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October 22, 2014

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Education:

Higher ed funding process siphons money from UNLV

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Spencer Holladay

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Dan Klaich, chancellor of the Nevada System of Higher Education, testifies Monday, June 6, 2011, at the Legislature in Carson City as lawmakers wrap up their 120-day Legislative session.

Dan Klaich, chancellor of the Nevada System of Higher Education, testifies Monday, June 6, 2011, at the Legislature in Carson City as lawmakers wrap up their 120-day Legislative session.

UNLV Student Union

The UNLV Student Union. Friday July 15th, 2011 Launch slideshow »

Gerry Bomotti, UNLV senior vice president for finance and business, recalls a budget meeting during the legislative session in which an elected official asked, “If fees are raised, does the university get to keep that money?” The answer given and accepted: Yes.

The real answer? Not exactly.

Welcome to the world of higher education funding, Nevada-style. It’s a politically charged, convoluted black hole fueled by an algorithm few understand and governed by a body of people who largely don’t have college degrees themselves. In Nevada, “yeses” are “maybes,” students are taxpayers and educational institutions are playing a zero-sum game. Thousands of people are suffering because of it, but the suffering is not equal. Not by a long shot.

One institution gets systematically shortchanged: UNLV.

Each of the seven institutions in the Nevada System of Higher Education raises money through student tuition and fees. Combined, that totaled more than $182 million last year. That chunk of change is poured into the state’s general fund, that big (but getting smaller) pool of money that pays for prisons, human services and welfare, among other things. Then, the government allocates money to the educational institutions based on budgets the state legislators set for them.

If that sounds straightforward, it really isn’t. This practice of colleges and universities surrendering tuition and fee money to the state is unusual and highly criticized. “It essentially turns students into taxpayers,” says Gregory Brown, UNLV history professor and chairman of the Faculty Senate. “Sometimes it seems like they’re the only ones paying.”

Most states that once followed a similar model have left it behind, likely because it penalizes the institutions generating the most money from tuition and fees. Here’s an analogy even a remedial student should understand: The state determines that Institution A needs a budget of $1 million to operate. Institution A raises $200,000 through tuition and fees, so the state gives it $800,000. If, however, Institution A can raise $400,000 through tuition and fees, it would receive just $600,000 from the state. Translation: The institution has no incentive to earn money, because it will always end up with the same amount.

Chancellor Dan Klaich weighs in: “One of the things we keep hearing is that higher ed needs to become more self-sustaining or more entrepreneurial. That’s code for ‘raise your own budget.’ Well, if the pressure is on institutions to raise their own budgets, there shouldn’t be disincentive within the formula, and there is.”

At UNLV, 15.1 percent of students are paying out-of-state (aka: more expensive) tuition, compared with 9.7 percent at UNR. This higher percentage means UNLV winds up receiving a disproportionately smaller share of state funds. One analysis, based on fiscal year 2009 numbers, shows UNLV generating 48 percent of all tuition in the higher ed system but receiving only 34 percent of the state’s higher ed budget. Meanwhile, UNR generated 27 percent of the higher ed tuition stream that year, but also accounted for 34 percent of the higher ed budget.

Another way to look at it: Based on the 2010 budget, UNR received $9,477 per student, while UNLV received only $7,564 per student — that’s $1,913 less. Even more disturbing: For every dollar in tuition raised by UNLV in 2010, it received $1.24 back. UNR received $2.68, and the numbers only grow higher for the state’s community colleges, topping out with Great Basin College receiving a striking $3.58 for every dollar it raises.

Any way you cut it, UNLV’s slice of the pie doesn’t looking very appetizing.

The funding formula is complex. A national research company, MGT America, evaluated Nevada’s funding model for overall inefficiencies and noted that most of the regents, legislators and citizens they interviewed did not understand it. In fact, MGT noted that several legislators mentioned that they believe inequities exist but don’t understand enough about the underlying formula to grasp whether those beliefs are valid. “They probably don’t know enough (about the formula) to know what policy changes could benefit the system,” Bomotti says.

