2025-2027 NSHE Budget Report and Outlook

The Nevada Faculty Alliance had a constant lobbying presence at the Legislature, advocating for higher education and NSHE professional employees.  NFA worked diligently to advance shared budget goals in collaboration with the NSHE lobbying team, and we also advocated for professional employee compensation and rights.  With the notable exceptions of the new funding formula being rejected and the failure to fund inflation adjustments to enrollment caseloads, NSHE came out very well in a difficult budget year. 

Here we summarize the total appropriations for NSHE as well as instructional operating budgets by institution, and provide an analysis of implications for future NSHE budgets.  (An end-of-session update on all of NFAs legislative priorities is also available.)

Highlights of the NSHE Budget 

Overall, NSHE total state operating budgets are increasing in dollar amounts as shown in Table 1.  The total appropriations will increase by 9.2% for FY2026 over FY2025, then be about flat in FY2027 (small decline partly due to lower fringe rates in the second year).

Table 1. NSHE Total Appropriations
Fiscal Year	State Appropriations	Year/Year Change
FY2024 (actual)	$816,736,844
FY2025 (budget)	$898,940,295	10.1%
FY2026 (operating appropriations)	$982,055,914	9.2%
FY2027 (operating appropriations)	$970,657,934	-1.2%
Sources: FY2025 NSHE Budget-to-Actual Report and FY2025 NSHE Operating Budget, including all state appropriations for operations.  FY2026 and FY2027, NSHE general fund appropriations in AB591, plus individual appropriations in AB568  (COLA backfill), SB498 (Nursing and NSU), SB119 (CSN NV Grow), and AB596 (Classified compensation).  Excludes capital improvement projects, deferred maintenance, and various indirect funding, grants, and student financial aid.

For comparison with total appropriations in prior years, Table 1 includes the total NSHE appropriations in AB591, plus the following individual appropriations: (1) AB568, backfill of the 12%+11% cost-of-living adjustments in FY2024+FY2025 up to 80% at $28.7 million/year, (2) SB498, continued Nursing education expansion at $10 million/year plus $2.5 million for NSU academic programs in North las Vegas, (3) SB119, for the NV Grow program at CSN, and (4) AB596, compensation for Classified employees with collective bargaining agreements, partially funded.  

No cost-of-living adjustments were provided for NSHE faculty or other state employees not covered by collective bargaining agreements (CBAs) under NRS 288. For non-CBA employees, retention bonuses of $1000/year will be discontinued as of 7/1/2025 and the employee retirement contributions will increase from 17.5% to 19.25%, a 1.75% reduction in take-home pay.  As a result, net take-home pay for faculty will decrease.

For the main instructional budgets of the seven colleges and universities, Figure 1 below shows state funding and student fee and tuition revenue per full-time-equivalent student, adjusted for inflation, from FY2007 through FY2027. Although state funding per student has recovered from the pandemic budget crisis, it is still significantly lower than before the Great Recession. Student registration fees have made up some but not all of the difference. Non-resident tuition revenue has suffered from decreasing out-of-state student enrollment recently.

Figure 1. State appropriations and student revenue per student FTE for the combined instructional budgets of the seven NSHE colleges and universities, FY2007 to FY2027.

COLA Backfill Funding

Notably, AB568 will provide $57.4 million for the biennium in backfill funding for the 12%+11% COLAs awarded in FY2024 and FY2025, up to 80% per budget.  This is a big win for NSHE, faculty, and students.  This funding helps cover the budget mitigations made in FY2025 to cover the COLAs and other shortfalls: (1) the student fee and tuition increase by 5% or $16.2 million/year, which remains in effect, (2) faculty COLAs delayed by three months, a one-time savings of $19.3 million, and (3) positions held vacant or other budget cuts totaling $27.9 million/year.  In addition, the regular inflationary increases in student fees will be 2.7% in FY2026 (about $8.7 million/year or more) and 5.2% in FY2027 ($16.8 million/year) based on the Higher Education Price Index, per the NSHE Predictable Pricing Program. In addition, institutions with enrollment growth received caseload increases, totaling $22.8 million/year in base funding across NSHE. With the 80% COLA funding in AB568, the $11.9 million/year budget enhancement for increased energy costs,  and the scheduled student fee increases, the institutions should be able to cover the 1% internal merit pool for faculty and fill open academic positions. It is time to restore academic programs!

However, AB568 also states that it is funding only for the next biennium and explicitly instructs NSHE to raise non-state revenue to cover these costs after FY2027. For the instructional budgets, that means the Legislature mandates the Board of Regents to raise student fees and tuition as necessary to continue the AB568 funding past FY2027.  This should be done soon to give students time to plan ahead, but it is also time to reconsider the Predictable Pricing Program—a five-year future commitment on student fee increases is problematic given fast-changing economic conditions. Because of their lower percentages of state versus student funding, UNLV and UNR will require higher student fee increases than the other institutions.

Furthermore, since it is clear that the Legislature will only fund COLAs for the state-funded portion of NSHE budgets, a portion of future HEPI increases in student fees should be reserved for COLAs and merit raises in the next budgeting process, not committed to other uses. 

Additional One-Shot Appropriations

Campus security, NFA’s top budget priority, received a $11 million one-shot appropriation in AB567. NSHE requested $38 million plus continuing funding of $7 million.  SB498 continued the Nursing education expansion for two more years at $10 million/year.  SB427 and SB498 provided $6.2 million each for UNLV and UNR for building planning and design, and a total of $11.0 million  for other institutions for renovations and deferred maintenance.

In other funding related to NSHE, the Knowledge Fund, which provides research grants for NSHE, was continued at $2.5 million/year, rejecting an increase to $14.6 million/year in the Governor’s budget. A budget of $50 million/year for Graduate Medical Education largely from Medicaid funding was also rejected, but SB262 provides $4.5 million/year.  

Employee Compensation

Governor Lombardo’s budget had zero cost-of-living adjustments (COLAs) for FY2026 and FY2027, and the Legislature did not award any across-the-board COLAs. Nor did the Legislature address the 1.75% increase in employee retirement contributions, which will result in a decrease in take-home pay for active employees on 7/1/2025, as described in a previous article on the history of COLA funding. 

Unfortunately, NFA’s consistent advocacy for state employee compensation, including NSHE professional employees, to cover inflation and retirement contribution increases were unsuccessful. NSHE  did not support these efforts, at least in public.

The lack of new COLAs for FY2026 and FY2027 undermines the historic but underfunded 12%+11% COLAs in 2023-2025.  As shown in Figure 2, relative faculty take-home pay, adjusted for inflation, will fall to 19% below the level in FY2009 by the end of the next biennium, wiping out the gain from FY2025.

