MINUTES OF THE JOINT MEETING OF
ASSEMBLY COMMITTEE ON WAYS AND MEANS
AND
SENATE COMMITTEE ON FINANCE
Sixty-seventh Session
January 21, 1993
The joint meeting of the Assembly Committee on Ways and Means and the Senate Committee on Finance was called to order by Chairman Morse Arberry Jr., at 8:10 a.m., on Thursday, January 21, 1993, in Room 119 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda. Exhibit B is the Attendance Roster.
ASSEMBLY COMMITTEE MEMBERS PRESENT:
Mr. Morse Arberry, Jr., Chairman
Mr. Larry L. Spitler, Vice Chairman
Mrs. Vonne Chowning
Mr. Joseph E. Dini, Jr.
Mrs. Jan Evans
Ms. Christina R. Giunchigliani
Mr. Dean A. Heller
Mr. David E. Humke
Mr. John W. Marvel
Mr. Richard Perkins
Mr. Robert E. Price
Ms. Sandra Tiffany
Mrs. Myrna T. Williams
SENATE COMMITTEE MEMBERS PRESENT:
Senator William J. Raggio, Chairman
Senator Raymond D. Rawson, Vice Chairman
Senator Lawrence E. Jacobson
Senator Bob Coffin
Senator Diana M Glomb
Senator William R. O'Donnell
Senator Matthew Q. Callister
ASSEMBLY COMMITTEE MEMBERS ABSENT:
None
SENATE COMMITTEE MEMBERS ABSENT:
None
STAFF MEMBERS PRESENT:
Mark Stevens, Fiscal Analyst
Dan Miles, Fiscal Analyst
Gary Ghiggeri, Deputy Fiscal Analyst
Bob Guernsey, Deputy Fiscal Analyst
PROPOSED REORGANIZATION OF EXECUTIVE AGENCIES
REVIEW OF NEW EXECUTIVE BUDGET FORMAT, JUDY MATTEUCCI, BUDGET DIRECTOR
Chairman Arberry welcomed everyone to the first Joint Hearing of the Senate Finance and Assembly Ways and Means committees for 1993. He introduced Ms. Judy Matteucci, Budget Director, for her presentation.
Ms. Matteucci thanked Chairman Arberry and the committee members, introduced herself as the Director of the Department of Administration and her Deputy Paul Forrest "Woody" Thorne. She stated both she and Mr. Thorne would be working with the committees on the Executive Budget and the Governor's Reorganization Plan throughout the legislative session. She pointed out the awkwardness of presentation's timing as she would be unable to talk specifics until after the Governor's State of the State address on Monday evening. Ms. Matteucci elaborated the specific of positions and anticipated dollar savings as a result of the recommended reorganization could not be discussed, but all information would be made available to committee members after Tuesday morning.
Ms. Matteucci called attention to the Current Organization Chart (see EXHIBIT C). EXHIBIT C represents the government's current structure and indicates the Governor's concern about his 200:1 span of control. She noted the history of the reorganization began in March 1992 when the Governor announced he would formulate a review committee headed by Kenny Gwynn to evaluate the organization of the state's government. In addition, $50,000 was raised from private donations to pay the consultants, KGMP Peat Marwick, to review the organization and make recommendations for reorganization (See EXHIBIT G). Ms. Matteucci stated the report had been sent out to the committee member's offices earlier. She indicated all the recommendations were not incorporated into the final Governor's Reorganization Plan.
Ms. Matteucci mentioned $85,000 of budget reduvction reserve for the Budget Division remaining was spent to complete finite work on the plan. She pointed out the Department Location List (see EXHIBIT D) was provided as an information piece to review the reorganization. She indicated another information piece, not for discussion at this time, was the list of Boards and Commissions and what would happen to them in the proposed reorganization (see EXHIBIT E).
Ms. Giunchigliani asked Ms. Matteucci if "C" meant consolidation. Ms. Matteucci responded yes.
Senator Coffin requested Ms. Matteucci indicate which were taxpayer supported Boards and Commissions versus professional Commissions and Boards that are self-supported. Ms. Matteucci explained it would be difficult because a chart was not prepared, but it would be discussed on Tuesday.
