement, and Library Acquisitions. These formulas cover approximately 75 percent of the funding represented in the operating budget. Dr. Anderes stated that functions not funded by the formula are Research, Public Service, and Scholarships and Fellowships, which are addressed through incremental budget requests. In addition, other activities that are not covered by funding formulas include the medical school, dental school, law school, cooperative extension, agricultural experiment station, system office, system computer services, athletics, and radiation safety programs.
Dr. Anderes explained that the formulas were established to provide a vehicle that objectively and uniformly projected funding needs for a very diverse system of institutions. In 1996, 30 states have been reported as using funding formulas for their four-year institutions, compared to 25 in 1973 and 33 in 1992.
Dr. Anderes informed the Committee that he would next present a detailed outline of each funding formula:
Faculty and Instructional Support Staff
Dr. Anderes explained that direct classroom instruction and direct support to the classroom are examples of instructional support. He explained that for university salaries, the formula is computed by taking the number of full-time students divided by the student/faculty ratio and that produces the number of faculty needed. Then, the total number of faculty multiplied by the average salary from the prior year equals the total amount of faculty salaries. Dr. Anderes continued that staff support is determined based upon a faculty/staff ratio of 5:1. So, the total number of faculty divided by five then multiplied by the average staff salary from the prior year equals the total staff salaries. Total staff salaries plus merit, plus part time, plus fringe benefits (based on job class) equals the total faculty and instructional support salaries and benefits.
Dr. Anderes explained that the above methodology is also used for computing salaries in community colleges except that the faculty and related salaries are based upon a 60 percent full-time and 40 percent part-time basis. In addition the student/faculty ratio for regular students is 23:1 rather than the 21:1 ratio for the universities. In determining operating support, actual expenditures on a per-faculty basis are multiplied by the number of projected faculty.
In response to Mr. Perkins’ inquiry, Dr. Anderes pointed out that a listing of student/faculty ratios by institution and programs for the 1997-99 and 1999-01 biennia are shown on page 17 of the report (Exhibit E).
Senator Raggio asked if the ratios referenced were prepared by nationwide comparison. Dr. Anderes replied that the UCCSN has only reviewed this data for the system for the past two years. However, if the Committee hires a consultant to assist with the study, perhaps a nationwide comparison could be accomplished.
Senator Raggio asked for an explanation of the 23:1 student/faculty ratio for community colleges and the 21:1 student/faculty ratio for universities. Dr. Anderes replied that the differentiation is related to student credit hours and variety in programs. He added that the UCCSN could certainly look at ratios of other states.
Senator Raggio asked how merit pay was applied in the faculty and instructional support staff funding formula. Senator Titus remarked that merit pay varies between the universities and the community colleges, between the universities and the colleges, and also between the two universities. Senator Raggio concurred, and requested that the UCCSN provide the Committee with information regarding how and on what basis merit pay is determined at each of the institutions. The percentage of employees receiving merit and average merit award by college should also be provided. Dr. Anderes stated they would provide that information to the Committee.
Regent Sisolak asked how the role of funding and enrollment affected new program offerings. Dr. Anderes responded that increased growth generally results in less support.
Dr. Harter asked if the average faculty salaries for the two universities were the same. Dr. Anderes said that was requested but he does not know if that occurred. Senator Raggio invited Larry Eardley, System Budget Officer, UCCSN, to respond. Mr. Eardley stated that the UCCSN requested equal funding for all positions but that request was not funded by the Legislature, resulting in approximately $3,500 to $5,000 difference to UNLV.
Senator Raggio asked staff to respond. Mark Stevens, Assembly Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, stated that the new faculty positions were funded at 90 percent of the actual average salaries.
Mr. Eardley replied that there was basically less available to pay for new-higher positions.
Regent Sisolak commented that the difference noted ($3,500-$5,000) would affect the quality of faculty, which ultimately affects the quality of education. Dr. Anderes agreed this could potentially occur.
Chairman Raggio clarified that the Legislature funded the positions at 90 percent. Mr. Eardley stated that the average and additional enhancements were equalized.
Senator Raggio commented that average salaries of the two institutions would never be the same because of new positions, new faculty versus older faculty, and benefits, etc. Dr. Anderes agreed.
Mr. Snyder asked for the faculty funding at each institution and the numbers of faculty and staff. Senator Raggio suggested historical salaries and numbers of faculty should be provided at each level. Salary schedules for the institutions should also be provided to the Committee.
Dr. Anderes said the Committee might need to decide if average salaries should be used in the formula. Dr. James Richardson said he applauds equalization and is in support of equal salaries between the universities. Senator Raggio stressed that there is a difference between a starting salary and average salary.
