The formulas used to fund Nevada System of Higher Education institutions are undergoing an overhaul that represents a chance for state and education officials to make a significant positive impact on Nevada’s colleges and universities.

The current formulas, developed more than 10 years ago by a legislative interim committee established during the 1999 Nevada legislature, have been used for four biennia to distribute available funding. The dramatic downturn in NSHE funding over the past two biennia resulted in a suspension of the funding formulas for the past two legislative sessions. There have been many calls for the formulas to be revamped or abandoned, with claims that they were outmoded and unfairly distributed funds throughout the rapidly growing system.

One frequent critique of the formulas is the practice of counting tuition and fee moneys against the amount of funds due to institutions from the state. And out-of-state tuition funds were kept by the State, a process that harmed institutions such as the University of Nevada, Las Vegas, which has high out-of-state enrollment.

NSHE officials have called for a study of new funding formulas in past legislative sessions, but this proposal did not gain traction until the 2011 session. The legislature passed a bill establishing a new interim committee to examine funding formulas and other policies, such as allowing institutions to retain their tuition and fee moneys, and seeking local funding for community colleges. (In most states, some local funding is furnished to such colleges.)

Greg Brown, NFA president, says, “Faculty across the state believe this process represents a once-in-a-lifetime opportunity to reorient how the state assesses its investment in higher education. The old formula, clearly, is no longer viable, and we are on the path to something new. The formula can no longer be a rigid and incomprehensible black box that serves political purposes.”

He adds that the NFA hopes the next formula will bring about these specific changes: greater transparency and credibility for the System; fairness for students, whom the state in the past has treated as tax-payers; and a focus on educational attainment rather than raw enrollment.

“We look to the committee to develop a formula by which each campus, which has a distinct mission in our multi-tiered system, can represent accurately and transparently the real cost of fulfilling that mission,” Brown says. “The formula, above all, must provide a flexible platform for us to expand degree completion and expand academic rigor.”

The interim committee, established a few months ago, has met several times. At a January meeting, Chancellor Dan Klaich presented a possible way forward that would involve NSHE budget staff developing funding scenarios for the committee to consider.

Klaich says, “The current formula approach lacks credibility primarily due to two reasons: the widespread perception of unfairness and the complexity that leaves few people understanding what it is and does.” His goal is to look to other state models for best practices, construct something reasonable, simple and comprehensible by all, and fundamentally fair to all institutions – an incredibly difficult task, he says, particularly given recent severe budgets cuts.

The interim committee and NSHE are currently working out details of the Klaich’s proposal. It included some bold concepts such as 1. allowing institutions to retain their tuition and fees, thus giving incentive to student recruitment; 2. focusing on completed degrees and courses rather than initial enrollments; 3. including for the first time some element that would help fund research at the two research universities; 4. a significant element of performance funding that would reward accomplishment of goals set by regents to mesh institutional efforts with State of Nevada’s economic development goals; and 5. efforts to graduate students from underserved groups.

The Alliance Editor Jim Richardson, who served on the 1999 formula study committee, appointed by Governor Guinn to represent the faculty, says that, as with any new proposal, the devil is in the details. Representatives of NSHE institutions are eagerly awaiting the specifics of the chancellor’s budget team to see how they will be affected.

Brown says, “As part of the process, to ensure that the focus on course and degree completion is matched by a focus on academic rigor and course quality, faculty leaders suggested to the Chancellor a working group of faculty to help identify measures of degree quality that can be incorporated into the performance-based funding portion of the formula. This group has recently been appointed and will begin work very soon.”

Scott Huber, NFA past president, notes Nevada has a significant and growing number of students who benefit greatly by attending community colleges. “The community college experience represents an important academic and financially available first step for these students need as they work towards becoming Nevada's next generation of skilled workers,” he says. “We are hopeful the funding study recognizes the important role community colleges fulfill.”

Angela Brommel, NFA vice president, says she believes the ideal funding formula will align the mission of Nevada State College and other NSHE institutions with regional and statewide economic objectives. “NSC has been successful under the existing formula in educating and launching graduates into the workforce,” Brommel says. “We anticipate that the new funding formula will advance the college’s mission to a greater degree.”

