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Work session lays out higher-education funding options; lawmakers signal preference to delay full formula rollout
Summary
LCB staff presented options to implement a new NSHE funding formula, including phased implementation and hold-harmless protections for UNR and UNLV; committee members expressed concern about phasing and budget uncertainty and generally leaned toward maintaining base maintenance methodology while considering amendments.
Legislative fiscal staff presented a detailed work session on options to fund Nevada's seven instructional institutions under the Nevada System of Higher Education (NSHE), laying out a choice between maintaining the traditional base maintenance and enhancement approach and implementing a new distribution methodology recommended by an ad hoc committee.
Jay Marie Mangoba, LCB Fiscal Analysis Division, opened the session by noting no decisions were required that day: "No decisions would need to be made today. The purpose of this work session is to seek guidance from the joint subcommittee regarding the methodology and funding levels that will be considered during the closing recommendations to the full committees," she said.
Fiscal staff summarized the ad hoc committee's recommended distribution: allocate available general funds among institutions using a three-component formula (75% weighted student credit hours, 15% outcome-based relative performance growth, and 10% student attributes including headcount, underrepresented minority and Pell-eligible measures), increase small-institution factor values and thresholds, and eliminate the current performance funding pool. The governor's budget would phase in the new distribution (20% in FY26, 40% in FY27) and proposed a hold-harmless to prevent general-fund cuts to the two R1 universities (University of Nevada, Reno and University of Nevada, Las Vegas). The governor's Office of Finance also submitted amendments to remove two decision units (E685 and M204) and to increase the phase-in percentage in FY26 and FY27 (to 26.25% and 52.5%, respectively) to mitigate impacts for smaller institutions.
Fiscal staff presented multiple options with attachments showing institution-level dollar impacts under each scenario, including: - Option 1: Keep base maintenance and enhancement methodology (no distribution change). - Option 2A: Full implementation of the new distribution methodology (cost-neutral redistribution would reduce funding for UNR and UNLV and increase funding for Nevada State University and community colleges). - Option 2B/C: Phase-in the new methodology at governor-recommended percentages, with 2C including a hold-harmless for UNR and UNLV. - Option 3 and 4 variants: Same as above but combined with governor's proposed budget amendments (eliminating E685 and M204) and alternative phase-in percentages.
Members expressed concerns about implementing a formula that could require additional ongoing general-fund support for UNR and UNLV, and about the formula's stability across future biennia. Majority Leader Kim Azaro said the presentation left unresolved questions: "I don't think that we were presented with something that also is workable ... I don't think as a whole it is workable." Assemblymember Hafen said smaller institutions could be disproportionately affected and asked staff to consider comparisons with districts and other institutions. Chair Monroe Moreno and others indicated they were gravitating toward Option 3 (maintain base maintenance and enhancement while approving certain budget amendments) as a cautious short-term approach given economic uncertainty.
No formal vote was taken during the work session. Staff said the attachments and modeling are posted in NELIS and that they will use direction from members to prepare closing recommendations for the full joint committees. "We may wish to determine whether to recommend approving funding for the 7 instructional formula budget accounts utilizing the traditional base maintenance and enhancement decision unit methodology ... or full implementation of the new funding formula distribution methodology," Mangoba said, summarizing the day's guidance.
