+ MINUTES OF THE JOINT SUBCOMMITTEE MEETING OF SENATE COMMITTEE ON FINANCE AND ASSEMBLY COMMITTEE ON WAYS AND MEANS Sixty-eighth Session May 19, 1995 The joint subcommittee meeting on Higher Education 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 Friday, May 19, 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 Bob Coffin Senator Dean A. Rhoads ASSEMBLY COMMITTEE MEMBERS PRESENT: Mr. Morse Arberry, Jr., Chairman Mr. John W. Marvel, Chairman Mrs. Vonne Chowning Mr. Joseph E. Dini, Jr. Mr. Thomas A. Fettic Mr. Lynn Hettrick STAFF MEMBERS PRESENT: Dan Miles, Fiscal Analyst Mark Stevens, Fiscal Analyst Bob Guernsey, Principal Deputy Fiscal Analyst Gary Ghiggeri, Principal Deputy Fiscal Analyst Judy Jacobs, Committee Secretary OTHERS PRESENT: Dr. Tom Anderes, Vice Chancellor, Finance and Administration, University and Community College System of Nevada Dr. Joseph Crowley, President, University of Nevada, Reno Dr. Norval Pohl, Vice President for Finance and Administration, University of Nevada, Las Vegas Don Hataway, Chief Assistant Budget Administrator, Budget Division, Department of Administration Dr. Richard S. Jarvis, Chancellor, Chancellor's Office, University and Community College System of Nevada Dr. Ron Remington, President, Northern Nevada Community College, University and Community College System of Nevada Dr. Richard Moore, President, Community College of Southern Nevada, University and Community College System of Nevada Dr. James T. Richardson, Lobbyist, Nevada Faculty Alliance Dr. Tony Calabro, President, Western Nevada Community College, University and Community College System of Nevada Dr. Robert M. Daugherty, Dean, School of Medicine, University and Community College System of Nevada Dr. James V. Taranik, President, Desert Research Institute, University and Community College System of Nevada Senator Raggio requested staff to describe the proposed budgets found in Exhibit C (Original is on file in the Research Library.), and to distribute a list of potential closing actions (Exhibit D). University of Nevada System Administration - Page 283 Mark Stevens, Fiscal Analyst, called attention to the overview set forth in Exhibit C. He stated it includes a recommendation for an increase over the current biennium of 18.5 percent in General Fund support for the university system for ongoing operational expenses. Mr. Stevens noted the appropriations for the University and Community College System of Nevada (UCCSN) currently make up 18.3 percent of total General Fund appropriations statewide, and the Governor's recommendations continue that percentage for the coming biennium. Included in the exhibit are lists of the maintenance and enhancement decision units. He called attention to the maintenance items and the recommended appropriations for each depicted on the first three pages of Exhibit C. Mr. Stevens pointed out the fee increases approved by the Board of Regents on page 5 of the packet, which will be funded by increases of $3 per credit in each year of the biennium. He noted the allocations for services for the first year of the biennium are listed on page 5. The fee increases will amount to approximately $3 million in the first year of the biennium, he said, and $6.1 million in the second year of the biennium. Mr. Stevens reported his belief the Fiscal Analysis Division, the Budget Division and the Chancellor's Office have come to an agreement regarding accountability reporting. According to the agreement, once the operating budget is complete, the University and Community College System of Nevada will provide the Budget Division and the Fiscal Analysis Division information, and UCCSN will provide information again following the end of the fiscal year (FY) when actual revenues and expenditures are compiled. The information to be provided is discussed on pages 3 and 4 of Exhibit C. Mr. Stevens pointed out there are a number of pages that outline the individual closing actions for each budget, and adjustments for each of the campuses are listed on pages 6 through 8 of the packet. In addition, he said, outlines for potential closing actions are set forth in Exhibit D. Senator Raggio noted the Executive Budget recommends General Fund salary increases of $7.9 million for the university in FY 1996, and $14.3 million in FY 1997, representing raises of 4 percent and 3 percent as are being recommended across the state. He asked if there were any questions remaining regarding the technical items which the legislative staff was requested to work out with the university staff. Mr. Stevens replied there are no contentious issues regarding the items on the first page of Exhibit D. Senator Raggio invited representatives of the Budget Division and the university to comment on the proposal. He noted some of the items are changes from or adjustments to the Executive Budget. University of Nevada, Reno - Page 299 University of Nevada, Las Vegas - Page 329 Community College of Southern Nevada - Page 347 Truckee Meadows Community College - Page 359 Western Nevada Community College - Page 365 Northern Nevada Community College - Page 353 School of Medical Sciences - Page 305 System Computing Center - Page 291 University Press - Page 295 University of Nevada System Administration - Page 283 Intercollegiate Athletics - UNR - Page 309 Statewide Programs - UNR - Page 313 Agriculture Experiment Station - Page 317 Cooperative Extension Service - Page 321 Intercollegiate Athletics - UNLV - Page 335 Statewide Programs - UNLV - Page 339 Business Center North - Page 371 Business Center South - Page 375 Desert Research Institute - Page 381 Mr. Stevens commenced a review of the items. He explained in the past the university system utilized $2.5 million in each year of the biennium derived from estate taxes. The balance of the taxes, he said, was put into the principal account for the endowment fund, from which $100,000 at each university campus, and $37,500 at each community college campus, for a total of approximately $350,000, was utilized for book acquisitions. Because that sum was not included in the Governor's budget, the UCCSN made a request for it to be reinstated. Mr. Stevens stated the recommendation is to take the funding from the Experimental Program for the Stimulation of Competitive Research (EPSCOR) in the special projects account and move it into book acquisitions. Dr. Tom Anderes, Vice Chancellor, Finance and Administration, University and Community College System of Nevada, asked if the General Fund appropriations will be reduced by a like amount. Mr. Stevens answered there is no offset from general funds, only funds from estate taxes are involved. Mr. Stevens noted the instruction budgets at each campus will be adjusted by a number of required technical adjustments. He stated the merit appropriations were overfunded for the University of Nevada, Reno (UNR) and for the University of Nevada, Las Vegas (UNLV), as were graduate assistants at UNLV in the second year of the biennium. Other modifications, he said, were made in fringe benefits for the community colleges, all of which result in a saving of general funds. Senator Raggio pointed out the sums are reflected on the second page of Exhibit D. Mr. Stevens indicated additional operating funds will be added for UNLV and the Community College of Southern Nevada (CCSN), while funding proposed in the Executive Budget for equipment