The NSHE Task Force that the Chancellor appointed last fall to analyze the impact of the PEBP Board's proposal for a new insurance model has posted its report, which will be discussed by the Regents at the upcoming Board meeting March 10-11.

The NFA was well represented on the Task Force, by UNR Professor Jim Richardson and UNLV Professor of Health Care Administration Chris Cochran. The full report has been available on the Chancellor's website since late January, and can be found on the NFA website here.

Because it is rather lengthy, including various appendices, a summary has been prepared by Chris Cochran and is available here. (Note that even this brief summary is six pages single-spaced; this topic is truly not for the faint of heart or the rushed...)

The key elements of the recommendations follow:

• NSHE should engage (as NFA already has through the Benefits Coalition) to seek legislative action to ameliorate the impact of the PEBP Board proposal, at a minimum by increasing the amount of money allocated to each individual participant's Health Savings Account.

• NSHE should explore offering a "flexible benefit option," a supplemental health benefit available to NSHE active employees for FY 12. (This might involve a three-year pilot program of NSHE operating a supplemental, partially separate or fully separate health insurance pool for its professional and classified employees.)

• NSHE should seek greater flexibility in handling the full array of benefits for its professional and classified employees, just as it currently operates the RPA retirement accounts independently of the state. This might enable NSHE to redirect the anticipated increase of a fraction of a percent of the state match for our RPA retirement accounts towards health benefits. This might also enable NSHE to explore whether we could obtain more cost-effective coverage as a separate insurance pool than PEBP offers currently. (This is not to recommend that NSHE leave PEBP outright, which would require legislative approval and could be costly for both entities; rather, it is to consider becoming a separate, autonomous insurance pool within PEBP.)

In support of these recommendations, the report includes an evidence-based comparison of PEBP benefits – current and projected under the new CDHP plan being proposed to take effect this summer – with the health benefits offered by leading private employers in Nevada and with those offered by public and private institutions or systems of higher education in the West. The Task Force found that Nevada is already at a "competitive disadvantage" with the current benefits and is likely to be even less competitive with the higher premiums and deductibles, and reduced co-insurance and reduced dental coverage included in the PEBP Board Plan for the coming biennium. (This comparison is based upon the work of an independent consultant retained by NSHE to provide an empirical analysis of PEBP benefits.)

This data leads to a series of recommendations. The full recommendations are reproduced below for those unable or too short of time to read through to Pages 5-6 of the summary.

a. The Task Force recommends that NSHE have Gallagher Benefits update and finalize their
comparative data analysis as soon as the PEBP premium levels are known February).

b. The Task Force recommends that NSHE be very active in the upcoming legislative
session regarding health care benefits for its employees. This could include supporting
improvements in the PEBP health care program over what has been approved by the
PEBP Board, adjusting the structure to include both a high and low deductible option
(since the current plan with only a high deductible option and an HMO will be relatively
unique in comparison to other public and private employers) and/or consideration of
viable near‐term alternatives for how NSHE provides health care benefits to its
employees.

c. It is recommended that NSHE develop a communications plan with an external focus, to
highlight that NSHE employees do not have high benefits, and are in general not in the
PERS retirement program (except for classified and a very small percentage of
faculty/professional staff who came from PERS covered employment).

d. NSHE should support an implementation year adjustment for spouse or domestic
partners that are covered under non‐PEBP plans, to allow flexibility for the six (6) month
period of overlap between those on a calendar year plan schedule.

e. Consideration should be given to extending the enrollment period, as was done last
legislative session to allow employees to adjust to the radical changes in the PEBP plan,
and still have a July 1, 2011 implementation date. It is recognized there is a relatively
large cost associated with this option.

f. Phase‐in of the reductions in HMO rates in the North, if in fact these rates drop over
what exists now. There is a PEBP policy for short‐term/2 ‐year subsidy for large rate
increases, and this is inserted below. It should be noted that this subsidy policy is
currently in effect with the Northern HMO program for FY10/FY11, but at their 1/13/11
meeting the PEBP Board suspended this policy for the FY12/FY13 biennium. This adds
additional concern since the northern HMO rates have been under this subsidy policy
for the current biennium, combined with the fact that the pooling of rates north and
south will clearly lead to reductions in the north and increases in the south. The HMO
participants in the south will therefore have no advantage of this subsidy policy during a
biennium when their rates will increase due to higher costs in the north.

