MINUTES OF THE

      ASSEMBLY COMMITTEE ON WAYS AND MEANS

 

      Sixty-seventh Session

      March 22, 1993

 

 

The Assembly Committee on Ways and Means was called to order by Chairman Morse Arberry, Jr., at 8:05 a.m., on Monday, March 22, 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

      Ms. Sandra Tiffany

      Mrs. Myrna T. Williams

 

COMMITTEE MEMBERS ABSENT:

 

      None

 

STAFF MEMBERS PRESENT:

 

      Mark Stevens, Fiscal Analyst

      Gary Ghiggeri, Deputy Fiscal Analyst

     

 

AB318Makes supplemental appropriation to division of child and family services of department of human resources for certain expenses.

 

Ms. Annette Swainston, Sr. Management Analyst for the Division of Child and Family Services, introduced herself.  She stated AB318 is a request for a supplemental appropriation in the amount of $62,726, $20,670 which was incurred in FY91 for the Youth Community Services budget for outstanding claims and $42,056 also incurred in FY91 Youth Alternative Placement budget for payment to Corrections Corporations of America.

 

Ms. Swainston indicated that within the Youth Corrections budget a total of $18,815 for three items:  McDowell Youth Homes, $1,440 or $80/day; Doris Clarkson, $50 for shelter care retainer fee; Truckee Meadows Hospital, $17,325 for 55 days total for three clients.  There are seven additional payments due for child welfare transportation:  Discount Travel, $1,001.60; Lorraine May Long, $10.08; Doris Skwertz, $14.40; Discount Travel, $331.00; Vicki Suda, $43.20; Valerie Levitt, $309.12 and Wanda Jean Hicks, $145.44.

 

She stated for Youth Alternative Placement outstanding payment the contract had been written for a certain amount of days and the division was billed at the actual amount of bed days during the fiscal year.  At the close of the legislative session, the division was billed for the balance of bed days.  She concluded these are the payments due to various vendors where no state appropriated monies balanced forward to pay them.

 

Mrs. Evans asked if a work sheet has been submitted on these payments.  Ms. Swainston stated this information had been submitted to LCB.

 

Mr. Marvel asked when the claims were incurred.  Ms. Swainston replied they were incurred at the close of FY91 with billing received after the close of the fiscal year.  He asked if this would be a one-shot appropriation.  Vice Chairman Spitler responded it would be.

 

Vice Chairman Spitler closed the hearing on AB318.

 

AB316Makes appropriation to state board of examiners for settlement of claim on behalf of certain state employees.

 

Vice Chairman Spitler stated this is a continuation of testimony from Monday, March 15, 1993.

 

Ms. Matteucci, Budget Director, stated the primary focus of AB316 is to provide a one-shot appropriation to allow the payment of overtime (the extra half time only) determined to be due to a number of state employees as a result of the Benzler decision.  The settlement of this Fair Labor Standards Act (FLSA) case was approved by the board of examiners in December 1992.  The amounts to be allocated are included as EXHIBIT D with the proposed amended appropriations included on page 1 of EXHIBIT C.  She stated there is a part of the appropriation which would allow the transfer of some positions into the exempt merit class and are included in part c of section 1 of AB316. 

 

Ms. Matteucci explained the handout and memorandum of March 22, 1993 (see EXHIBIT C) provides background information and a letter from Glenn Rock.  Mr. Rock's letter includes a skeleton bill to create the three-tiered personnel system for LCB staff to utilize for preliminary drafting purposes and a memorandum of Attorney General's opinion on the issue of establishing the exempt merit class.  She pointed out the chart of the proposed three-tiered personnel system is also included in EXHIBIT C.

 

Ms. Matteucci explained the proposed amended appropriation represents the previously unaccounted overtime for the Gaming Control Board employees discussed last week.  $291,908 should be added to subsection (a) of section 1 bringing that total to $2,231,866 and $47,158 should be added to subsection (c) of section 1 bringing that amount to $1,712,719.

 

She proposed an amendment to include a highway fund appropriation of $345,155 to accommodate payments to the Department of Motor Vehicles (DMV) and Public Service Commission (PSC) employees for their prior year costs as indicated on page 2 of EXHIBIT C.  Any remaining balance of the appropriations made by this section must not be committed for expenditure after June 30, 1994 and reverts to the state highway fund as soon as all payments of money committed have been made.

 

Ms. Matteucci pointed out some language was included to indicate the other payments to SNEA members, DMV, Attorney General's office and PSC or other employees eligible for retroactive payment liability for FY93 can use funds appropriated by the Sixty-sixth session.  She noted (b) and (c) of section 1 would permit this because they are current year expenditures, not expenditures prior to the current fiscal year.

 

She reiterated, once the committee decides on how to process AB316, the bill should be expeditiously moved because payments are due April 23, 1993. 