will be eliminated in order to move to the base budget level in the amounts of approximately $500,000 for UNLV and $300,000 for CCSN. According to Mr. Stevens, approximately $90,000 in funding for occupational studies has been added to appropriate budget accounts for executive branch agencies in the budget, but not to the university system. Mr. Stevens indicated a proposal to reduce the retirement increase in decision unit M-300. He explained a number of the university positions are not part of the state retirement system and thus need no adjustment, which he estimated represents a $225,000 savings in General Fund appropriations. Mr. Stevens acknowledged the method used to calculate funding from state resources in the Governor's budget posed some problems at certain campuses, because inequities resulted. He reported the committee felt student fees and other revenues should be used in projections. As a result, if there was a need for General Fund appropriations, or there were savings in general funds, those were used in projections, he said. In response to a query by Senator Raggio, Dr. Anderes responded previous discussions have been productive. He indicated it would be useful for him to go over the format in Exhibit D with Mr. Stevens even though he asserted he understands the basic direction. He declared: I think, as some of the institutions look at this, they'll see big negatives and they'll see big positives. And what I just want to make sure is that they'll understand the context of that. Senator Raggio opined, "It's about the most equitable approach that we can utilize in closing these budgets." Dr. Anderes responded he was not complaining. Mr. Stevens interjected, "The big negatives or the big positives would not impact the overall expenditures within that budget, just the revenues that support them." Dr. Anderes agreed, and said, "Correct. For me, it's just explaining ... to each of the institutions." Senator Raggio asked Mr. Stevens to explain the indirect cost allocation to UNR. Mr. Stevens stated: The indirect cost at UNR has been changed to a 75/25 [percent] split, 75 percent to UNR's benefit, 25 percent to the state. That impacts UNR's budget by about $30,000 in the second year of the biennium only. There was no change at the other campuses. The other campuses are not at the 75/25 level, so those amounts were not changed. Senator Raggio declared: We were dealing with an issue here that had not been resolved over previous years. There were understandings on the part of the system regarding the indirect cost allocation, one of which was that the amount that the state would receive from indirect costs was going to remain at a static level forever. That was unacceptable to this committee, and so I'll take the heat. It was the chair's suggestion that, as far as we're able to restrict, in the future, that the limit be set at 75 percent and 25 percent to the state. So that is what results from this action. I understand there is some loss to the university in Reno, but it's my understanding that they accept that in return for having some ... as far as we're able to establish ... commitment to that principle. So now we have it on the record, where in the past we only had it in the minds of some deceased legislators. Mr. Marvel commented the percentages are the reverse of what they have been in the past. Dr. Anderes asked, "Do you envision this being applied across to every institution? Right now there's really only three institutions...." Senator Raggio responded, "No, we're setting this cap, but it does not change for the other campuses at this point." Mr. Stevens stated: The other campuses are not at 75/25, and what has happened at UNR in the past couple of bienniums is that the amount, I think [it] was $1.2 million, was set ... and then they retained everything above that. I think that the other campuses should be probably applied in the same fashion where the state amount is frozen until we get to the 75/25 level, and at that point everyone will be consistent. It might take 3 or 4 years for that to happen. Senator Raggio inquired if that was understood. Dr. Anderes replied, "Yes." Dr. Joseph Crowley, President, University of Nevada, Reno, called out from the back of the hearing room, "Okay." Senator Raggio gave instructions to include the dialogue in the record. Mr. Stevens pointed out support services formulas were reduced in two areas. Grants-in-aid were eliminated from the graduate assistance formula, he said, in the amount of approximately $50,000 at each campus in each year of the biennium. Also a number of formula areas were overfunded, some were underfunded, and they were adjusted accordingly, he added. He declared the amount of those that were overfunded was multiplied by 20 percent and a reduction was made in the formulas for a total of approximately $240,000 in each year of the biennium. Two buildings on the West Charleston Campus of CCSN will be completed earlier than anticipated, according to Mr. Stevens, as well as a building in Boulder City, which will cost approximately $190,000 in the first year of the biennium, and $150,000 in the second year of the biennium, for utilities. Dr. Anderes declared, "These are different figures, and I know that there was a different way of calculating. But I just want to be on record as saying these are slightly different from what we had suggested they would be." He asserted the difference is not material. Mr. Stevens responded the Budget Division calculations were based upon the additional square footage that was being requested, and there was a timing difference. He stated the Budget Division applied the same method in projecting utilities for the Executive Budget, and thus it is consistent with the rest of the budget from their perspective. Mr. Stevens noted there is a very small, technical increase in the reimbursements at UNR for operations and maintenance in the first year of the biennium, and a savings in the General Fund from $15,000 to $20,000 in the second year of the biennium. He explained it will enable placement of funds in other budget accounts, such as medical school and cooperative extension budgets. Senator Raggio stated instruction budgets will be reduced at Truckee Meadows Community College (TMCC) and at Northern Nevada Community College (NNCC) due to lower student enrollments. Mr. Stevens responded the enrollments were lower than projected in the current fiscal year. He said the percentage of projected growth was based upon actual enrollments and a growth cushion of 2 percent, providing an increase of 4.5 percent in the first year of the biennium, and an additional 2.5 percent in the second year of the biennium at TMCC. Similar calculations were made for NNCC, providing for a growth rate of 5.7 percent, which includes the 2 percent cushion above the current growth rate of 3.7 percent, and 2.5 percent for the second year of the biennium. Senator Raggio recalled the matter was discussed at length, and the chair had directed staff to allow some tolerance which is built into the proposal. He acknowledged the university system may not totally agree, but will understand the consistency being sought. Dr. Anderes responded: I understand the position. I guess the option that we provided ... is that, if, in fact, they do not realize the projected enrollments, that they're right now saying that they will have, our