Figure 2. Net take-home pay based on legislatively funded COLAs, furloughs, cuts, average merit raise, and retirement contribution, adjusted for inflation (FY2009 = 100%).

AB596 will partially fund collective bargaining agreements (CBAs) between the State and Classified employee bargaining units, including for NSHE Classified employees.  However, the legislature provided no funding for COLAs or continuation of retention incentives for non-collective-bargaining employees. That shows legislative intent to increase compensation only for state employees in state collective bargaining units, at least when budgets are tight.

Therefore, NSHE would be better served with collective bargaining for professional employees in NRS 288, with negotiated CBAs channeled into the state budget on the same timeline as for Classifed CBAs as envisioned in AB356.  For the state classified staff bargaining units, AB356 will place compensation increases in GovRec at the outset rather than waiting for crumbs at the end of the session. The Board of Regents opposed AB191, which would have established collective bargaining for NSHE professional employees, based in part on exaggerated fiscal impact estimates from NSHE legal counsel, but that decision will turn out to be short-sighted.

Another NFA priority was AB188 which, if signed by the Governor, will modestly improve retiree health benefits for state employees hired before 2012. Unfortunatley, the main provision to restore retiree health benefits for post-2011 state hires was amended out to move the bill forward in the face of an exaggerated fiscal note from the Public Employees Benefits Program. Our public employee partners worked with NFA on behalf of AB188, but neither NSHE nor faculty senate representatives testified.

There is No Funding Formula

The “old” resident Weighted Student Credit Hour (WSCH) distribution formula was suspended by the Legislature in 2023. The new funding formula recommended by the interim Ad Hoc Committee on Higher Education Funding was rejected by the 2025 Legislature, with or without hold-harmless funding for UNLV and UNR. Legislators found decreases to UNLV and UNR to add funds for community colleges unpalatable, but also were unwilling to provide new funding to hold them harmless. The last time instructional funding was redistributed based on enrollment data was in the 2021 session using the 2019-2020 count year. WSCHs are still used for enrollment caseload adjustments and the Small Institution Funding, remnants of the old formula. Figure 3 shows the history of the dollar value per WSCH adjusted for inflation. The real value per WSCH has declined, meaning lower resources per course taught.

Figure 3. Dollar value of appropriations per Weighted Student Credit Hour (WSCH) from FY2024 to FY2027, in FY2025 dollars.

B+M+E Funding Mechanism

So how are budgets determined? With no funding formula for redistribution among the seven educational institutions, all NSHE budgets including the professional schools and other non-formula programs are funded through a Base + Maintenance + Enhancement process.

The Base budget is the current-year (FY2025) legislatively approved appropriations with adjustments for (the state-funded portion of) COLAs but excluding one-time appropriations.

Then there are “Maintenance” adjustments, including changes in WSCHs at each institution between the count year (2023-2024 this time) and the prior count year (2021-2022) totaling $22.8 million per year, the WSCH component of the Small Institution Factor, and changes in research space square footage at UNLV and UNR. Those are remnants of the old formula. There are also statewide Maintenance items, for changes in fringe benefit rates including PEBP and retirement contributions ($55.2 million for the biennium), for example, which are still funded at 100% from the General Fund.

Finally, there are proposed budget “Enhancements”. GovRec initially included Enhancements for (1) increased costs of utilities at $11.9 million per year statewide; (2) phased-in implementation of the new funding formula at 20% in FY2026 ($4.1 million ) and 40% in FY2027 ($8.8 million) including hold-harmless funding for UNLV and UNR; (3) funding the 12%+11% COLAs from 2023-25 up to 80% per budget account ($27 million/year); and (4) increasing the enrollment caseload adjustment per WSCH from $173.29 to $208.99 to account for the state-funded portion of COLAs for FY2025 ($4.5 million/year). Because Governor Lombardo’s initial budget had a structural deficit, against state law, the Governor’s Finance Office submitted amendments to shift the funding to address past COLAs, (3) and (4), from continuing appropriations to one-shot funding.

At the 5/5/2025 NSHE budget closing, the only Enhancement approved was the utilities funding, which releases program funding that had to be diverted to pay increased energy costs. There will be no implementation of the new formula, with or without hold-harmless provisions. The funding of past COLAs up to 80% per budget was funding through AB568 as a one-shot, but the adjustment of the WSCH caseload amounts for inflation in SB472 failed to pass on the final day of the legislature.

Table 2 compares state appropriations for the seven main instructional operating budgets. This includes the one-shot appropriations in AB568, SB498, and SB119 that are part of institutional operating budgets, for comparison with prior years including such appropriations.

Table 2. State Appropriated Revenue in State-Supported Instructional Operating Budgets
Inst.	FY2024 (actual)	FY2025 (budget)	FY2026 (appropriated)	Change FY2026 /FY2025	FY2027 (appropriated)	Change FY2027 /FY2026
UNLV	$233,991,397	$253,973,037	$292,382,958	15.1%	$288,269,757	-1.4%
UNR	$160,582,630	$173,121,548	$194,891,519	12.6%	$193,730,842	-0.6%
NSU	$32,863,186	$38,814,685	$41,821,260	7.7%	$40,552,728	-3.0%
CSN	$117,591,040	$125,133,833	$132,395,334	5.8%	$129,416,524	-2.2%
GBC	$17,101,283	$18,105,687	$19,174,214	5.9%	$19,127,707	-0.2%
TMCC	$39,918,718	$42,777,073	$50,434,290	17.9%	$49,558,313	-1.7%
WNC	$16,053,002	$19,333,255	$21,890,537	13.2%	$21,883,039	0.0%
Total	$618,101,256	$671,259,118	$752,990,111	12.2%	$742,538,909	-1.4%

An expanded version of Table 2 including student fees, tuition, and other non-state revenue is available.

Ramifications of No Formula

Because no enrollment-based formula is being applied to the main instructional budgets for the seven NSHE colleges and universities, funding per student or per credit hours will diverge as enrollments change over time. Figure 4 shows the state operating budgets per full-time-equivalent student for each of  the institutions from FY2007 through FY2027. The resident WSCH formula was implemented in FY2014 and continued through FY2022. It was successful in bringing per-student funding in alignment for like institutions (the comprehensive universities, UNR & UNLV; the community colleges, CSN, GBC, TMCC & WNC; and the single “state college”, NSU). Unfortunately, that was accomplished by bringing per-student funding down to a lower common denominator. But since the WSCH formula was abandoned in 2023, the funding per student between similar institutions has started to diverge again. 

Compared with either the old WSCH distribution formula or the new formula with a student-based component that was rejected, UNLV and UNR benefit at the expense of the community colleges. The solution in an increase in overall funding for a student-based component along with WSCHs.

Figure 4. State appropriation per average annual full-time-equivalent (FTE) student enrollment for the main instructional budgets from FY2007 to FY2027, for UNLV, UNR, and NSU (top) and the four community colleges (bottom).

