NSHE Funding Formula 1. Preliminary Recommendations of the Consultant
Part 1 of a series analyzing proposals for modifying the legislative funding formula for NSHE colleges and universities. These articles delve into various proposals the Committee will consider on May 30 and finalize on July 25. The NFA state board issued a set of fundamental Principles for Funding of Higher Education.
The NSHE Ad Hoc Committee on Higher Education Funding is working toward recommendations on changes to the funding formula for the seven NSHE colleges and universities. At the April 26th meeting, consultants from HCM Strategists presented their preliminary recommendations for feedback from the committee. The HCM recommendations were based in part on recommendations submitted by the seven presidents and on interviews with committee members and a few other stakeholders, but also represent HCM's view of best practices.
The NFA is actively engaging with the committee, with little other faculty input so far in public comment periods. The NFA state board provided a set of Principles for Funding of Higher Education to committee members, and we have provided background data and analyses on how the current formula has affected funding and how it has been implemented in the state budgeting process. Committee members have taken note of our information during the meetings.
The Committee has just two more meetings, on May 30 and July 25, to finalize its recommendations.
Here we present an outline of the main HCM recommendations as presented on April 26. Future posts will analyze some of the consequences if the recommendations are adopted.
HCM Recommendation 1:
Create a separate enrollment-based portion of the formula that uses both full-time equivalent FTE and headcount enrollment and incorporates weights for Pell recipients and underrepresented minorities (URM)
HCM Recommendation 2:
Modify the resident Weighted Student Credit Hours calculations:
- Include headcount enrollment with adjustments for student attributes
- Review nursing program costs in light of state needs and goals
- Include all summer course credit hours in WSCH
- Do a 3-year average for WSCH to avoid odd incentives of “every other year” counting for the year of measure.
HCM Recommendation 3:
- Include all WSCH in the formula regardless of term (i.e., including summer) to remove the disincentive to offer summer courses. NSHE could request a budget enhancement but should pursue this policy with or without new funding.
HCM Recommendation 4:
Performance Pool changes. The current Performance Pool is a 20% carve-out from base funding that is at risk if an institution does not meet performance targets, but has rarely resulted in funding being jeapardized.
- (HCM preferred option 1) Performance Pool should incorporate or be based on share of outcomes or relative growth.
HCM-recommended Relative Growth Model: A certain percentage of the total funding (20% in the HCM example) is carved out as a performance pool and earned back based on “relative growth” or how much an institution has changed from its own baseline on a percentage basis. Institutions with higher relative growth get a larger share of the pool. Institutions with lower growth than other institutions (or negative growth) get a smaller share of the pool.
- (option 2) Modify the existing Performance Pool by re-baselining each institution’s targets each year.
- (option 3) No performance pool or fund with new money only
Other HCM recommendations:
- No new cost study to adjust student credit hour weightings—just modify key areas based on state workforce needs, such as nursing.
- No changes to Performance Pool metrics.
- Do not create separate formulas for different institutions
Committee Discussion on April 26
Some committee members pushed back generally on the idea of redistributing funding with no new funding. For example, the addition of all summer courses to WSCH counts in the formula would dilute the funding value per WSCH and redistribute funds among institutions by up to 0.5% of their total budgets. Chancellor Charlton and Chair Hardesty indicated that the charge of the committee was to recommend changes to the distribution formula, not to recommend additional funding, but there was also discussion that the Board of Regents could make budget enhancement requests to fund any formula changes. Some committee members also objected to HCM’s Relative Growth Model for the Performance Pool because it would be funded out of existing appropriations rather than new money.
NFA Analysis
Every formula change has “winners” and “losers” unless the changes are fully funded and there are hold-harmless provisions for a transition period. A new formula that merely redistributes existing funding will be a failure. Some of the HCM recommendations may have unintended consequences based on current budgeting practices at the various institutions at NSHE (for example, how or whether summer school revenue is shared with departments). NFA will be providing analyses of the consequences of the various funding proposals in forthcoming posts.
We welcome feedback from faculty, especially department chairs and others who manage budgets on the ground. Contacts: Kent Ervin (kent.ervin@nevadafacultyalliance.org), Doug Unger (doug.unger@nevadafacultyalliance.org), Jim New (jim.new@nevadafacultyalliance.org).
Series on the NSHE Funding Formula