Regent Sisolak asked for clarification on what was being discussed. Dr. Anderes explained that the institutions make decisions based on the money available. For instance, the funding they are provided guides them in what they can offer as a starting salary.
Senator Raggio opined that the flexibility of the institutions often establishes the inequity. Mr. Snyder countered that the flexibility may only be a contributing factor. Senator Raggio reiterated that it was more likely the cause.
Assemblyman Beers suggested consideration of indexing average salary based on seniority.
Senator Raggio stated that even if equalization were attempted and/or ultimately accomplished at one point, it would change eventually and the inequity would be evident again. Mr. Snyder suggested that using a salary range rather than an average salary could be an alternative.
Dr. Anderes turned the Committee’s attention to the next funding formula.
Dr. Anderes stated that the student services category included all funds expended for admissions, registrar, and counseling services to contribute to the student’s well being outside the formal instructional program. For example, Financial Aid Offices, Career Planning Services, Student Counseling Services, International Center, Support for Disabled, Veteran, Minority, and Older Students, and Student Health Services.
Dr. Anderes explained the formulas used to compute staffing needs for Student Services (See page 5 of Exhibit F). In addition, he stated that a review of the larger community college differential is necessary. For instance, CCSN has a combined FTE and headcount of 43,000. In addition, both CCSN and TMCC have greatly expanded their off-site services.
Dr. Richardson asked to receive the percentages of full-time and part-time students for the different campuses. In addition, he would like to know the number of expanded sites for the community colleges and universities.
Dr. Moore said he was interested in the cost implications of two systems treated in the same manner because he believes the magnitude of costs has an impact on calculations. Further, Dr. Moore stressed that the mandated costs of access for students has dramatically increased. For example, costs for hearing-impaired individuals have gone from $30,000 to $300,000. Senator Raggio commented that the Committee should consider expanding the student services category.
Dr. Anderes stated that this category included all funds expended for activities whose primary purpose was to provide operational support for the day-to-day functioning of the institution, excluding all expenditures for physical plant operations. However, appropriate allocations of institutional support should be made to auxiliary enterprises, hospitals, and to any other activities not reported under the Educational and General expenditures heading.
Dr. Anderes said examples of institutional support include Alumni Affairs, Campus Security, Budget Office, Purchasing, Publications, Presidents/Vice Presidents Offices, Human Resources, Development Activities, and Computing. He pointed out that the largest item in institutional support is Computing. In fact, technology and safety are the two items that have most dramatically increased and exceeded the formula. Although much has been done with estate tax, they are spending more than what is generated for these items. Dr. Anderes encouraged the Committee to establish formula funding for technology.
Senator Raggio reiterated that the purpose of this funding study was not to expand total funding to UCCSN, so they must look at existing money and funding. He asked whether a technology fee was imposed on students. Dr. Anderes replied that there was now a $4 technology fee; however, they still need to reach an agreement on the elements involving technology and how it is funded.
Mr. Snyder asserted that technology should be viewed differently; although students did not seem to have a problem paying the $4 fee for technology.
Mr. Snyder asked how private funding affected the formulas. Dr. Anderes replied that private funding had no affect on the operating budget. Senator Raggio mentioned that the amount of private funding the UCCSN received and how it was distributed is unknown to the Legislature.
Regent Seastrand stated that he agreed with Dr. Anderes in that technology needs to be added to the formula somewhere. Regent Derby asked how budgeting and funding for technology was handled in other states.
Senator Raggio interrupted the meeting to welcome the second grade class of Fritsch Elementary School in Carson City to the meeting.
Regent Sisolak asked how alumni support was handled. Dr. Anderes answered that the budget does not support alumni affairs. Regent Sisolak asked that information on the level of support for foundations for both institutions be provided to the Committee. Regent Sisolak also asked for information on the funding levels for Presidents and Vice Presidents at each institution. Senator Raggio interjected that decisions made by alumni affairs are internal and therefore do not apply in this instance.
Dr. Anderes said the formula factors under the category of institutional support were as follows:
· Percentages of total operating budget less institutional support function
· 15 percent of first $15 million ($2.25 million)
· 10 percent of second 15 million ($1.5 million)
· 6.5 percent of remainder over $30 million
· North and South Business Centers maintain separate budgets after calculation
Dr. Moore commented that CCSN’s relationship to the Business Center South should be examined as part of the formula funding study.
Operation and Maintenance of Plant (O & M)
Dr. Anderes stated that this category deals with the beauty of the various campuses within the system whereby all expenditures go toward the operation and maintenance of the physical plants, net of amounts charged to auxiliary enterprises and hospitals. In addition to the services provided for maintenance to the campus grounds and facilities, this category also includes utilities, property insurance, and fire protection.
