MINUTES OF THE
SENATE COMMITTEE ON FINANCE
Sixty-seventh Session
March 15, 1993
The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:00 a.m., on Monday, March 15, 1993, in Room 223 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda. Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Senator William J. Raggio, Chairman
Senator Raymond D. Rawson, Vice Chairman
Senator Lawrence E. Jacobsen
Senator Bob Coffin
Senator Diana M. Glomb
Senator William R. O'Donnell
Senator Matthew Q. Callister
STAFF MEMBERS PRESENT:
Daniel G. Miles, Fiscal Analyst
Robert Guernsey, Principal Deputy Fiscal Analyst
Birgit K. Baker, Program Analyst
Jeanne L. Botts, Program Analyst
Judy Jacobs, Committee Secretary
OTHERS PRESENT:
James P. Hawke, Director, Office of Community Services
P. Forrest Thorne, Deputy Administrator, Budget Division, Department of Administration
Robert T. Sullivan, Executive Director, Nevada Rural Housing Authority
Kevin Christensen, Acting Director, Office of Protection and Advocacy
Rochelle Summers, Principal Budget Analyst, Budget Division, Department of Administration
Claire N. Perrigo, Associate Executive Director, United Cerebral Palsy of Nevada
William L. Fox, Executive Director, Nevada State Council on the Arts
Senator Raggio announced time was limited due to the early scheduling for the Senate session. He presented the committee with a bill draft request (BDR) for consideration.
BILL DRAFT REQUEST 40-1829: Corrects statutory reference to require that certain fees be deposited in state highway fund.
SENATOR GLOMB MOVED FOR COMMITTEE INTRODUCTION OF BDR 40-1829.
SENATOR COFFIN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR O'DONNELL WAS ABSENT FOR THE VOTE.)
* * * * *
Senator Raggio opened the hearings on commerce and industry budgets.
Energy Conservation - Page 437
James P. Hawke, Director, Office of Community Services, passed out a document (Exhibit C. Original is on file in the Research Library.) containing information to supplement his testimony. He pointed out the Energy Conservation program budget contains no appropriations from General Fund, rather funding is provided through two small grants from the United States Department of Energy (DOE).
Mr. Hawke said there are other funds earmarked through the Institutional Conservation Program for schools and hospitals which come directly from the federal government. He noted the receipt of an additional $137,000 from the DOE this year, and he anticipated more funds will be forthcoming for energy programs over the next few years as a result of the National Energy Policy Act of 1992.
Not only are there federal grants, Mr. Hawke said, but also there are cooperative agreements with the Western Area Power Administration (WAPA). He said he just completed a 5-year agreement with the Western Area Power Administration under which WAPA pays 60 percent of the cost of the project and the Energy Conservation program pays 40 percent using "stripper well" funds. He added:
We grant out funds to local governments and the university. The money that they provide as match is the money that we use as match if we don't have any General Fund appropriation. Using that and other agreements we are able to generate a reasonable budget to operate the state's energy, conservation and renewable energy programs.
Mr. Hawke called attention to the proposed transfer of the small business program to economic development. He elucidated:
Many years ago the Office of Community Services created a...Small Business Revitalization Program that was consolidated at the beginning of Governor Miller's administration.... We have continued to fund that...through our Community Service Block Grant program.... Because of changes in the federal law we can't do that after this year so our proposal is to fund that, which is also going to mean a change in the mission of the small business program.
Mr. Hawke explained the Small Business Revitalization Program will continue to aid business development for the handicapped and disadvantaged. It will provide services like securing contracts from the DOE at the test site for jobs such as cleanup. He speculated significant funds will be coming to the state as a result of the National Energy Policy Act of 1992 to develop jobs, to provide economic incentives, and to mitigate environmental activities. He said:
I think that, in working with the director of that program, Helen Myers, we have scoped out some new services that would conform to small business program services sufficiently, the energy programs, to warrant their transfer. I don't see a problem with that. Financially, I don't see a problem with making this transfer either.
Mr. Hawke said, "On the stripper-well funds, that represents our best guess of what we think we will receive. If we receive less than what we are anticipating...we will just have to pull our horns
in a little bit, and it probably means reducing the amount of grants that we give."