Outlook

With no funding formula in place, a legislative mandate to increase student fees, and no COLAs in 2025-2027 for faculty, NSHE has significant budgetary challenges ahead, but the outcome of the 2025 legislative session was positive overall. NFA will continue to push for collective bargaining as a means to promote faculty recruitment and retention and guarantee employment rights.

  

Updated 6/11/2025:  Governor Lombardo signed AB567, AB568, and SB498 on June 9. SB119 and AB596 were signed on June 10. Corrections to bill numbers and dollar amounts.

Your NFA Government Relations Team has been hard at work all session to advance the interests of NSHE professional employees.  Our legislative and budget priorities and advocacy have been consistent.  

We may be too busy in the final hours of the session for details, but we are updating the progress, or lack of progress, of bills and funding in our "End-of-Session Priorities" document. [6/3/2025: Document updated with final actions (or inaction) as of the end of the session on June 2.]

NSHE Budget Update and Explanation

          [End-of-session Budget Report and Outlook now available]

The NSHE budget closings at the Legislature were held on May 5, 2025. The money committees made changes to the Governor’s recommended Executive Budget (GovRec) and set the NSHE operating budgets for the coming year, although there are some decisions still to be made. The difficult overall state budget situation is discussed in a separate article.

Bottom lines: NSHE budgets are largely static after considering inflation and enrollment growth and remain lower than before the Great Recession. No cost-of-living adjustments are in the budgets, but could be added later. The new instructional funding distribution formula recommended by the interim committee is not being implemented, which means that the needs identified for per-student funding for wrap-around services are not being addressed—more changes may be coming in the next session. There are still decisions to be made, including cost-of-living adjustments and appropriations for campus safety. NFA will continue advocating on behalf of our members through the end of the session.

Highlights of the NSHE Budget 

Overall, NSHE state operating budgets are increasing in dollar amounts as shown in Table 1. As explained in more detail below, however, resources are flat or declining after considering inflation and enrollment growth. 

Table 1. NSHE Total State Appropriations
Fiscal Year	State Appropriations	Year/Year Change
FY2024 (actual)	$816,736,844
FY2025 (budget)	$898,940,295	10.1%
FY2026 (May 5 budget closing)	$939,784,293	4.5%
FY2027 (May 5 budget closing)	$927,881,926	-1.3%
Sources: FY2024 NSHE Budget-to-Actual Report and FY2025 NSHE Operating Budget, including all state appropriations and state-funded COLAs. FY2026 and FY2027, NSHE budget closing on May 5 before any additional one-shot appropriations.

For the main instructional budgets of the seven colleges and universities, Figure 1 below shows state funding and student fee and tuition revenue per full-time-equivalent student, adjusted for inflation, from FY2007 through FY2027. Although state funding per student has recovered from the pandemic budget crisis, it is still significantly lower than before the Great Recession. Student registration fees have made up some but not all of the difference. Non-resident tuition revenue has suffered from decreasing out-of-state student enrollment recently.

The overall appropriation increase of 3.2% by FY2027 over FY2025 will partially cover inflation (before potential one-shot appropriations and statewide COLAs), but provide no extra relief.  

Figure 1. State appropriations and student revenue per student FTE for the combined instructional budgets of the seven NSHE colleges and universities, FY2007 to FY2027.

The legislature is funding the Small Institution Funding for GBC and WNC, augmented as recommended by the interim formula funding committee but phased in at 20% in FY2026 and 40% in FY2027. 

In other funding related to NSHE, the Knowledge Fund, which provides research grants for NSHE, was continued at $2.5 million/year, rejecting an increase to $14.6 million/year in the Governor’s budget. A budget of $50 million/year for Graduate Medical Education largely from Medicaid funding was also rejected, but could be reconsidered later.

Items Still to be Decided

The NFA continues to advocate for members on remaining budget issues.

Campus safety, one of NFA’s top budget priorities, has a $11 million one-shot appropriation in GovRec that is still to be considered. NSHE requested $38 million plus continuing funding of $7 million.

Governor Lombardo’s budget has zero cost-of-living adjustments (COLAs) for FY2026 and FY2027. COLAs could still be approved near the end of the session, but the budget outlook is dim. There is a possibility that the Legislature could address the 1.75% increase in employee retirement contributions, which, if left unaddressed, will result in a decrease in take-home pay for active employees on 7/1/2025, as described in a previous article on the history of COLA funding. NFA advocates for COLAs for state employees to cover inflation and the increased retirement contributions. 

Budget enhancements to fund NSHE for the historic but underfunded 12%+11% COLAs in 2023-2025 up to 80% per budget can still be considered as one-shot appropriations per the Governor’s amended budget. However, legislative leadership has expressed skepticism about funding these continuing costs as one-shot appropriations. NFA will continue to push for action to address the budget cuts created by underfunded COLAs. For the instructional operating budgets, student fee and tuition increases of 2.7% in FY2026 and 5.2% in FY2027 are slated and will help fill the gap from the large COLA increases in FY2024 and FY2025 that were funded only for the portion of the budgets from the state general fund appropriations. (Institutional breakdowns are discussed below.) 

The expansion of nursing instruction funded at $10 million/year in 2023 would need a renewed one-shot appropriation to continue. 

There is No Funding Formula

The “old” resident Weighted Student Credit Hour (WSCH) distribution formula was suspended in 2023. The new funding formula recommended by the interim Ad Hoc Committee on Higher Education Funding was rejected by the Legislature, with or without hold-harmless funding for UNLV and UNR. Legislators found decreases to UNLV and UNR to add funds for community colleges unpalatable, but also were unwilling to provide new funding to hold them harmless. The last time instructional funding was redistributed based on enrollment data was in the 2021 session using the 2019-2020 count year. WSCHs are still used for enrollment caseload adjustments and the Small Institution Funding, remnants of the old formula. Figure 2 shows the history of the dollar value per WSCH adjusted for inflation. The real value per WSCH has declined, meaning lower resources per course taught.\

Figure 2. Dollar value of appropriations per Weighted Student Credit Hour (WSCH) from FY2024 to FY2027.

B+M+E Funding Mechanism

So how are budgets determined? With no funding formula for redistribution among the seven educational institutions, all NSHE budgets including the professional schools and other traditionally non-formula programs are funded through a Base + Maintenance + Enhancement process.

The Base budget is the current-year (FY2025) legislatively approved appropriations with adjustments for (the state-funded portion of) COLAs but excluding one-time appropriations.

