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.

Thank you, Mr. Nance, that was a civil and well-argued comment.

I can understand your frustration with K-12, and as I have kids I share it to some extent. Teachers have a tough job, and are not paid terribly well, but I certainly agree that the quality of education is an intractable problem that an intelligent society should be able to address better than we have. I have more hope perhaps than you do, because I have seen improvement in my freshmen over the last decade or so, but there is so much more we need to do, and progress on that front is so terribly slow.

K-12 education is also a crucial function for a modern society, and we can't simply cut their budgets out of pique and think we are making things better. We should fund them better, expect more from them in return, and redesign the system as dramatically as we know how.

I would disagree with you about higher education, however. Yes, there is more aid than there used to be, and more people go to college who otherwise would not have. But that is a good thing, don't you think?

Higher education was an institution largely for the elite a half century ago, and as universities have grown to teach a larger share of our population, and as our economy demands more specialized knowledge out of our workforce, it is likely that the "average" student is not as good now, but that is only because our average now includes a bigger pool of students.

What universities do, what knowledge they produce and pass on, is far above where we were a half century ago. Few professors from then, and even fewer students, could comprehend the content of research journals now, and they would be staggered by the increase in knowledge. And my students, I think, are getting a pretty good education for their money.

It is perhaps true that universities could do better at reaching more students through the internet, but there is much more to a university than listening to a canned lecture from a distant voice. We can always do better, all of us. At my university we are trying hard to improve, believe it or not, and I hope the citizens of Nevada will take pride in that fact, and help us keep doing so.

Sincerely,
Elliott Parker

[continued from above]

On a related topic, did you know Nevada also ranks at or near the bottom, on a per-capita basis, of monies received from the federal government. Why? Because we don't put up the money to get the matching grants. Alaska, by contrast, receives the most, and it gets most of its matching funds from taxes on oil extraction. Mining in Nevada, however, pays roughly 1% of its gross proceeds to the state, while casinos pay around 7%.

Regarding Mr. Nance's assertions about higher education spending, let me direct readers to my letter to Regent Knecht on the same topic, which I just put on my website. There I say:

"You note that expenditures on higher education in the United States doubled, as a share of GDP, between 1960 and 1992, and then rose over the next decade by another 50 percent. I don't mean to quibble, but during the same period higher educational enrollments rose from roughly 3.6 million students to almost 15 million, a 2.6-fold rise as a share of population. The number of degrees conferred grew almost four-fold, relative to population, and the share of graduate degrees doubled. We spent more because we did a lot more.

"It is also worth noting, I think, that Nevada did not fit the pattern you observed for the rest of the country, at least not in its spending on higher education. The data I've collected only goes back to the mid-1980s, but the state-supported NSHE budget in 1985 was about 0.63 percent of our Gross State Product. By 2005, this had risen to only 0.65 percent, hardly what I would call unsustainable growth."

Finally, regarding the initial assertions on the athletics budget by both "skisailmtb40" and Mr. Nance, the Governor's budget proposed the cuts I mentioned, not the Regents. The Regents and the Legislature will probably not concur, and perhaps they will be able to overcome the Governor's likely veto. For UNR, it is a $70 million cut on a $140 million dollar allocation. For those who note that times are tough all over, consider that when private firms are laying people off, it is because demand for their products has fallen. At the university, demand for our services is increasing. More people want to improve their education during a recession, so they can get a better job.

The decline in overall national income is roughly 4%, if the decline of the last quarter is extended for a full year. The decline in the university budget is ten times that. Construction firms can start back up quickly once the economy recovers. If the university is cut by $70 million, it will take us a decade or more to climb back up to our current level.

To the rest of you, thank you for reading and thinking about this crucial issue for the future of our state.

Regards,
Elliott Parker
Professor of Economics
University of Nevada, Reno

Professor Parker replies:

Though I do try to read these blog comments, at least when the level of vitriol does not get too high, I don't usually reply to them. Mr. Nance, for example, has over 3800 blog entries listed in his Sun profile, so the chance I would get in the last word is pretty small, and debating him is a losing proposition. I do invite interested and objective readers to look up some of the material on my website (http://www.business.unr.edu/faculty/park...), including the data I have made available there.

KDR81 raises a good question about grant funding, however, that I would like to try to answer. It does seem on the surface that I contradicted myself. Perhaps an explanation is necessary for those who don't understand how grants work.

If faculty are able to win competitive grants, the university can do more. We can use that money to bring in graduate students on research assistantship, we can hire full-time researchers on so-called soft-money, and we can study problems to help address the problems of the state and its citizens. The School of Medicine brings in a large share of those grants, and uses them to fund research on disease prevention. They could not afford to do that without the grants. There are researchers all over campus doing amazing things that most citizens are completely unaware of.

Grants also have an "F&A" portion which we can use to help pay for operating costs of existing facilities, and which can help fund the building of new facilities. Being able to build new research facilities then also helps us bring in more researchers, who can help us attract more research funds, et cetera. We can also use research funds to buy out some instructional faculty from their teaching responsibilities.

We cannot, however, use a research grant to hire a lecturer, or to pay salaries of instructional faculty. It is illegal to misuse or reallocate funds in this way.

By funding research activities, the state gets more bang for its buck. It takes money to make money, as they say. It is completely sensible for the state to fund education and then ask for more bang for the buck, to provide incentives for faculty to compete for more research funds. It will take time, of course, and not every department can do it of course; an English professor is much less likely to get a research grant than a chemistry professor.

It is not sensible, however, to cut support and pretend that somehow other funds will pour in to replace it. It shows a complete lack of awareness of how things work. Donors, for example, don't contribute to a sinking ship.

[to be continued]

Yeah, it pays to spend four years in college, work hard and make really great grades, then spend five or more years getting a Ph.D. or an M.D., taking out student loans, and then spend six more years trying to get tenure through publication in academic journals that reject 80% of submissions while teaching 200-300 students a year, and then, once tenured, to try to build an international reputation, and then maybe once you get promoted to full professor, you get a governor who probably couldn’t pass your courses telling everybody that you are an overpaid freeloader.

I noticed when I looked at the governor’s spreadsheet that the top earners were in the Med School. What a surprise that doctors make a lot of money! I also noticed that while these top doctor/professors earned an average salary of $195K, the state budget only paid for an average of $87K. I presume the rest came from clinical practice, which also benefited the school. Is this not right? And what did the governor contribute? Last I saw, he was trying to find ways to contribute less, at least on his land, not more.

The Chancellor’s criticism was harsh and not very politic, but at least he was defending an institution, not his own political interests. The governor was only concerned with himself. This petty attack ranks right up there with the plagiarized speech in Elko, in 2005, where he attacked “liberal, tree-hugging, hippie, Birkenstock-wearing, tie-dyed liberals” for opposing the war in Iraq.

We have about the lowest tax burden in the nation, the lowest share of people that graduate from high school or go to college, a very low level of public services, and suddenly the bottom falls out from the budget. The governor wants the universities to cut spending by 14% or more, on top of 8% or so already, and that is not adjusted for growth or inflation. And somehow Nevada has a spending problem rather than a tax problem?