Neal Smatresk: The UNLV president fights back over budget cuts
Genuinely angry and despondent over Governor Sandoval’s draconian budget cuts, UNLV President Neal Smatresk is just starting to fight. Game on.
4 April 2011
5 April 2011 5:41 p.m.
VEGAS INC coverage
Las Vegas Sun coverage
- Tentative schools budget includes 2,500 layoffs, pay cuts, larger classes (3-25-2011)
- Students rally against education cuts, but what’s next? (3-22-2011)
- Higher ed switches from tales of budget woes to honesty (3-16-2011)
- School District seeks study on actual cost of educating students (3-14-2011)
- Hundreds urge lawmakers to battle proposed cuts to education (2-28-2011)
- Chancellor’s memo outlines scenarios involving closures, consolidations (2-25-2011)
Neal Smatresk looks fit and rested. You wouldn’t know that UNLV’s president is enduring despair, anger and the most frustrating period of his career.
Through a window in his seventh-floor office, Smatresk can see a portion of the Maryland Parkway campus that’s about to be decimated by faculty layoffs -- a campus that soon will be turning away some students for a lack of resources.
Smatresk has the unenviable task of explaining why UNLV should be spared from further cuts -- unenviable because he knows the big tourism and construction industries in Las Vegas have themselves shed 75,000 jobs since 2008 because of the recession and overbuilding.
But, dressed like a CEO, Smatresk matter-of-factly lays out for VEGAS INC a compelling argument that would make sense to CEOs: State funding for UNLV is not spending, but an investment in the Southern Nevada economy.
And as any CEO would understand, reductions in investments by their nature usually result in reductions in revenue.
In other words, as Carson City cuts UNLV, fewer UNLV faculty and staff will be spending money locally. Fewer students will rent apartments and buy groceries. Fewer federal dollars in the form of grants to UNLV will be multiplying through the economy.
"If you’re GM you might cut your losers, but you’re going to keep your profit centers. We are a profit center for the state, but the state seems to view us as a cost. We need to change that thinking,’’ Smatresk said during our interview, which he called his most extensive to date on the coming cuts.
Highlights of our conversation:
What’s the role UNLV plays in the economy and how does UNLV interact with the business community.
If you try to break down what a university does in a community, it produces a highly educated workforce. The alumni of UNLV is 60,000 strong here, maybe 70,000, in the valley, and we’re approaching a total of 100,000 alumni in our 52-year history, which I think is phenomenal.
Somewhere between 60 and 70 percent of them live here.
We are a form of business, we are a state-subsidized business. What do you get back from, this year, the $175 million that is being invested in us?
And how is the university a resource for the development of new businesses, the support of existing businesses and in a more broad way how do we impact the quality of life that would make businesses want to move here?
Starting with the workforce, we’re working hand in glove to try to create economic recovery in Las Vegas.
Our alumni have bachelor’s or higher degrees.
We had an economic impact study by the UNLV Center for Business and Economic Research headed by Stephen Brown -- this is a guy who really knows what he’s doing
If you look at Las Vegas as a city, about 20 percent of our population has a higher education degree. In more prosperous regions there’s a higher percentage of higher education degrees, it varies from 38 percent to 45 percent. It can actually be higher in some cities.
There are any number of correlations you can draw. They go like this: Invariably the more higher ed degrees you have, the more diversified the economy is, the stronger the tax base is and the most recent recession has had less impact. Those are really important.
A highly-educated workforce makes your economy more robust; buffers you from the affects of recession and while we have maybe half of the typical higher ed workforce we ought to have, that’s not surprising.
We’re a 50-year-old institution in a city that has been formed by immigrant populations -- in a city that was formed with a very basic service economy where there wasn’t a strong value or need for higher education. We’re suffering the consequences of that.
A fundamental job for higher education and a major institution is to generate degrees. I’m going to tell you a funny thing: Everyone thinks `that ought to be business degrees or hotel degrees or engineering degrees.’ It doesn’t matter. You need more degrees. That highly-educated workforce in turn has enormous impact.
