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September 04, 2012 1:26 PM Nevada’s New Funding Idea

By Daniel Luzer

For the last few years Nevada has been having trouble funding its state colleges. Due to reduced property and sales tax revenue Nevada government started to run short on cash. Because Nevada doesn’t have a personal or corporate income tax it’s hard for the state to raise new funds.

Now it’s developed something of a solution, if not a very generous one. According to a piece by Jon Marcus at The Hechinger Report:

Nevada public universities would be funded based on how many credits their students complete, rather than how many students they enroll, under a dramatic change in policy recommended Wednesday by a legislative committee.
While the concept the committee approved, which is called performance funding, isn’t new, Nevada’s version would be among the most dramatic. It would allocate 100 percent of the state’s base annual budget for higher education by calculating the number of completed credits. That is, money now parceled out based on how many students enroll would instead be distributed in response to how many complete their classes.

Many other states have introduced plans to fund public universities based on student achievement and other measures, but in other states performance funding represents only a potion of total state allocations.

While this is billed as a way to encourage achievement—“We want to fund institutions based on student success,” said State Senator Steven Horsford, according to the article—it actually looks like a way to merely justify cuts, and pass more costs to Nevada students.

Marcus explains that the formula would also allow state colleges to set their own tuitions and keep all of the revenue. Current policy requires state colleges to submit all tuition collected to the state’s general fund. Nevada then allocates the money back to all colleges in the state. This means that the state’s bigger schools, in the southern part of the state, subsidize those in the North.

As Nevada Higher Education Chancellor Dan Klaich pointed out in 2010, the state did have other options to increase funds, options that would have prevented tuition hikes. If Nevada increased the state sales tax by a mere one quarter of one percent, which amounts to roughly $12.50 per person a year, the state would take in about $88 million in new funding.

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer

Comments

  • Gregory Brown on September 04, 2012 10:24 PM:

    Just as a matter of fact, each of the following statements from the Hechinger story are inaccurate

    Marcus explains that the formula would also allow state colleges to set their own tuitions and keep all of the revenue. Current policy requires state colleges to submit all tuition collected to the state’s general fund. Nevada then allocates the money back to all colleges in the state.

    1. The new formula would not allow individual campuses to set tuition policies independently; that authority has been and remains the prerogative of the Board of Regents.

    2. Campuses currently do retain student-generated revenue and it does not revert to the state general fund. What happens under the current formula is student-generated revenue offsets, or debits, a given campuses' state allocation and allows that money to be distributed to other campuses in the state. The new formula would replace that with a practice whereby the state's allocation would be the "first dollar spent".

    3. All expenditures, including those of student-derived revenue, have been and will remain subject to audit by the state. What will change is that student fees and tuition will no longer be recorded by the state as part of the "state supported operating budget," which comingled student fees with state funds -- and which allowed the state legislature to cut higher ed more deeply than it appeared by simply filling in some of the cut with anticipated increases in student fees. That practice would no longer be possible under the principles adopted by the legislative committee.

    4. Note that the new formula proposal generates no calculation of "cost" or "need", so that the basic structural problem remains -- the state will still approach higher education funding as discretionary spending.