January 24-25, 1994
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
1. State Revenue Projections and Budget Review of UCCSN
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
2.5% Commerce and Industry
1.6% Finance and Administration
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
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
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
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
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
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
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
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
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
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
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