Supplemental subsidy allocation:
• A supplemental subsidy will be allocated to any tier and plan with participant
contribution increases:
  * greater than one and a half times the blended medical trend as provided by plan
actuaries, and
  * greater than $100.
• The supplemental subsidy will be the amount required to reduce the participant
contribution percent increase to the average of the unsubsidized participant
contribution and the blended medical trend, but no lower than the amount required
to reduce the increase of the participant contribution to $100.

Other Overall Recommendations:

a. It is the recommendation of this Task Force that NSHE establish a system‐wide
standing committee on NSHE benefits overall, to include Health Care Benefits but
not just limited to this program. This would include a focus on future health care
coverage (including impacts of federal requirements) and retirement issues. This
group, while working with System staff, would also focus on how we can effectively
communicate with legislators and other key groups that NSHE employees have
major differences in retirement coverage, and that our "compensation" is not
consistent with the previous reports distributed about overall "public employee
compensation." The System needs to take immediate action in communicating these
facts to key constituent groups.

b. The Task Force recommends that NSHE immediately begin researching future
options to identify alternative approaches to providing health care benefits for NSHE
employees that are independent and outside of the current PEBP program, including
viable options for communications and/or action steps initiated in the 2011
legislative session. This could include consideration of fully insured programs,
self‐insured, and/or combining with other large public employee groups.

c. If the current PEBP plan for FY12 cannot be changed, the Task Force recommends
that a request be made to the Board of Regents to provide some funding to support
a Flexible Health Benefits Account for each NSHE employee to offset medical cost
increases and improve retention and recruitment. The “flexible benefit credit”
approach to provide employees with additional health care funding seems to be the
most flexible and easiest to implement of any options reviewed. It is recognized that
a key factor in implementing this recommendation is identifying funding, especially
in this financial climate.

d. As the Chancellor and Board of Regents consider the option of providing
supplemental benefits for NSHE employees, we would like to highlight several
potential challenges and key issues that would need to be addressed if supplemental
benefits are provided. We have attempted to highlight these issues below.

1) A major issue relates to identifying funding to provide additional health care
support, which will be challenging in this fiscal environment.

2) Another major issue that would have to be discussed relative to
supplemental benefits is a legal one relative to the Board authority over
NSHE state classified staff. It is the view of the Task Force that any
supplemental benefits authorized by the Board cover ALL NSHE employees
including state classified staff employed by NSHE.

3) The supplemental benefit approach recommended by this Task Force would
not be applicable for retirees under the current administrative structure. In
fact, we have not been able to identify any supplemental option for retirees
that would not require the development of an administrative solution.
Retirees interact directly with PEBP for health care, and this information
does not come through NSHE.

4) The Task Force recommends the Board of Regents consider the option for a
graduated rate/premium structure based on income levels (or allocation of
supplemental benefits from NSHE based on the same).

5) The Task Force recommends NSHE seek additional flexibility in managing all
“benefits,” specifically, the option to consider retirement and health care
programs as a package within all benefits, given they are the two largest
benefit programs by far. Additionally, there will be an added opportunity this
coming legislative session, with the projected significant increase required
for the PERS employee/employer contributions (moving from the current
11.25% for employee and employer to 12.25%). Most NSHE
professional/faculty do not participate in PERS, therefore does do not
contribute to any future state retirement liability. If NSHE received the
normal funding for retirement, health care and all other benefits, but was
given the flexibility to manage them as needed, we would be able to
consider a total compensation review of our competitiveness for
recruitment and retention of faculty and staff, with no increase in funding
from the state over what they provide to all other agencies.

6) Continue the analysis of the data from PEBP on actual claims experience for
NSHE employees in a form appropriate to compare the revenue and
expenses from NSHE (net costs), along with utilization trends relative to the
NSHE population. This will help foresee the longer range options and
opportunities for NSHE relative to health care programs.

7) NSHE should argue for alternative approaches to what exists now relative to
how PEBP negotiates rates for medical procedures (and including overhead
and profit costs). More transparency is needed regarding this process to
assure that PEBP members and taxpayers are getting the best prices
available.

