MINUTES OF THE JOINT MEETING OF SENATE COMMITTEE ON FINANCE AND ASSEMBLY COMMITTEE ON WAYS AND MEANS Sixty-eighth Session February 16, 1995 The joint meeting of the Senate Committee on Finance and the Assembly Committee on Ways and Means was called to order by Chairman William J. Raggio, at 8:00 a.m., on Thursday, February 16, 1995, in Room 119 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. SENATE COMMITTEE MEMBERS PRESENT: Senator William J. Raggio, Chairman Senator Raymond D. Rawson, Vice Chairman Senator Lawrence E. Jacobsen Senator Bob Coffin Senator William R. O'Donnell Senator Dean A. Rhoads Senator Bernice Mathews ASSEMBLY COMMITTEE MEMBERS PRESENT: Mr. Morse Arberry, Jr., Chairman Mr. John W. Marvel, Chairman Mrs. Jan Evans, Vice Chairman Ms. Sandra Tiffany, Vice Chairman Mr. Dennis L. Allard Mrs. Maureen E. Brower Mrs. Vonne Chowning Mr. Jack D. Close Mr. Joseph E. Dini, Jr. Mr. Thomas A. Fettic Ms. Chris Giunchigliani Mr. Lynn Hettrick Mr. Bob Price Mr. Larry L. Spitler STAFF MEMBERS PRESENT: Dan Miles, Fiscal Analyst Bob Guernsey, Principal Deputy Fiscal Analyst Mark Stevens, Fiscal Analyst Gary Ghiggeri, Deputy Fiscal Analyst Debbra J. King, Program Analyst Sue Parkhurst, Committee Secretary Deb Salaber, Committee Secretary OTHERS PRESENT: Ron Sparks, Director, Western Interstate Commission for Higher Education (WICHE) John Vergiels, Executive Commissioner, Western Interstate Commission for Higher Education Don Hataway, Chief Assistant Budget Administrator, Budget Division, Department of Administration Richard Jarvis, Chancellor, University and Community College System of Nevada (UCCSN) Tom Anderes, Vice Chancellor of Finance, University and Community College System of Nevada Joseph Crowley, President, University of Nevada, Reno (UNR) Ashok Dhingra, Vice President of Finance, University of Nevada, Reno Robert Daugherty, Dean, School of Medicine, University of Nevada, Reno Bernard Jones, Dean and Director, Agricultural Extension Department, University of Nevada, Reno Kenny Guinn, Interim President, University of Nevada, Las Vegas (UNLV) Norval Pohl, Interim Vice President for Finance, University of Nevada, Las Vegas Richard Moore, President, Community College of Southern Nevada (CCSN) Ruell Fiant, Vice President for Finance, Community College of Southern Nevada Ron Remington, President, Northern Nevada Community College (NNCC) Carl Diekhans, Vice President for Finance, Northern Nevada Community College Rita Gubanich, Acting President, Truckee Meadows Community College (TMCC) Stephen Salaber, Director of Budget and Planning, Truckee Meadows Community College Anthony Calabro, President, Western Nevada Community College (WNCC) Dane Apalategui, Dean of Finance, Western Nevada Community College James Taranik, President, Desert Research Institute (DRI) Dale Schulke, Vice President for Finance (Departing), Desert Research Institute Mary Lou Jarvis, Vice President for Finance (Replacing Dale Schulke), Desert Research Institute Jim Richardson, Lobbyist, Nevada Faculty Alliance Elizabeth Raymond, History Professor, University of Nevada, Reno Jim Eardley, Chairman, University of Nevada Board of Regents On behalf of the joint committees, Senator Raggio extended condolences to Senator Mathews on the recent death of her brother. In opening remarks concerning the hearings on the university budgets, Senator Raggio requested committee members to limit their questions and comments to matters germane to the budgets. WICHE Loan & Stipend - Page 385 Following the introduction of Ron Sparks, Director, Western Interstate Commission for Higher Education (WICHE), Senator Raggio acknowledged the presence of former Senator John Vergiels, Executive Commissioner (WICHE). Mr. Sparks then provided an overview of the WICHE program. He noted the Nevada Legislature approved the state's participation as a member of the WICHE compact in 1959 and said the program is designed to provide educational assistance to students seeking higher education in various professional and graduate programs. Through WICHE's flagship program, the Professional Student Exchange Program (PSEP), Nevada has provided over 900 students access to a selected range of graduate and undergraduate programs throughout the western states region. The PSEP provides assistance to students each year in the following fields: law (12 slots), dentistry (3), optometry (3), veterinary medicine (4), occupational therapy (3), pharmacy (3), and physical therapy (4). In addition, two new slots have been requested in the proposed Executive Budget for a new program, Physician Assistants. Mr. Sparks further explained the manner in which the program functions, including the loan and stipend program and its requirements. In addition to the loan and stipend fund, which constitutes the major portion of the WICHE program, the commission is involved with the Western Regional Graduate Program (WRGP) and the Western Undergraduate Exchange Program (WUEP). The WUEP involves agreements among the different universities participating in the program with respect to tuition costs (150 percent of in-state tuition) for undergraduate students attending a university out-of- state. Mr. Sparks said the regional office of WICHE has become more involved in some of the different issues affecting higher education, including telecommunications. The regional office is putting together a program that will allow states to begin sharing, through telecommunications capabilities, academic needs common to education in the western region. The program, the goal of which is to develop standards to make it feasible for states to send telecommunications degree programs across state lines, is being examined by accrediting agencies throughout the nation. Senator Raggio requested Mr. Sparks discuss the need for the new Physician Assistant program in decision unit E-275 (page 386) and the rationale for its inclusion in the budget. Mr. Sparks said the new program is necessary because there is a need for more and better qualified health professionals in rural Nevada, and the Physician Assistant program addresses this need. He further stated the WICHE administration supports placing a rural practice requirement upon any student who accepts financial aid from the WICHE program. While a practice obligation currently exists for 1 year of practice for 1 year of certification, the administration would prefer to have a requirement for at least 1 year of rural practice. Four Physician Assistant positions have been requested. Regarding the adjustments to the base budget (page 385), Senator Raggio asked for an explanation of the funding of four physical therapy slots despite the 1993 Legislature's decision not to approve the funding request in anticipation of a graduate program being implemented at the University of Nevada, Las Vegas (UNLV). Mr. Sparks said WICHE had not initially funded the slots, but the commission was inundated with calls from people complaining about their nonavailability. The WICHE administration therefore determined to fund four of the eight slots originally funded out of the reserve account. Senator Raggio inquired if the funding was below the amount at which an agency is required to seek approval from the Interim Finance Committee. Mr. Sparks replied yes. Assemblyman Jack D. Close noted he is a member of the advisory board associated with development of the physical therapy curriculum at UNLV. He expressed appreciation for the commission's action in recognition of the high interest shown in this area and said he is hopeful the Legislature will approve the physical therapist slots for at least 1 year of the biennium for the benefit of interested students. Senator Raggio inquired as to the status of loan repayments and collections. Stating he did not have the specifics on hand, Mr. Sparks said the commission has been collecting above and beyond what was anticipated. The senator asked how the commission intends to deal with a projected depletion of the reserve account to about $100,000. In discussion on this matter Mr. Sparks reiterated the collection process should result in a far higher amount in the reserve account, at least $250,000. He estimated the current average monthly collections at $40,000 to $50,000. Senator Raggio requested the committees be furnished, at the earliest possible time, the status of collections, outstanding obligations, loans in default and related information. Mr. Sparks agreed to send the information subsequent to the meeting and then gave an overview of the current collection process. Mr. Sparks said many students, especially older students who perhaps did not understand what their obligations were when they elected to participate in the WICHE program or who discovered better opportunities in other states, "are having some difficulty returning...to the State of Nevada to practice." Consequently, the commission has been attempting to contact the students, convert the stipends to loans and thereby improve the collection process. An annual review of the entire portfolio is conducted to determine the status of the participating students in terms of their obligations. A practice questionnaire is sent to the students to determine if they intend to return to Nevada. If they do not intend to return, the commission contacts the student and seeks to arrange loan agreements. This benefits WICHE by improving the cash flow and benefits the students by keeping them informed of the status of their loans. Mr. Sparks said when a student obtains the financial support, a first-time borrower's meeting is held with the student to explain the financial obligation being incurred, to provide the opportunity to opt out before a contract is signed and to answer questions about the program and its requirements. Senator Raggio called attention to the omission of the optometry field in the budget (page 387). Don Hataway, Chief Assistant Budget Administrator, Budget Division, Department of Administration, said the omission was inadvertent and the item should be in the budget. Three positions are requested in this category. Assemblyman Close suggested the commission include the kind of detailed information requested earlier by Senator Raggio in future budgets presented to the Legislature. Senator Jacobsen voiced his long-standing concern about the lack of a cosigner on student loan applications. Mr. Sparks said WICHE no longer accepts applications without a cosigner. Assemblywoman Chris Giunchigliani raised the issue of means testing for assistance from WICHE. Mr. Sparks said the decision to provide assistance is not based on need, in accordance with Nevada Revised Statutes (NRS) 397 which requires the commission to select the best and most qualified students. Ms. Giunchiliagni suggested the issue of need is also important and requested that the subcommittee be provided with information that indicates applicant income. In discussion on how the allocation of slots to the various fields can be changed, Mr. Sparks said the numbers are determined by the WICHE commissioners and the commission intends to examine the present allocations to determine if changes are advisable. Ms. Giunchiliagni strongly urged the commission to do so because the allocations are skewed in terms of focus. Senator Vergiels said historically the commission has recommended the allocation numbers and the Legislature has decided on the numbers actually allocated. Ms. Giunchiliagni requested the commission prepare for the subcommittee information regarding the number of applicants in the various areas. WICHE Administration - Page 389 Mr. Sparks said the request for reclassification of the Management Assistant II (M.A. II) position to Program Assistant IV is due to the fact the position has been given more responsibility, has a higher profile, must be more able to function independently than has been required in the past and performs duties not required of an M.A. II, such as accounting. The position reclassification is necessary to enable the office to continue to function with only two persons. Senator Raggio asked Mr. Hataway about the 5 percent salary increase indicated in the budget for the unclassified positions. Mr. Hataway said he believes the request has been "backed out of" the budget but will verify this. The senator said the committees must know, for purposes of uniformity in dealing with the unclassified positions, whether the 5 percent increase recommendation is in addition to the other salary increases being contemplated. Mr. Hataway explained the budget office normally puts in the agency requests pertaining to unclassified positions, then may "back it out." Mr. Hataway reiterated he would confirm this had occurred with respect to the 5 percent salary increase requests in this budget. University of Nevada System Administration - Page 283 Senator Raggio introduced Dr. Richard Jarvis as the new chancellor for the University and Community College System of Nevada (UCCSN), and Tom Anderes, Vice Chancellor of Finance, UCCSN. The senator welcomed Dr. Jarvis to Nevada, noting he comes to the position highly regarded. Dr. Jarvis directed the committees' attention to a handout entitled "1995-97 UCCSN Budget Request System Overview" (Exhibit C). (A document entitled "UCCSN 1995-97 Biennial Budget Request" was also distributed to committee members and is included in the record of this hearing as Exhibit D. Original is on file in the Research Library.) Dr. Jarvis stated his intention to present an overview of system issues, the background to the university system's budget requests and UCCSN's reactions to the Governor's recommendations in the budget. He said Mr. Anderes would deal with the system issues and the overall system administration projects, after which each of the presidents of the campuses in the system would testify before the committees on their individual campus budgets. After recognizing Dr. Jim Eardley, Chairman, University of Nevada Board of Regents, Dr. Jarvis proceeded with his overview. Beginning with page 1 of Exhibit C, Dr. Jarvis itemized and commented on the areas that have been or are being addressed by the university system. Under Item 2, Student Revenues, Dr. Jarvis said the "Good Neighbor" tuition policy has been reformed. He said the policy was well intentioned but has led to a situation wherein it can be less expensive for students to pursue a baccalaureate (B.A.) degree at Nevada universities than to do so in California. The discrepancy is being eliminated because it is unfair, Dr. Jarvis stated. Another area to be addressed at board meetings is that of residency and tuition charges, which will be a major issue in the years ahead because of Nevada's proximity to "the largest number of unserved students in the U.S." (California). Dr. Jarvis discussed the issue of faculty (Item 3, page 1), which he noted is the largest part of the university's work force and accounts for the main part of its expenditures. It is a major topic of concern both nationally and within the university system. The work load and oversight system that has been implemented will address the way in which faculty are allocated to courses, the chancellor continued, and this process will no longer be done on a periodic basis. With regard to Item 4, Resources, Dr. Jarvis said the university system has put in place a new fiscal exceptions system to monitor expenditures during the year. This will enable the UCCSN to avoid the shocks and surprises of large deficits or unknown funds appearing during the year. Dr. Jarvis said the system is attempting to address each of the major elements of its budget and to provide better and greater oversight to the Legislature and the public. Turning to page 2 of Exhibit C, Dr. Jarvis spoke about the issue of growth in the UCCSN system. He noted the 1980s were a period of extraordinary growth in the system. Nevada built the fastest-growing university and community college in the U.S. during this period. Dr. Jarvis lauded the Legislature for what he termed "an incredible accomplishment" and said the 5 to 6 percent growth per year experienced in the 1980s was an extraordinary commitment by a growing state. The 1992-1994 period was difficult for the university system, and enrollments remained essentially flat with growth of no more than 1 percent per year. The system is now seeking to restart growth, Dr. Jarvis stated, and the projected growth in the proposed budget is a modest 2.8 per cent for each year of the biennium. He stressed the budget requests do not begin to address the demand factors of a projected growth in the number of high school graduates from 1994 through 2004 of 71 percent, the high volume of immigration into Nevada and the state's commitment to economic diversification. Dr. Jarvis discussed the chart on page 3 of Exhibit C which ranks Nevada second to the bottom in percentage of high school graduates enrolled in college. He said an index of the vitality of the state is often the number of high school graduates who proceed to college from high school. The chart shows Nevada is 20 points below the national average of 51.3 percent. Dr. Jarvis said a radical new partnership among the Legislature, the university system and the public will be needed to close the gap, and this will have to be done over a long period of time. Dr. Jarvis next drew attention to the chart on page 4 of the system overview, showing a drop in the number of high school graduates going on to college in contrast to an average increase of 5.9 percent, nationally. He said there is a gap in the number of students the university system is able to serve; capacity is full, while the system faces continued and sustained growth. Referring the committees to page 5 of the handout, Dr. Jarvis noted that any secondary or postsecondary education dramatically and favorably impacts income and unemployment rates. The long-term question facing the state, he continued, is how many of its population will be placed in the separate categories depicted. He emphasized the problem cannot be solved immediately, but must be addressed with a long-term commitment. Senator O'Donnell asked the cause of the above situation. Dr. Jarvis replied the primary factors are probably the rapid rate of growth in the state and lower expectations; in a relatively high proportion of families, he noted, the parents have not attended college. He further stated: Clearly there are job opportunities in many of our industries, a greater number than there are in other states, that provide initially high paying jobs for teenagers coming out of high school. But many of those jobs do not continue for very long, and the basis on which we build our long-term economy, I would suggest, will need a higher proportion than 30 percent going on to college.... So in a rapidly growing state it is not a big surprise; it is a symbol of the scale of the problem we face. Assemblyman John W. Marvel inquired if the university system tracks the number of high school graduates who matriculate out of state. Dr. Jarvis answered yes. Chancellor Jarvis continued the system overview. Discussing the data on pages 6 and 7 of Exhibit C, he noted the 64.1 percent increase in state funding is very large but is in line with many of the other agency requests and is felt to be warranted by the needs to be met. A modest increase in tuition fees and no increase in registration fees accounts for the small, 3.1 percent increase in the "other" funds. Dr. Jarvis reviewed the "factors influencing increases" items on page 8 of the handout in justification of the large increase in General Fund appropriations. He pointed out technology is rapidly developing in the field of education, and the technological needs of the UCCSN "have grown out of all recognition...