01/24/1994

 

UCCSN Board of Regents' Meeting Minutes
January 24-25, 1994








01-24-1994

Pages 72-81



BOARD OF REGENTS

UNIVERSITY AND COMMUNITY COLLEGE SYSTEM OF NEVADA

January 24-25, 1994



The Board of Regents met on January 24, 1994 in the Grand Hall,

Richard Tam Alumni Center, University of Nevada, Las Vegas.



Members present: Dr. James Eardley, Chairman

Mrs. Shelley Berkley

Dr. Jill Derby

Mrs. Dorothy S. Gallagher

Mr. Madison Graves, II

Dr. Lonnie Hammargren

Mrs. Carolyn M. Sparks

Mrs. June F. Whitley



Members absent: Mr. Joseph M. Foley

Mr. Daniel J. Klaich

Mrs. Nancy Price



The Regents' Workshop was called to order by Chairman Jim Eardley

at 9:15 A.M. Monday, January 24, 1994.



Interim Chancellor Richardson welcomed those in attendance and

gave a brief overview of the workshop session over the 2-day

period.



1. State Revenue Projections and Budget Review of UCCSN

Strategic Directions



Interim Chancellor Richardson introduced Mr. Perry Comeaux,

State Budget Director, who reported on the State revenues

and projections. Interim Chancellor Richardson stated that

Mr. Comeaux had recently met with the Chancellor's staff

to discuss the budget, problematic issues, and projections

for the next Nevada Legislative Session.



Mr. Comeaux explained that the Nevada State agency budgets

are prepared on a biennial basis. The budget process begins

in the early part of the calendar year and he is planning to

hold workshop sessions to assist the agencies in understand-

ing the budget process and the new budget formats and defi-

nitions. The budgets are submitted to the State Budget Of-

fice no later than September 1 of each year. These budgets

are then reviewed by the State Budget Office and the Gover-

nor. The Governor's recommendations will be presented to

the agency and upon agreement the Governor will present the

Executive Budget to the State Legislature.



The 1993-95 General Fund consisted of $2 billion and was

allocated as follows:



55.0% K-12 Education

25.9% Human Resources

18.3% Higher Education

10.6% Public Safety

2.8% Construction

2.5% Commerce and Industry

1.6% Finance and Administration

1.5% Infrastructure

.1% Other



He explained that Nevada revenue resources are derived

primarily from gaming and sales tax (76%). A study was

recently conducted on the tax burden for a family of 4

living in the largest city in each of the 50 states. Las

Vegas ranked 47th or 48th out of 51. This information is

good; however, Nevada's tax base is narrow and relies on

the service industry, such as gaming, hotel and recreation.

Nevada has a very inconsistent tax base. The State's Admin-

istration and Legislature encourage economic development

for a wider tax base.



Mr. Comeaux explained that the gaming reports for June-

November 1993 have indicated an increase of 6.7% gaming WIN

in which 3.9% of the gaming WIN taxes have been collected

for the General Fund. A projection of 6.3% was stated for

gaming WIN. He stated that with the new hotel/casinos in

the Las Vegas area coming on line, the impact has been good

and 12.3% has been collected for the General Fund. The

projection of 3.5% was stated for the sales tax. Although

these figures look promising, he cautioned that within the

next six months after the new hotel/casinos are completed

and in operation, there may be a drop.



He explained the process of making projections and indicated

that it is very difficult to estimate. In 1993, the Gover-

nor appointed a five-member committee to prepare these esti-

mates that are due every December 1, then adjusted through

May 1995, if necessary. He indicated that with only two

major sources of tax revenue Nevada's base is very volatile.

He stated that the 2nd year of this biennium, the budgets

will start with $30 million less than what the actual budg-

ets state. This is due to the change imposed on the insur-

ance premium tax. The new Federal regulations on health

care might impose $60-70 million more State revenue over

the next biennium.



He discussed other financial issues, such as a pay increase

for State employees. By 1995, State employees would not

have received a cost-of-living increase for 3 years. He

indicated that a 1% increase costs approximately $10 million

per year. Another issue is the prison budget and if the

Lovelock Prison were to be opened, it would cost approxi-

mately $10-12 million per year to operate. The expansion

of the class-size reduction is another issue along with the

restoration of the higher education funding formulas.



Mr. Comeaux explained that it is much too early to indicate

whether the General Fund will be sufficient for the next

biennium. He felt that by April the State Budget Office

would have a better idea with the results from the gaming

and sales tax revenues reports.



