MINUTES OF THE
ASSEMBLY COMMITTEE ON WAYS AND MEANS
Sixty-seventh Session
January 28, 1993
The Assembly Committee on Ways and Means was called to order by Chairman Morse Arberry, Jr., at 8:00 a.m., on January 28, 1993 in Room 352 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda. Exhibit B is the Attendance Roster.
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
Mrs. Sandra Tiffany
Mrs. Myrna T. Williams
COMMITTEE MEMBERS ABSENT:
None
STAFF MEMBERS PRESENT:
Mark Stevens, Fiscal Analyst
Gary Ghiggeri, Deputy Fiscal Analyst
ETHICS COMMISSION - Page 10:
Chairman Arberry recognized Mr. Spike Wilson, Chairman, Ethics Commission. Mr. Wilson reported the budget for the Ethics Commission was similar to the current budget, with one exception being the request for a funded attorney and legal research work. He distributed copies of several legislative opinions (Exhibit C) and informed the committee this would explain the significance of an attorney's work on the commission. Mr. Wilson stated when the Ethics Commission prepared an opinion, it was important for the law to be followed, the evidence be adequate and opinions be careful and reasoned. He added there were several attorneys who had done work on the commission pro bono and did an excellence service, but they would not always be available. He stressed further the need for full time counsel to assure careful, responsible treatment of issues involving public officers and employees.
Mrs. Williams stated these were times when confidence in government should be of utmost importance and therefore the Legislature should strive to properly fund the Ethics Commission. By doing so, opinions could be expeditiously rendered, thereby counteracting some of the misinformation received by the public. She referred to AB 190 of the 66th Session which attempted to increase funding for the Ethics Commission by raising filing fees. Mrs. Williams indicated it was the intent of AB 190 of the 66th Session for the Ethics Commission to receive all increases, however, various flaws in the language of the bill prevented the Ethics Commission from receiving the additional funding. Mrs. Williams suggested approving legislation which would allow the Ethics Commission to receive gifts and grants from organizations with the same goals and objectives.
Mr. Spitler questioned whether a full-time position in the Attorney General's office with dedicated staff to the Ethics Commission existed. Mr. Wilson answered affirmatively. Mr. Spitler asked if this would be full time, instead of five attorneys giving 20 per cent of their time.
Mr. Woody Thorne, Deputy Budget Administrator, answered there was an additional position in the Attorney General's Budget specifically for support of the Ethics Commission. Mr. Spitler further questioned whether the position would be clearly identified as such when the Attorney General's budget was presented. Mr. Thorne indicated there was a clear reference in M-200 Maintenance Budget which included support for an additional deputy attorney general.
Mr. Spitler asked Mr. Wilson would the half-time clerical position in the budget along with the full-time attorney bring the Commission up-to-date.
Mrs. Kateri Cavin, Deputy Attorney General, Ethics Commission, indicated the positions recommended included full-time deputy attorney general and full-time legal researcher.
Mr. Spitler reiterated the question if filling the two positions would be sufficient to bring the work load up-to-date where opinions could be issued in a timely manner. Mr. Wilson answered yes.
Mrs. Evans requested the budget division provide a listing of all attorney general positions whether financed by the general fund account or other revenues. She stated the issue had been discussed for two days and she believed it would be discussed in the future, making it difficult for the committee and witnesses to plead for something in the budget, which did not appear in the budget.
The Chairman instructed Mr. Woody Thorne to provide the committee with the listing of Attorney General positions.
Mr. Marvel questioned whether Mrs. Cavin was assigned full time to the Ethics Commission. Mrs. Cavin informed him she was not, she also represented the Secretary of State, Treasurer, Controller and Tahoe Bond Authority.
Mr. Thorne clarified the way attorney general's assignments were handled. He stated one advantage to the cost allocation method as opposed to reorganization was the ability to shift the assignments areas that required attention. He noted if there were significant increases in the legal requirements over the biennium, the Attorney General's office would have the resources to supplement in some areas and reduce in others depending on the caseload of the Attorney General's office.
