JULY 2020 Nevada Legislature Special Session

nshe.nevada.edu

NSHE BUDGET REDUCTION SCENARIOS

Governor Proposed Reductions – Total cuts to NSHE $109.6 million or 16% budget reduction
Expected Impacts
 Employee Furloughs
 Increased student fees
 Hiring Freeze
 Operating and Travel Reductions
 Not a significant loss of student services
 Minimal employee layoffs

COVID-19 Related Estimated Losses – Expected $120.9 million loss due to reduced revenues and increased expenditures because of
the COVID-19 pandemic.

Proposed additional $25 million reduction - Total cuts to NSHE $134.6 million or 19.4% budget reduction
Potential Impacts
 Employee Layoffs at some institutions
 Loss of Student Services, including advising, counseling, tutoring, community outreach
 Decrease in Class Offerings, which will lower graduation rates
 Elimination of academic degrees and workforce certificates offered
 For smaller institutions (i.e., GBC and WNC), sustaining these additional cuts calls into question their ability to adequately
deliver basic instruction

BACKGROUND
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Budget Reductions
The Governor has recommended $109.6 million in budget reductions to the Nevada System of Higher Education's (NSHE) state-supported
operating budgets for FY 2021 or 16% of the 2019 Legislature approved appropriations.

Proposed reductions include $34.2 million in vacancy savings, operating and travel reductions, transfers, and redistribution of student fees. Also,
$29.9 million in Coronavirus Aid, Relief, and Economic Security (CARES) Act funding is used to offset the General Fund reductions partially. The
Board of Regents also approved a temporary student per-credit surcharge as part of the budget reduction proposal for all teaching institutions.
Projected revenue from the temporary student per-credit surcharge totals $10.1 million in FY 21, offsetting General Fund reductions.

The Board of Regents also approved a $50 million distribution from NSHE's Market Fluctuation account. The market fluctuation account was
established after the great recession to finance monthly investment distributions to campuses in the event the system does generate sufficient
earnings. The market fluctuation account is part of NSHE's operating pool of 23,000 plus accounts across each institution. These funds are
invested in equities, bonds, and cash. The earnings on these funds are distributed back to the campuses based on each institution's balance
relative to the total pool. The market fluctuation account was initially funded from investment earnings, which were not distributed to the
institutions. The $50 million distribution offset $35.2 million in Governor requested budget reductions. The distribution of these funds could
impact the ability of the system to distribute investment income if we see another significant downturn in the stock market.

An additional $25 million reduction to NSHE's state-operating budgets is a further 3.6% reduction, bringing the total cuts to $134.6 million or
19.4% compared to the 2019 Legislature approved appropriations (see table below). The Board of Regents, at their August 7, 2020 meeting, will
consider a $15 million offset of the additional $25 million with operating reserves (ending fund balance). The remaining $10 million in
reductions will be spread proportionally across all NSHE's state-operating budgets subject to the Board of Regent's approval. These budget
reductions are in addition to an estimated $120.9 million loss due to reduced revenues and increased expenditures because of the COVID-19
pandemic.

Performance Pool
The adoption of the NSHE's Performance Pool came about as part of the funding formula study. The interim committee was explicitly charged
with considering methods for rewarding institutions for graduating students, which ultimately resulted in this performance-driven initiative.

Throughout the funding formula study, it was understood that there would be no additional state funding allocated to NSHE institutions through
the Performance Pool. Therefore, the Performance Pool is based on a 20 percent carve-out of base budget state General Fund appropriations.
The carve-out percentage will be set aside and, depending on an institution's performance in a defining year, and each institution can "earn
back" the set-aside funds.

Institutions compete against themselves in separate institutional pools, and an institution's performance is measured based on seven metrics

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(two of which have sub-metrics for under-served populations). Many of the metrics are based on the number of students graduating, including
metrics for students graduating in defined populations (underserved populations, STEM, allied health, etc.).

Institutions earn the performance funds for a given fiscal year based on performance from two years preceding the fiscal year.

The performance year of measure is before the distribution year to ensure that institutions know in advance of the fiscal year what performance
funds will be available for their budget.

Institutions that do not earn 100 percent of their performance funds in the first year of the performance cycle can earn back those funds in the
second year of the period. For example, for an institution that fails to meet its point targets in the first year, the unearned performance funds
carry forward to the second year, and the institution can earn those funds back if it over-performs in year two. In other words, the institution
must exceed its year two target. If there are performance funds that are unearned at the end of the second year of the performance cycle,
unearned funds will be distributed to all institutions for need-based financial aid. Because there are many "working poor" in Nevada who do not
qualify for Title IV Federal Student Aid, the institutions may determine students of need independent of Title IV guidelines. A redistribution has
not occurred since the formula was implemented.