Upon questioning, Mr. Comeaux explained the process in which

the State budgets are compiled. The Department of Adminis-

tration has employed an economic planner who will work with

the various agencies. The State Budget Office will attempt

to review all existing programs and use this knowledge as

its first step in dealing with the critical issues for each

agency. He explained that there are 3 components to the

State Budget:



1) Adjusted Base component, which reflects what is

actually needed to operate day-to-day;



2) Maintenance component; and



3) Enhancement component; i. e., new programs.



He further explained that agency heads develop strategic

planning issues and these issues will be discussed with the

Executive Cabinet. However, he stated that some budget is-

sues are mandated by statute, such as K-12 funding is based

on a formula stated in the Nevada Revised Statutes, and

prison funding is based on rulings set by Federal courts.

After such mandates are adhered to, then whatever is left

in the General Fund is taken into consideration when final-

ising the agency budgets. Mr. Comeaux stated that UCCSN

representatives will be invited to a future meeting with

the Executive Cabinet.



Mrs. Berkley stated that she was not proud of the fact that

Nevada has the lowest tax base in the country, because it

attracts corporations to Nevada who require job training

and a certain level for quality of life for its employees.

Mr. Comeaux explained that a balance is needed between the

conservative prudent tax structure that is currently in

place and the provision of services to Nevada residents and

businesses. He agreed that the low tax burden is nothing to

be proud of unless funding for education and human resources

are resolved.



UNLV Faculty Senate Chairman John Swetnam questioned how

the next budget process would recognize the fact that the

current base budget is underfunded, and Mr. Comeaux respond-

ed that he has met with Interim Chancellor Richardson and

staff who have made it clear that an emphasis needs to be

placed on the restoration of the funding formulas for high-

er education and that it would be made a priority of the

UCCSN. However, it will take $60 million to restore these

formulas. The Executive and Legislative branches will then

have to make a determination where this priority will be

placed on the State's priority list.



UNR Vice President for Finance and Administration Ashok

Dhingra questioned what the difference is between K-12

funding and higher education funding, and Mr. Comeaux

responded that traditionally the State of Nevada presumed

the responsibility for K-12 education. However, given the

structure of today's society, higher education is an inte-

gral part of public education. A College degree is a neces-

sity in today's employment climate and he is hopeful that

some time in the future the State of Nevada would presume

the responsibility for K-16 education.



WNCC President Anthony Calabro questioned whether the demo-

graphics of the labor force have been analyzed since the

new mega-resorts have opened, and Mr. Comeaux explained

that the Employment Security Commission has conducted some

studies on this issue, but he does not know the results of

these studies. There has been some indication that the new

mega-resorts employ low-income families which assists in

lowering the welfare situation in Nevada.



UNLV President Robert Maxson questioned if there were any

plans to expand the current tax structure, and Mr. Comeaux

responded that there has not been any recent discussion

regarding a new tax structure. The Administration will be

addressing this issue within the next few months. There

are two interim legislative tax committees that have been

formed and they will be addressing 1) a tax structure with-

in the various districts in Nevada; and 2) a tax structure

for the entire State to include exemptions to the current

tax base, expanding the tax base by including other services

connected to the sales tax.



Chairman Eardley indicated that K-12 education percentage

of the General Fund was increased, while higher education's

percentage was decreased from 20% to 17.5%. Mr. Comeaux

explained that he was not employed as the Budget Director

during the 1993 Legislative Session, so he was not sure why

this decrease took place. However, it was his understand-

ing that the General Fund percentages have increased and

decreased, between 17% to 20%, over the years for higher

education. It is his intention to involve UCCSN in the

budget planning process so UCCSN will be able to under-

stand other agency budgets in the whole scheme of State-

wide budget planning.



Upon questioning, Mr. Comeaux explained that a shortfall

in the budget could very well happen again, but that as

newly appointed State Budget Director, he will be conduct-

ing several planning meetings to review the budget process.

However, he stated that there is a fairly accepted assump-

tion that there will never be enough funding for every

State agency.



Mrs. Berkley stated that UCCSN was placed at a disadvantage

when the Governor gave UCCSN a choice of either accepting a

$6 million reduction, or having human resource agencies

suffer the consequence of reduced budgets. Mr. Comeaux

stated that several agencies were placed in that position

because human resources is a very vital agency to the wel-

fare of the residents in the State of Nevada. He suggest-

ed that to combat this situation, Nevada will have to con-

sider changing its tax base structure to enhance revenues.