Then there are “Maintenance” adjustments, including changes in WSCHs at each institution between the count year (2023-2024 this time) and the prior count year (2021-2022) totaling $22.8 million per year, the WSCH component of the Small Institution Factor, and changes in research space square footage at UNLV and UNR. Those are remnants of the old formula. There are also statewide Maintenance  accitems, for changes in fringe benefit rates including PEBP and retirement contributions ($55.2 million for the biennium), for example, which are still funded at 100% from the General Fund.

Finally, there are proposed budget “Enhancements”. GovRec initially included Enhancements for (1) increased costs of utilities at $11.9 million per year statewide; (2) phased-in implementation of the new funding formula at 20% in FY2026 ($4.1 million ) and 40% in FY2027 ($8.8 million) including hold-harmless funding for UNLV and UNR; (3) funding the 12%+11% COLAs from 2023-25 up to 80% per budget account ($28.7 million/year); and (4) increasing the enrollment caseload adjustment per WSCH from $173.29 to $208.99 to account for the state-funded portion of COLAs for FY2025 ($4.7 million). Because Governor Lombardo’s initial budget had a structural deficit, against state law, the Governor’s Finance Office submitted amendments to shift the COLA funding, (3) and (4), from continuing appropriations to one-shot funding.

At the 5/5/2025 NSHE budget closing, the only Enhancement approved was the utilities funding, which will release program funding that had to be diverted to pay increased energy costs. There will be no implementation of the new formula, with or without hold-harmless provisions. The funding of past COLAs up to 80% could still be considered as one-shot appropriations. 

Table 2 compares state appropriations for the seven main instructional operating budgets. Note that the FY2024 & FY2025 values include various one-time appropriations, such as pandemic enrollment recovery funds and the Nursing expansion, while any one-shots that might be approved this session are not yet included for FY2026 & FY2027.

Table 2. State Appropriations for Instructional Operating Budgets
	FY2024 (actual)	FY2025 (budget)	FY2026  (May 5 budget closing)	FY2026 /FY2025	FY2027 (May 5 budget closing)	FY2027 /FY2026
UNLV	$233,991,397	$253,973,037	$278,254,217	9.6%	$274,141,016	-1.5%
UNR	$160,582,630	$173,121,548	$181,186,466	4.7%	$180,025,789	-0.6%
NSU	$32,863,186	$38,814,685	$37,363,532	-3.7%	$36,095,000	-3.4%
CSN	$117,591,040	$125,133,833	$128,147,482	2.4%	$125,168,672	-2.3%
GBC	$17,101,283	$18,105,687	$18,469,845	2.0%	$18,423,338	-0.3%
TMCC	$39,918,718	$42,777,073	$49,388,135	15.5%	$48,512,158	-1.8%
WNC	$16,053,002	$19,333,255	$21,279,852	10.1%	$21,272,354	0.0%
Total	$618,101,256	$671,259,118	$714,089,529	6.4%	$703,638,327	-1.5%
Sources: FY2025 NSHE Budget-to-Actual Report and FY2025 NSHE Operating Budget, including all state appropriations.  FY2026 and FY2027, NSHE budget closings on May 5 before any additional one-shot appropriations.

An expanded version of Table 2 including student fees, tuition, and other non-state revenue, along with data on the allocation of registration fees by institution, is available.

Ramifications of No Formula

Because no enrollment-based formula is being applied to the main instructional budgets for the seven NSHE colleges and universities, funding per student or per credit hours will diverge as enrollments change over time. Figure 3 shows the state operating budgets per full-time-equivalent student for each of  the institutions from FY2007 through FY2027. The resident WSCH formula was implemented in FY2014 and continued through FY2022. It was successful in bringing per-student funding in alignment for like institutions (the comprehensive universities, UNR & UNLV; the community colleges, CSN, GBC, TMCC & WNC; and the single “state college”, NSU). Unfortunately, that was accomplished by bringing per-student funding down to a lower common denominator. But since the WSCH formula was abandoned in 2023, the funding per student for similar institutions has started to diverge again. 

Figure 3. State appropriation per average annual full-time-equivalent (FTE) enrollment for the seven main instructional budgets from FY2007 to FY2027.

The Final Days

Starting May 12, the budget committees are expected to start considering bills that implement budget decisions and one-shot appropriations in GovRec. Other bills that have fiscal notes will be last in line, if heard at all before the regular session ends on June 2l. The further erosion of the state budget by federal policies, including cuts to Medicaid funding, may require a special session later in the year. Drastic changes in federal funding of state-administered programs could endanger funding for higher education.

Updated 5/9/2025 with dollar amounts for Maintenance and Enhancement budget items, and to correct the purpose of the WSCH dollar-amount increase to account for FY2025 state-funded COLAs (not up to 80%). Updated 5/12/2025 with link to expanded Table 2 and additional information on student registration fee allocations to operating budgets.

State Budget Update after the May 1 Economic Forum Forecast

The Nevada Economic Forum issued its final General Fund revenue forecast for the 2025-2027 biennium on May 1. Expected General Fund revenue decreased by $191 million compared with the December 2024 forecast, but the total budget impact including FY2025 and the State Education Fund could be as much as $568 million. That’s out of a biennial budget of about $21 billion. This article provides some background and additional detail on the state budget situation.  The NSHE budget closing is discussed in a separate article.

Figure 1 shows the history of Economic Forum forecasts compared with actual revenue.  The Economic Forum underestimates future revenue most often, except they did not anticipate the recessions in 2008-2009 and 2020. This session is the first time since the 2007 session that the May forecast has been less optimistic than the December forecast, which means the legislature must reduce spending from the Governor’s Recommended Executive Budget (GovRec) from January, which was based on the December forecast. 

Figure 1.  Economic Forum revenue forecasts from FY2006 to FY2027.  December forecasts for the next biennium (blue patterned columns), May forecasts of the next biennium (solid orange bars), and actual revenue (black line).

In absolute dollars, the available funds for 2025-2027 are still increasing over 2023-2025, by about 2.6% per year. However, as shown in Figure 2, when adjusted for inflation and population growth (estimated at 2.5% and 1.9%, respectively, for FY2025 to FY2027) the available real revenue per person is decreasing--it has never recovered to the levels before the Great Recession and is now dropping below pre-pandemic levels.

Figure 2. Economic Forum revenue forecasts from FY2006 to FY2027, adjusted for inflation and population growth.  December  (blue patterned columns) and  May forecasts of the next biennium (solid orange bars), and actual revenue (black line). *FY2025-FY2027: inflation estimated at 2.5%, population growth at 1.9%.

The lower revenue forecast, as detailed by the Nevada Independent and Nevada Current, is mainly due to lower economic and tourist activity because of tariffs, federal funding reductions, and other actions of the Trump administration. The erratic policies coming out of Washington are making all forecasts highly uncertain.