UNLV political science professor David Damore has looked at the state government’s treatment of higher education and is highly critical not only of the legislators’ lack of understanding but also of their commitment to education as a whole. “The people in the legislature aren’t exactly the most educated bunch. Less than half of them have a degree,” he says. “So, they may not really see the value of education themselves. That’s horrible. Education has never been a priority here.”

What people can and do understand about the funding formula is that it breaks financial needs into crucial areas such as instruction, student services and operation/maintenance of campuses. The last area proves crucial in explaining the differences between UNR and UNLV’s per-student funding. Elliot Parker, a UNR economics professor, evaluated the formula’s inequities in 2009 and discovered that, if you eliminate operation/maintenance and specialty schools (i.e. UNR’s medical school), the universities are funded almost equally. Then, the question becomes: Why would UNR require so much additional money for its physical campus?

The answer given: It is twice as large and most of its buildings are older. It’s an argument many at UNLV think is shortsighted.

“You have to remember that most of our buildings were built for an institution that we no longer are,” says Bomotti, citing the major enrollment growth at UNLV in its short 50-year history.

Facilities such as Wright Hall and the Chemistry Building were built to accommodate the classes and missions of a much smaller institution. An updated funding formula might take this into consideration and allocate more to institutions forced to accommodate more than their original structures intended, but Nevada’s does not, Bomotti says. Similarly, the formula fails to take into account renovations that have made UNR’s older buildings more cost-efficient and in need of less operational funding. Similarly, there’s a dispute over how the formula handles the climate differences and varied costs of heating and cooling.

Of course, one cannot explain away the relatively giant chunk of money Great Basin College gets by looking at its square footage. This case brings up another controversial topic in education funding: rural vs. urban. Basically, it comes down to economy of scale. A larger, urban university is almost always cheaper to run, per student, than a small, rural college such as Great Basin College in Elko. Therefore, the formula allocates extra money to the rural institution.

“There is some truth to this,” Damore says, “but also, you could say, ‘The market has spoken.’ People in government are always saying, ‘If it’s too expensive, it shouldn’t be provided.’ Well, if for every nickel they raise at Great Basin they get a quarter, that isn’t sustainable.”

So how did we get into this mess?

Some believe the inequities are a byproduct of the system’s inability to keep up with its own institutional changes and growth. Consider not only the overall rise in enrollment, but also College of Southern Nevada’s maturation into an institution offering four-year degrees and the creation of Nevada State College in 2002. All of these expansions require tweaks to the funding formula, and sometimes those tweaks come with unintended consequences.

“For a long time, the mission was simply to grow, and that isn’t good strategic planning,” Brown says.

Others are downright cynical, arguing that it comes down to North vs. South in Nevada. Longtime state Sen. Bill Raggio, R-Reno, spearheaded the creation of the formula, they point out, so it may be no coincidence that it came with northern biases.

Bill Raggio

Bill Raggio

Klaich, a UNR graduate who participated in the state’s formula studies in the mid-1980s, acknowledges that many of his peers believe a northern bias exists, but declines to say whether he’s seen proof of it himself. “The concept of equity has a tendency to be very cloudy and very emotional,” he says. “There does seem to be a strong belief that there’s an inherit inequity that benefits the north. It’s absolutely critical that we get together as a state and lay that on the table.”

The opportunity to do that is now. During the legislative session, a committee was created to re-evaluate the higher education funding formula. Made up of members of the Senate, Assembly, Board of Regents and the chancellor’s office, along with a representative from the governor’s office, the committee is tasked with comparing Nevada with other states, considering factors such as performance-based incentives for institutions and retention of registration fees and nonresident tuition.

“This is overdue,” Klaich says. “Looking at all of these issues is critical. If we don’t deal with these issues head on, there will be growing dissatisfaction.”

Brown agrees. “We have a crisis of confidence,” he says. “People fundamentally believe they are getting no value in education.”