Interim Chancellor Richardson thanked Mr. Comeaux for shar-

ing information with UCCSN and stated that he looks forward

to working with the State Budget Office.



The workshop session recessed at 10:30 A.M. and reconvened on

Monday, January 24 at 10:45 A.M.



2. Strategic Directions - Progress to Date



Interim Vice Chancellor Karen Steinberg stated that this

session of the workshop is intended to provide an overview

of progress toward implementing UCCSN Strategic Directions

and Objectives. She gave a broad overview and discussed the

major areas of the System's progress.



Several handouts were distributed to the attendees of the

workshop and are filed in the Regents' Office.



Interim Vice Chancellor Steinberg reviewed the specific

accomplishments that have occurred over the last year.



She stated that the progress to date has led UCCSN to

conclude that significant progress has occurred; progress

that may not have occurred in the absence of the Strategic

Directions. In particular, the Campus master plans have

incorporated the Strategic Directions and there is repeated

evidence of the impact this has had throughout the System.

In a very short time and with restricted resources, much

has been accomplished.



However, there is still much to do. She suggested that

UCCSN adopt a System "Agenda for Action" for 1994. This

agenda would provide UCCSN with a list of System activities

that are "doable" in one year as well as set some priorities

for action. The agenda, when set, would further detail who

would be responsible for the action and in what time-frame.

This would provide a level of accountability to the planning

that has been missing to date.



Interim Vice Chancellor Steinberg announced the membership

of five small groups, involving every workshop participant,

and instructed them to focus on developing an "Agenda for

Action".



The workshop session recessed at 11:20 A.M. to allow for the

small groups to meet and work on the assignment suggested by

Interim Vice Chancellor Steinberg. The session reconvened at

3:00 P.M. Monday, January 24, 1994.



Interim Vice Chancellor Steinberg requested a representative

from each small group to present a summary report on his

group's discussion.



The workshop session recessed at 3:40 P.M. and reconvened at 9:10

A.M. Tuesday, January 25, 1994.



3. Integrating UCCSN Strategic Directions into the UCCSN Budget

Planning Process



Interim Vice Chancellor Karen Steinberg stated that since

1992 members of the UCCSN have been working to put in place

a planning process that would link the academic plans to

the budget process. A process has been developed that be-

gins with a review of the System and Campus missions, artic-

ulates a System vision through the Strategic Directions,

builds Campus academic master plans around that vision, and

finally utilizes the plan to develop budgets. She reported

that all of the planning "blocks" are in place to begin to

build the 1995-97 budget.



UNR Vice President Bob Hoover questioned if the research

component would be adopted this year, and Interim Vice

Chancellor Steinberg responded that the workshop partici-

pants will have a chance to address that issue when they

break into the small groups. He also suggested that net-

working, computing and equipment be addressed in the small

group discussions.



Dr. Derby relfected on the comments made earlier by Mr.

Perry Comeaux during his presentation of the State's budget

process, and it was her understanding that there is not

much opportunity for enhancements, and she posed the ques-

tion of how the System should address changes for the future

System enhancements. Interim Vice Chancellor Steinberg

responded that funding formulas are used to secure alloca-

tions from the Legislature. She suggested that the small

groups begin discussing long-term budget plans.



In addition, Interim Chancellor Richardson responded that

several events are already underway with regard to the

budget process:



1) Each President indicated during the January 6, 1994

Board of Regents' meeting that the formula approach

is appropriate, but needs modification. They have

been requested to submit suggestions on how to

modify the process.



2) The Council of Presidents suggested that the System

go forward with the current formula structure to

the next legislative session.



3) It has been suggested that the existing basic needs

are so great, that the System should not change the

formulas at this time.



4) It has been suggested that the System request a

legislative interim study to be performed on fund-

ing of higher education.



Chairman Eardley questioned the cost of allocating a cost-

of-living increase for System employees, and Vice Chancellor

Sparks responded that each percent increase for all State

employees will cost approximately $14-15 million which in-

cludes all fringe benefits. The UCCSN's share is approxi-

mately $2 million for each percent increase. Vice Chancel-

lor Sparks indicated that 80% of the System's budget is

allocated to salaries, as are other agencies within the

State.



Vice Chancellor Sparks stated that throughout the past 3

budget workshop sessions it has been indicated that a legis-

lative interim study on funding of higher education would

be requested from the Legislature. He stated that institu-

tional formulas were suspended at the last session and it

is very important to restore those formulas and he suggested

that this be a high priority of the Board of Regents.