 

Mr. Marvel inquired if the budget office anticipated any litigation on section (c) involving the proposed exempt merit class of employees.  Ms. Matteucci indicated the Attorney General's opinion outlines where litigation could occur in the bill.  She pointed out Mr. Gagnier has already indicated SNEA intends to sue, but she stated she had no basis as to what area the suit would address.  She explained she has received no formal indication of the proposed litigation, but noted Mr. Gagnier would probably wait to see the final language of AB316 and the exempt merit bill prior to proceeding with any litigation.

 

Mr. Marvel inquired if the exempt merit bill had been introduced.  Ms. Matteucci reiterated it is included in her handout as a skeleton bill (see EXHIBIT C).  No BDR has been processed as yet.  This issue was originally included in the reorganization bill, but because of the complexity of the issue it was decided to include this issue in a separate bill.

 

Mr. Marvel asked what will be done with the $1.7 million appropriation if the state is challenged.  Ms. Matteucci explained litigation is not anticipated for that section unless SNEA intends to litigate on the issue of whether or not agreements can be signed retroactively or prospectively.  As discussed last week, the Attorney General's office is recommending full payoff on the retroactive liability and any agreements between state agencies and employees need to be on a prospective basis.  Mr. Marvel emphasized, according to Mr. Gagnier's testimony of last week, SNEA would like to have a retroactive agreement.  Ms. Matteucci replied it was Mr. Gagnier's opinion, but the Attorney General's office has advised the state cannot enter into agreements retroactively.

 

Mr. Marvel inquired as to the number of positions which are proposed to be included in the proposed exempt merit class.  Ms. Matteucci replied approximately 2,600 positions. 

 

Ms. Matteucci stated in regard to those people who want retroactive payment or want to accumulate overtime, if the three-tier personnel structure is adopted, the issue becomes moot because these employees will be paid off for any comp time at the end of the year prior to becoming an exempt merit position.  She reiterated the administration's recommendation to decide on the payment level issue because it has been settled by the board of examiners and filed with the courts.  Payments need to be made in April for both the SNEA overtime and first half-time payment for retroactive payment liability.  The proposed payments will be to the board of examiners meeting on March 25th contingent on passage of AB316. 

 

Ms. Giunchigliani remarked currently there are classified and  unclassified categories and according to Glenn Rock's memo of March 11 on page 3 "The Study proposes to create an exempt merit category of employment, which would be comprised of a mix of employees who are currently in the classified or unclassified services."  She voiced her concern this mix would add to the problem.  Ms. Matteucci indicated the FLSA and Benzler settlement made clear there are a number of classified employees, mostly grade 37 and above and unclassified employees, that are entitled to time and one half rather than just straight time for overtime worked.  This was as a result of the way time was tracked and the failure of the FLSA test.  Ms. Matteucci explained this study identifies all positions which, regardless of being classified or unclassified, could be moved into the exempt merit service.  The proposed exempt appointed positions are those individuals directly appointed by an elected official or body and all other appointed individuals employed at the pleasure of the elected official.

 

Ms. Giunchigliani asked if the state has an organization, such as SNEA, who wishes to enter into an agreement for comp time or cash payment so the state does not have to pay fully in cash, regardless of the Attorney General's opinion, why the state does not take advantage of this proposal and therefore reduce the cash liability.  Ms. Matteucci insisted the Attorney General is the legal counsel for the state and executive branch and their advice is overtime worked in the past is not subject to a retroactive agreement and therefore cash payment is required.

 

Ms. Giunchigliani stated the verbiage came back down that it states they "may" pay and the debate centers on this.  She stressed as long as no one's rights are being sold out and they are willing to be part of the final agreement, why is the state entering into another problem or potential liability situation.  Ms. Giunchigliani pointed out SNEA came forward two years ago and said they would negotiate this issue with the state.  The state was stubborn and now there is a $4 million plus liability.  She reiterated maybe the state ought to learn from that situation and take advantage of the offer to negotiate at this time.

 

Ms. Giunchigliani voiced her concern that another problem will be created with the exempt merit service and accompanying three-tiered personnel proposal, because it has not been decided as to specific duties in regard to supervisory personnel.  She indicated she felt the state was overreacting without doing a proper job at the front end and it could result in more problems on the back end.  She asked if it was possible to get together with the parties involved prior to the April 23 payment deadline and the drafting of the exempt merit bill to reach an agreement on how to define the areas. 

Ms. Matteucci reiterated the Attorney General's opinion and there has been no indication from SNEA they will sue on the issue of retroactive payments.  The issue regarding the establishment of an exempt merit class does not need to be acted on as expeditiously as the payment required by the Benzler decision and therefore, those issues can be separated and addressed individually.  She noted the Department of Personnel has been investigating the definition for the new service classes concerning whether positions are supervisory, executive or professional.  The Department of Personnel has also had the Department of Labor review the proposed placement of positions with the exempt merit class and removed the borderline positions from the proposed exempt merit service category.