“A real problem is dramatic cuts in funding for NHSE institutions,” Richardson says. “We all hope State leaders will realize that an adequately funded system of higher education is essential for the well-being of its citizens and for the economic health of the State. Having new formulas will not help much is Nevada does not step up to the plate and face the funding needs of NSHE institutions.”

The interim committee includes twelve members: three state senators, three Assembly representatives, three regents and three appointees of the governor. There are also four non-voting members appointed by the governor, three of which are from NSHE institutions, and one from the state budget office.

The interim committee members are Senator Steven Horsford, Chair; Senators Ben Kieckhefer and David Parks; Assembly Members Debbie Smith, Pat Hickey, and Paul Aizley; NSHE Regents Jason Geddes, Kevin Page and Mike Wixom; and governor appointees Heidi Gansert, Mike Dillon and Hugh Anderson. The non-voting members are Julia Teska, of the state budget office; Mike Richards, CSN president; Greg Mosier, UNR College of Business dean; and Spencer Stewart, NSC associate vice president of college relations.

Friday, Feb. 24, Scott Huber (NFA past president and professor at Truckee Meadows Community College) and I met at the Nevada System of Higher Education office to count the collective bargaining interest cards and present the application to Chancellor Dan Klaich. Christine Casey, director of human resources, attended the official count as the chancellor's representative. The results are as follows:

• 43 cards signed out of 51 eligible faculty.
• This represents 84.3 percent of the eligible faculty.

Jeff Downs and I met with Chancellor Klaich for a few minutes, summarizing the results. The chancellor said he would follow the NSHE Code, and that he had no problem with Western Nevada College joining the bargaining unit. He said he has seen no problems in working with TMCC compared to any other institution; thus, he does not view collective bargaining as any kind of impediment to our mission. He also acknowledged it is our right to collectively bargain and reiterated that he would follow the process as laid out in the code.

The next step is for the chancellor to present the results to the board of regents. The March board meeting agenda is set, so our application will be presented either at the April special meeting or at the regular May meeting. We will do what we can to get it done sooner rather than later. Then the board will set up an official, anonymous vote, administered by the American Arbitration Association. I will, of course, keep you up to date on the progress of events.

In the coming weeks I will be addressing some of your issues and concerns about collective bargaining. You are asking me good questions and have expressed to me some valid concerns about the collective bargaining process. I will do my best to answer them clearly and thoughtfully.

I want to thank all of you, both those who signed cards and those who did not, for your support and hard work at WNC.

James Strange is president of the WNC chapter of NFA.

Editor's note: Jason Geddes, chair, and Kevin Page, vice chair of the Nevada System of Higher Education board of regents released the following on Feb. 24:

Statement on behalf of Nevada Board of Regents, NSHE faculty, staff and students on the passing of Sen. Bill Raggio

Like all Nevadans, those of us in the higher education family were shocked and devastated to hear of the death of Senator Bill Raggio. First and foremost, our thoughts and prayers go out to his wife, Dale, his daughters, Leslie and Tracy, his six grandchildren, and one great grandchild.

Much will be said in the coming days and weeks about the lifetime of accomplishments of this giant of a man. However, for those of us in higher education, indeed the whole education community, we pause to thank this man who came from humble immigrant roots and rose to great power, in part by public education. He never forgot the contribution of education to his life. We have lost a member of our family today – indeed, our patriarch and champion. You will be greatly missed, Bill, but we will never forget all that you have done for Nevada and, particularly, for her young men and women who, like you, look to better lives through education.

Since our last comment on the revelation of the $43 million excess reserve reported by PEBP in January, the program's executive director told the Rebel Yell that in fact this excess reserve had been accrued entirely prior to the start of the current plan year

The reserve is not a result of plan design changes and premium rate increases effective July 1, 2011. Instead, it accumulated due to premium rate estimates that were higher than the amount of claims PEBP had paid leading up to June 30, 2011.

This is difficult to understand, as it appears to contradict the program's own CFO's report of December 2011, which reports a positive "change in cash" figure of over $10m for the first quarter of fiscal year 2011-2012 (against a budgeted figure of negative $22m.) The same chart shows an "actual" figure for "net realized funds available" (ie above the budgeted reserve) of $45.2m, versus an anticipated figure of $11.8m. Thus, PEBP appears to have expected to have $32m more in cash on hand by September 20, 2011, than it actually expected to at that point in the year.

