MINUTES OF THE JOINT MEETING OF

      ASSEMBLY COMMITTEE ON WAYS AND MEANS

      AND

      SENATE COMMITTEE ON FINANCE

 

      Sixty-seventh Session

      February 18, 1993

 

 

 

The joint meeting of the Assembly Committee on Ways and Means and the Senate Committee on Finance was called to order by Vice Chairman Larry Spitler, at 8:04 a.m., on Thursday, February 18, 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 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:

 

      Senator Raymond D. Rawson, Vice Chairman (Excused)

 

STAFF MEMBERS PRESENT:

 

      Mark Stevens, Fiscal Analyst

      Dan Miles, Fiscal Analyst

      Gary Ghiggeri, Deputy Fiscal Analyst

      Bob Guernsey, Deputy Fiscal Analyst

      Jeanne Botts, Program Analyst

 

DEPARTMENT OF EDUCATION, HEALTH & HUMAN SERVICES

 

Dr. Eugene Paslov, Superintendent of Public Instruction, introduced himself and Ms. Mary Peterson, Deputy Superintendent of Instruction, Research and Evaluative Services, and Mr. Doug Thunder, Director of Fiscal Services.  Dr. Paslov stated he wanted to accomplish six tasks in his testimony:  share the constitutional origin of the Nevada Plan and why it represents critical, historical public education policy; explain how the Nevada Plan works, outline the Board's recommendations for the DSA which is the state's responsibility in the Nevada Plan; highlight concerns with the Governor's recommendations on the Nevada Plan; have local school board representatives and others share their views about school finance; and discuss class-size reduction (CSR).  Dr. Paslov emphasized the importance of having the Distributive School Account (DSA) available for public review and input at the state level (see EXHIBIT C).  

 

Dr. Paslov reiterated the Nevada public education system has worked well and Nevada schools are good and getting better.  But improvements can be made and the system is capable of renewal and improvements through public access and cooperation and leadership by all the critical systemic components. 

 

Dr. Paslov explained the Nevada Plan was introduced in 1967 and became effective during the 1967-68 school year (see EXHIBIT D).  The Nevada Plan is called a power-equalizing formula in school finance literature.  Power equalizing means that the formula attempts to differentiate funding based upon property wealth and rural or urban settings.  It is assumed school districts that have high assessed property values will need less financial help from the state than those with lower values.  It is also assumed that it costs more to provide comparable education services in rural areas than in urban areas.  Dr. Paslov stated the formula in the Nevada Plan addresses both of these elements equitably. 

 

The Nevada Plan is built on per pupil guarantee and a program guarantee.  There are three elements within the plan:  Local School Support Tax (LSST), Ad Valorem and the DSA.  Other revenues outside the plan are:  50 cent Ad Valorem tax on property , motor vehicle privilege tax, franchise tax, other local revenues, federal revenues, miscellaneous revenues and opening fund balance.  Additionally, districts receive:  federal categorical funding; capital financing; and debt service funds.  He discussed EXHIBITS E-1, E-1a and E-2 as attachments to EXHIBIT D.

 

Mr. Dini asked if districts do not attain the projected level of 2.25-cent Local School Support Tax (LSST), does the state general fund make up the shortfall.  Dr. Paslov stated it does.  He noted the $51 million supplemental appropriation needed for the DSA could be traced directly back to the shortfall in LSST which was increased from the last biennium and was anticipated to generate a certain amount of revenue.  If the LSST revenue does not materialize does not, the legislature is responsible for covering the guarantee of the funds.  Dr. Paslov discussed the Nevada Plan worksheet included as EXHIBIT E-2.

 

Ms. Giunchigliani inquired where the wealth equalization factor would apply on EXHIBIT E-2.  Dr. Paslov stated it would be applied under "Basic Support Per Pupil" and an additional charge for transportation in rural areas would be included.  He noted the per pupil average is below the national average and Nevada is currently ranked at about 35th or 36th nationally mainly due to the legislature's and department's efforts since 1985.

 

Dr. Paslov noted many people tried to make school funding for Nevada into something mystical and enormously complicated, but with the Nevada Plan and the worksheet included as EXHIBIT E-2 anyone can figure out the funding formula.  He stated there are three factors working:  student enrollment, wealth factor (assessed value), and revenue estimates.  He explained if revenue estimates, especially on the LSST, are lower than the actual accrued, then there are consequences for the state responsibility.

 

Mr. Marvel asked Dr. Paslov to explain rollup costs.  Dr. Paslov remarked these costs would be addressed later in the testimony.

 

Senator Callister questioned where the education funding comes from and what percentage of the total funding is driven by other than property taxes.  Dr. Paslov cited EXHIBIT E-3 as a graphic example of revenue sources for the past three fiscal years.  According to FY91 figures, 24.8 percent of revenues was from sales (LSST), 6.44 percent was from the 25-cent portion of property taxes, 49.4 percent was from the DSA as part of the Nevada Plan (State Responsibility portion) and 18.9 percent was local funds including 50 cents of the ad valorem (property tax).  Senator Callister asked what the makeup of the DSA portion would be.  Jeanne Botts, program analyst, stated about 85 percent of DSA was general fund revenue primarily from sales tax and gaming.  Senator Callister noted 50 percent of school districts' general funds was from gaming and sales with another 25 percent sales and perhaps 10 percent would be derived from property tax.  Ms. Botts stated the remainder was from motor vehicle tax and franchise tax.

 

Senator Callister pointed out approximately 84 percent of the funding base for education was driven by something other than property tax.  He asked Dr. Paslov, given the historically volatile nature of sales and gaming revenues, is Nevada wise to continue to premise it's capacity to fund a constitutionally mandated program, like public school education, on revenue sources 85 percent dependent on someone else's discretionary funds.  Dr. Paslov stated funding education from regressive and volatile taxes causes problems.  He reiterated the more stable funding for public education comes from property and income taxes.  Previously, the majority of educational funding had been from property taxes, but, in the early 1980's, funding was shifted away from property taxes.  Senator Callister asked what other states funded education in this manner.  Dr. Paslov pointed out Nevada has a significantly different economy from other states and the school funding mechanism has been related to the gaming and sales economic condition of the state.  Senator Callister requested Dr. Paslov submit an analysis of how other states approach funding for K-12 education.  Senator Callister expounded on the impracticality of this funding policy and pointed out sales taxes were not deductible on federal taxes whereas real property tax would be.  He explained sales and gaming taxes were also notoriously unstable.  He concluded funding nearly 40 percent of the total state mandatory expenditure from such a revenue base was ludicrous.  Mr. Spitler asked Dr. Paslov to submit the analysis to both committees.  Dr. Paslov stated he would.

 

Mr. Dini pointed out Senator Callister neglected to mention the local school bond issues which average from 75 cents to a dollar in almost every school district, and when LSST and bond issues are combined it pushes the $3.64 cap established on local governments.  Therefore practically no monies are left for the local governments.  He asserted the local entities are also responsible for construction and the total figure has to be added together. 

 

DISTRIBUTIVE SCHOOL FUND -- PAGE 642

 

Dr. Paslov read EXHIBIT F and discussed EXHIBIT E-4.  Dr. Paslov referred to pages 642 and 646A,a nd particularly page 646A - Alternative which the Department prepared as a separate handout.  The Agency Request columns and several notes concerning enhancements were included because the Department felt it was important for the committees to see what the State Board of Education recommended.  The estimated enrollments for FY94 and FY95 are only a a few students apart when comparing the Agency Request and Governor Recommends columns.  The estimated growth percentages were based on the data received from the school districts concerning their projections.

 

The agency requested basic support per pupil in FY94 of $3,460, the agency's request was $3,479, compared with the Governor Recommends of $3,312.  Dr. Paslov added, the original basic support amounts for the Governor Recommends were lower than the $3,312 shown in the Executive Budget for FY94 and FY95.  The amounts were as low as $3,114 for FY94 and $3,039 for FY95.  As the result of extensive discussions with the Department and the School District Superintendents and a direct appeal to the Governor, the Basic Support amounts were increased to the $3,312, the legislatively approved level of support for FY93.  "We are grateful to the Governor for the restoration to the FY93 level of support given the severity of the current revenue picture.  We deeply appreciate his commitment to the education of Nevada's young people demonstrated in that action and we applaud him for it,"  said Dr. Paslov.

 

However, he explained, maintaining the level of funding the same as in FY93 represents a significant drop in Nevada's support of K-12 education.  The $3,312 per student would provide the same budgetary support as in FY93, if all of the costs remained the same in FY94 and FY95 as in FY93.  Textbooks, library books, and instructional supplies increase in costs from year to year; as do transportation, utility costs, maintenance and repair expenses, equipment purchases, and all other line items.  The annual increases included in the school districts' salary schedules for their teachers and other employees moving from one step to another in the schedule because of added experience and/or education, which are referred to as "rollup costs," are normally calculated as a 2 percent salary increase.

 

He emphasized maintaining the same basic support per student permits the movement on scale increases only at the expense of decreasing other items such as textbooks, instructional supplies, maintenance, transportation, other operational line items, or, the reduction in staff.  This would result in the gradual increase of student-to-teacher rations, said Dr. Paslov.  He also pointed out that going back to FY77 the basic support per student has not decreased from one year to the next even, in FY83 when the Legislature reduced the basic support per student by $31.  The lowest percentage increase was between FY92 and FY93 when the legislature approved a 0.8% increase.  If the Legislature adopts the Governor's Budget Reduction proposal and reduces the FY93 Basic Support amount to an estimated $3,227, it would be the first time since the advent of the Nevada Plan in 1967 that the Basic Support for one year was less than the previous year, a reduction of 1.8 percent.

 

Dr. Paslov summarized his concerns as follows:  the 2 percent movement on scale factor, the reduction of fund balances from the beginning of a fiscal year to its conclusion, the addition of elementary counselors to the DSA without providing additional support to pay for them or to provide funding for their training and certification, and the inadequacy of several of the operational line items.  The State Board of Education recommended salary increases of five percent for FY94 and six percent for FY95.  The Board is acutely aware of the State's revenue picture and, therefore, adopted this recommendation with the understanding these increases would be possible only with a significantly improved economy.  In FY94 the additional amount required to meet this recommendation would be $41,677,948 increasing the Basic Support per Student to $3,635, and adding $2,073,079 to Special Education.  The corresponding numbers for FY95 would be:  $98,442,573 at $3,872 Basic Support per Student, and an increase of $4,572,370 in Special Education.

 

Dr. Paslov continued, the State Board of Education and the Department as well as the school districts have been seeking a solution to the funding of special education for several legislative sessions.  An interim staff study will be presented to the legislature providing some of the information needed to make progress toward a solution to the vexing problem.  Approximately $25 million annually of local school district funding has been diverted from some other areas to special education.

 

Dr. Paslov noted the total recommended for regular and prison students in adults high school diploma programs for FY92 was $8,052,488 and for FY95, $8,666,581.  The Governor Recommends holds the program "flat" at the FY92 actual expenditure level of $7,798,935 for both FY94 and FY95.  The Governor Recommends does not include the two percent movement on scale or any allowance for growth or expansion.  Dr. Paslov expressed concern with the "Governor Recommends" for the Adult High School Diploma program in that it represents in FY94 and FY95 a $867,646 reduction in the estimated expenditures for FY93.

 

The amount of funding a school district receives from the state coffers, Dr. Paslov explained, is determined by subtracting the locally generated 2.25-cent LSST and 25 cents of the 75-cent Ad Valorem Property/Mining tax from the State Guarantee.  An additional provision of NRS stipulates that at least 10 percent of the State Guarantee must be paid to the district.  For the past several years the combination of the locally generated taxes in Eureka County School District has exceeded 90 percent of the State Guarantee.  Adjustments in the DSA are made for Eureka's exceptional situation.

 

Dr. Paslov then reviewed the locally generated revenues that are deducted to determine state aid and the sources of revenue into the DSA.  The general fund appropriation provides all the revenue needed for state aid which is not available from these other sources:  the Slot Machine Tax, Investment Income from the Permanent School Fund, Mineral Land Lease revenue from the Federal government, and LSST collected on out-of-state sales.  Any amount would be reverted to the state general fund.  Any deficit at the end of a biennium must be made up by a supplemental appropriation in the next legislature.  A $51 million supplemental appropriation is required for FY93.  The cause of this shortfall is not an under-projection of enrollment, but an over-projection of the locally general portions of the state guarantee, particularly the LSST, explained Dr. Paslov.

 

Senator O'Donnell noted enrollment growth went down from the projected amount from 1991 to 1992, but asked if the projected revenue from LSST and the DSA would decrease or increase for the coming biennium.  Mr. Thunder stated it would increase approximately 15 to 17 percent including rollups.  Dr. Paslov cited EXHIBITS E-4 and E-5.  He noted the Governor had requested that school districts in FY92 voluntarily hold back approximately 2 percent of their budgets, which they did by placing approximately $3.2 million into reserve.  The Governor requested another voluntary savings of 5 percent or $14.8 million for FY93 with the understanding the amount would be tied into the $51 million supplemental request for the next biennium.  Dr. Paslov stated this would need legislative approval and, as yet, he has not seen any action on this request.  He stressed the $3,312 per pupil basic support restore the 5 percent reserve from cuts but still represented an overall cut (see EXHIBIT E-5).

 

Mr. Dini inquired if the approximate $15 million reserve was put under the ending fund balance.  Dr. Paslov stated it was put there for FY93 and it was noted in a reserve account for FY92.  Mr. Dini asked Dr. Paslov to specifically state the amount of reserve funds included in the ending fund balance when he discussed that line of the budget.

 

Senator Glomb pointed out the basic support per pupil was reduced to include the two reductions and asked what the actual allotment would be.  Dr. Paslov replied it would be $3,227 for FY92-93 rather than $3,312.  Mr. Thunder clarified the FY92 amount would be added to the FY93 amount rather than retroactively reducing the FY92 amounts on books already closed, thereby the basic support per pupil in FY93 would be $3,227, and the budget recommends $3,312 for FY94 and FY95.

 

Senator Coffin asked, if the changed amounts in FY92 and FY93 would be $3,342 or less.  Dr. Paslov reiterated the school districts were asked to hold out $18 million over the two fiscal years.  They all have taken actions to have the $18 million set aside either in reserve or in their ending fund balances as savings.  The legislature authorized for FY93 a guarantee of $3,312.  If the $18 million was subtracted, the resulting guarantee would be retroactively reduced to $3,227.  Mr. Dini clarified the school districts were authorized at $3,312 for basic support, but voluntarily cutback to $3,227.  Senator Coffin asked for Dr. Paslov to submit the actual amount spent per pupil for FY92.  Mr. Thunder stated they would calculate and submit the amount.

