User profile: EP

Looking at this report, it seems more true that Mr. Ralston's headline should have been "Rural Continues to Screw Urban," and this is a pattern often seen in the rest of the country. Why do folks in Clark County lump the entire rest of the state into the "North"? The Reno-Tahoe area is very different from Fallon, Tonopah, and Elko. We also have a disproportionately large share of our state general fund revenue coming from gaming, and most of that is in Las Vegas. So the headline could have been "South screws tourists, and Rurals get a Cut." But I guess that headline would not have been as fun.

Let me make a minor correction. The piece I wrote with Bruce Shively was not a shot in response to the memo by UNLV's former president and current financial VP, or an attack of any sort on anyone. It was written as a service to our faculty and our community, and it followed on an earlier piece we wrote that focused on UNR's budget alone, which is on my website at http://www.business.unr.edu/faculty/park.... It is called a Guide for the Perplexed.

I also want to clarify that although I coauthored it with our budget director, it was not an official UNR report. Though I am confident we said nothing in it that would discomfit our adminstrators, readers should know it was neither requested nor approved by them.

Chancellor Rogers argues that we are all underfunded, and that the desire to increase UNLV's budget is not meant to hurt UNR or the other NSHE institutions. As the recent legislative stop-loss maneuver demonstrated, this sentiment is not easy to put into practice. UNLV's stop-loss funding came at the expense of everybody else, especially CSN. When the biggest kid in the class starts complaining that he doesn't get enough allowance, the other kids in the class get nervous about their lunch money.

As the Donner Party so well demonstrated, in times of shortage it is tempting for us to eat one another. While it is fun for our students to compete with each other on the ball field, our institutions need to cooperate with each other for the sake of the state. We are all in this together.

Peegee76 makes a case that UNLV has improved over the past couple of decades. I agree. Though I am only a Nevadan by choice, not birth, I applaud UNLV's efforts because I see them making the state a better place to live, both north and south.

I hope I am making it clear that I think it is harmful to Nevada's higher education for UNLV to play tug-of-war with UNR and the other institutions. I want UNLV to improve, but not at the expense of our institutions and our students.

Bruce and I showed that in our 2008-2009 budgets, UNR and UNLV had almost identical instructional budgets per student FTE. UNR spent more per student, but less overall, for administration, operation, and maintenance. We argued that this can largely be explained by the other budgets that UNR is responsible for.

I guess I can understand why former President Harter and Vice-President Bomotti would like UNLV to have more administrators per student, but I am not sure how that makes a difference to the quality of UNLV's teaching and research.

This week the institutions are putting together their detailed budgets for 2009-2010. Once I can get this new budget data from UNLV, I will rerun the comparison. I will make these results available on my website, however it turns out.

Elliott Parker
Professor of Economics
University of Nevada, Reno

Professor Parker replies:

Thank you, everybody, for a discussion that was intelligent and mostly civil in nature, focusing on facts and reason over personal attacks. Unlike many blog discussions I have seen, it was a pleasure to read this.

Mr. Gibbons points out correctly that state funding for the Nevada System of Higher Education grew faster than inflation since 2001. What he does not mention is that our enrollments rose dramatically during this time, what with Governor Guinn's Millennium Scholarship program combined with the fastest population growth of any state. Universities also compete on a national marketplace, so we also had to pay more over time -- in real terms -- to attract and retain good faculty. Of course. I would hope that Mr. Gibbons has also seen his salary rise over time in real terms, since he is an intelligent man with a college education, and I presume he does work that pleases his employer.

Mr. Gibbons points out that our K-12 educational system could be much better. Absolutely, and though it is not my specialty I personally welcome all practical innovations that offer solutions to this problem. Does throwing money at a problem fix it? Of course not. It is equally reckless to think you can solve a problem by taking most of the money away.

But the Governor's budget focused on dramatically cutting higher education, not K-12, and that is what the bulk of my column concerned.

Mr. Gibbons uses the word "elitist" to describe public education, and this makes no sense to me. Mr. Gibbons is paid by his employer, the Nevada Policy Research Institute, to advocate against public funding of education, and their so-called "Freedom Budget, 2009-2011" contained a proposal to privatize higher education. What is possibly more elitist than that, to say that only the wealthy should have access to college, and the rest of us don't really need more than high school?

But what do I know? I am a product of public universities, and I am eternally grateful for the chance they gave me to get a good education and make a better life. I am now trying to give that back to my students, and my state.

Continued...

Finally, for the reader who made the ad-hominem attack, it is true that I don't want to leave the university. I love it, I love my job, and I love teaching. But I could leave if I wanted to, and I would have probably done much better financially if I had.

Like many of my colleagues in the business college, I have worked in the private sector. Many of us were quite successful there. It is a curiousity that the salary I was offered to stay in the private sector, when I left for graduate school, was higher than the salary I was offered at UNR seven years later, when I finished my Ph.D., and I am not even adjusting for inflation.

But I am not complaining, for I have never looked back. If I were rich I would do this job for free. Given the state of my retirement, I will probably have to do it until I die, so it is a good thing I like it so much.

Professor Parker replies:

For readers interested in a somewhat more careful discussion of the issue, I wrote up a better explanation, "The Economic Principles of State Budget Cuts", a few months ago. It is on my website, at http://www.business.unr.edu/faculty/park....

The Governor's argument that this problem was caused by overspending, which Mr. Neiman repeats, does not hold up, unless you believe that ANY government spending is too much. This is caused primarily by a decline in revenue, and the data is on my website, with graphs. If you can't find it there, send me an e-mail and I will send you the links. Look around Las Vegas at the casinos on the verge of bankruptcy, and then tell us you think these are normal times for the economy.

Mr. Neiman spoke of what the "least educated amongst us know," but surely you know that you don't sell your car if you lose your job, for you will need it if you hope to find a new job. You may temporarily have the income of a street person, but you don't want to become one by adjusting permanently to a temporary decline in income.

Yes, I certainly agree that you do not spend beyond your income, not in the long-run, and that is what got us into this mess. Households stopped saving, on average, people bought houses they could not afford on the belief that prices would keep rising, and financial institutions lent to them on the hubris that diversification through the derivatives market eliminated any real risk. Another way to become a street person is to keep spending more than your income even when you have a job.

Which brings us to President Hoover. Yes, tax revenues fell and spending increased, but this is to be expected when a quarter of the workforce is unemployed and has no safety net. Yes, there was an effort by the Hoover administration to increase public works spending, and make other relief available. But in 1932 the administration also supported a Revenue Act that increased taxes to reduce the deficit, and tax revenues rose significantly as a share of GDP. Poor President Hoover was even criticized by FDR for deficit spending, in spite of his efforts to raise taxes.

The problem is the mindset of the time, which some readers of this paper may still not have gotten beyond. What is a solid principle in good times is a terrible idea in bad times.

There is a legitimate concern -- which I share -- that once state governments realize they can borrow to get over bad times, they can borrow even in good times. The Bush Administration cut taxes and raised spending when they thought the economy was going into recession -- a mild one from our current vantage point -- and then did the same thing when the economy was growing. Ditto California, which basically tried to solve long-run problems through short-term fixes. I am not advocating that.