But whats more egregious, and seems to compound the problem, is that, according to Wells, "PEBP knew during the 2011 legislative session that there was going to be a reserve of approximately $35 million," because, as he told the Rebel Yell, claims increased by only 1% during fiscal year 2010-2011. (Again, this $35m actually refers to excess reserve, over the amount set aside for claims that have yet to be filed and the amount set aside for potentially costly catastrophic claims.)

So "PEBP knew ...that there was going to be a reserve" because of lower-than-expected claims during the 2011 legislature, at the same time he and PEBP staff were presenting the new plan design to the legislature as necessary “to urge on participants to regard more critically about the need for medical treatment". Indeed, Wells himself told the legislature in early 2011 that without the plan switch, the program would run deeply into the red.

Jim Wells, executive director of the Public Employees' Benefits Program, said maintaining the status quo and subsidies paid by the state would have left an $85 million shortfall.

Yet even after all this, he told the Rebel Yell that while he will recommend no increase in participant premiums for the next year, the Board may still want to increase premiums at its March meeting to avoid steeper increases in future years. (Of course, PEBPs' own January 2012 fiscal report says just the opposite, that "reserves in excess of the required reserve levels will be used to reduce premiums and contributions during future plan years" (p. 3)).

This same report, on the next page, shows PEBP's history of carrying excess reserves; in every year since 2004, the plan has carried excess reserves of at least $20m per year with excess reserves over $40m per year in six of those years. And the projected reserve for the current fiscal year is even larger than the actual reserve for 2010-2011.

Yet, without explanation, PEBP reports it intends to hold $0 excess reserve in the coming year, 2012-2013, even though it will get a big jump of 14% in the employer's share (the larger share) of premiums for that year. That increase, by the way, which will represent a hit of over $3m for UNLV and at least $7m for NSHE, is money that will have to come from our operating budgets and be diverted from academic uses. So this is an issue that impacts the students quite directly, too.

PEBP has, in the words of a great American economist, "some splainin' to do " at its next board meeting, Wednesday March 14 at 9am, about how it intends to spend that reserve down to 0. One obvious solution is to restore an option for the status quo ante by putting in place for 2012-2013 an affordable "middle-tier" option, between the HMO and the catastrophic-only coverage model, which the Board rejected at its last meeting.

Another is to refund that money by instituting a premium holiday for both employer and employee, as it has done in the past, which would help cushion the blow for faculty and staff and help NSHE (and all other state agencies) both pay for gap coverage for its staff and restore services to the public that have been cut so deeply.

Faculty, staff and administration at Truckee Meadows Community College have a busy spring ahead.

First, faculty and representatives of the administration are preparing to renegotiate the collective bargaining contract, which was last negotiated the spring of 2008. The contract covers a wide range of work-related and academic issues, clarifying the process by which the TMCC administration and faculty conduct business and themselves. The contract provides stability and protection, while fostering a collective sense that both entities have a stake in the institution. 

TMCC is the only community college in Nevada with collective bargaining. It is anticipated that the renegotiation will be completed before the end of the academic year, and that the TMCC NFA membership and the NFA state board will ratify it soon after.

At the same time, the college is engaged in a five-year Major Gifts Campaign seeking much needed funds for equipment, scholarships and current programs. Paula Lee Hobson, TMCC foundation director, reports that the campaign is ahead of schedule, having received $4.7 million in cash and pledges to date. Additional proposals, either pending or in development, push this figure to $10.8 million.

Also, TMCC recently received notification that the Neil J. Redfield, EL Cord and Dorothy Towne foundation has voted to make a $200,000 gift to the institution. This significant gift will be used to fund scholarships, purchase equipment and to support professional development.

During the current funding crisis in Nevada, it is extremely important to note the contributions and effort put forth by education advocates within our community and within the institution. Because of their efforts and monetary gifts, students are able to find classes and adequately equipped programs that very likely would not be available otherwise.

Faculty, staff, and students at TMCC are coping with furlough days, increased workloads and classes that are increasingly difficult to register for. Given the sluggish economy in Nevada, and the apparent disregard for an adequately funded system of higher education, faculty, staff and students feel increasingly pessimistic about the future.