STATE CONTROLLER'S OFFICE - Page 47:
Mr. Darrel Daines, State Controller, explained the responsibility of his office was processing, recording and reporting the financial activities of the state. He added the Controller was also the state fiscal officer for the federal government and was responsible to keep and have access to all records in connection with administration of, and compliance with, the federal revenue and income tax laws. Mr. Daines referred to a modified copy of the budget Exhibit D which would assist the committee in reviewing the Controller's Budget more readily. He expressed in an effort to comply with the direction of the statutes his office employed a staff of 34 which included accountants, programmers and other data processing personnel. He related part of the Controller's duty was providing reports on a weekly basis to state agencies for administrative purposes. Mr. Daines added demonstrating the fiscal health of the state was done through the publication of the Comprehensive Annual Financial Report. This report must be assembled under exacting standards and was essential to the issuance and selling of bonded debt. Mr. Daines summarized his presentation with an explanation of the Cash Management Improvement Act (CMIA). He stated the rule of CMIA was federal funds could not be used until an actual check had been written for a service. Money drawn early would require interest be paid to the federal government. He noted if the state funded a federal project which required matching funds the federal government would owe the state money. Mr. Daines expressed the state was trying to get to an interest-neutral position where the state or federal government would not owe each other money. He stated CMIA placed an added burden on the Treasurer and the Controller's office to determine which entity owed the other interest.
Chairman Arberry asked whether Mr. Daines had a date in mind when the problem would be resolved or at least workable. Mr. Daines answered negotiations were on the way with the Department of the Treasury and suggested by June 30, 1993, a decision should be reached.
Mr. Marvel inquired how the Controller's office would be affected by moving the data processing personnel to information technology services. Mr. Daines asserted he would offer strong objections to moving data processing from his office. He maintained the constitution gave the Controller the responsibility of the state's records. He suggested it would be impossible to provide this service with the data processing personnel in another office.
Mr. Marvel asked if it was necessary to amend Nevada Revised Statutes because NRS 227.120 required the Controller to have his own accounting equipment. Mr. Daines answered a change would be necessary. He further added the Legislature gave the Controller the equipment and the personnel to operate the accounting system in his office.
Chairman Arberry asked if the committee granted the Controller's request to maintain data processing in his office, what effect would it have on the budget. Mr. Daines referenced Exhibit D, Item 01, where monies were deducted for the salaries of data processing employees and were transferred to the Department of Administration. He pointed out further, Item 11 indicated the return of the money which allowed the Controller to pay Data Processing employees. Mr. Daines added he did not believe the suggested move had been thought out thoroughly. He indicated industry was moving away from centralization and has implemented the use of word processors and other computers to do work faster and more effectively.
Chairman Arberry called attention to Exhibit D, Item 00, where $1,904,388 was recommended by the Governor and Item 11 which indicated $502,911 in Data Processing and asked if the difference was from deducted salaries.
Mr. Daines maintained if the money was returned to the Controller, it would cover Data Processing salaries, retirement, SIIS, Unemployment compensation, their training and travel.
Chairman Arberry queried whether the Budget and Controller's offices could reach some common ground on the data processing issue. Mr. Daines suggested the only middle ground was each office should perform the duty required by the office and not turn control over to one particular office.
Chairman Arberry asked Mr. Thorne to clarify some of the points being discussed. Mr. Thorne explained within the reorganization recommendations from Peat Marwick was a strong recommendation to consolidate data processing and telecommunication into a centralized function.
He stressed the logic was to replace the stale, overlapping support functions with better coordination for standardization of systems and software. Mr. Thorne asserted there was a difference between centralized data processing and decentralized application processing. He emphasized the trend has been toward moving the application and downsizing and rightsizing to the appropriate form. He said there were so many systems within the state which had common data elements, yet used in different formats preventing one system from making use of the data being maintained on another system. This recommendation would provide for better coordination in data processing platforms and software support.
Chairman Arberry asked if the Controller's office was using a Hewlett-Packard Computer system. If so, would the transition be a difficult one.
