Chancellor: Start over on college funding in Nevada

The formula Nevada uses to fund its colleges and universities is unfair, confusing and outdated.

It encourages growth for its own sake, rewards mediocrity instead of excellence, and discourages the colleges and universities from innovating.

“I’m just saying get rid of it,” said Dan Klaich, chancellor of the state’s higher education system.

The state first implemented a formula based on enrollment more than 40 years ago. It has been tweaked many times since then. It has been modified so much, in fact, that the formula has become so confusing hardly anyone understands it. Think of it as being like the federal tax code in that way.

“It is probably the most complex funding formula in the country,” said Michael Richards, president of the College of Southern Nevada. “There are only two or three people who really understand it.”

So, Klaich has come up with a proposal to replace the formula with a new one that will be similar to formulas used in other states across the country.

What’s wrong with the formula, specifically? We’ll need to use some numbers to explain, but don’t be scared.

Picture the higher ed system as a huge pizza. Slice the pizza into six pieces.

If the entire pizza were all of Nevada’s college students, four of the six slices would be attending college full time in Clark County. That includes the University of Nevada, Las Vegas, the College of Southern Nevada and Nevada State College. (It’s 63 percent for you numbers geeks).

Also, if the whole pizza were all of the tuition and fees paid by Nevada’s college students — that’s a couple hundred million a year — four of those six slices (66 percent, geeks) are paid to the three institutions in Clark County.

UNLV students alone pay almost three whole slices (46 percent) of all the tuition and fees paid to the seven colleges and universities in Nevada, despite having less than two slices worth (31 percent) of the full-time students.

The university attracts tons of out-of-state students, who pay more.

Yet, only half (three slices worth) of the state tax money spent on higher education in Nevada — more than a billion dollars every legislative cycle, typically — is spent at the three institutions in Clark County.

So 63 percent of the students get half the money. Er, we mean four slices worth of students get three slices worth of money.

UNLV, in fact, gets less than two slices worth (31 percent) of all the state tax money spent on higher ed.

CREDIBILITY PROBLEM

To put it another way, the three institutions in Clark County are subsidizing the four institutions up north.

That’s one way to see it. That’s the way a lot of people see the state’s funding formula for higher education.

This is what the state’s higher education leaders call a “credibility problem” with the formula.

“Most people in Southern Nevada believe that it has been applied to unfairly benefit the northern institutions,” said Klaich, who is himself a northerner.

He attended the University of Nevada, Reno, and still lives there.

The hope is that rewriting the formula will not only take care of the credibility problem once and for all, but also take into account how well a college or university is doing its job — namely, graduating students.

That’s the other problem. Because the institutions are essentially rewarded with more tax money for enrolling more students, the focus has naturally been to sign up more students. Not necessarily to get them to the finish line.

It worked tremendously, as far as enrollment went. In the last 27 years, enrollment more than doubled to top 100,000 students.

DIFFERENT REWARDS

The new formula, the details of which a committee is hashing out right now, would instead reward what is called “completion” instead of enrollment.

Completion essentially is an institution’s graduation rate, as well as successfully transferring students to four-year institutions and awarding certificates at the community colleges.

That last part is a big deal, especially at the College of Southern Nevada.

CSN is woefully underfunded. It gets less than half the general fund dollars, per student, that the universities or Great Basin College, in Elko, get.

“We are the lowest funded institution in the state,” said Richards, the CSN president.

Part of that is because of what is called economy of scale. That means that no matter how big an institution is, or how small it is, it has the same fixed costs as the other institutions. Fixed costs are things like the president’s salary, for example.

But CSN, Richards points out, has three separate campuses in Clark County. It is almost like running three separate colleges.

TAXING STUDENTS

UNLV’s leaders have long complained that the formula takes their money and gives it to the other schools.

That’s because whatever a college or university raises through tuition is then taken away from whatever general fund dollars they would otherwise get.

In other words, the more a university’s students pay, the less the state pays.

That’s a problem at UNLV in particular because it has so many nonresident and international students, especially in its high-profile hotel college.

Neal Smatresk, UNLV’s president, said the university loses about $14 million every year because of this.

“It has turned the students into taxpayers,” said Gregory Brown, a UNLV history teacher and president of the university’s faculty senate.

A key to Klaich’s new formula proposal is that the institutions would get to keep the tuition and fees the students pay, without penalty.

Students have been asking for this change for years.

“It would more accurately reflect the free market,” Brown said.

In other words, institutions that do a better job attracting students — by being better institutions — would get rewarded for it.

It would be a radical rewrite of the way things have been for decades, but Klaich thinks it can happen.

PRESENTING PRIORITIES

One of the keys to whatever new formula gets written is that it will take into account how much a class costs to offer when funding the institutions.

Everybody knows it’s a lot cheaper to offer an English 101 class than an upper division science course.

But instead of conducting a study to figure out how much each course costs to offer, the formula committee will look at similar studies that have been done in other states.

They will come up with a scale that will use the cheapest courses as a base. An introductory history course will get the same funding no matter where it’s taught, for example.

More expensive courses will be funded at a rate of, say, two times the base. The more expensive courses you offer — upper division science courses at the universities in particular — the more money you’ll get to pay for them.

Brown, the faculty senate president, said that is a huge part of the rewrite.

Klaich’s proposal also calls for additional dollars to the universities through a set-aside to fund “research missions” that the community colleges and the state college do not have.

Whatever happens, it’ll have to happen soon. The chancellor wants the new formula in place before Sept. 1, when the higher education system must submit its next budget request to the governor’s office.

Klaich wants to use the new formula to do it.

Even if that does happen, there is no guarantee the new formula will actually be used. Both the governor and the Legislature would have to sign off on it first.

“We don’t know if the chancellor’s plan is what will come out of it,” Brown said. “But it’s at least a good chance for higher education to make its priorities known.”

Contact reporter Richard Lake at rlake@reviewjournal.com or 702-383-0307.