Nevada public service workers statewide have suffered from a big cut to public employees' health care benefits, made in July 2011. The new Public Employees' Benefits Program (PEBP) plan has such a high deductible that it covers only major medical problems.

Faculty and staff across the Nevada System of Higher Education have complained about it. Campus administrations have expressed sympathy and support for doing something about it, and nearly a year and a half ago the Chancellor appointed a PEBP Benefits Task Force with three charges: seek immediate improvements in customer service from PEBP, research if NSHE could leave PEBP altogether and establish its own self-funded pool, and determine whether, in the meantime, NSHE can offer gap coverage as a supplemental benefit to its employees.

At each of the last three Board of Regents meetings, as well as at various public events in the fall of 2011, individual regents and the board have heard an earful from faculty and staff of UNLV and other NSHE institutions.

At UNLV, the chair of the Administrative Faculty committee (and an active NFA member), Shaun Franklin-Sewell, assisted in developing and implementing a survey to document faculty and staff concerns and especially those who have declined coverage or bypassed prescribed treatments for reasons of cost. This survey was reported to the board in December and will be followed up this spring by an NSHE-wide survey.

At a Jan. 24 meeting of the UNLV Faculty Senate, and again at the Jan. 30 UNLV Town Hall, I (John Farley, president of the UNLV chapter of NFA) asked UNLV President Neal Smatresk a pointed question. We have heard the concerns of the faculty and staff, the Regents have expressed sympathy and a desire to act, and the NSHE Task Force is charged with developing a proposal for gap coverage as a supplemental benefit. So, when can we expect the topic of supplemental coverage to be put to the Board of Regents for action?

The UNLV NFA chapter urges the Board to put this item of gap coverage as a supplement to PEBP for 2012-2013 on its March agenda.

Statistics are valuable tools used by scientists, economists and businessmen, among others. These groups use data to clarify and reveal trends and standings, to make projections, to measure how efficient or how far off the norm a certain parameter is. Thus, a practitioner is able to state pretty accurately whether his or her research interest is near the mean, achieves a certain percentile or is within variance of the top as compared to other similar parameters. When used appropriately, statistical values provide a clearer more concise understanding. That has value.

A problem with statistics, however, is the misuse of them for political purposes. Those bent on political persuasion too often selectively lift statistics out of context in order to serve their argument. This effectively clouds rather than clarifies, and of course, that is the intent of the misuse. That’s the first rub.

The second rub is that statistics tend to sanitize situations. Figures cannot accurately represent situations as felt by the parties they represent. They are bombs released at 30,000 feet that do not accurately portray the situation on the ground.

Therefore, whenever statistics concerning the status of Nevada’s colleges and universities are used, particularly where funding is ranked against other systems around the country, I am reminded that the real story is likely not being represented clearly, or understood accurately.

Statistics aside, here is what is really going on in the Nevada System of Higher Education today:

Virtually every faculty member who has relocated to Nevada in the past 10 years has a home mortgage that is underwater. These junior faculty represent the future of higher education in Nevada. They are caught in a no-win situation of diminished salaries, a bankrupted health care plan and a state government that doesn’t care that they are forced to moonlight in second jobs or use personal savings to get by each month. By comparison, and equally disturbing, senior faculty are calculating to the month when they can escape through retirement. We see recently retired colleagues, many of who gave their entire professional lives to Nevada, being forced to shop through outsourced health plans that are inadequate or disingenuous in their benefits. Our administrators are exhausted and burning out, because they have been forced to assume responsibility for two and three administrative positions that they know they cannot manage adequately. Our institutional presidents are harried by the fact they are cutting worthwhile programs, classes and staff to meet diminishing budgets, and we have a chancellor who is awake at night trying to plan for a downsized NSHE, when in fact he knows he should be enhancing NSHE to meet the demand in the years ahead. Finally we have students who are justifiably frustrated because their career choices, supporting programs and classes are gone, likely never to return. The question for them is whether to stay and attempt to be a contributing member of Nevada’s workforce, or leave the state for good.

Statistics that are deployed to mask this state of affairs serve no meaningful purpose, nor do they reflect the reality in our classrooms, on our campuses and in our System office.

It took a generation to create a fine system of higher education in Nevada and two bienniums to degrade it by a third. Without a viable and adequately funded system of higher education, a diversified economy is absolutely not going to happen in our state. No statistics are needed to support these two facts.

