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 9:35 a.m. on November 30, 1999, at the Legislative Building, 401 South Carson Street, Room 4100, Carson City, Nevada.  The meeting was video-broadcast to the Grant Sawyer State Office Building, 555 East Washington Avenue, Room 4401, Las Vegas, and to the Great Basin College, 1500 College Parkway, Lundberg Hall, Room 4, Elko, Nevada.

 

COMMITTEE MEMBERS PRESENT:

 

Senator William J. Raggio, Chairman

Senator Dina Titus                            -           in Las Vegas

Assemblyman Joseph E. Dini        

Assemblyman Bob Beers

Regent Jill Derby

Regent Doug Seastrand

Regent Steve Sisolak

Dr. James Richardson

Dixie May                  

John P. Comeaux

Dr. Carol Harter

Dr. Richard Moore

Dr. Joseph Crowley                         

 

COMMITTEE MEMBERS ABSENT

 

Senator Randolph Townsend                      (Excused)

Don Snyder                                                    (Excused)

Assemblyman Richard Perkins                   (Excused)

 

 

STAFF PRESENT:

 

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:

 

In Carson City:

 

Tom Anderes, University and Community College System of Nevada (UCCSN)

Rick Bennett, University of Nevada, Las Vegas (UNLV)

Larry Eardley, University and Community College System of Nevada

Allen Ruter, Community College of Southern Nevada  (CCSN)

Mark Alden, Board of Regents

David Keebler, Truckee Meadows Community College (TMCC)

Cindy Rossetti, Truckee Meadows Community College

John Richardson, Truckee Meadows Community College

Pat Miltenberger, University of Nevada, Reno (UNR)

Bob Dickens, University of Nevada, Reno

Sherry Blunt, University of Nevada, Reno

Lane Simonian, Truckee Meadows Community College

Michael Sauer, University of Nevada, Las Vegas

Marilou Jarvis, Desert Research Institute (DRI)

John Case, Desert Research Institute

Steve Wells, Desert Research Institute

Ashok Dhingra, University of Nevada, Reno

Bruce Shively, University of Nevada, Reno

Kim Snow, University of Nevada, Reno

George Scaduto, University of Nevada, Las Vegas

Becky Serbirch, University and Community College System of Nevada

Linda Piersin, University and Community College System of Nevada

Don Hataway, State Budget Office

Cy Ryan, Las Vegas Sun

Carol Lucey, Western Nevada Community College (WNCC)

Dane Apalatequi, Western Nevada Community College

Bob Silverman, Community College of Southern Nevada

Michelle Dondero, Western Nevada Community College

 

In Elko:

 

Ron Remington, Great Basin College (GBC)

Carl Diekhans, Great Basin College

Dorothy Gallagher, Board of Regents

 

In Las Vegas:

 

Richard Wilkie, City of Henderson

Gina Polovina, Boyd Gaming

 

 

List of Exhibits

 

Exhibit A         Meeting Notice and Agenda

Exhibit B         Attendance Roster

Exhibit C       Meeting Packet – (Three Volumes)

Exhibit D        Potential Consultants for the Study of Higher Education in Nevada

Exhibit E         Letter to Senator Raggio from Don Snyder dated 11/29/99

Exhibit F         Testimony and handouts provided by Lane Simonian

                       

 

NOTE:           All Exhibits are on file at the Research Library and Fiscal Analysis Division of the Legislative Counsel Bureau.

 

Roll Call – Opening Remarks

 

Chairman Raggio commenced the meeting at approximately 9:35 a.m.  He acknowledged those persons accessing the meeting at the outside locations of Great Basin College in Elko, and the Grant Sawyer Office Building in Las Vegas.

 

He noted that Committee member Don Snyder was excused, and that Assemblyman Perkins had participated via telephone conference to the Subcommittee meeting of the Committee to Study the Funding of Higher Education held previous to the meeting, but he was now excused.  He also noted that Senator Titus would be accessing the meeting at the Las Vegas site.

 

Approval of the Minutes from October 27, 1999

 

Chairman Raggio stated that a few typographical errors have been brought to his attention but if there were no substantive changes from the Committee, he would accept a motion for approval of the minutes (Tab 2, Exhibit C).

 

Dr. Richardson said the minutes were excellent and informative.  However, he wanted to clarify his comments made at page 16.  He suggested the following language be inserted instead of the second paragraph of page 16 of the minutes (Exhibit C):

 

            Dr. Richardson interjected that the 60/40 ratio was due to an

action taken when community colleges were established, which

meant that 40 percent of 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.

 

Mr. Comeaux indicated that on page 10 of the minutes, the second to last paragraph states that that CCSN had a combined FTE of 43,000 and that was incorrect.  Brian Burke, Legislative Counsel Bureau, stated that someone from the Working Group noted that error and suggested the following change:  “CCSN has a combined FTE and head count of 43,000.”  Mr. Comeaux and Dr. Moore said that language was acceptable to make the statement correct.

 

            SPEAKER DINI MOVED TO APPROVE THE MINUTES OF

            OCTOBER 27, 1999, WITH THE CORRECTIONS INDICATED.

 

            REGENT DERBY SECONDED THE MOTION.

 

            THE MOTION CARRIED UNANIMOUSLY BY THOSE PRESENT.

 

Chairman Raggio informed the Committee that there was a tape recording malfunction from the October 27, 1999 meeting, and the secretary prepared much of the minutes by her notes.  He thanked her for her attentiveness.

 

Issues/Principles Developed by Institution Presidents

 

Chairman Raggio recognized Dr. Thomas Anderes, Interim Chancellor, University and Community College System of Nevada (UCCSN) to speak on this agenda item.

 

Dr. Anderes directed the Committee to Tab 3 (Exhibit C) of the Meeting Packet.  He opined that the issues he would be discussing, would need the assistance of a consultant in order to see what else was going on around the country.  In addition, he advised the Committee that some of the issues brought up by the Institution Presidents for the Committee to Study the Funding of Higher Education to review were policy issues, but they were included in the list because as the Board of Regents made policy changes, the Committee, the Legislature and the Governor should be apprised of those changes.

 

Dr. Anderes stated that the issues/principles he would be discussing were agreed upon by all the institution presidents and himself.  He indicated that the first two items created new formulas—one for research and one for technology.  He said the UCCSN has learned that in a formula-driven budget process, if funding for specific items was not driven by a formula, those items received less attention.  If priorities are on instruction and access, then emphasis will be placed in those categories.  Dr. Anderes asserted there was a better mechanism to define research and technology.  The formulas might give the Committee some basis to understand what they need in conjunction with other plans.  Dr. Anderes said the funding needs for technology were significant and perhaps a formula could set a target for funding of technology and research. 

 

Dr. Anderes next discussed the instruction formula.  The institution presidents suggest the system move away from using undergraduate and graduate FTE in driving the formula, and instead, a more sophisticated approach could be developed by aligning costs with associate programs, bachelor’s programs, master’s programs, and doctoral programs.  Dr. Anderes said that was already being done with the Library Acquisitions formula.  He stressed that the formula should be defined in relation to the specific program and that should make the formula more accurate. 

 

Turning to high cost programs, Dr. Anderes reminded the Committee that at the last meeting, discussion took place regarding how the student/faculty ratio could be enhanced based on a more difficult program in terms of teaching students.  For example, engineering required more attention by a faculty member than a business course or a math course.  Programs such as engineering or dental hygiene, vocational education could be funded at a higher cost than regular programs.  The regular programs are placed in the formula at 21:1.  The consultant should recognize that the ratios for the various programs were developed in 1986 and they need to determine if those ratios are still accurate, if other programs should be considered as part of the high cost programs, or if other programs should be scaled back.

 

Dr. Anderes pointed out that currently UCCSN has a 21:1 ratio for the majority of programs at UNLV, UNR, GBC and WNCC.  In 1986 it was determined that CCSN and TMCC would be at 23:1.  At this point, the UCCSN can no longer see the logic in maintaining that differential.  Rather, all the institutions should be at 21:1 ratio for regular programs.  The consultant may want to determine what the logic was in making that ratio differential in 1986, and see if that logic still pertains.

 

Chairman Raggio said his recollection for the ratio differential was the size of the facilities and faculty recruitment.  He suggested that a 23:1 ratio be established for all institutions. 

 

Dr. Anderes said that he did not believe the ratio was determined because of the size of the institution, and he encouraged the Committee to review the issue of ratios.

 

Turning to No. 6 of the principles (Exhibit C, page 29), Dr. Anderes said the support formulas were designed to equalize funding for all institutions.  For example, if the aggregate of the support formula for one institution that was funded at 70 percent of full funding and then if a second institution was at 75 percent, a third institution was at 80 percent and a fourth at 85 percent, in order to equalize, all institutions would be at 80 percent.  However, there could still be sub-formulas at the different institutions.  The UCCSN and the Board of Regents would like to move toward the equalizing position of 80 percent, or whatever level was determined.  He stated that the Board of Regents could do this separately and bring it to the Legislature as an initiative, but the chances for success would be better if the Committee suggested the change.