The final handout from Ms. Matteucci was the Proposed Reorganization Charts (see EXHIBIT F) which was provided for committee members, their staff and members of the media only. Ms. Matteucci requested handouts not be widely disseminated at this time unless absolutely necessary. Inquiries for information should be routed to Ms. Matteucci's office until after the Governor's State of the State.
Ms. Matteucci discussed the recommended Governor's reorganization included as EXHIBIT F. Ms. Matteucci stated 20 agencies and boards and commissions through consolidation are grouped by functional units: Finance and Administration, Business and Commerce, Human Services, Public Safety, Infrastructure and Special Purpose Agencies. Ms. Matteucci explained these proposed functional units would replace the old functional units of general government, education, human resources, and public safety. The proposed units are the basis of the new budget format.
Ms. Matteucci began her discussion of the Operational Organization Charts (EXHIBIT F) with Department of Finance (page 3, EXHIBIT F). She stated the department would consist of four divisions and an administrative services unit. The four proposed Finance divisions would be Budget and Planning, Internal Audit, Information Technology Advancement and Benefit Services. Ms. Matteucci stated the recommendation included in the skeleton format bill from Legislative Counsel Bureau would be vesting responsibility for each department at the director level with latitude in establishing each department's and division's structure. Ms. Matteucci stressed the need for expedient action on this bill by both committees.
Senator Raggio acknowledged Ms. Matteucci's reluctance to go into depth on the proposed budgetary savings, however he pointed out the importance of this issue. He asserted if reorganization was just for the sake of reorganization without any realistic savings to the State, the proposal would have a rough road to run. Senator Raggio requested Ms. Matteucci identify on the current organization chart (EXHIBIT C) which boxes would no longer exist if proposed reorganization occurs. Senator Raggio stated it would provide a threshold for the members prior to discussing the proposed reorganization. Ms. Matteucci remarked the status of each existing area would become clear as she walked through the proposed operational organization charts for each department. Senator Raggio reiterated he preferred to know up front.
Ms. Matteucci moved her discussion to EXHIBIT C explaining a number of the boxes would be consolidated into the proposed departments. She stressed the constitutional officers would not be impacted by the proposed reorganization other than some recommendations regarding the Data Processing unit. She continued to address each box of EXHIBIT C and stated what would occur to each existing unit under the proposed reorganization plan as follows: State Job Training Office would be consolidated into the Department of Employment, Training & Rehabilitation (ETR); Interagency Committee for Coordinating Tourism and Economic Development is currently an executive committee and would not be impacted; Department of Transportation would continue to exist; Department of Prisons would be changed to the Department of Corrections; Office of Community Services would no longer exist; Department of Insurance would be a division of Department of Business and Industry (B&I); Office of the State Public Defender would no longer provide services to the county and would simply provide appellate services for the state; Office of Labor Commissioner would continue with the Employee Management Relations Board (EMRB) rolled into it; Department of Administration would continue to exist; Department of Commerce would be consolidated into B&I; Department of Motor Vehicles and Public Safety would be split; Department of General Services would become a division of the Department of Administration; Department of Human Resources would be combined with the Department of Education for a new department; Department of Conservation & Natural Resources would be split with the Wildlife Department would come under the proposed Department of Natural Resources.
Mr. Marvel questioned Ms. Matteucci what the function of the State Board of Education would be under the proposed combination of Education with Human Resources. Ms. Matteucci responded it would become clear when she reviewed that area on the current organization chart.
