Budget Updates

UNLV will unveil the details of its second round of the Voluntary Separation Incentive Program (VSIP) on March 15. The final date for submission of the application will be May 7, with separation from the institution being June 30, 2010.

Although no final decision has been made, the university is considering another Voluntary Separation Incentive Program (VSIP). If a new program is offered, it likely would include professional staff, faculty, and classified employees and occur this spring.

If the university conducts another VSIP, the savings would have to be applied toward offsetting the state budget cuts. It would not be redirected to hire new employees. UNLV’s budget was cut $32.8 million seven months ago. The current discussions range from $25 million to $32 million in additional budget cuts.

Several different options were reviewed and analyzed before the final VSIP was introduced in fall 2008. Our VSIP provides participants a lump sum to use any way they wish. It does not specify how much would/should go toward health care, retirement, or any other item. VSIP participants — at their own discretion — may contribute to their health care coverage or retirement plan.

From a financial perspective, the success or failure of a program like the VSIP depends on whether it actually encourages a change in normal separations, and if those separations are in areas where the loss can be accommodated in some reasonable way. The attractiveness of the program is based on an individual’s specific situation and the total lump sum.

The phased-in retirement program option still exists.  It was designed for academic faculty members.  Anyone interested in exploring this opportunity should talk with his or her immediate supervisor.

The governor and Legislature set the priorities for state expenditures in Nevada. The NSHE chancellor and UNLV president have been strong advocates for protecting education funding in Nevada and believe funding education is an investment in the future of the state.

I have been told several times that faculty members have the necessary expertise in the areas this university so desperately needs in order to cope with the recent economic downturn. I'd venture to guess that certain faculty in the finance and economic departments would be able to offer support, perhaps in brief memorandums, of their own financial evaluations and how the projected outcomes will affect UNLV. Moreover, the creation of a committee to aid the communal effort in keeping the campus community up to date in this aspect would be extremely helpful. In the worst times communication has proved to be one of the best outlets to reassure people where exactly they stand in the big picture.

Many faculty — by way of the Faculty Senate — have provided ideas and suggestions on how to deal with the current financial challenges. Several UNLV faculty in the economics department are actively involved in helping the state with future revenue projections.

Currently, state law requires the university to be open five business days a week. The Legislature can change this law in an effort to save money.

A bigger challenge, however, is trying to squeeze all of UNLV’s course offerings into a four-day workweek — even when you consider that classes on Friday are lighter than the rest of the week. And, the potential savings in operational costs from closing one day are not that significant when compared with the level of additional cuts needed to balance the state’s budget. Nearly 80 percent of the university’s budget is spent on salaries and benefits.

This would not create any new funding. In fact, part of UNLV’s current plan to absorb FY 2010 budget cuts is to use GIF funds to cover current activities and then returning an equivalent amount to the state general fund. The end result would be the same, however. It would not involve additional transactions with the iNtegrate funds.

The FY 2010 budget cuts are projected to be larger than the savings stated here. They will consume one-time funds and would not help our base budget, which is what is being cut.

In a relative sense the FY 2010 budget cuts will be the easiest to manage, compared with the major challenges for FY 2011, and those that are likely even larger for FY 2012 and FY 2013.

Yes, however, the PERS contributions are defined based on careful reviews of the financial reserves required, so one way or another the total contribution must be provided.

If the employee paid 75 percent of the PERS contribution and the employer paid 25 percent and the salary remained the same, it would clearly be a savings to the state, but a cost to the employee.

The Millennium Scholarship program is defined by legislation, and the source of the funding for the program is a portion of the tobacco settlement money the state received.

Technically the law could be changed to direct the funding to UNLV/NSHE, but this would result in fewer students being able to afford a higher education.

This program is clearly responsible for increasing the college participation level of Nevada high school graduates, bringing more students and funding for their education to UNLV and other NSHE institutions.

UNLV leaders believe the Millennium Scholarship program is very beneficial, but fear that under the current financial model, the program will run out of money in the near future.  This is an issue for legislators to address.