 

Speaker Dini commented that equalizing now might cause an inequity later.  For instance, if an institution was at 90 percent and it was brought to 80 percent and held harmless, in future years, when analyzing the parity, there would likely be an inequity. 

 

Dr. Anderes replied that over time as the policy went to 80 or 85 percent, an institution, because it would not be receiving additional funds for operating support as a percentage, would begin to drop and the 90 percent would go backwards.  However, there should be a point where parity occurred since percentages are driven in part by FTE and students, annual fluctuation will occur.  Ultimately, the goal is to get the institutions as equalized as possible and if one institution was at 90 percent then funds could be taken from that institution to another institution to obtain a quicker parity.  Dr. Anderes said if the formula indicated percentages under 100, then an institution was already under-funded on the basis of the overall formula and that institution would be held harmless. 

 

Continuing to the next principle (Exhibit C, page 29), Dr. Anderes said the institutional support function and student services defined administrative costs.  One of the major administrative costs in institutional support was technology.  The other major cost was safety and hazardous material management.  Dr. Anderes said these activities have changed dramatically over the past 12 years and were not part of the funding base that existed in 1986.  Therefore, when the formula was created in 1986, it did not have any sense of the type of expenditure or the magnitude of that expenditure.  Generally, there were more dollars being spent in the areas of institutional support and student services then was generated by the formula.  This was not because of exorbitant programs, high salaries, or because of an emphasis on instruction.  Rather, there has been an expansion of programs and program costs within those areas.  The consultant will need to look at the activities and the formula components in those categories.

 

Dr. Anderes said in higher education it was recognized that the amount of funding required goes beyond the amount provided by the State General Fund. 

 

Looking at No. 8 of the principles (Exhibit C, page 30), Chairman Raggio asked what was included in “non-state resource base.”  Dr. Anderes replied that would include student tuition and fees.  Chairman Raggio interjected that student tuition and fees was included in the calculations for State General Fund.  Dr. Anderes clarified that the state operating budget has General Fund and the remainder of the operating budget that was approved by the Legislature included student tuition and fees, estate tax and investment income and a few other minor income sources.  He suggested that the operating budget should continue, but the UCCSN needed to look more closely at the relationship throughout the country, or just the west, of what students were paying to support the operating budget, versus the appropriation from the State General Fund. 

 

Dr. Anderes said that the UCCSN must identify other funding sources, outside of the State General Fund, including a review of existing tuition and fee policies.  He stated that the UCCSN was currently involved in an extensive strategic planning process and growth, alone, will generate an increased funding need.

 

Chairman Raggio stated that when student tuition and fees were last reviewed, it was clear that the students in the state were getting a bargain compared to other regional institutions.  Even with the raise in student tuition and fees that has been recently implemented, the students in Nevada are still getting a bargain.

 

Dr. Anderes said looking at ratios of what student’s contributed to the operating budget versus what was contributed by the State General Fund showed that Nevada was at a low percentage, nationally and regionally.  He pointed out that the system needed to look more closely at that aspect.  It should be noted, however, that since 1994 the student and the estate tax share of the state operating budget has grown from 23 percent of the total state operating budget to 30 percent. 

 

Dr. Anderes read No. 9 from the principles outlined by institution presidents:  “Development of a basic formula that would provide incentive funding for programs addressing state needs and priorities.”  He said the UCCSN could establish with the Governor and the Legislature specific areas the state needed in higher education, training, research, economic development, and other areas.  Principle No. 9 suggested that an incentive fund be established whereby the Legislature would offer to provide one or two percent of the appropriation as incentive.  Then, higher education would have to meet certain conditions and bring in a certain product in terms of priorities defined by the Legislature and Governor. 

 

Dr. Anderes said the 10th principle discussed by the institution presidents was reviewing possible formula alternatives for Desert Research Institute (DRI), and other non-formula, non-instructional units.  He informed the Committee that the DRI did not come before the Governor or the Legislature as part of a formula package, but rather as an incremental budget.  Dr. Anderes opined that some of the units not based on instruction (research, public service, institutional support) did not get the attention they might receive if there was a formula that would justify or better define the funding those categories required.  He pointed out in the budget process in the past, the UCCSN presented the amount of money that was provided to DRI the previous year and then made a request for additional appropriations in that fashion.  Dr. Anderes said that while there was justification for the additional requests, he asserted that there was a general feeling that since it was not formula-based or instruction-driven, there might be less significance at some point in time.  The UCCSN has made Instruction the number one priority.  Yet, the non-instructional and non-formula areas were not understood well enough to receive the funding needed.

 

Finally, Dr. Anderes said the last principle defined by the institution presidents was to think about having the General Fund cover instruction, financial aid, equipment, and what could be defined as the core programs, relating mostly to instruction, research and service.  Then, the student tuition and fees could be designated to support campus technology, student services and other programs that were not designated as core programs.  He concluded that this strategy would start to allocate funds based on the revenue stream.

 

Chairman Raggio asked if Dr. Anderes was suggesting that more General Fund would be required in order to free up fees to other categories.  Dr. Anderes replied that could be the outcome, but that was not what he was inferring.  He said there would have to be an agreement regarding the existing resources (estate tax, student tuition & fees, and the General Fund) to make judgments using existing funds, without putting an undue burden on the General Fund.  Chairman Raggio said the Committee to Study the Funding of Higher Education was not designed to come up with additional funding.  Rather, the Committee would be looking at the formulas and funding mechanisms allocated within existing resources.

 

Mr. Comeaux said the Chairman had identified his concerns.  Additionally, the Committee had much work to do in a short period of time.  He did not want to get side tracked on developing formulas or looking at artificial allocations that were not designed to accomplish anything. 

 

Dr. Anderes agreed with the comments of Chairman Raggio and Mr. Comeaux as to the tasks of the Committee and that the Committee might not be able to give much time, if any, to the principles he identified.  However, he was concerned with the responsibility of the cost.  While there could be some interpretation that the UCCSN was trying to foist more funding from the state, if it was determined that student tuition and fees would be allocated for technology or areas that already have a great need, then the pressure is on the UCCSN to either raise student tuition and fees, do something differently with the estate tax, or do something outside of the General Fund to meet what the Committee might define as their responsibility. 

 

Senator Titus noted that at the last committee meeting there was considerable discussion of the differences of faculty salaries between UNR and UNLV, not existing faculty, but the hiring of new faculty.  She asked why there was no recommendation in the principles identified by the institution presidents to equalize the salary schedules of newly hired professors between the two universities.

 

Chairman Raggio asserted that information on that subject matter was contained in the Working Group report that would appear later in the agenda. 

Dr. Anderes responded that the 11 principles he brought forth at the request of the institution presidents were general in nature.  He acknowledged that the salary schedule of new hires was a major issue for the UCCSN, and that issue was incorporated in No. 3 of the list of principles (Exhibit C, page 29).

Senator Titus thanked Dr. Anderes for his response and additionally asked in relation to the 10th principle regarding DRI, whether any consideration had been given to “folding” DRI back into the existing institutions.  She acknowledged having the history of why DRI was originally made separate, and asked why the DRI needed to remain separate.  Further, by including DRI with the existing institutions, it could help the universities in the process currently underway to be designated as Research institutions. 

Dr. Anderes replied that there were some misunderstandings regarding the DRI being moved into one or two institutions.  In response to a Regent’s question, a review of that issue was completed.  The UCCSN determined that allocating the DRI piecemeal and breaking them up would probably cause the activities performed at DRI to be significantly curtailed, and the types of research and level of research would be diminished to the extent that nobody would benefit.  Currently, by being a “stand-alone” entity, the DRI has more opportunity and more visibility than it would otherwise. 

Regent Sisolak said he was intrigued by the response he received from DRI and asked whether a response had been received from the two universities about the benefits or drawbacks of “folding” DRI into the universities because he was interested in hearing from UNR and UNLV on the issue.

Dr. Crowley asked whether UNR had been requested to respond to the matter.  Regent Mark Alden, UCCSN, said he made an error in requesting a response from the universities, and he would like to hear from UNR and UNLV.

Dr. Crowley said he would like to have the opportunity to respond in writing, thoughtfully.  However, the subject of including DRI in the university budget was not new and had been raised on at least two other occasions.  On each of those occasions, the position of the Board of Regents and other significant decision-makers in the state was adamant opposition.  Dr. Crowley said both the pros and cons should be aired for a full review of the matter.  He expressed reluctance to use the Committee to Study the Funding of Higher Education to deal with a question that goes beyond the charge of the Committee.  Dr. Crowley stated in the past when the issue of shifting the responsibility of DRI to the two universities was brought forth, he was supportive of that concept.  However, reflecting on that position in recent years, he was not willing to take a position this time but he would discuss the issue at the appropriate time.

