Regents call on reserve estate tax fund for help

With great trepidation, the University Board of Regents on Wednesday voted to tap into the reserves of its estate tax fund to the tune of $22.22 million.

It was not a happy song.

Regents, presidents and administrators alike voiced deep concerns about using the estate tax money to address funding problems that are the responsibility of the Legislature.

"I was there at the beginning of the estate tax, about 1985," University of Nevada, Reno President Joe Crowley said. "The biggest concern then was that during hard times it would be an attractive place to go."

The estate tax fund adds about $37 million per biennium to the higher- education budget, money derived from interest-bearing accounts.

Officials have said if more than $50 million from the account is spent, there is a danger of depleting the account.

Under the proposal agreed to Wednesday, $22.22 million would be added to the usual $37 million for the upcoming biennium budget for a total of $59.22 million. The next biennium, the total estate tax funding budget would fall back to $52 million.

Chancellor Richard Jarvis said this action shows the Legislature that regents are serious about addressing the funding equity issue. During the next two years, he said, an effort will be made to have the state assume the $22.22 million debt.

"This is not a good long-term solution," he said.

In addition to the estate tax money, Jarvis told the regents, Gov. Kenny Guinn plans to put more than $5.5 million back into the budget to be used solely by UNLV and was going to ask the Legislature to add another $8 million to entire University and Community College System of Southern Nevada budget -- $4 million a year for the next two years.

Crowley said a strong statement needed to be made that any funding issues brought about by growth and equity concerns should be the primary obligation of the Legislature, not the universities and colleges.

Regent Dorothy Gallagher noted that if the Legislature doesn't step forward, then the regents face the same problem in two years.

If that happens, the system may be forced to cut programs and people.

Crowley had just experienced another unprecedented action by the regents, when they took $900,000 away from UNR to help even out a funding disparity among northern and southern colleges and universities.

The money was what was described as an overpayment for anticipated student enrollment that did not happen.

Crowley said his institution was being penalized twice -- once by the loss of funds from student fees and a second time with the $900,000 reduction in his budget.

But he added that all six institutions of higher education in Nevada were hurting for funds and everyone made sacrifices to arrive at a new budget proposal that must be into the Legislature by 8 a.m. Friday to receive consideration.

Even though UNLV and the Community College of Southern Nevada will be getting the lion's share of the funding adjustments, their total needs still are not being met.

The adjustments will reduce the inequity in funding by only 33 percent and fund 88 percent of money they need for growth.

UNLV President Carol Harter said with added funding she will be able to hire staff for a new library, but the staff will be short-handed.

Still she is satisfied with the new budget proposal.

"I'm quite pleased," she said. "We don't get everything we need, but it's a step in the right direction.

About $350,000 would be cut from the chancellor's administrative office budget. About $2 million would be cut from research funding throughout the system.

Prior to Wednesday's special meeting of the Board of Regents at UNLV to address budgeting issues, the presidents of the state's two universities and four community colleges forged the compromise budget proposal involving the estate tax and the additional funds expected from the governor and Legislature.

According to a funding equity study released at a Board of Regents meeting in Reno last week, the Community College of Southern Nevada and UNLV were the most seriously underfunded institutions.

The study recommended an immediate infusion of $24 million into the higher education system to resolve funding inequity problems and $24 million a year after that.

The $22.22 million that will come from the estate tax over the next two years is a far cry from the $48 million that is needed.

Officials believe it will take six years -- three biennium budgets -- to resolve the funding inequity that seems to be driven primarily by the unprecedented growth of Southern Nevada.

The funding changes agreed to by a unanimous vote of the regents Wednesday must be approved by the Legislature and the governor.

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