Ms. Matteucci continued her testimony on the proposed status of the current organization chart units: Department of Data Processing would split its functions into the Department of Administration and the Department of Finance; Office of State Climatologist would be eliminated; Department of Industrial Relations would become a division of the Department of Insurance under the proposed B&I; Department of Personnel would become a division of the Department of Administration; Department of Museums & History would be combined with the Library and Arts Council to becomes the proposed Department of Museums, Library & Arts; Office of Nevada Commission for Veteran Affairs would be placed under the proposed Department of Public Safety's Military division; Employment Security Department would be a division of ETR; State Library & Archives would be combined, as noted above, with Museums and History and Arts Council to become the Department of Museums, Library & Arts; Department of Parole & Probation would be a division within Public Safety; Department of the Military would be a division within Public Safety; Office of Nevada Attorney for Injured Workers would be placed within B&I; Department of Taxation would remain with additional responsibilities; SIIS would remain as a special purpose agency; Colorado River Commission would remain; State Board of Parole Commissioners would remain as a separate entity under Public Safety; Commission on Economic Development and Commission on Tourism would remain; Gaming would remain as Gaming Control Board; Public Service Commission of Nevada would continue to exist; State Department of Agriculture would become a bureau of B&I; Department of Wildlife as discussed above, would be consolidated with the Department of Conservation and Natural Resources in the proposed Department of Natural Resources; Nevada Rural Housing Authority would become a bureau of B&I; Department of Minerals would become a bureau of B&I; State Dairy Commission would become a section of the bureau of Agriculture under B&I; Commission on Post-Secondary Education would be placed under B&I; Nevada Equal Rights Commission would become a bureau within B&I; Public Employees Retirement System would remain as a special purpose agency; State Public Works Board would become part of the proposed Department of Administration; Nevada Indian Commission would become a section under the proposed Department of Education, Health & Human (EHH) Services; State Communications Board would be transferred into the proposed Information Technology Service (ITS) within Finance; Nevada State Council on the Arts would become part of the proposed Department of Museums, Library & Arts; EMRB staff would be phased into the Labor Commission under B&I; and Commission on Nuclear Projects would be included within the Department of Environmental Protection.
Senator Callister asked where the State Communications Board would be transferred. She replied ITS, a proposed new department which would be a result of the combination of Data Processing and Telecommunications. She further remarked this would be clarified as she discussed the individual proposed reorganization charts (see EXHIBIT F).
Senator Coffin acknowledged Senator Raggio's frustration in trying to follow savings and agency realignment which would take months to analyze, but he stressed modernization was the most important issue and the potential dollar savings would be secondary. He further emphasized the span of control in management would dictate consolidation and the committees must follow this more than the potential long-term savings. Senator Coffin commented on the project's worthiness and the confusion of changing boxes around; he believed there could be a better approach than the linear.
Ms. Matteucci reiterated clarity would come when she walked everyone through the individual reorganization charts. Senator Coffin questioned her on the possible timetable and asked what areas should be expedited during the current session for the Governor's action and what could be studied more in-depth. Ms. Matteucci replied there would be a number of recommendations in the study which needed further study. One would be the accounting system which would need a one-shot appropriation and another would be the combination of the Payroll/Personnel functions. She clarified the latter was a recommendation of the SCR2 committee. Ms. Matteucci stated although the Governor supports the combination, it would be a large undertaking and the administration recommends that a study be funded in the personnel department to create a plan for implementation. She asserted the remainder of the proposed reorganization plan, by and large, would be effective in October 1993. The reorganization plan was designed to preclude phasing.
Ms. Matteucci reiterated substantial savings would result, both short- and long-term, some of which would be determined through work with the two money committees. She stressed the short time period available to put this recommendation into the Executive Budget for presentation. Some savings could be taken immediately, but details were unavailable the time of Ms. Matteucci's testimony. She reiterated she could not talk about specifics, but she felt the committees would be pleased with the savings through the efficient placement of directors and functions within the proposed reorganization.
Mr. Price wondered what would be the savings to the taxpayers. He asked what the savings would be to taxpayers if the plan shifted the burden to city and county governments or if less services would be provided. He questioned if any analysis had occurred of the potential impact on Nevada's citizens and local government versus state government alone.
Ms. Matteucci assured Mr. Price that overall very few of the recommendations in the Governor's reorganization would shift duties and responsibilities to the local entities. Further, she stated the reorganization plan would allow for some responsibilities to be handled more efficiently at the local level, but the savings at the state budget level were not achieved through shifting. Ms. Matteucci stated the savings would occur through consolidation of duplicate functions at the agency level. Ms. Matteucci replied there would be savings to taxpayers through streamlining and restructuring which had been demanded by the electorate.
Ms. Giunchigliani inquired if Peat Marwick looked at the previous consolidation report ordered by Governor O'Callaghan. Ms. Matteucci responded they had. Ms. Giunchigliani further questioned if incentives would be offered for top-level administrators, through attrition, to move out and add a cost-savings factor. Ms. Matteucci remarked an early retirement program would be offered with an availability window of July to October, but she noted any retirements would have to directly result in reorganization savings in order to utilize the option. Ms. Giunchigliani asked if the Interim Committee on Privatization's recommendation of consolidating of Payroll was included in the reorganization package or would it need to be addressed as a separate issue? Ms. Matteucci reiterated $300,000 would be placed into the Department of Personnel's budget during the interim to facilitate consolidation. Ms. Giunchigliani voiced concern over the attention to efficiency without regard to quality or service-level maintenance. She believed reorganization only for the sake of dollar savings would be wrong and eventually responsibility would eventually fall back on the taxpayers who deserve the level of service paid for originally. Ms. Matteucci appreciated Ms. Giunchigliani's concerns, however the Director stated by paring down agencies, savings would occur through upper-level management consolidation, not at the worker level.