For Custodial/Building Maintenance in campuses with more than 12,000 students there is one position for every 12,000 square feet. For campuses with less than 12,000 students, there is one position for every 10,000 square feet. In the area of Grounds Maintenance, there is one position for every 4.5 improved acres.
Dr. Anderes pointed out that the funding formula does not include slot tax. In response to Senator Raggio’s inquiry, Dr. Anderes said that slot tax brings in about $7.5 million annually. Senator Raggio asked how those funds were allocated. Dr. Anderes replied that the Operations & Maintenance (O&M) Committee examines priorities in the system and make recommendations to the Project’s Director. Senator Raggio noted that the formula for the O&M budget strictly funds positions.
Regent Derby informed the Committee that MGT of America, Inc., is currently conducting a “space equity study” and it would be interesting to see what impact, if any, that study may have on the O&M funding formulas. Dr. Anderes related that there could be an impact if any inventory is changed.
Regent Sisolak commented that many institutions have extended their facility use by offering classes at varying times. He asked whether the utilization of space impacted the O&M formula. Dr. Anderes replied that the formula is based solely on the number of students, not when they attend.
This category, explained Dr. Anderes, includes all the activities used to provide support services that are an integral part of the operations in one of the three primary programs for the institution: Instruction, Research, and Public Service. Academic support also includes the media and technology for the above three programs, as well as the administrative support operations for the various academic units.
Examples of academic support activities include: Audiovisual Services, Academic Administration (Deans Offices), International Affairs, Learning Resource Center, and Libraries. Dr. Anderes added that the libraries are the “big ticket” item, and are based on the number of volumes.
The formula factors for this category are as follows:
· 2 Professional positions, 1 Classified position for the Vice President
· 1 Professional position, 1 Classified position for each College
· Library staffing is based on number of volumes
· Other units – 6.5 percent of instruction function
· Percentage of instruction function
· 20 percent – TMCC, WNCC, CCSN
· 25 percent – GBC
Dr. Anderes explained that Library Acquisitions are a subset of the academic support function but are handled separately, and attempts are made to differentiate between the institutions. Library Acquisitions include the purchase of books, periodicals, monographs, and other library materials.
Dr. Anderes explained that the academic support formulas for library acquisitions are based on the numbers of volumes. Further explanation on these formulas is contained on page 9, Exhibit F.
Dr. Anderes informed the Committee that the level of funding for the Library Acquisitions category has been low in recent years. Senator Raggio acknowledged that satellite campuses could be contributing to the problem as it would be impossible to furnish libraries at every satellite or extended site.
Dr. Richardson asked if the UCCSN could provide data regarding the number of volumes and dollars per volume for libraries nationwide that are comparable to our state’s institutions. Dr. Anderes replied that a system consultant could provide that data.
Assemblyman Beers suggested that more uniformity could be enhanced by using an electronic database of library materials for use by all campuses. He suggested automation could lead to economies of scale whereby institutions could share access to periodicals through a single license.
Senator Raggio commented that perhaps the Committee should examine the differences between the present Library Acquisitions category and the one from 1986, when the last study of higher education funding was completed.
Dr. Anderes advised the Committee that the Board of Regents would be hearing from the library departments of each institution during their monthly meeting in December 1999, and he would be happy to bring the information received at that meeting to the Committee.
Dr. Moore expressed his appreciation for the regional support and regional electronic systems by the libraries, especially UNLV, which has been very helpful to the students at the Community College of Southern Nevada.
Dr. Anderes went on to explain the four other funding formulas used by the UCCSN:
The formula for universities projects the number of graduate assistants based on: 1) the number of regular (non-doctoral) graduate FTE, and 2) the number of doctoral FTE. Dr. Anderes explained, the number of regular graduate student FTE is divided by five and the number of doctoral students is divided by 3.33, with the combined total of the two providing the projected number of graduate assistants. Senator Raggio asked for clarification. Dr. Anderes stated the average salary figure is used in the formula.
Dr. Anderes stated that in this formula, funding is projected by applying an equipment index, or inflation factor, against the prior year equipment inventory. The product is then multiplied by a replacement factor (5%) for the request. He explained that the 5 percent factor is based on a 20-year replacement pattern.
Dr. Anderes stated that in computing this formula, the biennial equipment appropriation is multiplied by a maintenance factor of six percent. The six percent factor was derived from facilities management standards. Senator Raggio pointed out that they might need to change that figure.
Dr. Anderes directed the Committee to what they believe to be the strengths and weaknesses of the formulas (Exhibit F, page 11).
Dr. Anderes stated the intent in projecting funding requirements is to ensure an equitable distribution in a uniform and consistent manner. Formulas are used to budget development, not budget control.