 

Ms. Giunchigliani stated, as a public school teacher on an unpaid leave of absence, who would not be deriving anything different from anyone else, she would be participating in discussion.  She emphasized, by reducing the per pupil dollar amount, because the districts have to hold back the funds, both the per pupil pool and the ending fund balance are lessened.  Dr. Paslov elaborated, if the legislature takes an affirmative action on retroactive accommodation of the $18 million, the adjustment would be made in the state-aid payment.  Ms. Giunchigliani voiced her concern over reducing the actual per pupil expenditure which would set a different precedent as a rollback in the commitment.  Dr. Paslov remarked the impact on the perceived rollups to districts would be unknown at this time.  He noted $9 million of the $15 million reserve for FY93 would be Clark County's portion alone and could be a great impact if the monies are not rolled back.

 

Dr. Paslov continued his discussion of the agency's budget request (EXHIBIT E-4) which describes the state board's salary increases.  He noted the Board took action on the requested salary increase.  He discussed the necessity to increase teachers' salaries in light of the state's very serious fiscal/economic situation, and if the economy did not improve to a significant extent, the Board understood salary increases could not be considered.  The recommendations and potential costs have been included as endnotes on the Alternate Budget page.  He stated the requested increases would adjust the per pupil cost to $3,635 and there would be a $2 million increase.  The Agency Request column of the Alternative Budget page includes agency rollups and inflation and does not include any salary increases.  He discussed Line 4 of EXHIBIT E-4 on Special Education and the Governor's recommendation to increase the number of special education units only at the same rate of projected enrollment growth.  Dr. Paslov stressed the serious problem occurring in Special Education.  It is mandated by federal legislation without full federal funding.  Only eight percent of funding for special education comes from the federal government and the state and local school districts are required to fund the remainder through general funds.  He maintained the problem is that demand for special education services is twice the projected enrollment growth, whereas the amount per unit as originally conceived was for a special education teacher.

 

Chairman Arberry asked what was the growth was in special education and to explain the reason for the growth.  Ms. Peterson stated growth in the special education population for FY93 was 12.3 percent versus 5 percent for the regular education population.  She noted there were a number of reasons for this and cited Ms. Gloria Dopf, Director of Special Education, as a source for more detailed information on the growth factors in special education .  Chairman Arberry remarked on parents' concerns for their children and the impact of larger classes where less "hands on" time would be available for all the children.  He asked if parents were requesting their children be placed in special education to increase the attention they receive and if this would increase the special education numbers.  Ms. Peterson emphasized there were very stringent established criteria for children to qualify for special education services and the parents' desire for placement would not be a key factor. 

 

Mrs. Williams asked if as a result of class-size reduction (CSR) there were fewer children placed in special education and if the number might diminish.  She wondered if the increased number of special education students was from out-of-state or district transfers.  Ms. Peterson believed these could be explanations, but they have found in the initial review of the CSR project that special education referrals did decrease.  This was a study of one class for one year and could not be extrapolated regardless of the reductions indicated.  Mrs. Williams commented the special attention inherent in CSR had really paid off for these children more than test scores indicate, and the project should not be measured by test scores alone.  Dr. Paslov agreed with Mrs. Williams comments and noted the CSR Evaluation Report would include dollar savings and the special education impacts.

 

Senator Glomb inquired if the money for at-risk students was included in the special education line item.  Dr. Paslov replied federal ECIA Chapter I monies were received for at-risk and handicapped students, but those funds were not included in the special education line item dollars.  Senator Glomb pointed out the state programs were not reaching all the at-risk students.  Dr. Paslov concurred.

 

Ms. Giunchigliani asked if out of the 12.3 percent were identified as special education children, especially in relation to the 8 percent that has been identified and served in the past.  Ms. Peterson replied the full 12.3 has been identified.  Ms. Giunchigliani inquired if Nevada was now up to the national average.  Ms. Dopf stated the 12.3 percent was a rate of growth, not the percentage of the total enrollment in special education, and noted actually 10 percent of the regular student population was being served in special education.  Ms. Giunchigliani commented the national average was 12 percent and the state is off 2 percent.  She asked if ADD (Attention-Deficit Disorder) was not included in the identified group.  Ms. Dopf replied some of the ADD population, if they fulfilled the special education criteria, would be served and are represented in the ten percent.  She noted those ADD students who did not fulfill the criteria would be considered at-risk.  Ms. Giunchigliani asked for clarification of Note 3 on EXHIBIT E-4 in regard to full unit funding at $49,784.  Dr. Paslov stated the note addresses the state board's recommendation for moving forward on full funding for special education, which the board believes would begin to solve the state's special education problem in serving the total population.  Ms. Giunchigliani requested Dr. Paslov submit to the committee:  the difference between what was actually recommended versus what was actually needed to fund the program properly and a breakout of what impact the difference will have on the local districts to offset the revenue shortfall.  Dr. Paslov indicated the agency would provide the requested information from ongoing reports.  He elaborated the local school districts are required to provide mandated services for those who are eligible regardless of the amount of revenue they receive from both federal and state levels.  Because federal and state monies do not keep pace with the services requested, local services are eroded to meet the mandates.  Dr. Paslov pointed out the result of the erosion had been tracked over the past few years and amounts to over $23 million.  This erosion of local funds is a very serious problem for the local school districts which needs to be addressed.

 

Mr. Humke asked if Dr. Paslov had tracked the local law firms in regard to pending lawsuits against the state board and if any of these firms were close to filing the suits.  Dr. Paslov stated the Board does track the number and types of lawsuits generated, but he would provide a list of hearings and outcomes.  Mr. Humke requested a list of past or existing lawsuits and an analysis on the potential impact of the lawsuits. 

 

Dr. Paslov continued his testimony (see EXHIBIT F and E-4).  Regarding funding for the Adult Diploma program, he stressed the Governor's Recommendation makes no provisions for growth that has already occurred FY93, let alone in FY94 or FY95.  On line 22 of EXHIBIT E-4, Dr. Paslov stated the deficit amount shown for FY 93 is the estimated amount that will require a supplemental appropriation of $51 million for FY93 by the 1993 legislature.  The cause of this shortfall is not an under-projection of enrollment, but an over-projection of the locally generated portions of the State Guarantee, particularly the LSST. 

 

Ms. Giunchigliani asked for a written report on the status of the Adult Diploma Funding which was changed by the 1991 Legislature.

 

Ms. Botts clarified per Senator Callister's request earlier what percentage of total school district revenues came from various sources in FY91:  sales tax, 41.8 percent; gaming, 21 percent; property tax, 20 percent; interest, other taxes and fees and state general fund, 15.4 percent; and federal, 1.8 percent.

 

Vice Chairman Spitler called for public testimony.

 

Dr. Mary Nebgen, Superintendent, Washoe County School District, testified (see EXHIBIT G) the five percent budget cuts impacted all areas of services and, even with the restoration of the cuts, future needs would not be met due to inflation, salary rollups and new programs.  She explained for 1994-95 the per pupil rate is projected to remain flat and will result in more serious reductions.  In the past, budget cuts were targeted in areas as far away from the classrooms as feasible.  Therefore, she stated, future cuts would direct the impact on classroom instruction programs.  She thanked the legislature for class-size reduction efforts and noted the tremendous benefits for K-3 students.  Dr. Nebgen pointed out the recommended budget does not provide sufficient funding to allow the district to maintain the status quo and asked the committee for additional funding, if available, to be used for K-12 education.

 

Mr. Heller cited the Reno Gazette-Journal special report from December entitled "Failing our Children" and asked for her comments on 1) the resource allocation inequities between school producing more at-risk students, 2) the accountability factors for Washoe County schools, and 3) how her office would be addressing the problems cited in the report.  Dr. Nebgen stated the district allocated funds on a per-student basis equally among schools without regard to the location of the school and if additional funds were available, at-risk students would be addressed first.  She noted the level of funding was basic at this time and would not deprive one area's students for the benefit of another area.  She elaborated one thing not emphasized in the report, to the detriment of the district, would be the established programs for at-risk students funded both with federal and state dollars.  An example would be the funds allocated at the high school level for 42 teacher allocations, over and above the 25:1 ratio, just for alternative programs. 

 

She stressed the district is not doing enough, especially at the elementary level where the district is seeing an increase in seriously disturbed and violent children.  She emphasized these are students who have had situations in their homelife and in their backgrounds which seriously prevent them from being able to learn.  The district needs more counselors, alternative programs, smaller class sizes, and other resources in order to meet the demand.  Dr. Nebgen asserted the school district needs to be accountable to the public, but publishing schools in rank order by test scores does not do any good for anyone, especially for students at the lower-ranked schools.  She maintained the differences in socio-economic and cultural levels must be considered and is not reflected by test scores.  The district as a whole must be accountable and the schools must establish goals and objectives for themselves.  Each school would then publish an annual report on its own goals and objectives to be accountable to its specific community.

 

Senator Jacobsen asked what would be her first three priorities as an administrator.  Dr. Nebgen stated:  decrease class size, provide better services to at-risk students, and increase textbook and instructional supplies and materials funding. 

 

Mrs. Evans wondered about the removal of the DSA from the Department of Education superintendent's office and what the implications could be for education.  Dr. Nebgen voiced concern about the proposal and, specifically on removing the DSA from its current process, noting she did not believe K-12 education would get the vital attention needed to maintain the level of success as a state.  Removing the DSA from its current process would place it in an area with a number of other agencies which all vie for the same resources rather than leaving the DSA with a special status.  All seventeen school districts met with the Governor last November and expressed their concern over the potential implications of relocating the DSA.  Dr. Nebgen asserted if the agency had been moved to another area, she did not believe those meetings would have occurred. 

 

Mr. Humke asked, in regard to the Reno Gazette-Journal report, could the list of private sector support "Partners in Education," for Washoe schools be used to equalize the support between higher and lower economic areas.  Dr. Nebgen responded the board has encouraged Partners and prospective Partners to adopt schools in the lower socio-economic parts of town and have met with some success.  More significant than the Partners program was the amount of monies the PTOs, PTAs and boosters clubs have raised and the significant differences between various areas of the community, such as Reno High's AAA which funds staff development opportunities for the staff.  This is a significant fundraiser with impact far beyond just playgrounds.  The agency will continue to encourage private sector support for the areas which do not have such fundraising capabilities.

 

Senator Callister voiced concern at the superintendent's priority list where class size is number one, especially in light of the Reno Gazette-Journal report which suggests differential funding levels between richer and poorer schools and if, given that priority, in which grade, Kindergarten  or third, is class-size reduction more important.  Dr. Nebgen reiterated reducing class size would be the first priority because all students benefit and it would be more valuable in third grade because Kindergarten is only a half-day program.

 

Mr. Heller requested Dr. Nebgen supply a written report on why the county's book allocation was only $17 per student when the DSA book allocation was $43 per student.       

 

Dr. Brian Cram, Superintendent of Schools for Clark County School District, introduced himself and his Associate Superintendent and Chief Financial Officer, Michael Alastuey.  Dr. Cram recognized the priority given to K-12 education by the Governor and expressed the school district's appreciation for his efforts.  Dr. Cram read his testimony (included as EXHIBIT H).  He noted the following:  Reduction in funding resulted in the curtailment and elimination of services; flat per pupil funding for the future would impose further cuts; $11 million in district savings would be jeopardized; $13 million more would need to be cut in addition to the $9 million already cut; increased special education costs negate the "hold-the-line" budget; and should economic conditions improve, there is no mechanism to enable school districts to restore the program cuts. 

 

Dr. Cram summarized the proposal by the analogy:  Most Clark County school children will have shoes, but all of the shoes will be two sizes too small and the money to pay for the shoes will be taken from the children's piggy banks.  He stated the result was losing money at both ends.  This pattern cannot continue over any extended period of time and the state still have quality schools.  Dr. Cram summarized Nevada's funding of public schools and stated they are funded lower than two-thirds of the states.  In addition, the students are significantly in worse shape than students in other states.  He noted if the top ten predictors of wellness in children were considered, Nevada would rank at the very bottom of the states in about five of the predictors and second to the bottom in about three of them.  These predictors include:  juvenile incarceration rate, pregnancy rate, drug usage, no medical insurance in the home and children who are living apart from their parents.  When modest education funding is combined with the fact the raw material (students) entering schools has significant problems, there is a catastrophic situation.  Dr. Cram emphasized he was not criticizing and understood the state's positioning between a rock and a hard spot.  He maintained if the state did not put the money at the front end, the state would continue to spend six times the money on the prison cells at the back end.  He reiterated this needs to stop. 

 

Dr. Cram expounded on crucial issues.  First, stable funding must be found to enable delivery of consistent, decent service from year to year.  Second, special education funding is a travesty.  The district spent $21 million more on Office of Civil Rights (OCR) cases than was received on special education and a pending OCR case will cost $3-5 million more every year beyond the $21 million.  These children desperately need the services, but these demands continue to erode the general operating fund budget for the district.  Dr. Cram asserted the future of Nevada is in education.  He noted, in 1950, Nevada had approximately 13 people in the workforce for every retired person whereas in the year 2035 there will be 2-3 people in the workforce for every retired person.  He stressed those 2-3 in the workforce better be damn good or pensioners will be in serious trouble.  He maintained that would be the future of Nevada education, either patch the tire or deal with the issues.

 

Mr. Dini asked if having children at-risk was characteristic of Nevada's lifestyle or was it characteristic of most metropolitan areas.  Dr. Cram replied three factors were involved:  a high percentage of population in service industries, neglected children in the middle income bracket, and lack of health care.  He elaborated children's health and achievement in school is closely linked to income.  Two primary predictors to children's success in school are education level of the mother and income in the family.  The same aspects that draw people to Nevada, employment and no state tax, kills the state in maintaining the infrastructure.  He pointed out if the three major factors are not dealt with, these children will be in hospitals, prisons, institutions -- places other than producing income for this state. 

 

Senator Glomb asked how to change the attitude and get the public into the "invest now for the future" mentality.  Dr. Cram reiterated the swelling retired population needs to see that economic wellbeing is tied to what is in the classroom today.  Additionally, he stated there will be a need for some people with courage to step forward, such as from the legislature and district administrators, to speak.  Nevada spends less on educating children than two-thirds of the states and the children are ranked the worst, but Nevada's achievement is above average in almost every category.  He stressed where does the state want to put the money, the front end for healthy, productive citizens or the back end in prisons and hospitals.