Dr. Harter agreed that the Committee was not the proper forum for a discussion regarding DRI.  However, the discussion should be had and it was an important issue.  In addition, the universities should be given the opportunity to respond in writing.  A discussion would involve looking at the costs and structures to measure and weigh the value of keeping DRI an independent organization or having it become part of the university as it was previously.

Dr. Crowley stated that during the meeting of the presidents of the institutions the issue of DRI was discussed and it was agreed that at some point a discussion on the matter would take place, and since the issue has been raised again, that discussion should occur.

Regent Seastrand agreed that there needed to be certain funding for technology, but he was uncertain how that should be defined.  He advised the Committee that he recently heard that by the year 2000, businesses, on the average would spend about 60 percent of their operating budgets on information systems and technology.  In the 1980’s less than 10 percent was spent on technology.  Presently, there are no funding formulas for technology so that area must be addressed.

Secondly, Regent Seastrand acknowledged that although it was true that Nevada had a low tuition in comparison to neighboring states, it was his understanding that the low tuition was balanced with low access and low attendance.  The state has the lowest number of adults attending college, and the lowest number of adults who have graduated from college.  So, the Regents have made a concerted effort to maintain low tuition rates in an attempt to increase access for students and hopefully increase attendance of Nevadans in higher education institutions throughout the state. 

Regent Seastrand thanked Dr. Anderes for his presentation.

Dr. Richardson pointed out that principle number eight discussed by Dr. Anderes (Exhibit C, page 30), indicated that the percentage of student fees plus estate tax had gone from 23 percent to 30 percent from 1994 to 1999.  He asked what the percentage change was for student fees alone.  Dr. Anderes answered that he could obtain that exact information, but student tuition and fees was in the vicinity of 80 percent of the other funds.  Dr. Anderes said the increase in student tuition and fees was not because the UCCSN was charging a large amount per student, but rather the increase was due to the increase in the number of students coming into the system.

Regarding principle number five that dealt with ratios (Exhibit C, page 29), Dr. Richardson said at the last meeting of the Committee, Dr. Moore raised the issue regarding the number of sites maintained by the institutions.  He asked whether that factor was incorporated into the principle discussed by Dr. Anderes.  

Dr. Anderes replied that the institution presidents have discussed different factors that impact the ratios.  However, the high cost of certain programs (vocational education, rural, engineering) also played a role in providing a certain amount of additional funds.  Dr. Anderes agreed that additional campuses of the institutions should certainly be a factor to consider.

Dr. Moore commended Dr. Anderes for his summary of the six-hour session that was held by the institution presidents regarding what they wanted the Committee to review.  He pointed out that the meeting of the presidents was not geared in any fashion as an attempt to obtain more funding.  Rather, the institution presidents attempted to obtain specificity regarding accountability for the system.

Dr. Moore directed the Committee to principle number six (Exhibit C, page 29).  He pointed out that it was not CCSN’s position to attempt to be funded at the level to which they were operating, but that the formula should be calculated at the enrollment levels to which they were budgeted by the state, which was an appreciable difference.  There was no attempt to indicate that no matter what the number of enrollment, funding must be so based.  He wanted that to be clarified for the Legislature.

Assemblyman Beers asked how long the Regent’s policy to maintain a low rate of tuition in order to encourage attendance at higher education institutions had been in effect.  Dr. Anderes replied that the student tuition and fee policy was in its third or fourth year.  The policy takes the cost per credit multiplied by the cost of living and then adds one percent to come up with the cost of tuition.  Prior to that policy, the setting of tuition fluctuated.  The Regents adopted the existing policy because in the past the fluctuation was too varied.  For example, one year may see a zero percent increase and the next year would be at ten percent.  There was a dramatic inconsistency based on the moment, rather than based on long-term projections. 

Mr. Beers again asked how long the policy about keeping the tuition low in an attempt to increase enrollment, had been in place.  Dr. Anderes stated that concept was not a written, documented policy, per se, but had been in effect as a position of the Board of Regents for at least five years. 

Mr. Beers queried if that policy was actually driving attendance.  He asked whether performance indicators had been developed to determine if the cost of tuition or access were reasons why students in Nevada did not go on to higher education.  Regent Derby replied that the Board of Regents has taken the position for the past several years that access is the absolute top priority for students.  The Board was proud to be a low tuition state and believe that low tuition serves the citizens of the state well.  The Board of Regents was committed to the tuition policy to make incremental increases that can be predictable.  However, there has not been a study that has clearly indicated why Nevada has such a low number of students going on to higher education.  Although there have been many speculations in that regard but there was no hard data.  She reiterated that access is a high priority with the Board of Regents so tuition rates have remained low.  Dr. Derby stated that the Legislature has been generous in giving the UCCSN support for student aid, but there has been a fairly low rate of student aid, so those who cannot meet the tuition and fee levels established have not been able to attend higher education because there was not adequate student aid.  In the last four years, the UCCSN has emphasized the issue of student aid.

Turning to another matter, Dr. Derby asked whether information would be forthcoming regarding what other states were doing regarding ratios.  She stated it was apparent to her that the ratio established, 21:1, had significant quality implications.  She noted that institutions were ranked by these ratios, and parents and prospective students review the ratios, so she was interested in information on what other states are at in that regard.  Dr. Derby opined that the 21:1 ratio was satisfactory to her, and any higher than that might result in concerns of quality assurance.

Regarding principle number three (Exhibit C, page 29), Regent Sisolak asked when a new program was proposed at the doctorate level and no fiscal impact was implied in proposing the new program, how was it funded at a higher level once at the Legislature?  In addition, he asked whether new or existing programs were ever cancelled once they have been established.  For instance, there might be a doctorate program with merely one or two students over an extended period of time.

Dr. Anderes responded that doctoral and master’s degree programs, upon review, could be eliminated.  He stated it was common for institutions to review programs and, based on enrollments, eliminate the program if needed.  Regarding the program planning process, Dr. Anderes explained that when an institution commenced a new program and the institution indicated the program did not cost anything, the UCCSN assumed that the institution would be reallocating funding from some other place.  For instance, they might move a faculty member to teach more basic courses, or something else to effectuate the change. 

Regent Sisolak pointed out that if an institution was reallocating funding for a new program, then likely something was being taken away from somewhere else.  He asserted that he was in favor of new programs; however, he was sensing that this was an area that could be misrepresented to the Legislature.  For instance, if the institution was indicating that there was no cost to implement the new program, yet the funding was being reallocated, then that was not an accurate statement and perhaps the institution should be clearly setting forth the cost of the new program, especially since the doctorate programs cost significantly more than undergraduate programs. 

Dr. Anderes said the UCCSN has an inventory of the existing programs at every level.  Although the system does not review each new program individually as changes are made, the UCCSN does review new programs that show funds will be reallocated.  Usually, the institution will instruct the UCCSN that as the instruction formula is devised with new enrollments, there will be a reduction in enrollments in some other corresponding program.  For example, if a faculty member was removed from one area then not as many students can be taught in that area and an offset in enrollments must occur somewhere. 

Dr. Crowley emphasized that the concern raised by Regent Sisolak applied to all new programs, not just new doctorate programs.  With the exception of the new programs established for the medical school and the law school, the state has historically not provided funding for new programs.  The funding simply grows with enrollment.  Therefore, if the program was successful and attracted a significant number of students, the funding formula would bear that out even if the funding formula was not differentiated by the level of instruction. 

Dr. Crowley surmised that additional dollars were achieved by additional enrollments and that was how new programs became funded.  Further, at the graduate level, there currently was no formula for calculating the amount of time graduate faculty spent on graduate programs, in mentoring their students and all the time that went into helping the student with his/her dissertation and the committee that was devised to supervise that student’s progress.  All those costs were not incorporated quantitatively into the new program proposals at the graduate level.  Perhaps a mechanism should be prepared for that purpose.

Senator Titus asked for examples of programs that have been eliminated.  She pointed out that there were built-in incentives for a program to remain “on-the-books” such as higher salaries.  In addition, the faculty from a department offering a PhD had lower teaching loads even though they might not teach in the specific PhD program, so why would such a program be eliminated?

Dr. Anderes replied that from his experience the concept of eliminating a program was symbolic because the administration was desirous in showing that a review of programs was being conducted.  Based on enrollment, elimination did occur.  He pointed out that the elimination of a program did not necessarily eliminate a faculty member or faculty salary.  Dr. Anderes related that he did not have any specific examples of programs that have been eliminated.  However, he believed that UNLV provided the UCCSN with two or three examples of programs that had been eliminated after they performed a specific assessment of various programs.