Just in reference to the cuts, when you cut our capacity to produce those degrees, you stall our economic recovery. You make us more vulnerable to future recessions.
Let’s talk about the real impact of our graduates. If you look at employment by educational attainment; kids who don’t graduate high school have about a 17 percent unemployment rate in Nevada. Nationally it’s about 14 -- everything’s about 2 or 3 points higher in Nevada. With an associates’ degree it’s 10 percent or 12 percent. With a higher ed degree, unemployment here in Las Vegas is 6 percent.
The first thing we know is if you have a higher ed degree you’re more likely to be working. Nationally it’s 4 percent, which is considered to be full employment.
If you look at income potential, it’s directly correlated to educational attainment. The person who graduates from high school earns far less than the person with a higher ed or advanced degree.
You can do a little math. If the same percentage of our population had a higher ed degree as our competitor regions, closer to 36 percent or 40 percent, our unemployment levels would drop dramatically. And the income generated by our population would increase dramatically.
You talk about higher education and a lot of people think I have a degree in English and the most important thing I learned is `do you want fries with that?’ That’s not true. It is true that you’re more likely to have a good job and you’re much less likely to be unemployed and there’s a real dollar value to that. It’s stunning.
Here in Las Vegas where we have a first-generation, often economically-challenged, often minority populations, the need for access to that higher education degree is truly an opportunity to change things. We produce leaders who inhabit every sector of the economy here, from leaders on the Strip to banking to the legal community and our political community and the technical community. Our alumni support virtually every sector of the economy here.
Let’s talk about UNLV as a business. There’s a company in Las Vegas. It employs 3,000 people. It has a billion dollar a year economic impact that provides a workforce for our growing region.
It brings into this state from outside the state more than $300 million a year. It attracts the best and brightest from 50 states and 70 countries to participate in our economy. That company is UNLV. The return on the state’s $175 million investment is enormous. We are a profit center for state government. We bring resources and income and opportunity to this region.
Where do we get those dollars? We bring in nonresidential (out of state) students and two thirds of them pay full freight nonresidential tuition at $18,500 per year -- that’s just the tuition.
We have more nonresidential students than all the rest of the state’s higher ed institutions combined. So our global city has a global educational enterprise.
Of course those students don’t just bring their tuition dollars. They buy cars, they buy gas, they buy groceries. The direct impact of that is $140 million per year -- that’s raw dollars, not economic impact.
That’s a pretty good business.
In addition we run a major entertainment venue, the Thomas & Mack Center. It is the top grossing college arena in the country.
It is perennially in the top 10 of all arenas in the country. That’s almost a mind-blowing thing for a university enterprise. It’s a profit center that allow us to have Runnin’ Rebels basketball and football, to host the NFR and PBR, which bring people from all over the world. We hosted U2 and the Black Eyed Peas and other concerts at Sam Boyd Stadium. Those events all bring in dollars.
Some of those dollars are from here, some are from out of state. They spend over and over in the economy. The estimated economic impact of that (Thomas and Mack and Sam Boyd Stadium) is $250 million per year.
That’s a business.
We bring $100 million a year in federal funds -- grants and contracts. Those dollars have the biggest economic multiplier you can imagine. The economic impact (with a multiplier of 4.8) is enormous.
That helps us bring kids in, it helps fund them with financial aid and it helps support their success.
If you take a look at someone who brings in $1 million a year in research -- we have some real superstars here we hope we can keep in this climate. Those folks hire -- they pay for undergraduates and graduate students -- so they’re supporting the education of those students. Sometimes they pay their own salary.
They buy research equipment out of that money and then they train those students in cutting-edge technologies. We ought to pay them! They’re generating in some cases -- not all cases -- intellectual property. They may be spinning off some day a tech company. We’re a young university. We don’t have much of that. But we need to grow it.
This is where all the needles are pointing: It’s clear our economy is not diversified. There are many different ideas for how we attain that. There isn’t a state that has managed to diversity its economy without investing in research universities.
Any where you go, you see major investments. The longer they have been doing it, the more benefit they’ve attained -- whether it’s Arizona or Utah.