Senator Raggio commented that it is not and never has been the intent of the Legislature or this Committee to micro-manage the UCCSN.
Dr. Anderes stated that the accountability report is of great value to the system in tracking functional transfers of expenditure authority.
Dr. Anderes identified general and specific weaknesses in the existing formula
· Existing formulas do not recognize programs that are new or have expanded since 1986, i.e., technology
· Formulas are not differentiated adequately among institutions
· Formulas do not provide incentives for attaining Board and state objectives
· Formulas may not adequately project need in periods of rapid growth or decline
· The 60%/40% full time to part time funding ratio for community college faculty salaries should be reassessed relative to university faculty salaries
Senator Raggio noted that the weaknesses identified by Dr. Anderes certainly could create more inequities. In addition, addressing the issue of growth is a great concern.
Senator Raggio commented that there would never be 100 percent, full-time funding at the community college level, and asked why that was considered a weakness. Dr. Anderes replied that the UCCSN would simply like to review the issue of 60/40 funding for community colleges.
Dr. Richardson interjected that the 60/40 ratio was due to action taken when community colleges were established, which meant that 40 percent of the faculty positions would be funded at less than a full-time salary. The legislative committee that reported to the 1987 Legislature recommended that a goal be established to move to a ratio of 70/30.
Dr. Anderes added that the percentage of instruction and percentage of institutional support are related to the student/faculty ratios. He added that the principles have been developed over time but could be changed.
Senator Raggio pointed out that the Appendices located at the back of the report (Exhibit F) were very helpful; however, he would like to see the non-state support supplements UCCSN receives. In thanking Dr. Anderes for his presentation, Senator Raggio stated that the information he provided will be useful to the Committee, and has given the Committee a good overview of the funding formulas. Chairman Raggio directed staff to brief the Committee members who were unable to attend the meeting on the funding formulas.
Funding Equity Study Recommendations by MGT of America, Inc.
Senator Raggio stated that the funding equity study produced by MGT of America, Inc., was provided to the money committees during the 1999 legislative session (Exhibit E). Since there was not much time to review the report during the session, and in order to assist this Committee, staff was asked to prepare an analysis of the MGT study.
Brian Burke, Fiscal Analysis Division, Legislative Counsel Bureau, directed the Committee to page 13 of the meeting packet (Exhibit C). He stated that the MGT funding study contained a wealth of objective baseline data that could be incorporated into this study. The intra-institutional portion of the study analyzed per-student funding controlling differences in instructional program mix and level. For instance, unique program areas such as UNLV Law School, UNR Medical School, UNR Cooperative Extension and Agricultural Experiment Station, and UNR/UNLV Intercollegiate Athletics funding were eliminated from the intra-institutional comparisons. Also, excluded from the study were recharges related to administrative support to the medical school, cooperative extension and agriculture experiment station, and indirect cost reimbursements for UNR and UNLV.
Mr. Burke informed the Committee that the MGT funding study provides objective data on weighted average full-time equivalent costs (FTE) for functional areas within the UCCSN, as well as objective comparisons on maintained square footage costs. Most importantly, the MGT analysis provides a foundation of baseline institutional data from which the Study of Higher Education Funding can build.
Continuing, Mr. Burke stated that there are several problem areas in the peer comparison portion of the MGT study that could dissuade the Committee from including it in future funding formula considerations. He pointed out that the peer comparison analysis accounted for 50 percent of the weight in the MGT composite index.
Mr. Burke went on to identify specific considerations regarding the peer comparison portion of the MGT study:
1. The peer comparisons included all costs. Therefore, from the Integrated Postsecondary Education Data System (IPEDS) charts provided by MGT, it is not possible to determine whether programs among the institutions are similar.
2. UNR’s current Carnegie classification is Doctoral II. UNLV is classified as Comprehensive I. The MGT study upgraded UNR and UNLV’s Carnegie classifications to Research II and Doctoral II, respectively. This assumption would be problematic if the comparison institutions had similar upgrades.
Senator Raggio asked Mr. Burke to explain Carnegie classifications. Mr. Burke explained that the Carnegie Foundation classifies all colleges and universities in the United States based upon such factors as the number of masters and doctoral degrees granted and the federal dollar support received annually for research. Mr. Burke explained the Carnegie Foundation currently classifies UNR and UNLV as Doctoral II and Comprehensive I, respectively, but that the MGT study assumed upgrades in the classifications for Research II and Doctoral II.
Mr. Snyder asked for clarification regarding the MGT Carnegie classifications upgrade assumption. Mr. Burke explained that the UNR and UNLV upgrades were made based upon the 1994 Carnegie classifications. While UNR and UNLV appear to meet the 1994 Research II and Doctoral II criteria at this time it is likely comparison institutions had similar upgrades. Likewise, Mr. Burke continued, Carnegie Foundation is likely to revise the criteria in future classification releases.