Chairman Raggio asked if specific examples of program elimination could be provided to the Committee.

Dr. Harter stated that UNLV reviewed every program in the institution at least once every five years.  During the last curricular review activity, approximately three to six programs were eliminated.  She recalled that Shelley Berkley at the time had remarked that few programs had been eliminated during her time as a Regent.  In a couple instances, Dr. Harter continued, programs were eliminated because of low enrollments; however, in some instances (i.e., Radiography) the program was eliminated because a higher level of technology and expertise was required to maintain an effective program.

Dr. Crowley stated that UNR performed comprehensive program reviews.  His recollection revealed that a technology program had been eliminated as well as programs in the medical school.  In addition, when UNR closed down the School of Home Economics, many programs were eliminated at that time as well.  Dr. Crowley informed the Committee that at the Regent’s next meeting, there was a proposal to add a new program at the master’s level and to eliminate another master’s level program.

Fundamental Base Budget Review

Don Hataway, Deputy Budget Director, State Budget Office, stated he was acting in the capacity as the Co-Chairman for the Governor’s Fundamental Review of Base Budgets of State Government (Governor’s Steering Committee), and that was his focus to the Committee.  Mr. Hataway stressed that the Governor was serious about taking an in-depth look at Government and how it was operating.  He said it would be a mistake to think that the Governor’s Steering Committee was only taking a cursory review of the UCCSN. 

Mr. Hataway directed the Committee to the handout included in the meeting packet that was prepared by the Governor’s Office (Exhibit C, Tab 4, page 31). 

Mr. Hataway drew attention to the questions the Governor had regarding Government:

·        What is the proper role of state government?

·        What services must we provide?

·        What is the most efficient way to provide those services?

·        What is the best way to pay for those services?

Secondly, Mr. Hataway outlined possible outcomes from the fundamental review process:

·        Programs may be eliminated, continued or expanded.

·        Agencies may be reorganized.

·        Services may be contracted out to other sources, privatized or converted to non-profit status.

·        New programs will be created only after other alternatives have resulted in real savings in the General Fund.

Mr. Hataway pointed out that the list of the members of the Governor’s Steering  Committee was set forth on pages 32-33 of the meeting packet (Exhibit C, Tab 4).  In addition, his Co-Chairman is Denice Miller of the Governor’s Office.

Mr. Hataway stated that the Governor’s Steering Committee would be reviewing all Executive Branch state agencies, to a greater or lesser degree.  The Executive Branch included the UCCSN. 

Directing the Committee to page 34 of the meeting packet (Exhibit C), Mr. Hataway said the questions outlined therein related to all budget accounts in the Executive Budget, including all of the UCCSN accounts.  Further, by May 1, 2000, an answer to these questions will be required to be provided to the Governor.  He emphasized that the Governor was interested, in relation to the UCCSN, in looking at more outcome measures to determine whether institutions were performing within their mission.  He stated that the Chancellor assured him that the UCCSN was working on those answers.

Mr. Hataway said that the Budget Office and the Governor’s Office has identified approximately 200 suggestions for the improvement of state government.  He said those suggestions were not part of an “end-all” list, but rather were devised as “idea-generators.”  Mr. Hataway pointed out that the list should be completed and ready to review on the Internet by mid-December 1999. 

Relating specifically to the UCCSN, Mr. Hataway said that just a few years ago, the state was the provider of police training for police officers within the state.  However, presently the state and four community colleges and approximately seven local governments were providing training.  The Governor’s Steering Committee will be examining that issue.  In addition, the infrastructure in the state was aging, and that mostly involved prisons and higher education institutions.  However, the state needed a mechanism to address the long-term needs of the aging infrastructure throughout the state.

Mr. Hataway stated he had heard the suggestion to establish a minimum financial support level for registration and tuition fees to support university budgets.  He noted that the Committee has discussed the Regent’s existing policy to maintain low tuition.  Mr. Hataway pointed out that he has been involved in the university budget since 1988 so he could comment on that particular issue.  There will need to be more justification for General Fund services and allocations that were provided for university budgets that also have large self-supporting budgets (i.e., athletic programs, University Press).

Mr. Hataway stated that the Governor’s Steering Committee has identified approximately 24 items that State Purchasing should take a look at and solicit proposals on a global scale to get the economies of scale that are needed.  One that would have direct benefits to the state was electric deregulation and the Request for Proposal for electrical services for all state buildings and facilities.  That would have some long-term fiscal benefits for all facilities.  There has been another suggestion to solicit a proposal for electrical services to all members of the Public Employees Retirement Association, as a fringe benefit for all state employees. 

Continuing, Mr. Hataway stated that there has also been a suggestion to cost allocate the expenses of Central Director of Administrative Services for all Director functions.  For example, UNR has an excellent cost allocation plan for the operation and maintenance of state buildings.  All those expenses are contained in their budget and the revenues from all the diverse entities that receive services from operation and maintenance.  The same could be done for the president’s office, the controller’s office and personnel. 

As to the 200 suggestions referenced above, Mr. Hataway said the Governor was requesting from all state agencies an in-depth analysis of why a suggestion was considered impractical, or provide a better suggestion on how to provide the level of service in a different manner along with a timetable for that suggestion.  He said the Governor’s Steering Committee recognized that there were major issues identified in the list of 200 suggestions, which might take several bienniums to implement. 

Next, Mr. Hataway outlined the Governor’s Forum on Fiscal Issues (Exhibit C, page 37) and stated that while the Governor’s Steering Committee will be reviewing the expenditure side of how State Government operated, they will also be reviewing the revenue side.  He informed the Committee that the Budget Office was in the process of completing major revenue sources that represent approximately 80 percent of the General Fund, along with major caseload expenditure driven units and cost centers that represent 75-80 percent of the budgets (i.e., K-12, UCCSN, Prison System).  The Governor’s Steering Committee was charged with presenting to the Governor a preliminary indication of long-term trends in those areas.  Their projections will be through 2009. 

Mr. Hataway advised the Committee that the Legislature has also established a process for long-range projections and at some point in time, the work of the Governor’s Steering Committee will dovetail with that process.

Mr. Hataway said the major change that will be seen from the budget review process was the May 1, 2000 deadline.  At that time, a number of critical issues must be presented to the Governor and the Budget Office for a preliminary review of fiscal impact needs of the 2001-2003 biennium.  First, the Budget Office will be presenting preliminary rough estimates of the additional revenue for the 2001-2003 biennium.  Of course, that information would be fine-tuned prior to the Economic Forum that meets in December 2000.  However, the Governor needed preliminary information in order to know what can be supported in the agency request phase of the budget cycle. 

Mr. Hataway advised that the Budget Office will be presenting fiscal impact and major caseloads and K-12 and the UCCSN will be included in that for the 2001-2003 biennium.  In addition, the Budget Office will be presenting fiscal impact and cost of living increases for state employees.

Mr. Hataway said the agencies will be required to present their basic budget review reports as outlined by the Governor’s Memorandum (Exhibit C, Tab 4) along with all enhancement requests in an executive summary format.  Mr. Hataway said during the last budget cycle, the Governor was impressed at the amount of time the agencies and the Budget Office spent to build budgets and review agency requests, respectively.  The Budget Office thereafter cut approximately $1.4 billion out of the Executive Budget to balance the budget during the last biennium.  By May 2000, the agencies will know what support from the Governor’s Office was forthcoming in relation to the Executive Budget.  Mr. Hataway clarified that did not mean that the Executive Budget would be balanced at that time, but the amount of time that goes into the process would be reduced. 

Mr. Hataway asserted that there were thresholds of expenditures that the Legislature has set in place regarding business plans and if a business plan has an expenditure threshold of more than $1 million per year or an accumulated growth of $1 million per year over time, then a formal business plan must be developed for the new programs, and that document, at least in executive summary format, must be presented to the Governor by May 1, 2000.

Lastly, Mr. Hataway indicated that the Budget Instructions will contain elements related to a modified zero-base budget process.  Some of these will relate specifically to the university budgets, i.e., to review and justify the non-General Fund revenues available to support budget programs.  In addition, reviews and justification of the formulas used to support budgets will need to be provided as well.  For example, if a university is routinely budgeted at 21:1 and history indicates that the budget was really 23:1, a justification will need to be supplied as to why it should go back to 21:1.  Another example would be the community college’s full-time/part-time faculty.  If that category was budgeted at 60/40 but the record indicated it was more like 55/45, then more justification would be necessary.