Senator O'Donnell asked Ms. Matteucci to quantify the savings through shifting from state to local levels. Ms. Matteucci stated she could not quantify the "substantial" savings as she would lose her job if she did. Senator O'Donnell inquired further if Ms. Matteucci could discuss how many positions would be lost. She reiterated the Governor would announce all the details.
Mrs. Evans voiced concern about the proposed time table. She cited the example of a division of the Department of Human Resources which had requested a change in 1987 and, to date, the change had not been finalized. Ms. Evans asked Ms. Matteucci how a project of this magnitude could be accomplished in so short a time. Ms. Matteucci maintained the Governor's plan had been more thoroughly delineated than the example Ms. Evans cited.
Ms. Matteucci noted the cooperation at the planning stages and the inherent flexibility in the reorganization budgets would facilitate implementation within the recommended timetable.
Senator Callister stressed the establishment of specific expectations at the outset would be crucial to the plan's successful passage, adoption and implementation. He asked everyone to turn to page one of the KPMG Peat Marwick packet (see EXHIBIT G) to review the objectives recommended by the experts. Senator Callister stated the four objectives. He emphasized the report's purpose was profoundly and specifically NOT dollar savings. Ms. Matteucci concurred. Senator Callister pointed out neither the money committees nor the executive branch would want the focus to be on saving but on efficiency through restructuring and if the focus was put on savings it would be a trap. Senator Callister asserted savings could not be accurately measured and should savings be the measuring stick, the question would become where to stop. He stated the level of budget cuts since the last session have been draconian enough. To look for more heads to lop off or other agencies to pare down more in an already bare base budget would not be advised. Senator Callister stated he profoundly disagreed with Senator Raggio.
Senator Raggio responded to Senator Callister and indicated Ms. Matteucci, as the Governor's representative, voiced there would be substantial savings with cost efficiency a goal, not just change for change sake. Senator Raggio voiced to Director Matteucci savings would be a crucial issue. He maintained he did not share Senator Callister's comments on the cuts being draconian. Rather he stated he would indicate the legislature had made a serious error in adopting the Governor's proposal for such excessive increases in the last budget. Senator Raggio pointed out the committees would need to start from the base budget including the cutbacks and, at the initial stage, live within the means available and limit the growth of government. Senator Callister reiterated the focus should remain on limiting the growth of government and not on reducing services.
Chairman Arberry remarked the Senators Raggio and Callister could discuss this on their own time although he appreciated their dialogue. He asked Ms. Matteucci to continue her testimony.
Ms. Matteucci continued to discuss the proposed organization charts (see EXHIBIT F). She stated part of the savings would be achieved through consolidating a number of areas/divisions under the Department of Administration. She discussed each division of the proposed Department of Finance (page 3). Mr. Thorne discussed the Information Technology and Benefit Services divisions (page 3). Mr. Thorne stated Information Technology would be a planning, standard setting and quality assurance section for both data processing and telecommunications. It was an area where fractionalization had occurred and standardization between the two systems would be essential. He stated Benefit Services would be an expansion of the current benefits program to bring them all under one roof including state employee benefits, worker's compensation for state employees, creation of a small employer's fund. Benefit services would also serve an expanded role in medical services procurement. He pointed out Information Technology was the planning and standard setting side. The operational and tactical planning side would include information services, delivery systems, contract services for development of the applications and customer services and contacts where the potential for substantial savings existed through combined servicing contacts.
Ms. Matteucci returned to her discussion of the proposed Department of Administration (page 5 - EXHIBIT F). She stated the most significant change as a result of the Fair Labor Standards Act (Benzler) settlement would result in the proposed "Exempt Merit" classification to accommodate salaried employees' ranges by Personnel which would be a streamlining function.