The General Fund is not the only budget that must be balanced. The State Education Fund (SEF) receives revenues from a variety of dedicated taxes as well as appropriations from the General Fund. The State Education Fund was created in its present form in 2021-2023 and is not included in Economic Forum forecasts, but the Nevada Independent obtained the May 2023 forecast by the Legislative Counsel Bureau.  Comparing that forecast of non-General Fund revenue with the Pupil-Centered Funding Plan Account in GovRec, as shown in Table 1, suggests shortfalls of  $183 million for FY2025 and $212 million for the 2025-2027 biennium (vs about $200 million and $160 million, respectively, as reported by the Nevada Independent).

Table 1. Pupil-Centered Funding Plan Account (GovRec vs May 1 Forecast)
	FY2024 Actual	FY2025 Projected	FY2026 Forecast	FY2027 Forecast	TOTAL
General Fund Appropriation	$1,187,446,261	$1,487,995,964	$1,605,397,182	$1,524,854,793
Other Revenues Dedicated to Education (per GovRec)	$4,251,063,621	$4,261,465,701	$4,321,863,115	$4,493,003,499
TOTAL	$5,438,509,882	$5,749,461,665	$5,927,260,297	$6,017,858,292
Other Revenues Dedicated to Education (May 1 LCB Forecast)	$4,251,063,621	$4,078,421,600	$4,217,315,000	$4,385,677,000
Change in Other Revenues	$0	-$183,044,101	-$104,548,115	-$107,326,499	-$394,918,715

The one brighter spot in the Economic Forum forecast was an increase in projected General Fund revenue of $17.9 million for FY2025, the current fiscal year. Excess revenue from FY2024 and FY2025 may be used for one-shot appropriations (much of it already allocated). Combining the forecast changes for the General Fund and State Education Fund for FY2025, FY2026, and FY2027 gives a reduction of as much as $568 million.  For the 2025-2027 biennium, the forecasted reduction to the General Fund is from $12.433 billion to $12.242 billion (1.5%) and the reduction to the State Education Fund is from $8.814 billion to $8.603 billion (2.4%).  Nevertheless, both are still projected to increase over actual revenue during the 2023-2025 biennium, but only by 1.7%  and 3.3%, respectively. 

The budget committees, Assembly Ways & Means and Senate Finance, have been anticipating shortfalls and have been trimming agency budgets from GovRec.  It’s nearly impossible to keep a tally, but the Nevada Independent reported about $130 million in cuts as of the end of April. That includes a NSHE-related items $29 million from the Knowledge Fund.  On May 1 during the capital improvements budget closing, reductions of a net $141 million from the General Fund were made, mainly by shifting maintenance items to General Obligation Bond funding. During the May 2 NSHE budget closing, the implementation of the new funding formula in GovRec was cancelled, saving $13 million.  That gives a total of roughly $284 million in cuts so far, exceeding the $191 million needed for FY2026 and FY2027 for the General Fund alone.  However, the K-12 education budget closings are on May 8 and 9 and general funds may be needed to compensate for the shortfalls in the State Education Fund.

The Governor’s recommended budget included large new outlays upwards of $500 million for various programs that have yet to be considered by legislative committees, including education, housing and economic development. Legislative leaders have their own ideas. Conversations will continue through the end of the session.

None of this discussion accounts for potential future federal cuts to Medicaid or other essential services or for cuts made by Trump/Musk/DOGE to various programs including Nevada Humanities, AmeriCorps, public broadcasting, and university research grants.  There will likely be additional pressure on the state to provide lifelines to many deserving organizations.

At the April 24, 2024, special meeting of the Board of Regents, the Board voted 8-4 to oppose AB 191, which would enshrine the right to collectively bargain in state law for Nevada System of Higher Education (NSHE) faculty, graduate assistants, and other professional staff. NSHE professionals comprise the largest group of state public employees without collective bargaining rights in statute. To say NFA is disappointed in this outcome is an understatement as this signals that the majority on the Board are opposed to collective bargaining even as they noted “gaps” in current processes that leave workplace conflicts unresolved for both faculty and graduate assistants.

During over 1.5 hours of oral public comments and in written public comments, over 50 graduate assistants and faculty members spoke passionately for the need for collective bargaining to improve employment conditions for academic workers.

Amy Pason, Chair of the NFA Government Relations Committee, stated, “It is ironic that the Regents both decried that problems have gone on so long for both graduate assistants and faculty that we have been advocating for collective bargaining rights for four legislative sessions, but then for Regents to oppose the bill based on not having resources to adequately address workplace harassment and complaints.”

The Regents who voted to oppose AB 191 cited the high fiscal note created by NSHE, and that their fiduciary responsibility demanded them to oppose a bill that would cost the System money in an uncertain budget year. Interim Chancellor Charlton said in the meeting that she stands by the fiscal note even though NFA has documented and rebutted what we see as inflated and unnecessary costs.

Charlton noted that to be able to implement the provisions in AB 191, even if no new bargaining units formed immediately, NSHE would need additional lawyers specializing in labor law to be ready to negotiate any new contracts. NSHE says they need additional human resources personnel to be able to train supervisors on worker’s rights, to onboard new professionals and instruct them on their rights and procedures, and then to be able to address workplace complaints as, for units with bargaining agreements, AB 191 expands the scope of grievance and give access to formalized grievance procedures than what is currently provided for in NSHE policy.

Co-Vice Chair of the NFA Government Relations Committee, Ian M. Hartshorn stated, “This response from NSHE is precisely why we need collective bargaining in the first place. After dozens of public comments about the failure of existing systems and policies, their response was to argue workers should continue to use the same systems and policies.” He added, “NSHE’s lawyers believe that collective bargaining is too costly, we believe the status quo is. Collective bargaining is effective and necessary.”

NFA has noted that NSHE is likely to save money on costly litigation and pay outs from conflicts that escalate. They argue that collective bargaining agreements and access to a third-party arbiter when needed better address workplace grievances.

Kent Ervin, NFA Director of Government Relations, who has worked on NFA’s collective bargaining bill for the last four sessions, underscored that the current internal NSHE policy for collective bargaining applies only for a limited group of faculty to bargain under limited conditions. Ervin argued, “With collective bargaining for faculty only allowed through an internal policy of the Board of Regents, NSHE management and management lawyers control the interpretation and the ground rules for bargaining. That is a clear conflict of interest. ”

Although NSHE Deputy General Counsel Carrie Parker noted differences between AB191 and NSHE’s internal regulations at the meeting, NSHE has not submitted amendments to correct any deficiencies it perceives in AB191. The Board of Regents has now taken a position in opposition to AB191 without seeking amendment, even if the bill is revised to include a funding appropriation when it is heard by the Assembly Committee on Ways & Means.

NFA maintains that NSHE professionals deserve equal rights to other state public employees and only AB 191 can achieve that.