Mr. Beers pointed out information on Carnegie Classifications for UNR and UNLV is at page 4-3 of the MGT Study (Exhibit E).
Mr. Snyder inquired if Mr. Burke was arguing against using a peer comparison. Mr. Burke replied that he was not arguing against peer comparisons in general. Rather, he cautioned the Committee on potential problems with the peer comparison included in the MGT study.
Chairman Raggio reminded the Committee that staff was asked to do a comparison of the MGT funding study, and in that capacity, Mr. Burke was not arguing one position or another; he was simply providing his analysis of the study.
Mr. Snyder commented that he supports using a peer comparison. Dr. Harter commented that while UNR went up two positions in the ratings, UNLV only went up one position in the ratings.
Chairman Raggio asked how often Carnegie units are changed. System staff commented that the classifications are generally updated about every five years.
Dr. Richardson commented that MGT had no intent to inflate numbers, and he believed more detail is needed in order to properly analyze the issue of peer comparison.
Senator Raggio asked staff to perform IPEDS comparisons for UNR and UNLV using the current Carnegie classifications of Doctoral II and Comprehensive I.
Mr. Burke continued with his analysis of the peer comparison portion of the MGT funding study:
3. MGT compared core support at UNLV to Doctoral II institutions with law schools for the 1996-97 fiscal year. UNLV did not have a law school in 1997. Therefore, the resulting comparisons could overstate UNLV’s shortfall relative to the selected peers.
4. MGT’s peer chart represented UNLV’s peers as institutions with law schools and/or certain FTE criteria. However, there were several institutions with medical schools being compared to UNLV. Again, the resulting comparisons could overstate UNLV’s shortfall relative to the selected peers.
5. Using MGT data, but modifying the comparison institutions and FTE comparison ranges, the following comparisons of core support per FTE student can be made for FY 1997:
· Core support funding per FTE student at UNLV is 105.93 percent of the weighted average funding for all Doctoral II institutions with FTE between 10,000 and 15,000, without medical schools. MGT reports an FTE of 12,705 for UNLV for the comparison year.
· Core support funding per FTE student at UNLV is 99.08 percent of the weighted average funding for all Doctoral II institutions with FTE between 10,000 and 16,500, without medical schools but with law schools.
· Core support funding per FTE student at UNR is 107.80 percent of the weighted average funding for all Research II institutions with FTE between 8,000 and 13,000. MGT reports an FTE of 8,904 for UNR for the comparison year. Nine institutions, excluding UNR met these criteria. Only one institution, University of Vermont, also had a medical school.
· Core support funding per FTE student at UNR is 85.90 percent of the weighted average funding for all Research II institutions with FTE between 8,000 and 13,000, with a medical school. Only one institution, the University of Vermont, met these criteria.
Mr. Burke pointed out that IPEDS charts used for the above comparisons were located at pages 16 and 17 of the Meeting Packet (Exhibit C).
Mr. Burke stated there were other recommendations of the MGT funding study that the Committee may wish to consider:
1. MGT’s recommendations brought all institutions up to the highest level of equity. In addition, the results were accumulated by function rather than netted for the intra-institutional inequities. For instance, when it was determined that UNR was funded at a higher rate than UNLV, funding adjustments were recommended to increase UNLV to UNR’s level. Likewise, CCSN’s support funding was increased to the per capita rate at GBC. This recommendation, Mr. Burke concluded, could result in an expansion of the base rather than simply addressing the goal of equity funding.
Mr. Burke further explained that taken separately, the intra-system equity analysis revealed that all the institutions would require equity funding adjustments ranging from 4.0 percent (UNR) to 30.8 percent (CCSN). Additionally, if the peer comparison was eliminated from the composite index and the intra-institutional functional equity recommendations are netted rather than accumulated, the required adjustment for UNLV would be reduced from $7.6 million to $2.76 million.
2. MGT included all functional cost areas when making its equity funding recommendation of $24 million. If MGT’s composite index were used with UNLV receiving an equity funding adjustment, it would appear Instruction costs should be eliminated from the calculation because UNLV’s average instruction funding per WFTE was greater than UNR.
Mr. Snyder asserted that MGT should be able to review the comparative analysis by the Legislative Counsel Bureau, and that perhaps a more comprehensive analysis should be performed since the numbers are highly complex.
Senator Raggio commented that it would be beneficial to have a representative from MGT come in and explain why they did certain things, for example why they up-graded, etc. Further, if the Committee wishes to accept their findings, they need to know what the imperfections are, if any, and that is what Mr. Burke is attempting to do.
