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October 1, 2014

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STATE GOVERNMENT:

Higher ed officials call stimulus waiver shortsighted

Chancellor fears future funding would suffer

A push to obtain federal stimulus dollars for Nevada without strings attached could ultimately hurt the state college system, higher education officials say.

Gov. Jim Gibbons this week asked the Obama administration to waive a requirement that the state put up more of its money to get stimulus funding for education. Assembly Democrats and Nevada’s three U.S. House representatives supported the request.

But higher education officials, including Chancellor Jim Rogers, want that federal requirement to remain. If it is removed, they contend, the state could underfund the college system, creating a problem that will remain long after the federal money is gone.

Without the exemption, Nevada must spend as much on K-12 and higher education as it did in fiscal 2006 to secure $396 million in stimulus money, of which nearly $325 million would go to K-12 and higher education.

Gibbons’ budget met the bar for K-12. But funding for the college system fell short by $268 million. So in essence, the governor is asking the federal government to grant Nevada permission to reduce higher education spending.

“Here’s the problem,” Rogers said. “If the secretary of education were to grant the waiver, it takes the governor off the hook. It takes the Legislature off the hook. And what it means is we get a one-time fix which has no permanent positive effect. Now, at some point, the state of Nevada has got to stand up and say, ‘We are willing to do our share.’ ”

In February, Dan Klaich, the system’s executive vice chancellor, noted that a one-time infusion of federal dollars would not solve the state’s long-term problems.

Higher education officials have long argued that Nevada’s public colleges are “underfunded” compared with similar schools in other states, and some said the silver lining of the financial turmoil was that it forced politicians to seriously consider thorny ideas such as raising taxes that address the state’s long-term health.

Now, the fear in higher education circles is that a waiver would tempt state leaders to put off dealing with Nevada’s long-term problems and leave the college system foundering.

“Granting the waiver, if it happens soon, would support K-12 and assure K-12 funding, but would have a very negative, adverse impact on higher education,” UNLV President David Ashley said.

Administrators who oppose the waiver think the stimulus dollars are attractive enough to bait legislators into coming up with about $268 million for higher education. Even then, state funding for the college system would be about 17 percent below fiscal 2009 levels, according to budget figures the governor cited in a Wednesday letter to U.S. Education Secretary Arne Duncan.

The risk exists, of course, that without an exemption, Nevada will lose the federal dollars because the Legislature can’t find a way to meet the stimulus’ funding requirement.

In his letter to Duncan, Gibbons wrote that the $268 million is “simply money we do not have.” He noted that tax revenue has fallen dramatically as the tourism industry struggles and people lose their homes.

Assembly Democrats said they supported Gibbons’ request because it could give the state more flexibility in handling the budget crisis.

In a bipartisan letter to Duncan backing a waiver, U.S. Reps. Dina Titus, Shelley Berkley and Dean Heller wrote, “While we certainly agree that states should be held accountable for maintaining appropriate levels of funding for education programs on their own balance sheets, we also know that it (is) simply not an economic reality for states facing the worst budget shortfalls, like Nevada.”

Exactly when Nevada will get an answer on its waiver request is unclear. The letter says Nevada needs quick action because the state holds 120-day legislative sessions every other year.

The Education Department has neither issued guidance nor released an application for the waiver, so Gibbons’ request is premature, Senate Majority Leader Harry Reid said through a spokesman Thursday.

During the recovery bill conference discussions, Reid worked to ensure that the waiver provision was included in the final bill. “The expectation was that states would work to meet the 2006 funding level requirements and use the waiver only as a last resort,” Jason Unger, Reid’s senior education policy adviser, wrote to Klaich.

Reid’s view, Unger said, is that “clearly, by sending a letter weeks before a waiver application is available, it doesn’t appear that the governor is doing everything he can to ensure that education is funded at 2006 levels.”

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