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Chancellor Dan Klaich
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Funding Formula Update


Dear Friend of Higher Education:


If there is one thing this economic depression has underscored, it is that there is no room for shortcuts and quick fixes. Everything we do, and I mean everything from deciding which programs we retain to how effective each interaction with our students is, must be reexamined. Where there is room for improvement, we must improve. 


One such legacy whose time has come is the funding formula. I reviewed the need for a new formula and summarized our proposal in my April 25 Chancellor's Report. In a nutshell, we are attempting to shift the funding emphasis from the number of students attending college to the number of students graduating from college. 


We have submitted a proposal to the Legislative Committee to Study the Funding of Higher Education and are anticipating a decision on a new funding formula by the end of August. 


In the meantime, three of our presidents collaborated on a letter of support for the proposed formula that appeared in the July 1 edition of the Las Vegas Review-Journal. I have included the body of that letter below. 


I'd like to thank presidents Bart Patterson, Mike Richards, and Neal Smatresk for their effort and support of a formula proposal that will better align the success of NSHE and our students with those of the State of Nevada and our fellow citizens.  


Dan Klaich
Nevada System of Higher Education

Proposed new funding formula for state colleges a good move

Nevada is at a critical juncture in determining how higher education is funded. In April, the university system presented a significant new funding formula plan to a legislative committee - chaired by state Sen. Steven Horsford, D-Las Vegas - which is tasked with the responsibility to recommend a funding formula for approval by the 2013 Legislature.

While we support the work of the committee and understand that changes may be made to improve the formula, we want be on record supporting the basic approach and objectives of the funding formula plan as submitted by the system.

It is crucial that the state adopt a new funding formula in the next session, and we applaud the creation of the legislative committee and the active involvement of the governor's office. The prior formula (which has not been utilized in the past two sessions) is not easily comprehensible to the public and fails to meet the needs of the state, in particular of the student populations in Southern Nevada at the College of Southern Nevada, Nevada State College and UNLV.

The system plan, which is based on models utilized in other states and guided by the work of the National Governor's Association, is designed to shift away from just encouraging the enrollment of more students, and instead seeks to allocate funding based on a number of concepts that are more entrepreneurial and performance driven. Among the important elements of the plan that we support include the following key points:
  1. Establishing equity in the funding of all institutions by using a common set of metrics based on course completions, with additional funding provided to course completions in upper division, master's and doctoral courses, as well as courses that are generally more expensive to deliver at all institutions, such as the sciences and nursing.  
  2. Allowing institutions to retain the tuition and fees that each generates, rather than having these funds sent back to the state to be redistributed as part of the formula. This helps the institutions by providing resources and incentives to build long-range planning objectives, instead of incentivizing the spending of every last dollar at the end of the budget cycle.  
  3. Encourages mission differentiation between institutions and establishes, for the first time, funding for research to assist the state in its economic development objectives.  
  4. Creates a performance pool that rewards student success, principally in achieving degrees.  
  5. Increases the clarity, simplicity and transparency of higher education funding.
Some have argued that the funding formula should be designed to provide more resources to Southern Nevada. However, the net effect of the proposed plan, if the system is awarded no additional funding in the upcoming legislative session, is to shift more than $13 million to Southern Nevada institutions. All three Southern Nevada institutions benefit significantly from the system plan both in the short run and the long run.

In fact, because of the significant impact on two-year institutions in Northern Nevada from the proposed changes, it will be important for the state to mitigate or phase-in the proposal, or better yet, find additional funds to soften the blow to Northern Nevada.

Apart from the impact geographically, any institution could argue that it deserves more funding, as higher education generally has been underfunded. Universities could argue that they deserve more funding for research initiatives to help diversify the economy, and they would be right. Two-year colleges and the state college could argue that their at-risk student populations deserve more resources to help students obtain the skills they need to meet job demands, and avoid continued pressure on social services, and they would be right.

In a limited-funding climate, however, these types of arguments miss the mark as they are based on a set of value propositions designed to benefit a particular institution or type of institution as opposed to recognizing that state funding of higher education must strike a balance of providing fair resources to all segments of the student populations at our institutions.

Moreover, by seeking to elevate the value of any particular institution's student population, the key elements of fairness and transparency upon which the system's proposal is based are likely to devolve into a chaotic power struggle that is played out every two years in the Legislature - an approach that cannot benefit the students and taxpayers of Nevada.

For these reasons, the presidents of each of the Southern Nevada institutions endorse the key elements of the system's proposal and urge the state to move forward in approving a new funding formula. Nevada has the opportunity to greatly improve the fairness and predictability of funding higher education, and to encourage our institutions to be entrepreneurial and performance driven. This is a rare opportunity that should not be lost.

Michael Richards, Bart Patterson and Neal Smatresk are the presidents of the College of Southern Nevada, Nevada State College and UNLV, respectively.