The NFA is urging members of the Board of Regents to support Assembly Bill 191 (AB191), the Collective Bargaining for NSHE Professionals bill, at their special meeting on April 24th. The bill seeks to give more than 7,200 education professionals in the Nevada System of Higher Education - the single largest group of public employees in Nevada without collective bargaining rights in state law - the same protections as their state coworkers.

On April 18th, NFA's Government Relations Committee sent the following letter to members of the Board of Regents, NSHE administrators, and student and faculty leaders:

Voting for officers on the Nevada Faculty Alliance's State Board begins on April 18, 2025. All NFA members in good standing will receive a ballot via email from ElectionBuddy.com. Voting will remain open until May 2nd. The newly-elected officers will take office on June 1st and serve two-year terms.

Candidate statements are provided below.

Office: President
Candidate: Staci Walters, College of Southern Nevada

To all of my NSHE colleagues, I am honored to run for President of our Nevada Faculty Alliance. For nearly eight years, I’ve had the privilege of serving on the NFA State Board in several roles—Secretary, CSN-NFA Chapter President proxy, and State Collective Bargaining Chair—working in partnership with faculty statewide to strengthen our voice, defend our rights, and build a more empowered higher education community in Nevada.

At the College of Southern Nevada, I’ve served as CSN-NFA Vice President, Membership Chair, and Collective Bargaining Chair, and I’m currently Lead Negotiator on our third collective bargaining agreement. Through strong teamwork and member engagement, we’ve secured tangible wins—raising faculty salaries, protecting due process rights, and achieving significant salary increases for new hires. Over the past eight years, we’ve also grown our chapter’s membership by nearly 30%, showing the power we have when we organize together.

I’m running for NFA President because I believe the challenges we face—both here in Nevada and across the country—demand coordinated, statewide leadership rooted in collaboration and shared purpose. Academic and administrative faculty alike are experiencing growing pressure from shifting federal policies, including the proposed elimination of the U.S. Department of Education, sweeping changes to Title IX, and deep cuts to research funding. These attacks are part of a broader movement to undermine public higher education, weaken faculty voice, and destabilize our institutions.

We must be proactive and united in our response.

As NFA President, my goals include:

• Growing statewide membership, with an emphasis on advocacy chapters at UNLV, UNR, GBC, and DRI, to build power and move more campuses toward collective bargaining rights.
• Supporting local chapters through membership drives, organizing efforts, and training from our national affiliates, tailored to each chapter’s unique needs.
• Expanding collective bargaining to more faculty across the state—because when we bargain together, we win together.
• Advocating for academic freedom, fair compensation, and job security—especially as national forces threaten these core values.
• Embedding transparency and accountability both within NSHE and within our own organization, so we can better serve all faculty.
• Elevating the voices of both academic and administrative faculty, recognizing that all of us play a critical role in shaping the future of Nevada’s higher education system.

Now more than ever, we need to stand together—to defend what we’ve built, to fight for what we deserve, and to ensure that Nevada remains a place where faculty are respected, supported, and empowered.

I ask for your vote, and more importantly, for your partnership as we continue this vital work together.

Office: Vice President
Candidate: Andrew Lavengood, Nevada State University

I am currently finishing my term as Vice President of Membership & Organizing for NFA-NSU. During my past 2 years in this role, I successfully organized and led a collective bargaining drive, resulting in the formation of a collective bargaining unit here at Nevada State University on April 2nd, 2025. We won in a landslide, with 95% of voting faculty (which translates to 85% of all faculty) casting a "yes" vote. My goal is to bring this expertise and experience to the Vice President position on state board. I would like to refocus the state board's energy on organizing and membership, so that we can build our power from our members. It is important to do this in a grassroots manner, as I did at NSU. For this reason, I intend to meet with each of the chapters to hear your issues, understand your faculty, and help develop strategies for engaging with, organizing, and building your membership. I hope you will provide me with the opportunity to serve our faculty in this vital capacity.

Office: Secretary
Candidate: Joey Ray, University of Nevada, Reno

Hello, my name is Joey Ray, and I am a candidate for the secretary position for the NFA. I have been a member of the NFA for over eight years and am the current state NFA secretary. I also served as a member of the NFA board for the University of Nevada, Reno chapter, and am currently on the executive board as a representative from the College of Business. I also led the NFA website redesign a few years back and helped organize the database.

I have been at the University of Nevada, Reno as a lecturer since Fall 2016. I was an LOA for one semester, and have been a lecturer since Spring 2017. I currently teach human resource management and strategic human resource management. I have also taught organizational behavior, business communication, compensation, salary & benefits, business law, personal branding, and project management.

I have also worked in the private sector for over 20 years. I have worked for companies such as the Walt Disney World Company, Lowe’s Home Improvement, Premier Parks, Austin Wranglers, SFE International, Gallagher, and API, among others. I have worked in operations management, supply chain management, marketing, and mainly, human resources. I have also held a secretary position in many volunteer organizations and committees in the past as well.

At the university level, I am currently in the following committees: Athletics Committee, Department Curriculum, and Department Outreach. In addition, I am the club advisor for the Management and Human Resource Association (MHRA) student club on campus. My vision for the NFA going forward is an organization that continues to expand its reach among the different campuses to represent all the different types of employees. I would like to continue to see the NFA be strongly involved in the legislative process and continue to work to make sure that our voices are heard so the Nevada System of Higher Education is more faculty and staff friendly and focused. As the secretary, it will be my job to communicate all the legislative updates, get information to the members, take good meeting minutes, and all other duties as assigned. I will make sure to be an effective, timely, and accurate secretary.

At the direction of the board, I plan to communicate in a clear and concise manner the items that matter to our members. I also want to help continue to keep the NFA organized and orderly, and work towards broadening our influence in the great state of Nevada.

Thank you for your consideration.

Office: Treasurer
Candidate: Greta de Jong, University of Nevada, Reno

I am a professor and chair of the history department at UNR. I have been an NFA member since I was first hired as an assistant professor in 2002 and joined the Executive Board of the UNR chapter in 2019. For the past year I have served as Vice President of our chapter. With my fellow board members, I have worked to recruit new members, build support for collective bargaining, organize social and educational events, and develop a guide for faculty facing disciplinary proceedings. I believe higher education is a public good and an essential element in a healthy democracy. I am committed to NFA's mission and look forward to serving as state treasurer if elected.

Tales of the Legislature: Weaponization of Fiscal Notes 

The NFA has proposed two bills – Assembly Bills 188 and 191 – to the Nevada Legislature. AB 188 proposes restoring retiree health benefits to post-2011 hires and retirees on the PEBP Medicare Exchange, while AB 191 seeks to establish collective bargaining rights for NSHE professionals, including faculty and graduate assistants. Both measures have encountered substantial cost estimates from the relevant agencies – costs that may be overinflated or designed to discourage legislative support.