The current system (SIS) is based on 1970s and ’80s computing technology and is severely outdated. Just like a worn air-conditioning system, the only option is to replace it.

UNLV volunteered to be a pilot institution for the iNtegrate system and will continue moving forward with its implementation. Full implementation is scheduled for fall 2010.

The new system comes with increased base costs — which is the reason for the $3/SCH iNtegrate fee.

Increases in non-resident fees go directly to state coffers and, in essence, reduce the level of support provided by the state. President Smatresk is working with officials to address this issue.

Foreign students cannot work in the U.S. without meeting strict federal immigration and naturalization requirements — requirements that became much more stringent after September 11 and are out of the state’s control.

Although the recent budget reductions have made this a more formidable challenge, it has existed for a significant period of time. Employees need to continue working with their supervisors to set clear expectations for levels of service. Most stakeholders will understand these limitations, but not all.

NSHE staff are evaluating the details of this approach. More discussion about this option will occur at future Board of Regents’ meetings.

With more budget cuts on the horizon, NSHE is looking for more budget flexibility and lengthy notice periods make this difficult. Notice periods are part of the Board of Regents policies, and it would have to either change those policies or declare financial exigency to temporarily avoid them. Both options are under discussion.

The answer to the first question is dependent on the outcome of the February special legislative session. In response to the second question, UNLV’s president has consistently talked about the importance of higher education to the future of this state, relative to economic development and creating a better future for all Nevadans. The first furlough day was enacted through legislation, and any additional furlough days (or direct salary reductions) would likely follow the same path.

Answers to these questions will depend on the outcome of February’s special legislative session. The state revenue shortfall is so high that current discussions seem to include all possible ways to save funds, with any salary reductions/furloughs being just one part of an overall budget reduction requirement.

If there are additional furlough days or direct salary reductions, they would likely be something impacting all state and NSHE employees.

UNLV is tracking overtime payments. In the first six months of FY 2010, we are significantly below the overtime paid in the first six months of fiscal year FY 2009. Some overtime is required, but clearly it has dropped off dramatically during the fist half of FY 2010.

All furlough/unpaid leave savings at UNLV have been used to help offset the $32.8 million budget reduction we faced at the start of FY 2010 (which began July 1, 2009).

If the question relates to state classified, there are defined state policies relative to seniority for layoffs that would have to be followed. It is not known at this time whether layoffs would be required to meet the additional budget reduction requirements, and the president has been committed to supporting the jobs of existing employees while forcing vacancies from the normal turnover of positions.

The state budget cuts apply to state-funded programs and activities. The self-supporting/auxiliary programs have nonstate revenue streams, but are subject to the same furlough/unpaid leave requirements as all employees. Additionally, we have increased the overhead for these programs, which is being used to help offset some of the state budget cuts. Cutting the Residence Hall auxiliary program, for example, would not save state dollars, but could reduce the number of tenants and the revenue stream that comes from them.

One of the president’s priorities has been to support graduate students, but it is not yet known whether this can be sustained through the next round of budget reductions. We will need to understand the depth of those additional cuts, as well as the duration of time before state revenues are projected to increase significantly, before determining funding.

If a program is eliminated, UNLV is committed to making sure students enrolled in that program are able to finish their program of study within two to three years.

The Legislature mandated the current furlough/unpaid leave program, and it applied equally to everyone regardless of salary level. While there are some benefits to a nonlinear salary reduction plan (higher cuts for higher salaried positions), there are many challenges and problems with such an implementation as well. It is important to note, however, that many high-paid UNLV professionals took voluntary unpaid leave in FY 2010 to match the impacts to state classified (this is in addition to the mandatory unpaid leave in FY 2011).

President Smatresk is a vocal advocate for higher education and has been working hard to demonstrate the relationship between education and Nevada’s financial future. Many legislators share his view, but their challenge is balancing an unprecedented fall in state revenue with Nevada’s core state programs and functions.