8) NSHE should consider developing specific health care options for NSHE
employees for the following biennium (2013‐2015). These
options/alternatives should consider ways that NSHE resources of health
professionals, health programs (med school, dental school, nursing
programs, etc.), and health and wellness centers might be used as part of an
overall plan to provide health care benefits to our employees.

It',s been a long week since last Tuesday, when UNLV President Neal Smatresk took the first step towards a declaration of financial exigency. A lot has been written in the press about the financial crisis at UNLV, which you've been able to follow if you are receiving our daily bulletins and weekly updates. (If not, or if there are colleagues who would like to receive them, there's a simple sign-up box on the NFA website.)

I think the most important thing for us all to keep in mind is that this will be, as it has been for at least the past three years, a long and arduous road for everyone, and there is no simple solution or silver bullet that will make our situation go away. Nor is there any inevitable, irreversible outcome that is pre-ordained. The situation is just as unpredictable this week as it has been for the past several months or years. And no one at any level is entirely able to understand, or control, the entire outcome. It was remarked to me today "I don't know what to believe so I believe anything." I responded that "I don't know what to believe either, but I'm least likely to believe those things that are simple or easy."

So that means we need to be smart and keep our heads. It is, I believe, important that the faculty remind the community, the state government and the Regents not only what irreversible and deeply detrimental damage financial exigency, and the budget that would induce it, would do to the future of the region and the state. We must also remind them of the seriousness with which faculty have and continue to approach the state's structural budget crisis. This article  on our blog is my best effort to make that case by reviewing not only the specific sacrifices we have made, but also the measures we have supported to avert exigency over the past three years.

As I see it, we are in the first of what promises to be many phases of the long and arduous road we'll have to travel this year as an institution and as a faculty. The current phase is not the phase in which an actual declaration of exigency will or will not be made, nor in which an actual exigency plan would be implemented. The current phase, it seems to me, involves two issues that are really much larger: discussions towards a budget plan for implementing cuts in the case of an exigency and discussions towards a budget plan that would avert exigency. By no means is the latter an alternative that holds no pain for faculty, students or UNLV. But also by no means is the former an unavoidable outcome. That is, we should be seeking all measures to avert exigency, but we should not expect that merely averting exigency would avert crushing cuts to our programs.

The current phase, it seems to me, will run through at least March 10 as the Provost compiles a budget plan, which may or may not be presented to the Board of Regents on that date. In reality, it will run through the end of the legislative session in June (or later).

In the meantime, rumors are, of course, running rampant about what will be in that plan, and published news reports may begin soon to appear reporting on one or another aspect of it. My personal view is not to put a lot of stock in such reports. As I told one reporter who called today for a comment on the plans in one particular college, "Any plan that has been leaked to you is obviously being leaked for a reason and not because the Provost has already adopted that idea."

For the faculty leadership, then, this is a time to ask questions about that plan's outlines and intentions and to inform ourselves about what sort of choices can be made in developing budget plans under normal circumstances and under exigency.

Andrew Doughman of the Nevada News Bureau filed this extensive story on how the state is losing, and has been for some time, not only leading faculty but also the grants, contracts and research enterprises they generate. As Michael Wixom has said, "we're losing real dollars in real time" by not supporting higher education faculty.

A former DRI researcher made this point quite directly: “It turns out, ironically, that the state of Texas has big economic problems as well,” Young said in a phone interview. “But there’s a very fundamentally different level of understanding in terms of what the university does for the economy and for the future of the state [in Texas]. You don’t really hear that a lot in Nevada.”

The hearing described in the story was held by the Senate Select Committee on Economic Diversification and Employment, chaired by Senator Rubin Kihuen. It heard testimony about programs in other states to invest public dollars in building areas of research focus at institutions of higher education to jumpstart economic development. Such programs have been successful in Virginia, Utah and elsewhere, in part because the state committed adequate resources not only to "steal top faculty" from other states but also to build a strong all-around faculty to provide a solid basis for advanced research and training.

by Sandra Cosgrove
College of Southern Nevada

On Feb. 23 the joint Assembly Ways and Means and Senate Finance Committee listened to a report by PEBP Executive Officer Jim Wells on proposed changes to the Public Employees Benefits Program. These are the changes we in NFA have been following since July, 2010. Three legislators specifically asked very probing questions regarding the impact these changes will have on participants. Senator Mo Denis, Assemblyman Marcus Conklin and Assemblyman Paul Aizley asked questions that indicate their serious unease with the proposed changes. Issues raised included:

1.  Why is the state shifting healthcare costs to individual PEBP participants when the state agreed to pay these costs when participants were hired?

