Last week, Governor Brian Sandoval delivered his annual State of the State address and reaffirmed his commitment to education. He presented his Executive Budget that calls for an increased investment in Nevada's public colleges and universities. While our staff is still going through several hundred lines of detail and calculations, I wanted to share with you an overview of the higher education budget recommendations.

Operating Budget

1) Restore Professional/ Classified Salary Furlough Savings - Similar to all state employees, the Governor has recommended eliminating the furlough program and restoring NSHE professional and classified salaries.  This restores approximately 2.3% to the salaries of our non-grant funded full time employees.
 

2) Professional Merit/ Classified Merit-based Step Increases and Longevity - Similar to all state classified employees, the Governor has recommended funding for merit based step increases for NSHE classified employees.  This is an important program that directly impacts many of the lowest paid NSHE employees.

The Executive Budget recommendation did not contain funding for professional merit.  This is an item that is of critical importance to faculty, both from a standpoint of morale and institutional recruiting and retention efforts.  We will continue to make it a priority during the Legislative Session. 

Likewise, the Executive Budget did not include funding for the Longevity Payment program, which provides semi-annual bonus payments to classified staff based on length of service. 
 

3) Formula Funding - Governor Sandoval supported the new NSHE funding formula by continuing to use the revised performance and success model that he first employed in his 2013 Executive Budget recommendation as enacted by the 2013 Legislature.  There are a few important points to bring to your attention:

•  Caseload Growth - NSHE, as a System, produced 86,001 more weighted student credit hours (WSCH) in FY 14, which was the caseload base year for next biennium, over FY 12, which funding for the current biennium was calculated on.  This generated $24.33 million additional funding for NSHE next biennium in the Executive Budget. 

•  Elimination of one-time mitigation (bridge) funds from GBC and WNC - As directed by the 2013 Legislature in its closing actions, the Governor recommends removal of the one-time mitigation (bridge) funds from the small community colleges.  This removes $2.96 million from GBC and $2.30 million from WNC in both FY 16 and FY 17, when compared to FY 15 funding levels of each institution.  These funds are critical to the viability of GBC and WNC as they adjust their budget and growth strategies to the new funding formula.  Securing legislative support for the colleges will be a high priority during the legislative session.
   
• Elimination of F's for non-attendance - Also as directed by the 2013 Legislature and consistent with the NSHE budget request, the Executive Budget removes F's for non-attendance from the WSCH calculation.
   
• DRI formula - While separate from the WSCH formula for the instructional budgets, the DRI formula budget, which is based on a sliding scale calculation determined by the amount of grant activity, was implemented by the Governor this biennium.  It resulted in a decrease in funding for DRI of $975,000 in FY 16 and $1.07 million in FY 17, when compared to FY 15.  As with the small community colleges, this bridge funding is critical to DRI as we implement the new formula and will be a high priority during the legislative session.
   
• Performance Funding Pool - Consistent with the recommendations of the Interim Formula Funding Committee as well as the action of the Board of Regents in December 2014, the Governor has recommended continuation of the Performance Pool program.  This carve-out of general fund dollars from the instructional formula budgets of 10% in FY 16 ($40.6 million Systemwide) and 15% in FY 17 ($60.9 million Systemwide) will be held in a separate budget account which can be earned back.             

Enhancements

Although not all enhancement requests proposed by the Regents are included for funding in the Executive Budget, Governor Sandoval recommended a number of enhancements to the NSHE budgets:

1) Public Medical Education - In his Executive Budget, the Governor strongly indicated his support for the creation and funding of a full allopathic medical school at UNLV.  The Governor also recommended $1.49 million in operating funding in the 2nd year of the biennium for the UNSOM partnership with Renown, as well as $240,000 in funding in both years for Project ECHO, a telemedicine initiative of UNSOM.  One time funding of $575,000 for Project ECHO equipment and other medical education video equipment was included in the recommendation as well.  The Governor did not include funding to NSHE for Graduate Medical Education expansion.  (However, please see below under "Non-NSHE Budget Items.")
 

2) Boyd School of Law Shortfall - The Executive Budget also contains a recommendation of $1.5 million/year to partially address revenue shortfalls due to enrollment declines.  This is consistent with the Board of Regents' request. 
 

3) Unfunded Enhancements - The following major enhancements were requested by the Board, but were not part of the Executive Budget:

1. Increase in the dollar amount per WSCH
2. Bridge funding for GBC, WNC, and DRI    

Working with the Legislature, it remains a high priority of the Board and the Board's officers to advocate aggressively for funding of these two priorities during the session.

Capital Improvement Program

The Governor recommended two items for NSHE in the 2015 Capital Improvement Program.

1) Hotel College Academic Building - The Governor has recommended a total of $24.65 million in funding, primarily from bond proceeds, to fund approximately one half of the estimated cost to complete construction of the Hotel College Academic Building on the UNLV campus.  The remaining one half of the cost of construction is an institutional match to be provided by UNLV.  Furnishings, fixtures, and equipment would then be funded in the 2017 CIP.
 

2) HECC/SHECC - The Governor has recommended continuation of the $15 million/biennium allocation from slot tax funds to NSHE deferred maintenance, as requested by the Board.  

Non-NSHE Budget Items

 While not part of the NSHE budget, there were other items in the Executive Budget that I wanted to call to your attention.
 

1) Knowledge Fund - The Executive Budget contained $10 million in funding to the Governor's Office of Economic Development for continuation of the Knowledge Fund.  Importantly, this appropriation is now contained in the base budget of GOED, which gives us reason to believe it will continue into the future at this appropriation level.  Our research institutions are able to plan projects with a longer timeline for implementation as a result of this budgeting.  We look forward to continuing our partnership with GOED in this area.

2) STEM Workforce Challenge Grant - The Executive Budget funds the office of Science, Innovation and Technology within the Governor's office and allocates $1.5 million per year of the biennium for the STEM Challenge Grant.  You will recall that this is a proposal advanced by NSHE during the deliberations of the SB 391 committee and based on the research and work of Brookings and Brookings Mountain West.  Among the beneficiaries of this grant are our institutions.

3) Graduate Medical Education Expansion - The Governor's recommendation included $10 million in support of the recommendations made by the Blue Ribbon Task Force that he appointed to expand medical residencies and fellowships.  Both UNR and UNLV were represented on that Committee and while these funds will not be flowing directly to either of the NSHE medical schools, we will be actively engaged in community partnerships supported with this funding and expect that NSHE residencies and fellowships will be strong candidates for funding under this new program.

4) College and Career Readiness Grants - $8.0 million has been recommended for appropriation to the Nevada Department of Education for these grants.  We expect the grants to support a variety of partnerships between K-12 and higher education that are geared to enhance the quality and quantity of our student pipeline.
 

5) Teacher Preparation and Professional Development - This is another recommended appropriation that will flow to the Nevada Department of Education but which we believe will support our teacher education programs throughout the system.  This is another example of the emphasis in the Executive Budget on education, and in particular, education as a continuum.

Our biennial budget is now in the hands of the Nevada Legislature, which convenes its session on February 2.  I will continue to keep you apprised of developments as this process progresses.