Mr. Daines affirmed his office was using Hewlett-Packard and it was performing well. He claimed the machine did the work in 28 minutes which took the state mainframe computer 4 hours 38 minutes to do. He said the machine was doing exactly what it was designed to do. The Controller's office did not have to compete for time on the state's mainframe computer. Mr. Daine referred to Exhibit D Item 11, stating $76,102 had been allocated to go to Central Data Processing. He insisted it could be reduced to $24,000 because as of February 1st all of the state's accounting system would run on the Hewlett-Packard. He pointed out all reports were being run on a parallel basis now on the state's mainframe and the Hewlett-Packard. He insisted the $24,000 could be reduced to $0 if a printer was purchased for the Controller's office because the Controller's office would not be required to pay Central Data Processing.
Mrs. Tiffany expressed she was somewhat offended regarding Mr. Daines statements referring to centralization. She insisted some people were allowed to keep their own hardware, but the application software ran at a local level. The centralization of planning was done in one unit to allow for viewing of and distribution of information. She related the biggest problem to be faced was public access to information. Until interfacing could established a problem would remain. Mrs. Tiffany stated she supported the idea of the application software being purchased, but the Controller should spend more time investigating whether its feasible to put information on the mainframe. She suggested he study the big picture for information services, and the fact of being in line with other departments to follow suit.
Mr. Daines admitted looking forward to working with Mrs. Tiffany because of her prior knowledge of data processing, however, he insisted the balance of the committee was entitled to know he had spent 10 years as head of data processing in Clark County, and has had 10 years supervising data processing in his current position. Mr. Daines related his background was comparable to Mrs. Tiffany and when two people with equal backgrounds got together, there were often differences of opinion. However, he added, he felt it would have been easier to communicate with Mrs. Tiffany than other members because of her background in data processing. Mr. Daines stressed it was important to communicate with other members of the committee, therefore he needed to use language they could understand.
Mr. Price insisted he took issue with the previous statements and he agreed with Mr. Daines. He countered the elected officials took an oath to uphold the Constitution of the State of Nevada. He said he believed there was an inherent problem within a constitutional office such as Controller or Treasurer when the employees were controlled by someone else. He stressed the allegiance would be to their supervisor and their department rather than to the constitutional elected officer, who had the responsibility for work being done.
Mr. Daines clarified Mr. Price's question regarding the constitutionality of moving data processing from the Controller's Office. Mr. Daines read from the Annotations to Article 5, Section 19, the designation of the Controller in Nevada, "...of its own force, positive delegation of powers usually incident to office of controller, auditor, controller general, auditor general or any of various names used to designate similar officers." He stated the Controller currently has a bill before the Legislature, SB 52, which would allow all constitutional officers the same privilege allowed the Legislature and Judiciary, submission of their budgets directly to the Legislature without the intervention of the Budget Department. Mr. Daines related the experience of having submitted bills to the Budget Office that were never heard from again because the bills did not agree with the budget office's proposals. He remarked there were statutes in need of amending, but he could not cite the numbers. One in particular states a constitutional officer should not be required to answer to a single, solitary appointed official in Nevada. He added further being elected by the people, officers should be accountable to the people. Mr. Daines replied in the past his office has answered to various other elected officials, but the gauntlet was down and they would not answer in the future. He asked all corrections be made and the Controller's Office be placed on the same level as the Legislature and Judiciary.
Mr. Woody Thorne stated he was not aware of anything indicating the Controller should report to or was under the direction of the Budget Office or the Administration. He endeavored to clear up the confusion concerning the personnel and data processing equipment. Mr. Thorne stated he was not aware of any plan to move any of the applications or physical equipment in the Data Processing and Telecommunication area. People in those functions would remain in the Controller's office.
Mr. Daines referred to Exhibit D indicating it represented their request and the Governor's recommendation. The requested budget figures reflected the budget to be less in 1994 than in 1992 and 1993. The Controller's office was keeping two position vacant in order to assist in keeping costs down. He reported 76 percent of the Controller's budget was spent in salaries and it would be impossible to cut very much from the budget without cutting salaries. He commented $130,000 was returned by the office last year and reiterated his office was doing its part by keeping two positions vacant, however he stressed that the requested funds we needed to meet the minimum constitutional responsibilities.