 

Ms. Giunchigliani emphasized the Benzler and exempt merit issues should be separated in order to move forward on AB316 and have time to discuss the exempt merit issue.  She stated the employees proposed to be moved to exempt merit class need to be included in the dialogue to prevent a logjam at the end as to debate on specific positions.  She asserted the need to sit down with the Department of Personnel, perhaps some legislators, and the employee groups to begin to resolve any issues related to the exempt merit class prior to a more detail BDR being drafted.

 

Ms. Giunchigliani asked to have clarification from SNEA on its standpoint on the retroactive payback and agreements and from the budget office on the Gaming Control Board issue.  Ms. Matteucci explained the Gaming Control Board amounts are included in the packet and represent prior years' Benzler settlement issues.  The overtime amounts were not included in personnel records because the overtime was removed at the board level prior to submission to payroll section.  This was the reason the amounts were not included in the original estimates.  This is not an exempt merit issue, it is a Benzler settlement issue.

 

Ms. Giunchigliani asked how board members can be eligible for overtime payment.  She stressed she had a problem with how hours were documented and wondered if Board members were doing something other than what they were charged as a board to do.  Ms. Matteucci reiterated it was as a result of how time was recorded.  The FLSA states employees are exempt if appointed, i.e. not subject to FLSA adjustment, if they are appointed by an elected official and serve at their pleasure.  Because board and commission members serve a fixed term, they are subject to FLSA requirements.  Ms. Giunchigliani asked if this issue would be addressed in the skeleton bill.  Ms. Matteucci emphasized the Department of Personnel would need to tell her exactly how to address these types of positions concerning inclusion into the exempt merit class.

 

Ms. Giunchigliani emphasized this sets up a discriminatory situation because a number of boards and commissions are not even paid while others are compensated through cash time sheets.  The results are huge dollar amounts skewed between board members.  She asked if possibly members are out doing other activities while allocating overtime to the state.  Ms. Matteucci responded the amounts and what the board members are being paid for are curious.  She understood the board had asked the Attorney General for an opinion in writing which states the board is entitled to the money originally on the time sheet, but not input in the system.  Ms. Giunchigliani indicated she had never heard of a board or commission submitting time sheets before.  Ms. Matteucci replied this is the issue because, as boards and commissions, they should not be submitting time sheets.

 

Ms. Giunchigliani asked if all boards and commissions do time sheets.  Ms. Matteucci noted these board members are full-time employees of the state and do not sit as an occasional board.  She indicated she was not sure if the Gaming Commission, which is a part-time board, puts in time sheets or not.  In most cases, part-time board members sign a request for payment for the specific day.  Ms. Giunchigliani commented this is a good argument for bringing the boards closer in the reorganization, more under administrative control and to establish policies to prevent this from occurring again.

 

Ms. Matteucci indicated this is the crux of the issue which is the strict application of time and a half payment for overtime.  She stated if the State of Nevada does not do something to straighten out the board situation and the others involved everyone will be able to earn time and a half for overtime worked.  This compelled the administration to create a true salaried class with duties and responsibilities clearly defined or this issue will be a recurring event.

 

Ms. Giunchigliani inquired if there has been any tracking on the amount of overtime accrued overall and if any discussion on the policies has occurred on hiring new people rather than approving overtime, perhaps even hiring part-time or temporary people to avoid benefit payout.  Ms. Matteucci stated when the administration put the hiring freeze into effect, agencies were told accumulating large amounts of overtime was not an option and was not to be an alternative to not hiring employees.  She indicated the FLSA was originally approved to improve employment numbers as Ms. Giunchigliani pointed out.  When it moved into the public sector it created a large problem because of these reasons and the factors involved with the Benzler decision.  She stated the overtime and comp time on the books has been reviewed and did not find a large amount overall, but there are isolated pockets of large overtime usage.

 

Vice Chairman Spitler inquired if the exempt merit bill will go to the Assembly Committee on Government Affairs or if it would be concurrent.  Ms. Matteucci replied it would depend on the legislature, but those types of bills usually go to Government Affairs.  Vice Chairman Spitler pointed out Ms. Giunchigliani brought up good points on how this issue overlaps both Government Affairs structurally, and Ways and Means for financial planning.  Ms. Matteucci indicated if it is the committee's decision to split out the exempt merit and just provide the payment portion, the salary issues will be included in the exempt merit bill to assure it will come to Ways and Means.  Vice Chairman Spitler stated it would be wise to have both committees look at it because each would take a different perspective which would result in good responses.

 

Ms. Matteucci remarked this is an ongoing process and quite a deviation from the classified and unclassified system, but it is an appropriate response on how to deal with the requirements of FLSA.  She strongly urged the consideration of the exempt merit service and she would have no problem with removing the appropriations for proposed exempt merit employees from AB316 in order to expedite the Benzler settlement monies.