[and] are now levels of magnitude larger than they were 5 or 10 years ago." Dr. Jarvis said the university's budget requests include a sizable amount for salary increases in recognition of faculty and staff efforts. Dr. Jarvis explained the larger elements of the enhancement budget requests listed on page 9. Regarding Priority I, Instructional Expansion ($35 million), Dr. Jarvis said faculty must be put back into the classrooms to deal with the current volume of students and the modest projected growth. The Support Services include student and library services. The 50 percent indicated for this item represents the difference between the current level of funding and that provided in the legislative committee study in 1987, before formula funding was used. The funding request is an attempt to close the gap between where the university system is now and the recommendations of the 1987 legislative study; this would cost $29.1 million. Assemblyman Dennis L. Allard asked if, given the statement made earlier regarding low expectations for attending college, the UCCSN has any statistics that track demand. He questioned whether the demand actually exists that would justify the amount of the increase requested. Dr. Jarvis replied there are some statistics available, although they are not comprehensive with regard to students who are unable to get into specific courses. There are two problem areas, he stated: (1) students who cannot get into the university programs because they cannot get the courses they need to begin on time; this pushes them into a part-time status, causing them to fall further and further behind the curve in terms of completing their program; and, at the end of the process, (2) students who cannot get into courses that will enable them to complete their degree requirements. Dr. Jarvis said he could provide some statistics on attempts to get into courses, but could not give such information concerning the loss of demand that results when people simply "give up and go away." He said this is the most insidious problem the university system faces. Mr. Allard inquired if the demand matches the increases. Dr. Jarvis responded the real demand is probably substantially higher than the 2.8 percent increase the university system has projected in its budget. Mr. Allard requested the committees be provided with whatever relevant statistical information is available. Concerning the figures for enrollments and student demand shown on page 10, Exhibit C, Dr. Jarvis offered to provide a breakdown of the figures by university and community college campus. He delineated what the additional funding requests would accomplish for the students, as outlined on page 11 (Exhibit C). Assemblyman Morse Arberry requested Dr. Jarvis discuss the need to enhance campus safety. Dr. Jarvis said he would defer to the campus presidents to answer this question when they testified on the budgets for their respective institutions. Dr. Jarvis stated the 18.2 percent increase in state support recommended by the Governor was "an extraordinary experience." (The $460.7 million does not include the recommended one-shot appropriation of $20 million for equipment or the financial aid request which was made into a one-shot appropriation of $7 million.) Referring to the figures on page 13, Dr. Jarvis said the key element shown is that the significant percentage increases take place in the teaching institutions, the universities and the community colleges. By restoring the instructional formulas in this budget, the substantially over enrolled and underfunded community colleges would be restored to equity with the universities, Dr. Jarvis stated. Assemblyman Joe Dini suggested Dr. Jarvis explain the formula funding for the benefit of new members on the Senate Committee on Finance and the Assembly Committee on Ways and Means. Senator Raggio inquired if Dr. Jarvis was prepared to discuss the formulas established in 1985 following legislative adoption of the recommendations of a special committee. Dr. Jarvis deferred to Mr. Anderes as vice chancellor for finance to discuss the formula funding. Senator Raggio noted the formulas are a goal and are not "set in concrete." Tom Anderes, Vice Chancellor for Finance, UCCSN, proceeded with a detailed description of formula funding. He said the primary formula, which is related to the instruction formula, is very basic and is used to identify the number of faculty needed to teach students. Included with the formula is the identification of support staff, which is directly related to the number of faculty. In terms of relating the total dollars that are needed to support those faculty and staff, average salaries from the prior year are utilized. Noting there are seven or eight different student-faculty ratios that are aligned with the student population, Mr. Anderes said the most widely used ratio (for liberal arts, education and other academic areas) is 21 students per faculty member. If this were to be applied against a population of 1,000 students, 50 faculty members would be needed. The ratio for engineering studies is 15 to 1; for nursing, the ratio is 7.5 to 1. The community colleges have another set of ratios related to their unique needs: developmental, dental hygiene, rural, vocational, and nursing. Mr. Anderes explained the basic premise is that the number of faculty is determined; this number is then multiplied by an average salary, which gives the faculty salaries. The ratio of faculty to staff is the number of faculty supported by one staff member. Using the above example of 50 faculty for 1,000 students and a faculty-to-staff ratio of 5 to 1, the number of support staff required in the instruction area would be 10. The related dollar amounts are derived by adding the amounts for the faculties to those for the instructional support staff to determine the total salary needs, not including merit increases and fringe benefits. This is the basic premise behind the instruction formula, Mr. Anderes stated. The formula is relatively simple, but becomes more complex when the differences between types of students are identified. Ms. Giunchigliani requested the subcommittee be provided information regarding the class loads and class sizes. Mr. Anderes said there are four or five sub-formulas in addition to the primary formula. They fall within the category of support formulas. One of the sub-formulas is for the library acquisitions program, which, at the university level, is essentially built on a stated base of volumes to be acquired (85,000 volumes), related to the number of faculty, the number of students, the number of undergraduate degrees, the number of masters and doctoral degrees, and separately the number of doctoral degrees. There are specific numbers tied to each of the components that "then become multiplied and [are tied] in to essentially determine what the total number of volumes are that are necessary," Mr. Anderes explained. A base number of volumes is thereby established for the purposes of the biennial budget, and for future projections an acquisition rate of 5 percent per year is attached to the figure [base number of volumes]. "On top of that," Mr. Anderes continued, "to arrive at the dollars you are looking at an average annual cost per volume. So you have your total numbers of volumes, you have how it is going to grow and you have the cost per volume, which essentially then provides the total dollar figure for the universities." Mr. Anderes said the community colleges are different in that their collection size is tied to the number of students enrolled. There is a resource allocation formula, but it is basically built on the number of students for each institution. The formula also relates to an average cost per volume and an acquisition rate similar to the university's. Mr. Anderes added as a sidelight that throughout the university system, library acquisitions are the least funded area and are at a level of approximately 50 percent of funding. Senator Raggio remarked this is probably an area of the formula that needs to be revisited in view of the new technology, information services and so forth. Mr. Anderes agreed, noting the formulas were developed 9 years ago, and much has happened since then related to distance learning, data processing and other areas. Senator Raggio requested Mr. Anderes discuss briefly the institutional support and support services portions of the formula and said he would request the fiscal staff to provide the committees an overview of the formulas in written form. Mr. Anderes volunteered to assist the staff in this regard. With respect to the institutional support function, Mr. Anderes said this is probably one of the more simple formulas. It entails looking at last year's total operating budget and subtracting from this the amount identified for institutional support. For definition purposes, Mr. Anderes stated, institutional support relates to the functions of accounting, audits, budget, personnel office, executive management, affirmative action, campus safety, and a whole array of support areas. He continued his explanation of the formula pertaining to institutional support. Mr. Anderes said the student services academic support model, which relates to library staffing, the dean's offices and so forth, "is simply identifying numbers of staff for the vice presidential offices, for each of the colleges." Library staffing is based on numbers of volumes. Any other unit, such as a museum, that does not fall within the library or dean's offices is simply a percentage (6.5 percent) of the instruction function, Mr. Anderes stated. Senator Raggio said the summary was adequate for the committees' purposes. He stressed again the recommendations of the 1985 legislative committee were adopted by the Legislature as goals to be reached as funds become available, not as standards that must be met. The senator called the committee's attention to information provided by the fiscal division staff containing a comparison of the Executive Budget figures with actual expenditures. He requested comment from the university system administration on the increases in instructional expense compared to the increases for institutional support. Noting the percentage increases for instructional expense are significantly lower than the expense for institutional support, particularly in the community college budgets, Senator Raggio asked why this is the case. Mr. Anderes said the relative increases in institutional support have been a national trend, "right or wrong." He said part of what must be understood and what must be provided the committees is the answer to the question, "What were the increases that are reflected in the institutional support area?" What is being found nationally, Mr. Anderes continued, is that this category includes campus safety, affirmative action, audit, personnel administration, computer services, telecommunications and other such areas. Some of these are very high cost, rapidly growing needs, and in some cases there are federal mandates, as well, Mr. Anderes stated. Senator Raggio requested the committees be provided information showing a breakdown of the components of the institutional support increases and any additional relevant information. Assemblywoman Giunchigliani requested the committees also be provided the number of actual staff in each of the areas mentioned by Mr. Anderes. Dr. Jarvis continued his overview of the system (Exhibit C). Reviewing page 14, he said the Governor's recommendation has returned the university system to an equity situation in the area of instructional expansion under Priority I and to a situation wherein the system can deal with the quality levels considered appropriate for both current and projected growth. Dr. Jarvis expressed appreciation for the Governor's support of the priorities established by the university. Discussing the highlights of the Governor's recommendations as listed on page 15, Exhibit C, Dr. Jarvis said the significant funding support for scholarships and grants will move the state from the position it has long held at the lower end of the scale relative to other states, significantly upward on the scale in the area of student financial aid. Dr. Jarvis stressed the university system's reaction to the Governor's recommendations have been positive, overall, because they enable the UCCSN to progress. Noting, however, that needs remain which will continue throughout the next several bienniums, he listed the priorities outlined on page 16 of the system overview (Exhibit C) should additional funds become available. Regarding the one-shot funding request for equipment, Dr. Jarvis said the most difficult challenge facing the university system over the next few years is providing both a statewide information network and distance education across the state. He said Nevada is facing competition and experiencing intrusion from neighboring states in this area. Dr. Jarvis said the equipment request is "a big ticket item" that is difficult to fund out of the $20 million recommended in the Executive Budget. He said $5.2 million is required for the minimum configuration of network/distance education equipment; below that amount it is impossible to obtain the equipment and support personnel and to cover the expenses involved in implementing and operating such a system. The cost of a fully funded system, which would be complete within three biennia under the university's original plan, would be $10 million per biennium. The planned completion time will probably need to be extended, Dr. Jarvis said, but another $4.3 million would enable UCCSN to begin implementing a fully functional system by the year 2000. He said the equipment needs are substantial and ongoing. With respect to the student financial aid needs of the university system, Dr. Jarvis said the $7 million recommended in the Executive Budget represents an enormous step forward and will be the largest increase in this state, and, proportionately, possibly the largest in the nation. However, it is a one-shot appropriation which causes some concern regarding future funding, Dr. Jarvis continued. He noted a set-aside to provide funds for the next biennium has been suggested. He requested that at least a portion of the $7 million in student financial aid funds be put on a fast track for early legislative approval to guarantee aid packages already awarded, and he recommended expediting approval of at least $2 million. Within the operating budget needs, Dr. Jarvis noted the university had requested funding of 50 percent of the formula. The request was not recommended in the Executive Budget, but the UCCSN would like to see the amount raised to at least 20 to 25 percent of the formula. Internal and external system audits are desperately needed, Dr. Jarvis stated, and the requested $300,000 would enable the university to increase both the internal audit staff and the scope of its external audits. The need with respect to salaries of community college part-time faculty was also itemized. Dr. Jarvis said the community colleges would "bear the first wave of any expansion" to the university system. The new programs and innovative new entrepreneurial activities will be built largely on the basis of part-time faculty, Dr. Jarvis stated, and any assistance in raising faculty salaries would be very helpful. Finally, the federal and state mandates are areas of rapidly growing importance in the university's budgets as the federal funds dwindle, the chancellor stated. Dr. Jarvis reiterated the university system's appreciation for the funding recommendations made in the Executive Budget while noting there are needs still to be met. Senator Raggio requested the anticipated ongoing expenditures within the one-shot appropriation for equipment be broken out because the committees need to be cognizant of any commitments incurred for continued spending. Dr. Jarvis agreed to provide the information quickly and noted the expenditures in question are a significant element of any large scale computing system. Senator Raggio informed the committees the fiscal staff have been requested to compile a list of the big ticket items that will require continued funding during the next biennium. Assembywoman Giunchigliani presented requests for information to be provided the committees, as follows: (1) where in the budget the appropriation for a performance audit needs to be added; (2) the status of articulation of courses from the community colleges to the university and why full articulation has not occurred if such is the case; (3) the facts regarding a prospective change in the entrance requirements to a different grade point average (GPA); (4) the number of courses being taught at high schools by university personnel around the state to determine if available facilities are being utilized that could reduce the need for additional construction of buildings and sites; (5) if the Legislature were to fast-track the student financial aid funds, how much would be needed; and (6) how many part-time K-12 teachers currently instruct at the community colleges, for the purpose of determining the existing partnership and exploring the possibilities for additional partnerships. Dr. Jarvis concluded his comments with reference to the UCCSN's capital improvements program by acknowledging the recommended budget meets many of the system's needs. Senator Raggio inquired if tugs-of-war within the system over the funding requests can be avoided this session. Dr. Jarvis replied yes. Senator Coffin disclosed his wife is a teacher at UNLV, but said this would not hinder him in voting or asking questions. He requested the following information to supplement the faculty work load report from the university system: the release time policy for each faculty member, which is in essence the course reduction criteria, by department, for all campuses. The senator said his request aimed at ascertaining whether there have been improvements in this area. Dr. Jarvis agreed to provide the information. He indicated the term "release time" is inaccurate since it implies the faculty are given time off when instead they are actually reassigned to other functions. He offered to provide information indicating the other functions faculty are performing when their instructional assignment is "less than the expectation," as well as information that shows the delivery of instruction within this system meets national expectations for the types of institutions involved. Dr. Jarvis further stated the university will be working to improve consistency in the area of faculty work load reassignments and to ensure there are relevant policies in place. Assemblyman Jan Evans stated for the record she is a university system employee and therefore does not intend to vote on the university budgets, but will ask questions. She requested the committees' staff be provided a status report regarding the endowment for the estate tax. Senator Jacobsen noted the audit report found the performance measurement for the university system was somewhat lacking and said performance indicators are important to the Legislature. He expressed concern there are no references in this regard to mining or agriculture, both of which are important industries in Nevada. Assemblyman Bob Price disclosed he is married to a member of the university's Board of Regents and expressed indecision as to how to handle the question of voting on university-related measures. Senator Bernice Mathews stated for the record she is seeking a legal opinion regarding voting on university-related matters since she is a professor emeritus for one of the university's institutions. Assemblyman Vonne Chowning said as a former teacher she is distressed at the statistics presented earlier (Exhibit C, pages 3-5). She requested the committee be given detailed information as to how the UCCSN intends to provide more college opportunities and classes to high school students so they can experience college as an attainable goal. Dr. Jarvis said university administration has been discussing with campus presidents opportunities to approach K-12, to radically rethink the way in which credit is dispensed and courses available in high schools are accredited. He voiced the opinion it has been disastrous to separate the attainment of college-level skills in high school from the awarding of college credit and said he supports making available college credit to any high school student who is ready to take the course. He further stated there are tremendous opportunities in this area that do not require new facilities or massive increases in funding and staff, but rather a different way of thinking and doing business. Mrs. Chowning observed such changes would benefit not only the students, but businesses wishing to relocate to Nevada and therefore the state's future. Senator Raggio stated his desire to review the various components of the Governor's recommendations for the university budgets. He noted the Governor's budget recommends $460.7 million in state funds for the UCCSN, which includes the funds recommended for salary increases. The recommended funding represents an 18.5 percent increase in General Fund support when compared to amounts approved by the Legislature for ongoing operational costs in the current biennium. State funds authorized for the current biennium represent 18.3 percent of total General Fund appropriations, and the proposed funding maintains this percentage. Senator Raggio said the recommended inflation increases in decision unit M-100 appear to be appropriate. He pointed out there were apparent miscalculations under M-200 which, if corrected, would reflect a savings of approximately $3.6 million to $3.8 million over the biennium. Mr. Anderes stated there are probably offsets to the savings. In decision unit M-300, Senator Raggio continued, the