Chairman Arberry asked Mr. Daines to elaborate on the data processing equipment purchased with the one-shot appropriation approved by the 1991 Legislature and how savings were realized from the original projections. Mr. Daines explained it was the plan of the Controller's office to obtain a larger machine to carry out its responsibility. Also included in the request was the software needed to operate the equipment. He stated while the 1991 Legislature was debating the issue, his office lease-purchased a 960 Hewlett-Packard which was smaller than the 980 requested. The Controller's office found the smaller machine fulfilled the need thereby reducing the cost, which was how the savings were achieved.
Chairman Arberry asked if consideration was given to purchasing the equipment outright, rather than paying over a period of time. Mr. Daines remarked this was considered and discussed at length with the Treasurer. He stated his department was under pressure from the Cash Management Improvement Act (CMIA) and a decision had to be made. Mr. Daines indicated the choice was either to pay off the machine or improve the accounting system to solve some of the problems initiated through the CMIA and others.
Chairman Arberry stated he appreciated the fact the Controller's office had done something worthwhile with the money, and the only problem he had was Mr. Daines should have reported back to the Interim Finance Committee on how these funds were planned to be spent. Mr. Daines replied the bill the Legislature passed gave them money to acquire hardware and software to improve the state's accounting system. He concluded his office believed they were allowed to decide what was most important and productive. He summarized it would have been easier to pay off the machine, but the Controller's office would be behind another 2 years in coming to the Legislature to get another appropriation for additional improvements.
Chairman Arberry asked when it was expected to have the computer hardware/software paid off. Mr. Ken West, Chief Deputy Controller, answered a lease-purchase agreement was entered into for the equipment and software implementation for a 5-year term. The leases would extend for another 3 years after fiscal year 1992-93. He said in the budget the Controller had requested a continual lease purchase of the equipment because the money would be used for a study. He explained there were several alternatives to be considered: Pay off the equipment and software or use $150,000 for the study and take the results of the study to return to Interim Finance Committee for a lease purchase of equipment from the contingency fund. He maintained the Controllers's office tended to favor lease purchases because the payments were extended over a period of years and government funds do not depreciate. A lease purchase was a cost allocation and the equipment was not being paid all at once so the taxpayer would not be taxed in one lump sum when the equipment was used over a period of time. Mr. West stated the Controller's budget was structured for continual lease purchases. The budget also contained $259,000 each year for lease of the Famous System.
Chairman Arberry questioned whether there was enough money remaining in the one shot appropriation to pay off equipment and software. Mr. West affirmed there was enough to pay off equipment and software. He explained the Governor's Budget was structured differently, proposing the equipment be paid off in FY93 and the one-shot appropriation recommended in the Executive Budget be used for the study. The Governor's budget also requested the Famous software not be lease purchased.
Mr. Heller asked why equipment was purchased first and then a study proposed. Mr. West noted when the system was purchased, questions were asked concerning what accounting systems would be compatible to the Hewlett-Packard platform. He indicated most of the data was now on the Hewlett-Packard Computer.
Mr. Heller inquired what the result would be if the system was not compatible to Hewlett-Packard. Mr. West confirmed the system would be compatible.
Mr. Heller asked if the recommended one-shot of $150,000 was used for the study and results showed the systems to be compatible, and another one-shot appropriation was not received for several years, would the equipment already purchased be rendered obsolete. Mr. West stated it could be rendered obsolete.
Mr. Daines referred to information received from Peat Marwick indicating if the Famous System was installed on an IBM OS Machine the license fee would be $630,000 a year. If the same system be installed on the Hewlett-Packard, the license fee would was $150,000 a year. The larger the machine the more costly the license fee for software, and this was the reason for not wanting centralization. The cost would be absolutely prohibitive.
Ms. Giunchigliani asked how much was owed on the lease to totally pay the balance. Mr. Daines answered there was enough in the budget to pay the balance.
Ms. Giunchigliani suggested Data Processing should be allowed to evaluate what system and what software would be appropriate. Mr. Daines answered a survey had been conducted for the last 6 years to evaluate software for accounting systems. He indicated several states have paid large amounts for their accounting equipment. If Nevada chose an all new accounting system including new codes, it would cost in excess of $6 million. He admitted this would not be feasible.
Mr. West noted the balance in the budget was $280,000 as of June 30, 1993.
