by Sandra Cosgrove
College of Southern Nevada

On Feb. 23 the joint Assembly Ways and Means and Senate Finance Committee listened to a report by PEBP Executive Officer Jim Wells on proposed changes to the Public Employees Benefits Program. These are the changes we in NFA have been following since July, 2010. Three legislators specifically asked very probing questions regarding the impact these changes will have on participants. Senator Mo Denis, Assemblyman Marcus Conklin and Assemblyman Paul Aizley asked questions that indicate their serious unease with the proposed changes. Issues raised included:

1.  Why is the state shifting healthcare costs to individual PEBP participants when the state agreed to pay these costs when participants were hired?

2.  Why are public employees being subjected to pay reductions and substantial increases in healthcare costs?  This seems to be a disproportionate level of sacrifice to be asked of one group of Nevadans.

3.  Will these disproportionate sacrifices drive lower income state workers on to the welfare rolls?

4.  Will these higher healthcare costs keep participants from going to the doctor and will this reluctance cause disease to go undiscovered until treatment options are very expensive?

5.  Do higher utilization costs discriminate against participants with health issues?

6.  Will healthy participants leave the program and opt to buy better private insurance?

7.  Is there any guarantee that HSA and HRA monies rolled over from year to year won’t be taken back at some future date?

NFA Lobbyist Jim Richardson spoke about the impact on NSHE faculty and staff and asked the Committee to please consider adding more money to the PEBP budget. He reiterated the fear that low income employees will not be able to afford even basic healthcare for themselves and their families.

An AFSCME representative asked if healthcare providers will be required to provide price information to PEBP participants to allow them to really make consumer-driven choices. If we are expected to change our behavior based on knowing how much healthcare costs, then we need the actual dollar amounts charged for services.  

Due to the many questions asked, the committee actually had to roll over the presentations scheduled after the PEBP report.

This week two key legislative committees heard testimony on the importance of higher education to Nevada's economic recovery.

In testimony yesterday (Wedesday February 16) to the Senate Select Committee on Employment and Economic Growth, UNLV Professor Robert Lang, director of the Brookings Mountain West Institute spoke about the role of higher education in fostering economic development. Among many important points, he said something in passing that is worth repeating. Although Nevada has a larger population than Utah, Utah has twice the number of faculty at public universities than Nevada. (In addition, of course, Utah has a large faculty at Brigham Young University).

This means that Nevada has many fewer experts contributing to the development of intellectual property than does Utah (and many other states). This also means we have many fewer upper division and graduate level classes in various areas to offer our students, and thus, our state produces fewer highly trained workers.

Our state’s failure to invest in higher education, even compared to other regional competitors such as Utah, has had negative implications for economic development in Nevada.

Also on Wednesday, a joint meeting of the Senate and Assembly Education committees heard testimony on the Millenium Scholarship program from NSHE Chancellor Dan Klaich, who also responded to questions about the prospect of a declaration of financial exigency at UNLV.

Moreover, the joint committees heard an excellent, detailed presentation from NSHE student leaders, led by Kyle George, President of UNLV Graduate & Professional Student Association. The presentation is available on the NFA website. Click here to read it.

Last Thursday, Feb. 3, the Chancellor and NSHE presidents addressed the Regents about the devastating impact of the proposed 29-percent cut to NSHE state support, on top of the more than 20 percent which has been cut in the past three years. It became quickly clear that this sustained reduction in state investment in higher education will irreversibly cut off educational opportunities for many families in this state, which already suffers from the lowest rate of college participation in the country. Let’s hope Carson City is paying attention.

Much of the meeting was devoted to deeply depressing discussions, which focused on an almost inevitable across-the-board pay cut for all faculty and staff, significant fee increases for students. There were also far too many mentions of the need to prepare for faculty layoffs; eliminations of degree programs, academic departments and even whole colleges through a declaration of financial exigency; and/or program review (on which we have written in the past and will, unfortunately, likely have more to say in future reports).

Anyone who had not gotten the message previously was put on notice: The situation of higher education in this state is dire.There were also some important aspects that were, while not good news, at least reassuring.