amounts recommended are based on increased retirement contributions recommended on July 1, 1995 and are also calculated incorrectly; the amounts are apparently overstated by about $200,000 for each year of the biennium. Regarding decision unit M-525, Senator Raggio noted the recommended funding is 25 percent of the amount requested for compliance with the Americans with Disability Act (ADA) and expressed agreement with the recommendation, which provides $115,000 per year. He acknowledged there is a need to continue with this program, which involves bringing a number of older buildings into compliance with ADA. Senator Raggio said decision unit E-250 contains the recommendation to restore student/faculty ratios to the levels approved in 1991 and would provide approximately $5.7 million each year of the biennium. Recalculation is also required in this unit due to the miscalculations within M-200. E-251 would provide 20 percent of the funding required to fully fund the support service (non-instructional) formulas and included academic support, student services, book acquisitions and equipment replacement. The funding recommendations are $5.5 million in Fiscal Year (FY) 1996 and $6.1 million in FY 1997. The amounts in E-252 would provide additional funds to grant waivers for out-of-state tuition, budgeted at $786,000 in FY 1996 and $860,000 in FY 1997. In E-253 the Governor recommended state funding of $660,164 in each year of the biennium for staffing support for the Las Vegas offices of the School of Medical Sciences as well as in some of the residency programs. In discussion on decision unit E-255, Senator Raggio noted the amounts recommended would increase funding available to finance the merit pool of the university system from 2.0 percent to 2.5 percent of professional salaries; the merit pool is for instructional staff and does not include positions at or above the dean's level. The cost for all budgets would be approximately $641,000 in FY 1996 and $1.3 million in FY 1997. The senator requested assurance by the university administration the merit pool funds would be applied based on true merit and would not be treated as a source of funds for automatic salary increases, in accordance with the Legislature's original intent. This completed Senator Raggio's summary of the Governor's recommendations for the university system budgets, and the UCCSN representatives were invited to comment on any of the budget items listed as well as the non-General Fund requirements in the budget. With respect to the latter, Dr. Jarvis stated there are parts of the budget concerning student revenues that must be revisited in terms of the contribution made by students, and this would be addressed by the Board of Regents at the February and March 1995 meetings. The board is to be presented with data on Nevada's comparative standings in this area, on the financial aid situation and on how student contributions could help make up the areas of the budget in which additional funding assistance is required. Senator Raggio directed the committees' attention to the information provided by fiscal staff in which student fees in Nevada for FY 1994 were compared to the average fees charged in other western states. In general the comparisons indicate the fees charged in Nevada are lower than those in other western states and are significantly lower in all categories of the university fees. Senator Raggio said the committees would expect to be presented with recommendations in this regard. Dr. Jarvis noted the financial aid recommended in the Executive Budget would be a crucial part of the discussion on student revenues. Senator Raggio discussed the budget format for the university campus, in which expenditures are broken into the following categories: instruction, institutional support, operation and maintenance of plant, and all other expenses. He commented the new format, which provides good information pertaining to the budgets, represents a major change in the presentation of university budget information. He surmised the question would arise as to the flexibility or ability to transfer funds within the several expenditure categories delineated. Mr. Hataway explained the differences between the current format for the university budgets and what had been done in the past. In the past, he stated, a single allocation was made for the use of all programs. The current format breaks down and allocates the expenditures based on what has been determined to be desirable, but reallocations are possible through the work program change procedures by which all other executive branch agencies are governed. Mr. Hataway described the format change as positive because it identifies the amount of funding for each of the expenditure categories for each institution. He said the new format uses uniform functional categories employed by all institutions and is also based on national categorical allocations. Senator Raggio inquired if the new approach is the one normally found in university system budgets. Mr. Hataway indicated various methods are used. The senator explained he raised the question because the committees need to know what money is going into each of the expenditure categories. He said he is not advocating the kind of line item review exercised with other agencies and invited response from the university representatives on the matter. Mr. Anderes also addressed Senator Raggio's question, observing that many states provide lump sums and leave spending decisions to the institution. He said accountability is an issue with this method, but it provides the flexibility to make changes. Further discussion ensued on this issue. Concerning the recommendation in the Executive Budget (page 299) that UCCSN be authorized to submit an amended work program after the Board of Regents approves the allocation of the reserve funds, with no further review required by the Interim Finance Committee, Mr. Hataway said the proposal would provide a review process and involves the budget office in the decision-making process without damaging the agency's flexibility to make changes as needed. Dr. Jarvis reserved the right to return to the committees with some indication of what the work load implications would be and how the university would be able to respond to a market which necessarily changes three times during the year. Senator Raggio restated the proposal by the Department of Administration regarding funding allocation as follows: Amended work programs must be submitted to and approved by the Board of Regents, but no further approval would be required, and the transfer of funds between the categories could still be accomplished. Senator Coffin expressed concern about the radical departures from the previous budget format and said the legislative committees might not be able to exercise due diligence on the budgets if a totally global budget were to be employed, as the university was virtually proposing. Noting the situation concerning the state's largest university campus, UNLV, wherein Interim President Kenny Guinn uncovered numerous problems including a complete lack of accounting practices, he stated his reluctance to approve a system so sweeping that the Legislature would have difficulty seeing the details. He observed the problems at UNLV occurred under the purview of the Board of Regents and had not been detected by that body. He further voiced the opinion the change in budgeting approach could not have come at a worse time and said he would have strongly discouraged such a change had he known it was planned. The senator reiterated his concern about the change from the previous accounting system which he said has at least allowed the legislators to exercise due diligence in their duties. At this time Mr. Hataway presented historical background information regarding the format of the Governor's budget. He said until the 1991 legislative session the entire university budget was included in the Executive Budget and was broken out in detail as to what the university could and could not do. The budget office then went to a lump sum allocation. What is being proposed with the new budget is to at least "bring it down to the functional categories they say they are going to work with." Mr. Hataway wished to clarify for the committee there are decisions the Board of Regents must make regarding the work programs that involve only accounting changes, in terms of how reserves, inflation and formula dollars are allocated. If standard practice that can be documented were to be followed, the change would be considered standard. However, Mr. Hataway continued, there have been changes during the year that have involved the flow out of one functional category into another, and new positions being created, which the budget office had no knowledge of until the university's budget was submitted and which resulted at times with the formula dollars being used to "build back up" the category from which the funds came, resulting in a "double hit" (to the General Fund). He said the budget office should be part of the process from the outset in order to know the sources of the funds and how the funds are being used. Further discussion ensued on this issue. Responding to questioning from Assemblyman Close, Mr. Hataway indicated that given the thresholds under which the budget is operating, changes in allocation of funds between expenditure categories that fall within the thresholds the university would go to the Interim Finance Committee for approval while changes outside the thresholds would go to the budget office for approval. Mr. Close asked if it was correct to say the proposed changes in funding allocation would assist the university in the area of accountability because they would be able to stay within the categories authorized by the Legislature, and the Legislature would retain control when changes outside the established bounds were desired by the university. Mr. Hataway affirmed his clarification. University of Nevada System Administration - Page 284 Mr. Anderes provided background information on this budget and then reviewed the budget requests. He said the system administration is the administrative arm for the Board of Regents, which provides the policy direction through review, development and implementation throughout the entire system and attempts to work to balance the needs of the various institutions within the system. The set of conditions is fairly complex, Mr. Anderes stated. The internal and external audit functions, both extremely important, fall within the system administration budget, as do numerous other activities. Funding support for 24 positions is requested in this budget. Under the work program for 1994-95 in the base budget, the approximately $1.9 million requested is primarily for positions and related benefits, but also has included $174,000 for the university's external audit. The agency is requesting the amount for the external audit be increased to $250,000 in FY 1996 and $275,000 in FY 1997 to reflect the large number of demands that presently cannot be met within the existing contract. In further justification for the augmented funding for external audits, Mr. Anderes said the external audits in such areas as fiscal audits and oversight are being performed more superficially than they should be. Additionally, the university administration would like to address the area of unrelated business income tax, and outside support is required in this area. The unrelated business income tax refers to the tax liability involved when a private entity shares space with a public entity; the amount to be paid by the private entity must be determined. Regarding decision unit E-253, Quality Education Opportunities (page 286), Mr. Anderes emphasized the need for the requested Auditor position to address the staffing deficiencies in the internal audit program which were identified by an independent auditor. He said the university is "running at a very risky cycle" at present, regarding the length of time between the audits in certain areas. The position requested would be helpful and would restore a position the university had 3 years ago, Mr. Anderes stated. Under the 999, Unfunded Decision Units category in this budget Mr. Anderes stressed the need for an additional $50,000 for equipment, related primarily to the networking of the system administration's office personal computers, improving communications with the institutions and the Management Information Systems (MIS). The electronics data processing (EDP) auditor was also cited by Mr. Anderes as a needed position. The request is for $155,000 for the biennium, $80,000 in the first year and $75,000 in the second. There is presently no EDP review within the internal audit function and no one with the technical expertise to review the procedures, make decisions, monitor the system and inform management of potential problems, Mr. Anderes stated, and this area represents one of the continuing needs stated in the system overview (Exhibit C) presented by Dr. Jarvis. Mr. Anderes discussed the university's intention to obtain a subscription for a legal database through whatever means possible. The UCCSN administration provides all legal support for the system and presently has great difficulty getting current information on a timely basis related to legal cases. The university requested $65,000 to support the legal database subscription, as part of the unfunded decision units. Senator Raggio inquired how the legal services are presently paid. Mr. Anderes said the university has legal counsel; however, the legal counsel requires access to legal databases to obtain current information. Assemblyman Marvel inquired as to the university system's current litigation status. Mr. Anderes and Dr. Jarvis offered to obtain the requested information for the committees. University System - Special Projects - Page 289 Mr. Anderes said the Special Projects budget is funded primarily through the estate tax at a rate of $2.5 million per year and supports a variety of projects that are very important to the institutions, but that lack sufficient funds. He said the areas currently being supported are libraries, equipment, research programs and student aid. With this budget the university system would like to continue the EPSCOR Research Program, which has been in place for a number of years. EPSCOR is an acronym for Experimental Programs to Stimulate Competitive Research and is a national program supported by federal/state matching funds. The primary intent of the program is to link university or community college research with economic development. The university system is currently supporting institutional libraries at a level of $350,000 per year through this budget. UCCSN had made their requests based on the belief the support formulas would increase to the point that it would not be necessary to continue to support the libraries at the existing level within this budget. Since the increase in support formulas did not occur, Mr. Anderes continued, the university system administration would like to reduce the amounts recommended in the Governor's budget under E-268, Quality Education Opportunities (page 289), by $350,000 in each year of the biennium and move it to the libraries of the institutions. That would still leave approximately $610,000 each year for the new EPSCOR program, EPSCOR II. In terms of its relationship to EPSCOR I, Mr. Anderes stated, EPSCOR II is a grant process whereby individuals come forward from the various university and community college institutions and try to work with private corporations, frequently with a grant. The allocation of these dollars must still be determined, but they would provide substantial amounts to allow the grant program to continue and to match federal funds. Senator Raggio inquired how the funds would be allocated across the system. Mr. Anderes said the formula has been that each university would receive an equal portion of the funds, and the same formula would be applied. Assemblyman Arberry requested explanation of why the university system had initially requested $1.1 million for EPSCOR and now is requesting $350,000 of the amounts recommended by the Governor for each year of the biennium be allocated to the institutions' libraries. Mr. Anderes replied the university's original request was predicated on the fact the funds isolated for the libraries would be returning to the system administration through the support formulas, and the assumption was that they could simply be put into the operating budget under the support formulas. He stated the library issue is a high priority for the campus presidents in the university system. Regarding the $500,000 under 999, Unfunded Decision Units, Mr. Anderes said the request is for student access funds, a financial aid package. Because of the Governor's support for the $7 million one-shot appropriation for student aid, this request is not regarded as a high priority; however, there is concern about the one-shot status of the funds and the need to continue the funding. Senator Raggio said he particularly wished to indicate, on behalf of the Senate Committee on Finance and the Assembly Committee on Ways and Means, it is very doubtful the one-shot request will be translated into a commitment for continued funding. He inquired as to the expectations of the budget office. Mr. Hataway stated the expectations are the same as those for the $29 million request for K-12: It is recognized as one-shot money and there are no guarantees any other funds will be available in the future. In line with the chairman's summary of the budget elements, Mr. Hataway said most of the dollars in the unfunded areas are for salaries and equipment and the formula dollars not funded in the recommended budget; the $500,000 agency request is part of the $40 million requested overall, of which the Governor is recommending $20 million as a one-shot appropriation. Assemblyman Larry L. Spitler inquired regarding funding support of the Lawlor Events Center. Mr. Anderes said $91,000 had been provided for operational support at the center. Senator Raggio explained the history of the funding, stating there had been a proposal for a specific appropriation for utilities to provide guaranteed support to both the Lawlor and the Thomas and Mack centers to the extent the income did not cover the utilities cost; apparently the funds had only been needed for Lawlor at the time. Mr. Spitler requested a report of how much of the subsidy has been for the Lawlor facility since its opening. Mr. Hataway said the $91,000 has been a uniform subsidy to the UNR Lawlor Events Center. Until the last session, UNLV's Thomas and Mack Center had received $120,000 from the same fund. The subsidy to that facility was dropped in the 1993 session because the Thomas and Mack facility did not need it. Mr. Hataway explained the Lawlor center has been slower to achieve profitability. Lawlor's need will probably be greater than the $91,000, Mr. Hataway said, but the funding request was limited to that amount. Mr. Spitler withdrew his request for a report on the subsidy. Assemblywoman Giunchigliani asked if the university event centers had been funded from the formula for higher education or as a separate capital improvement program (CIP). Senator Raggio requested an explanation of the funding history from Mark Stevens, Assembly Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau. Mr. Stevens said the centers were funded from a portion of the annual slot tax the federal government had returned to the state; bonds were issued, and that percentage of the slot tax was dedicated to paying off the bonds for both event centers. Ms. Giunchigliani requested a report on the status of the amount outstanding on the bond repayments. Mr. Anderes said the debt service for the bonds for FY 1995 is $5 million for the two event centers. Mr. Hataway noted the payment of the bonds is under Budget Account 1082, the Bond Interest and Redemption Program. He explained the mechanics of the bonds repayment and estimated the bonds would be paid by early 2000. System Computing Center - Page 291 Mr. Anderes stated this activity is primarily responsible for oversight of all administrative, financial, student and academic systems throughout the UCCSN and is a very comprehensive network related to both the provision of data and to video services. He explained a concern the system administration has about an item in the base budget, within which a large amount of money had been requested for equipment and lease purchases. The Governor's budget eliminated all expenditures related to equipment, and a lease purchase, reflected as an equipment expenditure, was then taken out of the budget base. Mr. Anderes said the UCCSN administration