Utah’s investment in higher education is stunning. Utah is a state with basically the same population as our’s. There are twice as many faculty in the public universities of Utah as there are here.
Utah in the last six years has invested in the USTAR Initiative — where they bring in top guns who bring in giant grants who are working in applied areas hand in glove with businesses, high-tech businesses. In a six-year period, they are now generating (part of) a $10 billion a year export economy in Salt Lake City. The University of Utah’s intellectual output equals or exceeds MIT’s as the top in the country. That’s a stunning turnaround in a short period of time. It illustrates how investment in higher ed creates business for the state.
Most major cities have several research universities. Las Vegas has one. I can’t tell you how many times a week I hear `Why do you guys need to do that stupid research? We don’t need that.’ They don’t understand what a research university brings to the table is a higher quality education and a more skilled workforce and the ability to engage a high-tech economy. If you don’t have that you will be relegated to backwater status. You don’t build a global high-tech economy by wishing for it -- or by low taxes. You build it by having a resource-rich environment and the most critical asset for any high-tech business is access to graduate programs and research expertise that supports the mission of that company. Period. If you do it, you’ll get more high-tech businesses. If you don’t, you won’t.
When a company comes here, one of the first things they do is look at the capacity of the city to support research in their area and in an ancillary way to have a major university that can provide a higher quality of life for their family.
Philadelphia for instance is littered with universities. There are eight or nine medical schools in Philadelphia. There are probably 100 universities in the greater Philadelphia area. As a result they have a huge high-tech economy. They support the entire East Coast bio-pharma establishment, and that’s a giant economic cluster.
We have one research university that is one of the least funded in the country in terms of total state dollar commitment.
If you look at states with populations of 2 or 3 million people and you plot the raw state dollars on higher education -- and this doesn’t include the contributions of counties to community colleges, so in some ways we’ve underestimated the numbers - Alabama, Arkansas, Mississippi, the investment there is double ours. We’re a bargain-basement state. Our per-capita spending on higher education is the lowest of the states our size.
More importantly, Las Vegas is the largest metropolitan region with only one research university -- and a very poorly-funded one.
When people talk about economic diversification and the need to build our economy here you have to match the capacity of the research institution that’s producing those valuable degrees against your dreams for building an economy, or it doesn’t happen. You can wish for it, but wishful thinking isn’t good enough.
As you cut us, you cut the future capacity of this city to meet its needs.
Interaction with business
How we interact with business. NV Energy have given us $1 million in funding to start a renewable energy minor -- primarily solar -- it’s green energy. In a two-year period we have more than 200 kids in that program.
There’s a technical track and a nontechnical track. The nontechnical track is for policymakers, lawyers, people in real estate, people who have ancillary interests in the burgeoning solar industry here. The technical track is science and engineering students.
There was a need by NV Energy to see a renewables workforce in the state, they came to us with a very generous gift. In a two-year period of time we’ve cranked up a workforce. We are very responsive when we have the funding that enables us to respond.
We want to be the best partners we can be.
Take a look at the hotel school -- that’s a no-brainer in Las Vegas. But casinos and gaming aren’t just in Las Vegas, they’re now a worldwide economy. A big worldwide economy.
One of the questions we’re asking ourselves is `How can we take the expertise and technologies that the resort, hospitality, food and beverage and gaming communities have evolved in Las Vegas because of the skills of our operations and project that technology globally?’
I had an opportunity last year to search for a dean of the hotel school -- the candidates were OK. I thought about it for awhile and I said `Are we really matching up against the needs and opportunities of Las Vegas with what we think is the best hotel school in the world? Have we coasted a bit, have we lost focus, have we gotten away from our core? We brought in someone who was the president of Boyd Gaming. Someone who has run banks. Someone who’s very involved in electronic gaming and an icon in our community. And also one of the best fundraisers in the history of the state, Don Snyder (interim dean).
I pat myself on the back, he’s a home run. Don has spent a year working in the hotel college now talking about getting back to basics and what it takes to produce a quality employee for this region. Working with the resorts and the gaming community and saying `What do you want from us, what can we do better?’
