Executive Budget: The Good, the Bad, and the Ugly

Governor Lombardo’s recommended Executive Budget for FY2026 and FY2027, known as “GovRec”, was issued with his State of the State Address on January 15, 2025. The budget outlook for NSHE colleges and universities and NSHE employees is . . . mixed.

The Good

GovRec increases the oerall NSHE budget from $2.48 billion in the 2023-2025 biennium to $2.86 billion for 2025-2027, a 15.1% increase for the biennium or 7.3% annualized. Student fees and other revenues are projected to increase more (18.0%) than state appropriations (13.8%). The fraction of the total NSHE budget funded by state appropriations will decrease from 69.1% to 68.4%. The increases primarily go to fund inflation in personnel costs and utilities and enrollment growth, not new programs, improved staffing ratios, or enhancements.

NSHE Overall Budget [1]
Year	General Fund Appropriations	Student Fees & Other Revenue	Total Revenue
FY2024 actual	$816,736,844	$378,039,730	$1,194,776,574
FY2025 budget	$898,940,295	$387,835,109	$1,286,775,404
FY2026 GovRec	$979,845,771	$440,554,453	$1,420,400,224
FY2027 GovRec	$972,202,485	$463,198,572	$1,435,401,057
Biennium-over-Biennium Change
2025-27 vs 2023-25	13.8%	18.0%	15.1%

For the main state-supported instructional budgets [2] of the seven NSHE colleges and universities, state appropriations increase 15.9% overall biennium-over-biennium, ranging from 7.3% at GBC to 25.8% at WNC. The variation among the institutions results from differential enrollment growth and the partial implementation of the new NSHE funding formula.

State Appropriations for NSHE Instructional Operating Budgets
Institution	FY24 actual	FY25 budget	FY26 GovRec	FY27 GovRec	Change 2023-25 to 2025-27
UNLV	$233,991,397	$253,973,037	$292,207,372	$288,094,171	18.9%
UNR	$160,582,630	$173,121,548	$192,367,866	$191,207,189	14.9%
NSU	$32,863,186	$38,814,685	$39,015,309	$38,960,218	8.8%
CSN	$117,591,040	$125,133,833	$133,786,731	$133,143,032	10.0%
GBC	$17,101,283	$18,105,687	$18,780,503	$18,996,114	7.3%
TMCC	$39,918,718	$42,777,073	$51,638,274	$51,415,387	24.6%
WNC	$16,053,002	$19,333,255	$22,148,208	$22,374,812	25.8%
TOTAL	$618,101,256	$671,259,118	$749,944,263	$744,190,923	15.9%

The recommendations of the Ad Hoc Committee on Higher Education Funding are partially implemented in GovRec, phased-in over the two years of the biennium. The enhancements for each institution are shown in the table below (including the additions to the Small Institution Factor for GBC and WNC). The two comprehensive universities are held harmless; otherwise, funding would shift from them to the community colleges. NSHE estimated that  the full implementation of the new formula would cost $21.1 million per year.  The formula implementation figures represent a phase-in with 20% implementation in year 1 and 40% in year 2 of the calculated amounts for the small institution factor update and the new funding distribution formula, except without offsets for UNLV and UNR [3].

Formula Funding Enhancements in GovRec
Institution	FY2026	FY2027
UNLV	$0	$0
UNR	$0	$0
NSU	$963,120	$2,177,813
CSN	$1,991,237	$4,326,348
GBC	$492,355	$1,047,741
TMCC	$626,826	$1,279,916
WNC	$472,048	$908,700
Total	$4,545,586	$9,740,518

Other mostly good items:

GovRec funds the already-awarded cost-of-living adjustments (COLAs) of 12% in FY2024 and 11% in FY2025 at 80% for 2025-2027. The COLAs for NSHE were not fully funded by the 2023 legislature, with funding at only about 65%, versus the 80% funding level for most state agencies. NSHE had to come up with the balance through a combination of budget cuts, increased student fees, and a three-month delay for faculty COLAs in FY2025. GovRec adds the funding back at the 80%, although as an enhancement item not in the base budget.

The funding of enrollment growth measured by Weighted Student Credit Hours (WSCH) is adjusted for the COLAs, increasing the per-WSCH amount from $173.29 to $208.99. In the past, the enrollment growth maintenance item was usually funded without an increase to the per-WSCH amount.