 

Dr. Cram pointed out he planned to go to the school board and push the idea of diversifying how money is used.  He will ask to have more money placed into at-risk students and more money into elementary schools by taking it away from secondary, thereby loading the front end.

 

Senator O'Donnell asked if the $9 million reduction would be rebated from the $51 million.  Mr. Alastuey stated that would be correct.  Senator O'Donnell asked where class size reduction monies would be better spent -- at the third grade level or the kindergarten level.  Dr. Cram replied he would be inclined to split the funds, especially with the at-risk schools to put them at 15:1, then into third grade at non-risk schools.  He emphasized putting money into pre-kindergarten levels has paid off for Clark County, but noted the money goes further with the third grade level. 

 

Ms. Giunchigliani asked if he would support legislation to return funding to the pre-1991 level and, if so, would he work with superintendents who would be willing to come forth in support of such legislation.  Dr. Cram stated yes.  Ms. Giunchigliani pointed out the health aide tragedy in Clark County recently, and since  the district, nurses and nursing aides had requested additional funding last session, she inquired as to the status of school health services.  Dr. Cram stated elementary school offices have been staffed by two people who are responsible for all aspects of school functions including health services.  He emphasized this was just a bandaid approach and, simply put, children are coming to school sick with many illnesses.  In special education, the federal government continues to mandate more categories to be served.  Dr. Cram noted OCR is in his offices on a daily basis and the civil rights issue will cost large amounts of money that are not available at this point.

 

Ms. Giunchigliani commented Nevada's DSA is an equitable approach and pointed out discussion in previous years had been about freezing fundraising and PTA/booster input in order to determine the exact level these groups with the private sector support were subsidizing programs which were actually the state's responsibility to fund.  Dr. Cram pointed out Clark County has had to build more than 30 schools in the past two years, will build 10 more this year and 9 more the next year just to provide seats.  At the back end of the bond issue, monies will be spent on rehabilitation and modernization, but the difficulty is bringing those facilities up in regard to supplies, computers, etc.  He asserted if unequals are funded equally, inequality is guaranteed.  The key would be to be more internally efficient. 

 

Mrs. Williams voiced her concern about at-risk children.  They are not just children.  They are in every school, every socio-economic area and there are children at-risk who are not receiving any attention because they do not live in the "old concept" of where at-risk children are located.  She noted her continued support of the need for counselors in elementary schools, especially if qualified in the area of dysfunctional families, not just drug education.  She asked what the qualifications of the counselors hired by Dr. Cram's district are, and if they are educated and trained in family intervention techniques or are they just certified for substance abuse counseling by the Bureau of Alcohol and Drug Abuse (BADA).  Dr. Cram replied substance abuse counselors are trained for intervention for the children, but not necessarily at the family level.  She pointed out substance abuse is just a symptom, and counselors need to be able to do something meaningful in terms of mainstreaming these children.  To save dollars at the end, these counselors need to have training for more than just treating the symptom.  Dr. Cram explained there are on-going district programs to attempt to do that, but the situation is these problems were not anticipated and the problems are significant in scope. 

 

Senator Callister asked Dr. Cram to list what his three most urgent priorities for this legislative session would be in his district and for his comments on the reorganization of Education into a superagency.  Dr. Cram replied:  stable funding base, class size reduction and the costs and increased numbers involved in the special education issue.  He emphasized money matters for education and noted those individuals who say money does not matter have never thrown money at education.  He reiterated the need to be fiscally conservative and be good business people with the funds, but basically the money must be placed on the front end -- education.  Dr. Cram commented on the reorganization plan, stating education is important enough it needs its own identity.  He noted he supports the Governor, but education should be our number one priority because it is the state's future.

 

Ms. Tiffany asked with overwhelming class sizes and waiting lists for private schools why is there not a proliferation of private schools as an alternative delivery service for education.  Dr. Cram stated private schools are based on a faulty premise.  Nevada believes in universal education and private schools exist and flourish in some area by choosing who comes and who does not.  He elaborated private schools skim off the best students to escape from living in a multi-cultural and multi-economic society which strikes at the premise of university education.   He emphasized vouchers for private education would be applicable if the schools were required to take a complete slice of the student population.  From a business and economic standpoint, private schools cannot compete with the public schools, especially in buying power and cost/salary/benefits factors.  He remarked the combination of an increase in special needs students gaining entry, federal civil rights and medical laws result in fewer and fewer private schools.

 

Mr. Price asked the status of the funds from the voluntary cutback.  Dr. Cram replied the funds were placed in the reserve account, but essentially the funds would not be released for use by the district.  Mr. Price asked Ms. Matteucci if the education funds, as a whole, for K-12 and higher education were fully allocated at the requested level, would it put the state into a deficit situation.  Ms. Matteucci replied the budget reduction target amounts for all agencies were not uniform, some had higher targets in the first round of cuts than other agencies.  She explained if 55 percent of the general fund is going for K-12 and higher education, the other 45 percent would need to be hit harder in order to achieve the targeted savings to balance the budget.  For FY91-92, K-12 was targeted for a 2 percent reduction and higher education was also targeted at a lower percentage than other agencies.  These first-round cuts were not placed in the reserve for reversion account.  In the second round of cuts, 45 percent of the agencies were cut by 20 percent or more while K-12 was cut by 5 percent and higher education by 10 percent.  Ms. Matteucci noted 1991 legislation required the state to maintain no less than five percent ending fund balance effective January 1993.  The budget cuts helped meet the mandate for an approximate $50 million ending fund balance. 

 

Dr. Cram commented the state requires five percent as a minimum fund balance and the schools also need to have an approximate amount to operate. 

 

Mr. Paul Billings, Superintendent, Elko County School District, introduced himself and Marcia Bandera, Director of Instruction.  In his testimony (see EXHIBIT I), he stated he understood the fiscal pressures and budget problems of the state and appreciated the efforts to support education but wanted to share some of his concerns.  He emphasized the Governor's recommendation to keep the basic per pupil support flat for FY94 and FY95 would negatively impact the counties' ability to offer the same level of education as in previous years.  He pointed out the formula's effect would likely result in between $50 and $70 less per student for the first year of the biennium.

 

Mr. Billings stated three new schools would be opening in Elko County over the biennium and enrollment was projected to continue growing at about 5 percent annually.  He emphasized, for Elko County School District to remain fiscally responsible under the current budget recommendation, the following would need to be enacted:  class loading; limitations on operating, textbook and instructional materials expenditures; delays in needed building maintenance; and no raises for personnel.  He maintained, due to the given DSA recommendation, the quality of education for Elko County will be eroded.

 

Senator Jacobsen indicated concern when maintenance was neglected and asked if a maintenance schedule was currently in place.  Mr. Billings replied a schedule was in place which kept the schools in relatively good shape; however, money has to come from some source in the current budget.  Maintenance was not necessarily a primary priority, but it will would need to be addressed.  Senator Jacobsen inquired if honor camp crews had been considered for maintenance between school openings.  Mr. Billings explained both the Carlin and Wells crews have been useful for maintenance and other projects.  He pointed out the county was very concerned about losing the camps because they do a number of helpful project and would be a great loss for both the city and county governments.

 

Mr. Harold Tokerud, Superintendent Esmeralda County School District, introduced himself.  He pointed out while Dr. Cram represents 136,000 Clark County students, Esmeralda County has 140 K-8 students with about 139 who qualify for at-risk status.  Very few children in Esmeralda come from two-parent homes, in fact, of the five new students, four have been diagnosed ADD, with two needing placement in an out-of-district or out-of-state program as permitted under Chapter 395 of NRS.  Esmeralda County cannot provide the services.  He commented the Nevada Plan is one of the better plans he has seen in the United States.  He emphasized the approximate $3,000 average per pupil support is actually about $6,000 per pupil for his district. 

 

Mr. Tokerud testified the state's proposal to take ending fund balances essentially takes away the districts' discretionary funds that have been available for field trips and such.  The five percent holdback for the Dyer schools resulted in the loss of the food program.  The bottom line would be if the Nevada Plan cannot be maintained and the ending fund balance erosion continues, there will be no discretionary or interest funds for special opportunities for students.  He asserted Esmeralda is one of the seventeen counties and although they do not have a high school, part of the budget is for sending students to California and Nye County for high school education.  In fact, the transportation budget accounts for over 10 percent of the total.  Mr. Tokerud maintained the Nevada Plan does a wonderful job and encouraged the committees to fund it and keep it going at whatever level was possible, even in these tough times. 

 

Ms. Giunchigliani asked how many teachers were employed by the district and what the instructional budget was.  Mr. Tokerud said thirteen teachers with salaries account for approximately 70 percent.  Ms. Giunchigliani inquired if Dyer and Silver Peak schools were still housed in temporary trailers.  He answered that the buildings were left over from the airbase and many were over sixty years old.  He explained a recent bond issue to build new schools failed miserably and his priority for the district would be new schools.  Mr. Tokerud pointed out the Tonopah Honor camp has helped the district a lot, including building a ramp for handicapped students.  In fact, trying to bring the buildings up to ADA standards without the Honor Camp crews will be difficult.

 

Mr. Jan Cahill, Superintendent White Pine County School District, introduced himself.  He stated White Pine County schools rank tenth in the state in student population at 1,738 for 1992-93.  To emphasize the difficult situation found in White Pine County, should the basic support per pupil be held at the current level of $4,314 per student, he pointed out a few things items and programs county does not have which many other districts take for granted.  The district does not provide a hot lunch program anywhere in the county and has not had one since 1984.  He remarked the county has one speech therapist for well over 200 special education students, one principal at the high school, no assistant superintendent and the gifted and talented program was cut two years ago for the 48 students who are considered at-risk at that level.

 

Two years ago the legislature mandated, by the beginning of 1995, schools would maintain a ratio of one nurse to 1,000 students.  Since 1969, White Pine County schools have not had the services of any school nurse up until this year when a part-time nurse could be afforded for the 1,738 students.  He pointed out the school buildings are extremely old, but five months ago a bond issue passed, the first since 1954, to be used for new schools.  The new schools will replace a high school built in 1912 and a middle school built in 1903, but in the interim the current buildings need to be maintained and one of them must be brought into full ADA compliance by January 1995.  He stated both the middle and high schools are not accessible to any handicapped children -- no ramps or elevators or any means to get them into or out of the buildings exist.  Therefore, general fund dollars will need to be utilized to fulfill the mandate.  He stressed with other structures needing continued maintenance and higher utility costs, maintaining the status quo in basic support will mean the district will need to reduce services already dismally low for students.  He emphasized White Pine County School District is already down to the bone.  Addressing just the at-risk students in the special education and Chapter I population neglects the students at the other end of the spectrum.  Gifted and/or talented students have not been served either.

 

Mr. Cahill noted for White Pine district to maintain the status quo will mean there will be no raises for teachers when last year they received a one percent raise through contractual obligations in a two-year contract.  He stressed it is unconscionable not to give those raises to professional people who are in charge of the future of Nevada's communities and the state.  Some of the classified employees received only a half percent raise.  He reiterated this is simply not fair.  Contractual obligations require additional funding for rollups of approximately $140,000 per year for teachers.  They deserve to be paid adequately along with other staff members, and a status quo budget will not cover the rollup costs unless the funds are taken from other category items such as textbooks, building maintenance or elimination of the part-time school nurse without regard to the state mandate.  Mr. Cahill encouraged the legislators to take into consideration what Dr. Cram mentioned about putting funds at the front end and not at the back end of what we need for our society. 

 

Mr. Cahill mentioned he moved to Nevada three years ago from a state which does not fund education adequately and he commended the legislature and Governor for their commitment to education, but urged them to consider all the school students when deliberating the status quo of the DSA.  He stressed White Pine district was unique, but he knows all students in Nevada deserve to have the very best opportunities to become the very best he or she is capable of.  He asked the committee to keep in mind for every dollar spent on students, multiple dollars will be saved later at the prison honor camp, welfare and hospital levels.  He urged the committee to carefully consider what districts need to maintain a quality program for student.

 

Chairman Arberry noted the comment by both Mr. Cahill and Dr. Cram that the funds need to be put on the front end rather than the back end.  He asked what type of time frame did they believe would be the turnaround if funds were placed on the front end.  Mr. Cahill could not state a time frame, but he did believe if a sincere effort was not put forth now, the time will come very quickly and then it will be too late.  He stressed if the state fails to provide funding for services, the state will have serious problems by the end of this decade.

 

Ms. Giunchigliani asked, in regard to ADA impact, is that funding included anywhere such as in rollups or is it solely from bonding capacities.  Mr. Cahill replied all ADA funds will need to come from the general fund monies.  Ms. Giunchigliani inquired if the safety fire code problems had been resolved at the schools.  He stated the problem had been solved partially.

 

Senator Glomb noted some savings were seen through class size reduction by reducing referrals to special education programs.  She questioned, with the ADA mandates, could a dispensation be received while the new building was in progress.  Mr. Cahill stated, according to legal counsel, there would be no grace period regardless of the status of the new building and the district would be subject to daily fines if not in compliance with ADA.  He pointed out the ADA situation did not abrogate the district from accommodating physically handicapped students or staff access to the middle or high school.  If accommodations are not made for any individual the district could be in jeopardy of being sued by OCR or others entities.  It will cost a great deal of money to bring one of the two schools up to par until the new school is available.

 

Senator Jacobsen asked how many miles there are around the district and to name some of the communities included.  Mr. Cahill replied:  Baker Elementary, grade 3-8 with 26 students, 130 miles round trip (RT) from Ely; Lund Elementary, Junior and Senior Highs, 151 students and 70 miles RT from Ely; McGill Elementary, 121 students, 26 RT miles from Ely; Ruth School, 38 students including multiple handicapped unit, 14 RT miles from Ely.  The Ely schools include:  elementary, 536 students; high school, 485 students; and middle school, 383 students.  He pointed out, in the southwestern part of the county, there are five students who up until this current year had the services of a certified instructor provided by the district, but because of budgetary restraints, that instructor was eliminated and they are currently on a special type of program receiving instruction through an individual who travels to their ranch twice a month to oversee the children's schooling.  This included the purchase of some computer equipment to assist them.  Senator Jacobsen asked how many students were added to the district by the Ely Prison.  Mr. Cahill responded approximately 100 students were added over the past two years, but the Prison itself has approximately 400 students between the adult education, GED and associate diploma degrees which the White Pine School administers for them.  Senator Jacobsen inquired if the 100 students included the children from the honor camp employees.  Mr. Cahill stated they were included in the 100, but he did not know the exact breakdown.