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 XFY 2021
Total General Fund Appropriations Compared to
Governor Recommend Reductions and
Additional $25 million Reduction
(includes Performance Pool and Capacity Enhancement Funding)
FY 2021
FY 21 General Governor Additional
Fund Recommended % $25M % Total %
Institution Appropriation Reductions Decrease Reduction Decrease Reductions Decrease
UNLV $ 181,632,636 $ 29,088,116 16.0% $ 6,614,047 3.6% $ 35,702,163 19.7%
UNR $ 131,048,475 $ 20,987,162 16.0% $ 4,772,054 3.6% $ 25,759,216 19.7%
CSN 1 $ 109,024,754 $ 16,359,957 15.0% $ 3,970,073 3.6% $ 20,330,030 18.6%
GBC $ 13,974,209 $ 2,237,942 16.0% $ 508,863 3.6% $ 2,746,805 19.7%
TMCC $ 38,294,670 $ 6,082,817 15.9% $ 1,394,478 3.6% $ 7,477,295 19.5%
WNC $ 14,914,956 $ 2,388,601 16.0% $ 543,119 3.6% $ 2,931,720 19.7%
NSC $ 21,718,947 $ 3,478,248 16.0% $ 790,883 3.6% $ 4,269,131 19.7%
Formula Accounts
SUBTOTAL $ 510,608,647 $ 80,622,843 15.8% $ 18,593,518 3.6% $ 99,216,360 19.4%

UNLV School of Medicine $ 41,464,109 $ 6,640,397 16.0% $ 1,509,891 3.6% $ 8,150,288 19.7%
UNR School of Medicine $ 37,632,115 $ 6,026,712 16.0% $ 1,370,352 3.6% $ 7,397,064 19.7%
Law School $ 10,456,418 $ 1,674,576 16.0% $ 380,764 3.6% $ 2,055,340 19.7%
Dental School $ 9,806,394 $ 1,570,476 16.0% $ 357,094 3.6% $ 1,927,570 19.7%
DRI $ 8,666,365 $ 1,387,903 16.0% $ 315,581 3.6% $ 1,703,484 19.7%
Professional School
SUBTOTAL $ 108,025,401 $ 17,300,064 16.0% $ 3,933,682 3.6% $ 21,233,746 19.7%
Non-Formula Accounts
SUBTOTAL $ 76,221,413 $ 11,655,442 15.3% $ 2,472,799 3.2% $ 14,128,241 18.5%
NSHE TOTAL $ 694,855,461 $ 109,578,349 15.8% $ 25,000,000 3.6% $ 134,578,347 19.4%

Footnote:
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Reduction does not include a $1,100,147 HECC/SHEC reversion which brings the Governor Recommends reduction to 16%

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UNLV

UNLV already has been asked to absorb $41.1M in budget reductions in fiscal year 2021 (not including furloughs, or the loss of $20M of funding
for our engineering building), and is now committed to $1M annual debt service on the bonds we issued for the currently unbuilt engineering
building. We also are expecting revenue loss and COVID-related expenses exceeding $40M during the upcoming fiscal year in addition to over
$20M in losses and increased expenses in FY20.

An additional cut of $3.7M will further damage our ability to support our students as we will not be able to offer the full array of courses they
need and the supporting services that bolster their success. Specific impacts include:

 More limited course offerings. We will hire fewer instructional faculty members and will reduce the number of sections offered. This
may affect the ability of students to complete their programs and graduate in a timely manner.

 Increased class sizes, leading to a higher student-to-faculty ratio and an associated decrease in the student-faculty engagement.

 Reduced student and academic support services. These positions are critical to student achievement, retention, and completion of
degrees.

 Reduced peer mentoring, which supports student success, especially among first-generation college students.

 Fewer student co-curricular activities, which support student persistence by increasing their sense of belonging.

These additional reductions are likely to disproportionately impact our first-generation students, students of color, students from low income
backgrounds, and other underrepresented students.

UNR

Governor Sisolak proposed budget reductions for NSHE institutions of 16% ($20,987,162 for UNR) plus 12 days of furlough for 12-month
employees. These budget reductions were met with hiring freezes and operating fund reductions, a student fee surcharge, and application of
CARES Act federal funds. Given the speed at which this additional net $2.87 million budget reduction must be absorbed, the University of
Nevada, Reno would postpone $1.2 million in facilities deferred maintenance and $1.67 million in staff reductions. While efforts will be made to
protect the instructional function to the greatest extent possible, the most significant FY'21 cuts would be to our Letter of Appointment (LOA)
faculty and classified staff, not because either group is expendable, but simply because the contract notice periods are the shortest for these two
groups of employees. Similarly these deferred maintenance cuts are quick, but the impact will be higher net costs later as critical building
systems continue to age.