First, on the pay-cut issue, the Chancellor promptly and correctly pointed out that the change to the Code concerning pay cuts, as negotiated with faculty leadership last spring, does not allow the Board to act unless the legislature acts first. In other words, when one institution president proposed a 6-percent pay cut, the Chancellor pointed out that the Governor's proposal to the legislature is for a 5-percent pay cut. If that is enacted, the Board could only pass through that cut, not a deeper one, without declaring exigency. This significant compromise, we believe, illustrates the true principle of shared sacrifice, as faculty and staff have been and will continue to do more work for less compensation.

Secondly, the Chancellor pointed out, there are some good things in the Governor's budget for higher ed, including local government support from property tax revenues (which in the long term are likely to increase) and greater Board budgetary autonomy. The problem, of course, is the perception that this autonomy in and of itself will allow the Board to fill the budget hole. Regent Kevin Page quickly laid that misperception to rest, telling the campus presidents not to consider it realistic to present any plans that would fill the budget gap entirely on the backs of students or on the backs of faculty.

Most importantly almost all the presidents, especially UNLV President Smatresk and UNR President Milt Glick, focused on the risk to the state of loss of faculty. Regents demonstrated they understood the seriousness of what is being proposed for not only higher ed but also the state. In particular, Regent Wixom pointed out what bad business it is for the state to put itself at such risk to lose faculty whose grants and contracts represent not hypothetical business development but "real dollars in real time that will be leaving the state." He also pointed out that it is bad financial practice to monetize a business's essential capital to fund operations. This is just what the state is proposing to do when it considers cutting higher education, and with it our key instrument of human capital development, in order to fund operations that, if the state were considered a business, would be secondary support areas.

Institutional presidents were instructed to prepare more detailed budget plans on how they will implement cuts of this magnitude – on top of the cuts already taken over the past three years. Those reports, presumably, will be given at the next regularly scheduled Regents meeting, March 10-11, in Carson City.
 
The meeting closed with Regent Chair James Dean Leavitt forcefully calling for more tax revenue. He said that only with more revenues can the dire problems facing NSHE institutions be dealt with.

This week saw the beginning of the 120-day legislative session that will make or break higher ed in Nevada. The budget submitted by the governor would devastate NSHE institutions, forcing the closure of many programs, even possibly some campuses and colleges within campuses. It would also result in terminations for many faculty and staff, as well as the loss of educational opportunities for Nevada citizens. And the irony of the governor calling for more contribution from higher ed to economic diversification, while proposing a 29-percent cut in General Fund support, has not been lost on anyone, except, apparently, the governor.

Other representatives from NFA's Government Relations team and I will be in Carson City nearly every day of the session, attempting to meet the many new legislators and educate them on the issues facing NSHE because of the proposed budget. Indeed, I have already been doing so, mostly via email, but also was in Carson City three days recently during the budget preview to the money committees.

Two NSHE budget hearings have already been set. They will be March 3rd and March 22nd, both in the morning, probably starting at 8 a.m., and they should be available online. The two hearings will be joint meetings of the two education subcommittees that have been established by Senate Finance and Assembly Ways and Means.

Members of the two subcommittees include, for Senate Finance, Steven Horsford, chair, Mo Denis, Barbara Cegavske and Ben Kieckhefer; and for Ways and Means, Debbie Smith, Chair, Markus Conklin, John Oceguera, April Mastroluca, Paul Aizley, Tom Grady and Pay Hickey. These thirteen people will be crucial to decisions made about higher ed funding this session. They need to hear our voices, and the voices of our students.

NFA will be working with the NSHE lobby team, focusing most attention on the very problematic budget proposals from the governor. I will also be attending to issues concerning our health insurance and the PEBP program, which is also in great difficulty concerning funding as well. As your lobbyist, I will be alert to any other issues that arise which might affect higher education in Nevada and NSHE faculty.

NFA’s Alliance newspaper is coming out this week, and it will be of value in informing people throughout the State about the very serious problems posed by the budget proposals. (The Alliance is distributed to all faculty, and also to all politicians and journalists who cover the Legislature.) Please read the budget-related stories carefully, so you are fully informed. As noted in last week's Alliance Update, we have developed some new methods for circulating information quickly online; this report is but one example. Please make use of them.

At various points during the legislative session NFA will be calling on its members and others to communicate to key legislators. We will be furnishing information about how to do that effectively and efficiently. Please attend to these calls for your participation, and help us make progress during what will be a very trying session.

The Nevada Faculty Alliance calls on all faculty, staff, students, alumni and Nevadans who value our future to express their opposition to the proposal in Governor Sandoval's Executive Budget, which would decimate NSHE institutions and severely limit educational opportunities for Nevadans. Read the following summary by Jim Richardson, join the NFA and take action!