is concerned because there were lease purchases for pieces of equipment that are very significant, particularly in a computing center, and that represent a continuing cost as important as ongoing personnel. Senator Raggio said the committees would be willing to listen if the inclusion of the costs within the base budget could be justified, but the case for such inclusion would have to be strong and involve a static amount of funds. He welcomed presentation of the pertinent information to the fiscal analysis staff and invited comment from the budget office on this request. The senator expressed the committees' concern, not only with the UCCSN budgets but for those of all state agencies, about what is going into the base budgets. He said the public's interest is paramount in this situation as to what should properly be in a base budget. Mr. Anderes next explained the Unfunded Decision Units component of this budget (999, page 293). He said $5.7 million of the agency request for $7.7 million is for the Southern Regional Data Center; another $450,000 is for positions, which he characterized as extremely important in terms of the networking; and another $1 million is for equipment related to the distance education network and a variety of other purposes. University Press - Page 295 Mr. Anderes stated the University Press is a public service function and is a vehicle to support faculty efforts to reach expanded audiences on topics of interest related to their academic areas. Such an activity is typical of many universities, he said. The budgeted funds would primarily support positions. Regarding 999, Unfunded Decision Units (page 297), Mr. Anderes said the agency had requested funds for equipment and staff, including a production manager and a senior graphic designer. University of Nevada, Reno - Page 299 Joe Crowley, President, University of Nevada, Reno (UNR), introduced Ashok Dhingra, Vice President for Finance, UNR and provided historical background on the university's financial situation in recent years. He stated UNR is still in the process of coming through 4 extremely difficult years after a downturn in the state's economy. For the current biennium the university's share of the state General Fund declined from about 20.5 percent to 17.6 percent at a time when it had been looking for ways of absorbing, over the long term and system-wide, the largest enrollment increase in the nation. The large enrollment increases are expected to continue throughout the next decade, Dr. Crowley stated. The formulas were shelved, and the university has been operating without them during the current biennium. Dr. Crowley stressed the importance of restoring the formulas, as recommended in the Governor's budget, and said this would benefit not only the university system but the Legislature. Dr. Crowley said the university has accomplished much during the current biennium despite the difficult times. He expressed pride in the university personnel for their hard work and in the students for their efforts in support of the university. He said areas of accomplishment have included program development, planning of programmatic consolidation, reorganization, energy conservation and resource reallocation. Additionally, work has continued on the core curriculum, described by Dr. Crowley as the "heart and soul" of undergraduate education at the university. He said this notable accomplishment has received very favorable national recognition, including a $700,000 matching funds grant from the National Endowment for the Humanities. Work has also continued on the honors program, which in a recent national survey ranked among the top 55 college and university honors programs, private and public, in the nation. An undergraduate teaching initiative has been launched which allows the university to develop the skills of its faculty and teaching assistants. Dr. Crowley said the university is attempting to reorient its reward system to better reward good teaching. As befits a land grant institution, he continued, outreach has become a primary responsibility for all of the people of the university. The outreach activities include the establishment of what are called K-16 programs across northern Nevada in the three community college districts, with the goal of building a "seamless web" from kindergarten through graduation from the universities, incorporating community colleges (the school district and members of the community) and looking at ways to improve the university's presence in K-12 (such as developing standards and assisting the elementary schools in dealing with their problems). Dr. Crowley characterized the initiative as very promising. Economic development and diversification has continued to be a high priority for the university, Dr. Crowley continued. Research enterprise and other sponsored grant funding have approximately doubled in the last 6 years. The funding last year was $65 million; this year it is $71 million. It is anticipated to exceed $100 million, system-wide, and Dr. Crowley emphasized this area is an industry that, if nurtured, will continue to grow and produce substantial dividends for the State of Nevada. Dr. Crowley stated that despite the hard times the university has built an institution and a system, the institution last year having produced an economic impact on the State of Nevada of nearly one-half billion dollars and the system having produced an economic impact of $1.2 million. Dr. Crowley said the university has worked very hard on an assessment system that allows assessment of the students from the time they enroll until after they leave and examines the characteristics of the students by grade level. A survey of the general student population is also conducted to assess the performance of the university administration. Other assessment tools are senior exit interviews, alumni surveys, employer surveys and special projects to determine how the students are progressing academically. Summing up this part of his presentation, Dr. Crowley said the university has worked very hard, has had some significant accomplishments despite difficult times, is now looking at the prospect of very substantial growth and is trying to determine its future in terms of that prospect. That is why this budget is so important and why the university is grateful for what has been provided in the Executive Budget, particularly with regard to the faculty positions, Dr. Crowley stated. Dr. Crowley discussed some of the university's priorities and reinforced Chancellor Jarvis's statements regarding the area of technology. Acknowledging the $20 million one-shot appropriation is a large amount of money, he said that because for the last 2 biennia there have essentially been no equipment funds, the amount requested should be perceived in terms of distributing the $20 million among eight institutions, including the system institutions (for example, the computing center), over a 6-year period. In that context the amount is not large, Dr. Crowley maintained. He said there is a tremendous pent-up demand, and the $40 million requested by the university system would significantly increase the system's ability to regain lost ground in the technological area. He told the committees some of UNR's share of the recommended $20 million appropriation would go into "smart classrooms," which are revolutionizing teaching. At the $20 million level the UNR would probably be able to add 15 smart classrooms to the existing number (8 to 12). Part of the funds would also go to laboratory equipment, the campus demand for which was $12 million; that amount was trimmed to $4 million by Dr. Crowley's office and will be about $2 million as recommended by the Governor. The recommended amount would enable UNR to take advantage of matching fund opportunities in a number of high tech areas. Dr. Crowley stressed the importance of and need for computer laboratories and equipment upgrades, which he said are "an unending demand." With respect to the security needs of university institutions, Dr. Crowley said the need is serious systemwide and has become extremely so at UNR. He said the statistics for criminal activities at the campus are alarming. There has been a 20 percent increase in burglaries during 1993-1994, a 20 percent increase in larceny, and a 15 percent increase in property damage. Recently there were four break-ins at UNR involving robbery of vending machines and a break-in at the Lawlor Event Center involving robbery of an automatic teller machine (ATM). Such activities will increase until state- of-the-art, high technology equipment can be installed to discourage them, Dr. Crowley said. There are also security problems relating to personal safety, a situation of major concern to the university. For the equipment alone, the cost to secure campus buildings against criminal activity has been estimated at $2.5 million. Remarking the security issue is extremely important, Assemblywoman Chowning inquired if it has been built into the budget. Dr. Crowley explained UNR would be allocated a proportionate share of the $20 million one-shot appropriation for equipment, or about $6 million, from which about $500,000 would be used for security needs. Mrs. Chowning requested the subcommittee be provided a breakout of the $20 million equipment appropriation by campus. Dr. Crowley commented on the networking and distance education component of the equipment request, the additional $5.2 million alluded to by Chancellor Jarvis. He said it is difficult to overemphasize the importance of this request to the system's campuses, which have fallen behind much of the rest of the nation and most if not all of those in neighboring states in developing campus networks, installing the fiber optic cables that link the buildings of a campus together and the cabling required to link the campuses. Taking advantage of the opportunity that now presents itself would lead to substantial long-term savings for the State of Nevada, Dr. Crowley asserted, and the university would anticipate participating in the program in partnership with K-12 as well as with state government. Dr. Crowley began his review of the UNR-related budget requests. He offered to provide performance measurement data for UNR. In terms of the support formulas discussed earlier, Dr. Crowley stated, there are several areas of need. Prior to discussing the particular needs he commented on the differences between institutional support and instructional allocations to provide a context for discussing the needs. He observed the instructional budget is for $35 million while the institutional support budget is for about $7 million. Some uses for the institutional support dollars contemplated by UNR are security (campus police), affirmative action and the personnel division assessment, Dr. Crowley continued. He said the addition of the campus police is mandatory, regardless of the funding situation. Directing his remarks to all campus presidents as well as Dr. Crowley, Assemblyman Close said he wished to expand on Ms. Giunchigliani's earlier reference to the measurement indicators. He stressed the committees' need to receive information about the quality of the institutions' accomplishments and not just about the percentage of the goals accomplished. He encouraged the campus presidents to examine their goals and measurement indicators and requested the committees and subcommittee be provided more information regarding the status of the individual programs. Dr. Crowley agreed to forward the information. Senator Coffin stated the public safety aspect of the UNR campus disturbs him. He noted UNR is budgeted for 16.5 positions for public safety while UNLV has 24. In further questioning it was ascertained there are two positions in the self-support budget; UNR provides police service to the Job Corps at Stead as well as to the chancellor's office, the Desert Research Institute, the UNR campus and the Truckee Meadows Community College. Senator Coffin inquired if the campus police handle traffic enforcement. Dr. Crowley said some traffic enforcement is done by campus police as they are patrolling the campus, but the personnel are not detailed specifically to traffic enforcement. Dr. Crowley discussed formula items related to UNR's budget. He said library acquisitions and staffing remain very important to UNR; other majority priority areas are graduate assistant stipends as well as the number of assistantships. Addressing the unfunded mandates in the budget, Dr. Crowley called attention to decision unit 511, Hazardous Materials Management (page 301) and stated this area may be the single most serious problem UNR faces. No state funds were provided for the mandate, which Dr. Crowley said is a huge and costly mandate requiring maintenance of extensive, numerous records, the provision of chemical awareness training and medical examinations for all employees, and asbestos inspections of all renovations and remodeling, all imposed under threat of being heavily fined by the Environmental Protection Agency (EPA) and the Occupational Safety and Health Administration (OSHA). All employees of the university are held personally liable in this area. The agency requested approximately $500,000 per year to address the needs, which exist throughout the system and for which funding support is required. Senator Raggio inquired how compliance with the mandates is currently being funded. Dr. Crowley replied the money has come principally from the physical plant budget, through postponing maintenance and so forth. The senator requested each university institution present the committees with their existing deferred maintenance plans. Assemblyman Marvel asked how much of the hazardous materials (hazmat) problem stems from federal mandates as opposed to state mandates. Dr. Crowley responded the mandates are principally federal, although the state plays a major role with respect to inspections and performance surveys. He stressed the difficulty entailed in attempting to meet the standards and requirements for record keeping. Another unfunded mandate addressed by Dr. Crowley was M-525, Americans with Disabilities Act (ADA), for which he noted some funding is provided in the Governor's budget. He said the cost of ADA implementation is unknown, and the university regards its funding request for this item as very conservative. President Crowley next discussed student financial aid. He said the university system is being confronted at the federal level with the most serious efforts to dramatically reduce student financial aid since the program's inception. The bulk of UNR's aid (96 percent of the need-based aid) comes from the federal government, Dr. Crowley observed. The most important part of the program is the Stafford Loan Program, which serves 2,200 UNR students. The interest on the loans is subsidized by the federal government. Dr. Crowley said the major assault is on the subsidy, which would cause the cost of loan repayment to increase by 20 percent. Other loan and grant programs are also "under very serious assault," he stated, citing as an example the proposed elimination of the campus work-study program. Equating the program with workfare, Dr. Crowley said it is very much in keeping with Washington's current major priorities. In this context and the dramatic impact the reductions would have on students' ability to attend institutions of higher education, Dr. Crowley continued, the $7 million financial aid figure recommended by the Governor becomes even more important. President Crowley indicated the university system is grateful for the appropriation, but has concerns about its one-shot nature and the possibility of not having the funds in the future. He supported the earlier suggestion the Legislature should consider setting aside some surplus funds to help ensure continued funding in this area. Alluding to the request made by Chancellor Jarvis for fast-tracking of student financial aid funds, Dr. Crowley said about $500,000 of the $7 million would have been generated by the university itself because of the Board of Regents' policy regarding the manner in which tuition increase revenues would be apportioned to student financial aid, which is based on the federal methodology and is need-based aid. He said the university is reluctant to make the awards without knowing the funds are available to cover them. Senator Raggio asked when the funding must be in place to guarantee the awards. Dr. Crowley answered the process of making the awards would begin at the end of February or early March 1995, but the university is requesting approval at the earliest possible time. In response to an earlier request by Senator Raggio for assurance regarding the use of merit pool funds, Dr. Crowley assured the senator the funds would be used only for the intended purpose. The senator asked the percentage of faculty receiving merit pay. Dr. Crowley recalled the percentage of eligible faculty receiving merit pay during the last 2 or 3 biennia has been approximately 65 to 70 percent; however, this is misleading, he explained, because there are four levels of merit award, and the percentage of upper level personnel receiving merit pay is relatively small. Senator Raggio requested verification of the actual and projected enrollment figures for UNR as follows: Actual, FY 1994, 8,732; Projected, FY 1995, 8,895; FY 1996, 9,063, and FY 1997, 9,357. Dr. Crowley expressed the projections in percentage terms as 1.9 percent the first year of the biennium and 3.2 percent for the second year. Senator Raggio inquired if UNR is currently experiencing difficulty with course offerings. Dr. Crowley replied the number of course offerings actually increased during the biennium. The senator asked if the Governor's recommended budget would, in Dr. Crowley's estimation, provide the necessary course offerings given the projected enrollment. Dr. Crowley replied yes. Senator Raggio asked Mr. Hataway to explain the rationale of the budget office for not funding the group insurance increase in the particular budgets under discussion. Mr. Hataway answered that in what is now normally considered the base budget, the budget office has not routinely changed fringe benefits; however, the Governor and in some cases the Legislature has made some modifications for what are considered significant changes in fringe benefits. As examples he said in 1989, the group medical insurance was adjusted at the Governor's suggestion; in 1991, group medical and social security was changed, and in 1993, unemployment compensation was adjusted. Mr. Hataway stated one of the problems encountered is that many of the numbers for full-time equivalency (FTE) positions are hypothetical, but fringe benefits are budgeted on the numbers. The records indicate that with few exceptions the campuses rarely spend more than what the Legislature has allocated for fringe benefits. The only significant change determined by the budget office to be warranted in its recommendations this biennium was the percentage increase for the Public Employees Retirement System (PERS); no funds were recommended for group medical. Mr. Hataway affirmed Senator Raggio's assessment there has historically been sufficient "overfunding" to compensate for the cost of any increase in group insurance. He said the budget office's position is the budget contains sufficient fringe benefit funds for all needs, although there may be individual exceptions. School of Medical Sciences - Page 305 Mr. Hataway noted that in addition to the supplemental appropriation recommendations in the budget, the Department of Administration also had submitted a bill draft request (BDR) for a supplemental appropriation for the medical school for $135,000, for FY 1995, and that amount is not in the budget. Dr. Robert Daugherty, Dean, University of Nevada School of Medicine, reviewed the school's enhancement budget (E-253, Quality Education Opportunities, page 306) and discussed problems in the base budget. While expressing appreciation for the Governor's recommended enhancement budget, which provides approximately $660,000 to restore the funding that was cut during the 1991-1993 biennium, Dean Daugherty noted the reduction of $357,038 from family medicine resident stipends and professional salaries in the base budget . Senator Raggio asked Mr. Hataway if the supplemental appropriation of $135,000 would increase the base budget. Mr. Hataway replied it would increase the FY 1995 base budget, but the base budget for the new biennium has been adjusted to reflect the decrease in federal revenues. Dr. Daugherty directed the committees' attention to the biennial budget request information provided by the School of Medicine (Exhibit E). He reviewed the position requests outlined on page 2. Regarding