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Should these budget reductions linger or become permanent, thirty of the academic and administrative faculty vacancies would be closed
permanently, impacting the instructional mission across UNR, including the UNR Medical School. This will result in less research and fewer
classes offered by professors who are experts in their fields, more reliance on part-time instructors, loss of critical student support from
professional advisors, career counselors, financial aid analysts, and first generation and veteran social support counselors. It takes years to
establish reputations for academic and research programs nationally and internationally.  Highly acclaimed programs attract outstanding faculty
and students.  In recent years, the University has achieved important milestones such as the classification of Carnegie R1 "Very High" Research
institution, which has greatly enhanced the University's reputation on a national scale.  A program's proven reputational quality becomes a
magnet for knowledge-based industries that are so vital to the diversification of Nevada's economy.  The reputations of these programs will be
significantly compromised immediately through losses of faculty and it will take many years at best to restore reputations and credibility.

CSN

The proposed budget cut will translate to an additional $1.6 million reduction to CSN's budget for fiscal year 2021, which has already been cut by
16 percent, or $17.5 million, plus the cuts to professional and classified staff salaries. Taken together, these cuts will adversely impact our ability
to sustain the recent academic success momentum that has seen our graduation and transfer rates almost double in the past three years.

As a result of these additional cuts, CSN will be required to:

 Freeze approximately 24 more positions on top of the 26 previously frozen;

 Reduce operational costs by approximately 50 percent for travel, hosting, printing, supplies, and FFE;
 Limit personnel in facilities, administrative, academic, and student service areas;
 Limit the number of sections/classes that can be funded to meet student demand;   
 Reduce service and possibly close CSN Hi-Tech and Community Centers, such as those at Nellis Air Force Base, Summerlin, Green Valley
and Mesquite.
 Limit the number of accelerated short-term workforce training programs in Health Professions, Information Technology, Logistics and
Manufacturing, and Skill Trades (automotive, diesel tech, dental hygiene and dental assisting, veterinary nursing) being designed for
long-term unemployed and displaced. 

No matter what occurs, we will make every effort possible at CSN to reduce the impact on student services and academic instruction. At CSN, we
understand the need for significant budget reductions. But we are concerned that any further financial cuts will cause negative long-term
damage to CSN, our students, and to our community.

GBC

GBC has not fully recovered from previous severe budget reductions from the last great recession and the implementation of the new funding
formula.  Over 80 positions were eliminated, with only 15 positions restored. Nevertheless, GBC refocused, put in solid operations plans and

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successfully increased enrollments and began new high demand technical and health occupation programs across rural Nevada. Remaining
faculty and staff took on many additional responsibilities to their full-time positions. GBC is now stable and sustainable, and because of this was
able to maintain its operations with no layoffs through the current proposed 16% budget reductions.

Additional reductions of $204,000 for GBC, however, would mean layoffs of essential employees already stretched thin. This will possibly affect
enrollment and cause program reductions or closures.

The equivalent would be laying off 5 positions. If the positions are classified positions, all of which are essential to the current level of services to
our students, this will reduce the level of services to students, with impacts in financial aid, registration and enrollment, and student support in
the academic programs.  Staff in facilities, such as custodial, grounds, and maintenance would also be reduced at a time when there is the
additional demand for cleaning and sanitizing. Classified positions could be being earmarked, not because they are any less critical than other
employees at Great Basin College, but because they have the shortest notice periods for layoff/position elimination. Other employee groups
could require, under the current provisions of the Nevada System of Higher Education Code, Title 2, Chapter 5, at least a year notice of non-
reappointment.

Eliminating 5 classified positions at a time when this workforce at GBC is already vastly diminished, is not in the best interest of the students,
therefore, GBC would still need to look at instructor positions which would lead to closing or reducing academic programs that are critical to the
economy and workforce of the State.  These highly successful programs provide a skilled workforce not only for rural Nevada but throughout the
state.