Mrs. Karen Kavanau, Director, Data Processing, pointed out there were two issues, one technical and one philosophical. She explained the philosophical issue was whether the Controller should be supervised by another state agency. She indicated she understood the Controller's position of not wanting persons looking over his shoulder. Mrs. Kavanau noted it would make her life much easier if she did not have to oversee constitutional offices. She indicated the computers were upgraded before an application was found. She stressed this was absolutely the reversal of what should take place. The computers were upgraded with the assumption an application could be purchased to run on them. She stated in her opinion that procedure was a waste of money, to do a need assessment after upgrading the computer was a waste. She took exception to the Controller's statement he had conducted a survey for 6 years. She advised the committee he actually conducted a survey 6 years ago, and she was a part of the committee. She said 6 years ago was the last time the users were asked what they needed. Mrs. Kavanau revealed there was a difference of opinion regarding the needs assessment. The contract as it was presented to the Board of Examiners was only to include the State Controller and State Treasurer. She added she wholeheartedly supported the need for new software for the Controller's office, she only took exception to its approach. Mrs. Kavanau stated their need assessment had presupposed a conclusion. She related they wanted Peat Marwick to suggest another $200,000 for the software Famous System and $500,000 to $600,000 to implement the system. Mrs. Kavanau noted the Department of Data Processing has made tremendous changes in 2 years and expressed the vision was to implement a single enterprisewide system to prevent duplicate communication lines. The way the system was operated now because they have gotten off the main frame, required any agency needing to communicate with the Controller's system, which was about every agency in state government, would need a piece of hardware, a modem and communication software comparable to the Controller, because it was impossible to get through to his system anymore. She stressed whether or not the data was processed on the state's mainframe was irrelevant, it could be done on the either machine. However, the state's mainframe should be used for interconnectivity. Mrs. Kavanau said by not using the state's mainframe one could find at any work station in state government three different computer lines. One line connected to the state's mainframe, another connected to the State Controller's system and another perhaps for the Division of Emergency Management. She said it was her belief the State Controller did not understand the data processing could be distributed anywhere he needed, it did not have to be on the mainframe.
Chairman Arberry recommended Mrs. Kavanau and Mr. Daines work together to reach a compatible agreement both agencies could accept and the committee would do its best to accommodate both agencies.
Mr. Price stated much had been said about the only goal being efficiency, even to the disregard of constitutional matters. He noted there was no compromise on constitutional matters. Mr. Price suggested that if data processing centralization was taken to an extreme we would have one giant computer system in Washington to provide all services and information for every city, county and state. He indicated every employee would be a federal employee with one centralized computer station and no one needed to be concerned for responsibility. He reinforced the constitution comes first.
Mrs. Kavanau remarked it was the committee's decision whether there should be oversight or not. She agreed constitutional officers have a responsibility which must be met. She added she was not sure a middle ground could be reach as long as the Controller was a constitutional officer. She recited NRS 242 referred to his office as an elected official, so the distinction should be made as to which term applied. Mrs. Kavanau indicted this would clear up the problem.
In closing Mr. Daines asked that his office be allowed to retain data processing staff and the money needed for its operation.
DEPARTMENT OF PERSONNEL - PAGE 256
Mr. Glenn Rock, Director, Department of Personnel, pointed out in the budget the Department was slated to become The Division of Personnel. He indicated the recommended Personnel Division budget, reflected a hold-the-line, no-growth budget for the next biennium. Mr. Rock noted there would be no increase in the current personnel and payroll assessment rates of .82 and .31 of 1 percent respectively. He called the committee's attention to the reserve category, explaining it was not a slush fund. Mr. Rock recalled the Legislature changed the law requiring the Personnel Division to return any unspent money at the end of the fiscal year to the agencies it assessed. Money not spent rolled over and was placed in the reserve category. In order for the money to be spent a request would have to be approved by the Interim Finance Committee. A number of positions were authorized by the 1991 Legislature, but the freeze on hiring caused the positions not to filled for months. When the freeze was initiated the agencies not financed by the general fund were allowed to fill some of their vacancies, but were required to have people laid off in other agencies. The Personnel Division hired 3 people from the lay-off list. He noted there was quite a large savings in salaries. Mr. Rock said there were a number of things the Division wanted to do to the payroll system, but he reminded the committee the new system was not in the budget. The Division was obligated to make the current payroll system work. Mr. Rock reported the current system paid 9,600 state personnel, which did not include the payroll system for SIIS, Department of Transportation, the University System and Retirement System. Under Maintenance 200 items were requested to as inflationary adjustments, for In State Travel, Operating Expenses and Staff Development. The recommended budget would only allow for an increase in insurance of $2,933 in the Maintenance area.