the Las Vegas Administration request for the Associate Dean position, Dr. Daugherty said approval of the request would restore the position that was cut during the state budget cuts several years ago. There are currently over 40 full-time faculty in the Las Vegas administration who are increasingly more involved in many areas, including the care of Medicaid patients as well as the educational programs, and the administration needs someone who can manage the program on a day-to-day basis. Dr. Daugherty said the Associate Dean for Clinical Affairs position was requested to support the teaching activities outside of the hospital, in clinics and other places in the community. Continuing the rationale for the position requests, Dr. Daugherty said the Residency Programs requests include a faculty position in the psychiatry residency program in Reno which was started 2 years ago and which lacks one faculty position. He said the director for the pediatric residency program will be needed if the resources for the program can be assembled in cooperation with hospitals and physicians in Las Vegas. In the area of Student Recruitment and Financial Aid, the dean said the requested AHEC (Area Health Education Center) Recruitment Coordinator position would enable the medical school to continue its recruitment efforts among high school students, particularly minority students. He noted the school has adopted the science magnet school, a Clark County school in Las Vegas, and the science department of Hug High School in Reno. The faculty and staff of the medical school work with the adopted schools in this program. Also contained in the budget request is funding for minority student scholarships. Dr. Daugherty said about one-third of the minority students accepted by the medical school opt instead to attend another school out of state, primarily because the other schools can offer the students scholarships not available in Nevada; consequently, the state is losing some of its top minority students. Dr. Daugherty said the Basic Science Faculty position was cut during the state budget cuts and is important to the biochemistry program as well as to the teaching of first- year medical students. Concerning the Medical Library requests, Dean Daugherty said the School of Medicine is not in the UNR formula and its library is seriously underfunded. The library was ranked third from the lowest among 140 medical school libraries in the country following an accreditation visit in October 1994. The $40,000 for acquisitions would enable the school simply to maintain that ranking and not fall below the current ranking of 137th. Dr. Daugherty next discussed the problems in the base budget. Referring to the handout he had provided the committees (Exhibit E), he described the problem with the Salary Savings Reserve. On page 4 (Exhibit E), the salary savings reserve problem is stated as follows: During the last biennium, the School of Medicine budgeted professional and classified salaries on a net basis and did not use a salary savings reserve. [The school budgets on a net basis rather than a gross basis.] Instead of budgeting salaries on a gross basis and drawing to the appropriate level with a negative reserve the School of Medicine reduced its faculty and classified FTE funded from state funds to compensate for the salary savings assessment. The problem with the netting approach is that when the net salaries are rolled forward into the next biennium, they already contain a salary savings assessment. When another salary savings adjustment is assessed, the salaries are reduced a second time. A "second hit" of 1 percent on the salary savings reserve is the result, Dr. Daugherty stated, and the agency request is for restoration of the 1 percent to the base budget. Senator Raggio asked the dollar cost. Dr. Daugherty replied the cost is $134,622 for the first year and $137,148 the second year. Dr. Daugherty then called attention to the problem of Resident Stipends in the base budget, explained on page 6 (Exhibit E). Senator Raggio asked if this problem also is a result of budgeting on a net basis and not using a reserve. The dean replied yes. The senator requested comment from the budget office. Mr. Hataway questioned the terminology used by Dr. Daugherty with reference to "net" and "gross." He said the budget is based upon the salaries reported in the actual year, which are treated as the salaries for the positions shown. What occurs in the School of Medicine budget, he stated, is that the school spends all of its General Fund dollars first, and then whatever needs they have are paid for "off line," from their other funding sources. Mr. Hataway said the salary savings were budgeted for FY 1994-1995 just as they have been for FY 1996-1997. Senator Raggio requested the fiscal analysis staff work with the budget office on this item. The narrative on Resident Stipends reads as follows: During FY 1994, the object code used to record costs associated with medical resident stipends was changed from the graduate assistants' object code to a professional salary object code in order to accommodate a change in the residents' retirement benefits. As a result, the actual expenditures report for FY 1994 shows the total cost of medical resident stipends split between the graduate assistants and professional salary object codes. The budget for FY 1994 was established with 100% of the resident stipends in the graduate assistants category. Therefore, when you compare the actual expenditures (part in graduate assistants' object code, part in professional salaries) to the budget (100% in graduate assistants' object code), it appears that we did not spend the funds allocated for residents. Because of this, the Governor's budget recommendation for resident stipends was only $306,984 rather than the $529,400 approved for FY 1994 and FY 1995 and requested for FY 1996 and FY 1997. This represents a reduction of $222,416 in resident stipends which is approximately five FTE Family Medicine residents. Mr. Hataway explained what had occurred in this manner: Part of the graduate assistants expense, or residents expense, showed up in the professional positions dollar amounts for the 1994 actual. The budget office had carried the graduate assistant dollar amount as the 1994 actual but had also "driven up" the professional position category. Mr. Hataway said he would have no problem with adjusting the graduate assistant to the level recommended by the School of Medicine, but the professional salary funds should be reduced by the same amount. He described the situation as "a wash." Senator Raggio said this is another item on which the fiscal analysis staff will need to work with the budget office. Assemblywoman Chowning inquired how many graduates of the School of Medicine stay in Nevada to practice medicine. Dean Daugherty said it must be taken into account that when students graduate from medical school they enter a residency program. If a graduate student wishes to enter anything other than family medicine, such as surgery, internal medicine or psychiatry, that person must leave Nevada. The majority of the school's students leave the state for the residency training because about 60 percent of the students enter another specialty or go out of state due to the school's inability to accommodate all students wishing to attend. On the other hand, Dr. Daugherty stated, about 35 percent of those graduates who have finished their training and are eligible to practice are now practicing in Nevada. Senator Rhoads inquired how many slots are open to applicants and how many applicants apply for the slots. Dr. Daugherty said there are 52 slots this year for which 240 in-state applicants and approximately 100 out-of-state applicants are eligible for consideration. The senator asked why a recruitment program is needed, since the main reason for establishing a medical school in the state was to teach students in Nevada to become doctors and to practice here. He questioned the spending of money to recruit outside the state. Dr. Daugherty clarified it is not the intent of the School of Medicine to recruit outside the state. The desired recruitment program is twofold. First, it would recruit minority students. The number of such students entering the school has been low because there is a low number of applicants among minorities, defined in medicine as African-American, Hispanic and Native American. He said the three minorities are underrepresented in medicine, and the school has had a great deal of difficulty in attracting applicants. High school and university students would be encouraged to choose medicine as a career in the proposed recruitment program. The second area of interest for recruiting purposes is the small communities. It is likely that medical students who grew up in a small community will return to such a community to practice, Dr. Daugherty explained. Senator Raggio suggested Dr. Daugherty comment on the awarding of the Robert Wood Johnson Foundation grant for rural Nevada. Dr. Daugherty explained the foundation is one of the largest in the country that funds health education, medical education and health services programs. He said Nevada's medical school is fortunate to be one of only 12 schools in the entire country to be funded by the foundation for the purpose of establishing a training program to facilitate increasing the number of people choosing to practice in family medicine, internal medicine and pediatrics, or primary care, and at the same time to encourage young people in training to consider practicing in underserved areas, both metropolitan and rural. Currently, from 42 to 43 percent of the school's graduates go into the primary care area; the national average is below 30 percent. The medical school believes it can achieve a rate of 55-60 percent of students entering the primary care specialties. Dr. Daugherty said that toward that end, the Robert Wood Johnson Foundation has awarded the school about $500,000 per year for the next 3 years to make some changes in its curriculum. He said under the program, students will spend more time with physicians in the community and in rural Nevada, as part of their training, than they have in the past. Senator Mathews asked if it is possible to require students receiving financial aid from WICHE to spend time practicing medicine in the rural areas as part of their contract. Dr. Daugherty answered such a practice has in many cases been considered indentured servitude. He discussed two programs that address this area, including one approved by the Legislature that provides funding for doctors to repay their educational loans, for which repayment they agree to serve a minimum of 2 years in a rural community. The program has placed 29 health professionals in rural Nevada in the last 5 years, 14 of whom have been physician assistants. The School of Medicine has a physician assistant program which is designated a rural program. Three students per year from rural Nevada are accepted into the program. They are provided a $10,000 scholarship for a 2-year program, the first year of which is spent at the University of Washington in Seattle and the second year in Nevada. The students must then spend 2 years in a rural community working to repay the $10,000 loan. There are 40 to 60 applicants for the three positions every year, Dr. Daugherty noted. He said the program is very popular and provides an opportunity for people in rural communities to advance in the health profession. He stated his intention to speak with WICHE personnel in an effort to maximize both programs. Assemblywoman Giunchigliani inquired if there are any other one-shot appropriations in the budget of which the committees should be aware. Dr. Crowley replied no. Ms. Giunchigliani asked what percentage of the medical school students are from southern Nevada. Dean Daugherty said the number varies each year and offered to send the information to the committees. Ms. Giunchigliani also requested details regarding where in the state the residencies are being served. Dr. Daugherty said there are residents in surgery, internal medicine, obstetrics and family medicine at the University Medical Center in Las Vegas. A new internal medicine program was recently started at Sunrise Hospital, in conjunction with Sierra Health Services, which gives the residents an opportunity to be trained in an HMO (health maintenance organization) environment. In Reno the residencies are served at the Veterans Hospital and at Washoe Medical Center. Ms. Giunchigliani asked that the number of residents at the various hospitals be provided in the previously requested breakout. She inquired regarding the medical school's recruitment of women as part of minority recruitment. Dr. Daugherty said women are included in the recruitment, but there is not a serious problem in this area as 40 to 45 percent of the students are women. Ms. Giunchigliani suggested the medical school's mission statement in the budget could be enhanced by including more details regarding the minority recruitment program. In response to further queries from Assemblywoman Giunchigliani, Dr. Daugherty said the total cost of each resident stipend is $40,000, but the actual amount of the stipend is $28,000; the rest is for such additional costs as malpractice insurance and benefits. There is currently no requirement for practice in the state with respect to receiving the stipend. Assemblyman Spitler asked what percentages of students from each of the three minorities cited by Dr. Daugherty are currently enrolled in the School of Medicine. Dr. Daugherty said a total of 29 minority students have been accepted by the school over the last 5 years; of this number, 19 enrolled and 10 (30 percent) chose to attend other medical schools instead. He offered to provide the details later. Mr. Spitler asked why the funds requested for a major minority recruitment program were not instead requested as scholarship funds, since as alluded to in earlier testimony the unavailability of scholarships had been determined to be a significant reason the medical school is not attracting minority students. Dean Daugherty replied there are two problems: Those students who have been accepted by the school but decline to enroll because of a lack of scholarships is one problem, but the other problem is the small number of minority applicants in Nevada applying to medical school. It was therefore decided to spend effort in recruiting such applicants as part of the school's program to encourage more young people to enter the field of medicine. Mr. Spitler pointed out the need to increase the scholarships, in any case, since minority students recruited by the School of Medicine may still be lured elsewhere by the offer of a scholarship that may not otherwise be available. Dr. Daugherty concurred. Mr. Spitler questioned why more money for scholarships was not requested to address the immediate situation, along with funds for recruitment as a long-term measure. The dean noted the agency request is for $40,000 per year. Intercollegiate Athletics - Page 309 Dr. Crowley called attention to decision unit M-594, Title IX Gender Equity (page 310), an unfunded mandate. He said the federal government, the Office of Civil Rights, has proposed some very stringent regulations to satisfy Title IX and is aggressively implementing those regulations. The university took action last year toward meeting the requirements for proportionality; that is, the percentage of male and female participants, the sports budgets, and the scholarship awards must reflect the proportionate number of men and women in the undergraduate population. Assemblyman Arberry noted the rivalry between the UNR and UNLV in the areas of basketball and football and inquired if there is any possibility of UNR adding a soccer team to its athletics program. Dr. Crowley said students of both genders have expressed interest in such a plan; however, men's soccer would not be a near-term possibility because of deficiencies in the gender equity area. Mr. Arberry requested a breakdown of the cost to add a soccer team. Senator Mathews requested the subcommittee examine the purported practice by the university of reducing funds in the budgets of women's sports program by the amounts received from outside sources. Dr. Crowley said he is not aware of any instance of this having occurred in recent years. He averred that women's sports are supported overwhelmingly by revenues from men's football and basketball. Senator Raggio said one of the repercussions of the gender equity requirement was the elimination of the university's men's track program, the funds from which were then put into women's sports programs. Assemblyman Price noted the men's track program historically was very popular and asked what it would take to reinstate the program (given the current situation regarding gender equity). Dr. Crowley stated the current ratio of males to females in the undergraduate population is approximately 50-50. The university is at about 30 percent in terms of gender equity in the sports-related programs and has a long way to go, he stated. He estimated it would be 5 years before the men's track program could be reinstated. There is currently a women's track team. Senator O'Donnell inquired as to revenues from sales of the collegiate license plates authorized by the last session that were supposed to go toward funding of men's and women's sports events. Dr. Crowley said there is a minimal amount of revenue from this source, but the item was not included in the budget. He agreed to provide a breakdown of the revenue and related information. Mr. Hataway explained the item is a separate, off-line budget account. The first year it was started the revenues generated were less than $500. Statewide Programs - Page 313 In a brief overview of this budget Dr. Crowley explained the statewide programs are outreach programs providing applied research and services to the community in such areas as cancer research, seismology, mines and geology, and rural teaching. He indicated funding of the statewide programs, which are not formula funded, is a fundamental problem for the university that needs to be addressed in the future. Senator Raggio inquired about the transfer of one research professional position from the Desert Research Institute (DRI) to this budget in E-900, Program Transfers (page 315). Mr. Dhingra explained the transfer was recommended because the position is better suited to the academic mission of the university than to DRI. Senator Raggio asked if the transfer would be reflected in the base budget in the future. Mr. Dhingra indicated the position transfer would be reflected as an addition to the Statewide Programs' base budget and as a reduction to the DRI's base budget. Assemblyman Marvel raised the question of whether the university will lose the U.S. Bureau of Mines institution if the federal government proceeds with a recommendation to close that facility. Dr. Crowley said there is a strong possibility of such an occurrence. He said the facility is one of three U.S. Bureau of Mines agencies in the nation that have been targeted for substantial consolidation and reduction of expenditures. While such a possibility has existed at various times over the years, Dr. Crowley continued, the threat is more serious now than it has been in the past. Mr. Marvel asked if the Mackay School of Mines would be impacted by the proposed action. Dr. Crowley said the School of Mines works closely with the bureau, and should the bureau be closed the university will seek to obtain the federally owned building and to have certain staffing remain for the purpose of continuing the cooperative efforts. He said much of the facility would be used for School of Mines purposes, in that event. Assemblywoman Giunchigliani asked if duplication of programs exists in the UNR and UNLV Statewide Programs. Dr. Crowley indicated there is no duplication. Agriculture Experiment Station - Page 317 Drawing attention to the funding request of approximately $520,000 for the biennium in decision unit E-253, Quality Education Opportunities (page 318), Dr. Crowley said there are enough funds accumulated to cover the first year of the appropriation, but not the second year. Senator Raggio inquired if the budget request is part of the non- General Fund revenues the institutions are expected to raise. Mr. Hataway replied the budget office agreed in concept with the program as presented and has provided authority for it, but does not believe it should be state funded. Senator Raggio inquired as to the outlook for the program if state funds are not provided. Bernard Jones, Dean and Director of the Agriculture Experiment Station (AES) and the Cooperative Extension