Klaich sends letter to lawmakers after RJ story on funding formula controversy

Chancellor Dan Klaich on Tuesday wrote to state lawmakers to rebut a damaging Review-Journal story that exposed how the system was allowed to write a letter under a consultant's letterhead.

The missive, though, addresses mostly issues over the higher ed funding formula and not why an essentially false document was prepared for lawmakers. It also asserts ex-state Sen. Steven Horsford "misunderstood" the relationship between the system and the consultant.

Fuel on fire? Posterior-covering? I wonder what lawmakers and regents will think.

Klaich, using Chairman Rick Trachok as cover, has canceled an appearance on "Ralston Live" scheduled for Monday.


April 19, 2016




Members of the Nevada Senate


You may have seen a recent story in the Las Vegas Review Journal alleging that Nevada higher education leaders actively misled the legislative interim committee studying the formula to fund higher education during the 2011 interim.  There are allegations in this article that simply cannot go unanswered.


As a Legislator, you know funding formulas are the standard mechanism for allocating state support nationwide and in fact Nevada has had funding formulas in place for decades. The formula for funding higher education is a product of the Nevada Legislature, having been adopted and revised over a number of decades.   The current version of the formula was approved in 2012 after a series of public meetings by an interim legislative committee that was assisted and informed by their independent consultant SRI International. 


I was a passionate advocate for changes to a formula that was understood by few and inequitable among institutions in the System of higher education. The positions that I advocated were formed by countless hours of discussion among campus representatives, primarily the presidents, and publicly presented and debated at Board of Regent meetings and subsequently at public meetings of the interim committee. The issues were complex and it is safe to say that no campus got everything it wanted in the discussions.  I am thankful to the Legislative committee, which revised the funding formula to become equitable, easy to understand and based on national best practices of completion and institutional performance.


It is obvious and a matter of public record that NSHE’s funding formula proposal presented to the legislative committees was based in part on work performed by the National Center for Higher Education Management Systems (NCHEMS).  It was not a "secret" that NCHEMS worked for NSHE.  NSHE’s contract with NCHEMS is a public document. NSHE and the Legislature have a long history of hiring NCHEMS as a national consultant and subject matter expert. NSHE hired NCHEMS in February 2012, for its national expertise and experience on higher education performance funding models to help in designing this new funding formula proposal.  The minutes of the legislative Committee to Study the Funding of Higher Education reflect the fact that the Committee was informed, at its first meeting on February 29, 2012, that NSHE was consulting with NCHEMS.  See February 29, 2012 minutes, p. 11, at http://www.leg.state.nv.us/interim/76th2011/committee.  I explained to the Committee that NSHE is not formally affiliated with NCHEMS, but that I had hired NCHEMS before, and with regard to the funding formula study, NSHE had requested NCHEMS to prepare the weighting matrix which NSHE submitted to the Committee.   The minutes of the Funding Committee and the Formula subcommittee meetings, and written questions from LCB staff show that, throughout the funding formula study process, requests for clarification or information regarding NCHEMS were directed to NSHE, not to NCHEMS.  I did not know that Chair Horsford misunderstood the relationship of NCHEMS as a consultant with NSHE until the last meeting of the Funding Formula Committee.


The article also implies that higher education leaders were motivated to maintain the status quo.  Nothing could be further from the truth or less reflective of the transformative work of the legislative committee and its consultant SRI International.


Before 2011, the formula funding higher education did not allocate funding equitably among its institutions.  That was changed and formula funds are now allocated in a fair and equitable manner.  Before 2011, there were probably not a handful of Nevadans who could understand the Byzantine formula.  It is now simple and clear.  Anyone that wants to spend a few minutes reading publicly posted summaries can understand the formula.  Before 2011, funding was allocated based on enrollment without regard to whether anyone who enrolled actually completed a class, program or degree.  The formula is now based on completions and includes for the first time performance funding.  Nevada needs a more educated citizenry to meet the economy of the New Nevada and the formula changes provided that impetus.  Before 2011, there was no alignment between higher education funding and the economic development plan for the State.  The formula changes from 2012 provided that alignment. 


The overall impact of the implementation of the new formula was to move state support from northern Nevada institutions to southern Nevada institutions. The southern institutions received over $12 million in additional funding from the northern institutions. UNLV’s state funding increased by $2,959,275 under the new formula over what it would have received under the old formula. CSN’s increase was $6,981,249 and NSC’s increase in 2013 was $2,825,427.


As a result of all these changes, and in spite of budget cuts necessitated by the great recession, graduation and retention rates are at all-time highs.  Our community colleges are offering more certificates to provide workforce skills for our growing economy.  Nevada’s colleges and universities have dramatically reduced administrative expenditures to focus critical funding on the core missions of education, research and student success.


All of these changes were openly, actively, publicly and passionately supported by the Nevada System of Higher Education and were recommended to the committee by its own independent consultant.  We supported the committee while it did its work and we thank the Governor and the Legislature for utilizing this formula for the past two biennia. 


Chair Trachok has indicated his intention to call a meeting to consider this matter, and in deference to that discussion this will be my only public comment prior to that time.



Daniel J. Klaich,