In summary, Mr. Hataway stressed the importance that the Governor has placed upon the base budget review process.  He stated that he would be happy to meet with any of the Committee members, university staff or legislative staff as needed.  He encouraged the UCCSN to review the suggestions as they become published.

Chairman Raggio extended appreciation to Mr. Hataway for delivering the message from the Governor.  He stated they were interested in the activities of the Governor’s Steering Committee and the criteria that will be recognized in the budget construction process.  Although the legislative view may differ from the Governor, Chairman Raggio stated that both recognized the limits in the existing revenue stream and that the base budget of the state system already took up 95 percent of the total revenues before the opportunity to consider new programs.  Unfortunately, the picture for the next biennium did not appear to be improved from the previous biennium.  Everyone was concerned with filling the state’s needs with the existing revenue.

Regent Seastrand thanked Mr. Hataway for his informative presentation and stated he agreed that Government needed to “tighten the belt” and that needed to be done effectively and efficiently.  He asked if consideration had been given to funding higher education the same way as K-12 funding.  He noted that presently there were no incentives through the university system to save money.  In fact, the last report he saw showed that $200,000 was returned to the state because it had not been spent.  He said that represented the inability of finding opportunities to save. 

Mr. Hataway said he has often thought of funding higher education in the same fashion as K-12.  In fact, in preparing the budget for K-12, a single budget was considered for 17 county General Funds, and that was reduced to a basic support, per student.  He said there were pros and cons on that type of a formula.  However, using the funding mechanism designed for K-12 in the higher education arena was certainly an option.  He pointed out that the only balance forward that the school districts were allowed were in the interim year within the biennium and that was related to the dynamic of the State General Fund guaranteeing basic support.  So, if enrollments were lower or other revenue sources were higher, there would be a certain savings of General Fund dollars that was balanced forward, but it reverted at the end of the biennium. 

Mr. Hataway said he has embraced the proposals that came forward but he was uncertain how it would be accomplished in terms of allowing a certain percentage of the amount reverted to be retained by the agency.

Mr. Hataway reiterated that the Governor was interested in the best way to budget dollars.  For example, in terms of the full-time/part-time ratio, if it was routinely budgeted at 60/40, but history indicated that the institutions did not spend at 60/40, maybe it should be budgeted at the amount of the actual ratio and then set up a type of funding mechanism, either through the Interim Finance Committee Contingency Fund or somewhere that would provide for the difference.  The state would fund it but would not routinely budget the item.  The Constitution charges the state with having a balanced budget.  The UCCSN was the largest discretionary block of funding in the budget and everyone needed to look at how the state could better handle available funds.

Dr. Richardson said initially he did not believe there would be much involvement with the UCCSN and the base budget review process outlined by Mr. Hataway, because he did not specifically see that the UCCSN was one of the agencies to be reviewed during that process.  However, based on Mr. Hataway’s comments, the UCCSN’s budget will be reviewed under that process.  Therefore, he was concerned about the composition of members on the Governor’s Steering Committee.  Specifically, he noted that there were two representatives from K-12 on the Committee; yet there were no representatives from higher education on the Governor’s Steering Committee.  He stated if the Governor’s Steering Committee was to be a policy-recommending body, then the UCCSN should be represented.

Mr. Hataway replied that the Governor’s Steering Committee was connected by the Constitution, by statute, between state government and local government and the Executive Branch with everything going through the Legislature.  He assured Dr. Richardson that all recommendations would be well-documented, justified, and well thought out.  Further, opportunities were available for persons to voice opinions through the open meeting process.  He suggested that Dr. Richardson request to be placed on the mailing list to receive agendas of the Governor’s Steering Committee, and although the UCCSN may not have direct representation on the Governor’s Steering Committee, there were ways to access and provide input into the process. 

Mr. Hataway informed the Committee that there was another process underway with the new Division of Internal Audit, who is looking at six major departments, not including the UCCSN.  Therefore, a number of recommendations would be funneling into the Governor and ultimately into the Executive Budget process next fall.  He stressed that the initial burden was placed on the state agencies within the Executive Branch to document why they exist, and show where similar services were provided 

Dr. Richardson brought up his concern for the construction of new buildings needed by the state, particularly the 15-cent limitation that has been imposed on what the state can use to service the debt of new buildings.  He asked if the Governor’s Steering Committee would be reviewing the issue of how new buildings were constructed (including new prisons, higher education institutions, and other state buildings).  Mr. Hataway replied that the Governor’s Steering Committee would indirectly be reviewing the issue of the construction on new state buildings; however, they were limited by Constitutional provisions.  He explained that CIP projects were funded through excess General Fund reserves or Capital Improvement money from bond sales.  Although there was a certain amount of money that has come in through the university system through the Higher Education Capital Construction Account but the two percent debt limit does pose decision-making problems for the Executive and Legislative branches of government.

Dr. Moore underscored Regent Seastrand’s comments.  He suggested that the state come up with a savings plan, perhaps up to four percent.  Then, that money could be shared with the state on some percentage, and the remaining money could be allocated in the next year to a category that the Legislature had previously approved.  Perhaps that would reduce the expenditures for agencies in the following year.  For instance, if the UCCSN saved four percent and half went back to the state, the other half could be applied towards technology.  He opined that a savings plan would reduce expenditures to the state.  Dr. Moore asserted that state agencies needed incentives to be savers.  He would like to develop an incentive plan whereby the state benefited from the system’s savings, and the remaining funds could only be spent on pre-approved items.  Further, expenditures for the following year could be cut based on the savings.

Mr. Hataway responded that the Governor was interested in creative ideas that would save money for the state.

Report on the Status of the Working Group

Chairman Raggio directed the Committee to the responses of questions posed at the last committee meeting (10/27/99), along with a report of the assignments of the Working Group  (Exhibit C, Tab 5). 

Brian Burke, Legislative Counsel Bureau, Fiscal Analysis Division, stated that the Working Group had met several times since the October 27, 1999, Committee Meeting.  He pointed out that three work products were prepared and contained under Tab 5 of the meeting packet (Exhibit C):

·        Responses to committee questions from the October 27, 1999, Committee Meeting.

·        Draft Contract for the hiring of a Consultant (Tab 6, Exhibit C).

·        Review of Current Formulas, and Potential Modifications.

With regard to the responses to committee questions from the previous meeting, Mr. Burke asked if the Committee had any questions as to those responses. 

Chairman Raggio asked if any committee members had questions or comments regarding the responses provided by the Working Group, otherwise he would accept the report.  He asked Mr. Burke to relate to the Committee the members of the Working Group.  Mr. Burke said the Working Group consisted of himself and Mark Stevens from the LCB, Larry Eardley and Jim Randolph from the UCCSN, Don Hataway and Bob Atkinson from the State Budget Office.  He said the Committee also gave the institutions authority to provide representation at the Working Group.  In that regard, Mike Sauer, UNLV and Al Ruter from CCSN, Ashok Dhingra from UNR, Dane Apalatequi from WNCC, Marilou Jarvis and John Case from DRI, David Keebler from TMCC, and Carl Diekhans from GBC.

Chairman Raggio recognized Regent Seastrand.  Mr. Seastrand inquired into question number eight:  “The committee would like MGT to explain further why the Carnegie classifications were upgraded and the potential problems this would cause.”  He suggested that the Committee not only look into “potential problems,” but also take a look at what problems might be solved by upgrading the Carnegie classifications. 

Chairman Raggio stated that someone at MGT had been contacted regarding the study they performed that included Carnegie classifications.  He asked Mr. Burke to comment on that discussion.  Mr. Burke related that he spoke with Dr. Dan Layzell of MGT of America, Inc., who was the consultant that the presented the equity study during the 1999 legislative session.  Mr. Burke said Dr. Layzell was invited to attend the meeting of the Committee today but he was unable to attend due to a conflict in his schedule.  In addition, Mr. Burke stated that he solicited a written response from Dr. Layzell on the issues discussed at the last committee meeting, but no response had been received to date.  Mr. Burke said he would be happy to follow-up on Regent Seastrand’s particular question.

Chairman Raggio said it was his understanding that Dr. Layzell indicated he was not planning on providing a written response to the questions of the Committee.

Dr. Richardson said he requested comparative data from around the country on the part-time/full-time ratios, and while that specific request was not shown in the Working Group report, Mr. Burke has pointed out that it was included in the contract document. 

Chairman Raggio stated that the Working Group prepared the draft contract that was included in the meeting packet, and that item would be discussed under the next agenda item. 

Regent Sisolak directed the Committee to pages 89-91, which were the responses to question number 10 from the previous meeting (Exhibit C).  Chairman Raggio asked for clarification on the contents of pages 89-91 of the meeting packet.  Mr. Burke explained that responses contained on pages 89-91 came from the annual March/April issue of Academe Bulletin of the American Association of University Professors. 

