Nevada regents approve $79.4M distribution to schools from reserves
Nevada System of Higher Education’s Board of Regents voted Friday to approve a one-time distribution — an estimated $79.4 million in operating pool reserve — to help partially offset budget cuts.
Updated August 21, 2020 - 5:58 pm
Nevada’s higher education system will return an estimated $79.4 million to colleges and universities to partly offset budget cuts forced by the coronavirus pandemic.
The Nevada System of Higher Education’s Board of Regents decided Friday in a split vote to approve the one-time distribution. Regents Laura Perkins, Patrick Carter, Lisa Levine and John Moran voted no. Trevor Hayes didn’t cast a vote due to a technology glitch.
NSHE staff presented four options for how much money to distribute, but regents opted for none of them and decided to pursue a higher amount by accessing unrealized gains in NSHE’s operating pool reserves.
Regent Rick Trachok, who made the motion to use the funds, said the unrealized gain isn’t cash sitting in an account. If the market goes down, there’s nothing to distribute; if it goes up, there is, he said.
“Nothing that we do is without risk,” he added.
Trachok said there would still be $181 million in a short-term liquid account that could be accessed in case of other emergencies.
But NSHE Chief Financial Officer Andrew Clinger disagreed, saying that should not be considered reserve funds.
“This is not a fund we could then tap into in case of an emergency,” he said.
The amount that will be distributed to NSHE’s eight colleges and universities is subject to final July reconciliation, Clinger said, noting the $79.4 million is an estimate.
The board’s action means there will be zero operating pool reserve. And depending on what happens with the market, there may not be enough money to make a normal monthly distribution to schools, Clinger said.
The money will only offset part of the budget cuts mandated for NSHE. The higher education system faces a total of $137.8 million in state budget cuts, including $25 million for fiscal year 2020-21 required by Assembly Bill 3 that the state Legislature passed in July.
Regents considered four options Friday for how much money to take out in operating fund reserve: $23.5 million — what NSHE staff recommended for approval — as well as $15 million, $35.9 million or $41.1 million. NSHE Chancellor Thom Reilly said staff’s recommendation was for a 5 percent fund balance.
The budget information regents heard was based on June figures. July estimates indicate a market gain of $20.1 million in the operating pool, Clinger said.
Regent Cathy McAdoo asked for input from college and university presidents about how they feel about risking the monthly distribution versus having money in hand now to deal with COVID-19 budget shortfalls.
Most of the eight presidents said they were in favor of the larger cash flow amount in order to deal with the short-term budget crisis and plan for long-term needs.
But Karin Hilgersom, president of Truckee Meadows Community College in Reno, said the new option on the table was a lot to process. She said she believes it will help all schools and that an influx of cash would be great, but she was concerned about potentially losing the monthly distribution when budgets have been built on it.
Budget reduction committee
During the Friday meeting, the board also voted to create a budget reduction response committee, as well as an affiliated ad hoc advisory group. Moran and Levine opposed the motion.
Regents are holding off on making a decision about what areas the committee will focus on until a September meeting.
A document included with meeting materials includes a mission statement, though, and areas the committee would consider: “strategies that generate additional revenue or reduce expenditures” by searching for potential efficiencies in computing, online education, shared services, purchasing and business services; possible campus mergers or closures; eliminating certain programs at schools; reviewing real estate holdings for possible lease or sale; and reviewing employee compensation.
Many of the public comments submitted for Friday’s meeting were from college and university employees who expressed opposition to creating the committee, and to potential cuts to programs and employee compensation.
Levine said she couldn’t support creating a “secret” committee and said she was confused why the committee has a mission statement if it hasn’t even been created.
Board Chairman Mark Doubrava said it’s a special committee and that the mission statement, which was intentionally broad, was included as a starting point for discussion.
Regent Jason Geddes said there’s nothing secret about the committee, which will be subject to open meeting law, and that recommendations will have to come before the full Board of Regents during a public meeting.
Reilly told regents that the committee’s decisions need to be made through a public, transparent process, and that students and faculty leaders are critical to the discussions.
In April, Gov. Steve Sisolak directed state agencies — including NSHE — to create budget reduction proposals. Agencies prepared for cuts up to 4 percent for the 2019-20 fiscal year and up to 14 percent for 2020-21.
That month, NSHE approved budget reduction proposals of up to 14 percent — up to $124 million — including 12 furlough days for academic and administrative faculty, and a temporary student surcharge for this school year.
In June, Sisolak asked the university system to plan for 5 percent in additional cuts — about $35 million. He also recommended furlough days for all state employees. In response, NSHE regents approved a one-time $50 million distribution that month from a market fluctuation account to individual schools.
Title IX legal action
Regents also authorized NSHE Chief General Counsel Joe Reynolds to take legal action “reasonable and necessary” on behalf of the Board of Regents to challenge new Title IX regulations.
This month, the board voted 10-3 to change board policy to comply with the new sexual misconduct regulations from the U.S. Department of Education that went into effect Aug. 14. Regents heard public comments arguing the changes will make it harder for sexual assault victims to obtain justice.
Shortly after the board meeting ended, an eight-second video clip began circulating on Twitter showing the Board of Regents’ Chief of Staff Dean Gould interrupting Levine, asking her to mute her line. When she continued speaking, Gould said he didn’t want to “man speak,” but would have to if she continued to “child speak.”
In response to a question from a regent during Friday’s meeting, Doubrava said he excused Gould from attending the meeting. He said he can’t make any further statement because it’s a personnel matter.
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