Log in
Log in




NSHE Funding Formula 6. Reimagining the Formula: A Win-Win for Students and Institutions

20 May 2024 11:22 AM | Kent Ervin (Administrator)

Reimagining the Formula: A Win-Win for Students and Institutions, not Winners and Losers

Part 6 in a series analyzing proposals being considered by the NSHE Committee on Higher Education Funding. These articles delve into various proposals the Committee will consider on May 30 and finalize on July 25. The NFA has issued a set of fundamental Principles for Funding Higher Education.

The recommendations here from the Nevada Faculty Alliance are presented in good faith as ways to improve the funding formula and meet achievable goals. We appreciate the Committee’s difficult task and hard work. Our shared concerns are in serving students across the state, especially those in underserved areas. 

One of our actionable solutions begins with analyzing the current NSHE funding formula. Because it is only a distribution formula an institution can meet all of its performance goals and still experience a budget decrease because other institutions had larger enrollment growth. Any new formula that merely redistributes existing funds will produce winners and losers and fail for Nevada’s students. 

Chair Hardesty and Vice Chair Charleton have emphasized the Committee’s charge is to develop a new formula without new funding. Committee members have advocated for additional funds to fairly implement formula changes. As shown in Part 3, including summer course credits in the Weighted Student Credit Hour (WSCH) formula without additional funds would result in significant budget cuts for five of the seven institutions. 

Reimagining the Formula as a Funding Formula

Budgets for the seven NSHE colleges and universities are currently developed through the state budget process, starting with the base-year budget and making various maintenance adjustments including caseload. At the end of the process, the total appropriation for the seven institutions is redistributed according to their WSCHs. That is backward and it leads to constant competition among the colleges and universities.

A true funding formula would determine the cost of providing higher education per WSCH (or other chosen metrics), then budget that amount multiplied by the WSCHs. The existing dollar value per WSCH should be adjusted for inflation according to the Higher Education Price Index (HEPI). Then that value multiplied by each institution’s WSCHs would be the institution's new base budget. The detailed budget (including cost-of-living adjustments) for each institution would be developed with the formula funding totals. Using WSCHs as the starting point for budgeting would prevent a redistribution or competition between institutions.

If the state provides insufficient funds to fully fund the formula, the only alternative is to reduce the appropriation per WSCH across the board by the same percentage and then raise student fees or cut services to compensate. That’s the reality regardless of which formula is established.

In case another sudden drop in enrollment were to occur, as happened during the pandemic, the best of the past two years of the WSCHs should be used to provide time for recovery or adjustment. (A three-year average has been proposed, but that still counts even and odd years differently with a biennial budget and increases the lag between count and budget years.) Ideally, projected enrollments would be used, but further study would be needed to find a feasible and accurate projection method.

Funding Student Services

In Part 4, we recommended shifting funding for existing student services expenditures from the WSCH to a headcount to reflect the costs of providing student services beyond the classroom. To implement that in a revenue-neutral way, each institution’s current student services expenditures would be carved out of their WSCH allocation (8% overall but varying from 5% to 14%). The total amount would then be redistributed according to the average of fall and spring student headcounts, resulting in an initial minor funding shift. For future budgets, the total student service funding would be divided by the total headcounts to obtain the dollar value per headcount. That value would be increased by HEPI inflation to set the budget based on each institution’s new headcount.

Funding Enhancements

The Committee cannot appropriate funds, but it can recommend additional changes in the formula be contingent upon full funding. These should include:

  • Adding all summer course credits to the WSCH formula, with an appropriation to cover the full cost. Unintended consequences of including summer credits without additional funding are discussed in Part 3. If all summer school courses convert to regular WSCH funding in the state-supported operating budget, then UNR’s and UNLV’s academic departments must receive equivalent funding levels to support their research missions.

  • Enhancing the headcount formula to fund additional wrap-around services for at-risk and underserved students, counting them at 1.25 to 1.30, with an appropriation to cover the full cost. The categories of at-risk students should include Pell-grant recipients, underrepresented and first-generation students, English-language learners, and students needing disability accommodations. Details can be found in Part 4.

  • An adjustment to the weighting in the WSCH formula for Nursing and possibly other critical needs. Again, weight enhancements must be fully funded to avoid robbing one institution to pay another. The Committee should also recommend a regular procedure to update the level and discipline weights in the WSCHs. They should be revised every four to six years to keep up with changes in the cost of instruction and the state’s critical economic areas.

Without full funding for these enhancements, smaller institutions would face severe budget cuts because existing funds would be redistributed to larger institutions. Recommending formula enhancements contingent upon funding would provide a path to future budget requests.

Inflation Adjustments

NSHE already has a policy to raise student registration fees according to HEPI, and state funding should keep up. A funding formula that is not adjusted for inflation results in cuts that prevent our ability to serve students and compensate faculty and staff fairly and competitively. The HEPI by Commonfund is a reasonable national measure of inflation in the higher education sector. For each biennial budget, the WSCHs or headcounts should be adjusted for the most recent two years of HEPI inflation.

Indexing the WSCH dollar value for inflation is not a major change from actual practice. For all the biennial budget requests and supposed enhancements since the current formula was established, the following figure shows that the appropriation per WSCH adjusted for inflation has been mostly flat since 2014, except for the decline after the pandemic from which we haven't not fully recovered.

If (and only if) the formula funding for NSHE is indexed for inflation, then the mechanism for funding COLAs for NSHE employees could be reconsidered for the formula-funded NSHE budgets. COLAs in line with the HEPI could be accommodated within the formula. Catch-up increases for competitive compensation require additional state funding, however.

Outcomes-Based Funding

We recommend eliminating the current performance pool as a carve-out from base funding. Any outcomes-based funding should be additions to the base budgets. Our recommended enhancement to the headcount formula for at-risk and underserved students provides outcomes-based funding, applied to about 8% of the budget (versus the 20% carve-out in the current performance pool). Institutions that recruit and retain those students would receive a funding boost based on their headcounts but without competing against other institutions for a fixed allocation or being threatened with a reduced budget for not meeting targets, as with the current performance pool. Headcount values could also include student-centric performance metrics for retention, progression, and completion. If a larger percentage of the formula is allocated to headcounts to enhance student support services (such as disability resources or mental health), it should be phased in with hold-harmless funding.

Other performance could be rewarded in a similar manner. For example, WSCH values could receive a bonus for efficiency measured by the number of degrees and certificates awarded per credit hour; that would prevent a reduction in funding if an institution graduates its students more quickly. All outcomes incentives must be additional funds that do not make institutions compete or put base funding at risk. No performance funding should risk base funding using metrics that track the total number of students, directly or indirectly. The WSCHs and headcounts already account for enrollment. Instead, institutions should be rewarded for increasing efficiency or reaching a higher proportion of a target population.


For full transparency and to promote trust between NSHE and the Legislature, all institutional reporting of formula factors (e.g., WSCHs and headcounts) should be audited regularly.  The formula should incentivize services to students, not creative accounting.


Data are sourced from public records and reports. We welcome questions and welcome corrections from authoritative sources.

NFA Series on NSHE Funding Formula

Updated 5/20/2024 11:30 a.m. Edited for clarity.

Contact Us:

Office: 702-530-4NFA (4632)



840 S. Rancho Drive

Suite 4-571

Las Vegas, NV 89106

Powered by Wild Apricot Membership Software