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If enrollment drops, what happens to funding for Nevada’s colleges and universities?

Education leaders and budget gurus cast doubt on worst-case scenarios. Instead, a looming revision of how funds are allocated presents a bigger issue.
Jacob Solis
Jacob Solis
Higher Education

Last September, the Board of Regents in charge of the state’s public higher education system received a presentation that, if correct, suggested enrollment trends that could upend Nevada’s higher education budgets within the next decade and force steep cuts.

But the doomsday scenario doesn't seem to worry the state’s top higher education officials. In interviews with The Nevada Independent, a mix of institutional leaders and budget gurus cast doubt on whether the worst projections would come to pass, especially as post-COVID enrollments have started to rebound. 

More pressing, they said, will be the looming revision of the higher education funding formula in 2025 — the first major revision of that formula in more than a decade, and an inflection point affecting the higher education system’s trajectory for years to come. 

At a meeting last month of an interim legislative committee charged with crafting that new formula, discussion pitting long-term enrollment trends against shorter-term funding formula changes set the stage for the coming debate about how to dole out more than $1.2 billion in biennial state dollars for higher education. 

But undergirding more than six hours of presentations was an acknowledgment that every institution was ready for change. Kent Ervin, a former head of the Nevada Faculty Alliance, told the committee that the old formula was “universally disliked” across all institutions, that it was “unfair and did harm to their institutions.” UNR President Brian Sandoval told the committee the formula was “one-size-fits-all.”

“It really doesn’t work,” Sandoval said.

So how did we get here? 

Doom and gloom for whom? 

Many of the enrollment fears are laid out in a 54-slide deck compiled by Las Vegas economics firm Applied Analysis — known chiefly for its more recent work for the relocating Oakland A’s and Formula One — commissioned last year by former Chancellor Dale Erquiaga and presented to regents in September. 

That presentation tested three enrollment models through 2040 — a base, high and low scenario — that projected the future of the existing funding model with no changes. Those scenarios were dictated by what the report called “demographic realities” — an operating assumption that demographic shocks stemming back to the 2008 financial crisis will hollow the ranks of 18- to 29-year-olds that traditionally supply colleges and universities with students  sometime within the next 10 years. 

That analysis projects that Nevada’s population would peak in 2029 before beginning to decline. Under the base scenario, enrollment would continue to rise before dipping down in the 2030s. With costs expected to rise, the worst-case low-enrollment scenario could create a funding gap of $500 million by 2033, growing to $1 billion by 2039.

In order to cover the gap, the report posited, regents would need to contemplate anywhere between a 4.5 percent and 6.5 percent hike in tuition and fees, assuming the funding formula remained the same. In the worst case scenario, the necessary increase would be nearly double the current 10-year average of just 3.2 percent. 

In an interview, Applied Analysis principal analyst Jeremy Aguero said the issue was “twofold.”  

“One is this sort of cliff, that I think K-12 education as well as higher education is going to deal with, there are just fewer younger people,” Aguero said. “But the other half of it is also the question, relative to those same groups of people, smaller as they may be, in terms of their marginal propensity to engage in these programs.”

The phenomenon is known nationally as the enrollment cliff, and it’s a cliff that researchers have posited could cut national college enrollment by as much as 15 percent over the next 10 years, starting as soon as 2025. That research has also signaled a potentially steeper cliff for public land-grant institutions servicing local students, as demand for degrees is expected to consolidate among the country’s most elite institutions. 

Nathan Grawe, an economics professor at Minnesota’s Carleton College who has for years studied the relationship between demographics and enrollment, said in an interview that recession-era demographic trends are already appearing in K-12 graduation and enrollment data — though national data is hardly a monolith. 

Part of the complexity, Grawe said, was that migratory patterns can change the enrollment math. Where coastal states have lost people, states in the South and Mountain West have grown.

“In some parts of the country, even as we look forward, the migratory patterns will more or less offset the contraction in fertility,” Grawe said. 

Texas, Grawe said by way of example, is on track for “a real tear” in projected high school graduates. It’s a tear expected to last through the mid-2020s, where even then, he said, enrollments are expected to move “more or less sideways.” 

Nevada institution presidents have nonetheless sounded a similar tone — pointing to Nevada’s numbers as having little in common with the hardest hit areas of the Northeast and Midwest, where the rapid decline of small, private liberal arts colleges has compounded the issue in ways that are generally less applicable in the Mountain West. 

But citing K-12 graduation projections from the Western Interstate Commission for Higher Education (WICHE), Grawe suggested Nevada “might not be super strong.” Part of the reason, he said, were graduating cohorts that were already smaller than expected. 

For instance, Nevada Department of Education numbers show more than 31,200 Nevada high school graduates for the 2022-2023 school year — about 4.6 percent less than the 32,680 graduates WICHE had projected.

More than that, Grawe said, falling matriculation rates (a measure of how many high school graduates move on to college) cannot solely be explained by demographics — “leaving us to wonder, are people reevaluating their relationship with higher education?”

