Colleges expect worst from state budget cuts

Jennifer Knight

Thursday, May 3, 2001 | 10:42 a.m.

Nevada's higher education system is expected to take hefty cuts in its two-year budget to help the state make up for its $121.5 million deficit, higher education officials say.

"We're anticipating that we will be asked to bear a large portion of the cut in terms of meeting the governor's budget," Dan Miles, Nevada's higher education vice president of finance, said.

Legislators of the Assembly Ways and Means and Senate Finance committees were expected to decide today how much to cut from the budget and where to cut it. Nevada's higher education budget could face a $37 million reduction, according to recent estimates.

"Last week the proposal was to cut about $37 million out of the university budget," Rick Bennett, UNLV's director of government relations, said. "That may change slightly, but as far as I know that's still on the table."

Under that scenario, the state's colleges and universities would have to freeze hiring, possibly cut positions and leave some positions vacant to stay within budget, Bennett said.

The university system faced similar cuts in 1991 during an economic downturn, and budget shortfalls resulted in a sizable amount coming from higher education, said Keith Schwer, director of the Center for Business and Economic Research

"We're talking about 3 percent," in the state's overall budget shortfall, Schwer said. "That's not a lot. If that 3 percent comes out of your particular portion of the budget, though, it could decimate it."

The $24.2 million state college proposal is still on the table, however, Assembly Speaker Richard Perkins, D-Henderson, said.

"If the college is cut completely, we would have to find additional money that we don't have in order to get those students educated," he said.

Other projects such as the system's much-needed research money is also on the chopping block, Bennett said. If the university system loses that money, it would mean a loss of millions of dollars of federal matching funds.

One hope for avoiding such last-ditch measures could come from a legislative move to change the state's tax structure, something that is gaining support in the Legislature, according to several lobbyists for the university system.

If nothing comes of behind-the-door talks about tax increases, system officials have backup measures they can use to fill the gaps.

Universities can cut into their endowment earnings to get extra money. The endowment pool is like a long-term savings account.

The other option is to dip into the system's estate tax savings. System officials have been trying to put a certain percentage of estate tax money into a "rainy day" account, so that if the estate tax is eliminated in Congress, they will have some of the income saved.

"We've been hoping that something would come forward so we could avoid these situations," Bennett said. "It's not a pleasant situation, because the university situation is now at its base budget."