 

Mr. Marvel inquired who would set the salaries for the proposed exempt merit class.  Ms. Matteucci replied the Department of Personnel would establish large bands of minimum and maximum salaries with employees assigned to the bands similar to the current class codes.  Mr. Marvel stated the legislature would have no input in setting salaries.  Ms. Matteucci stated that is correct.  Mr. Marvel indicated this would be an in-between class.  Ms. Matteucci noted, according to the Attorney General's opinion, the exempt merit class would still have to be a merit system with due process, hiring formalities, etc., but it would remove 600-700 unclassified salaries where the legislature previously set the maximum salary.  Mr. Marvel reiterated there is a fine line between classified and exempt and unclassified classes of employees and voiced his concern in this area.  Ms. Matteucci responded the employee classes are very distinct:  exempt appointed are those employees appointed by an elected official or body while exempt merit are those positions appointed by executive directors.

 

Mr. Bob Gagnier, Executive Director of SNEA, introduced himself.  He stated the handout includes the amendments proposed by SNEA to AB316 (see EXHIBIT E).  He stated the first three amendments to section 1 all deal with removing exempt merit from the provisions of AB316.  He reiterated, from last Monday, if exempt merit is left in the bill, the committee is giving tacit approval to the issue without really hearing the merits of the overall issue.  He indicated SNEA still is unaware of what the exact proposal is in spite of requests to the Director of the Department of Personnel.

 

Mr. Gagnier encouraged the committee to give strong consideration of AB316 for two reasons.  Two years ago in testimony against AB576 of the Sixty-sixth session, SNEA had indicated the bill was in retaliation for the Abshire decision.  The administration and the Attorney General had stated AB576 of the Sixty-sixth session was to bring the state into conformance with FLSA.  SNEA indicated clearly they did not believe this and would sue if the bill was passed.  However, someone else filed suit prior to passage.

 

Mr. Gagnier stated AB576 of the Sixty-sixth session had an appropriation included to compensate state employees who had taken off time without pay.  He pointed out those funds were spent, essentially, for nothing because the time off was paid in an attempt to avoid liability which it did not.  Mr. Gagnier reiterated he understands the administration's stance when its legal counsel tells them one thing and SNEA's legal counsel states something different.  Further, he commented, history has proven SNEA's legal counsel is just as good, if not better, than the state's legal counsel and SNEA has a better track record.

 

Mr. Gagnier asserted exempt merit and payments due to the Benzler decision need to be separated and the exempt merit issue should be addressed in another bill.  Mr. Gagnier stated the second issue is whether agreements can be retroactive providing members their choice of cash or comp time.  He explained all the discussions and the settlement for cash payment was for the half time the employees did not receive for overtime worked.  This is section 1(a) of AB316.  There had never been any discussions in the settlement regarding paying off of existing comp time on the books.  Mr. Gagnier stated SNEA assumed the comp time on the books would remain and people would consider it within the frameworks of the regulations as they exist today.  Both SNEA's counsel and the federal law were clear the agreement did not need to be entered into before working the overtime.  The only time agreement which has to be proactive is in the case of unrepresented employees.  He pointed out the second portion of EXHIBIT E which is to amend the bill as a whole by adding new language.  He remarked he was unsure if the committee could mandate the choice be honored or if they could just inform the board of examiners of the desire to limit fiscal impact.

 

 

Mr. Gagnier stressed to limit fiscal impact, the state should allow those who wish to use comp time to retain their choice to do so.  He maintained SNEA would also be willing to include a time limit if there are concerns about what the eventual fiscal impact will be until all choices are made.  He clarified there will be a lawsuit if the administration continues with the exempt merit class as it is currently proposed.  He noted it is entirely possible, if the administration forces SNEA members to cash out their comp time which the state is not requiring other employees to do, that a lawsuit may be filed.  This would be a result of taking benefits away from SNEA members which others have and this is in direct violation of the FLSA which assumes represented employees will have a choice.  Mr. Gagnier asserted what the state is saying is they will provide a choice of cash or comp time to non SNEA members.  He noted many agencies have already done this with a memo stating all SNEA members must be paid for their comp time on the books by a certain date; non-SNEA members can return their comp time or cash whichever they prefer.  He reiterated that is discriminatory and guaranteed SNEA will be in court on it.

 

Ms. Giunchigliani clarified section 1(a) is the Benzler issue and removing subsection (c) will allow the exempt merit issue to be discussed at a later date.  The third component is all SNEA members must take cash for all comp time on the books currently.  Mr. Gagnier stated that was correct and all future comp time for employees in agencies who have entered into an agreement with SNEA, will have the option cash or comp time for overtime. 

 

Ms. Giunchigliani requested Ms. Matteucci respond to the $707,610 in subsection (b) and asked if the amount was for payment of current comp time balances.  Ms. Matteucci replied it was.  She explained Subsection (b) includes the retroactive payment liability for the plaintiff's already accrued comp time and also SNEA comp time liability on the books.  She asserted Mr. Gagnier is in error if he is indicating all of item (c) was linked to proposed exempt merit employees.  She reiterated there is some retroactive liability for nonplaintiffs in the amount of $449,995.