Modest funding for campus safety improvements is included in GovRec, with a one-time appropriation of $11 million. NSHE requested $38 million in one-time funding and $7 million per year in ongoing funding. GovRec thus underfunds campus safety and security improvements requested by NSHE by 72% and makes no provisions for continuing funds for the Southern and Northern Commands of University Police Services..

The nursing education expansion funded in 2023 was continued with one-time appropriations of $10 million per year.

The UNLV School of Medicine expansion funded with one-time appropriations in 2023 was continued as part of its base budget.

The budgets include increases for inflationary utilities costs and for fringe benefits including PEBP and retirement contributions.

The Bad

The Governor has not recommended any COLAs for state employees in FY2026 or FY2027. Because mandatory retirement plan contributions will increase by 1.75%, take-home pay will decrease. With inflation running at 2.5% or higher, COLAs of 5% in FY2026 and 3% in FY2027 are needed to avoid declines in real take-home salaries.

No NSHE capital improvement projects are included in GovRec, not even planning funds. Deferred maintenance is funded at only $15 million statewide, which is totally inadequate. In 2023, no NSHE building projects were funded but $50 million in one-time funds was allocated to deferred maintenance.

Graduate Medical Education is funded at $25 million per year, which should be a good thing but it is one-time funding, explicitly for 2025-2027 only, with non-state funds through the Governor’s new Public Health Authority and therefore does not provide for a sustainable increase in capacity.

The Public Employees’ Benefits Program is being moved into the new Public Health Authority along with Medicaid and the American Care Act Insurance Exchange. PEBP is an employee benefit program, not a public health program; it belongs with human resources and benefits. PEPB is currently a semi-autonomous agency under the state Department of Administration supervised by its own board appointed by the Governor.

Many one-time appropriations from the 2023 session were not continued in GovRec.

The Ugly

Upon release of the Governor’s Executive Budget, Assembly Speaker Steve Yeager expressed concern that the budget is not balanced: “It looks like ongoing expenditures are more than revenues. The budget that was brought to us actually has a structural deficit.” The statewide general fund total appropriations in GovRec is $12.769 billion for the biennium. In December 2024 the Nevada Economic Forum forecast revenue of $12.433 billion. That implies a deficit of $335.4 million for the biennium ($233.3 million in FY2026 and $102.1 million in FY2027). Because state law requires a balanced budget based on the Nevada Economic Forum forecast (the final forecast is in May 2025), the legislature will have to resolve this discrepancy. We will be interested to hear explanations from the Governor’s Finance Office at its presentation to the Legislative Commission Budget Committee on Tuesday, January 21.

Also ugly:

The work program budgets for FY2025 in GovRec, which are used as the base budgets for the next biennium, do not include the full 12%+11% COLAs already awarded to NSHE employees. Although GovRec includes the COLAs as an enhancement funded at 80%, other state agencies apparently have the actual salaries for employees including past COLAs automatically included in the base budgets.

GovRec funds PEBP claims assuming medical, prescription drug, and dental inflation will be 3.55% in FY2026 and 3.50% in FY2027, lower than the trend projection from PEBP’s actuary of 6.75% for medical and prescription drugs and 3.0% for dental. That virtually guarantees future deficits.

[1] “FY2024 actual” represents actual revenue received in fiscal year 2024 from the annual NSHE State Operating Budget Budget-to-Actual Comparison Report. “FY2025 budget” represents expected revenue for fiscal year 2025 from the annual NSHE State-Supported Operating Budget. “GovRec” is Governor Lombardo’s recommended budget in the 2025-2027 Executive Budget as proposed in January 2025 to the 2025 Legislature. All revenues in GovRec are matched by budgeted expenditures.

[2] State-Supported Operating Budgets include the main instructional budgets of the seven NSHE colleges and universities. There are a total of 31 state-supported NSHE programs that are separately budgeted by the State, including the educational institutions, professional schools, Desert Research Institute, System Office, statewide programs, and other entities, with restrictions against transferring funds between the separate budgets. There are also many Self-Supporting Budgets funded by student fees, user fees, sales, and other revenue, without any state funding.

[3] Phase-in information updated 1/20/2025 per information from NSHE.  The new formula shifts from 100% WSCH (weighted student credit hours) to 75% WSCH, 10% student enrollment attributes, and 15% outcome-based factors. Additional information on the new funding formula.

Prepared by Kent Ervin, Director of Government Relations, Nevada Faculty Alliance. Corrections or amplifications are welcome. Contact: Kent.Ervin@NevadaFacultyAlliance.org, 775-453-6837.