2.  Why are public employees being subjected to pay reductions and substantial increases in healthcare costs?  This seems to be a disproportionate level of sacrifice to be asked of one group of Nevadans.

3.  Will these disproportionate sacrifices drive lower income state workers on to the welfare rolls?

4.  Will these higher healthcare costs keep participants from going to the doctor and will this reluctance cause disease to go undiscovered until treatment options are very expensive?

5.  Do higher utilization costs discriminate against participants with health issues?

6.  Will healthy participants leave the program and opt to buy better private insurance?

7.  Is there any guarantee that HSA and HRA monies rolled over from year to year won’t be taken back at some future date?

NFA Lobbyist Jim Richardson spoke about the impact on NSHE faculty and staff and asked the Committee to please consider adding more money to the PEBP budget. He reiterated the fear that low income employees will not be able to afford even basic healthcare for themselves and their families.

An AFSCME representative asked if healthcare providers will be required to provide price information to PEBP participants to allow them to really make consumer-driven choices. If we are expected to change our behavior based on knowing how much healthcare costs, then we need the actual dollar amounts charged for services.  

Due to the many questions asked, the committee actually had to roll over the presentations scheduled after the PEBP report.

This week two key legislative committees heard testimony on the importance of higher education to Nevada's economic recovery.

In testimony yesterday (Wedesday February 16) to the Senate Select Committee on Employment and Economic Growth, UNLV Professor Robert Lang, director of the Brookings Mountain West Institute spoke about the role of higher education in fostering economic development. Among many important points, he said something in passing that is worth repeating. Although Nevada has a larger population than Utah, Utah has twice the number of faculty at public universities than Nevada. (In addition, of course, Utah has a large faculty at Brigham Young University).

This means that Nevada has many fewer experts contributing to the development of intellectual property than does Utah (and many other states). This also means we have many fewer upper division and graduate level classes in various areas to offer our students, and thus, our state produces fewer highly trained workers.

Our state’s failure to invest in higher education, even compared to other regional competitors such as Utah, has had negative implications for economic development in Nevada.

Also on Wednesday, a joint meeting of the Senate and Assembly Education committees heard testimony on the Millenium Scholarship program from NSHE Chancellor Dan Klaich, who also responded to questions about the prospect of a declaration of financial exigency at UNLV.

Moreover, the joint committees heard an excellent, detailed presentation from NSHE student leaders, led by Kyle George, President of UNLV Graduate & Professional Student Association. The presentation is available on the NFA website. Click here to read it.

Last Thursday, Feb. 3, the Chancellor and NSHE presidents addressed the Regents about the devastating impact of the proposed 29-percent cut to NSHE state support, on top of the more than 20 percent which has been cut in the past three years. It became quickly clear that this sustained reduction in state investment in higher education will irreversibly cut off educational opportunities for many families in this state, which already suffers from the lowest rate of college participation in the country. Let’s hope Carson City is paying attention.

Much of the meeting was devoted to deeply depressing discussions, which focused on an almost inevitable across-the-board pay cut for all faculty and staff, significant fee increases for students. There were also far too many mentions of the need to prepare for faculty layoffs; eliminations of degree programs, academic departments and even whole colleges through a declaration of financial exigency; and/or program review (on which we have written in the past and will, unfortunately, likely have more to say in future reports).

Anyone who had not gotten the message previously was put on notice: The situation of higher education in this state is dire.There were also some important aspects that were, while not good news, at least reassuring.

First, on the pay-cut issue, the Chancellor promptly and correctly pointed out that the change to the Code concerning pay cuts, as negotiated with faculty leadership last spring, does not allow the Board to act unless the legislature acts first. In other words, when one institution president proposed a 6-percent pay cut, the Chancellor pointed out that the Governor's proposal to the legislature is for a 5-percent pay cut. If that is enacted, the Board could only pass through that cut, not a deeper one, without declaring exigency. This significant compromise, we believe, illustrates the true principle of shared sacrifice, as faculty and staff have been and will continue to do more work for less compensation.