 

Ms. Giunchigliani summarized the state is maintaining the Attorney General states Subsection (b) cannot be accomplished through memorandums of understanding with state agencies.  Ms. Matteucci stated not retroactively.  The Attorney General asserts the most prudent way to proceed legally is to pay off all comp time balances and the agencies are prohibited from retroactive agreements.  Proactively this is applicable and some agencies have entered agreements for anything after the settlement took effect.

 

Ms. Giunchigliani asked if there was a cap for comp time.  Mr. Gagnier stated there is no cap on the amount of comp time which can be carried over, but it states after 120 hours are accumulated cash is paid.

 

Vice Chairman Spitler requested Mr. Lorne Malkiewich, Legislative Counsel, discuss the issues.  Mr. Malkiewich stated the skeleton bill (see EXHIBIT C) submitted by Ms. Matteucci will take awhile to draft in regard to the specific boards and commissions, personnel classes, which positions will or will not be included, what types of services, etc.  He indicated taking out any reference to classified and unclassified service of the state will make the bill be 150 or 200 sections long.  After decisions are made in regard to the personnel issues, then the bill can be drafted in detail.

 

Mr. Malkiewich pointed out he is not a judge and cannot rule whether the Attorney General or SNEA's legal counsel is correct concerning these issues.  He stated the best way to handle this type of situation would have been to handle it in the beginning, but the litigants did not realize the problem existed at settlement hearings in December.  If it had been addressed then, the judge could have heard the issues and made the appropriate decision.  He indicated time restraints now make it more difficult to go back to the judge and ask what he meant concerning payment or returning of comp time balances.

 

Mr. Malkiewich briefly addressed the issues.  The major issue is whether a representative of employees can agree after the performance of work to provide comp time in lieu of payment for overtime.  He explained the statute says "pursuant to an agreement..." and "for employees not covered by (i) in agreement understanding entered before the performance of the work."  An analysis of the two arguments raises the implication that SNEA has been arguing correctly.  Mr. Malkiewich pointed out the regulation, 29 C.F.R. 553.23 (a) (1) which says the above section requires an agreement of understanding before.  The judge's order said since SNEA is the authorized representative, the plaintiff's were entitled to cash payment for all overtime because no contract exists between the defendants and SNEA for compensation.  He reiterated this is the other issue:  what does "entitled to" mean and if they had to pay.

 

He pointed out the settlement stated, "The amount owed to the plaintiffs due to the retroactive effect must be paid in two equal installments, the first one on April 23, 1993 and the second on July 16, 1993."  Mr. Malkiewich remarked this creates a tactical problem because without the whole liability being known, the half cannot be paid.

 

Mr. Malkiewich reiterated the state is arguing the regulations interpret the statute, the state was ordered to pay and paying is the only safe way to comply.  There is a regulation which states an employer can substitute cash for comp time at any time.  SNEA argues the regulation conflicts with the statute and the statute controls.  Not negotiating is intended to be punitive so SNEA members are cashed out while others are given the option of cash or comp

 

Mr. Malkiewich indicated he could say, after exhaustive search, with relative certainty there is no precedent on this issue.  He noted, in fact, this was expected prior to the search.  Logically, there is no precedence because if the situation exists where a group has an authorized representative, they usually have an agreement or they do not.  If they do not have an agreement, the comp time will be paid in cash -- period.  He stated comp time will not be accrued to which a retroactive agreement could apply.  The only way this issue could arise is in a situation where people have been treated as though they were not represented by an authorized representative, therefore they are subject to the general rules which state, "You have a certain amount of comp time you can carry, etc."  As a result of litigation, it is determined the employees do in fact have an authorized representative and have comp time on the books.

 

Mr. Malkiewich pointed out there is some indirect, very weak authority.  One is dictum, Local 2961-IAFF v. City of Jacksonville where the court states under 29 C.F.R. 553.23 (a) (1) "when employees select a representative an agreement is required between employer and employee's representative before work is actually performed.  The agreement may be by collective bargaining agreement, memorandum of understanding or other agreement."  Another is a Minnesota Law Review article entitled "Public Sector Compensatory Time Exception to the FLSA:  Trying to Compensate for Congress' Lack of Clarity."  The author states the FLSA amendments require public sector employers to enter into compensatory time agreements with their employees before the employees log any overtime.  Mr. Malkiewich indicated he would not take the statement to mean anything, but it does mention one significant point which is in the 1985 amendments to FLSA, the Senate version is the one which was adopted.  Therefore, the Senate interpretation is the authority and Senate Report #99-159 which is the report to the FLSA standards amendments of 1985 states:  "the use of comp time in lieu of pay must be pursuant to some form of agreement or understanding between the employer and employee reached prior to the performance of the work."