He reported that the State has a 3-tier budget process which

includes 1) adjusted base budget; 2) program maintenance

budget, which addresses new growth, inflation and Federal

mandates; and 3) enhancement budget. Vice Chancellor

Sparks stated that UCCSN is attempting to modify its budget

process to reflect the State's budget process as closely as

possible. He stated that the Chancellor and the Presidents

have begun the process for the development of the Base Budg-

et and Program Maintenance parameters to be used in the

construction of the 1995-97 UCCSN Biennial Budget Request.

The following parameters will be presented for the Board's

review at the February Board of Regents' meeting with final

adoption to be requested at the March 31-April 1, 1994 Board

of Regents' meeting. He provided an approximate cost to

the System for each parameter:



(a) Restoration of 100% funding for the Instruction formula

using student/faculty ratios approved by the 1991

Legislature applied to projected enrollment for the

1995-97 biennium. (Cost: $25-30 million per year)



(b) 50% of the difference between full funding and current

budgeted amounts for the formulas adopted in 1986 by

the Legislative Committee Studying Funding of Higher

Education. (Cost: $13 million per year)



(c) Increased funding for legally authorized grants-in-aid

equal to 50% of the difference between full funding

and current budget. (Cost: $2 million per year)



(d) Funds equal to 50% of student fee increases dedicated

to the State budget to be "set aside" for improving

student access. (Cost: $2 million per year)



(e) 2% merit pool for all professional positions, except

exempt positions. Eligible classified merit increases

are included. (Cost: $4.4 million per year)



(f) Fund to operate and maintain new buildings are includ-

ed. (Cost: $2 million per year)



(g) Equipment maintenance funding for new equipment ac-

quired during the 1993-95 biennium with "one shot

funds". (Cost: $37,000 per year)



(h) Inflationary increases are included for book acquisi-

tions and Departmental operating. (Cost: $3 million

per year)



Application of the above stated parameters is likely to

require about $60 million in increased funding for the 1st

year of the 1995-97 biennium, which would be a 23% increase

in the UCCSN operating budget. Depending upon projected

enrollment increases, as many as 400 faculty and staff

would be added for instruction on the UCCSN Campuses.



Vice Chancellor Sparks stated that 17.6% is UCCSN's share

of the State's General Fund for fiscal 1994. If UCCSN's

share of the State's General Fund remains unchanged, the

State's revenue would have to increase a minimum of 23% in

order to fund the $60 million increase (assuming all other

UCCSN budgeted revenue increased by 23%). Vice Chancellor

Sparks felt that this scenario would not likely happen since

an increase of only 3.8% in revenues is projected for the

1995 fiscal year. This means then, UCCSN's share of the

State's General Fund would need to increase substantially

to provide for a $60 million increase in the budget.



Vice Chancellor Sparks reviewed the Priority Requests for

New Funding, which among other issues included raises for

professional employees, an increased merit pool to 2.5%

with an addition of exempt positions, and an increased

salary allotment for part-time faculty at the Community

Colleges. He suggested that the Interim Study address

other major formula funding issues. He recommended that

the current formulas remain in place until after the Interim

Study has made its recommendations.



UNR Vice President Ashok Dhingra stated that the System

should perform a "reality check", and suggested that the

Board of Regents and the Chancellor challenge the current

structure. When discussing the future of the System, dreams

are stated which may not be attainable. He suggested that

the Board of Regents sponsor a Statewide symposium on qual-

ity education to include everyone in the State of Nevada.

Chairman Eardley felt that the Board would be criticized

and assaulted by the public if such a symposium were to be

held. Dr. Derby agreed that UCCSN must do a better job in

selling higher education to the people in Nevada.



Upon questioning, Vice Chancellor Sparks indicated that the

Chancellor's Tuition Committee is discussing revenue for

UCCSN and that any increase in student fees and tuition

would certainly impact the needed 23% of the State's orig-

inal fund allocation to higher education. However, he was

not suggesting any incrase in student fees and tuition at

this time, and in his opinion, the students have supported

UCCSN while the State Legislature let them down.



The workshop session recessed at 10:30 A.M. to allow for the

small groups to meet and work on the assignment suggested by

Interim Vice Chancellor Steinberg and Vice Chancellor Sparks.

The session reconvened at 1:30 P.M. Tuesday, January 25, 1994.



The small groups reported on their discussions. Interim Vice

Chancellor Steinberg will summarize the discussions and report

back to the Board at a future meeting.



The meeting adjourned at 2:15 P.M.



Mary Lou Moser

Secretary of the Board

01-24-1994