Ms. Matteucci discussed the Department of Taxation. She focused on the proposal of transferring the auditors for both State Industrial Insurance System (SIIS) and Employment Security Department (ESD) for employment compensation to this department with the potential for substantial savings to both the paying public and businesses in addition to state savings and efficiency. Ms. Matteucci drew attention to the recommendation of transferring the collection of the insurance premium tax to this department.
Mr. Price inquired why the collection of gaming taxes was not included under the Department of Taxation. Ms. Matteucci responded the area of gaming is so highly specialized no potential efficiency or saving could be seen by moving it to this area.
Mr. Heller asked if the budget office previously had the authority to audit agencies. Ms. Matteucci replied agencies are required by statutory authority to open their books, but the lack of staffing in the budget office had prevented previous routine audits. The proposed flexibility of agency director's over their accounts would be facilitated by the formation of the internal auditor as a division within the proposed Finance Department. Mr. Heller wondered if audit authority was for all agencies including the constitutional officers. Ms. Matteucci reiterated all agencies are required to open their books by law to the budget office acting on behalf of the Board of Examiners. Mr. Heller questioned the placement of the Board of Finance under the auspices of the Department of Finance and Ms. Matteucci responded the reporting line to the director rather than the Treasurer was correct. Mr. Heller asked who would be the directors of Finance and Administration. Ms. Matteucci said, according to the Governor's Chief of Staff, agency director appointments were not anticipated until June or July.
Ms. Matteucci continued her testimony with explanation of the proposed Department of Business and Industry (B&I) Operational Organization Chart (page 10 of EXHIBIT F). Ms. Matteucci stated there would be three divisions and an administrative services division. Business Regulation Division would contain most of the current Commerce Department agencies and regulatory functions as well as the Labor Commissioner and Taxicab Authority. Consumer Services would be a new division to group agencies with constituencies requesting assistance. Industry Development would contain agencies whose main purpose would be to advocate for a particular industry. Board and Commissions would be included under the proposed B&I Administrative Services Division. The B&I Administrative Services Division would provide for liaison and support for the Boards and Commissions. No structural changes would occur to the boards or commissions. Their budgets would not be included within the general fund, but would be submitted through the particular departments which would provide filing space and Attorney General support.
Mr. Humke asked Chairman Arberry to direct the fiscal staff to compile two lists of boards and commissions: one of those supported by fees and the other of those supported by taxes. Chairman Arberry replied he would. Ms. Matteucci remarked her office could assist Chairman Arberry with compiling those lists.
Mr. Dini inquired if under the proposed Department of Agriculture the Dairy Commission would be abolished? Ms. Matteucci responded the Dairy Commission would be rolled into the Department of Agriculture and would be discussed later.
Ms. Matteucci moved on to discuss the proposed Department of Education, Health & Human (EHH) Services Operational Organization Chart (page 14 of EXHIBIT F). She responded to Mr. Marvel's earlier inquiry regarding the State Board of Education explaining the Board would remain with direct oversight over the Education Services division as well as having input to the Director of EHH. The proposed reorganization essentially expands the Board's input and communication lines with the director. Ms. Matteucci explained consolidation is recommended because, in many cases, school districts are currently being asked to provide more social services, such as nutrition, health, drug and HIV education, and NRS Chapter 395 placements which parallel many functions of the current Department of Human Services.
Senator Raggio stated after reading the summary of the commission, it was not clear why it was felt necessary or desirable to include Education with Health and Human Service. He further elucidated Education, Health and Human Service are each a big part of the government and budget. Senator Raggio asked Ms. Matteucci, as a member of the commission, what she believed the rationale was in combining these areas rather than maintaining Education separate from Health and Human Services. Ms. Matteucci responded the commission had interviewed not only agency heads, but also workers for feedback, input and recommendations related to their areas. Ms. Matteucci stated the commission, from its review of the major department roles, felt there were significant similarities in the administrative structure and function of the departments and much of the innovation and work in the elementary and secondary areas could be and is being conducted by the school districts themselves. Ms. Matteucci replied this was an opportunity to move much of the administrative functions of education over in combination with the same functions of the current Human Services to create the proposed department. Ms. Matteucci restated a number of parallel programs would be consolidated. Senator Raggio stressed the basic issue could be perceived as de-emphasizing support of education, although not the intent, which would be an issue of great concern especially on the Senate side. Ms. Matteucci appreciated Senator Raggio's concern, but pointed out his statement the rollover would de-emphasize education is a red herring. The naming of the proposed department would counter any belief education would lose its emphasis.