 

Mr. Malkiewich summarized while all of these sources indicate agreements must enter into before work is performed, all three are very weak authority.  The fact is, as a practical matter, if there was an agreement to do this retroactively by the court, there would probably not be much of a class of plaintiffs to sue.  He stated these agreements have been structured to allow the employee the option rather than being forced to cash out, the employee gets the choice of comp or cash.  If an employee felt this was somehow a violation of the FLSA, Mr. Malkiewich indicated he was not sure what they would claim as damages.  While technically it may be a violation to enter into retroactive agreements, he did not know what damages could be claimed and the defendant would be SNEA rather than the state because if they force the state to enter into the agreement the members of the union could say SNEA bargained away the employees rights. 

 

Mr. Malkiewich concluded logistics is the issue currently.  If there was more time to allow the comp time or cash option it might be considered, and he suggested if SNEA would allow the payment time to be delayed more discussion of options could be pursued.  He indicated the current situation is backward to what had previously occurred between the state and SNEA.  Previously SNEA was telling the state to comply with FLSA and the state was saying they are trying to comply.  Now, the state is telling SNEA the state cannot do so because they are trying to comply with FLSA and SNEA states this would be in compliance with the FLSA. 

 

Mr. Malkiewich concluded the safest approach would be to get the courts to approve whatever is decided prior to action, but given the time constraints this may not be practical.  He stated paying off the total amount will insulate the state from liability.  He indicated one thing which will help the state is the hearings today and last Monday which produces a record of the state's indication to comply with the FLSA and SNEA's indication they want to make the adjustment.  This would make it difficult for SNEA to come back and say they were forced into retroactive agreements.

 

Mrs. Evans inquired if the suggestion to change the payout date from April 23 was possible and what it would take to allow more time to negotiate.  She pointed out the amount of money at stake and the desire to assure the employees' rights is important, but if the state does not need to allocate as much money as originally recommended the funds could be used to fill other budgetary needs.  Mr. Malkiewich replied the date which is driving AB316 and making Ms. Matteucci anxious is from the settlement agreement which was approved by the court.  He explained the Benzler decision was a partial summary judgment where the court ordered on some issues and said the remaining issues will have to go to trial.  The settlement conference settled the remaining issues of the case rather than taking them to trial.  The settlement agreement says due to the retroactive amount due the plaintiffs must be paid in two equal installments, but the agreement did not specify what the payment was because at that time they were not aware of who was liable for what amounts.  The agreement indicates payment is due on April 23 and July 16.

 

Mr. Malkiewich reiterated since the agreement was approved by the court, it has a binding effect and the state must comply.  He understands the state's reluctance to go beyond the April 23rd payment date.  He explained a delay in the payment dates must be negotiated and agreed to by both parties and an additional order approved by the court.

 

Mrs. Evans emphasized through two days of testimony it has become apparent there is a great reluctance to negotiate.  She stressed there is an old-time standoff and a lack of willingness to talk.  This element of negotiation has been missing all along.  Mrs. Evans pointed out if the parties to the agreement would sit down to talk and negotiate then what can be done.  Mr. Malkiewich concurred if discussion occurs it would be possible to revise the settlement.  He maintained the state's position at this point is liability can be closed by paying the overtime liability and moving on.  He reiterated that position may not necessarily put the liability behind the state and SNEA has indicated if the issue is pushed they will bring a lawsuit because of the failure to allow entering into agreements concerning the choice between cash payment and comp time.

 

Mrs. Evans inquired if the committee could require the two parties to sit down and negotiate the issue rather than having the constant fighting. 

 

Vice Chairman Spitler reiterated Mrs. Evans point that it is difficult to go back and adjust a standing agreement, but the lesson to be learned in the future is that the parties must sit down and talk before letting the courts decide.  He concurred with Mrs. Evans that negotiation is needed.

 

Mr. Price asked if there is any potential of FLSA violation with the  committee trying to pressure the employee's representative to take action one way or another rather than it occurring voluntarily.  Mr. Malkiewich responded this is why he would be reluctant to do anything without further order of the court.  He reiterated the established record of today and last Monday would indicate the intention of the Ways and Means Committee and the parties is not to circumvent the FLSA, but to reach an agreement and be in compliance with it.  Mr. Malkiewich stated because there is an issue as to the legality of the retroactive agreement under the FLSA, he reiterated it is prudent to have any agreement be subject to court approval.  He stressed he did not believe there would be any problem in obtaining court approval and the court would probably say the state was providing a better benefit than would otherwise be available.  Without the court's approval, he pointed out the state would arguably be violating the FLSA by entering into or not entering into the retroactive agreements.  He stated again there is no easy answer.

 

Mr. Perkins cited Ms. McCoy's discussion of 29 C.F.R. where the first paragraph discussed performance after an agreement while later paragraphs stated there were at least implications the agreements did not have to occur in this manner.  Mr. Malkiewich explained the fact of one portion in the regulation of the requirement for a prior agreement while in another portion there is no mention of the requirement.  This dichotomy also occurs in the statute.  He reemphasized rules of statutory construction would imply an agreement prior to performance of work is not necessary and a retroactive agreement could be established.  On the other hand, indirect authority is present.  Mr. Malkiewich stated a negotiated agreement probably would be approved by the court, but if legal counsel says the state can enter into the retroactive agreement and the court says no, the state would be in violation again.  Because of the time constraint, the court order and the element of doubt, the Attorney General's stance is the safest route. 