suggestion was that, in effect ... at the end of the first year of the biennium, that they would be basically penalized at that point in time. That if they didn't realize the revenues, or the enrollments in the first year, the second year their budget would be reduced. It was kind of a halfway sort of.... Senator Raggio interjected, "I don't think you'd want us to do that if the reverse occurred and the enrollments increased." Dr. Anderes replied: Under the way the formulas are now established, that's probably true. What really should happen, again somewhere further down the road, is that when you have significant increases or decreases, and I'm saying increases as well, there should be a way of modifying, that there should be averages. There should be a different way, so that if you have a tremendous increase in enrollments, there isn't necessarily a tremendous increase in resources that comes with it. That, in effect, it's averaged. Similarly, if you're going down in enrollments, and, again, there's a large decline, that you shouldn't be ... held harmless, that there shouldn't be some recognition that there is a decline. But at the same time there should be a way of modifying that. Senator Raggio agreed with the analysis of Dr. Anderes, but pointed out there must be a budget formula in order to operate. He opined the formula is not so severe with the built-in tolerance proposed. Mr. Stevens stated the adjustments for the Western Nevada Community College (WNCC) budget are mainly technical in nature. He indicated the adjustments to TMCC are also technical, with a need to reconcile the Executive Budget to the base budget with the addition of approximately $16,000. In the computing center item, Mr. Stevens said, a number of computer lease payments were removed from the base budget because it was felt those were equipment purchases, not equipment leases. He added since that time the matter has been clarified, and the funds, approximately $350,000 per year, were added back into the system computing center budget. Also, he said, a number of classified positions have been reclassified upwards this fiscal year, which will increase the amount of expenditures for those positions, which he recalled was about $60,000 per year. Mr. Stevens said the regents approved a $3 fee increase per unit in the each year of the biennium, which represents approximately $3 million in the first year of the biennium, and $6.1 million in the second. He noted those sums have been added to revenue and as expenditure authority to each of the campus budgets, and there has been no offset in the General Fund. Senator Raggio noted ordinarily there would be a General Fund adjustment, but the recommended action is not to do so. Calling attention to the last item listed on the first page of Exhibit D, Mr. Stevens stated it is a non-General Fund change. He explained the salary increase recommended by the Governor was not included in the Radiation Safety budget, so the amounts are being added. Senator Raggio summarized the potential closing actions. He called attention to the second page which sets forth their impact on the General Fund if they are approved. He noted the subtotal will result in reductions of $793,682 in the first year of the biennium, and $1,514,220 in the second year of the biennium. At Senator Raggio's request, Mr. Stevens explained the group insurance items. He said the Fund Group Insurance Increase item will provide the revised group insurance premium amounts recommended by the Governor, not the original amounts. He noted the group insurance increase was not included in the Governor's recommendation for funding, and it will cost approximately $550,000 in the first year of the biennium and $1.1 million in the second. Additionally, he stated, there is a change in the Retired Employee Group Insurance assessments of $100,000 in the first year of the biennium, and $180,000 in the second. Senator Raggio pointed out the total General Fund impact delineated in the middle of the second page of Exhibit D. He noted the reduction in General Fund appropriations in the first year of the biennium will amount to $345,169, and $540,659 in the second year of the biennium. Dr. Anderes directed a question to Mr. Stevens, saying: To make sure that it's understood ... for the purposes of the format.... When you talk about reducing General Fund, and we see some large numbers with brackets, that is intended to reflect the changes from the Governor's recommendations primarily related to the instruction formula? Mr. Stevens replied in the affirmative. He explained: If you're taking a look at UNR, which would be on the first of those sheets, there was a large amount of money that was put in as discretionary funding, which was basically additional student revenue, or additional non- General Fund revenue. And that's, in UNR's case, half of the General Fund decrease, because that's why the number is so large. Basically, what I've done is, I've gone in, taken the ... agency's request for in-state and out-of- state student fees, and I've compared that to the Governor's recommendation, and that is what is reflected on these sheets. Mr. Stevens acknowledged there are a few cases, such as investment income, in which he has used the figures provided by the university system. He noted the registration fee or in-state student fee figures were increased in a couple of cases, which were agreed upon by the chancellor and representatives of UNLV. He stated the figures mostly represent agency requests. Dr. Anderes queried: Most of what you have really are adjustments to some of the fees. That very first item of reducing the General Fund, though, relates to the backing out related to the instruction formula, doesn't it? To the overfunding of the - that's the one that I just want to make sure that everybody understands, that very first one. Mr. Stevens responded: All of the non-General Fund revenues ... it all occurs in the base budget. It all involves changing those student fees ... based on the FT [full-time] enrollments that are projected are included in the budget. After that ... the General Fund has to fund completely all of the maintenance and enhancement decision units. So, if you take a look at UNR's case, in the first year it's about $1.8 - $1.9 million reduction in General Fund in the base. But by the time you get down to the end, it's only a $547,000 adjustment, because we're going in and funding the maintenance and enhancement decision units completely with General Fund dollars. Senator Coffin requested information regarding UNLV. Mr. Stevens noted the figures for UNLV are on page 8 of Exhibit C. He reported there was a large difference between the Governor's recommendation and the agency request for in-state student fees, because the Governor's recommendation took the figure back to the base level and based each decision unit upon the percentage mix of state and non-state funds. Mr. Stevens stated he compared the agency's request to the Governor's recommendation and registration fees of approximately $800,000 to $900,000. In addition, he said, he felt UNLV had not calculated their in-state student fees correctly, based upon projected full-time equivalent (FTE) enrollments. Agreement was reached by the parties following subsequent conversations with the Chancellor's Office staff and representatives of UNLV, he said. Nonresident