AB 449, the economic diversification bill, was heard April 4 in a joint meeting of the two money committees. It was presented by the chief sponsor, Senator John Oceguera, along with Governor Brian Sandoval, Lt. Governor Brian Krolicki and Majority Leader Steven Horsford. So, it has some momentum and will pass, and be signed by the governor with great flourish.

Nevada System of Higher Education Chancellor Dan Klaich testified, offering  support from the System, and appreciation for the recognition that the System must play a major role in economic diversification in Nevada. He indicated that he understood the funding for the Knowledge Fund, which the bill's authors would like to set at $10 million, would not be carved out of the NSHE allocation at the end of the session, but would be directly allocated from the state General Fund in addition to the NSHE allocation. The precise amount of the allocation, however, will be determined later, pending availability of state funds.

Moreover, the Chancellor noted that the fund would only impact research done by university and DRI faculty who were funded from the Knowledge Fund and therefore did not represent an imposition on the academic freedom or autonomy of higher education faculty.

In response to a question from Senator Horsford, Klaich agreed that there was a significant incongruity between this effort at economic diversification and the huge budget cuts being recommended by the governor for NSHE institutions. Klaich indicated that NSHE institutions would  not be able to do all that needed to be done toward economic diversification if anything like the current budget proposals were approved.

The bill contains $10 million in funding for a “Catalyst Fund” that is in the Sandoval budget to help lure businesses to Nevada, and to assist those businesses already here. There is a separate “Knowledge Fund” that is supposed to assist the two universities and DRI in doing research in areas the State has chosen to promote. However, there is no specific dollar amount yet designated for the state's contribution to the Knowledge Fund. The original version of the bill actually called for contributions directly from UNLV, UNR and DRI totalling $8 million, but that was dropped in the new version after concern was expressed by NSHE representatives, and the funding from the Knowledge Fund was left open. This is cause for concern among NSHE faculty, staff and administrators, who fear that any funding will in fact be taken from the overall NSHE allocation for the next biennium.

The bill is supposed to be modeled after what has happened in Utah with the USTAR project that has helped rejuvenate the Utah economy as a result of the infusion of tens of millions of dollars into the two public universities there over the past several years. USTAR has been funded since 2006 with about $15 million per year from state funds, and also received $33 million from federal stimulus funds as well. Click here for information about USTAR.

One person associated with USTAR testified on AB 449 indicating support for the effort and pointing out that Utah developed its model during a time of budget surpluses, whereas Nevada cannot have such an advantage given the budget situation here (the refusal to develop new sources of revenue for the State). He wished us luck in this effort. Many others testified in favor of AB 449, and it seems to be on its way to quick passage, even with no specific dollar amount yet designated for the state's contribution to the Knowledge Fund.