At almost the same time that University of Nevada, Las Vegas, faculty and staff were asking, repeatedly, at today's town hall meeting in Las Vegas if the Board of Regents would be taking up the prospect of a supplemental benefit for Nevada System for Higher Education faculty and staff to offset the woefully inadequate coverage offered under the current Public Employees' Benefits Program, the executive director of PEBP was telling an interim legislative committee in Carson City that it has accrued a breathtaking $43 million reserve.

This is deeply distressing news, particularly in light of the impact that the shift to a choice of either high-deductible catastrophic-only coverage or high-premium HMO coverage has had on NSHE faculty and staff. A survey of UNLV faculty and staff conducted in November found the changes have led to a marked increase in UNLV staff either declining coverage outright, delaying care or skipping needed medications (especially among those making less than $50,000 per year, which is over half the campus workforce).

What is particularly galling about the news of the surplus is that the PEBP staff's own report to the Board prepared for the most recent Board meeting in January, attributed over half of the reserve ($23.5 million) to "[d]ecreased self-funded claims expenses" (p. 109) – this despite repeated claims made by the Board and staff in 2010, when they proposed converting the PPO to a high-deductible/ catastrophic-only model of "participant over-utilization." Equally galling is that most of the rest of the reserve is attributed to a claim of $20.5 million in "[h]igher beginning cash" at the start of the plan year, last July 1. (Another $5.3 million of the surplus is attributed to "[i]ncreases to HMO premiums.")

This means that the overcharging of participants clearly pre-dates the beginning of the new plan design, since PEBP was already running a hefty reserve in fiscal year 2011, precisely at the time the claims of "participant over-utilization" were being repeatedly raised at Board meetings.

PEBP is now sitting on a reserve that has accrued almost $1,200 per insured state worker in the last six months – a time during which treatments have been skipped and a record number of employees have dropped off the plan. (This also puts the state in jeopardy of running afoul of new federal requirements, to take effect in 2014, that all individuals must be insured.) Keep in mind that the employer contribution for each employee will actually increase in fiscal year 2013, so that the supposed good news of stable premiums for participants that the PEBP board will consider at its March meeting means PEBP would still be increasing its revenue next year while continuing to offer sub-standard health coverage.

Finally, as for the PEBP staff's assertion at the hearing that the reduction in benefits paid is a consequence of "sheer luck" and that insurance claims in the latter part of the current plan year will reduce reserves, this raises a puzzling question: Who performs the actuarial work there? After all, PEBP and PEBP alone has the full data on its participants' past utilization experience, and PEBP and PEBP alone designed the current plan. If their economic models in fact projected that claims would be lower in the first six months of plan year 2012, then why did they not project this hefty surplus? And if they are in fact running significantly ahead of their own expectations for cash on hand, then why in the world does a nonprofit, self-insured plan not adjust the rates accordingly and give not only participants but also the state a break on premiums for next year?

Or, of course, go back to offering decent medical coverage that we public service workers have been paying for, but clearly not receiving.

President Obama in his State of the Union tonight "put colleges and universities on notice" about rising tuition, proposing to cap federal financial aid eligibility for students at institutions which increase tuition.

While this sort of cost control measure clearly has populist appeal, keep in mind that the same approach to capping Medicare reimbursement rates, which is part of federal budget law, is annually circumvented through the so-called "doc fix" precisely because medical providers are in a position to decline Medicare patients if the reimbursement rates are below the cost of providing care.  

The President is right to call for greater access to affordable, quality public higher education. But it would appear from the President's rhetoric tonight that he does not believe the actual cost of providing education at many institutions is rising, only the price charged students. If there are institutions where that is the case, his approach seems sound and salutory.

But as is abundantly clear  from the recently published 2011 College Board report on Trends in College Pricing especially the section on "Institutional Revenues -- Public Appropriations", the most significant driver for increases in student tuition at public colleges and universities, not just since 2007 but going back to at least 1998, is declining public support, while the cost of delivering education has risen below the rate of inflation. (Since 2004, the report shows, 4-year public colleges and universities have seem a reduction nationally of about 5% in state and local support, while the national average for increases in student fees over that same period is only 4%).