student fees, explained Mr. Stevens, represent the difference between the agency's request and the recommendation made by the Governor. He said miscellaneous student fees were increased slightly upon agreement by UNLV, as were investment income figures, based upon information from the Chancellor's Office. He indicated he eliminated discretionary funds used from a mix of state and non-state funds by the Budget Division as a balancing figure. Mr. Stevens stated an additional $522,000 was added back in for equipment because it had been removed twice. The remainder, he said, are all General Fund appropriations for each of the decision units, with one change. He explained Support Services Formulas were overfunded for UNLV, which were reduced in decision unit E- 251. Mr. Stevens declared there should be no disagreement over the remaining budget items, and the Chancellor's Office will notify him of any discrepancies. In order to assure agreement, Senator Coffin asked if the budget is satisfactory for both the Chancellor and the campus. He indicated Dr. Norval Pohl, Vice President for Finance and Administration, University of Nevada, Las Vegas, was nodding agreement. MR. MARVEL MOVED TO RECOMMEND CLOSURE OF THAT PORTION OF THE BUDGET INVOLVING ALL THE ITEMS UNDER POTENTIAL CLOSING ACTIONS (EXHIBIT D) AS INDICATED. SENATOR RHOADS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Senator Raggio called attention to requests from the University and Community College System of Nevada for additional funding listed on the bottom half of the second page of the Potential Closing Actions sheet. He declared another item has been identified by Senator Rawson for additional funding for the residents' program as a result of the closing of Medicaid budgets. Senator Raggio explained in the past residents were fully supported at the hospitals where they were serving, but under anticipated waivers they will no longer be required to spend more than 50 percent of their time in a hospital setting, and therefore there may not be adequate funding to support either the residential component or the educational faculty component. He recalled those amount to approximately $2 million. He indicated input on the medical school requests will be required early next week. Mr. Hettrick inquired if the $2 million is for 1year or for the biennium. Senator Raggio responded with the opinion it will require $2 million per year. He reiterated a full discussion with the committee will be necessary. He asked if any other items will have to be added to the request for additional funding listed on the second page of Exhibit D. None were mentioned. Mr. Stevens explained the request for an increase in the National Direct Student Loan Match will require an additional $30,000 in state funds in order to continue the program at its current level. Dr. Anderes declared, "This is one of those programs where the federal government says, and told us very late, if you want to stay into the benefit of the full federal funding, you're going to have to pay another $30,000 a year, so we're just kind of communicating what that cost is." MR. MARVEL MOVED TO RECOMMEND APPROVAL OF THE REQUEST. SENATOR COFFIN SECONDED THE MOTION. Senator Raggio noted he would accept joint votes unless there was a request for a vote by each committee. THE MOTION CARRIED UNANIMOUSLY. * * * * * Senator Raggio announced his intention to defer any action on the Distance Education/Network line item. He asked for an explanation of the Internal Audit - EDP Auditor line item. Mr. Stevens responded the university system made a request for a data processing auditor. He pointed out there is one additional internal audit position included in the system administration budget. The position being requested was eliminated during budget reductions, and is now being restored through the system administration budget. He explained a data processing auditor earns a substantially higher rate of pay. Dr. Anderes added the function is not being performed at present, and there is a critical need for it. MR. MARVEL MOVED TO RECOMMEND APPROVAL OF THE PROPOSED APPROPRIATION FOR THE INTERNAL AUDIT - EDP AUDITOR POSITION. MR. DINI SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Senator Raggio noted item D is a request for an External Audit at a rate of $50,000 in each year of the biennium. Mr. Stevens commented the university plans to engage an external auditor for additional services involving some tax issues revolving around the events centers and possibly the foundations. He suggested the committee may want to explore sources of funding other than from the General Fund. Senator Raggio inquired if there are other sources of funding available, perhaps from discretionary funds. Dr. Anderes replied: What I would request in this particular case is that, in the analysis that we've done, one of the questions that came to the committee was, what ... exclusive of the tax issues ... was the external audit going to cost. And if I could ask, just to now adjust the external audit cost to relate to what we will be doing in terms of new auditors, which would be $15,000 in [FY 19]96, and $20,000 in [FY 19]97. That will exclude the analysis of tax issues, and we will pursue that through other means. Dr. Anderes pointed out the additional $35,000 will be in addition to the existing external contract. When asked why the sum cannot be paid from discretionary funds, Dr. Anderes answered, "The state has always supported the external audit reviews, and it has been pretty much a state commitment over the years." Senator Raggio pointed out there has been a substantial increase in those amounts, and there has to be some point of termination. Dr. Anderes quipped, "We may end here." Don Hataway, Chief Assistant Budget Administrator, Budget Division, Department of Administration, reported, "The amount that's in the base budget is $160,000, and that's based upon the known [19]95 cost of the external audit. We have traditionally funded the full ... external audit cost in the state operating budget, and at the time we put the budget together, we didn't have any additional costs on increases...." Senator Raggio suggested that should be adequate, to which Dr. Anderes expressed agreement. MR. MARVEL MOVED TO DELETE THE ITEM. Senator Raggio pointed out no action would be necessary and turned to the issue of part-time salaries for community college instructors. He declared further explanation is necessary since they are different at the various colleges, much of which has been caused by independent action at the campuses. He declared the committee refuses to get into a "whipsaw" situation in which the campuses attempt to keep up with each other because some have higher salaries due to independent action. He asked for an explanation of the need for an adjustment at this time. Dr. Richard S. Jarvis, Chancellor, Chancellor's Office, University and Community College System of Nevada, declared the problems are very different at the two ends of the state. He explained southern Nevada has a problem attracting high-quality individuals to part- time positions in the community colleges. He stated the compensation rate is approximately $1,500 per 3-credit course, which is not sufficiently competitive to attract faculty for lower-division instruction. He declared there is a stipend-per- course problem in the south. Dr. Jarvis