The hotel college is currently reorganizing and restructuring its entire curriculum. So that when they produce a graduate it’s a graduate ready for the highest levels of leadership and simultaneously looking at those opportunities -- whether it’s in electronic gaming, or hotel security, or whatever they might be -- for how we can work hand in glove not as followers of the dominant industry but as thought leaders and innovators who can help them find those new technologies that help their industry be more efficient and effective and create export economies.
Another example is our College of Business got together with our College of Engineering. There’s a senior design competition where the engineers have to build something practical.
I had said almost three years ago (as provost) as I met with the advisory committee: `I want two things out of you. The first is I want you to have the senior design competition and I want you to tie it to MBA students who work with them hand in glove so we can create business plans for engineers who can go out and start up little businesses. The second things is I want you to take the idea -- which is very practical, hands-on and draws kids into engineering -- and migrate it down to freshman year.’
We received a generous gift from Bob Mendenhall (longtime Las Vegas Paving Corp. owner and CEO) and Fred Cox (chairman emeritus, Emulex Network Systems) to build a design center for the freshmen where they can design stuff and fiddle with stuff and they have to do something practical.
A lot of times engineering curriculum doesn’t really start until your sophomore year because you’re taking all these prerequisites, but that’s not very motivational to those kids. So now, freshman year, they get to do stuff -- the kind of stuff they think they were put on earth to do. It’s terrific.
It’s so much fun to watch them. They take that experience and say `that’s why I’m taking those classes.’ It puts a relevance frame around sometimes very dry coursework they have to take. By the time they get to their senior year, they are ready to knock it out of the park. They are ready to come up with inventions that typify the roles they will play as innovators in our society.
They very widely. They’re pretty crazy! How about a garbage can that senses when it’s full and robotically empties itself out? It sounds goofy -- it’s all fun. Or a higher-efficiency, lower-water-wastage irrigation system -- the list goes on.
The MBA students work with the engineering students and there are outputs from that. There are kids moving from their engineering role to a business incubation mode.
That ought to be a key focus for us.
We ought to be spinning out more inventions and more little tech startups.
Now there will be a growing cadre of innovators to go back and guide the students who are right in the middle of it.
So you build a support community. It’s kind of exciting.
Back to basics
A key lesson here is we are confronting the most difficult time higher education has faced in Nevada. We have been cut radically. Through this we recognize we can’t respond to cuts simply by complaining and becoming less. We have to take that opportunity to get back to basics, to align what we do with the needs of the future.
In virtually every college, we are reengineering to try to deliver the kinds of learning experiences that will build a stronger future -- a better workforce and a more prosperous Las Vegas.
I’m not going to tell you you can do everything and improve continuously with the kinds of cuts we’re experiencing. The cuts will result in the loss of programs. The cuts will clearly reduce our capacity to support transfer students because the number of upper division seats we have is very limited. Rather than throwing away the quality of what we do, the cuts will force us to reduce access. We’re determined to create this smaller, higher-quality vision of the future in response to these cuts. We will not sacrifice the quality of our alumnis’ degrees.
The negative part is we won’t produce that workforce as quickly as this city needs. Disinvesting in the one institution that has the capacity to train bachelor’s and above is a pennywise and pound foolish strategy for our state.
Should the higher education community take some of the blame for the current predicament for not better communicating this story when times were good?
Yes. But I think our state has never placed high value in higher education. We’ve always been the budget balancer. As other parts of the budget mandatorily grew, the mantra was `They can always charge more tuition.’ So we get squeezed because K-12 can’t charge tuition. I don’t want it to seem like I’m pitted against K-12 because they are our sister educational limb. But every year it’s the same thing, we get the biggest cuts. This is just the same, except the cuts are bigger.
Should we have done a better job of explaining it? We did try to explain it and there was a mixed bag of strategies used. A lot of folks thought that when we took the $50 million in cuts we’ve already taken that we were crying wolf and it wouldn’t really hurt us.
The general belief by many people in our state -- and it’s kind of a national belief -- is that `those higher ed people they’re kind of fat and well paid and don’t work very hard.’
