Higher ed hopeful about budget after years of cuts

Last month, just before the legislative session began, UNR rolled out the full college experience to welcome new Gov. Joe Lombardo to campus.

At one end, he toured Morrill Hall, the oldest building on campus dating back to 1886. At the other, he emerged in a snow-covered quad where the marching band and cheerleaders awaited, spelling out L-O-M-B-A-R-D-O in oversized letters in Wolf Pack blue.

The subtext to Lombardo’s visit was clear. On the heels of his State of the State address that promised to restore higher education budgets devastated by COVID, the new governor arrived as the bearer of the first promise to substantially boost college and university funding in more than a decade.

“The funding is critical for them to be successful in their research and be able to accommodate the student body and the academics that go along with higher education.”

On paper, Lombardo’s proposed budget would give the Nevada System of Higher Education its largest single budget boost since before the pandemic. But the budget stopped short of boosting funding beyond 2019 levels, and in some places fell short of budget requests from individual institutions still concerned that pandemic-induced enrollment declines could still ripple into future budget years.

That proposed budget must now also pass through a Legislature that has long been skeptical of the sprawling and unwieldy higher education budget, famed in the money committees as much for its opacity as it is for its size.

In 2021, lawmakers funded a legislative audit of certain NSHE accounts. Released this January, auditors identified millions in “questionable spending” with student dollars, and sharply criticized “insufficient oversight” by the Board of Regents, NSHE’s elected governing body.

Regents later defended their oversight, but also accepted dozens of proposed recommendations from auditors, with plans to vote on finalized changes in October.

As lawmakers ponder the size of higher education’s coffers, they will also consider a bill to reduce the size of the board and a constitutional amendment that could take the board out of the Nevada Constitution altogether (after just such a measure narrowly failed in 2020).

Still, Lombardo preached patience.

“We got to chip away with it,” Lombardo said during his UNR visit. “So we're in the first biennium of my first budget, and we'll continue to evaluate it as we move forward.”

Reversing COVID cuts

At just over $2 billion per biennium, NSHE is the third-largest state appropriation from Nevada’s general fund, sitting behind only the Department of Health and Human Services and the state’s K-12 budget.

The funding increase in Lombardo’s proposed budget included $74.8 million in operating budget cut restorations, as well as $20 million in new money for graduate assistantships, $9 million for new faculty at UNLV’s medical school, and $5 million for a new legislative study on the system’s funding formula.

These sums are buoyed by $15 million more in expected dollars allocated to deferred maintenance projects, as well as major boosts to state worker pay and retention bonuses (which will likely also include public higher education employees, a subset of the state workforce).

All told, however, higher education administrators say the new investments only reverse most of the pandemic-era damage to collegiate coffers — essentially leaving the system roughly where it was in 2019.

In an interview, acting Chancellor Dale Erquiaga said the system was “very pleased” with the recommendations.

“(The governor’s budget) does get us at least to somewhat pre-pandemic levels, and that allows the institutions to restore some vacant positions and to sort of dig back into the work,” he said. “I think it is then on us, at NSHE, to come perhaps to the next legislative session with maybe bolder expansion programs.”

Asked why the system did not press for additional funding this year — especially after a decade of internal laments over legislative budget cuts — Erquiaga pointed to a timing issue. Regents approved the first budget documents last fall, before it was clear the state would enter the next biennium with a billion-dollar surplus, and as a result, he described the Board of Regents as “cautious.”

Still, he said, in the interim it will be on the system to tell lawmakers: “If you want us to move the needle on graduation or on economic mobility or workforce, here's what that costs,” while also providing legislators with more clarity on historically byzantine higher education budget accounts.

“We have all this private money and think people think, ‘Well, you have all that private money, you should just spend it,’” Erquiaga said. “Well, it's allocated, right? So it makes it very challenging.

“When they're hearing in a money committee, the Department of Health and Human Services, the Department of Education, Department of Conservation and Natural Resources — all those things look alike,” he added. “And then there's us. We're like the Sesame Street song, ‘One of these groups is not like the other.’”

Even as state money has tipped back into the system, some pandemic-related pain may remain as a result of the built-in timing mechanisms of the state’s funding formula.

Administrators refer to it as a “look-back” formula — it accounts for institutional credit loads in specified “count years” and distributes money from a singular pot of state funding based on weighted student credit hours, or credit hours weighted by how expensive different courses are to teach.

Designed in part to iron out regional differences between historical funding levels at UNR and UNLV, the funding formula has been heralded as a success by the state’s universities — but less so at the state’s four community colleges, where leaders have increasingly criticized a formula that does little to account for non-traditional and non-credit-bearing students who (by virtue of the formula) cannot be paid for by state money.

“When you look at students at a community college versus students at a university, there's far more part-time students,” said Andrew Clinger, NSHE’s chief financial officer. “And so even though you might have a student at a community college who's taking six credits, when you look at a university, the averages are much higher — maybe it's 12 credits — and so that translates into more dollars.”

To that end, the state’s look-back formula will absorb COVID-era enrollment declines for the first time in the next biennium — declines that disproportionately hit community colleges.

Across all four of the state’s two-year colleges, enrollment dropped by more than 12 percent between 2019 and 2021. Those hits were most acute at Truckee Meadows Community College in Reno, which fell 16.6 percent, at the College of Southern Nevada, where enrollment fell 11.7 percent, and the Elko-based Great Basin College, which fell 11.4 percent.

Carson City’s Western Nevada College escaped the double-digit enrollment drop among community colleges at a two-year, 4.7 percent drop.

Today, those enrollments have started to trickle upward. But the recovery has raised new concerns that the formula’s snapshot of pandemic-affected enrollments could lock institutions into lower funding allocations for growing student bodies, in turn risking layoffs.