noted in smaller communities in the north the difficulty is finding any qualified individuals, because $1,000 per course is not enough for a living wage to attract people to northern or western Nevada. He declared there is a need for assistance in recruiting part-time faculty members. Senator Raggio asked what will be provided through the request for $1.1 million per year. Dr. Anderes replied the $1.1 million will increase the average salary to $20,000 per year throughout the campus system. He acknowledged there are different average annual salaries at the various colleges. Senator Raggio noted that, according to information provided to the committee, the average annual salaries vary from community college to community college. The average part-time salary at CCSN will be $20,000 for FY 1996, at TMCC it will be just under $21,000, at WNCC it will be just under $17,000, and at NNCC it is about $14,300. He asked if the figures represent varying times at each college, or if they are an attempt to equalize salaries throughout the system. Dr. Ron Remington, President, Northern Nevada Community College, University and Community College System of Nevada, responded, "In essence ... we're trying to elevate the rate of pay for part-time faculty in the community colleges. There is ... disparity among the four colleges. That can probably be traced back 20 years or more in terms of practices at each individual campus." Dr. Remington declared it is difficult to find qualified part-time faculty and to pay them competitive salaries. He indicated it is difficult to locate people holding advanced degrees in the discipline at NNCC and in the remote areas. He asserted, "With the rate of pay that we offer, it's becoming increasingly difficult for us to accomplish that." Dr. Remington pointed out the figures involved represent a hypothetical full-time equivalent (FTE) faculty member teaching 30 credits over two semesters. He stated, "What occurs, particularly at the smaller schools, and, I suspect, at the larger ones as well, is that we do not have the precise numbers of sections. We have to offer additional sections. So the dollars become somewhat diluted." Dr. Remington noted the pay for a part-time instructor may be $900 to $950 per course at NNCC. He calculated when preparation time and time to grade papers is included, the pay is barely above minimum wage. He reiterated the request for the allotment in order for the four colleges to become more competitive. Mrs. Chowning wanted to know the average student/teacher ratio. Dr. Remington responded it varies from college to college. At NNCC, in the smaller communities, the average number of students per class is often 9, with a funding ratio of 12 to 1, he said, whereas the average number of students is approximately 17 or 18 with a funding ratio of 21 to 1. Mrs. Chowning noted some classes have 30 or 31 students. At $1,500 per course, she stated, "I think you are being very generous in your calculation, because, if I, as an English or English as a Second Language teacher ... and I cannot see how in the world it can work out for my education and for all of the time, because, if I only spend a half an hour ... correcting, counseling, etc. per student, then my average wage is going to be $4.90 an hour." She computed the wage at $3 per hour for those receiving $900 per course. She called $4.90 an "insult," and agreed the subject must be reviewed. Senator Raggio directed staff to make some calculations. Mr. Stevens responded existing part-time salaries at CCNN will average just under $20,000 per year using the Governor's recommendation and adding the merit increase proposed for FY 1995-1996, which will be approximately $2,000 per 3-credit class. At NNCC, he said, the same calculations result in a salary of $14,342 per year, at a rate of $1,434 for a 3-credit course. Mr. Stevens warned there is an additional complication in that the Governor's budget provides that new part-time faculty members be provided at 90 percent of the rate for existing part-time faculty. He declared, "If you just took care of the difference between - if you raised the new part-time faculty annual amounts to what the existing part-time faculty amounts are, that would be about $100,000 in the first year, and $125,000 in the second year, just to make sure that all of the part-time faculty were being budgeted at the same rate." Mr. Hettrick asked how the requested $1.1 million will be distributed. Dr. Remington responded, "I understand the strategy was to position the hypothetical full-time equated faculty at every college to the initial step on the full-time faculty salary schedule." He said the initial step will be approximately $25,875. Dr. Anderes interjected, "That was the original request when it was a request for 2.2 and 2.2. This is half of that original." Dr. Remington said, "It would be exactly half that. Halfway to the initial step." Mr. Hettrick said, "All campuses." Senator Coffin noted the staff estimates approximately $2,000 is being budgeted per class, whereas compensation works out to be only about half of that. He voiced his confusion. Dr. Remington replied one of the complicating factors is that the rate of pay is different at the four institutions. He declared, "If you don't achieve the average class size, which are funded, then those dollars necessarily become diluted, as you pay the money out." Senator Coffin asked if the teacher receives more compensation if he teaches a larger than average class. According to Dr. Remington, that has not been the case. At the smaller institutions, he explained, more sections are taught, so the amount of compensation per class is reduced. Senator Raggio asked if Dr. Remington disagreed with the computation made by the Governor's proposal. Dr. Remington answered, "No." In order to clarify the situation, Senator Raggio said: Where there was some comment that at Southern Nevada [Community College] it was $500 a credit, under the Governor's proposal it actually is $666 a credit, so for somebody teaching a 3-credit course, it's $2,000. And at your institution, under the Governor's proposal, it would be $478 a credit, so ... the Governor's proposal would increase that to ... $1,434 for a 3-credit course. Dr. Remington responded, "I understand." Mr. Fettic voiced his understanding the colleges are having difficulty attracting instructors with the current pay rate, which results in a narrowing of areas of instruction. Dr. Remington confirmed his statement. Senator Raggio noted the computations do not include a cost-of- living adjustment (COLA) which is included in the budget. Dr. Anderes added: If nothing else, what discussion is really driving is that there ... is a substantial difference between different institutions. Our original goal ... that may well now be a $20,000 and $21,000, really what it does is indicate there is a difference in marketplaces in Las Vegas versus in Elko, but that difference, related to what we had computed at about $12,600 versus $19,000 is not a reasonable difference, and that's really what we're trying to do. Senator Raggio asked if Dr. Anderes agrees that the differential was not created by the Legislature, and each time a differential comes about due to the way the campuses apply funding, it should be up to the UCCSN to resolve. Dr. Anderes expressed agreement. Dr. Richard Moore, President, Community