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Chancellor says Nevada higher education system will plan for 8 percent budget cuts



by Sean Whaley – Nevada News Bureau

Chancellor Dan Klaich has informed the state budget office that the higher education system will participate in a budget cutting exercise in the event spending reductions are needed due to lower than expected tax revenues.

In a letter to state Budget Director Andrew Clinger sent Monday, Klaich said a special meeting of the Board of Regents of the Nevada System of Higher Education has been set for Feb. 2 to consider the 8 percent budget reduction plans that will be submitted by each campus.

The 8 percent reductions are in the middle of the 6 percent, 8 percent and 10 percent cuts requested by Clinger in a memo sent out last month to all state agencies.

“I have directed the campuses to focus on the mid-range of cuts between 6 percent and 10 percent outlined in your All Agency Memorandum,” Klaich said.

The letter is a departure from Klaich’s first response to the request for budget cutting scenarios on Dec. 8, when he urged Gov. Jim Gibbons to find alternatives to cutting the higher education budget.

“Governor, I know you made a promise to the people of this state concerning taxes,” he said in the December letter. “However, the current situation and further requests for budget cuts will lead to the dismantling of critical structures and functions of higher education that do not serve the state. There must be another way.”

In the Monday letter, Klaich continued to urge that the majority of any budget cuts come in the second year of the two-year budget, not the current fiscal year which is now more than six months over.

“Contracts have been issued, class schedules set, and registration is largely complete,” he said. “I believe that utilizing proper cash flow techniques and other options available, including acceleration of use of the already budgeted line of credit, that cuts this fiscal year, at a minimum to education, can be avoided.”

There is a $160 million line of credit included to help balance the two-year state general fund budget, but $130 million is scheduled to be used next fiscal year. If the full amount is used this year instead, some cuts could potentially be avoided until 2011.

The Gibbons Administration has not endorsed this idea, saying it would just make the budget gap even bigger in the second year.

The cuts now being contemplated by Gibbons could start as soon as March 1 this fiscal year.

In his letter, Klaich noted that enrollment in the system is up 4 percent as more Nevada residents seek to improve their skills in a tough job market.

Enrollment caps at the system’s campuses has been discussed, he said.

“While this is a highly undesirable result with long-term ramifications for the state, it can’t be ruled out should worst case scenarios, such as the levels addressed in your memo, come to fruition,” he said.

An 8 percent reduction in the final four months of this fiscal year would mean $13.4 million in cuts to the eight campus system. An 8 percent reduction in the full 2011 fiscal year would total $40 million.

Gibbons is considering budget cuts to balance the state budget, which is now $67 million in the red in just the first few months of the 2010 fiscal year. No decision has been made on what level of cuts may be required.

Gibbons is waiting for a Jan. 22 report from the Economic Forum, a panel of private citizens with fiscal expertise, before making any budget decisions. A special session of the Legislature may be required to implement any budget cuts.

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