MINUTES OF THE
ASSEMBLY COMMITTEE ON WAYS AND MEANS
Sixty-seventh Session
May 28, 1993
The Assembly Committee on Ways and Means was called to order by Chairman Morse Arberry, Jr., at 8:05 a.m., on Friday, May 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
Ms. Sandra Tiffany
Mrs. Myrna T. Williams
COMMITTEE MEMBERS ABSENT:
None
STAFF MEMBERS PRESENT:
Mark Stevens, Fiscal Analyst
Gary Ghiggeri, Deputy Fiscal Analyst
AB149Requires attorney general to establish fraud control unit for industrial insurance.
Assemblyman Scott Scherer, District 2, stated AB149 was a concept which had been included in several different bills this session including SB316. He testified AB149 would create a workers compensation fraud unit, for both the self-insured or state-insured programs, in the Attorney General's Office. He indicated the rationale had three components: (1) the current system has not been effective; (2) there has not been a focus on where the "big" dollars were; and (3) it is important for the investigative unit to have independence from SIIS. He explained SIIS had not always received good cooperation from the local district attorneys and others prosecuting these cases. He emphasized the local District Attorney's were not necessarily at fault, but by dedicating a specific unit to this task in the Attorney General's Office, there would be better prosecution. He noted the "big" money was with the provider fraud and employer fraud and, therefore, should be the focus of the unit's activity. Finally, he stressed having all investigations occur separate from SIIS jurisdiction would assure accuracy and would provide the Attorney General more latitude in getting into the cases. Therefore, independence would be the best aspect of forming the unit.
Mr. Marvel inquired who had developed the fiscal note showing 48 new positions. Mr. Scherer stated the Attorney General's Office had revised the fiscal note to $1.7 million with 26 positions. Mr. Marvel asked if this would be funded by SIIS. Mr. Scherer replied yes. He noted amendments in Government Affairs addressed the transfer of positions and equipment and the funding source. Mr. Marvel wondered if there would be any duplication of services between agencies. Mr. Scherer indicated there might be. He stated it would be practical to have a combined fraud unit within the Attorney General's office which would handle Medicaid fraud, workers compensation fraud, securities fraud, telemarketing fraud and other fraud issues. He indicated many of the financial investigations were similar and there were many clear overlaps, such as Medicaid and workers compensation. He pointed out a problem could occur in properly accounting for where funds were spent in relation to the activities of the various fraud units.
Ms. Frankie Sue Del Papa, Attorney General, addressed the revised fiscal note (see EXHIBIT C). She explained from 1912 until 1993, the Attorney General's Office had not been involved with worker's compensation because worker's compensation had always had its own counsel. Therefore, there was no expertise currently available within the Attorney General's Office except some deputies with previous experience with SIIS.
Ms. Del Papa explained the fiscal note was prepared because the Attorney General's Office could not absorb the new fraud unit and additional responsibilities into the existing agency structure. The current, revised fiscal note reflected the bottom line of 26 positions and a $1.6 million budget which was agreed to by the Senate Commerce Committee. She emphasized the amounts were built upon the Attorney General's previous experience in constructing the Medicaid fraud unit budget after the 1991 Legislative session.
Ms. Del Papa remarked both Senator Townsend and Assemblyman Giunchigliani were in agreement with the revised fiscal note and AB149. She stated her office personnel were currently moving toward the formation of the fraud unit based on the base budget presented. She emphasized there would still be a lag time before full implementation regardless of how prepared the agency was in anticipating the passage of AB149. This would include hand carrying all paperwork related to this legislation. She pointed out the usual state bureaucracy was slow. She stated an example was equipment ordered by the Medicaid fraud unit in November 1992 which arrived in May 1993.
She explained the fraud unit would be based primarily in Las Vegas and Reno to coordinate with the existing SIIS offices. Funding would be 90 percent paid from SIIS and 10 percent paid from self-insureds until the unit had some experience on how the cases developed. She noted the funding percentages and sources would be subject to negotiation after the caseload experiences were reviewed in the future.
Ms. Del Papa explained employer fraud, provider fraud and employee fraud would be moved to the Attorney General's Office while the SIIS and self-insureds would continue to conduct abuse investigations which were a claims cost. The Attorney General's Office was a criminal case investigative unit.
Mr. Marvel clarified AB149 was a basic component of SB316. Ms. Del Papa indicated it was one of the least controversial aspects of SB316. She emphasized this unit was being given to the Attorney General's Office with no solicitation by the office and the Attorney General was willing to take on the responsibility. She reiterated the Attorney General has had no previous direct experience with SIIS.