Years ago, the average Rebel knew next to nothing about the funding formula. All he or she knew was that UNLV’s tuition was one of the cheapest in the country. Now, after years of budget cuts and increased tuition and fees, the student population finally seems to be focused on the funding formula big picture, rather than fights to save individual departments.

Carrie Sampson is one such student. A doctoral candidate in the public affairs college, she completed a master’s degree at Syracuse and a bachelor’s at UNR. When she began working at UNLV two years ago, Sampson received then-Chancellor Jim Rogers’ budget cut emails and became increasingly involved in protests. In March, she helped organize the Shut Down the Strip rally for higher education. In the process, she discovered the inequities in per-student funding.

Rally Against Budget Cuts

Protesters make their way along Las Vegas Boulevard during a protest against education budget cuts Sunday, March 6, in front of the Bellagio on the Las Vegas Strip. Launch slideshow »

“I’d always heard UNR was a better school, but I never knew why,” she recalls. “Now, I think, well, if they are funded more, of course they’ll be.”

Sampson says if she weren’t rooted to Las Vegas through mortgage and marriage (her husband is a UNLV law student), she would have gone elsewhere for her higher education. In fact, she still might move. “If education keeps going this way in Nevada, we will wind up leaving when we graduate,” she says. “I think that’s the story for a lot of people.”

What might UNLV become if the state allowed it to keep its own tuition and fees? Bomotti’s staff crunched the numbers and found that if UNLV had been allowed to keep its nonresident tuition, it would have had an extra $17 million last year. How many professor buyouts, cut courses and axed departments might that have spared? And going forward, what could that additional revenue mean in building the institution into a reputable university with the types of facilities needed in a major metropolitan area and international hub such as Las Vegas?

Robert Lang of the Brookings Institution suggests comparing UNR and UNLV with the University of Arizona and Arizona State University, respectively. “Arizona is a lot like us — they’re a Western state, they have a libertarian tradition. You can compare us with them,” he says. For a long time, UA was considered the better of the two research universities, but the state government recognized that ASU was in the state’s largest city and that it would behoove them to have a good school near Phoenix. “Mission accomplished,” Lang says. “They did it. It took money. It took an extra infusion of money.” Yet, the benefits are obvious. Good universities stimulate the regional economy. They make cities more enticing to higher-quality businesses that need college-educated, white-collar professionals.

Were Nevada to follow a similar model, Lang says, Las Vegas could grow into a headquarters for online gaming’s ancillary industries — media services, management, information technologies. At the very least, the state might recognize the value UNLV could bring to the local economy as a whole.

And if the inequities aren’t addressed?

There is no specific UNLV doomsday prediction. If there were, legislators would have been forced to address these issues years ago. Instead, the slow chipping away of resources, which has flown under the radar for so long, will only continue. If it does, well, don’t expect the percentage of Clark County residents with bachelor degrees (21.3 percent) to rise. Don’t expect an influx of new businesses to sprout or move to our city. Don’t be surprised when K-12’s best and brightest decide to further their education out of state. And don’t be surprised when they stay there after graduation.

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  1. Have money funneled to the state before releasing it over to those who generate it - that is a model that seems to come up over and over again in this state. It kinda like the state wants to run some elaborate money laundering operation. I expect this will have to come down to a court case as well where the people of Nevada (in this case the students) have to fight their own government for return of money.

  2. April- Would have loved to have heard both sides. I don't see an explanation from any government official. I do see these quotes:

    "The people in the legislature aren't exactly the most educated bunch. Less than half of them have a degree,"

    and

    "It's a politically charged, convoluted black hole fueled by an algorithm few understand and governed by a body of people who largely don't have college degrees themselves".