TMCC

COVID-19 has had a chilling effect on Nevada's economy, triggering unexpected financial insecurity for many Nevadan's and intensifying the day-
to-day struggle for those already living in poverty.  Public higher education stands ready to serve, providing training and workforce programs
that will allow our citizens to get back on their feet. 
For community colleges, the increased budget cuts proposed by the Nevada Legislature will be catastrophic to the effort to help unemployed
and displaced Nevadan's upskill and re-enter the workforce in emerging careers.  It will further marginalize populations, such as Latinx and other
minorities, who make up more than 30% of TMCC's student body. Proposed budget cuts will dramatically impact a critical entry point into
higher education for Nevada's most vulnerable populations and undermine the very system needed to successfully rebuild Nevada's economy.
For Truckee Meadows Community College, an additional budget cut of $557,000 will result in –
 Impacts to instruction, including disproportionate reductions of part time faculty positions. That will require eliminating course sections,
reducing access points and potentially delaying graduation for Nevada students.
 Cuts to this extent also mean that deferred maintenance projects will not occur. Some of these projects are vital to infrastructure
upgrades necessary to sustain student success over time. 
 This financial blow will require reduction of critical student services that support student success, eroding the significant gains in
completion rates achieved in recent years, particularly among minority and special populations students.  Reducing availability of these
critical support services, which are closely connected to human services that individuals and families rely upon, will have the heaviest

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 impact on our most vulnerable students - limiting access, widening the achievement gap, undermining retention as success rates fall,
and lead to declining enrollment for the future. These partnerships between NSHE and the Department of Health & Human Services are
thoughtful, innovative and necessary for a strong community.
WNC

With additional budget reductions, Western Nevada College students will experience a severe impact due to dramatically reduced services.
Added reductions of $217,000 for WNC will go deeper and will include reductions in already severely limited areas, including academic
advisement and class offerings.

In order to reach the reduction originally requested by the Governor's Finance Office of $2.8 million in FY21, the college has left vacant 14 staff
positions and 7 instructional faculty positions as well as providing notice of non-renewal to 9 additional staff members.

The college is still recovering from budget reductions over the past decade and has just started to recover. These cuts not only affect the
upcoming fiscal year but if continued into the next biennium would seriously limit the college's ability to effectively support student access and
success.

WNC serves low-income, rural communities that depend on WNC for the education and training that allows entry into meaningful employment
benefitting our workforce and lifting entire families out of poverty. With dramatically reduced services, it will take longer for these communities
to access the training they desperately need and desire.

Nearly one-third of WNC students are the first in their families to attend college which makes counseling and support services absolutely critical
to success. These families struggle to help their students determine career goals, encourage persistence and navigate through degree
requirements. With counseling services diminished, wait times will increase, counselor to student ratios will increase and student success rates
will plummet.

We express our deepest concerns about the cuts overall and the impact they will have on students and their ability to pursue post-secondary
education.

NSC

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 These additional proposed cuts would lead to reductions in staff and operating budgets at a time when the College is continuing to
experience rapid growth. Currently, the College is projecting up to a 15% year-over-year increase in enrollment for Fall 2020. Additionally,
the College has increased its total number of graduates by 80% since 2015.

These cuts are in addition to Governor Sisolak's proposed budget reductions for NSHE institutions of 16% as well as furloughs. Taken
together, these cuts amount to 23% of Nevada State College's State appropriations. As a young institution with a mission to serve a
diverse and deserving student population, and recent successes in significantly increasing their graduation rates – this is a substantial
reduction of funds.

A calculation of an additional $316,353 reduction of funds assumes a $474,530 offset by the NSHE Investment Operating Pool. Without this
offset, the total reduction to Nevada State College would be $790,833 as outlined in the amendment to Assembly Bill 3.

Brief Summary of the Potential Impact of an Additional $316,353 Cut:

 An additional hiring freeze of 3-5 critically needed positions to generate savings of approximately $216,000. These position
freezes are in addition to the currently 14 frozen positions, compounding the challenge of having adequate faculty and student
support staff to meet the needs of a rapidly growing institution.

 An additional reduction of $100,000 to Nevada State College operations and travel budgets on top of the $666,885 operations cuts
already planned across the campus.

 If it is determined that the $1.4M of CARES Institutional funding cannot be used to help close the funding loss, the impact will be
even more dramatic.

DRI

DRI's state funding is vital to our ability to earn grants and contracts for work that is performed by our research faculty. State funding helps
support our administrative staff and the operation and maintenance of our facilities. This support is essential to our research faculty, who, in
turn, conduct research via federally and privately funded grants and contracts.

An economic impact study conducted last year found that for every dollar in state revenue that we received, our research faculty brought in
nearly $5 in funding from outside of the state, and had a total direct, indirect and induced economic benefit of $9.

DRI has cut 16 percent of its state budget and has planned for furloughs as requested by the Governor and outlined in AB1. In addition, DRI has

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not received any funding through the CARES Act so the $3.5 million in estimated coronavirus impacts will be absorbed by the institution.

An additional $126,232 in cuts to state funding will force us to reduce administrative support for faculty through the utilization of indirect cost
recovery funds. Faculty pay into that fund from their research projects to cover the cost of writing proposals, faculty support, and to help
support DRI administration. The reduction in funds will mean fewer dollars available for faculty to write research proposals for future grants and
to support faculty.

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