Colleges would be hit hard by cuts

Jennifer Knight

Friday, May 4, 2001 | 10:57 a.m.

Gov. Kenny Guinn is asking colleges and universities to absorb one-third of the state's $121.5 million deficit, and the price of such a hard hit could be the elimination of some faculty positions, university officials said.

"This is a severe blow to the university system," Chancellor Jane Nichols told legislators during a joint subcommittee in Carson City Thursday. "You can't expect an institution to lay off people in order to give pay raises, and that's really what we're looking at."

The state's deficit was announced during this week's Economic Forum, and higher education is one area the governor is looking to trim. General fund revenues came up short, in part because the gaming industry did not do as well as expected.

Guinn's revised budget includes pay raises for teachers and startup money for the proposed state college, but it reduces by $38 million funding he originally promised to the university system in January.

"You're hearing all these people (in the university system) saying you're taking too much money away," said Sen. Majority Leader Bill Raggio, who chaired Thursday's joint finance committee meeting. "The enrollment that drives the formula was not calculated correctly in the first place, and that resulted in an adjustment."

Raggio said the miscalculation led to a $24.8 million reduction. The percentage of funding to the system was also dropped from 84.5 percent to 82.5. Each percentage point means about $10 million to the system, said one official.

Representatives of Nevada Faculty Alliance issued a press release, which states budget cuts would result in fewer class offerings throughout the system, an under-funding of the Millennium Scholarship program, reduced grants and out-dated equipment.

The cuts are more damaging that Guinn realizes, said Jim Richardson, the NFA's lobbyist.

"We don't think the governor understood the impact of what was proposed today," Richardson said. "We're hoping against hope that we are not stuck with the amount that the governor proposed today because it will cause some real problems."

As of late Thursday afternoon the governor was meeting behind closed doors with university officials in an attempt to potentially broker a better deal.

"I don't think you'll be looking at anything like (the $38 million figure) when they get finished with this budget," Raggio said.

Still, under the worst case scenario, the system would be forced to pull from various endowment funds to keep up with growth and pay for the faculty it has, several higher education officials said.

One option is to dig deeply into the principal in an estate tax account set aside for future use. The other source of revenue for the school is to dip into interest earned on its endowment fund, money donated by philanthropists to the university system.

A university official said today that in the Thursday meeting Guinn and school officials reached an agreement that would ease the cuts. The official, who asked not to be identified, said the governor has agreed to allow the university to shift money out of its estate tax fund to cover pay raises for faculty.

Initially, the governor put aside money for a 2 percent cost of living increase for faculty and told the university to come up with the other 2 percent from its operating budget.

Under this new plan, the university would be able to use money it had no access to before to pay its share.