Service, UNR, explained the AES is a joint program with the U.S. Department of Agriculture. The state must match the federal funds to receive those funds. In response to further questioning from Senator Raggio, Mr. Jones said the federal funds are appropriated on an annual basis; the AES is a continuing program that has existed for many years and has been funded by state and federal funds in the past. Approximately $200,000 in state funds was returned by the agency to the General Fund during the budget cuts 3 years ago, and the enhancement budget request is for restoration of the previous funding and the professional positions for water research. Mr. Hataway equated the budget request with the requests in the budgets for the School of Medicine to restore funds to the agency that were given back to the state when the economic difficulties were encountered during the 1991-1993 biennium. Assemblywoman Giunchigliani questioned the need for the program and suggested it is a duplication of functions performed by other agencies. She asked where the state climatologist position appears in the budget. Mr. Hataway explained the position currently has a separate budget account, and the Executive Budget proposes removing the funds recommended in that budget account and putting them in the budget for the Director's Office of the Department of Conservation and Natural Resources; the services would then be provided through contract with UNR. Ms. Giunchigliani noted the ratio of professional to classified positions in the adjusted base budget is almost 1 to 1. Dean Jones explained the ratio is very typical of research programs at other universities because not only secretarial positions, but many research technicians are involved. Ms. Giunchigliani questioned the need for the positions requested. Senator Jacobsen spoke in favor of the Agriculture Experiment Station as a program that was once "a shining light" for the rural areas and for the entire state. He voiced concern the program has been receiving less and less support while the water and agriculture-related problems it deals with are still "very primary" and stated his belief the program still has real value to the state. He indicated opposition to diluting the program any further. Dean Jones restated the need for restoration of positions as requested in this budget. He also noted the AES has been increasing its federal research grant dollars at the rate of 29 percent per year over the last 10 years. He said the agency has very productive personnel performing excellent work and generating funds for the state. He reiterated the importance of restoring the positions and said the state would benefit by doing so. Assemblyman Close requested that the subcommittee be provided justification for relocating a major portion of the administrative offices of the Cooperative Extension Service (CES) from Reno to Las Vegas. Mr. Jones said the move was made because of the greater population in Las Vegas and because over half of the agency's employees live there. He said the reduced travel resulting from the move has simplified administration of the programs. Dr. Crowley made two observations in response to earlier questions. With respect to Ms. Giunchigliani's query regarding a prospective increase in the admission standards, Dr. Crowley said there is no such proposal forthcoming, to his knowledge, although there has been some discussion about increasing the GPA requirement for nonresident undergraduate students. Concerning the budget request for the Lawlor Events Center, President Crowley reminded the legislators the original concept of the so-called subsidy to the UNR and UNLV event centers was that it is a rebate from state sales taxes realized as a result of the event centers' activities and is therefore not a direct subsidy. Further, he stated, Lawlor Events Center is struggling because the university is not situated as well as UNLV's Thomas and Mack Center in terms of demography and geography. Senator Raggio announced the joint meeting of the Senate Committee on Finance and the Assembly Committee on Ways and Means would be in recess for lunch until 1:30 p.m. When the committees reconvened, Senator Mathews acknowledged the presence of a group of visitors from St. Vincent's Haven of Hope comprised of consumers, parents and professionals in the audience. Senator Raggio welcomed the group and then called forward Kenny Guinn, Interim President, UNLV, to present the UNLV budget. University of Nevada, Las Vegas - Page 329 Mr. Guinn noted his 9-month tenure as interim president had actually ended the previous day. He said many of the points and remarks made by UNR President Joe Crowley directly relate to the circumstances at UNLV. He provided background information regarding difficulties encountered at UNLV over the past year or so, which he emphasized were not reminiscent of any of the other institutions within the university system. He told the committees the UNLV campus has made tremendous progress after experiencing some difficult times and shortfalls that were due not to inadequate funding, but to poor fiscal practices and methods employed at UNLV. He explained that the initial overspending was not done frivolously; all of the funds expended over and above the formula allocations that created the shortfall were spent primarily in the instructional category. Mr. Guinn further explained that when he arrived at UNLV in May 1994, there were 74 positions under contract for which formula funds were not being provided. (He attributed this to the institution's lack of a control system that has since been put on computer.) It was therefore necessary to take the funds from other sources to pay for the positions, because once the contracts and schedules are in place it is difficult to make changes. Mr. Guinn said a program of staffing control has been instituted, and at this time the university is only 34 positions over what has been funded. He said this has necessitated hard work by UNLV, which provided instruction for almost 500 new students last September with 60 professors less than there were the previous year. Mr. Guinn summarized UNLV's plans to avoid an occurrence of the recent financial difficulties. A detailed budgeting process has been implemented and has been presented to the chancellor, with whom Mr. Guinn said it is important for UNLV to work to set up the new system being established by the UCCSN. There has not been a formalized budget for the individual campus at UNLV prior to this time, he stated. It was anticipated the budget will be virtually completed within the next year and will account for all of the revenues and expenditures. A second part of the budget will indicate all of the revenue and expenditures on the "soft money" side, consisting of about $75 million. Implementation of the budget is "just good business sense," Mr. Guinn continued, and will enable UNLV to answer questions from the legislators, the taxpayers and the citizens of Las Vegas. He said UNLV should be able to achieve the same kinds of good management techniques and budgeting processes that exist at UNR. Another significant area lacking throughout the UNLV system is internal auditing control, Mr. Guinn stated. In his opinion as a businessman, funds should be allocated for internal auditors, especially for the EDP (electronic data processing). He stressed the need for expertise in this field because of the potential for severe security and confidential breaches in the university's student, personnel and financial records that could lead to horrendous problems in the future. He doubted the current number of internal auditors for the entire university system could provide adequate coverage. As an example of a problem in this area Mr. Guinn said reconciliation of accounts every month is essential, yet at UNLV in many cases accounts had not been reconciled for up to 1 year. The goal set under Mr. Guinn's tenure was reconciliation of accounts within 60 days; however, because of the internal systems, lack of data processing and lack of needed skills, it is anticipated the reconciliation cannot be accomplished in less than 90 days, which puts the university at risk. He emphasized the need for internal auditing controls. He said the Board of Regents has received a copy of the proposed budget program, and he invited their proposals and participation. In summary, Mr. Guinn said the committees should know UNLV has been performing well, under the circumstances. He expressed appreciation for the Governor's recommendations in the Executive Budget. He stated he had not come to the Legislature to request more funding but to say that what has been allocated will help immensely. He warned the committees to expect to see the proposed allocation of positions in this budget compared unfavorably with those of UNR, which contains a request for some 38 positions while the request for UNLV shows zero; he said the truth, however, is that UNLV is still dealing with the previous overstaffing situation and is actually being treated equitably in the Governor's budget recommendations. He stated his intention to explain the situation to the Las Vegas community because the recommendations in the budget are correct and fair. Mr. Guinn said one of the university's budget requests is to allocate funds for an internal assessment program. One of the priorities this year will be to set up an assessment department that will produce accountability and assessment data, he continued. An estimated 1,400 students were unable to enroll in classes they needed during the spring semester, which will mean higher enrollment in summer school classes. It was anticipated the proposed Executive Budget would help tremendously in this area. Comparing UNLV to other campuses in terms of the student population, Mr. Guinn noted the average age of students at UNLV is 27 years. Many of the students are in their thirties and forties, many of them single mothers, seeking to improve their employment opportunities through higher education. The average age of 27 makes a significant difference in the course programs and teaching methods at the university, Mr. Guinn observed. Mr. Guinn told the committees UNLV has made strides in such areas as multicultural recruitment activities, some of which have been accomplished since the performance measurement data was provided during the Governor's budget formulation process. The university has filed its affirmative action plan and has made assessments for every division on campus as to what the targets are. It is UNLV's objective to have a multicultural recruitment program that will bring about the kind of racial and ethnic diversity on campus that exists in the community, Mr. Guinn stated. Concluding his overview, Mr. Guinn said the previous year was a difficult one, but the university has balanced its budget by cutting services and by rearranging and reallocating funds. He expressed optimism the coming year will be an outstanding year for UNLV in the allocation of funds. Along with what had been discussed in the budget presentation, all of the shortfall that has been made up over the last year (about $10.5 million), the liabilities are being reduced and the assets are reproducing themselves. This will mean a great deal of money for UNLV to reallocate into the university system during the next year, and this situation, along with the Governor's funding recommendations in the Executive Budget, should make the coming year one of the best for UNLV, Mr. Guinn stated. He said his remarks were intended to communicate that UNLV had some problems, is clarifying the problems, is taking care of the problems and is making a great deal of progress. After disclosing he is currently on leave from the Community College of Southern Nevada (CCSN), Senator Rawson commended Mr. Guinn for the service he has provided to the university in his capacity as a businessman and for his successful efforts in the field of academia. He said it would be a grave mistake for the Legislature not to follow some of Mr. Guinn's recommendations and to provide the kind of oversight that is needed. The senator wished to extend his thanks for the difficult task he had performed. Senator Raggio supported Senator Rawson's laudatory remarks on behalf of the committees. Mr. Guinn presented the highlights of the UNLV budgets. He reiterated his earlier comment the measurement indicators do not reflect all of UNLV's accomplishments over the last year. He directed the committees' attention to the negative amount recommended for Reserves in the base budget expenditures (page 330) and said it is a mechanism in the formula that needs clarification. He encouraged the legislators to allocate funds toward that end when a related measure comes to the committees for consideration. Stating his opinion the funding allocations are a third party review in the overly complex, time-consuming budget process, Mr. Guinn suggested the committees look at the formula allocations with the goal of having them more simply stated and providing better controls. Regarding the Reserves item in the base budget, Mr. Guinn acknowledged the university had spent some money out of an instructional category for instructional equipment and that according to the rules, the amount of the money spent in this manner must be deducted and repaid. Because there were no equipment allocations for 4 years, however, it had been essential to obtain instructional equipment for the instructional staff. Stating the money will be reimbursed, Mr. Guinn pointed out the funds were actually deducted twice from UNLV's budget (once from the instructional category). This did not occur in the budgets for the other institutions, he observed. The deduction from UNLV's budget would be $1.7 million over the biennium, which Mr. Guinn said the university cannot afford. He requested the committee members consider the case for making the adjustment in UNLV's favor. Concerning the other areas in UNLV's budget, Mr. Guinn commented on the ADA mandates. He said the requirements for compliance go far beyond what most people realize and are not limited to modifications such as automatic door openers to accommodate wheelchair-bound persons. For example, when a blind student registers at the university the institution is mandated by ADA to convert all of the textbooks to braille within a limited amount of time, at the university's expense, otherwise the university is subject to being sued for noncompliance. A similar situation applies to deaf students or others with physical impairments. Mr. Guinn said such modifications are time-consuming, labor-intensive and costly, and the formulas have not been adapted to this situation. Further, there is nothing to address the matter of liability and liability insurance. Suit can be brought in federal court, and a single class-action suit could really hurt the university system tremendously, Mr. Guinn warned. He said he has tried to look at the situation as a businessman conscious of getting the most out of the dollars available for education. He again strongly urged the legislators to examine this area over the next biennium and predicted the resulting measures would be a "godsend" for higher education in Nevada. Intercollegiate Athletics, UNLV - Page 335 Mr. Guinn called attention to the fact the General Fund support for the university's intercollegiate athletics program ($1.2 million) has increased only slightly over the last 15 years. Another $1 million is provided from student tuition fees, making the combined contribution to UNLV's budget for this program from state funds about $2.2 million. The other $8.3 million comes from the program's ticket sales and from scholarship funds. Statewide Programs - Page 339 UNLV's statewide programs mostly involve continuing education and professional growth credits, Mr. Guinn stated. Senator Coffin asked if it is anticipated the parking fees recently instituted at UNLV will be used to create structures financed by revenue bonds. Mr. Guinn replied as follows: We have a bill that we have requested...on a revenue bond that was sold for housing that you approved at the 1991 legislative session. All of those bonds, $7 million, were sold at one time, and...all but $4.2 million [has been used] for student housing.... When we looked at those bonds we found out that bonds had been sold at one time, and it said that you could only use that for housing or facilities that were directly attached or related to the housing. Part of that was going to be housing for...sororities and fraternities, but [due to changing conditions] we are not going to build any. What had happened is those bonds had been sold on a 30-year basis at 6.4 percent, and [they had been] invested at 1.9 percent, [resulting in] a negative arbitrage. So what we are asking you to do is to change...the state law that says that could be used, from 1991, also for parking, because we are already paying the bill on it, and it would be like you having a house, paying on the house for 30 years and, when you get through, you do not have a house. If we are going to pay these bills, we need to take that along with the dollars that we are getting from this minimal parking fee...and start planning for the future. It may take us a year or two, but we have eventually got to add those together, utilize the negative arbitrage and turn it to a positive one, offset it with a fee from the students and the employees, and start parking, because [a very bad situation is beginning to develop which] relates as much to parking as it does to security on our campus.... Senator Coffin inquired if fees for the parking would go into the "soft money side" of the budget. Mr. Guinn said it would only be used for parking, as unanimously agreed upon by the parking committee. The senator requested a breakdown on the "soft money." Stating his concern about the proper use of such money and citing as an example the $20 fees students are required to pay each semester for health services, the senator said he would like to find out if all of the funds are being spent in the ways intended. He said the manner in which such funds are spent is a good indicator of intent. Mr. Guinn concurred and said he has had serious concerns about so-called soft money accounts. He expressed the opinion that when such funds are received by the university they become university funds (and therefore state funds under state regulations) and should be accounted for and expended accordingly. He further stated the $20 health services fee needs to be increased and pointed out UNR has increased the fee to $57. UNLV has been subsidizing its health program at the $20 rate out of its regular funds. The university is examining all of its fees, Mr. Guinn said. Senator Raggio asked Mr. Guinn if he is reasonably sure the budget presented to the committees will accommodate the necessary course offerings for the projected number of full-time equivalency (FTE) students for the biennium. Mr. Guinn replied yes. He stated his belief, however, there needs to be reallocation of funds at UNLV in the immediate future, and it is very important the university not expend a great deal of funds on a PhD program with only five students while there is a high demand in such areas as educating teachers. Mr. Guinn reiterated the need for reallocation in this situation and predicted if it occurs, UNLV can perform very well over the next year. Mr. Guinn introduced Dr. Norval Pohl, Interim Vice President for Finance, UNLV, and dean of the business school. He commended Dr. Pohl and his office for having done an outstanding job of producing the new budget program within a short period of time and with very limited staff. Community College of Southern Nevada - Page 347 Richard Moore, President, Community College of Southern Nevada (CCSN), introduced himself and noted he has held his position at CCSN for 4 months. He introduced Ruell Fiant, Vice President for Finance, CCSN as the business manager responsible for personnel and administration. As with UNLV, Dr. Moore stated, the average age of students attending CCSN is 27 years. Only 11 percent of the students attend full-time; 89 percent of the students hold jobs and attend one of the three campuses part-time. Dr. Moore said CCSN truly is a working person's college. An increasing number of students with disabilities are attending the college. Two years ago CCSN spent $50,000 on specialized programs for the disabled. The amount to be spent during the next fiscal year is anticipated at $250,000. Dr. Moore stated his intention to comment on several programs, the success for which he disclaimed responsibility since he inherited what he termed exceptional programs when he became president. In the field of health education, the dental hygiene program at CCSN is the only