As a remedy, Lombardo’s proposed budget allocates more than $12.5 million in one-shot funding for 2023 for CSN, TMCC and GBC, with the lion’s share — more than $11.5 million — going to CSN alone.

“The idea would be that this funding is temporary, to basically bridge the time between now and two years from now, when we come back … With the idea that in two years, we'll be seeing that enrollment recover to a point where the normal funding mechanism would kick in to support the institutions,” Clinger said.

Still, that money makes up only a part of the losses expected from formula changes, often referred to internally as caseload growth or shrinkage. At CSN, estimates from last May pegged formula-based enrollment losses at more than $17 million per year.

But with the $5 million promise from Lombardo to reopen discussion on the higher education funding formula through a new legislative study, college leaders have pinned their hopes on solving a long-running problem: securing funding for non-traditional students who make up the bulk of community college populations.

Re-opening the funding formula black box

Implemented in 2013, the NSHE funding formula operates on a system of weighted student credit hours, essentially distributing state money from one central pot to each of the system’s eight institutions. That distribution is then made not only by the number of student credit hours (a measure of how many students are enrolled), but also by weighting those credits by how expensive they are to teach.

The new formula was initially heralded as a success, smoothing out decades-long regional budget fights between the state’s two flagship universities. But now a decade later, administrators, lawmakers and the governor's office have all signaled a readiness to again tweak that formula.

“It’s been more than a decade since this formula was updated, and it's time for a new formula to reflect the current state of our system,” Lombardo said during his January State of the State address, pledging in the same breath to use the study to “require increased transparency and accountability” for college and university budgets, including non-state money.

As lawmakers work their way through the state’s budget, some committees have already begun grilling system officials on precisely how a funding formula overhaul should target underrepresented students.

Sen. Dina Neal (D-North Las Vegas) pressed Erquiaga at a meeting of the Senate Education Committee last month as to why achievement metrics — especially graduation rates and matriculation rates for Nevada students — persistently lagged for Black students compared with other groups, even as NSHE has become a majority-minority system by enrollment.

In an interview, Neal said students leaving community colleges before completing their degrees were a “missed opportunity,” as students — in particular Black and Latino students — who had hoped to receive an academic experience in college that they did not get in the K-12 system only found more of the same.

“Because I've seen those students, they’re students that are leaving, graduating and they're like, ‘Well, my chance for a real education is going to be in college,’” Neal said. “And then they're finding out that college is no different, meaning that they don't feel supported academically, they don't feel like they're learning.”

To that end, Erquiaga — who once led the state’s Department of Education under Gov. Brian Sandoval — suggested that a new formula could account for what he called “student type,” essentially echoing parts of the K-12 funding formula that allot higher amounts of funding for students with greater or different needs.

“I think it's part of that conversation for us, what are we offering to students? And in what lane should they go?” Erquiaga told The Nevada Independent.

Amid state worker crisis, faculty push for inclusion

For faculty, who were furloughed during the pandemic and saw their health benefits and long-term disability insurance cut amid the state’s wider budget crunch, the restorations promised by Lombardo’s budget — coupled with promised salary boosts of 8 percent next fiscal year and 4 percent the year after — were welcomed with open arms.

Still, Nevada Faculty Alliance President Kent Ervin told The Nevada Independent: “It’s a start.”

“But it's just the start, it is really not enough to really … be competitive, and solve the retention and recruitment problems that are pervasive throughout state government, including faculty at NSHE institutions,” he said.

Ervin said faculty are also still pushing for the restoration of certain public employee health benefits cut as a pandemic cost-saving measure in 2021, including the elimination of long-term disability insurance.

The NFA has also put its weight behind a third try at state collective bargaining in AB224, a bill that would place NSHE employees under existing 2019 law allowing for state employee bargaining. After withering under six-figure fiscal notes in 2021, Ervin signaled optimism that bipartisan support in both chambers could finally push faculty bargaining over the edge.

But in a sign that there are few guarantees once the machinery of the state government begins to move, thousands of NSHE faculty were written out of a bill funding the first round of $1,000 in bonuses for state workers designed to boost retention rates and curb ballooning vacancy rates across state government.

In his State of the State address, Lombardo pledged to give state workers $2,000 in retention bonuses annually, paid quarterly in $500 chunks. In order to speed the distribution of those bonuses, lawmakers have rushed this month to approve a budget bill, AB268, that would dispense the first two payments in the 2023 fiscal year, which ends in June.

Amid concerns that the bill’s original allocation — $23 million — was insufficient to cover state government employees and NSHE employees, committee chair Assemblywoman Daniele Monroe-Moreno (D-North Las Vegas) asked for an amendment excluding all NSHE professional staff — a group of roughly 7,700 people. Of those, roughly 4,900 are in state-funded positions traditionally subject to monetary policies, such as cost-of-living raises.

As of Tuesday, it was unclear what effect the exclusion of faculty from the first bonus bill — a money measure on an unusually short timeline, with fiscal-year deadlines fast approaching — would have on future employee pay bills.

Monroe-Moreno told The Nevada Independent on Wednesday that the bill as written was “significantly underfunded” for the “full cost of NSHE professional employees” — though it was unclear what that full cost was. In a tweet, the system — which does not have a public information officer — said it was “disappointed” in the removal of professional staff from the bill.

Erquiaga said in an interview — weeks before the bonus bill surprise — that the sheer complexity of higher education budgets relative to others made his overtures to legislators no easier.

“I have served in government a long time. This is my third cabinet job, if you will,” Erquiaga said. “It's very hard.”

This story was first published March 16 by The Nevada Independent and is republished here with permission.