Senator O'Donnell noted most of the budget goes through this particular chart (page 14, EXHIBIT F). The fact that agencies vie for funding through the two money committees creates a natural adversarial role between one department and another, i.e., education or mental health vying for state welfare dollars. This relationship is important to gaining the most dollars for their entities. Senator O'Donnell questioned if one director over this department could be an advocate for all areas equally. Ms. Matteucci disagreed with Senator O'Donnell's premise of an inherent adversarial role, rather she believed directors would try to consolidate and maximize federal and state dollars.
Ms. Giunchigliani asked if consolidating mental health functions with the Department of Education had been considered rather than combining them into one department with Human Resources. Ms. Matteucci recognized the overlap of mental health programs and education services, but felt other local programs such as nutrition, drug and HIV programs and early screening. By consolidation State dollars could potentially be freed up.
Mr. Price, citing page 14 of EXHIBIT F, inquired what the role of the elected policymakers of the Board of Education would be. Ms. Matteucci testified their role would not be disturbed whatsoever by the reorganization plan. The board would remain over the Education Division without any diminution of the board's services and its role with the director, not through him/her.
Senator Raggio asked who appointed the State Superintendent of Public Instruction and if it would change with this reorganization. Ms. Matteucci replied a constitutional change would be necessary to change the superintendent position and no discussion had occurred with the Governor regarding the appointment. Senator Raggio voiced he had concern regarding the reporting lines of the superintendent position and the potential changes with the proposed reorganization.
Ms. Matteucci began to discuss the proposed Department of Employment, Training and Rehabilitation (ETR) consisting of two divisions and one administrative services division (page 17, EXHIBIT F). She pointed out a great deal of efficiency and savings would occur with the consolidations under this department. With trepidation, Ms. Matteucci stated rehabilitation functions from SIIS would be transferred to this department.
Ms. Giunchigliani cited the Committee on Employees with Disabilities which focuses more on Americans with Disabilities Act and inquired if there had been any evaluation of making it more visible in dealing with B&I since that would be more its area. Ms. Matteucci noted disabilities had been broken out of Human Services because the commission believed disabilities had been lost in that area and would be more appropriate in the ETR area which deals with businesses.
Ms. Matteucci moved to page 19 of EXHIBIT F and acknowledged no one was arguing about this area: Department of Museums, Library & Arts which combines current Museums & History, Library, and Arts Council with the transfer of historic preservation and the Comstock Historic District from current Conservation Department. She stated this consolidation was simple and straightforward.
Ms. Matteucci outlined page 20 of EXHIBIT F. She stated the proposed Department of Corrections would be essentially the same as the current Department of Prisons. She acknowledged the Legislature has repeatedly looked at the current department incorporating Parole and Probation, but the commission felt these functions belonged more under Public Safety.
Mr. Humke asked where Parole was within the Department of Corrections. Ms. Matteucci stated it would be a separate entity with the Department of Public Safety, not this department.
Mr. Marvel asked about the status of the Prison Industries Advisory Board. Ms. Matteucci replied it would remain unchanged because it is an important board.
Senator Callister referred back to page 11 of the Peat Marwick study (see EXHIBIT G) where it was recommended to create a Department of Corrections consolidating the responsibilities of the Department of Parole and Probation and the Department of Prisons, as is the model in most other states, and having Public Safety contain the elements of Military, Highway Patrol, and National Guard. He noted the Governor's recommendation does not follow the commission's recommendation and he wanted a response as to why that recommendation was not followed. Ms. Matteucci stated the Governor had asked agencies to define their role and as the Parole and Probation function was more public safety than correctional it was placed within Public Safety. Senator Callister noted the committees would be free to sway the Governor to the alternative recommendation. Ms. Matteucci agreed with Senator Callister.
Ms. Matteucci continued discussing the proposed reorganization plan with the Department of Motor Vehicles (page 23, EXHIBIT F). Ms. Matteucci stated this department would essentially be a bifurcation of a current agency which has had a two-fold purpose. The proposed department would have responsibilities directly related to licensing and registering; the public safety functions would become the other proposed department. Ms. Matteucci stated the Department of Public Safety (page 25, EXHIBIT F) would include Law Enforcement, Military, Parole and Probation and Administrative Services.