College of Southern Nevada, University and Community College System of Nevada, stated if funding is increased by one-third, from $1,500 to $2,000, it will be adequate. Senator Raggio interjected the Governor's proposal will increase funding for a 3-credit course to $2,000. Dr. Anderes pointed out the bases will be different, since one college has a base of $1,500 while another has a base of $1,800. Mr. Stevens commented an existing faculty member at CCSN is presently budgeted for $19,511, or $650 per credit if he teaches 30 credits. He pointed out if the college is only paying $500 per credit, it is not using all the funding provided for part-time salaries for part-time instructors, or it is using more instructors than were budgeted for the campus. Dr. James T. Richardson, Lobbyist, Nevada Faculty Alliance, recalled when the community college was first established a decision was made to force the community colleges to use more part- time faculty than any other community college system in the country. At that time 45 percent of courses were to be taught by full-time faculty. He remarked the national average is 70 percent, which was used as a basis for a proposal by an interim study. Dr. Richardson declared the state has an "unbelievable burden" placed upon the community colleges to find part-time faculty. He reported the colleges declare they cannot find such instructors, and there is a 50 percent turnover of part-time faculty members from one semester to the next. He noted some departments consist of all part-time faculty, leaving nobody to develop curriculum or do counseling. Dr. Richardson declared he has been informed there is $44 million in the budget which, he asserted, should be used to help the faculty, at least in the amount of $1.1 million. He urged the committee to support the community college faculty. Senator Raggio asked if the recommendation came from the Board of Regents. Dr. Richardson affirmed it had, and said it is one of the top four priorities of the board. Dr. Anderes interjected the board recommended a $2.2 million raise which was later scaled back. Mr. Hataway stated, "The Governor's position is that we just ran out of money before the priorities. One of the last drafts we had, we had a third of these dollars in the budget, but we just couldn't ...." Senator Raggio indicated the Legislature faces similar problems, since the proposals under discussion are additional General Fund requests and there is at least one large item being requested by the university which has not yet been discussed. He acknowledged there is a large issue at the campus level that the amount that is presently in the budget is not being utilized fully for the purposes for which it was appropriated. Dr. Richardson declared all the campuses have been operating under "tremendous" pressure, and some decisions may have been made that do not appear to be defensible. He suggested, if that concern is holding back approval, that a letter of intent be sent indicating just how the committees wish the $1.1 million funding to be spent and calling for an accounting. Senator Raggio responded some method of accountability will be established. He indicated his view that it appears the funds in that budget have not been used for the purposes for which representation was made, that the funds available for part-time salaries were not used for them. Dr. Tony Calabro, President, Western Nevada Community College, University and Community College System of Nevada, testified the funds were extended to offer more sections in order to meet the needs and demands for services. He stated if the formula was used only to offer the sections that met the criteria, not enough students could be served. He explained, "We have been forced to pay less so that we could offer more sections of the courses." Dr. Calabro pointed out all allocations for part-time instruction at WNCC have gone to part-time instruction, and the ratio of part- time instruction has been maintained. Senator Raggio noted the Legislature cannot be held responsible for funds managed by the colleges in such a manner. Mr. Dini voiced his understanding there is funding in the budget to improve wages for part-time instruction. Senator Raggio affirmed the statement. Mr. Dini asked how much funding may be required to bring the part-time salaries up to a "decent salary." Senator Raggio indicated the committee can add whatever it feels is sufficient in addition to the university request or the Governor's recommendation. Mr. Dini asked, "What would $450,000 a year do?" Mr. Richardson replied, "It would do some good." MR. DINI MOVED TO RECOMMEND THE ADDITION OF $450,000 IN EACH YEAR OF THE BIENNIUM TO THE PART-TIME SALARIES. SENATOR RHOADS SECONDED THE MOTION. Senator Raggio pointed out the question of allocation will arise if the joint subcommittee approves the motion. He inquired how the university intends to allocate the funding if it is approved. Dr. Anderes replied, "We would look at ... the dollars that staff is referring to, relate to the merit mark, is that that increment? When you're talking about the increase in ... just the salary that's in the Governor's budget?" Mr. Stevens responded the figures he had used provide only for a merit increase compared to present pay, and he did not include any funding for cost-of-living allowances. Dr. Anderes stated: I think we would have to look at that in conjunction with the additional dollars. When we talk about equity, my interpretation wouldn't be that it would be equally [distributed] amongst the institutions. It would have to be looking at, as an example, northern Nevada is substantially lower, so they would get a higher proportion of the dollars. Senator Raggio inquired, "If you ... give nothing to the campus that has the highest, then how do you address the morale problem that Dr. Richardson raised?" Dr. Anderes replied, "I'm not sure that we would want to give nothing to, as an example, southern Nevada." Senator Raggio requested information on how the university intends to allocate the funding prior to taking any action on the matter. Dr. Jarvis suggested that "we try and relate this to the FTE generated by the part-time faculty. We know what that breakdown is on our campuses, and we can look at the distribution of enrollment generated by these faculty." Senator Raggio asked if that will result in maintaining the same disparity that already exists in average part-time salaries. Dr. Jarvis responded, "I think if we can weight it according to the importance of the part-time faculty on the individual campus, then we'll ... try to match the needs at northern with what their part- time faculty contribute, versus the needs at southern with what their part-time faculty contribute." Senator Raggio requested a proposal be presented from the university system for allocations by the following Wednesday, with each community college executive signing off on the recommendation. Mr. Dini stated that would be part of his motion. Mr. Hettrick asked to verify some of the figures discussed. He wanted to know if the $14,000 represents the actual funds being sent to NNCC. Dr. Anderes responded that is the amount budgeted. Mr. Hettrick acknowledged it is difficult to hire teachers in all areas, but, he said, teachers are not available in the smaller communities, particularly when the salaries are so low. Senator Raggio