Senator Raggio inquired why increased travel and seminar grants at $206,000 were included under the Enhancement in module 700. Mr. Hawke replied:
My office is composed of a number of budget accounts. One budget account is...4860...an administrative account that supports my salary or accountants and so on. I decided more than a year ago to eliminate that budget account. Basically there wasn't much administration in our office, and I...and our accountants are really program providers now.... In the course of consolidating those, bringing those...positions over...we ended up with some enhancements here in travel and things like that.
Senator Raggio wondered if the explanation was attributable to the elimination of the Office of Community Services. Mr. Hawke responded:
Then under reorganization that transfer of 4860 into 4868 does not go forward, so my position and the accounting positions and the management assistant position would be eliminated and would show under the reorganization savings.
Mr. Hawke added there still are some travel funds included, which were approved by the Interim Finance Committee (IFC). He explained grants from entities such as the Bonneville Power Administration (BPA) or the Western Area Power Administration (WAPA) include some travel funding to provide for attendance at meetings with them.
Senator Raggio interjected the budgets are somewhat confusing because travel is placed under Enhancement. He advised keeping the reorganization proposal in mind when considering the budget proposal. He reported the staff had explained the Office of Community Services would be eliminated and its programs would be transferred to new departments. The Energy Conservation Program, he said, would transfer to the new Consumer Services Division in the Department of Business and Industry, and the Petroleum Overcharge Rebate budget would transfer to the Department of Education, Health and Human Services. He asked why, therefore, budget reorganization would bifurcate the energy-related programs into two different new departments when it had not been recommended.
Mr. Hawke replied he had been the primary administrator of the oil overcharge settlement process since 1983. He declared, "It's no plum," because no funding was provided to administer the funds. He added, "Perhaps the thought was...the depth of accounting staff at welfare might be more useful in monitoring that program in the future, providing the reports, writing the plans and so on...."
Mr. Hawke continued to say many of the funds for the Petroleum Overcharge Rebate budget have come from the Exxon settlement but those funds do not include administrative expenses. He added, "Stripper-well allows us to collect 5 percent for administration." He noted until 2 years ago most of the 5 percent had been expended for legal fees for a special counsel retained by the attorney general. Since the expiration of that contract, he said, the 5 percent has been used to administer the Institutional Conservation Program.
Mr. Hawke acknowledged the State of Nevada receives $30,000 per year to administer the Institutional Conservation Program, while the grant funds do not appear in the Energy Conservation budget but
go directly from the DOE to hospitals and schools. He declared the state must match the $30,000 with nonfederal unappropriated funds which has been accomplished by using the 5 percent provided from the stripper-well funds for administration.
Senator Raggio called attention to the Transfer for Economic Development on page 437 which he surmised was for the Small Business Program. He inquired as to the source of that funding and as to whether that would be permissible usage of those funds. Mr. Hawke replied, "The source of funding would be from stripper-well funds and it would be allowable based on reconfiguring the scope of service that the Small Business Program...."
Senator Raggio asked, "What do you have to do to the Small Business Industry Program to make it conform to those guidelines?" Mr. Hawke answered:
You have to do two things.... The first thing, we're funding them right today at a level of $186,000. We've had to significantly pull back their budget requirements, and it cut `em in half.... The other thing...is to rewrite their mission statement. And their mission statement will now have to conform to providing some services. It's going to have to be a nexus between what they do and with energy programs to make it appropriate to provide that funding....
Senator Glomb asked why such a high Reserve was set forth on page 437 and for what it was earmarked. Mr. Hawke answered:
The Reserve may also be a little optimistic. That's one of those numbers that we hope is correct.... For the first year of the biennium we pulled from the `91 year and it's hopefully correct. That's a carried forward fund...and stripper-well funds that are unobligated reserve. We have some reserve that's obligated grants that we've given...and they haven't all been drawn....
Senator Glomb asked, "We can't put that money to good use?" Mr. Hawke proclaimed the funds are put to good use, adding those funds are kept in a separate account in the treasurer's office where they earn interest. He noted the budget includes receipts from interest, even though they do not appear as a line item but, he confessed, the estimated interest may be somewhat optimistic due to rates being lower than had been forecast.
