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Budget crisis weighs heavily on Board of Regents

The ax is about to come down. This much was made clear Tuesday by Nevada’s higher education chancellor. He swore he was not exaggerating for effect.

"Reality is shocking enough for all of us here today," Chancellor Dan Klaich told the system’s governing Board of Regents at a packed meeting on the College of Southern Nevada’s campus.

The state is facing the worst shortfall in anyone’s memory, almost $1 billion, forcing either massive service cuts or woefully unpopular tax increases. Or both.

Gov. Jim Gibbons is expected next week to call for a special session of the Legislature to deal with the budget shortfall. If the Legislature applies the cuts equally across state government, it will likely mean budgets will be reduced by 22 percent for the rest of this fiscal year and the next one.

A 22 percent cut from government support for the state’s higher ed system works out to about $37 million for the rest of this fiscal year and $110 million next year. About $501 million of the system’s overall $810 million 2009-2010 budget comes from the state’s general fund, or 62 percent. The rest comes from a combination of tuition, fees, research grants, and federal stimulus money, among other sources.

Klaich outlined three scenarios that would theoretically cut that much from the system:

• Close Nevada State College and the College of Southern Nevada.

• Close Great Basin College, Truckee Meadows Community College, Desert Research Institute, UNLV’s law and dental schools, and the system’s medical school.

• Close the state college, Great Basin, Truckee Meadows, Western Nevada College, all athletics at the two universities and the agricultural experiment station at UNR.

Though none of these is likely to happen, Klaich said that’s how much money is at stake. These numbers use the institutions’ overall budgets, so they do not take into account that some of the money in those budgets come from sources outside state government, such as tuition, grants and contracts.

Klaich laid out a few other scenarios that also, in theory, could save enough money to cover the potential cuts.

The system could take the drastic step of declaring financial exigency — a lot like bankruptcy — and suspend its contracts. This would allow the board to:

• Implement 20 percent salary cuts across the board.

• Lay off 1,290 faculty and staff.

The board could also close the funding gap, again in theory, by implementing tuition and fee hikes of 48 percent, which would be on top of a cumulative 39 percent increase in the last five years.

Klaich said he wants to avoid a declaration of financial exigency, if at all possible, but he doesn’t see any other option. "I don’t know how to do it," he said.

More likely than most of the scenarios Klaich laid out is a combination of tuition and fee hikes, enrollment caps or something like them, smaller pay cuts or furloughs and department eliminations.

Klaich said a 22 percent cut, added to all the other cuts the system’s has had in the last year, would mean 29 percent less state funding than what the Legislature OK’d for the initial 2009 system budget.

"We will turn away students. Students will be denied access," Klaich said.

None of this touches on what Klaich and other higher education leaders say will be the worst consequence: lasting damage. Nevada already ranks among the worst states when it comes to getting high school graduates through college. Cuts this large could make that worse.

Regent Michael Wixom railed against a no-new-taxes philosophy that at the same time encourages the Board of Regents to increase student fees and tuition to cover budget holes. Gov. Jim Gibbons has in the past said he targeted cuts to the state’s higher ed system because it could raise its own money through tuition and fees.

"It’s a student tax," Wixom said of tuition hikes. "We should call it what it is."

UNLV President Neal Smatresk told the board that Nevada ranked 49th in the nation when it comes to per student funding. He said the state took the third-worst higher ed cuts in the nation last year, when the system’s budget was cut 12.5 percent.

"This set of cuts puts us in sole possession of the bottom," he said. "A distant bottom."

Contact reporter Richard Lake at rlake@reviewjournal.com or 702-383-0307.

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