We’ve kind of become public employees and public employees are now the enemy. We’re treated like the enemy. If people in private industry made two or three times what we make they viewed us as kind of their slow and dim-witted counterparts because we weren’t earning money with them in an entrepreneurial way.
Now we’ve gone through this winnowing in industry here. Thousands of people have lost their jobs. Their pay structures have been changed radically. That’s the challenge of working in the private sector. The glory years are over and there’s a lot of resentment of public employees who chose this slow and steady path.
It’s like the tortoise and the hare and they’re trying to kill the tortoise.
Part of what you see in our state is resentment of public employees in general. It’s almost `The private sector has felt the pain, you should feel it too.’ Without enough thought that universities are the buffer. We’re countercyclical, so in the recession people come back to re-tool so they can engage in a new economy.
How frustrated are you about the budget cuts?
I vacillate between despair and anger. At a minimum this is the most frustrating experience in my life because all the metrics support the value of higher education and when you invest in higher ed your state does better. It’s universally understood. So as we radically disinvest, and believe that we can cut our way to greatness, I feel people are guilty of magic thinking. You don’t get something for nothing.
If you had a business and you generated $3 for every $1 invested in you, you’d be a pretty popular business. I’d invest in you. We’re a business that generates $2 to $3 for every dollar invested in us -- it’s a real cash export economy. That’s not including all the intangible services and alumni benefits we produce. It doesn’t make business sense that you cut us.
We are struggling with how to put this into a bigger perspective to get to where we need to be. For better or for worse, we put it out all the time but not everyone is equally receptive to the message.
There’s a large group of business processionals in this community who really understand the benefit of UNLV, value it and support it. You can look at our foundation board and our chamber of commerce and other entities, the Nevada Development Authority, they all know we need to have a good university here.
I now sit on the NDA executive committee, I sit on the Las Vegas Chamber executive committee, it’s the first time someone from higher ed has ever sat on that group. It signals a new awareness of how we need to partner in these times. To speed up our recovery.
But the chamber for years has fought measures to broaden the tax base and develop a more stable revenue source for the economy; while the NDA sells Nevada as a low-cost place to do business.
Slowly but surely, by participating (we’re addressing that).
The folks in those groups are major decision makers in our state. Working with them, bringing them to our campus, working collaboratively is really the key to gaining the kind of support that we need so that we can establish a reasonable revenue flow that’s predictable and stable.
You believe your participation with these groups will change things?
There’s a very strong sentiment of support in both of those agencies and we have to break through to that last little bit where there’s a recognition that only cutting the revenue flow to higher ed isn’t an answer.
They’re looking for us to be very responsive to them, and we’re willing to put that completely on the table and develop strong partnerships. But the flip side of that coin is that we can’t do it with the kinds of cuts we’ve had -- we need them to back budget stability.
The 'no tax’ mantra is a little bit of a reflex. I don’t blame them. Who wants to pay more taxes? But if you view taxes into profit centers as investments -- who in their right mind would want to lose that business (generated by UNLV for the state’s economy).
What do you say to people who feel that because UNLV isn’t going to become Stanford or MIT, it’s not worth supporting?
No one knows what we’re going to become. If your state dedicates itself in the same way Utah did, we could become a Stanford or a MIT -- it’s a question of will. I don’t want to say we’ll be Harvard or Stanford or MIT -- we want to be what this region wants us to be. We are in a unique city that is an icon for entrepreneurial approaches to creating the greatest entertainment destination in the world. Our university needs to match that spirit. I believe we will become nationally really prominent by embracing our Las Vegasness.
Is the proposal with the Ed Roski group for a stadium and associated developments a more business-like approach to use university assets more effectively?
Absolutely. We have assets that can be monetized in the form of land, reputation and our entertainment venues. We’ve been challenged to be creative, expand our funding streams and think out of the box. One of our responses is we believe we have found a way that puts no state or tuition dollars at risk to create UNLV as an entertainment destination like the Thomas & Mack has been, but even more so on a national scale. We can keep our core business and we can grow and expand revenue through our franchises, possibly through professional sports franchises -- we’d be the only campus that actually kind of owns a pro team, that has a pro team on campus. I think it would come if we get this done, sooner or later, whether it’s major league soccer or basketball or whatever. We also will create a truly vibrant university community with mixed retail, restaurants, bistros and living spaces.
