Stock tumble creates shortfall in college operational fund

Jennifer Knight

Thursday, Aug. 15, 2002 | 11:22 a.m.

Corporate scandals and an unforgiving stock market hit home for the state Board of Regents on Wednesday after it learned that one university system fund lost $38 million in the market in the past year.

In July 2001 the university system's operating fund had a total of $202 million, but that had dwindled to $164 million as of last month.

"This has just been a straight downhill avalanche," Regent Steve Sisolak said.

For every dollar in investment revenue generated from the operating fund, Nevada's eight institutions receive about 3 1/2 cents. Universities and community colleges depend on the revenue generated from that fund to pay certain salaries and for equipment and other expenses to keep Nevada's higher education institutions running smoothly.

The system's steady expenses combined with the operating fund's declining revenue have resulted in a deficit of $15 million linked to the fund, officials said.

"I'll be honest, the $15 million is starting to get to my limit of what is tolerable," said Kathlyn Payne, one of the advisers hired to handle university system investments.

Fearing spiraling losses, a four-member regent investment advisory committee voted unanimously Wednesday to be notified if the deficit reaches $20 million. If it should dip that low, an emergency meeting would be triggered.

Committee members were expected Wednesday to consider cutting the portion of money that universities and colleges get from the operating fund, but decided not to after being presented with an overall financial picture that was bleaker than previously thought.

Key points in the financial presentation were:

"We did not win the argument that we should not share in the pain of what the other state agencies have had to bear," Nichols said. "They feel that $1.4 million was a fair amount."