Mr. Hawke said, "The court settlement required us to keep this money in a separate account, interest-bearing, with the interest going back into that program," the stripper-well account.
Senator Jacobsen asked if the federal government mandates how the grant funds are to be administered and by whom. Mr. Hawke replied the funds are granted to any applicant designated by the Governor. He admitted there are some stipulations, including the requirement that an annual plan be submitted. He said the application must include the intention to carry out certain mandatory programs, but he added he must "write in a little profit" in order to comply with statutory requirements placed upon the Energy Conservation Program director by the legislature.
Even though there are many federal and state statutes Mr. Hawke declared it is getting easier to comply with the regulations. He explained since the petroleum shortage in the early 1970s the Energy Conservation office has maintained a plan to allocate fuel under the requirements of the Emergency Preparedness Program.
Mr. Hawke added his office enforces building standards and the prohibition on electric resistance heating. He said, "That's now
part of the National Energy Policy Act of 1992 so that's going to be required by the feds with their money so to that extent I can use their money to fulfill this state mandate too."
Senator Jacobsen inquired:
I notice one [budget] here that was not recommended by Peat Marwick. Did you have some kind of formula, or just pick a number and try to coordinate some of these other agencies? I get upset when you're taking this agency and splitting it in two.... I just wonder whether we're going to be able to track this in the future.
P. Forrest Thorne, Deputy Administrator, Budget Division, Department of Administration, voiced his belief the elimination of the Office of Community Services had been included as part of the recommendation. He said the programs administered by that office have been recommended for placement with similar programs in the new Department of Business and Industry and with the Welfare Division as part of the reorganization goal to group like functions.
Senator Raggio noted the Small Business Program is scheduled to be transferred from the Commission on Economic Development to the new Department of Business and Industry's Consumer Services Division. He asked, "Why does the money go to `econ.' development? Is there some other further transfer...?" Mr. Thorne replied, "It's a truncation of the label. It's a transfer to... economic development through the small business budget."
Senator Raggio asked, "So that should go to Consumer Services Division?" Mr. Thorne responded that was correct. Senator Raggio advised the staff, "Instead of economic development that should be the Consumer Services Division...."
Senator Coffin asked what is to become of the duties of the director because his salary is scheduled to be eliminated. Mr. Thorne replied the duties for operation of the specific programs will transfer to the Department of Business and Industry and to the Department of Education, Health and Human Services. He declared the statutes will have to indicate where the duties will lie.
Senator Coffin asked if that meant the Department of Administration was proposing that the duties transfer to the two agencies mentioned by Mr. Thorne, or if the proposal was to cut the duties. Mr. Thorne said, "I'm not...familiar with how those particular statutes read. The duties that are related to the specific programs that are going elsewhere and the statutes would have to be changed to reflect...where the new responsibilities lie for those programs." He offered the opinion some of the duties might be cut, but he knew not where.
Senator Coffin asked, "Is it likely that the duties can be assumed by the directors or responsible people in the agencies that is planned to move to?" Mr. Thorne answered, "Yes, I believe so."
Senator Coffin expressed concern whether those people who will have the responsibility have the knowledge and experience to assume those duties. Mr. Thorne replied, "Whoever the new directors are would be responsible for the new functions of the new departments." He did not feel the operation of the programs would pose any problem.
Senator Raggio suggested Mr. Hawke submit some performance indicators that would be more illustrative regarding the Energy Conservation budget to aid the senators in their deliberations.
Rural Housing - Page 450
Robert T. Sullivan, Executive Director, Nevada Rural Housing Authority, provided the committee with copies of a flyer describing the housing authority and the people to whom it applies (Exhibit D. Original is on file in the Research Library.).
Mr. Sullivan averred some people have difficulty understanding the functions of the housing authority. He said not only is the authority under the aegis of the state but also it has a board which sets policy. He distributed copies of the statute (Exhibit E) relating to the housing authority.