" Chancellor Klaich told the joint budget subcommittee of the state Legislative Commission.

• 1.      The total drop in state support by FY2013 is $162.4 million from FY2011 levels
• 2.      State support would drop by FY 2013 close to levels last seen in FY2003
• 3.      This represents a 29.1% drop in state support for NSHE institution over the current year’s funding (FY2011)
• 4.      The drop in state support from FY2009 to FY2013 is 36.6%
• 5.      The budget includes an across the board pay cut of 5% for all employees, which will replace the current furlough policy.
• 6.      Funding that would come to NSHE includes $121 million of from local governments in Clark and Washoe, a new and controversial concept
• 7.      The Governor stated that the regents can raise tuition and fees to help fill the gap, even though they have increased dramatically in recent year (49% for university undergrads since 2006-07 and 60% for grad students; 43% for NSC and 32% for community colleges).
• 8.      The proportion of the State General fund, which was traditionally about 18-19% drops to about 11.65%, and is 13.76% for FY 2013 if the new property tax revenues are included.

Probable impacts of the budget proposal

• 1.      Hundreds of employees would lose their jobs, and those remaining would have a pay cut. (If the budget hole were filled only by terminations this would mean about 1,850 lay-offs.)
• 2.      Tuition could increase dramatically (a 73% increase would be required to replace the $162 million, and even that assumes all current students would continue to enroll.)
• 3.      Many needy students would not be able to afford a college education, meaning that many students will simply be left behind.
• 4.      More programs would be cut (24 programs were cut this biennium already), probably some colleges would disappear, and perhaps some campus and institutions would be mothballed, severely limiting educational opportunities for Nevadans.
• 5.      Many students would be stranded without a degree as their programs are canceled.
• 6.      More of the fine faculty members recruited in recent years will leave and accept jobs in other states.
• 7.      NSHE direct contributions to the economy (see related story p. ___) would be seriously curtailed.

Chancellor Klaich commented, "We can raise tuition but we can't forget that we have very low financial aid in this state.  If we raise fees by a significant amount without addressing financial aid, we will leave many Nevadans behind.  Not only is this simply wrong, in the long run it is a very costly strategy for the state."

"We take our role in diversifying the economy of this state very seriously, and these cuts will make it more difficult to discharge that mission...If we sustain cuts of this magnitude, the NSHE will be a fundamentally different organization.  We cannot maintain serving the number of students which we currently do at these reduced levels of funding - and that is a tragedy."

Other bad news in the Governor's budget proposal

• 1.      Cost of health insurance will increase, and there will be significant benefit cuts
• 2.      Subsidies for health insurance for retirees would be phased out for current employees, and there would be no subsidies in retirement for employees hired after July 1, 2011.
• 3.      Part-time employees who are greater than 50% and less than 75% would only be subsidized at 60% of the level used for full-time employee.

Reactions

Democratic legislative leaders have taken strong umbrage to the Executive Budget, especially the cuts to K-12 and higher education, as expressed in news articles, Town Hall meetings, and other ways. Senate Majority Leader and Chair of Senate Finance Steven Horsford and Speaker of the Assembly John Oceguera have issued statements expressing concern about the size of cuts to education, as has Debbie Smith, Chair of the Ways and Means Committee.

Most Republican legislators have so far remained relatively silent, although some of indicated previously that more revenue might be needed to sustain essential state services.

Regent Chair James Dean Leavitt has also criticized the budget proposals, and has called for more revenues to fund education, as has Regent Mark Alden and several NSHE presidents. Regent Leavitt in the RJ story said the proposed budget "is absolutely outrageous and will result in cataclysmic changes to the Nevada System of Higher Education."Leavitt added, “It was not fair that higher education should get the steepest cuts.”

Chancellor Klaich made a spirited defense of NSHE and carefully explained the potential impacts of proposed cuts of the magnitude being proposed in his presentation on January 27 to the two money committees meeting jointly as a subcommittee of the Legislative Commission.

Scott Huber, President of the Nevada Faculty Alliance said, “If this budget is approved it will mean the end of higher education in Nevada as we know it. Many students will have their educations terminated, and their career paths dramatically altered. And Nevada will be the worse for it, as efforts to diversify the economy are derailed.”