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August 28, 2014
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Proposed budget unfair to community colleges

Nevada’s Board of Regents has sent the Governor a higher education budget proposal with a 15 percent requested spending increase for the next biennium (2015-17).

I voted against the request because the new funding formula it uses is biased in favor of graduate and upper division undergraduate courses and against basic undergraduate and career, technical and work-force education. Thus, it is also biased in favor of our universities and state college, but against our community colleges (CCs) and the students for whom they provide college access and job training.

I’ve opposed the new formula since it was first proposed two years ago, because it has a key flaw that wrongly favors upper division and graduate courses and the four-year institutions over lower division courses and the CCs.

The formula is based on a table that assigns funding-level numbers to courses offered at Nevada colleges. Using the table, each course is assigned a number between 1.0 and 8.8, and each college accumulates funding points by multiplying the number of students taking a course by its funding number.

When the points for all of a college’s courses and students are summed, the college has a total score. Then, the great majority of state funding of higher education is allocated among the colleges in proportion to the total scores for the seven colleges.

If the numbers in the table were sound, this would be a reasonable way to allocate the funds because it would reflect the relative values to society of the total instructional output at the colleges (and the values for each class, program, department, etc.). But they are not sound, and so the resulting proposed budget is not reasonable.

This approach requires that the numbers in the table reflect the value to society of instructional output — but the system of higher education did not even attempt to measure that essential characteristic, the value to society. This point is absolutely fundamental to public budgeting: Dollars should be allocated to various uses so that the public gets the most value for its spending (just as any consumer or business owner seeks to get the highest possible value for her spending).

The table in the new formula is “cost informed” — the system relied on a survey by an outside organization of the relative costs of the various kinds of courses at four large institutions east of the Rockies. Because there was a wide range of cost estimates for each kind of course, that organization chose a number for each kind of course from within the range of costs reported at each of the four non-Nevada universities.

For example, if an introductory world history course had recorded relative costs of 0.5, 0.8, 1.2 and 2.0, the number entered in the table was 1.0. After cost numbers were tallied, courses were grouped into clusters such as sciences, business, education and liberal arts, etc. And all the courses in each cluster at each level — lower division, upper division, masters and doctoral — were given identical round-number scores.

However reasonable and practical the intent of this exercise, when it was completed it had little or no connection to actual costs for course offerings at Nevada colleges. But even if it had accurately measured the costs of each course at each Nevada institution, the numbers would still have been wrong in principle because they measure the wrong thing – namely costs incurred by the providers, not value to the state economy (that is, to Nevada families and businesses that pay the taxes and fees to support higher education.)

Here’s an example of the problem – one of many. On average, lower division students taking a basic statistics in a math department will learn much to help them understand what they read in newspapers or on line and the diagnoses and advice they get from their doctors, and they will become more productive and valuable employees and thus better paid. Thus, the social value of this student credit hour is great. However, on average, advanced graduate students taking string theory in a physics department will learn some pretty neat stuff of very modest social value. But the statistics credit-hour gets a weighting of 1.0, while the string theory credit-hour gets a weighting of 8.8, due to the relative costs (not value) of each.

There were a number of good features of the budget proposal, but the bias in favor of the four-year institutions and against the CCs was too much. So, I voted no.

Ron Knecht is an economist, law school graduate and Nevada higher education regent.

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The Nevada Appeal Updated Aug 28, 2014 05:23PM Published Aug 28, 2014 05:23PM Copyright 2014 The Nevada Appeal. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.