 

Thus, the increases in student tuition are not a reason, as the President proposed, for reducing the amount of "public taxpayer dollars" invested in higher education -- but the result of already reduced public investment. 

The case of Nevada is telling. According to the same College Board report, as reported in the SF Chronicle and elsewhere, NSHE institutions charged as of 2010-2011 the lowest tuition in the country in their categories, with University of Nevada, Reno, identified as the least expensive public 4-year university in the nation (for in-state fees). The cost of a 4-year degree at UNR, with UNLV only marginally higher, is only a fraction -- as little as 1/10th of some private institutions that were singled out for praise for cutting tuition and about 1/4th of the amounts charged by the University of California system.

The significant increases in-state fees imposed at UNLV, UNR and other NSHE campuses  over the past four years have been entirely in response to the over $200 million in state support cut from higher education in Nevada in that period.

 

So while the President's proposal to cap financial aid in response to tuition increases may have merit, keep in mind that it will apply primarily to those colleges and universities whose high costs result in their students becoming eligible for federal aid, either in Pell Grants or subsidized loans. Nevada's in-state students qualify in much lower numbers than students in other states for Pell Grants and incur significantly less indebtedness due primarily to our low in-state tuition (even after the sharp increases of the past few years). So that this proposed cap would not actually apply to most Nevada students, because students at Nevada's public colleges and universities generally qualify in lesser numbers and for lesser amounts of federal aid due to our comparatively low in-state fees.

 

The more direct way to keep college affordable is, as he put it in the prior line of his speech, for states to restore the massive amount cut from public higher education allocations in the past few years. 

 

Another would be to revive an idea that only four years ago was supported by most Democratic candidates for President and a majority of 2008 primary voters, making community colleges and public colleges cost-free for all qualified students. Long before he became a national laughingstock for his personal failures, John Edwards proposed a policy of "College for Everyone" that would have given every qualified student aid for full in-state tuition through a combination of direct aid, work-study and direct loans repaid based upon a proportion of future income. While that proposal did nothing to address costs, it did not need to -- because the cost of delivering education is not what is making college unaffordable, especially in Nevada. Declining public support for our colleges and universities is.

(As for the case made by Richard Vetter that colleges and universities spend far too much on non-educational expenses (a case he will make this morning on KNPR), he may or may not be right depending on whether students consider those expenses necessary for their college experience. But either way, as Professor Vetter has acknowleged, those costs are borne on most campuses -- and certainly at UNLV this is true -- by student fees and are funded neither by instructional fees (commonly referred to as "in-state tuition") or by state general fund appropriations. Effectively, students make -- individually and collectively through their student government -- market decisions to pay for those services, and while students could reduce their cost by not paying those fees, those fees have nothing to do with the cost of delivering education and therefore do not reflect any sort of inflation. They simply reflect rising student expectations for services, just as most of us expect more health care services than our parents or their parents did.)

Another way the state of Nevada could cut in-state fees is to reduce state subsidy for out-of-state students who attend NSHE institutions on exchange scholarships, which allow students from California and other neighboring states to enroll for 150% of in-state fees, less than half of regular non-resident tuition. Currently there are more than 1800 such students enrolled at UNR (about 1/8th of their undergraduate student body) and another few hundred at UNLV (about 2% of UNLV's student body). The current discussion concerning a new funding formula for higher education in Nevada is a good occasion to address this problem.

So yes college is getting more and more expensive in Nevada, and that is something the President and our state government ought to stop and reverse. But blaming colleges and universities that have done more with less for years is neither economically sound nor going to solve the problem.

 

The Nevada Faculty Alliance is pleased and honored to announce that our integrated print and electronic communications program has been recognized by the AAUP Assembly of State Conferences.

The ASC granted the NFA its "Print and Electronic Communications Award" for 2011, in recognition of our "outstanding tabloid-style newsletter" and our "highly professional" electronic update and website.

During 2011, not only did the NFA create a new website with a new news blog as well as a Twitter feed and active Facebook page, and introduce a weekly electronic newsletter, but it also streamlined the editorial and production process of The Alliance print newspaper and integrated its editorial content onto the website and newsletter while also updating the design and layout of the print version. In 2012, the NFA is working to further enhance the value of these important assets for members.

We are gratified by this national recognition of our hard work.