In FY91 there were 26 grievances processed by Personnel Division, in FY92 50 grievances were received and in the first 6 months of this Fiscal Year 29 have been received. He stated this probably indicated a trend in more employee unrest, but he would attribute it to the Legislature opening up the grievance process to written reprimands and evaluations. He expressed he was not negating the fact it may or may not be necessary. It was the Legislature's decision to make. However, this action had increased the work load of the Personnel Division. He reminded committee members the last time he came before them he requested a contract to review the Fiscal Management and Staff Services Occupational Group. The reason he requested a contract was due to petition by the various agency personnel officers. The study was done by the independent firm of Ernest Young. Mr. Rock said the item listed under Enhancement Item 715, the Consolidation of Personnel/Payroll Systems, was not requested by his division. This was intended to provide a blueprint of how to consolidate the payroll function in state government. He added a substantial study was done previously on the Personnel Payroll system. So many band-aids had been placed on the current system it was now archaic.
Mr. Spitler stated he was not a computer expert, but he remembered the Price-Waterhouse Study reviewing the current state payroll system and asked what the state received for its $300,000 invested in the study.
Mr. Rock explained the contract was for a complete study and analysis to set up a new payroll system. After the study was completed a request to fund the new system payroll was not approved. The cost to implement the new payroll system was approximately $5 million and there was no money to implement the program. The interest now was to consolidate all the payroll systems together including Personnel and Highway payroll. He stated the system requirements were already complete but it had been deferred for a long time. Maybe in the next biennium the program could be accomplished. He related an example in the state of Oklahoma where the payroll system failed, and payroll checks were issued manually six weeks late.
Mr. Spitler questioned what liability the state could incur from a failure of the system. Mr. Rock stated people just would not get paid on time. Mr. Spitler asked if the completed study was only pertinent to the equipment already purchased or did it address the consolidation of the other seven payroll systems in the state. Mr. Rock affirmed it encompassed all payroll systems.
Mr. Spitler asked the Budget Division if the request included any information received from the Price-Waterhouse Study. Mr. Thorne answered yes, and the study from KPMG Peat Marwick on the Governor's reorganization recommended consolidating personnel and the payroll system of the state. Contact was made with Price-Waterhouse who had done the original study regarding prices to accomplish implementation in three phases. He explained the phases included a feasibility study for the state's Personnel and Payroll functions. He indicated many changes had been made, therefore the study would have to be updated. Mr. Thorne said by the time the next biennium budget was prepared they would know exactly what the time would be for implementing the consolidation of the systems and getting them in place.
Mr. Spitler asked whether $800,000 would be spent by that time,
including the Price-Waterhouse study, the proposed study Mr. Thorne referred to, and countless hours of staff time. Mr. Thorne answered he expected a good recommendation from the study. It was his goal to have a plan in place to consolidate and implement a centralized personnel system.
Mr. Spitler suggested more attention should be paid to all the studies being done with no results. His suggestion would have been to give the agency $300,000 and hire ten extra people to expedite payment of the state's debts. Mr. Spitler repeated his opposition to all of the studies and nothing being done after the studies. He asked for an explanation of an inter-fund transfer. Referring to page 256 of the Budget, he indicated under the Operating category, Inter-fund Transfer was not identified as a separate line item, it was rolled into Operating Expenses. He questioned the $71,000 for the first year of the biennium and $76,000 for second year, because he did not know what inter-fund Transfer meant.
Ellen Townsend, Budget Analyst, explained an inter-fund transfer represented an assessment by the new Department of Administrative Services Division. The above mentioned monies indicated were an assessment to Personnel for administration and clerical support to fund the division.