 

 

Mr. Marvel inquired if the district had considered "pay-as-you-go" to fund the problems.  Mr. Cahill replied yes, in fact, they have such a program in place now with the priority of a new school in Baker and portable classrooms to meet state's class-size reduction mandate of 16:1, and the new vocational center to replace a 1930 creamery building which is an atrocity for classroom use.  He reiterated the pay-as-you-go funds have already been prioritized and very little would remain for ADA or maintenance.  Mr. Marvel asked what the costs will be to fully comply with ADA mandates.  Mr. Cahill stated the high school will cost approximately $738,000  and the middle school $550,000.  Mostly the costs would be for elevator installation and, had the bond issue not passed, the middle school costs would have been significantly higher. 

 

Ms. Dede Goodnight, member of the Washoe County School Board and Vice President of the Nevada Association of School Boards, introduced herself.  She asked the other board members present to stand to be recognized.  In her testimony (see EXHIBIT J), she addressed two areas:  funding for education and the reorganization plan.  She appreciated the frustrations of public office and noted the CSR plan and AB103 of the Sixty-sixth session have significantly assisted the district in educating its students.  Of note, the district has been able to hire counselors trained in alcohol and drug abuse.  Ms. Goodnight thanked the legislators for their commitment to quality education. 

 

Ms. Goodnight discussed the impact of cuts and the flat basic support for the biennium noting after significant personnel and staff training eliminations, department budgets were reduced by 30 percent in instruction and student activities.  Supplies and library books were reduced by 20 percent while field trips were eliminated completely.  The bottom line is the current level of service cannot be maintained on the basic support guarantee.  The district is losing ground.  Regarding the reorganization, the Nevada Association of School Boards has sent a resolution to the Governor and all legislators urging the Board and Department of Education be left in their present state with the current authority.  She pointed out 15 of the 17 school boards have, by resolution, expressed opposition to the proposed consolidation, two are calling for more information.  Ms. Goodnight expressed concern over the lack of information and noted what is available is sketchy.

 

Senator Jacobsen asked what benefits have been found from the $50,000 appropriated last session for counselors.  Ms. Goodnight replied six counselors with alcohol and drug abuse training were hired and have been there to support and assist students in many areas, including such family situations as terminal illness or divorce, in addition to substance abuse.  The counselors are invaluable in providing these students with coping skills as situations arise.

 

Mrs. Williams asked if Washoe County has a DARE program.  Ms. Goodnight replied the program is utilized at all grade levels and the time increases as the grades progress.  It is quite popular with parents.  Additionally, the district has a program called "Here's Looking at Year 2000," based more on self-esteem and learning ways to deal with peer pressure.

 

John Cummings, Executive Director of Nevada State Education Association (NSEA), introduced himself.  He remarked most of what he and Al Bellister would say, the legislators already know and comprehend.  He pointed out the Governor has tried to keep his commitment to be the "Education Governor," but his efforts have been hindered by an economy in turmoil.  This turmoil accounts for the restrictive budget he has presented and its corresponding lack of imagination.  Mr. Cummings introduced Al Bellister, Organization Specialist for NSEA.

 

Mr. Bellister read his testimony and discussed the attachments (see EXHIBIT K).  He stated NSEA's concerns are two:  The budget does not adequately fund education in order to maintain the status quo and why would we want to simply maintain the status quo.  He discussed the status quo in relation to revenue, expenditures, student-teacher ratios, salaries and program cuts.  With special note, Nevada ranks 41st in the nation for public school support, thereby placing a greater burden on local school districts to maintain services and programs.  Nevada lags behind the national average of per pupil expenditures and has decreased the percentage over the last ten years.  Nevada is tenth nationally for student-teacher ratios, and failure to continue the class-size reduction program will not alleviate the situation.  In 1981-82, Nevada was ranked 13th in the nation for teachers' salaries and was above the national average.  By 1991-92 Nevada fell below the national average and is ranked 19th with the average 1992-93 salary lower than the 1991-92 national average.  Mr. Bellister emphasized the status quo is just not good enough.

 

Mr. Bellister stressed population growth in Nevada between 1980 and 1990 increased 42.1 percent while nationally it only increased 4.7 percent, and while children under six increased 12.5 percent, Nevada's under six population increased 64.6 percent.  The Governor's proposed statewide basic support per pupil is the worst in the last twelve years (see EXHIBIT K, ATTACHMENTS 4 AND 5).    The budget does not maintain the status quo nor meet the increased demands on the public schools due to increased enrollment.  The status quo is underfunded by $8,256,947.  Mr. Bellister emphasized NSEA is concerned that the proposed basic support assumes that revenue outside the formula will cover the underfunded amount.  NSEA believes the revenue assumptions and interest earnings are unrealistic and overestimated.  He noted the difference between the 2 percent recommended for the class-size reduction program rollups and the actual salary rollups which must be absorbed by school districts' general funds in addition to funding for special education rollups.  There is little allowance for inflation, particularly in FY95 (see EXHIBIT K, ATTACHMENT 8).  Dr. Bellister concluded, "If we lose ground now, we may never catch up and Nevada's children will suffer."

 

Senator Jacobsen asked for constituents to come forth with not just problems and complaints about status quo and demands for money, but with answers and solutions for the problems discussed and ideas to get more funds.  He further noted Douglas County has a unique program where elected officials are invited to be teacher for a day.  This allows legislators to see the process and the teachers. 

 

Mr. Dini wondered if NSEA has completed a future economic forecast for Nevada in relation to other states' gaming proposals and the sales tax levels to anticipate the need for a new formula for Nevada's educational funding.  Mr. Cummings stated they had not done any forecasting, but would be willing to do so and also relook at the study they completed in 1991.

 

CLASS SIZE REDUCTION -- PAGE 647

 

Dr. Paslov commented on the complex and diverse leadership guiding Nevada's schools who had presented testimony to the committees.

 

Mr. Thunder read testimony on the Class-size Reduction (CSR) budget (see EXHIBIT L).  He stated the CSR program began three years ago.  The program was intended to continue previously achieved pupil-teacher ratios in the first grades and at-risk kindergartens categories and to extend CRS to second grade in FY92 and third grade in FY93.  The funding was to achieve 16-to-1 pupil-teacher ratios, excepting at-risk kindergartens which maintained 23.5 teachers.  At the Governor's request, the districts chose to forego expanding the program to third grade FY93, and each district was granted a variance by the Board of Education.

 

Mr. Thunder stated the agency requested maintaining the program for FY94 with expansion for third grade in FY95 plus a 5 percent and 6 percent salary increase for FY94 and FY95 respectively.  The Governor recommends maintaining the program at the current levels through the coming biennium which translates to significantly less than the agency requested.  He pointed out the impact will be districts will have to transfer additional funding from their general funds to support the CSR program.  He commented the board was not clear on what was happening on the Revenue side of this account.  It appears that the Budget Office is completely spending the Estate Tax balance in the CSR program, but from what is printed in the Executive Budget the Board cannot be sure.

 

Mr. Spitler asked for the revised numbers for the agency's request.  Mr. Thunder replied $34.6 million for FY94 and $37.2 million for FY95.  Mr. Dini asked the cost for third grade.  Mr. Thunder stated $17.6 million for FY95.  Mr. Dini asked for clarification on the $6 million figure.  Mr. Thunder stated $1.6 and $6.1 million would be the cost of applying the Board recommended for salary increases for FY94 and FY95; therefore, third grades costs for FY95 would be $17.6 and $6.1 with salary increases.  The total cost would be approximately $50 million.

 

Senator Callister inquired what the cost would be to reduce the pupil-teacher ratio to 16:1 in all kindergartens.  Mr. Thunder stated that for FY94, it would be approximately $3.7 million.  Senator Callister asked why kindergarten is significantly less expensive than third grade.  Mr. Thunder replied primarily because kindergarten classes were half-time and due to enrollment.

 

Mr. Thunder continued discussion of EXHIBIT L.  He noted the total budget, using revised agency request amounts, would be $60,945,647 including salary increases.  The difference between the agency's request and the Governor's recommendations would be about $750,000 less for FY94 and $871,000 less for FY95.  The Budget Office used projected data for the current school year to estimate 41 fewer teachers than the Board's records show to be hired in FY93 and the average salary used in calculating cost was $643 less than used in the agency request for FY94.

 

Mr. Thunder emphasized the 2 percent rollup is not adequate for this group of teachers because most are in a lower salary range and tend to move up the salary schedule faster.  Additionally, all districts are reporting shortages in their allocated amount for FY93, and if shortfalls are not met, districts will have to transfer additional funding from general funds to support the CSR program.  He reiterated the Governor's recommendations includes a $3 million reserve for FY94 under Total Expenditures which can be especially misleading.  Mr. Thunder remarked the Board was not clear on what is listed on the Revenue side of the account as it appears the Budget office is completely spending the Estate Tax balance in the CSR program, but they cannot be sure.

 

Mr. Heller asked why there are no performance indicators on the Class Size Reduction or Distributive School Account programs and would they be provided to the committee.  Mr. Thunder stated these accounts have no administrative activity and are pass-through accounts primarily.  The performance indicators would be listed in other budgets and special accounts.  Dr. Paslov clarified the DSA indicators will be seen in the individual accounts.  Overall, the performance indicators are for accountability purposes and traditionally, the legislature has left the final accounting at the school and local levels.  He stated a report will be submitted with all seventeen counties' accountability reports included.

 

Mr. Heller summarized, if the committee wanted to have the performance indicators for a high percentage of the $74 million listed in this account, they would have to go the local level and examine the performance indicators of each school.  He noted this would be quite difficult, especially when the legislature has very little jurisdiction over the seventeen school districts.  Mr. Heller stated there should be a composite report submitted to the Board which the committee could review and discuss, including such indicators as dropout rate, test scores, average GPA of graduating seniors, number of students who continue on to college, etc. Dr. Paslov stressed the Board does have such a report which is presented as an annual status report profiling the seventeen counties.  What the board does not do, which would be a helpful accountability factor, is to tie the expenditure of funds to those indicators as well as other indicators.  He pointed out the Board does not have the authority to require school districts to provide such information, but the legislature could give the Board that authority. 

 

Mr. Spitler commented pass-through accounts need to have accountability because once the monies are passed down and combined with other funds, it becomes quite difficult to show the citizens the advantages for dedicating funds to the specific areas.

 

Mrs. Williams concurred the issue of attaching indicators to the appropriation of funds is difficult, but it needs to be done.  She asked what number of special education students have been mainstreamed, what the cost savings have been and what projections could be made on potential mainstreaming as a result of the CSR program.  Dr. Paslov answered the Board has intentions to provide a report from the recent data collected.  He reiterated CSR cannot be sold exclusively on student achievement, but a number of other indicators need to be reviewed.  Mrs. Williams stressed CSR was implemented for the purpose of adjustment so these children could have a smoother experience through education and be able to function better to consequently have impact on the social pressures which interfere with learning.  Dr. Paslov cited Dr. Cram's and Dr. Nebgen's list of priorities which pointed out the powerful intervention of CSR and also addressed the benefits not easily measured.  Dr. Paslov asserted over the long run higher and substantial student achievement levels will be seen and encouraged all legislators to continue CSR funding. 

 

Senator Callister noted the statistic where two-thirds of second and third grade classrooms are self contained which is much higher than previous years.  He asked if the space and number of teachers allocated was adequate to meet the CSR target ratio.  Ms. Peterson replied these statistics were correct, but with at-risk schools targeted first, some not-at-risk schools may not necessarily have met the CSR target ratio.  Senator Callister pointed out the disparity in test results between Nevada's preliminary two-year results and the Tennessee Star program's results, which have been the result of six or seven years of a CSR program.  She replied the test result disparity is primarily due to the study length, and the preliminary statistics from the Tennessee Star study and the same period for Nevada are similar.  Senator Callister asked the Board to supply the Committee some numbers as performance indicators for this account.

 

Ms. Giunchigliani noted the problem is CSR is not measurable at the elementary school level.  CSR allows teachers to teach more and administrators to view the actual teacher/student interaction, motivation, curricular setup, etc.  She commented one aspect of the measuring needs to look at the long-term view and commitment so all involved individuals can see the outcome for each student.  Therefore, a form of accreditation, not just accountability, needs to come into play, i.e., what needs to go into a school to assure that a child is looked at as a whole person.  She stressed schools need library books, safety and playground equipment, outside lighting, grass, nursing and administrative support, etc., all of which are not currently provided or funded.  Ms. Giunchigliani reiterated the question of where the state wants to be in the future and the answer to that drives the monies.

 

Dr. Paslov agreed with Ms. Giunchigliani's comments.  He pointed out her comments were what the Board has been stating for the past few years and deferred to Dr. Cram's comments regarding tracking and showing the progress of students over time which are necessary to plan the future of education.  He added, regarding Senator Callister's request, the statistics are currently being compiled and a report for the committee would be forthcoming.  He remarked the Reno Gazette-Journal report was very objective in presenting the current status of the schools.

 

Mr. Price asked if the Department of Education or State Board submitted any bill draft requests (BDRs) for this session.  Dr. Paslov stated yes they had, through the Executive office.  The BDRs with fiscal notes had not yet been processed.  Those without fiscal notes were "in the hopper."  Mr. Price asked the Budget Office if all BDRs are forwarded to legislature.  Ms. Matteucci replied since the Department of Education is part of the Executive branch, the Governor forward those BDRs he recommends and holds those that he does not recommend.  Mr. Price requested Ms. Matteucci to submit a list of all BDRs not recommended to be forwarded to the legislature.  Ms. Matteucci stated she would supply a summary list including the agencies who submitted the bill drafts to the Governor's office.

 

Mr. Heller remarked the status reports list comparisons of what Nevada pays for educators' salaries and per pupil to what other states spend and suggested also comparing statewide statistics with national and comparably sized states statistics.  Dr. Paslov replied the status report has some national comparison and it would be feasible to include state-to-state comparisons.

