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Thursday, March 10, 2011

UNLV misleads...still

Yup, it is out...but how did it get back in there?

UNLV officials keep trotting out a bogus statistic on how large their budget reductions have been since the recession started. Recently President Smatresk claimed the loss was $49.6 million and in some cases has been expressed in percentages (usually in somewhere between 20 and 40 percent).UNLV officials calculate this figure by adding up budget appropriation reductions from each year.

This is not how you make the calculation and unfortunately no newspaper in Nevada has called UNLV (or NSHE) on the use of bogus numbers and bogus math.

First, the appropriate calculation is (Current Year Spending - Previous Year Spending)/Previous Year Spending. Looking at appropriations allows people to overstate the magnitude of the lost revenue because appropriations are plans for future spending, not actual spending. 

For example, lets say you have a budget this year of $100 and you spent your entire budget. You're feeling good about yourself and you decide to appropriate $200 to your budget next year. You've only planned to spend $100 extra, you haven't actually spent a penny yet. Let's say that windfall doesn't come through so once again you only have $100 to spend (and you spend it). Looking at appropriations ONLY allows you to claim a budget cut of $100 even though you spent the exact same amount.

Blasted personal "budget" cuts mean I still can't buy my dream car. Curse you reality!!!

Its kind of like me planning to buy an Aston Martin again this year only to find that I'm about $120,000 short. Not being able to spend money I hoped to spend doesn't mean I actually had a reduction of $120,000 in spending (I never had that money in the first place).

So if you understand this now it is time to move on to the real numbers.

For this analysis I look at several categories of revenue (I don't have actual spending, but I suspect revenues are fairly close). UNLV officials generally look only at General Fund revenues but that makes up less than 1/3rd of all revenue at UNLV. I'll look at that, but I'm also going to include the "other" revenues which includes student fees along with "other" sources of revenue like grants, contracts, special appropriations and the "other" portions of the budget like the self-supported budgets and capital projects. I will include UNLV, the Dental School, Law School, statewide programs and Athletics (this is fair because UNLV proposed cutting from each of these to meet come somewhat close to, the requested budget from Governor Sandoval). I have also adjusted for inflation to 2010 dollar values.

Figures extrapolated from NSHE historical actual budget revenues

As you can see, even looking just at general fund revenues the difference between the peak in FY 2008 and FY 2011 is just $31 million, not $49.6 million. In other words, Smatresk's figures overstate general fund figures by 60 percent!

Once you start adding in other portions of the budget the reduction shrinks considerably only to grow again, but ONLY when you include capital projects (which is not only maintenance but new building construction). Excluding capital projects is usually a fair way to compare budgets across time because capital project spending fluctuates widely from year to year. 

The fairest comparison suggests that UNLV lost $20 million in revenue since the recession began during FY 2008. This is a reduction of 3.7 percent since the peak in FY 2008. 

In other words, by ignoring the bulk of the universities revenues, UNLV officials overestimate the magnitude of past budget reductions by 123 percent!!!!

The fact is UNLV officials (and many others at UNR and NSHE) have clearly overstated the size of past budget cuts. Embarrassingly, many of them also claimed world ending levels of devastating which have not materialized.  I recognize this is all part of the political strategy - make people panic to build political pressure to encourage policymakers to protect the budgets. Of course panicking students and professors about "devastating cuts" is no way to build confidence in your university system which is necessary to attract and retain students and faculty (this fact makes me believe that education and research isn't the main focus of our universities anymore - spending as much money as possible anyway possible seems to be the main focus).

As shameful this has been, NSHE officials will continue to play this game so as long as the mainstream media fails to do some basic research and math to double check NSHE's figures. 

Btw, has anyone considered terminating the journalism school?


  1. Wow, your ignorance of funding for higher education is mind-boggling and your article is worthless. The reason UNLV looks only at General Funds is because ONLY GENERAL FUNDS IS UNRESTRICTED. The other funds such as grant funds are legally restricted to specific purposes AND CANNOT BE USED FOR ANY OTHER PURPOSE. THEY CANNOT BE REDIRECTED TO SOLVE A BUDGET PROBLEM. Before you start posting this pompous drivel, learn the basics.

  2. Thanks for playing but that is actually a poor and misleading excuse. In effect, you are grossly understating the wiggle room that is available outside the general fund budget. (This has been confirmed by members of the NSHE board of regents btw).

    It is true the general fund is unrestricted but it is not true that all the other funds are tied up and can't be devoted to other uses or used to soften the blow of budget cuts. Grant funds are restricted to the use they were granted for, but they make up a tiny portion of the budget.

    Additionally UNLV and NSHE officials constantly discuss budgetary items outside the general fund that will be affected by the general fund cuts.

    In other words they (and you) want to include other budgetary items when it is politically convenient and ignore them when it is also politically convenient.

    Focusing on general funds is done to maximize the size of the claimed cuts to scare people, that is the only real reason.

  3. Grants and Contract revenue, for example makes up $69 million of UNLV revenue for FY 2011. Total revenue is $526 million (excluding athletics, dental school, law school and UNLV statewide programs).

    The General Fund revenue makes up $145 million of that $526 million, or just 27.5 percent for FY 2019. In other words you're wanting to exclude 72 percent of the revenues on account of 12 percent being allocated specifically toward some purpose.

    You're also excluded other state appropriations like the student fees which are sent back - $100 million and self-supporting budgets $212 million. Both of those sources can be tapped to soften the blow of the general fund reductions.

    On top of that, you also have Athletics, the Law School, Dental school and statewide programs ($82 million) to help adsorb some of the $47 million in requested spending reductions.

    I'd recommend actually looking at the budget numbers before accusing someone of not knowing what they're talking about.

  4. Whoops, that is supposed to be FY 2011... :P

  5. PS, the $47 million is a reduction for a 2 year period all the other budget numbers above are for a 1 year period.