Mr. Spitler asked if Mr. Rock was aware they were receiving the service. Mr. Rock said he was aware they were being rolled into a division rather than a department. As such, all of his fiscal people would probably be transferred into another division, maybe causing his division to pay an assessment for the use of their services.
Mr. Spitler inquired of the Chairman if he could ask for a clear written explanation of Inter-fund Transfer. He mentioned the brief time agencies have been appearing before the committee. He pointed out Mr. Rock's agency's request for central data processing reflects a large decrease in funding. He questioned whether Mr. Rock was cutting necessary expenditures in the data processing area or was someone else providing what was necessary which was not reflected in the budget.
Mr. Rock said the decrease in data processing funds was due to the request for a new system. The recommended feasibility would hopefully come up with a blueprint to consolidate all payroll systems, but meanwhile his division was living with a maintenance request. He could not guarantee it would work and the department may have to approach the Interim Finance Committee to request additional funds to operate until the new system was on-line.
Mr. Spitler noted he had never seen an agency operate with such a large reserve. Mr. Rock indicated he had not either, but the money was balanced forward into the new fiscal year and they had been conservative.
Mrs. Evans pointed out the reorganization savings were scheduled to be $208,000 in FY94 and $282,000 in FY95. The budget narrative did not explain how this would be accomplished, nor did it show how the savings were calculated or how many position were cut. Mr. Rock indicated he received a memo stating there was a negative item in the budget which represented elimination of administrative and business type positions. He was not aware of which specific positions were targeted for elimination. He admitted he could not answer questions of who, what and how, but could answer when. He said the positions were proposed for elimination on October 1st.
Mr. Thorne suggested there would be a reduction in certain types of staffing and the ultimate decision would be made by the director of the department.
Mrs. Evans stated the Ways and Means Committee would be closing budgets based on great unknowns. She related not knowing this information took Legislative authority out of these decision.
Mr. Thorne responded the changes the Legislature and the Executive Branch agreed on regarding the new budget format could eliminate much opportunity for detailed analysis and concentrate on the performance level and what was driving the budget to determine how well agencies were carrying out their functions. Certain values would be placed on the types of positions expected to be eliminated. He stressed the committee would be provided a list of the positions and how they were identified to be eliminated.
Mrs. Evans commented she had served on the Interim Committee which review the new budget and she did not agree with how Mr. Thorne characterized the purpose for changing to the new budget format.
Mr. Thorne indicated he was working with the staff and would provide the backup for the committee. Mrs. Evans referred to the new exemptment classification for employees, and asked for a detailed explanation of the concept.
Mr. Rock referred to the Benzler Decision stating it required the state to pay time and one half to all employees with the exception of those appointees who work directly for elected officials. Those positions were exempt by law. He explained the Welfare Administrator was not included, because he reported to another department head. He referred to AB 576 of the 66th Session and cited the Abshire Case which stated if people were subject to loss of pay for less than a day's absence, then they were considered hourly and not salaried employees. The Benzler decision stated because people were subject to suspensions without pay this made the positions hourly, not salaried. The fact people accumulate compensatory time for which they would be paid made them hourly. Mr. Rock said the Department of Labor was not concerned with classified or unclassified employees, they were only concerned with exempt or non-exempt status. Mr. Rock advised the constitution provided for a merit system for the State of Nevada employees. He questioned whether the state wanted to pay time and one-half to employees not previously eligible for this benefit. He noted there were many people that could be eliminated from being compensated for time and one-half with a savings of approximately $1 million a year.
Mrs. Evans asked how the final monetary impact would be determined.
Mr. Rock indicated the Department of Labor looked at two tests, a salary test (which the state failed) and a duties test. A duties test placed people in executive, professional and administrative, categories provided they met the salary test. Mr. Rock said the statutes applying to the exempt group needed to be eliminated. He noted approximately 3,000 employees needed to be tested for exempt service. The number was the first cut from about 13,000 employees in the work force. He added the information had been sent to all agencies to review and apply the duties test to those exempt positions identified in the request. The agencies were required to report back their findings of whether they met the duties test. Mr. Rock implied the number in the final cut could range between 2,000 and 2,500 exempt employees. He explained some sort of compensation would have to be given to those person exempt from time and one-half. Persons should be provided with some type of payment to compensate them for lost wages due to no longer being eligible for time and one-half payment for working overtime in the future. He suggested providing 40 hours of management leave for the executive, professional and administrative group. If the leave was not used during the year, that time could be paid to them. This method would not be overtime but a management benefit.