Mr. Sullivan pointed out the programs are not clearly delineated within the budget, so he gave the committee members copies of a flowchart (Exhibit F) depicting the major divisions of the housing authority. He also passed out copies of the projected budgets for fiscal year (FY) 1993-94 (Exhibit G) and FY 1994-95 (Exhibit H) for the Nevada Rural Housing Authority (NRHA) which he indicated would be more inclusive than the Executive Budget. He suggested the senators make note that the total budget runs about $6.5 million per year, with 30 employees, many of whom are under contract.
Finally Mr. Sullivan distributed a background paper (Exhibit I) describing the productivity and accountability of the NRHA. He declared the NRHA is having a difficult time elevating Nevada's alleged standing as last in the nation in terms of per capita federal funds or per capita health spending. He indicated the background paper elucidates that problem.
Mr. Sullivan declared the primary role of the housing authority is to promote low-income housing. He said NRHA, one of 3,200 public housing authorities in the United States, operates in the 15 rural counties of the state. The NRHA was set up by several counties in the early 1970s. He said the first staff was established through contract with the Reno Housing Authority.
Mr. Sullivan asserted the "bread and butter" program of the NRHA is through use of private sector owned housing, as is true of all authorities west of the Mississippi River. He explained a housing unit must meet certain standards and the landlord chooses the tenant but the subsidies go with the tenant. He affirmed the NRHA does own and operate a few housing units.
Mr. Sullivan explained there is a rehabilitation program which is a separate entity under the housing authority. He said about 25 homes are rehabilitated under funding from the Farmers Home Administration (FmHA) for very low-income homeowners in one or two communities. He added there is federal authorization to provide rentals, but so far no appropriations have been made for that program.
Mr. Sullivan said grants of approximately $150,000 per year have been made for Yerington, Lovelock, Ely, Fallon and Fernley. He stated Wells and Hawthorne are targeted, too, if resources can be provided for appropriate staff.
Mr. Sullivan stated on the whole the budget before the senators follows the request of the housing authority. The only item with which he took issue was the transfer to the legislative audit. He said:
We do an outside audit. We send it to you. It's basically a programs audit. It...satisfies the functions of the single audit act audit except we do not say single audit act. We send copies all over to the state process. We see now that we will also have a subsidy to the state around $5,000 and $5,500 to the Legislative Counsel Bureau for them to do our single audit act audit.
Mr. Sullivan continued to say the housing authority is quite different from an entity like the Women's Development Center in Las Vegas which is actually a business to provide a particular service for a targeted segment of the economy. He described the NRHA as a social service under both federal and local auspices.
Senator Raggio asked if the Performance Indicators on page 453 were accurate. Mr. Sullivan answered there are many ways to depict performance indicators. He said, "The Performance Indicators currently settled on are those which relate to our occupancy and to our complaint load."
Mr. Sullivan continued:
When I came on board the housing authority in 1985 we had some difficulties. There...was inappropriate staff in the housing authority. We weren't making our goals. Keep in mind, if we have a vacancy it's just like in the private sector. Not only is there not a person being served but also there is not income to the housing authority. We make about $45 per individual per month.
He pointed out 100 vacancies per month would add up to a substantial loss in funds which are used to offset personnel, rent and office supply expenses.
Senator Raggio inquired if Mr. Sullivan could provide an analysis of the units in the 15 counties served by the program. Mr. Sullivan said he would provide the senators with a copy of that information.
Mr. Sullivan declared the NRHA is one of few housing authorities in the United States permitted to use a certain technique. He explained:
Keep in mind, this is a public program. First come, first served. However, an applicant in Caliente or Pahrump more than likely does not want to live in Elko where a subsidy may come up. Hence, we have broken the state down and have further authorization to break it down into service areas.
Mr. Sullivan explained each service area has a target which the board of directors of the housing authority reviews. If the target meets certain tests such as for fair housing discrimination, the subsidy can be distributed to that area. He stated subsidies are distributed primarily in the major communities. He claimed private-sector subsidized housing is preferred by clients of NRHA since those dwellings are often the newest and best in town. He said, "Sometimes you see that we have a load that's fairly low in a community.... But you have to look at the other side of the equation and that's the private-sector subsidized housing."
Mr. Sullivan estimated there are about 60 units of housing in rural Nevada constructed by investors who receive a mortgage break under the FmHA. He said in turn they must provide the same break to renters.