Continuing, Regent Sisolak stated it was his understanding that the chart on page 89 of Exhibit C related to present faculty.  Mr. Burke confirmed that was correct.  Regent Sisolak pointed out that page 91 of the responses (Exhibit C) referred to new position hiring, new funding.  He pointed out that on the chart entitled UCCSN New Position’s Funding FY 88 through FY 01, the columns represented for FY 00 and FY 01 showed a huge disparity.  For example, there was a $4,400 disparity between a full-time faculty and UNR and full-time faculty at UNLV, and for the support staff there was a $1,100 disparity between the two universities.  In both instances, UNR faculty/staff received higher sums.  He said the same was true for the community colleges in that CCSN was the least funded of all four of the community colleges.  He asked for a reason why the funding occurred at different levels for new positions.

Larry Eardley, Budget Director, UCCSN, responded that historically, based on the last funding study, the UCCSN requested funding under the instruction formula based on the average existing salaries at the time in the base.  He further clarified that salaries were divided to derive an average salary figure.  Then the FTE is divided by the average salary and then funding is requested based on that amount.  He stated that typically the Legislature or the Governor’s Office supported the request or adjusted the amount through another methodology.  For example, in FY 1992-93, both UNR and UNLV were funded at the same amount and the UCCSN had requested equalization at that point in time.  There have been other biennia whereby the UCCSN requested that the salaries be equalized to UNR’s average because they were higher but funding was not received at those times to equalize the salaries.

Regent Sisolak stated he understood Mr. Eardley’s explanation, but what he was still confused about was if the positions were new, why was an average salary used?  Rather, why wouldn’t the same amount be spent for a new position at UNR as was a new position at UNLV?  He commented that the two southern institutions were being funded at a lower percentage than the northern institutions.  Mr. Eardley said there were specific instructions that the UCCSN had to follow when making their requests for the biennial budget which required the UCCSN to use the average existing salaries at each institution.  The instruction formulas were based on the previous study of the formulas.  Whenever new positions were generated through the formulas, salaries shown in the base budget that year are used.  If UNR and UNLV had different average salaries, based on budget instructions, they must use those amounts. 

Regent Sisolak asked how equalization could occur if the starting average salaries remained different.  If the enhancement was not achieved, could the difference be split so that newly hired faculty at UNLV were hired at the same salary as new faculty at UNR, as well as the same policy for the community colleges?  He stressed there was an inherent inequity based on the current hiring system.  Regent Sisolak stated that it was his understanding that the Board of Regents did request an equalization of the new hire salaries between the universities, but that was not funded by the Legislature.  Mr. Eardley stated that was correct.

Senator Titus acknowledged Mr. Eardley’s comments that the UCCSN “had” to do certain things in the budget process based on specific instructions and that was what needed to be changed.  She stressed that the funding for the salaries of new faculty should not be based on an ongoing formula that does not take into consideration equality.  She said enhancements were always difficult and should not be relied upon. 

Secondly, Senator Titus changed to the subject of merit pay, acknowledging the material that was provided by the UCCSN with the meeting packet (Exhibit C – attachments).  She recollected that the original question was “What percentage of the faculty at each campus received merits?”  She asked where in the report that response was provided to the Committee members.

Mr. Eardley, UCCSN, replied that the answer regarding merit pay was at page 43 of the meeting packet (Exhibit C).  He said the question as he recalled was “The Committee noted that merit distribution is handled differently at each of the institution.  The Committee asked UCCSN to provide an explanation on how and on what basis merit is distributed to each of the institutions and then provide the percentage of the employees receiving merit, and the average merit award by college.”  Each campus responded to that question beginning on page 43 of the Exhibit C.  In addition, the UCCSN provided back-up documentation which was the merit study that was performed in response to the Legislature during the 1999 session, representing figures for FY 1998-99. 

Senator Titus thanked Mr. Eardley for his answer and asked what the percentage of merit pay was for the Desert Research Institute (DRI).  Mr. Eardley said that was 44 percent.  In response to Senator Titus’ further inquiry, Dr. Harter said the percentage of faculty receiving merit pay at UNLV was 56 percent and UNR was 68.7 percent.  She stated that the differences appeared to be related to the relative dollar size of raises, with UNLV’s average raise being slightly higher.

Senator Titus asked whether the percentage being used in the answer regarding merit pay represented faculty only.  Dr. Harter replied that the percentage included faculty and professional staff.

Dr. Anderes re-enforced Mr. Eardley’s comments by stating that based on the actions of the Committee to Study the Funding of Higher Education that was convened in 1986, a specific process was mandated for creating budgets and working with the formulas.  One of those mandates was the requirement to use the prior year’s average salaries.  If the UCCSN cannot support the average salary outcome because they believe there was a differential, then an enhanced budget request was made.  Under the present system of budget development by the Governor’s Office and the guidelines outlined by the 1986 funding formula study, that was the only process the UCCSN had in developing its budget.  However, they can continue to highlight the issue.  The Board of Regents has supported the concept of moving away from the differential through the budget process for at least the last two biennia.

Returning to page 91 of the meeting packet, Dr. Crowley pointed out that for FY 91, FY 92 and FY 93, the figures for new position funding between the universities was same for each year.  Then, after the suspension of the formulas in 1994 and 1995, the Budget Office decided, after looking at expenditure patterns, that new hire dollars that had been provided were not used for the purpose and that was when the difference began. 

Dr. Crowley said UNR has always supported equitable funding on the basis of the understanding that the dollars would be used for the purpose allocated.  He opined that the UCCSN should continue to ask for the same new-hire funding for the two universities, as well as the community colleges, but there should also be a caveat that the funding be used for the purpose identified only. 

Dane Apalategui, Western Nevada Community College (WNCC), stated with regard to the funding for new salaries, all of the community colleges in the state are now using the same salary schedule so any difference in average salaries was explained either by faculty longevity or by rankings.  Further, representatives from the community colleges in the state discussed the issue of new hire salaries and they believe the ideal spot to fund new faculty salaries would be rank 4, step 10 because they cannot hire past step 10.  He stated that rank 4, step 10 is $42,158.  Currently, WNCC was funded at $47,205 so for every new faculty hired, they saved approximately $5,000. 

Mr. Apalategui stated that the community colleges recognized that if new hire salaries were funded differently, the state would be saving money.  He indicated that one of the proposals to the formula funding study was to lower the new hire salaries to rank 4, step 10, and that would be a fair average.  Further, the problem would be eliminated within the formula.  Mr. Apalategui said there were a lot of inherent flaws throughout all the formulas and he hoped the Committee to Study the Funding of Higher Education addressed those flaws.

Dr. Harter reiterated that in 1993 and 1994, UNLV made a decision, which was before she was the President at UNLV, to turn back merit money.  Dr. Harter said that was the wrong decision for the institution and she wouldn’t have done it if she had been there at the time.  Since that time, UNLV has lived with the problem that affects all new positions.  She emphatically stated that the inequity regarding new hire salaries must be corrected.  If it was not corrected legislatively, she hoped the Board of Regents decided that salary monies needed to be reallocated so that average salaries for new positions were equalized to the two universities. 

Regent Sisolak directed his next question to the chart entitled Distribution of Instructional Staff FTE by Rank FY 1989 to FY 1999 (Exhibit C, page 90).  He pointed out that in 1989, 31.9 percent of the faculty at UNR was at full professor.  In 1999, 36.7 percent of the faculty at UNR was at full professor, representing an approximate 5 percent increase.  On the contrary, at UNLV, in 1989, 28.4 percent of the faculty was at full professor and by 1999, 24.2 percent were at full professor, representing a decrease of 4.2 percent.  He asked for an explanation as to why one university was hiring so many more full professors.

Mr. Eardley replied that the new funding dollars could be part of the reason for the decreased number of full professors at UNLV because the new funding dollars for new positions represent a small amount of the total dollars available for existing faculty plus new positions.  There could be many other factors, but since the information came out of the MGT Study, he would ask that President Crowley or President Harter address the question.

President Harter, UNLV, said the decrease in the number of full professors at UNLV was due to a combination of salary dollars available and growth.  Because there was so much growth, in order to teach all of the students and all of the classes, they must hire a larger percentage of assistant professors.  It was more difficult to hire a $75,000 full professor using effectively two new salaries for that purpose, when growth was so rapid.

President Crowley, UNR, agreed with President Harter—stressing that the predominant reason was growth in southern Nevada and that would be represented in enrollment figures.  In addition, a careful study including some attrition statistics or retirement data might provide some additional answers.

Chairman Raggio said it would be more illuminating if the actual numbers of full professors was provided, rather than just percentages. 

Regent Derby asked for clarification on an earlier matter.  She asked if the Committee was still expecting to receive a written reply from MGT of America, Inc., specifically in relationship to Question No. 8 (Exhibit C, page 43). 

