The New NSHE Funding Formula, the Good, the Bad and the Worse

August 30, 2012

This statement was delivered at the Board Of Regents’ Special meeting at DRI South on August 24, 2012

The Good

  •  The plan to retain student fees and tuition on the respective college campuses should promote an entrepreneurial approach to higher education that has worked very successfully in many other states such as Arizona and Oregon.
  • Establishing a base formula in which the funding is tied to local student demand and the cost of content delivery is fair and transparent.
  • The emphasis on number of graduates rather than on enrollment should make institutions more accountable.

The Bad

  • The performance pool is disproportionately weighted in favor of the number of graduates, and is therefore only weakly tied to performance as recognized by students, faculty and organizations involved in ranking colleges and universities. There is much too great an emphasis on numbers and not on quality and efficiency.

The Worse

  • The absence in the performance pool of national benchmarks provides little incentive, particularly for the universities, to become centers of excellence

As you may know, student loan debt has replaced auto loan debt and credit card debt as the top source of debt in the nation. The total outstanding student loan debt now stands at a staggering $870 billion. For all borrowers across the nation, the average student debt is $23,000. In this regard, it is important to point out that the longer a student pursues a degree, the greater the debt accrued. That is, there’s a strong relationship between the years to completion and the accumulated debt. Moreover, students who fail to graduate accrue large amounts of debt without any of the considerable economic benefits of obtaining a BS or BA degree.

In Nevada, we cannot just reward institutions for the number of graduates. We also must incentivize our institutions to become better at the efficiency with which we graduate our students. In 2010, approximately 14% of students at UNR and UNLV completed their degrees in four years. The six-year graduate rates, about 40% at UNLV, and approximately 50% at UNR, are much better, but still are not nearly high enough by national standards. In the last two years, graduation rate at UNR has increased to 56%, but only as a result of extensive efforts in advising and other student support services.

To address the low success rate of our students, we need to include graduation rates in the NSHE Performance Pool component of the new Funding Formula. Nevada recently received a failing grade for the “student access and success” component of the recently published “Leaders & Laggards: A State-by-State Report Card on Public Postsecondary Education” by the U.S. Chamber of Commerce (http://icw.uschamber.com/reportcard/nevada/) A major factor in determining Nevada’s failing grade was “The four-year institutions rank in the bottom 10 states in terms of completion rate …” While graduation rate is not a panacea for student success, it is a national and international benchmark by which universities are ranked. Increasing graduation rate at NSHE’s universities will lower the debt burden on our students, improve the rankings of our universities, prevent the brain drain of Nevada’s best students to more prestigious out-of-state universities, and attract businesses to the state seeking a well-educated work force.

Thank you,

David W. Zeh
Chair, Faculty Senate