Legislative panel approves higher education budget cuts with coming federal aid, additional state funds in limbo

Despite revised state tax revenue projections amounting to more than $586 million over the biennium and expected billions in federal coronavirus relief, lawmakers nonetheless moved forward with approving $169 million in cuts to the state’s higher education system on Thursday.

Legislators said the cuts were a necessary step at this point, given the realities and schedule of the state budgeting process — noting that multiple paths for reversing the cuts still exist.

The seemingly contradictory moves of cutting higher education budgets while enjoying better-than-expected tax forecasts highlights a central conundrum facing state lawmakers over the last month of session — what proposed budget cuts to add back, and which add-backs should be prioritized given the coming influx of federal COVID relief dollars.

“In order for us to be able to button up Pupil-Centered funding, K-12, the big five (budget) bills that we've got to do, we have to keep that path moving forward,” Assembly Ways and Means Committee Chair Maggie Carlton (D-Las Vegas) said in an interview. “We cannot take an off ramp, we've got to keep going forward on that, and work on the other stuff parallel to that. And then at the end, figure out how we can merge them all together. It’s going to be a zipper move.”

The cuts given preliminary approval on Thursday mark the latest round of budget reductions for the state’s higher education system. In the worst days of the pandemic-triggered economic crisis last spring and summer, NSHE cut 4 percent of its fiscal year 2020 budget before cutting an additional 19.8 percent at the close of last year’s special legislative session. If approved by the full committee, this most recent cut would represent an additional 12 percent reduction in both 2022 and 2023, or $84.5 million per year.

Though deep, the cuts made over the last year have spared existing jobs, unlike the curricular review process of the Great Recession that gutted entire programs. 

Instead, institutions have so far absorbed the losses largely through widespread operational cuts and hiring freezes that have kept vacant at least 373 professional and classified positions across the system’s eight institutions. That includes roughly 100 jobs at UNLV and another 98 at UNR, according to figures shared with the subcommittee

Those budgets have also been buoyed by millions in federal relief dollars through the Higher Education Emergency Relief Fund (HEERF). Originally included as part of the federal CARES Act and later boosted through additional congressional relief measures, HEERF money was distributed directly to NSHE institutions as a means to patch over both lost state money and millions in reduced revenues triggered by campus closures.

But nearly half of HEERF dollars — including about $160 million of Nevada’s estimated $369 million allocation — are reserved solely for student aid and cannot be directed toward institutional operational costs or lost revenues. 

As legislators assess extra revenue and mull which depleted budgets to refill first, it remains unclear where NSHE will fit into the broader budget picture. Lawmakers on budget committees stressed that the subcommittee’s vote on Thursday isn’t the end of the story — legislators could choose to revisit those cuts when the action moves to full committee, or lawmakers could include funding restorations in a budget amendment passed closer to the end of the session.

Sen. Heidi Seevers Gansert (R-Reno) — a member of the budget committee who stepped down from her position at the University of Nevada, Reno in December — said lawmakers should look to prioritize restoring proposed cuts to higher education, K-12 education and the Health and Human Services budget using general fund dollars and not the coming federal COVID relief dollars.

“I think we need to treat them differently, because the state money is something where it potentially can be spent for ongoing uses, but when you look at the federal funds, those definitely need to be one shot dollars,” she said. “So I think we need to look at both sets of funds and see where we can best appropriate them.”

Sen. Chris Brooks (D-Las Vegas), who chairs the Finance committee, said lawmakers need to take a “deliberative approach” on where to restore proposed budget cuts so as to not overlap with any incoming federal dollars. As for restoring the proposed NSHE system cuts, Brooks said it was too soon to comment.

“I don't know that me and Chair Carlton have had a meaningful conversation about that just yet,” he said. “The world changed about Tuesday.”

Still, higher education advocates and lobbyists told The Nevada Independent Thursday that the limitation of subcommittee-approved cuts to the governor-recommended 12 percent level — and not more — was something of a win, especially as lawmakers probed higher education officials on the nature of an increase in so-called “caseload growth” funding provided through the system’s funding formula. 

Based on the number of weighted student credit hours across every institution, funding formula calculations draw from trends over two year periods. With the number of weighted student credit hours up nearly 5 percent across the board in fiscal year 2020 — the most recent year taken into account by the formula — it meant formula-based funding was set to grow by more than $24 million, even as enrollments dipped because of the pandemic.  

“We were expecting these cuts all along, because they're in the governor's budget, and that's what usually happens in a normal session,” Kent Ervin, vice president and lobbyist for the Nevada Faculty Alliance, said. “This is hardly a normal session, and we're just happy at this point in time that there weren't any deeper cuts or revisions to the formulas or caseload growth without more study about those issues.”

Similarly, UNR lobbyist Michael Flores said the university was “glad” that Thursday’s budget closed without additional cuts, and that he remains hopeful that federal guidance for money provided through the American Rescue Plan can spur a “conversation about restoration.” 

But concerns remain over the long term impact of such cuts, as well as worries they could become permanent reductions if they are not ultimately backfilled either during the remainder of the regular session or through an increasingly likely special session. 

“The colleges and universities can't refill the positions that have been held vacant, according to this budget today,” Ervin said. “We can't, without authorization, refill a permanent position with one-time funding, you have to have legislative authorization to do that.”

Those concerns are especially acute for professional teaching staff, which often takes a full search committee and an entire academic year to complete. With dozens of vacancies at both research universities, Ervin said permanent cuts could eventually endanger accreditation for the worst-hit programs.

Also hanging over Thursday’s meeting was the broader question of legislative oversight over higher education spending. Two budget items included the addition of a letter of intent by the system or institutions to provide lawmakers with specific metrics through the Interim Finance Committee.

Of particular interest to the committee was the University Research Space Operation and Maintenance budget, often shorthanded as O&M. After lawmakers asked both UNLV and UNR for a breakdown of expenditures and revenues for their O&M budgets, neither university could fulfill the request because, they told the committee, those research budgets were not associated with a revenue source. 

Under the proposed letter of intent approved by the committee, each university would now be required to “use a uniform methodology” to track and report O&M expenses on a yearly basis, as well as “identify benefits resulting from O&M funding.”

The requirements come as the Legislature has sought to increase its powers of accountability over NSHE through additional oversight measures. Most notable among them is SJR7, a legislative re-do of a proposed constitutional amendment from last year, Question 1, that would remove the Board of Regents from the Constitution and place them under statute, much like other state agencies. 

Legislators have for years argued that the regents have used their Constitutional status as a legal shield from accountability. Opponents, namely the regents themselves, have argued that the Legislature’s power of the purse already serves as the ultimate oversight tool, and that the measure would do little to address higher education needs in the state. 

In the meantime, the higher education system and individual institutions will remain in a limbo as lawmakers wait for U.S. Treasury guidance on the incoming federal COVID dollars and any potential restoration of proposed cuts. 

“NSHE would be a perfect example of something we really have to get a good understanding of where the federal funding will be coming and how they'll use it,” Brooks said. “We're having those conversations with them right now.”