Secondly, the Chancellor pointed out, there are some good things in the Governor's budget for higher ed, including local government support from property tax revenues (which in the long term are likely to increase) and greater Board budgetary autonomy. The problem, of course, is the perception that this autonomy in and of itself will allow the Board to fill the budget hole. Regent Kevin Page quickly laid that misperception to rest, telling the campus presidents not to consider it realistic to present any plans that would fill the budget gap entirely on the backs of students or on the backs of faculty.

Most importantly almost all the presidents, especially UNLV President Smatresk and UNR President Milt Glick, focused on the risk to the state of loss of faculty. Regents demonstrated they understood the seriousness of what is being proposed for not only higher ed but also the state. In particular, Regent Wixom pointed out what bad business it is for the state to put itself at such risk to lose faculty whose grants and contracts represent not hypothetical business development but "real dollars in real time that will be leaving the state." He also pointed out that it is bad financial practice to monetize a business's essential capital to fund operations. This is just what the state is proposing to do when it considers cutting higher education, and with it our key instrument of human capital development, in order to fund operations that, if the state were considered a business, would be secondary support areas.

Institutional presidents were instructed to prepare more detailed budget plans on how they will implement cuts of this magnitude – on top of the cuts already taken over the past three years. Those reports, presumably, will be given at the next regularly scheduled Regents meeting, March 10-11, in Carson City.
 
The meeting closed with Regent Chair James Dean Leavitt forcefully calling for more tax revenue. He said that only with more revenues can the dire problems facing NSHE institutions be dealt with.

This week saw the beginning of the 120-day legislative session that will make or break higher ed in Nevada. The budget submitted by the governor would devastate NSHE institutions, forcing the closure of many programs, even possibly some campuses and colleges within campuses. It would also result in terminations for many faculty and staff, as well as the loss of educational opportunities for Nevada citizens. And the irony of the governor calling for more contribution from higher ed to economic diversification, while proposing a 29-percent cut in General Fund support, has not been lost on anyone, except, apparently, the governor.

Other representatives from NFA's Government Relations team and I will be in Carson City nearly every day of the session, attempting to meet the many new legislators and educate them on the issues facing NSHE because of the proposed budget. Indeed, I have already been doing so, mostly via email, but also was in Carson City three days recently during the budget preview to the money committees.

Two NSHE budget hearings have already been set. They will be March 3rd and March 22nd, both in the morning, probably starting at 8 a.m., and they should be available online. The two hearings will be joint meetings of the two education subcommittees that have been established by Senate Finance and Assembly Ways and Means.

Members of the two subcommittees include, for Senate Finance, Steven Horsford, chair, Mo Denis, Barbara Cegavske and Ben Kieckhefer; and for Ways and Means, Debbie Smith, Chair, Markus Conklin, John Oceguera, April Mastroluca, Paul Aizley, Tom Grady and Pay Hickey. These thirteen people will be crucial to decisions made about higher ed funding this session. They need to hear our voices, and the voices of our students.

NFA will be working with the NSHE lobby team, focusing most attention on the very problematic budget proposals from the governor. I will also be attending to issues concerning our health insurance and the PEBP program, which is also in great difficulty concerning funding as well. As your lobbyist, I will be alert to any other issues that arise which might affect higher education in Nevada and NSHE faculty.

NFA’s Alliance newspaper is coming out this week, and it will be of value in informing people throughout the State about the very serious problems posed by the budget proposals. (The Alliance is distributed to all faculty, and also to all politicians and journalists who cover the Legislature.) Please read the budget-related stories carefully, so you are fully informed. As noted in last week's Alliance Update, we have developed some new methods for circulating information quickly online; this report is but one example. Please make use of them.

At various points during the legislative session NFA will be calling on its members and others to communicate to key legislators. We will be furnishing information about how to do that effectively and efficiently. Please attend to these calls for your participation, and help us make progress during what will be a very trying session.

The Nevada Faculty Alliance calls on all faculty, staff, students, alumni and Nevadans who value our future to express their opposition to the proposal in Governor Sandoval's Executive Budget, which would decimate NSHE institutions and severely limit educational opportunities for Nevadans. Read the following summary by Jim Richardson, join the NFA and take action!