inquired if volunteers are used. Dr. Jarvis replied they are welcome, and there are a few. Stating there is great disparity between UNLV and CCSN, and acknowledging the difficulty of obtaining qualified people to teach, Mrs. Chowning asked for clarification on how the $450,000 will be spent. She asked if inequities will be resolved. Dr. Jarvis replied, "It won't be taken care of for $450,000. We'll tell you how much of it we can reduce for $450,000." Mrs. Chowning asked, "So if we keep going at this rate, according to your calculations, it'll take us 6 more years to get this taken care of?" Dr. Jarvis responded, "Easily, because we're ... never moving the combined effort of a group of part-time faculty to the equivalent of a full-time person." Senator Raggio stated the vote on the motion to add $450,000 in each year of the biennium to part-time salaries at the community colleges would be taken separately by members of each house. THE MOTION CARRIED BY SUBCOMMITTEE MEMBERS FROM THE ASSEMBLY COMMITTEE ON WAYS AND MEANS. (MRS. CHOWNING VOTED NO.) * * * * * THE MOTION CARRIED BY SUBCOMMITTEE MEMBERS FROM THE SENATE COMMITTEE ON FINANCE. (SENATOR COFFIN VOTED NO.) * * * * * Senator Raggio indicated discussion and action on the request for additional funds for the line items for Medical School - Residents and Medical School - Salary Savings would be deferred until a later time. However, he asked Dr. Robert M. Daugherty, Dean, School of Medicine, University and Community College System of Nevada to clarify a point on residential salaries regarding Medicaid funding. Dr. Daugherty stated the $2 million does not relate to the issues before the committee as cited. He said the residents that are currently being paid by the hospital are not the residents addressed under the requests for additional funds in Exhibit D. Dr. Daugherty declared, "My understanding is that in the Medicaid discussion that the proposal is to move some essentially Medicaid money into education to pay for that, so it's not money coming out of the current education budget." Senator Raggio asked, "It will be General Fund money?" Dr. Daugherty replied, "Yes." Senator Raggio inquired if the request for $2 million during this biennium will continue at $2 million per year hereafter. Dr. Daugherty affirmed that is what is being discussed because interns and residents will not be used full-time in hospitals in the future under the Medicaid plan. He explained the hospital currently pays for the residents because they are there in the hospital, but when they are outside the hospital there is no means to provide for them. Senator Raggio asked what the total request for medical school residents will be in addition to the item on the list on Exhibit D. Dr. Daugherty replied, "The item you have on the list is for residents that are currently in the family practice center that are currently in the base budget. So those are separate." He pointed out the move out of the hospital will not be immediate. It will occur over the biennium, so $1 million is being requested for FY 1996 and $2 million is being requested for FY 1997. Senator Raggio instructed the committee to add those figures, $1 million in FY 1996 and $2 million in FY 1997 to the list of requests for additional funds. Mr. Hettrick asked what will happen in FY 1998. Dr. Daugherty answered: The request ... is based on moving 50 percent. Currently the hospitals are paying a total of $4 million a year for the residents, and what is anticipated both from accreditation standpoint and the care of the Medicaid patients is to move them 50 percent, so the $2 million is 50 percent, and so that's where it would stop. Noting that will then become part of the base budget, Mr. Hettrick inquired if it will include increases built into it each year from then on. Dr. Daugherty responded it will have the same cost-of- living increases as nearly all salaries. Senator Raggio pointed out the committee has not previously heard the request, but acknowledged it has come about due to the proposed actions with respect to Medicaid. Dr. Daugherty responded a series of discussions have been held regarding moving Medicaid into managed care. Dr. Daugherty recollected the last legislative session mandated inclusion of the Medicaid recipients and the medical school in managed care. It was determined the best way to hold down costs will be to assign residents to care for Medicaid patients in out- of-hospital settings. He pointed out that will require moving residents out of the hospital with requisite funding for them. He noted his original proposal had been for a 2 percent increase on Health Maintenance Organizations (HMOs) premiums. He attributed the defeat of the proposal to the lack of support from the HMOs. Dr. Daugherty declared he had not been present when the Medicaid budget was discussed, but he voiced the understanding "there were some dollars that had been ... set aside for increased caseload that had come from the hospital tax." Senator Raggio interjected that funding is a onetime savings from the General Fund. Dr. Daugherty agreed. Senator Raggio pointed out that funding will not carry the program. Dr. Daugherty responded it will be sufficient to start the program. Senator Raggio asked if there were other requests in addition to the costs associated with the residents. Dr. Daugherty replied there are none. The committee expressed a desire to withhold action on the medical school requests at this time. Senator Raggio set another hearing on the matter for Tuesday, May 23, at 5:00 p.m. Regarding the requests for operation and maintenance funding for the Desert Research Institute (DRI), Senator Raggio inquired if the $300,000 relates to all the buildings presently owned or contemplated by DRI. Dr. James V. Taranik, President, Desert Research Institute, University and Community College System of Nevada, answered the $300,000 request relates to the newly constructed Southern Nevada Science Center of DRI. He explained the original calculation based upon support services formulas had been $370,000 for each year of the biennium, but the request is now being reduced to $300,000 in each year. Mr. Marvel asked if DRI has been refused funding for operation and maintenance (O and M) in the past. Dr. Taranik affirmed the query. He reminded the committee the new facility for the Southern Nevada Science Center for DRI in Las Vegas was authorized by the Legislature in 1989 with the expectation it would not be completed during that biennium, so the request for operation and maintenance was denied. The building was completed in January 1991, but there was no way to support its operation and maintenance when it came on-line. As to further denial of the request, he explained: We came forward with the request for operating and maintenance in the next biennium, and in fact that request was supported by the University and Community College System [of Nevada] office. However, in that biennium ... everything had to change because of the budget requirements. So we came forward through the support services formula this time, and this was supported by the University and Community College System [of Nevada] office. And so we're now trying to maintain that new facility that the state constructed back in 1991. Mr. Marvel asked how the building has been funded since that time. Dr. Taranik replied, "We've been funding it through