Elliott Parker

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January 29, 2012
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Is there a north-south funding gap in higher education?

Learn more about: Legislature Legislature: PERS Legislature: Budget

Last week, state Sen. John Lee repeated the charge of bias in higher-education funding in favor of Northern Nevada - particularly that the University of Nevada, Reno, is treated better than the University of Nevada, Las Vegas. Everybody knows that UNR spends more per student than UNLV, right?

Mark Twain once said, "There is something worse than ignorance, and that's knowing what ain't so."

The budget gap between UNR and UNLV may have existed in the past, but not any longer. According to calculations by the Nevada System of Higher Education, UNLV's operating budget is currently $11,790 per student full-time equivalent per year, compared with $10,963 for UNR. At UNR and UNLV, students currently pay about 30 percent of this budget in registration fees, roughly $3,500 per student per year, and out-of-state tuition accounts for another 7 percent. While this seems expensive, the average public four-year institution charges almost $21,000 for out-of-state students, according to a recent Wall Street Journal article, and private schools are much more expensive.

One reason the budget gap is gone is that recent budget cuts to UNLV were cushioned by state legislators, at the expense of other institutions. During the past three fiscal years, UNLV saw its operating budget fall by 9 percent as its SFTE fell by 2 percent, so its budget per SFTE fell by only 7 percent. State general fund support for UNLV dropped by 24 percent per SFTE, but tuition and fees rose to make up most of the difference.

At UNR, in comparison, enrollments grew by 12 percent while the budget was cut by 11 percent, so the budget decreased by a net 21 percent per SFTE. General Fund support fell by 35 percent per SFTE, but as with UNLV, this was partially replaced with higher tuition and fees. At Western Nevada College, meanwhile, state support fell by 25 percent, SFTE fell by 4 percent, and fees increased, so that the budget per SFTE fell by a net 8 percent.

Some claim UNLV is underfunded, and I agree - but if so, every other institution in the state is underfunded even more. Some blame the much-maligned formula, but UNLV is currently funded at 72 percent of formula, while UNR is funded at 66 percent. Other institutions, such as WNC and the College of Southern Nevada, are funded anywhere between 60 and 69 percent of what the formula calls for. Perhaps we should try funding the formula before we try to fix it.

Of course, some find creative ways to create the appearance of a budget gap, comparing apples to oranges for dramatic effect. UNR and UNLV both have combined budgets that go beyond their main campuses. UNLV manages the law and dental schools, while UNR manages the medical school, which has most of its clinical services in Las Vegas. UNR also manages Cooperative Extension, which operates in Clark County and the rest of the state, and the Nevada Agricultural Experiment Station. Throwing these in to the per-student calculation is a bit like comparing the average income of patrons in two restaurants when Sheldon Adelson stops by one for a burger.

The attached chart compares operating budgets for each campus, sorted in order of size. If you combine all operating budgets in your calculation, UNR appears to spend more than UNLV. However, if you consider the main campus budgets, you get a more accurate and very different picture. If you exclude the costs of administration, maintenance and utilities (which UNR pays relatively more for), and consider the budget for actual instruction, the comparison is even more obvious.

UNLV brings in relatively more students from out of state, many of whom study hotel administration. The tuition these students pay is about 12 percent of UNLV's budget, and UNLV wants to keep it. Under the current system, which nobody really likes, the Legislature sets the operating budget for each institution, and then subtracts what students pay in tuition and fees to determine what the state kicks in.

It is an idea worth considering. Incentivizing institutions to find additional revenues makes sense, though there is also a danger that too much incentive could lead the universities to discriminate against in-state students, as state law forbids them paying tuition.

But framing this as a North vs. South issue is simply wrong. If every institution kept their out-of-state tuition while the pie remained fixed, then each would have to take cuts of 7 percent in the rest of their budget. UNLV would be a net beneficiary, increasing its budget by a net 6 percent, though the law and dental schools would lose. It would be a wash for UNR, which gets out-of-state tuition, too, though the medical school would lose. WNC would lose big, however.

Another recent proposal does the opposite, continuing to pool out-of-state tuition but keeping student registration fees on campus. It depends on how you divide up the rest of the pie, but at first glance this benefits the bigger institutions like UNR and UNLV at the expense of the smaller ones like WNC. This is not a North-South conflict.

Another proposal is to split the universities off from the community colleges. It makes sense from a management perspective, especially if the Regents begin to allocate funds based on graduation results, but as long as the budget is a fixed pie it is unlikely to solve the funding problem. Nevada is one of only a handful of states where local governments do not pay a substantial portion of community college budgets. But right now, cities and counties in Nevada are having their own budget crises.

Does the North-South divide actually apply to community colleges? Community colleges are much less engaged in research and cost less per student. But there are also some economies of scale, and a large institution like CSN can spend less per student than a small institution like Great Basin College in Elko.

What legislators promoting a North-South divide seem to forget is that we are one state. UNR also serves Las Vegas. About a quarter of UNR's students come from Las Vegas, and UNR graduates get jobs in Las Vegas. If the sons and daughters of Las Vegans want to go to college away from home, as so many do, they are more likely to return home if they stay in the state. Nevada needs both its universities and all of its community colleges, and it needs more of its students to be able to attend them.

Promoting the North-South divide does harm to higher education. By distracting people from the lack of funding with the North-South excuse, legislators avoid explaining why we are the least-educated state in the nation. As a share of Gross State Product, Nevada spends the least on higher education in the nation. As a share of population, we have the fewest number of higher education faculty and staff. Too few Nevadans have a college degree, or even a high school degree. Back when casinos and construction were the main drivers of our economy, we could get away with that. But now that Nevada has to reinvent its economy, we need a better-educated workforce and this is not helping.

• Elliott Parker is Professor and Chairman of the Department of Economics at the University of Nevada, Reno.

Article Topics: Legislature Legislature: PERS Legislature: Budget

Legislature Legislature: PERS Legislature: Budget

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The Nevada Appeal Updated Jan 30, 2012 09:13PM Published Jan 29, 2012 05:19AM Copyright 2012 The Nevada Appeal. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.