Regent Sisolak directed Mr. Burke to page 14 of the meeting packet (Exhibit C), and asked if UNR was compared to the University of Vermont, since they also have a medical school. Mr. Burke replied that that comparison was made using UNR; however, he reiterated that it is problematic to only have one peer institution to compare.
Mr. Burke stated that the economies of scale discussed throughout the MGT study indicate a possible influence on funding per FTE, even though the MGT consultant noted that the only adjustment for possible economies was the rural factor calculation, which accounts for the cost difference associated with heavy reliance on distance education.
Senator Raggio directed Mr. Burke to contact MGT of America, Inc., and give them an opportunity to review and comment on their analysis.
Discussion of factors to consider in the higher education funding study
Mr. Burke directed the Committee to page 19 of the meeting packet (Exhibit C). He stated there were several factors the Committee may wish to consider in the study:
Instructional Costs – Levels of Instruction/Disciplines
Mr. Burke quoted from portions of the MGT study analyzing instructional costs. (MGT study, Exhibit E, 5-8) In addition, he stated that MGT has indicated an accepted methodology for equalizing the instructional cost structure to apply the appropriate cost ratios to student credit hours by level of instruction in order to account for differences in instructional mixes between institutions. He informed the Committee that the MGT study utilized the 1989 Brinkman study to determine average cost ratios for selected disciplines.
Mr. Burke noted that Dr. Anderes brought up different levels of costs for upper division, lower division, masters, and doctoral, and those figures are produced on page 19 of Exhibit C. Further, there are differences within various disciplines and among the different levels (Exhibit C, page 20). In addition, Mr. Burke pointed out that the MGT study also cited the Delaware study to explain cost differences at a per-student credit hour basis for the various discipline areas and that chart has been replicated at page 21, Exhibit C.
Senator Raggio asked if the both the Brinkman study and the Delaware study were referenced in the MGT study. Mr. Burke replied that the graphs depicted on pages 19-21 of the meeting packet (Exhibit C) came directly from the MGT study.
Continuing to page 22 of Exhibit C, Mr. Burke explained that factors regarding instructional costs/levels of instruction also include the differences in costs between graduate education, research and missions, which should be funded at higher levels. The MGT study looked at instructional funding per student to equalize student funding and that revealed a slight funding deficit at UNR. Mr. Burke asserted that this was one area that may need further clarification from MGT; quoting from their analysis, “However, the gap has narrowed from 1989 to 1999 which MGT believes indicates increases in funding at UNLV have not kept pace with enrollment growth.” (MGT study, at page 5-16).
Mr. Burke added that MGT encourages the use of different instructional formulas for universities and community colleges. “For community colleges, the current policy of funding new instructional faculty positions on a 60/40 full-time, part-time basis should be eliminated.” (MGT study, at page 6-5). Mr. Burke reminded the Committee that discussion regarding those ratios was brought up earlier and the Committee will be looking into that further.
Mr. Burke said that MGT also encouraged consideration of an instructional formula component that incorporates greater differentiation by institutional mission.
Mr. Burke said that the MGT study also pointed out several issues pertaining to enrollment growth.
· Per student funding differences resulting from un-funded or under-funded enrollment growth raised questions about equity, especially if the system has a policy of maintaining access to higher education for state residents.
· That rapidly growing institutions will lose funding per-student when funding does not keep pace with enrollment growth.
· UNLV believes that institutions demonstrating the highest growth in students should be funded at higher rates for operating and capital construction.
· MGT encourages consideration of an enrollment funding policy that does not penalize institutions in a high-growth mode, nor reward institutions that consistently fall short of projected enrollment targets.
Economies of Scale
Mr. Burke said MGT discussed economies of scale on several occasions throughout their report; however there was no specific economy of scale factor developed so the Committee should review that. The Committee may wish to consider the following MGT comments when developing the formula recommendations:
· Smaller sized institutions have higher unit and instructional support costs due to the ability to achieve economies of scale.
· Economies of scale have a definite impact on administrative support costs given that every institution will have a certain level of fixed costs in administrative areas (MGT study, page 5-17). Mr. Burke said that the MGT study incorporated some findings from the McKeown study, which pointed out that scale-related economies for administration are generally achieved at 3,000 to 4,000 FTE.
· Research has found that relatively large institutions may actually experience higher unit costs than mid-sized institutions that might be due to the increased complexity of managing larger organizations. MGT went on to state “. . . In fact, given the research on administrative costs at large institutions, we might even expect to see a more rapid growth at UNLV versus that at UNR.” (MGT study, page 5-18). Mr. Burke commented that the above statements may conflict with previous economies of scale comments, and the Committee will want to reconcile economies of scale with the above statement.