 

Mr. Perkins inquired if the discussion is in regard to the potential violation of the FLSA or the court order.  He elaborated if retroactivity is the crux of the discussion, by his understanding of the FLSA, he could not see any violation of the intent or the concept.  In fact, this would open up flexibility between the employer and employees.  Mr. Malkiewich agreed, but he reiterated it is not a clear issue and what is clear is the authority stating the employer has the right to substitute cash at any time.  This is what the Attorney General is relying upon because it is a safer route rather than risking a violation of the FLSA.  The state can be protected by approval of any agreement by the court.

 

Mr. Perkins directed to Ms. Matteucci the Benzler decision was July 17, 1992 and the settlement agreement was decided December 1992.  He inquired why the bill was not received until March 1993 for an April 1993 payment.  It pushed an 11th hour decision when if there had been another 30-60 days, negotiation, clarification and approval by the courts could have been done.  Ms. Matteucci emphasized the bill was submitted in February with all other budget-support bills.  It was provided as quickly as possible.  The Board of Examiners approval of the settlement was not kept secret.  She suggested the issue of retroactive agreements and SNEA's position of retaining comp time on a retroactive basis is a new issue.  She stressed the Attorney General's office did not believe the state was doing anything contrary to what SNEA wanted, requested, and received as a result of the decision.  The state is just trying to comply with the order to pay off the members of SNEA as they are entitled.

 

Speaker Dini stated he is just about fed up with these kinds of arguments between SNEA and the administration.  The legislature gets caught in these battles every session.  He commented when he chaired Government Affairs and was able to negotiate between the parties and make some settlements.  Some were won in court, some were not.  Speaker Dini asserted the committee does not have the time nor expertise to battle it out unless the two parties can be brought together to work something out.  He stressed if the parties are willing to sit down and work it out, then do so right away and if not, let it go back to court where it could cost twice as much money.  He reiterated the committee has gone far enough.  Since there is room for negotiation, perhaps the committee can take the lead to get it accomplished.  This needs to be worked on in a different manner than is currently being pursued.

 

Vice Chairman Spitler concurred with Speaker Dini and stated they were words well spoken.

 

Ms. Giunchigliani asked how long it would take for the court to approve an agreement if the two parties negotiated the issue.  Mr. Malkiewich replied if the parties agreed to a supplemental stipulation of some type and presented it to the judge, he would probably act on it quickly.  Ms. Giunchigliani stated two years ago the committee had a couple of members sit down with parties who were in disagreement on an issue and they were able to work out a compromise.  She inquired if, as Speaker Dini had suggested, it would be possible to do the same in this situation.

 

Chairman Arberry requested Mr. Gagnier, Ms. Matteucci, Speaker Dini, Vice Chairman Spitler and himself discuss the situation.

 

Vice Chairman Spitler closed the hearing of AB316.

 

AB55        Makes various changes to provisions governing disbursement of administrative assessment for violation of misdemeanor.

 

Ms. Mary Henderson, representing Washoe County, introduced herself and Mr. Kirby Burgess, representing Clark County.  She stated AB55 is actually a Nevada Judge's Association bill and indicated Ms. Paula Treat, the Association's lobbyist, was out of town and unable to present the bill to committee.  Ms. Henderson explained she and Mr. Burgess came forward on the bill because while it was in Assembly Judiciary, they had worked closely with the Judge's Association to forge a compromise on the bill which brings some level of accountability and provide the ability to monitor some of the funds collected.

 

Ms. Henderson indicated the bill changes the disbursement of misdemeanor administrative assessment fees to the municipal and justice courts only.  It does not affect any of the state dollars or juvenile court disbursements nor is it a fee increase.  She noted it allows the local governments to establish a special revenue fund for the $2.50 collected from municipal and justice courts.  This would be tracked for two years in the special account.  The judges would come forward and, present a Capital Improvements Plan (CIP) to the Board of County Commission or City Council. 

 

She explained what the judges had originally requested was the monies be rolled over every year and kept in the account.  If the funds are not expended after two years, they will revert to the county general fund.  This is a compromise which the counties have agreed to. 

 

Ms. Henderson pointed out the other area is subsection 7 which more closely defines the use of the administrative fees.  She noted there have been previous problems with interpretations by the court and the city or county staff members.  This has closed up some of the loopholes and eliminated many of the problems which were experienced in interpreting this.  Now these funds can be used for training, education of personnel, acquisition of capital goods, management and operational studies and audits.