Ms. Evans remarked the agency had the Medicaid fraud unit, would soon have the SIIS fraud unit, and a number of bills in the current session regarding consumer affairs and telemarketing activities would also address various fraud units. She asked the Attorney General if there were any other "fraud" units potentially being formed, if she envisioned bringing all these fraud units together or would the units stand alone. Ms. Del Papa replied the goal of the Attorney General's Office would be to have a "mega-fraud" unit, but this concept would be complicated by (1) how the agency was funded and (2) the current location of the main Attorney General's Office. She explained in the next two years there would be changes with the purpose of moving the office toward a fraud unit with intercooperation within the agency structure.
Ms. Del Papa explained the Attorney General's Office currently has staff in 14 different locations statewide. This would change with the Old Supreme Court Building renovation in the North and the Las Vegas State Office Building completion in the South, both of which would help centralize the agency's functions within each region. The SIIS fraud unit for the northern region would still be located in Reno and would share resources with the Human Resources Deputy Attorney General located there.
Ms. Del Papa further clarified, although all the deputy attorney generals were located essentially together, the investigators were not located together. She explained she had been fighting to have the Consumer Affairs and Telemarketing deputies and investigators relocate to the Attorney General's Office. She emphasized experience had shown it was more efficient and cost-effective to have the investigators co-located with the deputies which allowed for the team approach. It also resulted in smoother operations, logistically.
Mrs. Evans asked if taking similar units to be consolidated into a whole would be the final goal. Ms. Del Papa stated yes, wherever possible it would be attempted. She noted it was her intent, after statewide reorganization by the Governor, to reorganize the agency to assure cost-effective and efficient operation of the Attorney General's Office statewide.
Chairman Arberry closed the hearing on AB149.
AB661Makes various changes relating to unarmed combat.
Mr. Spitler stated AB661 was companion legislation in closing the Athletic Commission's budget account where the agency would be increasing its fees to fund over 60 percent of what was added to the Commission's budget at closure. This bill would align the fee schedule to facilitate that action.
Mr. Marvel concurred with Mr. Spitler.
Vice Chairman Spitler testified AB661 was a product of the subcommittee reviewing the Athletic Commission's budget. The subcommittee had asked the Commission, to provide a method to fund the increased allocation of general fund support provided. The subcommittee was advised there was a variety of ways in which the events put on by the Commission added to the general fund through room taxes, sales taxes, merchandise purchases, etc. Mr. Spitler indicated this bill would increase fees to make up 60 percent of the increase allocated.
* * * * *
MR. MARVEL MOVED DO PASS.
MR. SPITLER SECONDED THE MOTION.
Speaker Dini inquired what the repeal of NRS 467.103 meant. Mr. Thorne, Budget Division, indicated the bill would add a fee for physicians and the repeal would eliminate the prohibition of charging a fee.
THE MOTION CARRIED BY VOICE VOTE. MS. GIUNCHIGLIANI WAS ABSENT AT THE TIME OF THE VOTE.
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BUDGET CLOSINGS
GAMING CONTROL BOARD -- PAGE 320
Mr. Mark Stevens, Fiscal Division, explained overtime pay budgeted within the salary category which normally was not budgeted. He stated most agencies fund overtime costs through vacancy savings. He pointed out discussions with the agency indicated they felt strongly about budgeting for overtime pay and did not recommend it be removed. Mr. Stevens emphasized the 1991 Legislature had removed overtime pay from the budget.
Mr. Stevens explained the Racing Commission related expenses were included in the budget. The reorganization plan had eliminated the Racing Commission and the duties of the commission were proposed to be transferred to the Gaming Control Board.
Mr. Marvel stated there was a bill being heard in the Senate which would expedite the transfer and would have a $40,000 impact. He recommended the decision be held until the results of the Senate bill were finalized.
Mr. Stevens mentioned the staff recommendation would be to move the $20,000 included under operating into a separate category for the Racing Commission and to increase it to a level of $35,000 for each year of the biennium.
He noted staff recommendation would be to eliminate the purchasing assessment and decrease in-state travel by the 5 percent budgeted motor pool rate increases or $11,000. He explained the motor pool had no intention of raising its rates in the next biennium.
Mr. Gary Ghiggeri, Fiscal Division, explained the other contract services included funding for maintenance costs would not be required since additional funding was provided in The Executive Budget to lease six new machines on a cost per copy basis. This would result in a $10,500 reduction per year of the biennium under maintenance contracts. He noted the agency would be relocating into the new Adams Building in Las Vegas during the second year of the biennium. The budget was slightly overbuilt in the non-state owned building rent category and should be reduced $50,167 for FY95. He commented enhancement E710 provided for a sound system in the Las Vegas Office Building and staff recommended deleting it and having the Public Works Board include the system when the building was constructed.