What are Fiscal Notes?

When a bill is introduced at the Nevada Legislature, the Legislature’s fiscal staff requires that relevant government agencies provide a fiscal note showing the budgetary impact of the proposed legislation. Fiscal notes play an important role in the process as they provide legislators with information about potential costs. When a piece of legislation has a recognized cost, it needs to be funded to ultimately be successful. If a bill has a fiscal note, it will be referred to the budget committees, Assembly Ways & Means Committee or the Senate Finance Committee, for consideration of an appropriation to fund the legislation. 

Weaponization of Fiscal Notes

Fiscal notes can be misused in a variety of ways. For example, those seeking to kill a bill or extract concessions can attach unrealistically high dollar amounts. Agencies may use fiscal notes to request staffing increases denied in the normal budget process. Short deadlines for agencies’ fiscal notes also contribute to inflated estimates—it may be easier to calculate a worst-case scenario than to do a full analysis. Ongoing staffing shortages likely mean that some agencies struggle to carry out this analysis even if they want to.

Weaponized fiscal notes are especially problematic in sessions with a budget shortfall, when bills with fiscal notes often die in budget committees. If agencies submit exaggerated fiscal notes, there is no mechanism for an independent review and modification of fiscal notes other than a hearing in front of a budgetary committee. The bill’s sponsor and proponents then must attempt to negotiate away the fiscal notes, either by conversations with the agencies or by amending the bill to avoid the fiscal impact.

AB 188 - Restoration of State Retiree Health Benefits

State employees hired after 2011 will receive no health benefits when they retire, while earlier hires receive a contribution from the state toward Public Employees’ Benefits Program (PEBP)  premiums or Medicare costs. As explained by the NFA’s fact sheet on AB 188, restoring benefits from the Public Employees’ Benefits Program (PEBP) for state retirees would stabilize the retiree health fringe rate (currently around 2.50% of all state salaries), rather than letting it decrease in future decades as post-2011 hires begin to retire after the minimum 15 years of service. No savings from these cuts have yet been realized, and restoring these benefits would merely keep budgets in line with current costs.

PEBP attached a fiscal note of $1,024,975 in FY2027 and $2,486,075 in future biennia for AB 188. The request includes four new staff positions, a 12% increase from their currently funded 34 positions, even though PEBP projects an increased caseload of only 0.15% in FY2027 and perhaps 2.0% over 10 years. The amount of over one million dollars is unclear, since PEBP did not provide an itemization. While PEPB may need increased staffing, AB 188 does not add significantly to its caseload. Because the fiscal note does not itemize expenses, we cannot determine whether other projected costs are reasonable.

AB 191 - Collective Bargaining for NSHE Professional Employees

AB 191establishes collective bargaining in state law for Nevada System of Higher Education (NSHE) professionals, including faculty and graduate assistants. NSHE’s fiscal note on AB 191 includes $840,000 in FY2026, $1.7 million in FY2026, and $3.5 to $6.3 million in future biennia. These projections appear to be based on the assumption that all eligible employees – and some not eligible under AB 191 – would form bargaining units within the next two or three years. This is highly unlikely, since only four bargaining units have formed in the last 50 years – these four units represent 14% of all eligible employees, fewer than 1,000 of 7,200 eligible faculty.

NSHE’s fiscal note claims that the implementation of AB 191 would require 20 new staff, including seven labor attorneys. In contrast, the State’s Labor Relations Unit (LRU) for the 12 bargaining units, with 5000 bargaining unit members and represented by five employee organizations, has only two attorneys and four other employees to handle collective bargaining negotiations, contract administration, and litigation. NSHE’s staffing requests are highly exaggerated.  There are 18,600 Classified employees (including NSHE) eligible for collective bargaining.

The current faculty bargaining units at NSHE (CSN, TMCC, and WNC) are handled by existing administrators and human resources, and since NSU's new bargaining unit has already formed under NSHE’s internal regulations for collective bargaining, AB 191 does not add to any future negotiation costs for these four bargaining units. In addition, only one new bargaining unit, for graduate assistants, would be likely in the next year if AB 191 is enacted. 

NSHE’s projected high staffing needs and costs could represent: 

• An attempt to make AB 191 unaffordable and kill the bill; 
• An attempt to slow down the formation of new bargaining units even under the old rules citing budget constraints;
• An expectation that NSHE will be defending against a great number of prohibited labor practices by NSHE institutions; 
• A desire to deploy a team of labor lawyers for anti-union activities; or 
• A lack of understanding of collective bargaining. 

With its costly fiscal note, NSHE is approaching collective bargaining with an adversarial mindset. That is an unfortunate choice. Collective bargaining does not need to be adversarial, time intensive, or costly. Professional employees who seek to join together do so out of a desire to have a stronger voice in their workplace. Nevada’s higher education employers should embrace the opportunity this bill provides to strengthen relationships and improve collaboration. NSHE should only expect increased costs to defend themselves if they interfere with workers’ efforts to organize or if they refuse to recognize employee collective bargaining rights under the law. The employer can avoid the costs of defending themselves against prohibited practice charges by committing not to violate the law.

NFA’s summary of AB 191 cites studies that show that faculty unionization is actually associated with lower institutional costs and improved student outcomes.

Moving Forward

For both PEBP and NSHE, some modest additional costs and appropriations may be reasonable. NFA has been ready to discuss reasonable expectations (as we have in previous sessions) but neither agency has moved from their fiscal notes.

Update 4/30/2025: Corrected total number of state Classified employees to 18,600 employees eligible for collective bargaining (including 16000 in state agencies and 2600 at NSHE as of 8/2024), and added the number of employee organizations that are their exclusive representatives.

NFA members celebrate the historic vote to establish collective bargaining rights for faculty at Nevada State University in Henderson.

Faculty at Nevada State University are celebrating today after winning the right to collectively bargain for a safe workplace, for faculty voice in decision-making through shared governance, and to address low and stagnant wages. The American Arbitration Association certified that an overwhelming majority of the roughly 120 faculty voted "yes" in the in-person election that took place April 1-2, by a vote of 104 to 8.

Nevada State University faculty have formed the fourth collective bargaining chapter of the Nevada Faculty Alliance, joining hundreds of colleagues who are members of the AFT and American Association of University Professors across the state, and more than 1.8 million members of the AFT across the United States. The AFT is the largest higher education union in the country. The AAUP represents faculty and other higher education professionals and has defended and advanced higher education since 1915.

Corey Fernandez, an assistant professor in the Department of Psychology and Counseling, said, "This win is the result of countless conversations, collective courage and a faculty who care deeply about one another, our students and the mission of Nevada State University. We are so proud to have reached this point—and even more excited to begin the next chapter: negotiating a contract that protects what we love about NSU and ensures it remains a place where we can all thrive."