    Sounds elitist. On the surface, it appears you're just trying to slam government and write yet another favorable article for education(three in the LVS in two weeks).If a reporter is doing research for this article, wouldn't it be wise to discover both the logic behind the formula and explain how revenue-sharing is applied to many other entities such as NFL (Revenue share TV contracts)and College (TV contracts- Revenue share)? Big schools(USC,Texas) and popular sports teams(Cowboys,Yanks) share TV contract revenue with smaller schools(Oregon,Kansas) and smaller TV markets(Green Bay,Milwaukee). UNR enrollment is approx 16,500 and UNLV approx 27,000. Do big/small states give an equal share of income tax revenue to the Feds? Maybe federal tax revenue should be an equal amount for all states, just divide the amount that states owe the Fed and divide it by the state's population. Should the top 20% of wage earners be upset having to pay nearly 70% of total federal income taxes collected? You could make this redistributing revenue argument in so many areas of society. I guess we choose to argue against redistribution when it suits our means.

  3. I would have liked to have seen this story at least mention that CSN is at least as underfunded as UNLV--if not more so, granting that UNLV has research expenses that CSN does not. I hope that the reporter intends to address this in a future story.

  4. While I agree with this article, there is one thing I would like to point out. Wright Hall was remodeled and greatly expanded in 2005 (really it was rebuilt), so I'm not sure it should be used as an example as a building that was "built to accommodate the classes and missions of a much smaller institution."

  5. I am a student leader that has been involved in both the negotiations from the legislature down to the college level and has been involved in every major protest action the last two years.
    I can personally attest to the fact that the college funding formula is "complicated".
    Part of the problem is that almost every major revision to how colleges are funded has to be lobbied for, haggled over, cried about and finally decided in the legislature. Then it goes to the Board of Regents to shovel out to the schools; even though the BoR had almost nothing to do with the actual creation of the formula.

    JEFF GARNER,
    The reason there are no politicians speaking to the matter is because they all want to get reelected. They all put some garbage about being "pro" education in their campaign and they know from history that touching the funding formula in interviews is political suicide.

    Politicians all think they will be rich and run the whole state of Nevada some day. (Both are one in a billion chances, but it makes them shy away from fighting the good fights.)

  6. Alright then. So I'm led to believe that no one in government nor a mathematician can explain the algorithm. So that falls into one's argument to change it. This fits the objective of April and Gerry. Can't be explained, so change it. Gerry has a degree and yet he can't even explain it.

    No pie chart displaying the amount of the $182 million that contributes to funding prisons, human services and welfare, among other things. The article leaves you with more questions than answers. What should the formula be? No redistribution between universities?

  7. Seems to me it's a principle of equalization of institutions. That is, students of any part of Nevada deserve equal state support. Whether UNLV, UNR, CSN, or any other public NV institution are indeed equal, is the crux of the problem. UNLV proponents & the article imply UNLV is superior to other institutions in meeting needs of NV students, and that all NV institutions should receive only what they "make," the typical "free market" attitude.

    And, yes, equalization means some institutions cost more per student than others.

    It may well be the formula should be changed from equal educational services to all NV higher ed. students to services depending on that institution's revenues. Perhaps the formula should be scrapped, altogether.

  8. The problem is that there are several ways to look at funding, and in particular at "funding formulas." For example, you can look at program costs. Some programs (such as those that require special facilities and use more resources) cost more to maintain than others, but they're valuable programs. On the other hand, you can look at numbers of students. From that philosophy, "bigger is better."
    Some people are pushing for what amounts to grade inflation: "graduate more students, and we'll give you more money." One thing that is difficult to compare is "quality of programs."
    All of these factors, taken together, allow for the politics. Each institution naturally emphasizes the measurement that make it look like it deserves a bigger slice of the pie.
    The same thing happens in K-12 education, too, which is why by some measures Nevada is "near" the bottom and by other measures NV is AT the bottom.
    The problem is that we want a formula that cranks out fairness, but we'll never agree on what fairness is.

  9. Las Vegas money. . . needs to stay in Las Vegas. The Supreme Court of Nevada just said the same.

    We don't need to subsidize other parts of Nevada. If the other parts of Nevada actually had to live within their own budget . . . maybe they would start electing representatives who would vote for funding.

    As long as Clark County "gives" money to other parts of the state - they will never have a need to vote for funding. They have enough! Meanwhile Vegas struggles because they have been attacked by parasite counties.