To wit, Interim Chancellor Patty Charlton told The Nevada Independent in February that the projections inside the Applied Analysis report were “a very important look at where we were at the time.”

But Charlton said she and Aguero had ongoing discussions to “continue to vet” that presentation, pointing to increasing enrollments in the fall 2023 semester and a now-baked cost for a historically large cost-of-living increase for higher education employees as evidence of the system’s ability to remain flexible even in the face of dire projections. 

“We're never being stagnant,” she said. “We're always looking at opportunities for efficiencies, for improvements. Institutions are always also looking at programs — is this the right program for the right time? Is this still viable?”

Opening the funding formula box

Instead, eyes now turn to a new legislatively approved study committee — the ad hoc Committee on Higher Education Funding — whose work could reshape the higher education funding landscape for the first time in more than a decade. Created in 2023, the committee is  staffed by a 14-member mix of lawmakers, regents, business leaders and chaired by former Nevada Supreme Court Chief Justice James Hardesty. 

At issue is the state’s higher education funding formula, which splits money across two research universities, four community colleges and a state university based largely on “weighted student credit hours.”

Those weighted credit hours function as a measure of not only how many students are completing courses from institution to institution, but also a sliding scale designed to account for more expensive classes — labs, graduate study or upper division work.

When it was crafted in 2012, the weighted student credit hour formula was hailed as a success in its primary goal — flattening decadeslong discrepancies, often fueled by discrete and occasionally esoteric regional political battles between UNR and UNLV. 

But in the years since, the formula has come under renewed scrutiny by community colleges, and perhaps none more vocally than from College of Southern Nevada President Federico Zaragoza

Sitting before the new funding formula committee last month, Zaragoza said that the formula as it exists “is not an equity formula,” that its prioritization of full-time students punished community colleges for catering to part-time students who are often poorer and come from worse schools. He likened the funding received from every full-time equivalent student to three part-time students. 

“It’s not that we don’t want to spend more, we don’t have the resources to spend more,” Zaragoza said. 

Accelerating the pain are a mix of outside factors, few more impactful than enrollment. During the pandemic, as colleges and universities nationwide pivoted overnight to online instruction, enrollment fell nearly across the board. But while enrollment trends at UNR and UNLV were relatively unchanged — falling by 1.7 percent at UNLV and increasing 0.8 percent at UNR between fall 2020 and fall 2021 — enrollment drops were sharp and sudden at community colleges. 

At CSN, enrollment in that same time period fell 12 percent. The college’s total headcount dropped by more than 5,800 students, resetting CSN to its lowest overall headcount since 1998. In the years since, enrollment has remained reduced, with headcount reaching just 30,040 in fall 2023, down from nearly 30,200 a year earlier. 

As headcounts drop, so do the revenues that came with tuition and fees for those thousands of students. 

Federal aid helped cover much of the financial burden caused by reduced enrollment, Zaragoza told the committee. But amid another crunch created by record cost-of-living increases for state employees, including higher education workers, the “hurt” continued.  

“When we do have declining enrollment, there is real pressure that is put on the institutions that will have consequences in terms of our ability to serve our students,” he said.  

The money question

Higher education leaders have signaled that the upcoming formula revisions represent a golden opportunity to secure more money from state lawmakers — money that lawmakers have historically remained hesitant to dole out amid concerns about transparency and accountability within byzantine college and university accounting offices. 

In an interview, UNLV President Keith Whitfield said he would like to see the higher education budget pie “to be a little bit bigger,” potentially tied to performance incentives than pure credit hours or headcounts. 

Whitfield raised concerns with the committee about the finer mechanics for year-to-year caseload growth that redistribute money over time without necessarily increasing the total amount of money, in effect pitting institutions against one another. Instead, he called for a new base funding level for institutions, with caseload growth or new incentives piled on top. 

UNR’s Sandoval likened the new funding formula as an opportunity to do “something visionary and historic,” drawing comparisons to the fundamental overhaul of the state’s K-12 funding formula in 2019 that created additional funding “weights” for different kinds of students — including English language learners to special education students.  

“Frankly, the amount of money in our state budget has increased dramatically, and there hasn’t been a proportional share that’s been devoted to higher education,” Sandoval, a former governor, said. “We did, and we should, put all that money into K-12 — but where do you think all those K-12 students go when they finish high school?”

The committee is still months away from completing its work, however, and lawmakers will not take up the charge of drafting a new formula until the 2025 legislative session. By then, they may also be working to reshape the structure of the Nevada System of Higher Education itself, should voters pass Ballot Question 1 in November and remove the Board of Regents from the state’s Constitution. 

And whether a Legislature that has long viewed NSHE funding skeptically will raise funding alongside a new formula remains a political question without an answer. 

Aguero, for one, told The Nevada Independent that the mechanics of the formula was a “wholly separate question.” 

“If the mechanics of the formula are leading to outcomes that are not aligned with the goals of the state, then fixing the mechanics first, in the absence of the political conversation, which is largely ‘How much should we be funding this?’ — I think those should be two completely separate conversations,” Aguero said.


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