 

STATE BOARD OF EDUCATION

 

Dr. Paslov briefly described the State Board of Education (see EXHIBIT M).  He explained the Board is the state level policy-making authority for elementary and secondary education and is one of only two publicly elected state boards answerable to voters.  It is an eleven person board with regionally elected members with statewide responsibilities and members are elected for four-year terms staggered with three-term limitations.  The Board provides leadership, service, supervision and accountability for public and private statewide education, K-12.  It is a policymaking body for the State Department of Education.  The primary activities of the State Superintendent and his staff of 90 FTEs in two offices are to advocate for and support the leadership issues, the supervisory issues and the accountability initiatives developed and articulated by the board.  Dr. Paslov pointed out an organizational chart is included as EXHIBIT E-6.  He remarked the Department of Education is now over 90 percent federally funded with a number of categorical programs to administer.

 

Dr. Paslov elaborated the Board has developed a comprehensive mission statement and a long-range strategic plan (see EXHIBIT E-7).  This plan was developed during 1989-90 and includes goals, objectives and performance indicators.  He continued his discussion of the Board emphasizing a number of accomplishments as a result of partnerships with the school and business communities (see EXHIBIT M) and noted a more comprehensive listing of the Board's accomplishments had been sent to LCB staff at Chairman Arberry's request. 

 

Dr. Paslov made the following general observations about the budget:  the Agency's Request is consistent with the Governor's intent for a lean operating budget; a number of critical budget requests were not supported in the Governor's Budget and will be discussed as budget accounts are reviewed;  department budgets have been recommended for further reduction by the proposed reorganization (see EXHIBIT E-8); and 25.75 FTE position values are eliminated in the Governor's Budget. 

 

Dr. Paslov made special note on the proposed reorganization savings some of the FTEs claimed as savings at the present time have been abolished.  They were restored in the Agency's program maintenance or enhancement budgets for FY94-95 only to be subsequently cut and claimed as reorganization savings.

 

In addition, line 2 on page 57 of the budget claims a $2 million savings in "other funds."  The $2 million appears in the DSA as an additional federal revenue and as an additional expense line item.  He pointed out since both revenue and expenditure are accounted for in that budget account, there is no amount to be claimed as reorganization savings.  Dr. Paslov stated in some cases where budget accounts are shifted to the agencies, the department's indirect cost line item is deleted and claimed as a reorganization savings, but  the receiving agency would need to assess some kind of administrative cost for the program.  He pointed out claiming savings from the indirect cost and for staff reductions constitutes counting the same "savings" twice.  He testified for FY95 a significant part of the increased "reorganization savings" is rent with the intent of moving the department to the old Fremont School.  Yet no information on how the new rent is charged or the square footage has been received by the department.

 

Dr. Paslov reiterated the consolidation of education and human resources should not be approved.  He emphasized, in addition to the reductions already in place, department staffing would be reduced significantly from what was approved in 1991, and the loss of staff and services performed is just one of the many concerns the Board has with the proposed reorganization.

 

He pointed out specific issues of the reorganization chart, included as page 3 of the Department of Education, Health & Human Services budget: Board is not responsible to voters; Board is in advisory capacity to new superagency director; Department of Education is reduced to a division within the superagency; DSA and other school funding is transferred to a subunit within a separate division of Administration in the superagency and isolated and insulated from the Board, community and public; State Superintendent of Public Instruction has disappeared; 25.75 FTEs deleted, some illegally, which will disrupt and decrease services at local level; and removal of staff does not address the needs of the receiving management unit.  He commented the reorganization assumes the current management in Human Resources has considerable administrative slack and can absorb additional work although this would be highly unlikely, given two years of budget reductions. 

 

Senator Raggio asked if under reorganization savings the Budget Office added back some previously deleted positions and then claimed savings by taking them away.  Dr. Paslov responded the deputy position for administration and finance had been abolished under objection, but it was reestablished and then claimed again for savings.  Ms. Matteucci explained, the position was vacant for the entire biennium and was eliminated as a result of the budget cuts.  When the department was given its target list for the coming biennium, they chose to add the position back, and in the reorganization review of EHH it was again deleted.  Senator Raggio stated this showed a false savings.  Ms. Matteucci replied it did not because if the department had not become a division of EHHS, they would have been allowed to retain the position.  Senator Raggio asked Ms. Matteucci if the position is not necessary only if the reorganization takes place in the way the Governor suggests.  Ms. Matteucci stated yes.  Senator Raggio asked Dr. Paslov if the reorganization does not occur will the position still be needed.  Dr. Paslov acknowledged some of the positions will need to be retained if the reorganization does not occur.  Senator Raggio asked Dr. Paslov to provide the additional costs if the reorganization is not approved.  Dr. Paslov remarked these costs would be delineated as each budget account is presented and he asserted the additional costs would not be much.

 

SCHOOL IMPROVEMENT -- PAGE 650

 

Ms. Peterson presented the account.  She explained the budget totals $1.3 million in general fund monies for the last biennium with $300,000 for Minority Educator Recruitment (MER) and $1 million for elementary school counselors.  Of the $1 million appropriated, $494,675 of the counselor allocations was not spent in 1991 and was used to meet budget reductions requested by the Governor. 

 

She pointed out the Agency Request reflects $300,000 for the continuation of the MER program; $1,588,965 for FY94 and $3,843,847 in FY95 for elementary school counselors and BADA training; and $4,901,574 in FY94 and $5,078,000 in FY95 for Limited English Proficient (LEP) student programs.  Ms. Peterson pointed out the Governor's Recommends does not fund the MER effort, the LEP programs or the current funding for elementary school counselors, which have been budgeted as an expenditure line in the DSA.  She testified the number of LEP students increased 18 percent in FY92 and federal civil rights and case law require that LEP students be served.  There is a potential for lawsuit.  She noted a further impact on the account would be in the elementary counseling area noting the DSA revenue is not increased to compensate for counselors or BADA training.

 

Chairman Arberry asked for a report on the status of minority recruitment efforts including the percentage of the licensed personnel at the local levels and any changes as a result of MER program.  Ms. Peterson stated the department had a report ready for review.  She summarized the program was successful, especially in the urban school districts.  There were three basic subgrants awarded from the $300,000 allocation:  one each to Washoe County School District, Clark County School District and the Rural Alliance, an association of the remaining 15 school districts.  Clark County was able to hire a number of new minority educators, but they also established a career ladder program which identified staff members with some post-secondary education who wanted to be licensed as teachers and were able to do so with some of the MER funds.  Washoe County has also expanded its recruitment efforts significantly.

 

Senator Raggio asked where the expenditure for MER was located in the DSA.  Ms. Peterson replied it is not included in the Executive Budget, but it is listed on the worksheet.  She explained only the elementary school counselors were included in the Executive Budget.  The $300,000 for MER and $5 million for LEP were not recommended by the Governor but were included under agency request.  Senator Raggio asked how much was listed for elementary school counselors.  Mr. Thunder replied approximately $900,000 was included to cover 22 FTEs.

 

EDUCATION STATE PROGRAMS -- PAGE 637

 

Dr. Paslov stated this budget account funds the overall administration of the Department i.e.:  1) General Administration which includes the activities of the State Board of Education, the office of the State Superintendent of Public Instruction and the Deputy Superintendent in charge of Instructional Services; 2) Support Services to Local Education Agencies which provides financial resources and technical assistance for the administration, management and operation of local educational agencies; 3) Consultation, Technical Services and Leadership to Local Educational Agencies for Improvement of Instruction, provides information, discussion and instruction in educational research, methods, curriculum and techniques to assist local educational agencies in the improvement of instruction and the administration of public education; and Planning and Developing State Education Programs consists of collecting pertinent data, conducting statistical analysis and research, and developing reports and studies directed toward the improvement of educational programs, the administration of statewide scholarship programs and maintenance of teacher and student assessment programs.

 

Dr. Paslov remarked as part of the Governor's budget reduction, this work program was reduced by $98,984 in FY92 and by $313,129 in FY93.  He noted budget reductions were accomplished largely by not filling vacant positions and by eliminating funding for dues and registration fees to national education organizations.  Subsequently, the Budget Office abolished the positions of Deputy Superintendent for Administration & Fiscal Services, the math consultant and the state funded portion of the elementary education consultant which had been held vacant to accomplish mandated budget reductions.

 

Dr. Paslov elaborated the Governor's recommendation funds this account at $840,017 for FY94 and $822,117 in FY95 but does not fund:  the Deputy for Administration & Fiscal Services; the elementary education consultant (.5); fees and registrations for national organizations; an additional 2.25 positions for accountability programs; or a 1 FTE science consultant.  Additionally, the Governor recommends replacing the Deputy Superintendent for Instructional Services with a "Chief of Instructional Services."  Dr. Paslov pointed out the reorganization would shift funding for the Director of Teacher Licensing, the Director of Elementary and Secondary Education and the Director of Special Education to other accounts to show reorganization savings.  The Governor does recommend an increase for the Board secretary to .75 FTE but does add a full-time math consultant.

 

Dr. Paslov stated one of the key positions in the Department is the Deputy Superintendent of Administrative and Fiscal Services, and the Department will be greatly impacted by the proposed reorganization.  This position and its duties are established in NRS 385.310 and 385.315.  Duties include determining apportionment of all state school money, developing a state uniform system of budgeting and accounting, preparation of biennial budgets and auditing.  Dr. Paslov asserted the DSA funding in excess of $850,000,000 requires a full-time deputy.  He stressed the inability to pay the necessary dues for professional organizations impacts Nevada's ability to be involved at the national level and, as the Reno Gazette-Journal article pointed out, the public wants more accountability, but without additional positions or contractual support it will not be feasible to address accountability at the state level.  Further, without a science consultant, the agency cannot provide the leadership that is needed to increase standards for teaching and learning.

 

Other issues Dr. Paslov addressed included: the shift in funding for the Director of Teacher Licensing which simply moves the expenditure from one state general fund account to another and does not, in fact, create a savings for the state; funding the Director of Elementary and Secondary Education with Chapter I funds is illegal and will be discussed under that account; and funding the Special Education Director with federal funds decreases the amount of funds available to local school districts for special education programs and may result in an inability to fulfill state plan requirements.  Dr. Paslov emphasized since the budget had been completed, the school library consultant resigned.  Enormous progress has been made in building school collections and in the automation through this position.  Dr. Paslov said he has been told these duties would be assumed by the State Library staff, but the State Librarian informed him that the State Library will be unable to perform this work.  He remarked he assumes they will lose this position and capacity.

 

He concluded state programs are decimated in this budget and in reorganization.  The department is concerned and would provide any information to the committee that it requires.

 

Senator Raggio asked if in the last biennium the Deputy Superintendent, Science and Librarian consultants positions had been filled.  Dr. Paslov replied the Deputy Superintendent position was vacant almost a year and a half, and the department was trying desperately to meet budget reductions.  He responded the librarian left in January 1993, and when the department attempted to fill the position, they were informed it would disappear.  Senator Raggio asked Dr. Paslov how many of these positions were key which he believes regardless of reorganization, would be necessary versus desirable.  Dr. Paslov replied as an absolute minimum at least half of what was abolished would need to be restored.  For example:  the math consultant and the Deputy Superintendent would be essential, the science consultant and half-time Board secretary could be let go and they would argue for some restoration of dues.  Senator Raggio asked specifically what the dues amounted to for the Education Commission of the States.  Dr. Paslov stated it was $35,000 annually.  Actually, in the past, $30,000 was allocated by the legislature for fees and dues and this was divided among the various organizations with the hope to fully fund in the future. 

 

Ms. Matteucci thanked the committee for the opportunity to address the reasons for the recommendation for the consolidation of the Department of Education with Human Resources to make a new department of Education, Health and Human Services.  Ms. Matteucci commented as the consultants were reviewing the situation in the state, they were asked to look at various similarities in departments.  When the consultants looked at the Department of Education, whose primary duty is passing both federal and state monies through to the local school districts, and at the Department of Human Resources, a number of similarities were found.  The essential similarity would be the administration of grants through their agencies.  Ms. Matteucci noted the Department of Education transfers about 97 percent of the monies it receives to local school districts.  She asserted this was the basis for the consultant's recommendation and Mr. Craigie would address the reason for the Governor's recommendation.

 

Mr. Scott Craigie, Chief of Staff for Governor's Office, remarked he had been monitoring the meeting from his office.  He commented, through the discussion of the 130-year-old system versus what is proposed, the Governor respects the way the system has operated and has no intention to change the interaction the seventeen Superintendents have with the state system or the interaction the school boards have with their own school districts.  He asserted all of those systems are important.  He emphasized the Governor was addressing a system which is an important set of policy issues. 

 

Mr. Craigie noted although politically it probably would have been smarter and more expedient to set this issue aside and leave the two departments separated, when addressing the reorganization in optimum terms, the Governor felt strongly, in policy terms not just money saving and duplication terms, consolidation of the two ought to be fully considered.  He explained looking at the environment in which children go to school today and the environment of different classrooms versus what occurred when this system was formulated 130 years ago, children face many much more difficult challenges than just dealing with the new math or science.  Many of the children are coming in with severe health problems.  In fact about 30 percent of the children in Nevada do not have adequate health insurance.  A large number are from divorced families where the absent spouse is no longer providing any support for the children.  Sixty-six percent (1989 statistic) of Nevada women are in the workplace which has put severe strain on the family and the children in schools. 

 

Rather than looking at this reorganization as an attempt to constrict or restrict what is happening, it is a way to put the education planners of the state and those people who work with health and human services issues under the same roof so they can communicate and plan together.  Mr. Craigie pointed out the School Board is seen as having the same regulatory and hiring/firing authority as they currently have.  The reorganization plan is one to broaden not restrict, and especially to combine and coordinate.  Ms. Matteucci added the committee needs to look at the organizational chart and see there is nothing included with the intent to remove any of the existing Board's authority.  It would continue to be policymaking, not advisory.  The Superintendent position is not removed, but does remain.  Some of the administrative positions are recommended for elimination, but the recommendations were made after the current Director of Human Services had discussed personnel issues with the Department of Education and the cuts are his recommendations.

 

Senator Raggio asked where the Superintendent's position would be placed on the proposed organizational chart and if, in effect, that position would be the Director of Education Services.  Ms. Matteucci said it would be that directorship.  Senator Raggio asked if this was correct, why was the authority line connecting the Superintendent to the Director of the Department of Education, Health and Human Services.  Ms. Matteucci reiterated it was to facilitate the coordination in the social and health services, and the Superintendent would remain accountable to and appointed by the Board.  Senator Raggio commented, if the Superintendent does not answer to the new director, why not keep the department separate.  He inquired what the purpose was if in fact they do not answer to the director.  Ms. Matteucci stated the advantage was, as Mr. Craigie addressed, the conceptual basis of broadening the role of education relative to health and social needs of children which is not necessarily what a perfect world would want, but the reality is the change in lifestyle for Nevada families is such that more and more of the schools are being asked to provide these services.  Senator Raggio granted the concept, but reiterated there is no reason these two areas cannot continue to work together without being combined into one super agency.  Ms. Matteucci stressed duplication and higher cuts were found with two departments and pointed out performance indicators would increase when duplicated areas were transferred into the one department. 

