Members of the Committee to Study the Funding of Higher Education, got a last-minute surprise at their Jan. 11 meeting, held at the Grant Sawyer State Office Building in Las Vegas. Nevada Senator Steven Horsford, chair of the committee, added Nevada System of Higher Education Chancellor Dan Klaich to the agenda so that Klaich could present NSHE’s proposal for a new way to fund public higher education in the state.

Nevertheless, everyone present and attending via videoconference from Carson City and Elko came prepared, and they seemed to agree on one thing: Equity must be part of whatever new formula is adopted.

Senator John Lee, whose bill established the committee, opened the meeting with a lengthy statement expressing concerns that the current formula redistributes student fee dollars in a way that “turns students into taxpayers,” as he said. Lee also drew on the last committee’s 2005 findings as a way of underlining concerns of historic inequities of more than $20 million each for the College of Southern Nevada and UNLV.

Following Lee’s statement, Horsford said he believed the intent of the legislation and the committee was, “to evaluate the best formulas that ensure equitable allocation and distribution of those sources, based on the mission of each of our institutions throughout the system.”

As Klaich walked the committee through NSHE’s proposal, he said: “I want to be very clear that I want to be mindful that this is not a taxation committee. It’s not my point here today to talk about the adequacy or inadequacy of funding for higher education. That’s a discussion for another day, and certainly I have strong opinions on that. But after we price our product, it’s up to us to fairly and adequately allocate those funds amongst the institutions based on the work that they do.”

Klaich touched on the shortcomings of the current model, which has been in use since the 1980s, saying it is difficult to understand (undermining its credibility) and discourages differentiation and entrepreneurial behavior. He added, “This issue of geo-politics is inextricably wound in, and you (Senator Horsford) stated it correctly – whether ‘real or perceived.’ It doesn’t matter whether it’s real or perceived; it’s there.”

Klaich proposed that the committee set aside Nevada’s current formula and start over, rather than tinkering with a broken model. The NSHE plan he presented was meant to provide a conceptual framework for a new model. Klaich explained that it would need to be developed through further study of the cost factors in Nevada (likely to be studied by an independent consultant) and of funding formulas used in other states, such as Texas, which also have multi-tiered systems of higher education.
 
The proposed framework has three main elements: 1. base funding, calculated using a weighted student credit hour matrix, in which each student credit hour completed would be weighted according to the cost of the discipline (with disciplines sorted into clusters of roughly common cost) and on academic level; 2. add-ons, or enhancements, for research missions (at universities) and for economies of scale at other institutions; and 3. a performance pool of funds available to each institution that achieves certain performance benchmarks, particularly the number of graduates or certificates awarded.

Members of the committee spent considerable time asking Klaich questions about the new approach, which was summarized in just over three pages. Assemblywoman Debbie Smith expressed concern about the many technical components of the proposal that would need to be fleshed out, pointing as an example to vagueness about distribution of performance pool funds. No questions were posed on the financial impact of shifting from the allocation of state funds based on enrollment to allocation based on completion of credits, and there was no discussion of a timeframe for transitioning from the current formula to the new one.
 
Klaich said following the meeting that he was pleased with the reaction of the committee, which agreed to integrate NSHE’s new model into the request for proposals from independent consultants that will go out in the coming weeks.

“As I tried to emphasize to the committee, this was a proposal that needed a lot of detail work and independent vetting,” Klaich said. “I think the questions from the committee highlighted many of the areas that we will have to study. I thought for such short notice, the committee was extremely well-prepared.”

As the formula is being hammered out, Klaich stressed, he wants teaching faculty to know that it will be based on what he considers their primary mission, teaching. “We will value it fairly across the system, and we will be highly supportive of the model that funds performance, excellence, assessment and rigor,” he said.

His next step will be to begin executing the committee’s request that NSHE fill in some detail in the model and provide examples of implementation. Klaich said he welcomes the NFA’s input as the process unfolds.

This next step will undoubtedly be the subject of discussion at the special meeting of the NSHE Board of Regents scheduled for Friday Jan. 20 at DRI in Las Vegas.