Ms. Giunchigliani asked if another bill passed regarding collective bargaining, could this be defined for many groups, thereby relieving some of the problems. Mr. Rock said he believed some of the grievances had been resolved. Ms. Giunchigliani asked whether the Personnel Commission currently handled the grievances for his department. Mr. Rock answered they did not. He noted the committee passed on all the occupational studies before they go to committee or budget department and on all classifications where there is disagreement. The hearing officers, who are attorneys hired by the commission, hear cases applying to terminations, suspensions, involuntary transfers, and demotions.
Ms. Giunchigliani questioned how many payroll systems there were.
Mr. Rock answered there were seven, including SIIS, PERS), Transportation, University of Nevada, (Las Vegas and Reno), Personnel, and The Legislative Counsel Bureau.
Ms. Giunchigiliani asked whether the personnel officers were trained to do evaluations. Mr. Rock said there was a statewide training course which covered performance standards training and performance evaluation training which is required by statute.
Mrs. Tiffany questioned whether the $175,000 and $125,000 recommended for consolidation of the Personnel/Payroll system were for a feasibility study with an implementation plan in the second phase. Mr. Rock said he believed the recommendation represented a feasibility study which would be conducted partially in both fiscal years 1993-94 and 1994-95. The implementation of the consolidation blueprint from the study, would require additional funds during the next legislative session.
Mrs. Tiffany asked who would be responsible for implementation of the recommendation developed by the feasibility study. Mr. Rock clarified the current payroll section would be involved. He called Mrs. Judy Taylor to complete the answer.
Mrs. Judy Taylor, Personnel Division, reported for the study previously conducted by Price-Waterhouse approximately 6 months were spent completing the required definition. There were many people involved in the process including, the chief of Personnel, payroll manager, staff and other people who write the rules and regulations. She admitted she would have to research the total number of hours, but it was a 6 months period.
Mrs. Tiffany inquired if all seven payroll systems would be under one software package or were there multiple packages being considered. Mr. Rock answered in the last study, the recommendation was to buy one software package and modify it to meet the state's needs.
Mrs. Tiffany asked if there was a package already implemented by another state which would supply everything required. Mr. Rock said he had no knowledge of a complete package in use. He was only aware of bits and pieces customized to meet each state's need.
Chairman Arberry asked Mr. Thorne to supply in writing an explanation of the reorganization savings in each budget. Mr. Thorne stated he would provide the information for the committee.
Mr. Rock concluded the Personnel Division was asking for a half-time position for an Equal Opportunity Officer which would make the northern EEO full time. It was not provided for in the budget and he asked the committee to consider the request. He noted also under Enhancement was a request for funds to place the departments many files on microfilm.
Mr. Humke asked through the Chairman if Mr. Rock could prepare in writing information on the EEO request.
Mrs. Judy Taylor, Personnel Division, addressed State Unemployment Compensation with custodian funds. She indicated a payroll assessment would be made and the Employment Security Department would be paid on actual billing for each quarter. The division was asking for $750,000 in authority to receive the necessary funds. She stressed if the amount budgeted was not needed, the assessment could be altered. At this point she stated it was set at .22 percent of gross salaries in each year of the coming biennium.
Mr. Spitler asked if .22 was a projected assessment. Mrs. Taylor affirmed it was a projected assessment. She explained because of the increase in employment claims, assessments were raised from .11 percent in FY90 and currently were .38 percent of gross payroll.
Mr. Spitler asked if the need was being underestimated due to the many positions scheduled to be eliminated.
Mr. Thorne pointed out the position count being discussed was 16 positions less at the end of the biennium.
Chairman Arberry adjourned the meeting at 10:55 a.m.
RESPECTFULLY SUBMITTED
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Lula B. Collins
Committee Secretary
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Assembly Committee on Ways and Means
January 28, 1993
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