Faculty Salary Levels
Mr. Burke said the Committee already discussed faculty salary issues, but pointed out that MGT encourages consideration of moving away from the use of actual salary averages and formulas and toward target rates of funding based on peers or other external averages. “ . . . . current practice of relying on actual averages encourages ‘game playing’ and perpetuates inequities.” (MGT study, page 6-5).
Mr. Burke said the MGT study found that facilities maintenance costs can vary depending on the size, age, types of facilities and intensities of use (MGT study, page 3-3). He said the MGT study performed a good analysis on instructional space needs and how they vary by discipline and type of course. For example, laboratory courses generally require more space per student than lectures and seminars. Hard sciences require more space per student than social sciences and humanities. Further, the MGT study revealed that UNR ‘s space difference may be reflective of UNR’s higher concentration of high-cost instructional areas (MGT study, page 5-25). Mr. Burke pointed out that MGT also factored in the age of buildings but did not go into depth in that area. However, he reminded the Committee that Regent Derby had informed them that MGT was currently in the process of conducting space equity study for the Board of Regents.
Support Services and Related Issues
Mr. Burke said the MGT study looked at unique program areas and how to fund those areas. Some factors the Committee may want to consider include:
· Funding formulas must take into consideration institutions with disadvantaged, at-risk students.
· Full-time, traditional students have different support needs than part-time and non-traditional students.
· UNR was quoted in the MGT study as stating that funding mechanisms, recognizing regulatory compliance issues should be examined.
Senator Titus stated that the UCCSN is an unique system, and asked if the Desert Research Institute (DRI) was considered in the MGT study. Senator Raggio replied that the DRI was not state-supported to the extent that it would need to be included. Senator Titus responded that DRI is becoming more state-supported. Mr. Burke interjected that DRI was excluded from the analysis of the MGT study.
New Formula Considerations
Mr. Burke said that MGT recommended consideration of new formulas:
· Recognition of the increased use of technology in delivering educational services and related support costs.
· Establish guidelines for allocation for scholarship funding among institutions.
· Establish guidelines for the allocation of research and public service funding as well as support for statewide programs.
Redfield and Henderson Campuses
Mr. Burke stated that the UCCSN is currently working toward the establishment of a facility at Redfield property which would benefit UNR, TMCC and WNCC students. In addition, Assembly Bill 220 of the 1999 legislative session created the Advisory Committee to Examine Locating a 4-Year State College in Henderson, so the Committee to Study the Funding of Higher Education should consider the unique environment at these two potential campuses when developing funding formulas.
Senator Raggio thanked Mr. Burke for his analysis of the MGT Study, and for apprising the Committee of his findings. He noted that the factors identified by Mr. Burke of items for the Committee to consider are not exclusive of factors the Committee should consider.
Mr. Snyder acknowledged that staff prepared a good summary of the MGT study and the information provided by Mr. Burke was useful in providing focus areas for the Committee. He acknowledged the comments brought forth regarding the Redfield and Henderson campuses, but noted there was no mention of the Summerlin campus. From a private fund-raising point of view, Mr. Snyder related there is a lot going on that is similar to the other potential campuses.
Secondly, Mr. Snyder commented that in regards to Senator Titus’ inquiry regarding DRI, he suggested that although DRI was not included in the MGT study, that issue was worthy of the Committee’s attention. Senator Raggio responded that there would be no reason that DRI could not be included, but that DRI was currently outside the formula. However, since they are part of the system, the Committee could certainly consider that factor.
Regent Seastrand said that if all the expansion regarding institutions was to be examined, perhaps the study expand in the area of Mesquite should included as well. Senator Raggio said the formulas should accommodate, within available funding, whatever expansions occur within the system, in addition to decisions made by the Board of Regents. He noted that the last funding formula lasted about 14 years, so whatever the Committee concludes should accommodate what occurs for an extended period of time.
Dr. Moore informed the Committee that the institutional presidents all prepared a list of items that they wanted to be brought to the Committee’s attention. He asked Dr. Anderes if that list had been incorporated in his report (Exhibit F), or if that was a separate item. Dr. Anderes replied that he testified earlier that he could provide that information to the Committee, when appropriate. Chairman Raggio indicated that could be an agenda item for the next meeting.
Definition of the Role of a Consultant to Assist the Higher Education Funding Study
Chairman Raggio said Senate Bill 443 was designed for the Committee to obtain a consultant to assist with the funding study, if needed. He said the basic decision they needed to make was the extent of the use of a consultant. He suggested that a consultant could be used as a data-collector, and to assist in comparing Nevada’s funding formulas with those in use by other states. Further, the Committee would need to decide the scope of the consultant’s work and whether or not the consultant would be in the capacity of making recommendations. However, he opined that the Committee was better suited to make recommendations.