 

Senator Raggio asked if this consolidation was something the Governor would "die for" and if education was left separate from human services, would it discount the whole reorganization plan.  Mr. Craigie replied that issue would need to be addressed between the committee chairs and the Governor directly.  Mr. Craigie reiterated this was a very important issue for the Governor.  Senator Raggio pointed out he does not reject the plan but voiced his concern over the conceptual aspect of it because he believed just doing it and displaying it diminished the education function and role of the department in the consolidation.  He maintained leaving it as a separate department with the elected Board's continued authority under constitutional mandate, along with the Superintendent's position, would prevent a diminished role.  Mr. Craigie insisted the Governor does not intend to diminish the superintendent's or Board's role, but to broaden and build a team effort as advocates for children.

 

Mr. Dini pointed out he saw no reason to put another function in the Human Services department, especially since it is already the largest department in the state.  He remarked it was already overloaded with duties and funds currently being managed.  He stated he was not yet convinced another program should be "melded" into the area, rather he believed the current Human Resources department should be split with two separate administrators. 

 

Senator Raggio added no matter how it is stated or the intentions, the new director would feel some authority over the Department of Education and would, therefore, see conflict between health, welfare and education.  He reiterated with monumental programs and problems, he could not see how there would not be conflicts.  Mr. Craigie agreed these were legitimate issues, but in time, it is important to recognize the director and administrators of each area would see the need to work with, be responsive to and participate in dialogues with this entity under the same roof.  Senator Raggio inquired what would occur if the superintendent and director were in direct conflict on an issue and wondered who would prevail.  Mr. Craigie stated on issues of education the superintendent would prevail.  He repeated the system is set up and intended this way and asked the committee not to let the organization chart define the only options.  He noted the chart itself could be redesigned to address specific authority issues.

 

Mrs. Williams asked if "under the same roof" was figurative.  Mr. Craigie stated it was.  She wondered why certain groups did not work together, but why would they "figuratively" need to be in the same house to communicate.  These groups should be able to work together with or without the same roof.  She stated communication should be attainable with or without the reorganization because this is their job, to serve children and families.

 

Ms. Giunchigliani asked if KPMG Peat Marwick recommended the consolidation occur.  Ms. Matteucci stated yes they had.  She commented Barbara Burnaby had come before Mrs. Williams subcommittee and discussed other states which are expanding the interagency agreement concept which should be considered for Nevada.  Ms. Giunchigliani inquired if interagency agreements had been investigated as an option rather than reorganization.  Ms. Matteucci responded it had not been investigated, but she recalled that last session the NRS 395 monies were required to be sent over to Child and Family Services which appears to be a very successful cooperative agreement.  This would be an example where two agencies worked together and, through statutes, it was effective.  Ms. Matteucci acknowledged the concept could be discussed with KPMG.  Ms. Giunchigliani stated she would provide Ms. Matteucci with a copy of how other states have addressed interagency agreements.  Ms. Giunchigliani reiterated the bottom line is service delivery.

 

Ms. Matteucci concluded other states, specifically, Minnesota has a proposal to combine departments into a Children and Education Services which "will consolidate early childhood, elementary and secondary education and higher education services programs" and "will pioneer the integration of local, social, health and education services."  She commented there is some thinking along these lines as education and the focus of education begins to change.  Therefore, Nevada is not alone in this concept.

 

EDUCATION SUPPORT SERVICES -- PAGE 624

 

Mr. Thunder stated this account contained the staff and costs associated with all of the department of education's financial activity.  It includes all personnel and payroll, budgeting and purchasing, reporting and auditing functions for the department.  He noted the budget is funded by indirect costs assessed on all administrative expenditures of the Department's other accounts.  The indirect cost rates are established based on a plan prepared by the Department and negotiated with and approved by the United States Department of Education.  The rates are then applied to all budget accounts administered by the Nevada Department of Education (NDE).  Because the revenue is based on the administrative expenditures of the other NDE accounts and also on the predetermined indirect cost rate, the resources can only be calculated after all other accounts are established.

 

Mr. Thunder pointed out although the reorganization budget shows a total of $910,666 under Governor's recommendation in Resources for FY94 and $859,830 in FY95, the actual amount available is calculated by applying the estimated indirect cost rates (14.2 percent and 16.2 percent) to the administrative costs from all of the NDE budgets.  He explained if the department assumes the three programs (drug abuse, health aides and JTPA) are not removed from the department, the total available resources for FY94 would be $805,544 and $778,935 for FY95 which would be a drop of 13 percent for FY94 and 10.3 percent for FY95.  He remarked the Governor's plan eliminates the position of Principal Auditor which is currently vacant.  The additional 13 and 10 percent reductions remain after the position is removed.

 

Mr. Thunder stated the department has serious reservations about continued indirect cost funding of this budget if the Governor's reorganization becomes effective with regard to the Department of Education.  The indirect cost rates are negotiated with the USDE based on the organization unit known as the NDE.  If the organization is fragmented, a new indirect cost proposal would have to be executed and it would also seem quite likely that a new plan would not be possible given the diverse makeup of the departments and division outline in the Governor's Plan.  If a new plan were not possible, there might be no funding for this account and the functions would either no longer be performed or the state would have to find additional funding of between $800,000 and $1 million each year, elsewhere.

 

He explained the activities of this budget include the budgeting and projecting activities for all Department of Education programs, including the DSA and CSR programs.  In addition, the reports required by NRS 387.303 are within the responsibility of this budget account.  Mr. Thunder stated the Governor's reorganization as depicted in the Executive Budget would have grave effects on this budget account.

 

Senator Raggio asked how it would "gravely effect" this budget.  Mr. Thunder noted it would not possible with the indirect cost system utilized currently by the USDE to charge federal programs for the administrative accounts of the Director of EHHS.  Senator Raggio asked if this account provides an audit function.  Mr. Thunder stated one of this account's functions was auditing to ensure compliance with OMBA 128 and 133 requirements.  Senator Raggio wonder if the CSR programs had been audited for compliance.  Mr. Thunder replied the department does not have funding for it, but has reviewed the CPA reports from the districts and does monitor them.  He stressed the department did not have staff or funds to actually go out and audit each district's CSR program.

 

Chairman Arberry asked if the department has the USDE impacts in writing.  Mr. Thunder noted these issues had not yet been explored with USDE, but should the reorganization occur it will be addressed.  Chairman Arberry requested the department provide in writing the potential effects of reorganization on federal funding for education.

 

STUDENT INCENTIVE GRANTS -- PAGE 629

 

Mr. Thunder stated this was a unique program in the department and funding is provided to assist students who qualify for PELL grants or other Title IV programs administered by the USDE.  Regulations apply to all eligible public, private, vocational, and proprietary postsecondary educational institutions in Nevada who elect to participate in the program.  The maximum annual grant per student is $2,500.  In Nevada in FY92, 703 students received assistance from this program, with 589 recipients from families with incomes of less than $20,000.  He noted of the 703:  283 attended two-year public institutions; 191 attended four-year public institutions; 5 attended four-year private non-profit institutions and 224 attended proprietary institutions.

 

Mr. Thunder explained the state portion of the funding in Nevada is provided by a grant from the Endowment fund of the University of Nevada System.  One .5 FTE program assistant IV directs the program for the NDE.  He noted in this program federal funds cannot be used for administrative purposes and the grant funding from the federal grant must be equalled or exceeded by the state funding.

 

Mr. Thunder asserted the agency request was built with the assumption that the program would continue for two more years at approximately the current level, with a small increase in federal funding and the Governor Recommends budget is within $20 of the agency request.

 

Ms. Giunchigliani asked what a propriety institution was.  Mr. Thunder replied it was a for-profit institution such as a beauty college.

 

EDUCATION GIFT FUND -- PAGE 652

 

Ms. Peterson explained this budget establishes authority for the department to receive funding from private sources for special projects.  during the last biennium the Department received gifts to fund the Nevada Scholars Program, the Young Writers Program, Teacher Mini-Grants, Nevada Book Review, Odyssey of the Mind, Citizen Bee, Young Readers Award, Nevada Reading Week and programs for academically talented students.  She pointed out, during the last two years, much of the money has "dried up," reflecting the general state of the economy.  For example, the Nevada Gaming Foundation no longer funds the teacher mini-grant program.

 

Ms. Peterson explained the agency request reflects anticipated funding from the Nevada Mining Association for:  the Nevada Book Review project which prints reviews of library books that have been written by Nevada school librarians; Young Readers Award which brings to Nevada the authors who have been selected by school children; and Nevada Reading Week to support printing and workshop expenses for Nevada teachers.  Other anticipated revenues are from the Nevada Gaming Foundation and will support:  the Nevada Scholars Program which allows the department to purchase medallions and certificates for high academic achieving Nevada seniors who qualify for the Nevada Scholars program and the Citizen Bee, a contest for high school students in citizenship and U.S. Constitution.  The total requested is $28,500 and the Governor's recommendation is the same.

 

ECIA - CHAPTER I -- PAGE 654

 

Ms. Peterson stated ECIA - Chapter I provides federal financial assistance to improve instructional programs for educationally disadvantaged pupils.  The programs are directed toward schools with high concentrations of low income families, schools with large numbers of children of migratory agricultural workers and institutions for delinquent, neglected or handicapped children and for youth correctional institutions.

 

She explained the federal granting agency places responsibility for administration of this program within the state and NDE.  It provides funds to employ staff to assist school districts to develop and improve programs, to review project applications, to supervise instruction, to evaluate effectiveness, to disburse funds and conduct audits, to make required reports and to assure compliance with federal law and requests.

 

Ms. Peterson elaborated State Handicapped Aid was also included in this account and was available under P.L. 100-297.  This aid supports supplemental education services to students who have been institutionalized, and to be eligible students must be or must have been in a state-operated educational program.  After initial eligibility is established through institutionalization, the student may received supplemental educational services in a school district or the non-institutional setting and continue to be eligible for benefits.

 

Ms. Peterson summarized the agency request reflects approximately $17 million in anticipated federal revenue in FY94 and nearly $18 million for FY95.  These funds would result in:  increased aid to schools, consistent with federal entitlement formulas; 7.75 FTE staff positions to administer the program according to federal law and regulations; out-of-state travel to allow staff to attend national Chapter I conferences required by the federal government as part of the administrative responsibilities for the program; additional salary costs for the director of the Elementary and Secondary Education Branch which are currently paid by general funds under BA 2673 deleting salary costs of the current director; deletion of two consultant positions to reflect reorganization savings; increased aid to schools beyond the federal entitlement; and reduced out-of-state travel amounts.

 

Ms. Peterson pointed out federal rules and regulations, contained in Vol. 54 No. 96 of the Federal Register, dated May 19, 1989, state that "The SEA may not use the funds referred to in paragraph (b) (1) of this section for state administration."  Since the Director of Elementary and Secondary Education supervises other state and federal programs, the rule would be violated if the Director's salary was paid from Chapter I funds.  She continued stating a federal audit conducted on Title I (now Chapter I) in Nevada for 1972-75 covered administration funds and, at that time, these funds were used to fund directors' salaries and were found to be in non-compliance.  The legislature subsequently had to appropriate state funds to pay the penalty for the misspent funds.

 

Ms. Peterson stated another feature of the Governor's recommended budget is to increase aid to schools, but district entitlements are determined at the federal, not the state level.  She pointed out the money designated for Chapter I administration must be used for administration and cannot be redirected at the state level to aid to schools.  Therefore, money that is not used for state administration, which would result if two positions are deleted for reorganization savings, must be returned to the federal government and would not, in fact result in savings to Nevada, it would be redirected by the federal government to other states.  Finally, by not allowing staff to attend required out-of-state meetings, the state runs the risk of not fulfilling management responsibilities and inadequate state administration may result in future audit exceptions requiring payback by the state and local school districts.

 

Speaker Dini noted the administration says it will transfer one position in and eliminate two FTEs, and he asked if the department can handle the elimination of one FTE.  Ms. Peterson replied it would cause problems for the department and there is an amount of money set aside for administrative funds which covers both positions.  She reiterated if the money is not used for administrative functions it must be returned to the federal level and cannot be utilized at the local level.  Further, she stated these positions monitor and review Chapter I projects in individual schools and assure compliance of student eligibility.  If the staff is cut, the risk is run of not completing the necessary monitoring.

 

Ms. Giunchigliani asked if staff monitors the equipment purchased by Chapter I funds.  Ms. Peterson replied yes, it is monitored very thoroughly where inventory and ID numbers coincide. 

 

Senator Glomb requested a breakdown of how the Budget Office plans to spend the $17.8 million if different from the department's proposal.  Dr. Paslov replied the Budget office did not necessarily plan on spending the funds differently, in fact they have increased the amount and the department is not sure where those funds come from, but the distribution and use of the funds requires state administration.  The budget office does intend to reduce two staff members and shift a general fund position into the account and this is the cause for departmental concern, not the use of the $17 million local school funds.

 

Ms. Peterson emphasized the increase in aid to schools beyond what the agency requested and explained those entitlements are determined at the federal level.  Senator Glomb noted the budget office recommended the funding of the Elementary and Secondary Education director which has not previously been done with some funds transferred to mental health.  Ms. Peterson stated this has been done in the past and the narrative on page 657 under base adjustments highlights these issues. 

 

Mr. Hataway stated previously an education branch had been split into elementary/secondary (ES) education and federal and related programs.  The deputy of the former branch became the director of the federal and related branch while the deputy of basic education became the director of the ES branch.  The proposal is to merge those two back together into the basic education area and then only one director would be necessary.  Therefore, it would be legal to fund the position from the primary budget account.

 

Mrs. Williams inquired as to when and why were the areas were split and asked why put them back together if problems had previously existed.  Mr. Hataway stated they were split two years ago because of the span of control of the director over the people.  Due to budget reductions over the last biennium and the proposed reductions for the next biennium, the span of control issue will not be as severe.