Chairman Raggio asked Brian Burke, Legislative Counsel Bureau, to comment.  Mr. Burke reiterated that he spoke with Dr. Layzell of MGT on the telephone and also provided him with the written request.  Dr. Layzell was unable to make the meeting personally, and has elected to not provide a response.  Mr. Burke paraphrased Dr. Layzell’s comment was that the study was prepared in a short time period and he did not have much disagreement with the analysis and comments from the October 27, 1999, Committee Meeting.  Further, he did not believe there would be anything to gain from a written response at this point. 

Chairman Raggio said that Mr. Burke informed him that Dr. Layzell indicated that the institutions directed him to make the peer comparisons which have become problematic, and that called into question the complete objectivity of the study.

Dr. Richardson commented on the new hire faculty salaries for the community colleges.  He said that he has heard complaints from some of the community colleges that they cannot hire certain faculty in the technical fields at the salaries they have to offer, so the community colleges might want to reconsider the rank 4, step 10 schedule plan and devise a way to address some of those problems, as opposed to accepting a lower salary for initial hires. 

In an attempt to clarify the record, President Crowley said he did not recall at any time that MGT was directed to do what they did.  His recollection was that at the first meeting held at the UNLV campus, Dr. Layzell indicated he would be using the Carnegie classifications and that he was going to upgrade the institutions to what their current status would be. 

Chairman Raggio said he was simply reporting what he was told regarding Dr. Layzell.  He asked Mr. Burke, Legislative Counsel Bureau to clarify the issue for the record.

Mr. Burke related that Dr. Layzell informed him that the institutions had suggested that the study upgrade the Carnegie classifications.  Further, Dr. Layzell said he would not do that unless, through his own observation, he could see that that would be appropriate.  After his review of the information, he found that it would be appropriate to upgrade the Carnegie classifications.  However, the suggestion about upgrading the Carnegie classifications was initiated by the institutions.

Chairman Raggio said that the explanation provided by Mr. Burke concluded the MGT issue.

Review and Approval of the Consultant Contract

Chairman Raggio directed the Committee to Tab 6 of the Meeting Packet (Exhibit C), a draft of the proposed agreement for consultant or consultants.  He explained that the contract was drafted by the Working Group, legislative staff and Legislative Counsel.  He stated that Section II of the Contract contained the gist of the agreement.  He asked for comments or changes regarding the proposed contract.

Dr. Richardson said Item C under Section II (Exhibit C, page 107-108) that the part time/full-time ratios at community colleges should be placed under Item B(1) of Section II.  His reasoning for the suggestion was that the contract included a great deal of work to be accomplished in a short time and it was germane to the discussions of the Committee to address the ratio issue.

Chairman Raggio said it was his understanding that the identification of tasks in the contract were designed to be listed by way of priority.

Dr. Richardson indicated he had another suggestion.  Regarding Section II(2) Salaries, he stated the focus has been on how salaries for new faculty and classified positions were determined.  It would be interesting to know how (a) salary levels for new hires were performed throughout the country, especially since there seems to be a difference of opinion between the Regent’s budget request and the Legislature on that issue.  However, the remainder of that paragraph (b) How salaries for existing faculty and classified positions are determined on an ongoing basis; (c) How merit awards are calculated; and (d) How equity pay adjustments are calculated.  Dr. Richardson asserted that those items were not within the purview of the Committee, which is charged with focusing on the funding formulas.  He reminded the Committee that in 1991 another study was presented to the 1991 Legislature regarding pay processes and levels.  He suggested that items 2(b)-(d) be given a lower priority and raised the question whether the items were necessary at all. 

Speaker Dini disagreed with Dr. Richardson.  He countered that the merit award issue was a real “can of worms” and differed amongst each institution and that was not right.  There were different standards at each campus yet it was the same state dollars providing the funding, so that issue should be included in the study.

Mr. Beers concurred with Speaker Dini.

Regent Derby echoed Speaker Dini’s comments and asked that item 2(c) “How merit awards are calculated” be moved to 1(e) to give it a higher priority (Exhibit C, page 105).

Dr. Crowley commented that in 1985 the UCCSN finally obtained equity with other state employee groups by having something more than a cost-of-living allowance built into the salary package.  Every session since then, merit for the UCCSN has been an issue.  He did not recall that state classified, state unclassified, or K-12 has had to defend the processes they have implemented. Dr. Crowley said he did not oppose going through the argument again, but expressed hope that it would be the last time the issue of merit pay was revisited.

Chairman Raggio stated it was his belief that the items in Section II(B)(2) should remain as shown in the contract as those issues have been areas of major concern.  The Committee should find out how other states are handling these problems. 

Chairman Raggio acknowledged the request that Section II(C) should be given a higher priority by being placed after Section II(B)(1) and that would change the lettering on D, E, and F.  Commenting on Regent Derby’s point, he stated that all the items under Section II(2)(b)-(d) were identified by the Working Group as important items and they were appropriately prioritized.  He stated that when the contract goes out for bid, the Committee might wish to ask the consultants to cost out the increments as appeared in the contract in order to get an accurate determination of the time and cost of accomplishing the tasks.

Chairman Raggio said unless there was any objection, he would accept the contract as presented in draft form.

Dr. Richardson inquired into Section II(B)(4) Facilities.  He said it was his understanding that the Board of Regents commissioned a study that was currently underway regarding facilities.  He asked whether some of the questions in the contract might be covered in the ongoing study, thereby allowing that issue to be a lower priority. 

Chairman Raggio said that even though the Board of Regents might be reviewing similar matters, those activities should not determine the actions of the Committee.  He asked whether the Regent’s study was looking at what other states were doing in the area of facilities. 

Dr. Anderes stated that there was some overlap; however, the primary difference was that the information the Committee was requesting was information that could be tied into an operating formula.  Whereas, the Regent’s study was mostly an inventory and defining and clarifying the facilities within the system in terms of square footage and what was needed in terms of capital projects. 

Additionally, Dr. Richardson said with regard to Section II(B)(3) Technology, it was his recollection that when the issue of technology arose, it included the issue of personnel to staff and maintaining technological equipment.  He hoped that issue would be covered adequately in terms of the contract and the work of the consultants. 

Chairman Raggio asked Dr. Richardson to provide some revised language for the technology paragraph.  Dr. Richards suggested “How personnel costs are covered” could be added.  Chairman Raggio asked the Committee whether “including personnel costs” should be added.  The Committee agreed with the inclusion of Dr. Richardson’s language.

SPEAKER DINI MOVED TO APPROVE THE CONTRACT, AS MODIFIED, AND THAT THE CONTRACT BE DISTRIBUTED TO POTENTIAL CONSULTANTS.

DIXIE MAY SECONDED THE MOTION.

Dr. Moore said he was remiss in not raising an issue earlier.  He stated he was intrigued by Regent Seastrand’s idea to develop a savings plan, which could also benefit the state.  He asked whether that could be an additional topic to be included in the contract; that consultants could review whether other states have implemented saving incentive plans.  Chairman Raggio said that could be added.  He asked whether that was acceptable to the Committee.  Seeing no objections to that inclusion, Chairman Raggio asked whether the movant and seconder would accept that inclusion to the contract in the motion.  Speaker Dini and Dixie May, respectively, agreed to include Dr. Moore’s suggestion in the motion.

Mr. Beers said the idea of a savings incentive plan was not a controversial subject so perhaps the Legislative Counsel Bureau could accomplish that task rather than the consultant. 

Chairman Raggio asked whether staff would have time to complete that assignment.  Mark Stevens indicated staff could report on what other states were doing as far as savings incentive plans.

Chairman Raggio brought the motion back to the floor for a vote.

            THE MOTION CARRIED UNANIMOUSLY BY THOSE PRESENT.

Chairman Raggio reported on the meeting of the Subcommittee that was appointed to select potential consultants.  He stated that previously the Committee solicited names of potential consultants and several resumes were submitted.  The Subcommittee considered the resumes at their meeting held prior to the full committee meeting and after an open meeting discussion, recommended three persons in the following order:  1)  Paul Brinkman;  2)  Larry Leslie; and 3)  Bill Pickens.  A copy of those consultants’ resumes was provided to the Committee (Exhibit D).

He asked for comments by the Committee, or for recommendations of other potential consultants.  Chairman Raggio indicated he would accept a motion to contact the three selected consultants to request proposals from them by December 15, 1999.

DR. RICHARDSON MOVED TO REQUEST PROPOSALS FROM THE THREE CONSULTANTS DESIGNATED:  PAUL BRINKMAN, LARRY LESLIE AND BILL PICKENS, IN CONJUNCTION WITH THE DRAFT CONTRACT DOCUMENT, AND THE RESPONSES SHOULD BE RECEIVED FROM THE CONSULTANTS BY DECEMBER 15, 1999.