Despite challenging union election regulations imposed on public higher education workers in Nevada, faculty organizers persevered, winning an overwhelming majority of faculty support for their union. Having won their election, faculty members will now turn their attention to negotiating a strong first contract.

"This work could not have been done without the countless hours of organizing, research and outreach executed by faculty on our Collective Bargaining Organizing Committee. I have had the distinct pleasure of working with and leading some of the most incredible people at Nevada State over the past year and half, and it is so fulfilling to see all of that work come together," said Andrew Lavengood, lecturer of Mathematics in the Department of Data, Media and Design. "We look forward to negotiating with NSU administration directly for a fair, collaborative contract that protects faculty needs."

"Faculty understand that now more than ever we need to be united to advocate for ourselves, our students and our professions. The small college culture of collegiality that was the hallmark of this effort is the culture faculty were trying to preserve by voting for our union," said Pete Martini, president of NSU-NFA.

AAUP President Todd Wolfson said: "In joining together in a union, the faculty are laying the foundation to improve faculty working conditions and student learning conditions at Nevada State University. They are also part of the nationwide union movement at a time when our work to defend workers and higher education has never been more important. We welcome them!"

AFT President Randi Weingarten said: "Today's vote shows that the Nevada State University faculty want a real voice at work. Their perseverance is a testament to their commitment to the university and to fighting for the funding and resources they and their students need. While President Trump and Elon Musk attempt to ban federal employees' collective bargaining rights, gut federal services and attack the whole idea of the college promise, we stand with Nevada State University faculty in their fight for the right to collectively bargain for a safe workplace, a voice in decision-making and the compensation they deserve."

The Nevada Faculty Alliance at Nevada State University is affiliated with the Nevada Faculty Alliance, the American Association of University Professors and the AFT.

Assembly Bill 188: Restore Retiree Health Benefits for State Employees

• AB 188 restores retiree health benefits for state employees hired after 2011 and for PEBP Medicare Exchange retirees.
• State employees hired after the Great Recession deserve the same benefits as those hired in better economic years.
• Robust retiree health benefits are needed to compete with other Nevada public employers, especially to retain  mid-career employees, who carefully consider health care and retirement benefits.

Problems: Cuts to retiree health benefits are unfair to newer state employees and hurt retention

• When state employees hired after 2011 retiree they will receive no retiree health benefits through the Public Employees Benefits Program (PEBP).  Because none of these state employees have met the minimum of 15 years of service for the retiree benefit, , this has resulted in no cost savings for the State.
• In 2011, retirees on Medicare were removed from PEBP coverage and required to buy supplemental coverage through a private exchange. Instead of secondary PEBP plan coverage, Medicare retirees only receive a contribution in their Health Reimbursement Account (HRA). The HRA contribution has not been increased since 2015 and has not kept up with cost increases for Medicare B premiums and Medigap insurance.
• A retiree's ability to drop PEBP coverage (e.g., due to coverage from other employment or through a spouse) and rejoin was reduced to once in a lifetime.
• Retiree HRA account balances are capped at $8,000, which means they have fewer funds for out-of-pocket costs or catastrophic health events.

Solutions: AB 188 reverses cuts to retiree health benefits for state employees

• Restore retiree health benefits for employees hired after December 31, 2011. These employees would receive subsidies for PEBP health benefits upon retirement and after at least 15 years of service. [Sec. 3]
• Encourage the Governor and Legislature to provide equitable subsidies to PEBP Medicare Exchange retirees. Require PEBP to calculate and report the cost of supplemental insurance to provide benefits that are actuarially equivalent to those for pre-Medicare PEBP retirees [Sec. 1].
• Allow retirees to reinstate PEBP coverage aftermore than one gap [Sec. 4].
• Prohibit PEBP from capping HRA balances for Medicare Exchange retirees [Sec. 3(7)].

Cost analysis: Minimal impact on fringe rate for retiree health benefits

Retiree health benefits are paid by a fringe-rate assessment on all state salaries, which averaged 2.50% since FY2010. Because the number of retirees relative to the total salary base will not change, the fringe rate should remain about the same with AB 188.

January 1, 2027, is the earliest that post-2011 state hires could retire with the minimum 15 years of service to receive a subsidy under AB 188. PEBP estimates 73 such retirees in FY2027, compared with a total PEBP state retiree population of 12,776. That would raise the fringe rate by only 0.01% (from 2.50% to 2.51%) for FY2027 (Fig. 1), which the Retired Employee Group Insurance Fund could absorb. PEBP predicts a total of about 1,000 additional retirees over 10–12 years, which could raise the fringe rate by 0.2%, but that may not consider the natural decrease of retirees hired before 2011. The cost of restoring retiree health benefits is very modest, and no general fund appropriation for 2025–2027 should be required. PEBP's fiscal note request for four new staff positions over its current 34 positions is not justified by a 0.15% projected increase in caseload in FY 2027 (73 out of 49,200 covered employees and retirees) or up to a 2.2% increase after 10 years (1000 out of 49,200).]

Removing the cap on HRA balances and allowing more than one reinstatement will have little fiscal impact.

AB 188 increases the Other Post-Employment Benefits (OPEB) accounting liability that must be reported (Fig. 2), but the Treasurer's Office has indicated that AB188 is unlikely to affect the state's credit ratings. PEBP has always been on a pay-as-you-go basis, and AB 188 will not change that. 

Fig. 1. Historical fringe rate assessments for state retiree health benefits, FY2010-2027. The retiree health fringe rate has varied from 2.13% to 3.18% since FY2010, and per GovRec it will be 2.59% in FY2026 and 2.50% in FY2027. The average is 2.50% of state salaries, paid by the employing agency funding source and deposited into the Retired Employees' Group Insurance (REGI fund 1368). Transfers from the REGI fund to PEBP pay for retiree benefits. The projected increase in the fringe rate due to AB 188 is  0.01% in FY2027 and 0.2% or less long term, smaller than the year-to-year fluctuation from other sources.

Fig. 2. Reported Other Post-Employment Benefits (OPEB) accounting liability for PEBP from FY2008 to 2024. The OPEB liability declined after the major cuts to retiree benefits in 2011, primarily moving Medicare retirees to the private insurance exchange. According to the fiscal note from PEPB, the partial restoration of retiree benefits in AB 188 would increase the OPEB future liability by $179 million, from $1.46 billion to $1.64 billion (upon enactment). The Office of the State Treasurer has indicated that the increase in the OPEB liability from AB 188 is unlikely to change the state's credit ratings. PEBP is on a pay-as-you-go-basis; no annual payments against the future liability are being made or contemplated.

[Updated 4/16/2025 using enrollment data from the PEPB Budget Closing on 4/15/2025.]