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States’ Methods of Funding Higher Education
In a report for the Nevada State Legislature, SRI evaluated how U.S. states fund higher education and compared them to Nevada's funding approaches.
As a result of Senate Bill 374 of the 2011 Legislative Session, a committee was established to evaluate the existing method of funding higher education in Nevada, to consider alternative funding mechanisms, and to submit a report of its findings to the 77th Session of the Nevada Legislature. The need for this action had been identified in several earlier reports, including a report in 2005. In that report a consultant noted that the existing state funding formula performed poorly on a variety of measures. It did not provide incentives for improvement, it failed to accommodate the different needs of different parts of the state, and it relied too much on a formula based on cost-reimbursement. The formula was also weakly linked to the master plan for higher education.
In many cases, higher education funding policies are a historic mash-up of different priorities and strategic decisions. In order to inform the debate around Nevada’s formula, SRI undertook a review of all states’ funding methods. The report utilized an extensive review of state legislation, publications, and reports as well as telephone and email interviews with state officials, performed over a 10-week period.
The final report covered three main sections:
Part 1: Higher Education Funding Best Practices and Recommendations for Nevada provided a brief summary analysis of SRI’s state-level research on key topics of interest in Nevada and distilled best practices that could inform Nevada’s review of its own method of funding higher education funding. The section focused on the context and drivers shaping higher education funding in Nevada and provided SRI’s recommendations on key principles and approaches for reforming Nevada’s funding method.
Part 2: States’ Methods for Funding Higher Education presented the detailed results and data from SRI’s in-depth state-level research on higher education funding, focusing on several key topics: use of funding formulas, use of enrollment-driven funding, use of performance-based criteria, and treatment of student-derived revenues. For each key topic, current and proposed Nevada funding approaches were summarized and compared to other states’ practices.
Appendices A, B, and C provide very detailed, state-level narratives and case studies for 48 states regarding their existing approaches for higher education funding (both formula- and non-formula-based). These detailed examples provided additional support and background for the state analysis and findings presented in Part 1 and Part 2 of the report.