" Chancellor Klaich told the joint budget subcommittee of the state Legislative Commission.

• 1.      The total drop in state support by FY2013 is $162.4 million from FY2011 levels
• 2.      State support would drop by FY 2013 close to levels last seen in FY2003
• 3.      This represents a 29.1% drop in state support for NSHE institution over the current year’s funding (FY2011)
• 4.      The drop in state support from FY2009 to FY2013 is 36.6%
• 5.      The budget includes an across the board pay cut of 5% for all employees, which will replace the current furlough policy.
• 6.      Funding that would come to NSHE includes $121 million of from local governments in Clark and Washoe, a new and controversial concept
• 7.      The Governor stated that the regents can raise tuition and fees to help fill the gap, even though they have increased dramatically in recent year (49% for university undergrads since 2006-07 and 60% for grad students; 43% for NSC and 32% for community colleges).
• 8.      The proportion of the State General fund, which was traditionally about 18-19% drops to about 11.65%, and is 13.76% for FY 2013 if the new property tax revenues are included.

Probable impacts of the budget proposal

• 1.      Hundreds of employees would lose their jobs, and those remaining would have a pay cut. (If the budget hole were filled only by terminations this would mean about 1,850 lay-offs.)
• 2.      Tuition could increase dramatically (a 73% increase would be required to replace the $162 million, and even that assumes all current students would continue to enroll.)
• 3.      Many needy students would not be able to afford a college education, meaning that many students will simply be left behind.
• 4.      More programs would be cut (24 programs were cut this biennium already), probably some colleges would disappear, and perhaps some campus and institutions would be mothballed, severely limiting educational opportunities for Nevadans.
• 5.      Many students would be stranded without a degree as their programs are canceled.
• 6.      More of the fine faculty members recruited in recent years will leave and accept jobs in other states.
• 7.      NSHE direct contributions to the economy (see related story p. ___) would be seriously curtailed.

Chancellor Klaich commented, "We can raise tuition but we can't forget that we have very low financial aid in this state.  If we raise fees by a significant amount without addressing financial aid, we will leave many Nevadans behind.  Not only is this simply wrong, in the long run it is a very costly strategy for the state."

"We take our role in diversifying the economy of this state very seriously, and these cuts will make it more difficult to discharge that mission...If we sustain cuts of this magnitude, the NSHE will be a fundamentally different organization.  We cannot maintain serving the number of students which we currently do at these reduced levels of funding - and that is a tragedy."

Other bad news in the Governor's budget proposal

• 1.      Cost of health insurance will increase, and there will be significant benefit cuts
• 2.      Subsidies for health insurance for retirees would be phased out for current employees, and there would be no subsidies in retirement for employees hired after July 1, 2011.
• 3.      Part-time employees who are greater than 50% and less than 75% would only be subsidized at 60% of the level used for full-time employee.

Reactions

Democratic legislative leaders have taken strong umbrage to the Executive Budget, especially the cuts to K-12 and higher education, as expressed in news articles, Town Hall meetings, and other ways. Senate Majority Leader and Chair of Senate Finance Steven Horsford and Speaker of the Assembly John Oceguera have issued statements expressing concern about the size of cuts to education, as has Debbie Smith, Chair of the Ways and Means Committee.

Most Republican legislators have so far remained relatively silent, although some of indicated previously that more revenue might be needed to sustain essential state services.

Regent Chair James Dean Leavitt has also criticized the budget proposals, and has called for more revenues to fund education, as has Regent Mark Alden and several NSHE presidents. Regent Leavitt in the RJ story said the proposed budget "is absolutely outrageous and will result in cataclysmic changes to the Nevada System of Higher Education."Leavitt added, “It was not fair that higher education should get the steepest cuts.”

Chancellor Klaich made a spirited defense of NSHE and carefully explained the potential impacts of proposed cuts of the magnitude being proposed in his presentation on January 27 to the two money committees meeting jointly as a subcommittee of the Legislative Commission.

Scott Huber, President of the Nevada Faculty Alliance said, “If this budget is approved it will mean the end of higher education in Nevada as we know it. Many students will have their educations terminated, and their career paths dramatically altered. And Nevada will be the worse for it, as efforts to diversify the economy are derailed.”