 

TEACHER TRAINING - ENGLISH AS A SECOND LANGUAGE -- PAGE 658

 

Ms. Peterson stated this account is 100 percent federally funded to provide teacher training and technical assistance to local school districts for programs that address the needs of students with limited proficiency in English (LEP).  She pointed out the number of LEP students enrolled in Nevada schools is reported in EXHIBIT E-9.  The agency request reflects increased federal funding in both years which covers the increasing number of second language students and additional expenditures for training that will allow teachers to address the needs of students who do not speak English.  Ms. Peterson mentioned the Governor's recommendation adds $2,879 in FY95 with no identified source/explanation for the increase.

 

DISCRETIONARY GRANTS -- PAGE 661

 

Dr. Paslov stated this budget is used to account for various Federal discretionary grants including:  the National Diffusion Network which is a 100 percent federally funded effort making school districts aware of successful instructional practices that have been developed through the various federal assistance programs; the National Cooperative Statistics Program whose funds are provided by the National Center for Education Statistics (NCES) and are used to implement and improve state agency data collections; the Homeless Assistance Act which determines the number of homeless children in the state and assists them in accessing educational services in local school districts; the Bilingual Education program, a 100 percent federally funded, program to strengthen curricula and general awareness of the needs of non-English speaking students; the Byrd Scholarship which provides at least 26 scholarships of $1,500 each to academically distinguished graduating seniors; and the School Bus Driving Training which uses federal funds received from the Department of Motor Vehicles to provide safety training for Nevada's school bus drivers.

 

Dr. Paslov explained the NCES contracts with the department to undertake specific projects related to the collection, analysis and reporting of data.  Receipt of this funding is dependent upon the delivery of results specified in the agreement.  He noted the Byrd Scholarships are distributed regionally according to Congressional districts and provide for convening a mandatory policy advisory committee.

 

Dr. Paslov stated when Congress reorganized the higher education act, it enhanced the amount of Byrd scholarships to recipients by eliminating funds for state administration of the program.  In Nevada this amount was $12,000, which was used to administer both the Byrd and the Nevada Scholars programs.  The department has appealed to the private sector to provide administrative funds, but to no avail, and since the money for administering the Byrd scholarships will not be available, effective in FY94, the program will be discontinued.

 

Dr. Paslov commented this was one of the unintended consequences of budget shortfalls and subsequent staff reductions and the department cannot provide even the minimal staffing that is required to operate this program. 

 

Senator Glomb clarified that $12,000 annually to administer $40,000 sounded like a lot of funds.  Ms. Peterson stated this was the amount allocated in the past and had been utilized to administer all the scholarships, not just the Byrd Scholarships, but that is the primary source.  Senator Glomb asked to have this disparity addressed in subcommittee hearings.  Dr. Paslov noted the administrative funds were deleted in order to increase the actual scholarship fund.

 

Mr. Price asked if previous funding came from the federal government, would the $12,000 administration funds still be needed for the Byrd scholarship.  Ms. Peterson replied less monies may be needed for administering only that scholarship, but some administrative funds would be needed.

 

OTHER STATE EDUCATION PROGRAMS -- PAGE 665

 

Mr. Thunder stated this account and the Education Gift Fund account were similar except the gift fund only accepts non-state monies.  The workshop revenue amounts represent receipts from participants at workshops held by the department.  The Nevada Young Writers funds represent school district contributions toward the annual publication of exemplary creative writing by Nevada students.  Class Size Evaluation funds have also been contributed by local school districts.  The remaining revenues reflect contributions from various sources.  The Governor's recommendations allow funding of workshops and the Nevada Young Writers program and the U.S. Senate Youth Program, which do not involve state funding.  The budget does not support the funding of the partnership with National Geographic or Public Broadcasting.

 

Mr. Thunder mentioned funding for the partnership with National Geographic would strengthen the teaching and learning of geography in the state, while the funding for Public Broadcasting is passed through to public TV and radio stations. 

 

Senator Glomb stated the department was just asking for legislative approval to accept these funds.  Mr. Thunder replied authority is needed to receive the funds into the accounts, and the Governor has approved authorization for all funds except the National Geographic and Public Broadcasting funds because they require state matching funds.

 

Senator Raggio asked what happened to the $50,000 one-shot appropriation for the Public Broadcasting.  Dr. Paslov explained it was actually a two-shot appropriation totaling $150,000.  He stated he would audit the actual account dispersement and provide a report to the committees.

 

Speaker Dini commented it appears the academically talented program was eliminated.  Mr. Thunder replied the $17,500 in B/A 2699 was part of the budget reduction for FY92 and has not been reinserted. 

 

ECIA CHAPTER 2 -- PAGE 668

 

Ms. Peterson stated ECIA Chapter 2 provides funds to support innovation, educational improvement, library and instructional materials, meeting needs of at-risk students, enhancing the quality of teaching and learning and supporting effective school programs.  She pointed out at least 80 percent of the funds received by the state must flow through to local school districts.  Not more than 25 percent of the remaining 20 percent can be used for administration of the grant.  The Governor's recommendation reduces staff by .5 FTE consultant position to reflect reorganization savings, reduces out-of-state travel by $4,761, and reduces in-state travel by $3,506. 

 

Ms. Peterson emphasized the impact is primarily in the .5 FTE position.  The position is currently vacant and proposed to be deleted permanently.  If deleted, meet the legislative intent to increase participation in the Nevada School Improvement Project will not be met.  This position provided training in the project, and it is a stated intent to increase the project.  Also, the agency's out-of-state and in-state travel requests are appropriate in light of the federal requirements for this program and should not be reduced.

 

Ms. Giunchigliani requested expansion on the two-tier component of the school improvement project, one of which is placement of counselors into the DSA, but she saw no funds for school improvement.  Ms. Peterson replied the nomenclature was probably the problem here.  There is a budget account titled "School Improvement" with MER, counselors, etc. which is separate from the "Nevada School Improvement Project" within this account and is based on the effective schools research where staff go into schools and work with teachers and administrators to identify needs and plan for improvements. 

 

Senator Glomb asked for clarification on the performance indicators.  Ms. Peterson noted FY92 showed not only the number of applications approved, but also the number of amendments, and the projections include just applications received without amendments.  The loss of staffing also affected the performance indicators.

 

TITLE II EESA -- PAGE 672

 

Ms. Peterson stated this account is funded from the Dwight D. Eisenhower Math and Science Act.  The purpose of this program is to provide training to elementary and secondary teachers in mathematics, science and technology.  Ninety percent of the funds are provided to local school districts to conduct training and inservice based on needs identified at the local level.  The program requires the state to administer the subgrants to each local school district.  The remaining ten percent of the funds are to be used by the state for additional statewide training of teachers, based on identified state priorities, and technical assistance to schools.

 

Ms. Peterson remarked prior to FY93, administration of this program was conducted by a contractor, and effective September 1992, the Department had authority to employ .5 FTE consultant to administer the program.  She noted the agency request reflects a carry-forward in FY93 that will be a continuation of aid to schools at basically the 1992 level.  The Governor's recommendation reflects the agency request.

 

Chairman Arberry asked if the school districts are experiencing any trouble hiring math and science teachers.  Ms. Peterson remarked they were having difficulty and the motive behind this account was to provide training to those teachers already in the field so they could receive math/science endorsements.

 

Senator Raggio commented the budget does not meet the minimum pass through requirements and explained at least 90 percent needs to pass through to the schools, with five percent spent on administration and five percent on demonstration or exemplary programs.  Mr. Thunder replied part of the problem is the carry forward administrative funds from FY93 can be used for FY94 and FY95.  Senator Raggio requested a worksheet be submitted to the committee showing the requirement for pass-through is being met.

 

 

 

 

EDUCATION FOR THE HANDICAPPED - TEACHER TRAINING -- PAGE 675

 

Dr. Paslov testified this program is 100 percent federally funded and the grant amount is generated by the number of students served statewide.  He noted the Child Count Summary is provided as EXHIBIT E-9.  He pointed out at least 75 percent of the funds must be provided to school districts through a planning process. 

 

Since the state has been in receipt of these funds, the department has flowed through a percentage in excess of 75 percent.  Dr. Paslov said this was done primarily to reduce some of the burden on districts by providing additional funds for meeting student needs, as opposed to requiring them to apply for special project grants.  In FY90 and FY91, 81.6 percent of the funds were flowed to local school districts with 79 percent for FY92. 

 

He explained this program provides grants to school districts through the Department of Education for the education of children and youth with disabilities.  The department employs staff to assist the local school districts to develop appropriate education programs.  This is accomplished through assuring compliance with federal and state statutes and regulations, reviewing applications for funds, evaluating program effectiveness, disbursing funds, performing audits, preparing reports and providing technical assistance.

 

Dr. Paslov said the governor's recommendation flows the minimum requirement of 75 percent to local school districts, adds a director's salary which is currently in general fund account 2673, deletes two FTE consultant positions for reorganization savings, and reserves $925,012 in FY94 and $1,414,002 in FY95 for "potentially" eligible state programs.  He remarked the director of special education currently administers state as well as federal programs and because of federal supplanting issues, shifting this salary could cause problems.  The positions recommended for deletion serve needs of special populations such as secondary school age youngsters.  These populations are growing and have ongoing needs which the state has a responsibility to address.  These staff members also perform monitoring functions essential to receipt of federal funds.  Eliminating the positions will reduce services to these special populations.  Dr. Paslov reiterated these funds must be used for very specific purposes and there is no evidence that "potentially eligible" state programs are, in fact, eligible.  The money should be made available to local school districts.  Dr. Paslov added the department's staff are experts, work with the districts and have an excellent idea of how much should be flowed through in excess of the 75 percent.  Dr. Paslov asserted the staff is also aware of what would or would not be eligible for these funds and the department believes these funds should be provided to the local schools for the reasons stated above. 

 

Ms. Giunchigliani asked if the $2 million in new funds have been disseminated to the schools.  Mr. Thunder stated a large portion of that was placed in reserve and is being held there pending the decision on how best to use it.  Ms. Giunchigliani asked the Budget Office why increased federal funds for special education are not being directly dispersed to the districts as should be.  Mr. Hataway stated the budget office was currently evaluating potentially eligible programs at the state level.  Ms. Giunchigliani exclaimed these were not new funds, rather an increase for handicapped education.  She wondered what was being evaluated and how long have the funds have been in reserve.  Mr. Hataway replied a work program was processed in November 1993 which added $930,000 to the program.  The account is currently using 85 percent of the available funds for the FY93 in aid to schools category and the department has recently submitted another work program for $392,000 to transfer from reserve to the aid to schools category.  This work program is being evaluated.  Ms. Giunchigliani reiterated the Budget Office has been holding nearly $2 million for four months.  Mr. Hataway responded the total reserve is approximately $700,000 of which the department already had $150,000 in reserve.  Ms. Giunchigliani pointed out with the local school districts experiencing a 12 percent increase in service need, all funds from the federal government should be released to be passed through to the local level.  Further, she stressed there should be no need to evaluate funds of an already established program. 

 

Ms. Giunchigliani pointed out the funds being held were additional funds granted over and above the initial FY92 allocation.  Mr. Hataway concurred this was an amount above the original authorization.  She maintained the department has been doing a better job of releasing more than the 75 percent federally required funds in order to offset and assist those districts which carry a $23 million burden, and yet the Budget Office has not released the "bonus" funds for passing on to those local districts.  Mr. Hataway responded the IFC approved work program brought the districts up to the current level of funding. 

 

Dr. Paslov stated there was some disagreement in the exact amounts and the funding.  Mr. Hataway reiterated the Budget Office understood the $930,000 added and approved by IFC would continue the programs at a hold-harmless current level of funding. 

 

Ms. Gloria Dopf, Director of Special Education, addressed the 75 percent flow-through and the 85 percent issue to try and clear up the confusion.  She stated the annual federal grant requires a minimum flow through of 75 percent.  In the previous years, 82 percent, 82 percent and 79 percent were flowed through.  For FY92, $315 per pupil were flowed through to the school districts or 79 percent of the total grant.  For FY93 the projected amount was not known because the award is received in August.  Projecting two years before, the work program authority did not cover the amount that would minimally flow through 75 percent to the school districts.  Ms. Dopf pointed out the work program authority is not synonymous with the grant.  She explained the grant is available for a longer period of time than the 12 fiscal year months, consequently there is a carry forward from the previous years if the districts do not use the full grant amounts.  If a school district has a program in place, but is not able to get a teacher or speech therapist, the money could be refunded back to the department.  That money, in order to be flowed back to the district, must be reauthorized by the Budget Office and IFC to spend, even though it was part of a previous work program authority.  Therefore, the work program authority would be different than the amount of the initial grant each year and coincidence of the program and grant does not indeed exist.  Dr. Dopf pointed out when the Budget Office, in discussing the 85 percent flow through, talked about the total work program authority, not the amount per grant.

 

Ms. Dopf discussed the initial grant.  The department had proposed in the original work program augmentation an amount that would have enabled the department out of the FY 93 grant to flow through $332 per pupil to the district.  This would have constituted 81 percent of that federal grant.  The department was allowed to flow through the amount which was the whole target amount from the previous year.  This constituted $315 per pupil or 77 percent of that federal grant.

 

Ms. Giunchigliani requested expediency in dispersing the monies to the local levels to fulfill local service needs.  Mr. Dini asked the budget office if they were looking at these funds to be placed in out-of-district placements.  Mr. Hataway stated the office received last Friday the work program being discussed and they plan to process it in a timely fashion for consideration at the next IFC meeting.

 

Senator Glomb pointed out there was a surplus in the out-of-district placement budget now and wondered if the Budget Office was looking for other uses for the grant funds.  Mr. Hataway replied this was his understanding, but he was unable to address the issue because he was not involved in the Human Resources side where the potential programs would be.  He pointed out this reserve situation also occurs in the Early Childhood Education budget and by the subcommittee meetings, the Budget Office will have an answer.  Senator Glomb asked if reserve was the federal funds not being allocated or utilized.  Mr. Hataway reiterated the funds are placed in reserve accounts until the programs are evaluated and he was not involved in that process.  Chairman Arberry requested these issues be addressed in subcommittee.  Senator Glomb asked to have a report of what accounts have these reserves and in what amount.

 

Senator Jacobsen questioned if there are a certain amount of funds where either all or a portion are not used, would it be considered reserve.  Mr. Hataway stated the budget office hopes recommendations for the fund allocations will be provided by the end of session and if not, the funds will go to Aid to Schools.  He pointed out the study was not completed when the budget was put together and this was the Budget Office's way of protecting the state's interests in the use of the eligible funds.  He emphasized the funds do not necessarily have to go to the schools.  Senator Jacobsen asked if the funds go into the savings ledger.  Mr. Hataway replied it is reflected as a reserve account, but once the decision is made it would be transferred out either back to the aid to schools category or to another budget account upon legislative action.