 

Vice Chairman Spitler asked her to expand on the audits outlined on line 19.  He noted audits should be part of the main budget rather than an ancillary portion and wondered what was being audited.  Ms. Henderson explained a situation with the Washoe Justice Courts, where an audit was performed of the fees collected based on what would occur with the new collections division.  She stated currently either the administrative assessment funds or county general fund would be used to perform the audits.  She indicated both the courts have requested this in order to audit the city's or county's in reverse.  This was a compromise.

 

Ms. Henderson stated Washoe County does support this bill in the compromise version.

 

Mr. Marvel voiced his concern because the administrative assessment has to be related to some type of judicial function and asked if the audit would relate in this way.  Ms. Henderson could not speak for the courts, but stated basically this came from the Las Vegas Municipal Courts from the problem which arose from monies being placed into the city's general fund and the judges had no way of knowing how much money was collected.  The result was the monies become lost in the whole account and this audit line would allow the auditing of the special revenue fund to assure the dollars were being expended and accounted for properly.

 

Mr. Marvel inquired of fiscal staff if this was distorting the way administrative assessment fees are currently being used.  Mr. Stevens replied AB55 only amends the local portion of the administrative assessment and does not affect the amount collected by the state.  Ms. Henderson concurred.

 

Mr. Burgess stated he worked on AB55 and Clark County is satisfied with the compromise which was reached.

 

Vice Chairman Spitler closed the hearing on AB55.

 

AB93        Clarifies provisions governing revenue to be deposited in fund for new construction of facilities for prison industries.

 

Mr. Howard Skolnik, Assistant Director of Industrial Programs, Department of Prisons, introduced himself.  He explained AB93 clarified language in previous legislation regarding deductions from inmates' accounts for funding of construction of new prison industries facilities.

 

He introduced Mr. George Weeks, Director of Support Services, to answer any questions regarding the bill.  Mr. Skolnik stated AB93 allows for the collection of fees only from inmates who earn wages in industries rather than from all inmates.  This prevents an impact on other programs such as restitution centers.

 

Mr. Marvel commented AB93 is a product of the Prison Industries Advisory Board as a result of some confusion over a bill from the Sixty-sixth session as to what money would be withheld.  He explained this bill clarified which monies will be withheld and from which accounts.  He pointed out this a strong recommendation from the Prison Industries Advisory Board which he currently chairs.  He stated the bill is constructed so it is not subject to misinterpretation again.

 

Vice Chairman Spitler closed the hearing on AB93.

 

AB94        Revises provisions governing profitability of programs for employment of offenders.

 

Mr. Skolnik explained AB94 clarified the definition of profitability for the purpose of prison industries.  He noted existing legislation requires each and every program be profitable.  Essentially this means in order to start a new industry program, the staff has to stretch the meaning of profitability or violate the law.  This bill would allow for an aggregate of all of the programs to be judged as profitable and would therefore allow for the implementation of new programs.  It does exclude rent, interest and license plate fees from revenue.  It also excludes administrative overhead from expenditures, thereby judging operations as an independent group rather than as each individual body.

 

Mr. Skolnik pointed out this also was a recommendation of the Prison Industries Advisory Board to help define profitability for the prison industry program.

 

Mr. Marvel stated another reason for AB94 is when a new program is implemented sometimes it takes a year or two before it becomes profitable.  If the statute had been interpreted literally, the new program would have to be abandoned and it was the feeling of the board, based on Mr. Skolnik's judgment, that programs that would become profitable in the long run should not be eliminated.  This bill provides a little time to let the new programs become profitable.  The whole prison industry program is running in the black and some intangible assets, such as training and education, cannot be measured with a dollar sign.  Mr. Marvel reiterated this is necessary legislation for the prison industries program.

 

Ms. Giunchigliani asserted this program maintains the premise of not being competitive with the private sector.  Mr. Skolnik agreed that language is left intact in the legislation.  Ms. Giunchigliani inquired if the inmates are assisted in preparing resumes, etc. and if they are able to count the time as work experience when they leave prison.  Mr. Skolnik replied Silver State Industries is a trademarked name and letterhead does not identify the program as a prison operation.  This will continue and letters of reference are provided for inmates who have done a good job.

 

Mr. Marvel inquired how the Facilities Capacity Act will impact the prison industries work force especially in relation to turnover.  Mr. Skolnik indicated they would be able to adjust to whatever actions are taken by the Legislature.

 

Vice Chairman Spitler closed the hearing on AB94.

 

      * * * * *

 

      CHAIRMAN ARBERRY MOVED FOR A COMMITTEE INTRODUCTION ON BDR 40-1825.

 

      MR. PERKINS SECONDED THE MOTION.

 

      THE MOTION CARRIED UNANIMOUSLY BY VOICE VOTE.

 

      * * * * *

 

Vice Chairman Spitler adjourned the hearing at 10:03 a.m.

 

                                                RESPECTFULLY SUBMITTED:

                                                _________________________

                                                Kerin E. Putnam

                                                Committee Secretary

??

 

 

 

 

 

 

 

Assembly Committee on Ways and Means

March 22, 1993

Page 1