Ms. Matteucci discussed the proposed Department of Environmental Protection (page 27, EXHIBIT F). She stated the consultants believed, and the Governor agreed, the issues of environment needed more highlighting and consolidating so the proposed department pulls the Environmental Protection division out of the current Department of Conservation. The department would include air quality, water quality, waste management and administrative services. Ms. Matteucci pointed out there was no attempt to change the roles of the Nuclear Projects Commission or the Rocky Mountain Low Level Radioactive Waste Board nor any other commissions.
Mr. Marvel asked what Ms. Matteucci's definition of water permit issuance would be. Ms. Matteucci answered it is what the EPA currently does as far as quality control.
Senator O'Donnell queried whether Mr. Loux would then report to the Director of the Department of Environmental Protection or directly to the Governor. Ms. Matteucci replied due to the sensitivity of the issue, Mr. Loux would be accessing the Governor directly, but with reporting lines through the Director.
Ms. Matteucci remarked these proposed consolidations would be done to bring together like functions and the movement of these functions would not be indicative of a diminution, only to lessen the Governor's span of control.
Ms. Matteucci continued with the proposed Department of Natural Resources (page 29, EXHIBIT F). She stated Lands and Forestry would be combined into one division as would Wildlife and Parks be combined to achieve a number of efficiencies at both management and working levels. She noted Water Resources would remain as is with the inclusion of Marlette Lake.
Ms. Matteucci stated the Department of Transportation (page 30, EXHIBIT F) would receive the Weights and Measures division, including current funding, from the current Department of Agriculture.
Mr. Price questioned where in the charts would the division or department responsible for collective bargaining be located. Ms. Matteucci responded if it became an issue, although doubtful, it would be located with either the proposed Department of Finance or Personnel Division.
Senator Jacobson noted he found no coordination between Department of Corrections and Forestry as far as Honor Camps are concerned. Ms. Matteucci stated the Honor Camps run by Forestry would stay there and Corrections would continue to staff as they had previously; she saw no reason to graphically demonstrate these departments run parallel programs and no purpose would have been served by moving Forestry to Corrections. Senator Jacobson mentioned the Marlette Water System included under Water Resources is dedicated to the Capitol Complex with primary responsibility to Virginia City and a couple others in line. He wondered if the advisory boards or boards instituted by the Legislature would be gobbled up. Ms. Matteucci responded Marlette Lake was a water resource and the state engineer's office has primacy on water issues. The boards which would report to this department and their impact, rules and regulations will be discussed with both committees at a later date.
Ms. Matteucci, at the request of the fiscal staff, walked through the new Budget format to orient members and to facilitate their review and understanding of the Executive Budget as well as to provide more flexibility for the Executive branch to accomplish missions. Ms. Matteucci pointed out the necessity of not looking at line items, but looking to see if the missions are being accomplished. Ms. Matteucci presented two documents: Commission on Tourism budget (EXHIBIT I) and the definitions list from the front of the Executive Budget (EXHIBIT H). She explained the new budget format was recommended by the administration in the last interim and the committee formed to review SCR21 of the Sixty-sixth Session developed the definitions on how and what would be used to build the budget. Ms. Matteucci discussed EXHIBIT H.
Ms. Giunchigliani asked if the members would be provided with the amounts actually cut during the interim from each agency in order to see what the Sixty-sixth Session had wanted to do, what the Governor had to do and what might be feasible to do again. Ms. Matteucci replied the fiscal staff should have the budget cut documents and if not, those documents would be provided. Ms. Matteucci pointed out the 92-93 fiscal year of the budget would indicate a reserve for reversion. The reversion line would show how much was cut out of the budget, and the expenditures for 93-94 fiscal year had been adjusted downward for committee members to compare while evaluating the budgets. Ms. Giunchigliani asked about positions not filled versus actual services cut. Ms. Matteucci replied positions not filled were eliminated and would have the related funding shown in the reserve for reversion; any reductions made, by category, were removed from the appropriate category and lumped into the reserve category.
Mr. Humke cited page A18 of EXHIBIT H and noted the medical inflation rate of 13 percent for the first year was realistic under the medical CPI, but 6.5 percent the second year seemed unrealistic. Ms. Matteucci stated the 13 percent was a two-year number for 91-92 through 1993-94 and thereby covered two years of inflation, not medical trend which would be something different (utilization) with separate components. Ms. Matteucci stressed not to confuse medical inflation and medical trend.