 

Mr. Price asked how does the Budget Office decides which of their representatives will be present at the hearing and how much information would be provided.

 

EDUCATION TO HANDICAPPED PERSONS -- PAGE 679

 

Dr. Paslov testified this program provides for the education and care of pupils with  handicapping conditions that require special education programming outside the pupil's home district.  Parents or guardians may apply for benefits with the appropriate local school board which certifies the eligibility of the pupil.  If the local board finds that an appropriate special education program is not available in that district, the board transmits the application to the Superintendent of Public Instruction who has final authority regarding the placement of any handicapped person under this program.

 

Dr. Paslov remarked, since 1991, under the provisions of SB611 of the Sixty-sixth session, administration of this program has been shared with the Division of Child and Family Services.  In FY92, $526,407 was transferred to Human Resources.  He noted a study of this joint effort is currently being conducted by an independent evaluation.  He stated the work program was reduced by $125,202 in FY92 and $205,660 in FY93 to meet the Governor's budget reduction mandate.

 

Dr. Paslov explained the Governor recommended $1,052,814 be transferred to Human Resources and that $1,206,864 in federal resources be spent for each year of the biennium and $528,423 in general funds be spent for each year.  The Governor's recommendation reflects an overall decrease of 12.8 percent.

 

Dr. Paslov pointed out this continued and increased use of federal monies will hurt school districts, as they will be forced to pay for the services now provided by the federal special use dollars with local dollars.  The Governor's budget fails to meet the matching requirement for these dollars, and therefore, cannot possibly become a reality because each federal dollar used must be matched with a state dollar.  He concluded, in the meantime, these federal dollars are tied up and cannot be used for special education programs in the schools, causing a reduction of services for handicapped children.

 

Senator Glomb asked for the total amount of reserve not being spent including those funds in the Human Resources account for the same purpose.  Ms. Peterson stated these programs are very unpredictable because it is difficult to predict when a student needing these services will appear in the districts.  This program is referred to as the 395 placement program and in the past, the legislature has not appreciated the department's interim requests for additional funds even though estimates are quite difficult.  Senator Glomb requested the leftover amounts in this and the Human Services account be included in the report.  Ms. Peterson asserted this account does not contain a line-item entitled "Reserve," but rather a balance forward.  Senator Glomb pointed out the item "Reserve for Reversion" line.  Mark Stevens remarked the work program amount is probably part of the budget cuts for this year.

 

Senator Raggio asked for clarification of the legality of the "reserve" amount being discussed.  Ms. Peterson directed the committee to the budget summary on page 680 of the Executive Budget.  She explained the FY 94 agency request for general funds is $1,105,063 and $986,365 for federal funds.  The FY94 Governor's recommendation for general funds is $528,423 and $1,206,846 for federal funds.  Each one of the federal dollars must be matched with state dollars and those additional federal dollars cannot be spent until they are matched.  Mr. Hataway pointed out under adjustments to the base the appropriations are recommended to be used in both years of the biennium.  This was requested to allow transfer as needed to match federal dollars.  Senator Raggio pointed out it would be expected there is nearly $3 million available for these programs, but the governor only recommends about $1 million of state general fund money so only $1 million in federal funds could be utilized.  Mr. Hataway replied the federal funds may need to be pared down a little only if the authority to use the funds for both years is not approved. 

 

Ms. Giunchigliani asked if any of the monies in B/A 2715 held in reserve are impacted or planned to be used in this area.  Mr. Hataway stated the monies came from the same source and it will be taken into consideration.  Ms. Giunchigliani wondered if any cost would be accrued for the study alluded to earlier.  Ms. Peterson replied there would be no additional cost.  The contract will be paid through funds already allocated. 

 

Mrs. Williams asked if the federal source was categorical grants and can funds be transferred in and out of programs or is there a requirement for certain monies to remain in specific programs.  Ms. Dopf replied the monies discussed in Budget Account 2715 and the federal money in Budget Account 2670 are from one single grant.  Previously called Education of the Handicapped Act (P.L. 94-142), it is now amended and called Individuals with Disabilities Education Act or (P.L. 101-476).  Those are the funds Dr. Paslov referenced earlier and are available on a per pupil amount based on a count of the youngsters served in special education and related services supplemental to the state program.

 

 

 

OCCUPATIONAL EDUCATION -- PAGE 694

 

Senator Glomb pointed out this budget also has some funds held in reserve which will need to be addressed in subcommittees.

 

Ms. Peterson stated this account funds occupational education.  State funds must be provided to match federal contributions for State Administration.  Various parts of the Carl Perkins program have different matching requirements -- some require a 50 percent match and others require none.  Non-federal support cannot be reduced from one year to the next.

 

She explained the primary mission of the Carl Perkins Act is to improve and maintain occupational education programs and to create "access" for identified "special needs populations," including:  high school age students; community college and post-high school students; and persons with socio-economic or educational handicaps that are barriers to employment.

 

This budget includes subgrants to local school districts and other state agencies to improve occupational education programs for the groups listed above.  As part of the subgrants, ancillary services in the areas of curriculum development, occupational guidance, career information systems, research and teacher training activities are also provided.

 

The 1991 Legislature approved AB103 which funded portions of the Nevada Business Plan, including:  Technical Preparation, Apprenticeship Training, Introduction to Technology, Career Information Systems, and Nurse Assistant Training.  She noted a copy of the Nevada Business Plan is available and it represents a major reform effort in occupational education.

 

Ms. Peterson testified, as part of the Governor's Budget Reduction, the state funded portion of this budget account was reduced by $36,776 in FY92 and by $119,385 in FY93.  Three positions, Assistant Director, Senior Research Analyst, and a Management Assistant I, were held vacant to accomplish the reduction and were subsequently abolished by the Budget Office.

 

She pointed out the Governor's Recommendation of $5,694,739 million in federal funds and $548,926 in state funds for FY94 and $5,561,447 in federal funds and $565,206 in state funds for FY95:  increase aid to schools, add one consultant position, add $239,079 for "tech prep" expenditures, do not fund the Nevada Business Plan, and create an "Occupational Education Bureau."

 

Ms. Peterson emphasized if the tech prep budget is funded at the level recommended in the Governor's budget, the Department will have to augment the budget when the $399,523 is received from the federal government.  All tech prep funds are subgranted to community colleges and local school districts in the state.

 

She noted the amount shown for apprenticeship training in the agency request for FY94-95 represents only state appropriations and the federal funds designated by the legislature for the training in the current biennium are included in the Aid to Schools line item in the FY94-95 budget.

 

She explained the Nevada Business Plan outlines a reasonable approach to building, strengthening and reforming occupational education in Nevada.  Failure to continue its implementation further delays progress of much needed occupational education in this state. 

 

Senator Raggio asked Mr. Hataway how the new consultant's position is paid for if there are no personnel expenses.  Mr. Hataway pointed out Ms. Matteucci tried to address it as reorganization savings earlier.  It is listed on the matrix provided earlier and the personnel monies were applied to Aid to Schools. 

 

Ms. Giunchigliani asked if tech prep funds were being used to place tech prep classes into the schools and how many schools will receive the funding.  Dr. Paslov replied a report was being prepared with the statistics.  Ms. Giunchigliani wondered if federal funds were guaranteed through the Perkins Act.  Dr. Paslov replied yes.

 

Mrs. Evans indicated, the Nevada Business Plan started with AB103 from the Sixty-sixth session and another BDR will be coming for another piece of that program.

 

ADULT BASIC EDUCATION -- PAGE 699

 

Ms. Peterson testified the federal Adult Education Act provides educational opportunities for adults to acquire basic literacy skills and to continue their education to the beginning secondary level, at a minimum.  Beginning in 1992, there was a state matching requirement with 75 percent federal funds matched by 25 percent state funds.  She explained five percent or $50,000 (whichever is greater) can be used for state administration.

 

Ms. Peterson clarified the Stewart B. McKinney Act provides for the development and/or expansion of educational opportunities that enable homeless adults to acquire basic literacy skills, and to continue their education to the beginning secondary education level at a minimum.  She cited EXHIBIT E-11 which summarizes all adult education statistics for 1991-92.

 

Ms. Peterson noted the Governor's recommendation: increases contractual services for consulting services in lieu of a new position; represents all of the required match in FY94; and makes part of the match in FY95 the responsibility of local school districts.  She emphasized using local funds to meet the matching requirement of this program jeopardizes it in the long run.

 

Mr. Dini asked if the FY95 recommendation would be $210,000 in general funds and the local school districts would have to make up the difference to $1.5 million.  Ms. Peterson agreed the local school district funds would be used to match the funds.

 

Senator Raggio asked if the match was 25 percent.  Ms. Peterson replied it would be and if the state cannot match the amount, the local districts would be asked to do so.  This was not the practice in the past.

 

Mr. Heller remarked in order to get all the federal funds, the local school districts would have to come up with approximately another $200,000.  Mr. Keith Rheault, director of Occupational Education, replied the FY94-95 projection for Adult Education is $1.2 million and 25 percent of that would be approximately $250,000 for matching.  He explained for FY95 about $290,000 would need to be matched.  There would be $210,000 in the budget with the local school districts matching between $70,000 and $80,000.  He noted most of the recipients are at the community college level and community based organizations.  Mr. Thunder clarified at least two grants are involved with this account.

 

PROFICIENCY TESTING -- PAGE 703

 

Dr. Paslov said this program provides for the assessment of student proficiency in reading, mathematics and writing at grades 3, 6, 9, and 11, as required by NRS 389.015 and 389.017 and is 100 percent state funded.

 

The reading, mathematics and language examinations at grades 3 and 6 and the reading and mathematics examinations at grade 9 are administered by the school districts and the results are reported to the Superintendent of Public Instruction.  The High School Proficiency Examination Program, which is carried out by the Proficiency Examination Program (PEP) staff, consists of those examinations which each student is required to pass in order to earn a standard high school diploma.  Staff members develop examinations, and administer, score and report results for these examinations in reading, mathematics and writing for grades 11 and 12 and for adult programs.  In addition, the PEP staff develops, administers, scores and reports the results of the direct writing assessments at grades 6 and 9.  This writing assessment is developing into a state-of-the-art performance assessment.

 

Dr. Paslov explained as part of the Governor's budget reduction, this work program was reduced by $59,062 in FY92 and $64,327 in FY93.  Consequently, local school districts paid for one administration of the 11th grade writing exam.

 

Dr. Paslov pointed out the Governor's recommendation:  does not allow participation in NAEP; allows for no new test development; maintains the current level of testing using the same tests; pays readers of writing tests the same stipends which were reduced in FY93 to $86 per full day session; upgrades test scanning equipment of optical scanning unit, high capacity printer and one new computer; and places this function in a "Planning, Research and Evaluation Bureau" in EHHS.

 

He noted the NPE is mandated by Nevada law and although there is some controversy with the testing program, the department has made progress.  He maintained much remains to be done to make it a truly beneficial testing program to students and teachers.  He stressed the Governor's recommended level of funding will not allow for test improvement, let alone new test development which may result in the school districts once again footing the bill.  This would be problematic because of their own reduced funding levels.

 

Dr. Paslov reiterated the state must pay for the programs it mandates and if Nevada is going to have a statewide state-of-the- art testing program, it must be comprehensive, performance-based and reliable.

 

Senator Raggio asked, in light of the criticism that the tests were too simplistic, were they made more difficult or were grades just raised.  Dr. Paslov replied the item difficulty has been increased as well as the cut scores.  It was a slow process to accomplish this, but it has been done.  Senator Raggio questioned if the test measures some skills and ensures the students who pass the test really deserve the diploma.  Dr. Paslov replied the test accomplishes the intended purpose more than it did in 1972, and he will provide the test for Senator Raggio or any other interested committee members to review. 

 

Ms. Giunchigliani stressed this is a minimum competency test and the debate is whether the minimum is becoming the maximum.  She addressed the general fund amount of $279,000 for FY91-92 where the district picked up $59,000.  The Governor's recommendation for FY93-94 is $260,000 and she asked if the district would be required to pick up some costs of the administration of the tests.  Dr. Paslov replied the districts will be in the same dilemma as before and the additional costs will be passed down to the local level.  Ms. Giunchigliani asked to have a complete list of the costs which will be passed down to the local school districts for each budget account.

 

 

EDUCATION PERSONNEL TESTING -- PAGE 707

 

Dr. Paslov explained this account was funded in the past through a loan from the general fund which is to be paid back in $2,000 annual payments for ten years with the fees from teachers' licensing tests.  Under this program, applicants for initial licensure as teachers are required to demonstrate their competence in basic skills, professional knowledge and specialty areas.  The Governor's recommendation would be for a work program of $35,014 in FY94 and $47,140 in FY95, reserves of $20,975 in FY94 and $33,600 in FY95, and general fund payback of $2,000 in FY94 and $3,000 in FY95.  Dr. Paslov stated the revenue projections reflected in the Governor's Budget are not accurate and artificially inflate resources in this budget account.  Dr. Paslov emphasized the department does not believe the license fees will generate the kind of monies reflected in the Governor's recommendation.

 

Chairman Arberry noted a portion of page 708 in the Executive Budget was missing.  The Budget Office stated they would provide corrected pages for the committee members.

 

Ms. Giunchigliani asked what the projected amount would be for the licensing fees.  Mr. Hataway stated the balance forward projected reserve for FY93 was higher and is reflected in the actual amount.  He pointed out testing fees of $16,805 with $11,269 in reserve which the Budget Office brought forward.  Ms. Giunchigliani concluded the two amounts were added together and reflect the higher amount.

 

Mr. Thunder stated the reserve in this account is not for the same reason as noted in the special education accounts.  This is an accumulation of available funds to develop new testing.  Ms. Giunchigliani pointed out the funds are for development, not actual test taking.

 

Dr. Paslov thanked the committees for their patience, cooperation and insight in the budget process.

 

Mr. Thunder commented on the three accounts moved to subcommittee hearings.  Each committee member will receive a statement regarding the proposed placement of these agencies, why they were originally placed in education and why the department believes they should remain there.

 

Chairman Arberry adjourned the hearing at 4:47 p.m.

 

            RESPECTFULLY SUBMITTED:

 

 

                                   

            Kerin E. Putnam

            Committee Secretary

 

??

 

 

 

 

 

 

 

Assembly Committee on Ways and Means

Senate Committee on Finance

February 18, 1993

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