This celebrates both the Midtown UNLV vision (Maryland Parkway revitalization) that Michael Saltman has advanced and American Nevada Company as well.
(American Nevada Company, a sister company of VEGAS INC, has been involved in the Midtown UNLV project).
Through this (the stadium development), the (Roski) Majestic Realty group recognizes our land, brand, entertainment and sports franchises have monetary value.
So we can leverage that value to create something that could spin out new revenue and make this an amazing university, a destination spot -- a globally-known destination -- and really enhance our ability to recruit and retain our students.
(Kirk Kerkorian’s) Lincy Foundation announced it is moving its assets to UCLA. Is that something UNLV competed for? How does it affect the Lincy Institute at UNLV?
We didn’t compete for that. Not all the money goes to UCLA. They will hold a portion of the funds. I have been assured by the Lincy Foundation that funding will become available for Nevada. We understand they are going through a reorganization period. Their commitment to Nevada has not waned. The institute is here and its’ funded and the funding will continue.
The College of Business is of special interest to the business community, what’s the impact there of the cuts?
The problem is, it’s no secret UNLV is relatively poorly funded even in comparison to our sister institutions. There are at least three institutions in the system that get more money than UNLV does on a per-student basis. Business faculty is very expensive. That’s the market. We live in a marketplace too -- a market for minds. The student-to-faculty ratios have been challenged because of a highly inadequate formula. The only way you can keep your funding is to continuously grow. That’s not a good, sustainable model.
The formula has forced us to take students that further erodes -- especially in popular disciplines like business -- the student/faculty ratio. What we’re doing is were going to trim the College of Business, we’re going to scale the student population to the faculty population. It will become a more competitive environment. Fewer students will have access and they will have to compete for spots. The College of Business I think will be producing a very competitive product.
When you scale us back, we produce fewer graduates. That’s one of those propositions where I need the business community to understand. If you need accountants, or marketers or real estate professionals, economists, it doesn’t happen free. The only way we can scale up is by investing in that program.
In virtually every area, we may address that by expanding our use of differential tuition. People will pay more.
We’ll lose 13-14 faculty in the College of Business (out of 76 full-time positions). Those cuts will be replicated in science, engineering, all across the university.
There has been an effort to save the construction management program.
I don’t want to have to cut it. We do have donors who have said they would step forward, although they haven’t yet. That could save it. We’ve taken some of our programs and put them in self-funded mode. You’ll see more of that. People need to understand all the entrepreneurial steps we are taking. We took Family and Marriage Therapy and took it off the grid. I would say we could do the same with construction management if we had enough tuition and donations to support it.
The law school recently commented the cuts could make it 'mediocre’
I am very proud of our law school. We moved up 7 points this year (in national rankings), from 78 to 71. That is stunning! This is an 11-year-old law school.
Our dean’s really hot. When you raise tuition, you may not compete for the smartest kids. The more expensive we get, the harder it will be to attract the top scholarship-winning law students, the very smartest law students. They’re cost-sensitive, they are looking for support.
Is the Singapore campus in line for cuts?
It’s partly brand projection because it gives us global status as does the hotel school. It’s self-funded. It got started with generous loans from the Singapore government. This year the Singapore government announced it’ll fund 200 full scholarships for Singapore residents to attend, per year.
That’s where we’ll get on stable financial ground and we’ll be able to pay back the loans.
I want to add we are the 25th most popular university in data from U.S. News and World Report
A good way of assessing a university is that for every 100 students we accept, how many come here? It’s 53.4. For Harvard it’s 77. That 53.4 puts us in the ranks of the finest institutions in the country. What it means is UNLV continues to be a first-choice university for those who apply whether they are from Clark County, Korea, California or New Jersey. Its the whole package, whether it’s the hotel school or they are living in Clark County and it’s a good value or they came to participate in the nursing program from California. Those are all major pluses.
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