Mr. Stevens explained the 6-A regulations governed cash transactions as required by the U.S. Department of Treasury. He indicated revisions to those regulations were pending and staff was unsure as to the number of new positions which would be required. He suggested providing the agency with a letter of intent to approach IFC if regulation 6-A was amended and additional staff were required. Mr. Stevens noted there were five positions included in the Governor's recommendation to implement the slot route operator tax. He emphasized it was not known if the tax would be approved and, depending on the action on that bill, the budget would need to be adjusted to delete the positions.
Mr. Marvel commented there had been no action, as yet, on the slot route tax.
Mr. Perkins inquired if the funds built in for overtime included the board and how would the three-tier personnel system affect the budgeted overtime. Mr. Ghiggeri responded the agency incurred $60,000 in overtime pay in FY92 and the amount recommended mirrored the incurred expense in FY92.
Mrs. Williams asked if the overtime reflected would be for workers. Mr. Ghiggeri commented the overtime was not specifically identified for one individual group. It reflected only a rollover of what the agency had incurred in FY92.
Mr. Marvel inquired what the status of the exempt-merit bill was. Chairman Arberry responded it was a good question. Mr. Stevens replied the exempt-merit bill was in Senate Finance, but he was not sure how it would be processed. It would be an issue which needed to be decided by the money committees prior to final closure of the budget.
EQUAL RIGHTS COMMISSION -- PAGE 1103
Mr. Stevens remarked the committee should receive information to review from the Department of Data Processing regarding the costs of some additional data processing capabilities for the Equal Rights Commission. He requested the committee provide staff with guidance on how to proceed with this account.
Mrs. Evans stated she did not have a proposal or solution, but declared if it was not possible to get the agency operating and doing the mission it was supposed to do now, she would recommend to either close it down this session or do what was necessary for two years with specific guidelines for performance with sunset legislation. If the agency did not perform as desired over the biennium, then it should be closed down and the federal government could do the job without expending state funds.
Chairman Arberry stressed the committee had provided the agency director with some direction last week, but he did not believe the committee would be receiving any satisfaction from the agency on the concerns addressed. He emphasized it would be necessary to provide the agency with specific goals, objectives and guidelines which would need to be achieved over the biennium or the agency would be abolished because it was a waste of taxpayer's money.
Mrs. Williams clarified that all complaints where there appeared to be probable cause go to the EEOC. She wondered if NERC was supposed to be expediting the claims to the EEOC or could the claims go directly to the EEOC.
Mr. Marvel inquired if it was the Legislature's job to set guidelines or was it the Executive Branch's responsibility. Chairman Arberry stated it was the Executive Branch's responsibility, but if the agency has been left to float on its own without any direction from the Budget Office, then the Legislative Branch would need to step in and take some action to hold the agency accountable through specific goals and objectives.
Mr. Humke remarked he had participated in a joint subcommittee with members of the Senate regarding this agency last session. The discussions had centered on the number of positions the agency received and three or four additional positions were funded. He stressed the Legislature was now in the situation of looking at the agency which had essentially failed. He believed the EEOC would perform the services should the NERC be abolished and indicated he would vote in favor of deleting the agency budget entirely. He was not hopeful the agency would turn around even with specific guidelines. He suggested drafting legislation which would sunset the agency at the end of the biennium. He recommended the guidelines, goals and objectives address the issue of the agency's ridiculous backlog of cases and the necessity of taking care of new complaints on a timely basis. He emphasized any action, at this point, must be done in writing and through legislation because talk would not work any longer with this agency.
Mr. Price pointed out that each session the NERC had come before the committee and, while the Legislature had told the agency to go out and do the job, it had essentially tied the agency's hands by not providing the staff needed to complete the tasks. He emphasized the reception by the public and the reality of eliminating the NERC would be devastating for the Legislature. He remarked elimination should be considered a last ditch effort and he would not support the elimination. He encouraged providing the agency with whatever tools including specific guidelines necessary to fulfill the mission of the agency.
Mrs. Chowning concurred it would be a devastating action and would send the wrong message to the state if the agency was eliminated. She commented, on the other hand, $400,000 in salaries were already allocated to the agency and there was an additional request for $155,000, yet the agency refuses to cooperate in providing requested information. She emphasized it was quite frustrating for both committees especially when the committees had requested specific justification for the additional positions from the agency and it had not provided the information to date. She stressed it was intolerable for taxpayers to pay over a half a million dollars and not receive any results. Anyone in a business capacity should be forthcoming with some type of plan, even after only two months in the position. Mrs. Chowning remarked the sunset concept was a "darn good idea."