one of the 208 programs in the nation that is in Nevada. The graduates take a national board (examination), which provides a score card that enables comparison of Nevada students with those throughout the nation at either 2- year or 4-year colleges. The CCSN students recently came in second out of the 208 colleges in America. In the culinary program, which Dr. Moore noted is under expansion at the college, one of the chefs was recently awarded Chef of the Year for Las Vegas. It is a program of very high quality and very high demand, President Moore stated. Dr. Moore told the committees one of their former colleagues, the late Senator Nicholas (Nick) Horn, has been memorialized in "a marvelous special theater" which is now in operation at the college. Named the Nicholas Horn Theater, the facility's premier season started this spring (1995). Recently Dr. Maya Angelou spoke at the theater, and renowned math teacher Jaime Escalante was scheduled to speak at the theater this spring. Dr. Moore pointed out the programs are not funded by the taxpayers, but by the students, who have a policy of inviting "some of the finest speakers on the planet" to speak to them and to the community. In planning for the future, Dr. Moore continued, CCSN has reviewed the budget and has made a recommendation which the Governor has supported. He said the budget has "an element about the instructional formula which we believe is very important." As historical background, Dr. Moore told the committees the college had been funded at 7,000 FTE students 2 years ago. Because of the state's economic difficulties the college returned money to the General Fund to help the K-12 system and as a result had funding for only 5,600 students. CCSN's faculty made a conscious decision, President Moore continued, to increase the class size in all of the courses across the college to the extent to which seating in the classrooms was available, thereby maintaining the 7,000 FTE level. He said the faculty's decision to work for 2 years at exceptionally higher loads so community residents would not be denied an education has led to a 30 percent increase in class size at CCSN. The Governor's budget would reinstate funding for the current level of FTE students (7,000). This translates into a major change for the college, Dr. Moore stated, and if the budget recommendations are approved by the Legislature, approximately 50 full-time faculty positions will be added at CCSN in Fall 1995. Discussing the impact of the prospective addition of 50 faculty positions to CCSN, Dr. Moore said the issue is not only about money and faculty positions, but involves a strategy of establishing partnerships between CCSN and the community. The first partnership would be with the automobile dealers. Two to three automobile instructors would be added to the faculty if the budget is approved. Currently the auto dealers, in order to gain technical training for their employees, are paying for people to either fly to and live in Reno to attend Truckee Meadows Community College (TMCC) or to attend a college in Utah, because CCSN has no automotive program. Dr. Moore said he has met with the 41 local auto dealers, a number anticipated to increase to 50-plus within the next year. The promise has been made to put together a consortium such that the employees will not have to be paid board and room to live in another town in order to gain automotive instruction. Second, Dr. Moore continued, the college has a history of exceptional health programs, including respiratory therapy, emergency medical technicians (EMTs), registered nursing and dental hygiene. What has been a bottleneck for CCSN is that all of the students in the practical nursing programs must go through an anatomy and physiology program. There has not been an adequate number of anatomy and physiology part-time faculty in the Las Vegas area and therefore it has not been possible to enlarge those programs. Dr. Moore said the first commitment is to the automotive field and the second is to the health field, which would entail expanding the health program so the prerequisite courses can be provided. Third, Dr. Moore continued, CCSN intends to work with such entities as the Nevada Development Authority (NDA) to create precise partnerships for the purpose of training currently employed people in the community so they can attain a higher level of skills. One skill area for which there is a need is the warehouse technician, he stated. A number of firms are interested in relocating to Las Vegas but they want a sophisticated, trained work force that can work with computers as part of a modern warehousing system. Dr. Moore further stated that under the leadership of Dr. Jarvis, CCSN has decided to make a major change in its relationship with the high schools. Alluding to the chancellor's earlier testimony that Nevada ranks near the bottom in number of high school graduates going on to college, Dr. Moore said the college's intention is to hire counselors and to form partnerships. The first partnership will be in the field of mathematics, and CCSN's intention is to work with the Clark County schools so that students at the high school level will receive college credit when they take collegiate level math classes, and the math instructors will act as adjunct faculty with the community college faculty. Dr. Moore emphasized the need for partnerships with different sectors of the community, including the K-12 sector, specialized business sectors, and the health field. The principal change in the proposed budget is the change in the funding formula, Dr. Moore continued. The purpose of the change is to fund CCSN with enough faculty to provide instruction for the existing level of enrollment. Commenting on the security component of the infrastructure budget, Dr. Moore said there are two security personnel on CCSN's largest campus (400,000 square feet), and the security problems at CCSN concern property rather than personal safety. Dr. Moore discussed two new facilities under construction that will need to be staffed by new culinary teachers and many new computing instructors. He said CCSN is requesting the Legislature accelerate funding of the equipment for the computer facility so the facilities can open in the fall as planned. The cost of the equipment is $6 million and will make CCSN state of the art in two technical work fields, culinary and computing. Senator Raggio inquired what portion of the $6 million requires acceleration. Dr. Moore indicated the full $6 million is needed and pointed out the original request was for $9 million. In further remarks, Dr. Moore said it is CCSN's desire to reduce the need to come to the Legislature to fund projects by finding its own resources. He applauded Dr. Jarvis's support for building new partnerships with the K-12 system and said CCSN believes it is important to grant credit to high school students doing college work so that when they graduate from high school they have already earned some college credit. Another area of importance to CCSN is distance learning, Dr. Moore stated. The funds requested for distance learning would help CCSN expand its reach to outlying areas so people there can avoid having to travel to Las Vegas to attend college. Concluding his overview, Dr. Moore said he wished to comment on another new form of partnership, a guaranteed training program. CCSN runs, at no expense to the taxpayers of Nevada, an in-service training program for all the businesses located in the community, Dr. Moore stated. The agreement with businesses is that if they will communicate to the college what specific skills they wish to teach their employees, CCSN will, for a fee, teach those employees and administer an employer-monitored test at the end of the training, with payment for the training (by the employer) contingent on the employee passing the test. The program is in its second year, Dr. Moore noted, and has had "over $1 million worth of participation." Northern Nevada Community College - Page 353 Dr. Ronald Remington, President, Northern Nevada Community College (NNCC), introduced himself and Carl Diekhans, Vice President for Finance, NNCC. He thanked the Legislature for action during the last session that has enabled NNCC to open a new facility in Winnemucca, which has meant a great deal to the community. The facility is expected to open shortly. Additionally, Dr. Remington stated, the NNCC has formed a partnership with the Legislature to construct a facility in Elko. Fund-raising in Ely, together with a federal grant, will provide for an NNCC facility in that location as well. Referencing remarks made earlier by Assemblywoman Giunchigliani about the desirability of sharing facilities, Dr. Remington said NNCC continues to share facilities throughout its service area of 45,000 square miles. Classes are being conducted in museums, churches, and in public schools, and the use of such facilities helps tremendously, President Remington stated. He said there has been remarkable progress in providing NNCC facilities in Ely and Winnemucca. Dr. Remington encouraged the committee to bear in mind, in considering the proportion of increase for NNCC's budget, that much of the increase involves utilities and maintenance for the much-needed new facilities. Commenting that much of what he had intended to say to the committees had already been highlighted by other UCCSN presidents, Dr. Remington expressed his desire to reinforce some of what had been said earlier. With respect to the EPSCOR program mentioned by President Crowley, Dr. Remington said the program has an interesting ideal associated with it in that part of the EPSCOR effort is the bringing together of university and college faculty members to do research for faculty enhancement or development. This primarily is directed at the community college faculty. Noting the small size and isolated location of NNCC, Dr. Remington said the opportunity to interact with colleagues in a given discipline and to pursue further education while making a living is heartily endorsed by the college. On the subject of distance education and statewide networking, he said institutions within the UCCSN have formed a consortium to secure funds that would provide the beginnings of a distance network in the State of Nevada. Dr. Remington indicated the project is off to a good start. He said the University of Nevada has invested money in the NNCC campus at Elko to provide interactive television, thereby enabling people in rural communities to engage in upper division work, and eventually, to participate in lower division opportunities through networking. He suggested the budget recommendations to fund such activities are well worth the Legislature's consideration. Dr. Remington also encouraged the committees to attend to the support formulas. Regarding these formulas, he said the technical difficulties in articulation have been worked out, but the kind of preventative support available through good academic counseling has not been provided. He suggested additional support in areas such as library services, counseling and fundraising would greatly enhance the institutions' efforts. Dr. Remington said the college would like to have some "institutional support dollars" to pay those who help in the fund-raising, which he indicated has been quite successful. He said the technical part of distance education is a support service function, and as the high tech equipment is provided some technical support will be needed. While there will be a savings in the long run, Dr. Remington continued, there are some up-front costs and there will be continuing costs, including personnel costs. Addressing the issue of formula funding, Dr. Remington said another element in this matter, with respect to the instructional area of community colleges, is the disparity between the full-time and the part-time rates of pay. The community colleges have proposed, in their budget requests, the part-time rate of pay be increased. Dr. Remington encouraged the committees to consider the request, noting that currently at NNCC the part-time salary, converted to full-time status, is $12,593 per year. He said the Northern Nevada Community College was visited last spring by the regional crediting association, which reported the rate of pay for part-time faculty as "miserably small and out of line with the rest of the country." Dr. Remington reiterated the need for legislative assistance in this area and said the request is for the community colleges in general. Returning to the subject of the support formulas, Dr. Remington said the need is systemwide and is not limited to the community colleges or a single institution. He stressed the equipment requests are quite legitimate. He said there is a strong pent- up need in this area because of the low level of funding for equipment for the past several years, and some of the needed equipment items are quite expensive. In conclusion, Dr. Remington stated, one of the new missions of community colleges is to partner with business and industry, "and the original request asked from each college for a bit of support in this particular area." NNCC has been quite successful in partnering with the mining industry, Dr. Remington observed, and the partnership has paid dividends. He said most community colleges could benefit from similar partnerships, which stimulate economic growth and development. Assemblyman Marvel inquired if there has been improvement in articulation, saying he has had complaints in this area. Dr. Remington replied he has been seeing a concerted effort on the part of the institutions systemwide to address this problem and has seen significant improvement in most categories. He said the problem seems to be rooted in the area of academic counseling, resulting from misinterpretation and misunderstanding on the part of the student with respect to course transfers to other institutions. Mr. Marvel asked how NNCC articulates with out-of-state universities. Dr. Remington said the college has typically done well out of state. He noted NNCC is much closer to other institutions in neighboring states than it is to Nevada's universities, and quite a few of its students transfer to colleges out-of-state. Mr. Marvel asked what the percentages of full-time and part-time faculty are at present. Dr. Remington answered that the 60-40 ratios were essentially abandoned in the last session. The ratio is currently at approximately 52 percent full-time faculty to 48 percent part-time. Dr. Remington said it should be kept in mind that since NNCC is a small college that serves a very sparsely populated area, many classes are very small. He indicated that given this situation and the way the funding formula works, it becomes necessary to "dilute the dollars" and to rely more on the part-time faculty to carry the load. Assemblywoman Giunchigliani requested that the budgetary specifics regarding the new Winnemucca facility be broken out of the budget for NNCC. Mr. Diekhans said the budget for the Winnemucca facility represents about 12 percent of the entire budget for NNCC, which he said is very close to the FTE provided for Winnemucca. Once the new buildings in Winnemucca and Ely are open, more funds will need to be allocated for maintenance and utilities in future budgets. Senator Jacobsen commended Dr. Remington and said he is particularly impressed with NNCC's facilities in Elko and the community support for the college. He asked if thought has been given to providing college courses for honor camp inmates. Dr. Remington replied yes and said courses will continue to be offered in the various honor camps as well as in Ely State Prison. He said the Pell Grant funds to help for tuition for inmates are vanishing, and new ways of serving the inmate population will need to be examined. Senator Jacobsen suggested the college's relationship with the prison inmates could be a two-way street, with inmate labor utilized for grounds maintenance in some instances. Dr. Remington answered that the college has been doing what was being suggested. Truckee Meadows Community College - Page 359 Rita Gubanich, Acting President, Truckee Meadows Community College (TMCC), introduced herself and her associate, Stephen P. Salaber, Director of Budget and Planning, TMCC. She then presented the TMCC budget, reading from prepared text (Exhibit F). She called the committees' attention to a packet of material containing information about TMCC's missions, programs, facilities, students and accomplishments as well as highlights of the budget requests. (See Exhibit G. Original is on file with the Research Library.) Regarding Ms. Gubanich's testimony on M-100, Inflation (page 360) that the maintenance inflation difference between TMCC's request and the Governor's recommendation is a major concern, Senator Raggio asked why the situation with respect to the inflation factors is different for TMCC than for the other UCCSN institutions. Ms. Gubanich stated she does not know. The senator pointed out the recommendation for inflationary support follows a standard formula for all of the institutions' budgets. Ms. Gubanich summarized her comments as follows: Student access can be provided by instruction formula funding, scholarship funding, and support formula funding; student success can be enhanced by providing up-to-date equipment, increased access to counseling, advisement, and learning resources, and by recruiting highly qualified faculty; student success can be assured by the partnership of our universities and community colleges, the community, and our legislature focusing on our student needs. Senator Mathews asked if the part-time faculty is part of TMCC's bargaining unit and how an increase in the part-time instructors would affect the bargaining unit. Ms. Gubanich replied no, explaining a vote to join the unit would be required. Regarding the current bargaining situation, she said the faculty has refused to ratify the proposed contract. Noting TMCC is the only institution within the university system which has engaged in "collective bargaining," Senator Raggio asked what the issues are on which the faculty have been able to bargain collectively. Ms. Gubanich said the issues include work load, grievance procedures and the right to have arbitration. Senator Jacobsen asked what the four most sought-after classes are at TMCC. Ms. Gubanich replied the largest student population at present is in the general arts and science transfer courses, and the most sought-after classes are computer-related. She stressed the need to update the computer equipment, pointing out that some of TMCC's equipment is not as up-to-date as what is in place in the high schools. Senator Mathews noted for the record that all of the occupational programs, such as nursing, health sciences and business programs, send students to the liberal arts classes, and there would be no need for liberal arts if it were not for the occupational students. Western Nevada Community College - Page 365 Anthony Calabro, President, Western Nevada Community College (WNCC), introduced himself and Dana Apalategui, Dean of Finance, WNCC. Dr. Calabro acknowledged the faculty, staff and student body at WNCC as outstanding and commended them for their part in the college's accomplishments. He then presented the budget requests for WNCC, beginning with an outline of its accomplishments. (See Exhibit H, Dr. Calabro's written testimony, and Exhibit I, which provides statistical details of the accomplishments.) Regarding the fact that more students are now going directly from high school to WNCC, Dr. Calabro said the college likes to think of this phenomenon as students seeing WNCC as a higher education institution of choice rather than of consequence. With respect to the interactive video teaching of nursing and other classes through a grant from the Nevada Rural Health Project, Dr. Calabro said that because the program has been so successful and is such a substantive change in the way instruction is presented, the Northwest Association of Schools and Colleges was asked to visit WNCC and do an accreditation on this particular program. The result is full accreditation of the program with great commendation, and it demonstrated to the WNCC administration that interactive video is the wave of the future and can provide access to higher education for people throughout the State of Nevada. In a survey, faculty and students also spoke very highly of the interactive video instruction. It allows people in the outlying communities to take the nursing courses in their own communities while practicing their profession as nurses. In terms of accountability, Dr. Calabro continued, WNCC nurses have graduated from the program and have had virtually a 100 percent record of passing the nursing