REGENT SEASTRAND SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY

Chairman Raggio said that in order to move the contract/proposal process forward, he would entertain a motion that upon receipt of proposals from the three potential consultants, the Chairman, after consultation with the Subcommittee, would be given the authority to award the contract to the bidder who could best perform the duties noted in the Draft Contract.  Additionally, the Chairman could be authorized to make any modifications to the contract, if necessary, to ensure contract costs remain within the budgeted appropriation.

DIXIE MAY MOVED TO GIVE AUTHORITY TO CHAIRMAN RAGGIO TO AWARD THE CONTRACT, AFTER CONSULTATION WITH THE SUBCOMMITTEE, TO THE BEST BIDDER, AND ALLOW CHAIRMAN RAGGIO TO MAKE MODIFICATIONS TO THE CONTRACT AS WAS DEEMED APPROPRIATE TO ENSURE THE CONTRACT REMAINED WITHIN THE BUDGET.

SPEAKER DINI SECONDED THE MOTION.

Regent Sisolak requested clarification.  He asked whether the Committee would have the opportunity to vote on the consultant.  Chairman Raggio said the next meeting of the Committee was not scheduled until late January 2000.  Yet, the consultant needed to be working on the contract as soon as possible.

Regent Sisolak stated he understood the reason for an expedited process; however, he was concerned that the ranking of the three bidders would never come before the full Committee.  Chairman Raggio stated the proposals would be reviewed and the most cost effective contract would prevail because the assumption has been made that all the consultants were qualified to perform the work.  He stressed that the proposals should be returned to the Committee by December 15, 1999, so the consultant could begin no later than January 2000.

Regent Derby asked whether the motion included that the proposals would be reviewed by the Chair in consultation with the Subcommittee.  Chairman Raggio stated the proposals would be received by the Chairman, and after consultation with the Subcommittee, the contract would be awarded. 

Senator Titus requested that the entire Committee receive copies of the proposals that were submitted in order to allow comments, if any.  Chairman Raggio said that could be included in the motion, and that was the intent of the Chairman.  He reiterated that the main point was to get the consultant on board so that the work of the Committee could be fully underway.

            THE MOTION CARRIED UNANIMOUSLY BY THOSE PRESENT.

Chairman Raggio instructed staff to send copies of the proposals to all the members of the Committee. 

Chairman Raggio submitted into the record a letter dated November 29, 1999, from a member of the Committee, Don Snyder (Exhibit E).  Chairman Raggio indicated that he spoke with Mr. Snyder regarding the concerns outlined in his letter.  Mr. Snyder wanted to make sure that the consultant made periodic reports to the Committee, so that provision was included in the Draft Contract.  Chairman Raggio said it was his intention that the consultant would make periodic reports to the Committee.

Public Testimony

Chairman Raggio asked whether any members of the public in Carson City, Las Vegas, or Elko wished to testify before the Committee.  The Chairman recognized Mark Alden.

Mark Alden, Board of Regents, said although some of the issues raised have been determined to be outside the purview of the Committee, he felt there was a triangle approach:  The Committee setting formulas for higher education; the Governor’s Steering Committee reviewing fundamental decisions regarding state government and the budget process; and the Board of Regents setting policy and budgets for UCCSN.  The entities were inter-related and everyone should be aware of what the other was doing.

Regent Alden said he had six points to bring to the Committee:

·        Whether DRI should remain in the system or as a separate entity was a big issue.

·        There was only a certain amount of funding that was available from the state budget (approximately 20 percent).  The community colleges serve a different purpose than the universities and perhaps a redirecting of other revenue sources to the state budget should be considered for higher education. 

·        A review of how the UCCSN spent money was needed, and the Governor’s Steering Committee will be doing that.  A review of administration costs and any duplication of efforts should be performed, as well as suggestions on how things could be done more efficiently.

·        The Governor’s Office has made it clear that outcome analysis and economic diversification are top priorities.  The new millennium will bring more high technology into the state.  In fact, major aerospace companies have decided to relocate their companies in southern Nevada.  Although high cost programs might look good on paper, if a new program did not result in outcome analysis and economic diversification then a second look should be given to that proposed new program.

·        The Governor’s Office also mentioned zero-based budgeting.  He acknowledged that the reason zero-based budgeting was not done in higher education was because it was too political.  However, higher education should look at how budgets are built.

·        The current system of “spend it or you lose it” was not an intelligent way of funding.  He supported the establishment of a savings incentive plan for state government as suggested by Regent Seastrand and Dr. Moore.

The next public testimony was received by Lane Simonian.  Mr. Simonian said he has a master’s degree in political science and a PhD in History.  He has taught at Truckee Meadows Community College for seven years.  Mr. Simonian’s prepared testimony and handout material is attached as Exhibit E. 

In response to Regent Sisolak’s question regarding why the average salaries for part-time and full-time instructors was so different between the institutions, Mr. Simonian said that was because none of the average salaries were the actual salaries being paid, with the exception of CCSN this year.

Mr. Simonian said that in 1987 the Nevada Legislature appropriated $900,000 over the biennium to increase the full-time/part-time ratios at the community colleges to 60/40 percent.  Those ratios were never achieved, however, because the UCCSN reduced the legislatively approved salaries of part-time instructors anywhere from 25-50 percent over the past 12 years.

Continuing, Mr. Simonian said the UCCSN then used the salary savings to hire more part-time instructors, and allowed administrators to offer more courses, and reduce their student/faculty ratio, and increase the FTE.  He said one of the reasons the institutions were never fully funded for their enrollment increase was because the money came from the part-time salaries which paid for the extra classes.

Mr. Simonian stated that by ignoring the funding formulas, community college administrators generated millions of dollars in extra funds for instructional and non-instructional purposes.  Correcting the problem was difficult because it could mean cutting hundreds of classes or reducing the number of part-time faculty and increasing the number of full-time faculty. 

Mr. Simonian asked whether the Committee wanted the funding formulas to exist only on paper or work in reality.  Should more than half of the classes offered at the community colleges be taught by part-time instructors who hold no office hours, often hold multiple jobs, and were paid a substandard wage?  Of, should the majority of classes taught at the community college level be taught by full-time faculty and the rest of the classes be taught by part-time faculty who receive a decent wage?  Mr. Simonian opined that the entire salary issue could be resolved if the average salary figures represented the salaries actually paid at each of the institutions for full-time and part-time faculty and for new hires.

Mr. Simonian recommended the following solutions to the problems he addressed:

·        Any full-time benefits such as stipends, overloads, sabbatical replacements and department chair compensation should be included as part of full-time salaries.

·        Full-time instructor teaching overloads and reserve money should be able to replace any reasonable course reduction for full-time faculty. 

·        Require the system to use the funds as appropriated.  If college administrators wish to run low enrollment courses, they would have to run fewer sections of multiple-section courses, or lower the student/faculty ratio.  They should never be allowed to offer additional classes by reducing the legislatively approved salaries of the part-time instructors.

Mr. Simonian said the backup material he provided (Exhibit F), supported his comments on the problems regarding part-time and full-time salary issues.

Chairman Raggio thanked Mr. Simonian for his comments.

Future Meetings of the Committee

Chairman Raggio reiterated that he was willing to have Committee meetings at some of the institution sites.  He suggested that the next meeting take place at the university or the community college.  He asked whether UNLV, UNR and GBC had video-conferencing capabilities.  He was advised those locations could access inter-active video conferencing.

Chairman Raggio suggested that a meeting be held, maybe in conjunction with meetings held by the Board of Regents, at the university in Las Vegas, then the next meeting at the university in Reno, and a third meeting in Elko.  He said that holding the meetings at the campuses would allow for a personal view by the members of the committees of the institutions, and perhaps some tours of those institutions could be held in order to help the members understand certain areas such as facilities, crowding and enrollment.

President Harter, UNLV said she would be pleased to have the next meeting at UNLV.

Chairman Raggio said the next meeting could be set for some time the last week in January 2000.  The Committee agreed that the next meeting would be held at UNLV on January 27, 2000 at 9:30 a.m.

Chairman Raggio asked when the Board of Regents would be meeting in Elko.  Regent Derby replied that the Board of Regents would be meeting in Elko in June 2000. 

 

Adjournment

 

Chairman Raggio thanked the Committee for their attendance and for reviewing the voluminous material that was provided.  There being nothing further to come before the Committee, the meeting was adjourned at 12:40 p.m.

 

           

                                                                        ________________________________

                                                                        Joi Davis, Committee Secretary

 

 

 

 

By: 

 

 

____________________________________

Senator William J. Raggio, Chairman

 

 

Date:  ______________________, 2000.