the monies that we use to support faculty for writing proposals and acquiring other research, and ... when we use that seed corn for operating and maintenance, it doesn't allow those faculty to go out and secure those other grants and contracts." Mr. Dini expressed the opinion the Legislature should take responsibility for the operation and maintenance of buildings once they have been approved and constructed. He proposed the Legislature appropriate $100,000 per year in contemplation of the completion of the building with no commitment to include it in the base budget. MR. DINI MOVED TO ADD $100,000 IN EACH YEAR OF THE BIENNIUM FOR OPERATION AND MAINTENANCE FOR THE DESERT RESEARCH INSTITUTE. MR. MARVEL SECONDED THE MOTION. Senator Raggio voiced his interpretation of the motion as being made in contemplation of the new building included in the Capital Improvement Projects budget, and that the appropriation will be for one time only and will not be included in any formula. He declared concern has been that the funding not be considered a commitment for inclusion in future base budgets. Dr. Taranik responded with his understanding the funding will be used for the Southern Nevada Science Center operation and maintenance. Senator Raggio replied: No, this is a ... departure from usual funding where the Desert Research Institute has relied upon its own sources of revenue for operation and maintenance. It's not in the university formula, and this would be a one-time appropriation during this biennium in contemplation of the building that will be approved under the Capital Improvement Project that's on the list ... Northern Nevada Science Center, the building to be constructed during the biennium. Senator Raggio noted there will be no operation and maintenance on the building until after completion, but the appropriation is in recognition that DRI will have a new building. He agreed the appropriation may be used for operation and maintenance, but he reiterated it will be a onetime appropriation and there is no recommendation to add it to the formula. In a request for clarification, Mr. Arberry indicated the Legislature is going to appropriate $100,000 in each year of the biennium to be used for maintenance and operation of the new building. Senator Raggio declared, "You can't use it for the new building because it isn't built. But when it is built ... they'll be able to use it for operation and maintenance as they desire. What it is, is we're subsidizing part of their cost for operation and maintenance during this biennium." Mr. Arberry asked, "So they can use it in the southern building." Senator Raggio responded, "They can use it wherever they want, but it's in recognition that their obligations are getting bigger, because they are increasing their ... inventory of buildings, and we're not sending a signal that you don't have to raise money any more for this purpose. You still have to raise money." Mr. Hataway inquired, "Just a clarification, is this a onetime appropriation out of the [19]95 surplus, or is it to be added as a special item in the budget?" Senator Raggio responded, "I think we'd better clarify it by putting it in one-shot." Senator Coffin wondered from which biennium the appropriation should be made. Mr. Marvel opined it will be made during the current biennium. Senator Raggio indicated it should be made during fiscal year 1996 and fiscal year 1997. THE MOTION CARRIED UNANIMOUSLY. * * * * * Senator Raggio asked which positions are to be included under the request for additional funding for classified positions at UNR. Dr. Crowley replied the funding is being requested for one full- time position in the budget and planning office. He explained previously General Fund money was appropriated to the institution with the understanding the funds could be used flexibly since no formulas were operative. He stated the funding ultimately was used for a different purpose than originally intended. Dr. Crowley declared the funding was used for a program under which it is the intention to make a comprehensive review of each academic program in a 5-year period with the aim of strengthening them or making resource decisions for each program as part of the accountability program. He noted the cost will be $30,000, with another $10,000 being requested for a part-time position in quality assurance. Senator Raggio asked why the positions cannot be funded out of the additional funds for support positions since they were not authorized in the last budget. Dr. Crowley acknowledged that would be possible. MR. MARVEL MOVED TO DELETE THE ITEM FOR ADDITIONAL SUPPORT FOR THE UNR CLASSIFIED POSITIONS. MR. ARBERRY SECONDED THE MOTION. Senator Raggio pointed out no motion is necessary, since the committee will simply not add that item to the budget. Mr. Marvel and Mr. Arberry concurred. Senator Raggio noted the university will be able to retain the position, but it will be funded from the additional appropriations for support positions. Senator Raggio asked staff to explain the request for additional funding for Radiation Safety/ SIIS (State Industrial Insurance System) Support. Mr. Stevens explained the appropriation will be used for the radiation safety budget in both the north and south ends of the state which have been funded in the past from SIIS reserves. He noted those reserves are being depleted. SENATOR COFFIN MOVED TO APPROPRIATE $250,000 PER YEAR TO MAKE UP FOR THE LOSS OF THE SIIS SUPPORT IN RADIATION SAFETY. Senator Raggio stated such funds have not previously been provided from the General Fund. Mr. Stevens responded the funds have been appropriated from SIIS reserves in the past. Senator Raggio asked if there was a second to the motion. There was none, and the motion died for lack of a second. Senator Raggio turned to the request for $1,500,000 for unfunded mandates. Dr. Anderes declared the request was part of the original budget request, and it includes a number of initiatives related to such things Average Daily Attendance (ADA), animal care, and hazardous waste. Dr. Crowley interjected the problems addressed under the request are serious. He warned the state will one-day have to take the federal mandates seriously, especially regarding hazardous waste which may one day result in huge fines. Senator Raggio asked if discretionary funds can be used for any of the items included in the request. Dr. Crowley replied they may, but they will only meet the need "bare bones." Senator Raggio took note of Dr. Crowley's plea. No motion was forthcoming on the matter. Mr. Hettrick pointed out that the Assembly Committee on Natural Resources heard a bill, A.B. 591, on hazardous waste. He urged the university system to support the measure because it will allow removal of hazardous waste without receiving fines. ASSEMBLY BILL 591: Provides in skeleton form for voluntary disclosure of certain hazards. Senator Raggio reiterated no action would be taken on unfunded mandates and a hearing on the remaining items would be held on Tuesday at 5:00 p.m. He adjourned the hearing at 10:35 a.m. RESPECTFULLY SUBMITTED: Judy Jacobs, Committee Secretary APPROVED BY: Senator William J. Raggio, Chairman DATE: Assemblyman Morse Arberry, Jr., Chairman DATE: Assemblyman John W. Marvel, Chairman DATE: Senate Committee on Finance Assembly Committee on Ways and Means Subcommittee on Higher Education May 19, 1995 Page