Ms. Tiffany concurred with Mr. Humke. She indicated she had a problem with the director and assistant director. She commented the director was a political appointment who was not focusing on the caseload or service. She stressed he did not have a business plan, a focus, a direction, any organizational structure or even a clue on how to get where the agency needed to be. She noted he did not know how to set priorities and it was unconscionable that he would give no response to the audit request. Further, there was no response from the agency to information requests by the money committees.
Ms. Tiffany reiterated if there was some other body which could provide these services, let them. She pointed out the problem with the agency was a people issue. The director kept stating he did not have the tools, but the computer system was in place. She stressed the director should be setting priorities, putting plans into action to have people trained and providing services to address the backlog of cases.
Mrs. Williams concurred with comments made by the other committee members. She agreed it would be devastating to abolish the agency, but something needed to occur to utilize the tools available and assure services were provided in a timely manner. The computer system had been in place for a while, but no plan was implemented to train staff. She commented time would be needed to train the staff and see what the agency could do with adequate staff, training and resources. She emphasized the committee had not been provided with satisfactory answers from the agency, but neither had the committee heard from citizens who had been provided with satisfactory services as a result of the agency. She stressed the committee could provide strict guidelines, but was not in a position to abolish the agency.
Chairman Arberry remarked, "If you want someone to fail or any entity to fail, don't give them the tools to work with." He noted it appeared the agency had not been provided the tools in order to see what could be accomplished. He hoped the committee could provide a mechanism to give the agency adequate tools to see if it could operate. If the agency cannot operate, "It would hang itself and the we will just tighten the noose."
Mr. Price pointed out what occurred in the 1991 Legislature where the agency asked for three positions, it only received one as recommended by the Governor. He emphasized the director at that time was practically begging for support because of the backlog which existed. The committee did not listen to the recommendations of the prior director and was still not listening now. He pointed out the committee was complaining the agency was not doing the job, but it did not get the tools to do the job two years ago.
Mr. Humke reiterated he would not back off from his position. He pointed out he had been told by a number of employer groups that they were concerned about handing this function over to the federal government. He stated, "He did not want to make any disparaging comments about the new administration in Washington, but he did not want to give these tasks over to a federal agency." He noted legislation would be worthwhile and possibly allocate funds to get a consultant with a business background into the agency to address the need for a business plan and some priorities. He recognized the agency needed to be managed first and foremost. Some directors became such advocates for the client group served that they did not provide for the management of the resources to carry out the agency's functions.
Chairman Arberry held the budget account.
AB373Requires state welfare administrator to establish program to provide grants for supplemental food program.
Mr. Stevens stated AB373 was put into a subcommittee and amended. He indicated there would be a financial impact to the bill with a general fund appropriation of $100,000 for each year of the biennium which was not recommended in the Executive Budget.
Mrs. Evans remarked she was very supportive of these types of programs generally, but she was concerned there were too many unknowns with this bill. She suggested placing AB373 on the "short list" and when the budget was wrapped up, see if funding would be available in relation to the other "short list" urgent items. She emphasized she was not prepared, at this time, to vote on bills of this nature.
Mrs. Chowning pointed out this bill previously had been funded from the abandoned property trust fund and the subcommittee chose to have it funded with general funds. She indicated all purchasing would go through the Department of Purchasing. She emphasized only 10 percent of the appropriated amount would be allowed for expenses and 90 percent would go directly to the purchase of food.
Chairman Arberry stated his support of Mrs. Evans' issue and not to passing any general fund appropriation bills at this time. He noted both Senator Raggio and he had agreed to hold all money bills until the full budget had been finalized.
Mrs. Chowning asked if the committee was in agreement on the amendment to AB373. Mr. Arberry indicated the bill, as a whole with the amendment, was on hold.
Mr. Price remarked, on the Isaac Roop bill, he would like to amend the amount from $5,000 down to $2,000.
Mrs. Evans remarked, related to the Joint Meeting scheduled for Tuesday, the purpose was to discuss SB494 which was the Hospital Tax bill. She commented the tax was currently up to about $49 million and the Welfare Subcommittee had not closed a number of budgets. She urged committee members to ask all the questions and concerns they had in order to facilitate budget closings. She noted, allegedly, the hospitals would come out okay, except for one in Mr. Spitler's district which would take a hard hit.
Ms. Tiffany asked if questions on managed care would be appropriate as related to SB494. Mrs. Evans replied it would be appropriate to raise the issues, but it was only a component and encouraged the committee to focus on the mechanics of SB494.
Chairman Arberry adjourned the hearing at 9:45 a.m.
RESPECTFULLY SUBMITTED:
_________________________
Kerin E. Putnam
Committee Secretary
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Assembly Committee on Ways and Means
May 28, 1993
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