board examinations. They not only passed, but in some years the students have scored among the highest in the U.S. Dr. Calabro expressed great pride in the nursing program, which he described as greatly sought-after. The waiting list for the program has been substituted with a new system of selective admissions because of the inability to accommodate the demand in nursing. Dr. Calabro further testified that in a survey of the students, specifically the female students, it was learned that the students' greatest concern is the need for child care. WNCC borrowed the funds to build the Family Services Center at the Carson campus. The facility and program serve both students and members of the community at large. There are children from 6 weeks to kindergarten age. The center is fully operating and also offers parenting education, which is a great need in the community, Dr. Calabro said. The college's associate degree in early childhood education has been approved, and the Family Services Center serves as a laboratory for students in the program. Dr. Calabro invited the legislators to visit WNCC's facilities and predicted they would be greatly impressed with the special furnishings at the center to accommodate the young participants in the program. Senator O'Donnell inquired how the child care program was funded. Dr. Calabro explained it was funded by obtaining a low interest loan, using funds derived from the college's capital improvement fee of $4 per credit, and charging the children's parents a fee for the child care service. He said the enterprise is self-supporting. In response to further questioning from the senator about the source of the funds, Dr. Calabro said the funds were borrowed from a bank and the state did not incur an obligation for the loan. He said WNCC has funded three buildings in the manner stated. He further stated the college is pleased with the Governor's recommendation of Phase 5 of the project, adding that the college has had to find creative ways to keep up with the demand for the child care services. Senator Raggio commended Dr. Calabro and his associates for their innovation. With reference to the college's mission, Dr. Calabro noted WNCC is a Total Quality Management (TQM) training center for state government, city government, the Carson- Tahoe Hospital and private industry and is striving to make Carson City a total quality community. Continuing his testimony from the prepared text (Exhibit H), Dr. Calabro pointed out that with regard to equipment, replacement funding in the formula is based on equipment lasting for 20 years; however, computers and software need to be replaced within 3 to 5 years of purchase, a period of time that is continuing to grow shorter with the demands of industry. He emphasized the $650,000 recommended by the Governor is not adequate to address WNCC's priorities. He also stressed the college is at a critical level in its "operating budget infrastructure." Buildings have been closed and maintenance has been neglected; additionally, security has been a concern. Dr. Calabro also testified the funding for part-time instructors needs to be increased to $25,875 because it is becoming more difficult to recruit qualified instructors at the current salary of $14,780. This concluded Dr. Calabro's testimony. Senator Raggio noted Dr. Calabro's impending departure as president of WNCC. Dr. Calabro said he will be retiring from that position at the end of this school year, but will begin teaching at UNR. Senator Raggio commended Dr. Calabro for his dedicated, distinguished service over the years. Desert Research Institute - Page 381 James Taranik, President, Desert Research Institute (DRI), introduced himself and Dale Schulke, Vice President for Finance, DRI. He noted Mr. Schulke's intention to retire shortly, after nearly 30 years of service with the state and the institute. He introduced Mr. Schulke's replacement, Dr. Mary Lou Jarvis. Dr. Taranik called attention to the handouts he had provided the committees. Exhibit J is an outline of the budget presentation; Exhibit K is a brochure about DRI. Dr. Taranak provided an overview of DRI's history and contributions to the State of Nevada. He noted DRI was created by the Legislature in 1959 and grew from a small handful of investigators to an institution with over 400 faculty and staff members. The institute generates over $22 million worth of research each year with the $2.2 to $2.5 million provided from state funds, for a 10-to-1 return on Nevada's investment in DRI. Dr. Taranik said the research money circulating in Nevada's economy further generates revenues for the state General Fund. The institute is part of the UCCSN. The research personnel are faculty, non-tenured, and are on 1-year contracts. They are responsible for obtaining research projects throughout the world. The formula created by DRI has been highly successful, Dr. Taranik stated. Recently the institute signed a cooperative agreement with the National Oceanographic and Atmospheric Administration establishing a new cooperative institute for atmospheric science and terrestrial applications. Noting this is a broad concept, Dr. Taranik said that in this era of tremendous restructuring, downsizing, reinventing and reengineering of government in Washington, D.C. and the consequent research needs, Nevada is fortunate to have such a cooperative institute which he said is one of the few and one of the first created. He further stated the cooperative institute will conduct a great deal of research that is international in scope. He pointed out that in addition to helping to diversify and support the economy and bringing in a return on the state's investment, DRI also brings worldwide recognition to Nevada. Dr. Taranik highlighted the institute's budget requests. As stated in the budget narrative (page 381), he noted the Governor has recommended zero funding for the weather modification program, but has recommended DRI be allowed to request funding from the Interim Finance Contingency Fund for the program. He stated the program has been very successfully operated in the past and will continue to be operated very aggressively even in the summer months. Senator Rhoads inquired if there has been any movement toward expanding coverage of the weather modification program to the area between the Sierra Nevada Mountains and the Ruby Mountains in Nevada. Dr. Taranik said DRI has been constructing generators in the Tahoe-Truckee basin and the Carson-Walker areas, but has not had enough funds to install other generators. He said the generators are operated by the ranchers in conjunction with DRI and cost about $80,000 each, plus operating costs. Senator Rhoads said there had been plans to expand the area of coverage and pointed out the drought affects the area in question, as well as other areas of the state. Dr. Taranik said he would keep the senator apprised of DRI's intentions in this matter. Continuing his budget review, Dr. Taranik said the agency had requested operation and maintenance funds for the physical plant last year, but did not receive the funding. The operation and maintenance funds are related to construction of the Great Basin Environmental Laboratory and the Southern Nevada Science Center, which were created in 1992. Dr. Taranik explained the discrepancy between the agency's request and the Governor's recommendations for Operations with the statement that even though DRI was then part of the formula, the formulas were suspended and the agency was not able to obtain the funds to support the operations and maintenance of the buildings this time. Dr. Taranik pointed out the operation and maintenance of the facilities is a matter of maintaining the state's assets, making DRI more competitive in the research marketplace by reducing its overhead rate and enabling the institute to conduct work "in an international sense" in a much more competitive way. Further, he stated, in terms of "leverage of state's investment," DRI used funds that would have gone toward the writing of proposals to secure more grant and contract funds, for operations and maintenance. He said DRI is the only UCCSN institution which does not receive such funding from the state. Referring to the $3.9 million enhancement in the support services formula cited by Dr. Jarvis as an area of continued need (page 16, Exhibit C), Dr. Taranik said the requested amount would greatly help DRI to begin maintaining the facilities and would probably provide enough funding for the Southern Nevada Science Center. Assemblyman Spitler requested further explanation of the lack of operation and maintenance support in the budget for DRI. Dr. Taranik said an interim study committee (prior to 1992) had looked at formula funding for new buildings and had agreed that new buildings would receive operation and maintenance funding. DRI had packaged its budget accordingly, but in the last legislative session the formulas that drive allocation of operation and maintenance resources for new buildings were basically suspended and no funding was provided at that time for the new Southern Nevada Science Center and the Great Basin lab. Assemblyman Dini noted the interim study mentioned by Dr. Taranik was performed in the 1985-1987 biennium. He said the committee has observed when touring the university plants that maintenance is falling behind. He warned the state must provide operation and maintenance for new buildings to avoid wasting taxpayers' money. Dr. Taranik told the committees DRI is pleased that a northern Nevada science center has been recommended for construction. Construction of the new facility would enable DRI to move some of its personnel out of the present location at Stead, which Dr. Taranik said was never designed for research. In the process of working with the State Public Works Board, he continued, it was realized that funds were limited and the building was "de-scoped" from $15.4 million to $11.3 million. The new facility will be 60,000 square feet, but initially only 40,000 square feet will be completed; a shell for the remaining 20,000 square feet is to be built with the idea that over time, using maintenance personnel, DRI can finish the construction. Dr. Taranik said that under this plan, not all personnel could be moved out of the Stead facility, initially, and this is a cause of some concern to the institute. Dr. Taranik concluded his presentation with a discussion of networking. Referring to the university system's high priority for networking, Dr. Taranik said probably one of the most important things the UCCSN can do is to develop a wide-band network for the State of Nevada, not only to enable distance learning, but to facilitate the conduct of science, research and management. Stating DRI's support for the networking priority, Dr. Taranik noted a distance learning course had been taught by a DRI faculty member at UNR last semester that involved students at UNLV. He said this is precisely the kind of activity the statewide network for higher education will support and added that DRI is anxious to see how the network would link with K-12, because there is a lot of opportunity in that area, as well. Senator Jacobsen voiced the opinion the DRI's SAGE Building at Stead has been a poor investment for the state and inquired if the northern Nevada science center will eventually replace the building. Dr. Taranik explained the new 60,000 square foot facility would have enabled DRI to move all of its personnel out of the SAGE Building; at the $11.3 million level, however, it would probably not be possible to move everyone into the new facility right away, and the remaining personnel would be moved once the 20,000 square foot shell was completed. In response to further inquiries from Senator Jacobsen, Dr. Taranik said DRI pays UNR for utilities and essentially rents space at the facility. Dr. Jim Richardson, Lobbyist, Nevada Faculty Alliance (NFA), came forward to testify on the budget for DRI. By way of introduction to new committee members, Dr. Richardson said the alliance lobbies on higher education issues. He stated he is testifying on behalf of the chapters throughout the university system and on behalf of the alliance's state president. He introduced his assistant, Elizabeth Raymond, a history professor at UNR. Dr. Richardson expressed appreciation to the Governor and the budget office for recommending a budget that addresses "the terrible problem" the university system has endured for several years. He said the most important aspect of the Executive Budget as it pertains to the UCCSN is the Governor's recommendation to reinstitute the formulas that had been shelved. He reminded the committee members that in the last session he had testified in a joint meeting of the Senate Committee on Finance and the Assembly Committee on Ways and Means that the faculty senates and the Nevada Faculty Alliance had recommended to the Board of Regents the reinstitution of the formulas above a cost of living increase for the faculty. The NFA conducted a survey last year asking the members' highest priority, Dr. Richardson continued, and the reinstitution of the formulas tied with the notion of a cost of living increase in salary as the first priority. He noted that in view of the fact there have been no increases for 4 years and an increase is desperately needed, the survey results indicate how strongly the faculty feels about the formulas. Dr. Richardson reiterated NFA's appreciation for reinstallment of the formulas, which he said offers hope for the future and circumvents problems of potential internecine warfare within the university system. He termed the formulas "fair." He suggested the committee members obtain, for reference, a copy of the interim study report on this issue, LCB Bulletin 8730, "Study of Funding of Higher Education in Nevada" (on file in the Research Library). Dr. Richardson next discussed the matter of access to higher education. Seconding earlier remarks made by Dr. Jarvis concerning "how desperately underserved Nevada is with the current system of higher education" as a result of being the fastest growing state in the country, Dr. Richardson strongly urged approval of the student financial aid recommendation to address this need. He also reiterated the request for accelerating some of the student aid money so award letters can be sent to deserving students without potential embarrassment to the university system and the state or possible defections of the intended scholarship recipients to other universities. In the area of student financial aid, Dr. Richardson reported to the committees he had recently returned from a trip to Washington, D.C. where he had attended a national governmental relations committee meeting of the American Association of University Professors (AAUP). In Washington he was briefed on the funding situation at the federal level, and virtually the entire focus of the meeting was on student aid. He said some of the ideas being proposed in Congress make the need for student aid funding by the state even more imperative. Some of the proposals include eliminating the Pell Grants, which are used by approximately six million students in the U.S. every year. Even if the grants are not completely eliminated, Dr. Richardson continued, there is a good chance the Pell Grants, which provide financial aid for the most needy students, will be cut. Additionally, the possibility of cutting work-study funds has been discussed. Dr. Richardson said there are other problems as well, and it has been suggested that if all of the proposals before Congress were to be implemented, in the next year or so two million fewer people would be attending higher education institutions in the U.S. He voiced the hope "wiser heads will prevail, and the progress this country has made in terms of access to higher education will not be washed away in some precipitious action," but he expressed certainty there will be changes that will include cuts in student aid. Dr. Richardson restated the importance of facing up to the student aid problem in the State of Nevada and attempting to improve the state's ranking in terms of aid available to needy students. Noting the one-shot nature of the recommended $7 million appropriation for student financial aid, Dr. Richardson indicated it is likely the Legislature will be asked for even more funding for student aid in the next legislative session, "simply because we rate so poorly, and because...there is a real good chance that the [federal government is] going to take away a lot of the money we do have." Commenting on the equipment issue, Dr. Richardson said NFA members around the state have communicated to him about the equipment needs. As an illustration of the problem faced in this area, he noted the chapter president at WNCC, Richard Stewart, had faxed him information about the great need for computers. Mr. Stewart pointed out that 5 years ago there were 30 computers in student labs at the Fallon campus, and the lab was one of the best equipped in the country. Because of the rapid changes in technology, the student labs at Fallon now have only 10 computers that can handle the new kinds of software, such as applications for Windows. Students are lined up to use the computers virtually every hour the facility is open, including on the weekends. The equipment money recommended in the Executive Budget is desperately needed, Dr. Richardson emphasized, and even more is needed than what has been recommended because the needs have gone unmet for so many years. Dr. Richardson also discussed the additional half percent in the merit pool, which he noted has been a high priority for some years. The interim study conducted by the Legislature several years ago recommended the merit pool be set at 2.5 percent, Dr. Richardson stated, to make it more comparable with the funding for the merit step program for the state classified workers and K-12 teachers. He urged full support of the Governor's recommendation to increase the pool from 2 percent to 2.5 percent, which he said is still somewhat below the per-worker percentage in some of the other categories, but which is the amount that has been requested. The Governor's recommendation would restore the 2.5 percent rate that has been in previous budgets. The final point made by Dr. Richardson concerned the cost of health insurance for faculty. Noting the Governor's recommendation to significantly increase the state's share of the health benefits costs, by $40 per month, per state employee for the first year of the biennium and $21 per month for the second year, Dr. Richardson said he was troubled to learn such an increase has not been recommended in the university system budgets. The UCCSN was apparently the only agency to which the recommended increase does not apply, he stated. While assuming there was no intent by the Governor's Office to begin treating university system personnel differently from other state employees in terms of health care benefits, Dr. Richardson said if the funds are not put in the budget, tremendous pressure will be placed on the university to find the funds elsewhere, and the effect will be a tax on the institutions' available salary savings as well as reduced flexibility in the budget. Dr. Richardson urged the legislators to consider adding the necessary funding for health care benefits to ensure there is no question about providing for university employees' health care, and to avoid crippling the institutions by taking away the small amount of "flexible money" available to them through the salary savings. Dr. Richardson closed his remarks with an expression of appreciation for the public and private support of certain committee members for funding of the proposed budget. Assemblywoman Giunchigliani inquired if the classified university system personnel are part of the state health care insurance system. Dr. Richardson indicated all of the university personnel are in the state plan. Senator Jacobsen commended Jim Eardley, Chairman, University of Nevada Board of Regents, for his attendance at the budget hearings and expressed disappointment that the other regents were not present. Mr. Eardley addressed the committees and explained he was attending on behalf of the board, whose members prefer to have "the professionals" represent them at the legislative hearings. He commended the legislators for their willingness to listen attentively to the issues raised during the budget hearings. The meeting was adjourned at 3:55 p.m. RESPECTFULLY SUBMITTED: Sue Parkhurst, Committee Secretary APPROVED BY: Senator William J. Raggio, Chairman DATE: Assemblyman John Marvel, Chairman DATE: Assemblyman Morse Arberry, Chairman DATE: Senate Committee on Finance Assembly Committee on Ways and Means February 16, 1995 Page