Mr. Snyder said the concept of using a consultant made good sense. After reviewing the MGT study, and getting more analysis of that study, it is clear that that study was done in short period of time and perhaps they did not have the time for data-gathering or the challenging of information. However, the MGT study is a good place for the Committee to start the process. A consultant that could take over from that point would be helpful to the Committee. Mr. Snyder said with regard to recommendations that can be decided as they get further along with the process.
Chairman Raggio invited the submission of potential consultants for the Committee’s consideration.
Mr. Perkins concurred with Mr. Snyder that a consultant would be helpful to the Committee. He expressed concern that if a report was received late from a consultant, there would not be enough time to digest and discuss the contents of the report. Therefore, the draft by the consultant should be received timely to the Committee so they can ask pertinent questions, understand methodologies, and ensure that the report is unbiased. Senator Raggio concurred.
Dr. Richardson agreed with Mr. Perkins, and stated that in light of the work performed by legislative staff and the UCCSN staff, perhaps it would be possible to develop a Request for Proposal (RFP) and identify potential firms to move the process along.
Chairman Raggio said as far as timelines, the Committee would likely meet in November. He asked if November 29th or 30th were available dates for the Committee to meet next. After some discussion, the Committee agreed to meet on November 30, 1999, in Carson City. He stated that the agenda for the next meeting would include the selection of a consultant, along with parameters and guidelines for that consultant.
Chairman Raggio said that rather than develop an RFP, staff could put together some guidelines and then names of objective consultants could be provided to the Committee within the next ten days.
Dr. Moore said he was comfortable delegating the task of hiring a consultant to responsible people. Therefore, he suggested that a subcommittee of Senator Raggio, Assemblyman Perkins, and Regent Jill Derby be formed to select the consultant and then the Committee could proceed with the recommendations of the subcommittee.
Senator Raggio said although that might be a good suggestion, he wants to make sure everybody feels the consultant is objective. However, he agreed that a subcommittee could be formed to review the consultant resumes and send the list to the Committee members for further recommendations.
Dr. Richardson asked if the Chairman would be inviting the consultants to appear before the Committee at their November 30th meeting. Chairman Raggio said that would depend on how many consultants expressed interest because the Committee did not have the resources to bring everyone to make a presentation before the Committee. It would be better to hire a consultant based on reputation and recommendation.
Chairman Raggio appointed Mr. Perkins, Mrs. Derby and himself to review the suggestions presented regarding consultants and the full Committee should be prepared to act on it at the November 30, 1999, meeting. He asked staff to gather suggested consultant names.
Mr. Comeaux asked if staff would be developing a minimum list of the data elements that will be required of the prospective consultants. Chairman Raggio agreed with his suggestion, and invited other Committee member to join the subcommittee/review committee. Dr. Richardson asked to be included in the review committee for hiring a consultant.
Chairman Raggio also assigned a working group to assist the Committee, consisting of the following people: Larry Eardley and Dr. James Randolph (UCCSN); Don Hataway and Bob Atkinson (Budget Office); and Mark Stevens and Brian Burke (Legislative Counsel Bureau). If any of the institutions wanted to participate that would be fine, keeping in mind that the working committee should not be too large.
Mr. Snyder said it is helpful to have feedback from the institutions. He suggested Mike Sauer, from UNLV, and the Committee would be well served by having input from each institution. Chairman Raggio indicated he would entertain a recommendation from each of the institutions that would like to appoint someone to the designated working group. He suggested that those names be supplied to staff.
Chairman Raggio pointed out that the meeting packet (Exhibit C, page 28) contained a suggested timeline for future Committee meetings. He noted that the Committee has agreed to meet November 30, 1999, at 9:30 a.m., in Carson City. He commented that if the Committee met that late in November, then no meeting in December would be necessary and the next Committee meeting could be some time in January 2000.
Chairman Raggio directed staff to review the schedules and calendars of the various committee members, as well as the legislative calendars and determine a meeting date in January 2000. He indicated he would like to accommodate the members, so if anyone had any major concerns they should advise staff. Further, the January 2000 meeting will be held in Las Vegas, and that date will be decided at the next meeting.
Dr. Richardson commented that the working committee might be well served to include a representative from DRI. Chairman Raggio concurred.
There was none.
Chairman Raggio asked if any members had anything further to add. Seeing none, he thanked the Committee for their attendance and agreeing to serve. There being nothing further to come before the Committee, the meeting was adjourned at 1:30 p.m.
Joi Davis, Committee Secretary
Senator William J. Raggio, Chairman