Ms. Giunchigliani requested a definition be given, sometime down the road, of medical inflation versus medical trend. She indicated a desire to also discuss what would occur with the Medicaid situation this time around. Ms. Matteucci responded that would be done.
Ms. Giunchigliani asked what percentage of increase was projected for SIIS -- only a dollar figure was noted. Mr. Thorne replied between 5 and 10 percent a year on the premium side.
Ms. Matteucci continued to review and discuss EXHIBIT H and the format of EXHIBIT I.
Senator Coffin asked if these definitions were from the actual budget and if the numbers were actual or fictitious. He also asked if she was prepared to discuss these numbers at this meeting or if she would at a later date. Ms. Matteucci replied these were from the actual budget, the numbers were thereby actual, and she would prefer to wait until a later date to discuss the numbers in detail. Senator Coffin voiced his concern at the rate of medical inflation being too low and noted the level would be discussed later in detail.
Ms. Matteucci continued to review and discuss EXHIBIT H and the format of EXHIBIT I. In EXHIBIT I, Ms. Matteucci noted under Resources, "Other" would include balance forward, lodging tax, registration fees, book and pamphlet sales.
Ms. Giunchigliani asked where the federal grants would be listed. Ms. Matteucci stated they would roll into the various revenue sources and although it would not be noted specifically, agencies should walk members through the specific resources included. Ms. Matteucci noted five categories of resources: general fund appropriations, highway fund, other, federal funds and agency transfers. These monies will be grouped as to where they come from into the appropriate categories. Ms. Matteucci stressed fiscal staff members would have breakouts of the revenue and expenditure numbers including individual positions and fringe rates for committee members to review. She detailed each line of the expenditures. She stated the budget analysts were requested to list on the last page of the budget the adjustments to base to show in detail what resulted in base changes; these should correspond to budget changes.
Ms. Matteucci drew attention to the demographics and caseload changes area and noted performance indicators should correlate with the changes in the budget and the caseload. Ms. Matteucci stressed this is a change in focus from line item to what the agency had actually accomplished -- database indicators to assure mission accomplishment.
Senator Glomb asked where federal mandate dollar costs will be located. Ms. Matteucci stated those monies and consent decrees would be listed in the Maintenance (M) 500 and 600 areas.
Senator Callister queried the adjustments to base on the last page and wondered if this would be indicative of a change of circumstances. Ms. Matteucci agreed. Senator Callister asked how to find the indicators of those adjustments. Ms. Matteucci noted only significant changes from FY92-93 to FY94-95 or differences between actual base and Governor's Recommendation would be listed in the adjustments to base area.
Ms. Giunchigliani wondered how the 18.47 percent and 18.22 percent contribution rate numbers were achieved for a decrease in contributions to the Public Employees Retirement System (PERS). Ms. Matteucci stated those were provided by the actuaries as the correct amount to be paid to keep PERS on the 40-year retirement plan. Ms. Giunchigliani asked if this had anything to do with the ongoing debate regarding the portfolio investments from 8 percent to 10 percent. Ms. Matteucci voiced she felt there was unfounded alarm coming from the head of PERS relative to the question. This is the actuarial amount already approved and there is no attempt to take anymore than that from PERS. Ms. Giunchigliani pressed Ms. Matteucci asking if her reply was a yes or a no. Ms. Matteucci clarified, no this had nothing to do with the debate and stressed this was the actuary amount that would be charged.
Senator Coffin commented whatever the actuary says does not really matter so much as what the board decides is the safest policy for PERS. He asked if the number represented should be assumed to have come from a report to the PERS board versus a PERS board recommendation. Ms. Matteucci clarified the actuary report was presented to the PERS board and confirmed by the PERS Deputy Director. Senator Coffin asked if these were the numbers the PERS board believed to be necessary. Ms. Matteucci stressed she was not aware of what the board believed was necessary.
Ms. Matteucci strongly urged the committee members to concentrate their review energies on the performance indicators when going through the budgets.
Chairman Arberry adjourned the hearing at 10:18 a.m.
RESPECTFULLY SUBMITTED:
Kerin E. Putnam
Committee Secretary
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Assembly Committee on Ways and Means
Senate Committee on Finance
January 21, 1993
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