Senator Glomb asked for further clarification of the subsidies for housing. Mr. Sullivan reiterated the staff determines eligibility for providing rent subsidies. Senator Glomb asked if the same subsidy was provided for mortgages. Mr. Sullivan replied it was not provided for mortgages.
Mr Sullivan said there is some assistance from the Community Reinvestment Act which requires banks to reinvest a certain amount of their funds in the community. He said banks sometimes pool their resources to assist low-income people to acquire home-ownership. He explained the NRHA plays a role in that project since NRHA has the skills to determine which low-income people may be eligible and to confirm social security numbers and other data. He said the NRHA gives assistance to those people to prepare the information to be presented to the bank when they make application for such mortgages. He added the Nevada Housing Division, a separate division, is also involved in the mortgage program.
Senator Glomb pointed out there are a number of individuals on the waiting list, as outlined in the Performance Indicators, and asked if any new projects are planned. Mr. Sullivan replied the rules and regulations for housing authorities require that a list be kept for a year. He said there is normally a gap ranging from 3 to 12 months before assistance can be provided; some housing authorities maintain a 5-year waiting list.
Senator Glomb asked, "What is the rationale for that?" Mr. Sullivan replied that when the housing authority was set up by the United States Congress in 1937 it was not intended to provide immediate relief. He explained, "The income distribution used to be taking care of the working poor...used to keep a percentage of moderate income people, low-income people and very low-income people." He asserted the demand far exceeds the supply.
Senator Glomb repeated her question as to whether any new projects will be undertaken during the next biennium. Mr. Sullivan replied:
We are into a catch-22 situation. You will see in...the list of personnel one called self-sufficiency coordinator. It's a bold new move in public housing...where you're not just giving a handout to a family without any commitment back from that family. It's a wrap-around approach involving job training, child care, etc.
He explained whenever social service recipients earn income it and other benefits are taken away from them. He said the new program will put those funds into an escrow account to provide incentive to the recipients. He asserted the program cannot get going without a self-sufficiency coordinator.
Mr. Sullivan asserted:
The difficulty is getting a position that flies, and
we've had a great deal of difficulty working through...the state process, getting a position that isn't a grants analyst or whatever, someone who is skilled in social services and knows...housing.... The point is, no new subsidies for any housing authority unless they get a self-sufficiency program going.
Senator Glomb asked, "Who is they? When you say `they get a self-sufficiency [coordinator]' isn't it your department gets that position?" Mr. Sullivan answered, "`They' in terms of requiring the position is our major funding agency, the U.S. Department of Housing and Urban Development. The agency that needs that position is the...Nevada Rural Housing Authority." He explained housing authorities whether in Clark County, Las Vegas, Sacramento or Portland, Maine, need to embark on projects in the new area of self-sufficiency in order to receive new subsidies.
Senator Glomb asked what needs to be done to move forward with that program. Mr. Sullivan responded the NRHA has difficulty filling the appropriate positions through the state personnel department. He called attention to vacancies in maintenance personnel. He charged, "I've yet to get a maintenance position I can work with."
Mr. Sullivan claimed he has been trying to fill a position for "program develop/rehab" with someone to manage the rehabilitation program but the state personnel office has only been able to offer him a grants analyst. He asserted, "I want someone who has hammers and nails experience. When they go into someone's home, they know what they're doing." He described as "difficult" the process of the housing authority working through the state system in order to find the appropriate job description for his use. He declared he did not want to risk filling a position with someone under a job description that does not fit the requirements of the program.
Senator Glomb asked if Mr. Sullivan meant no new subsidized housing could be filled in the next 2 years due to the inability to fill that specific position. Mr. Sullivan confirmed her statement and added the ability to move forward under the new requirements must be demonstrated in order to qualify for the new program which the housing authority cannot do at this time.
Senator Glomb asked him what he needs in order to go forward, how many people and what positions would be required. Mr. Sullivan reiterated he needs the correct personnel, a self-sufficiency coordinator. After members of the Nevada Rural Housing Authority spoke with the Governor last October, he said, the administration decided to attempt to fill the position, but so far it has not been done. He stated, "It's a very difficult process. You're putting me in a difficult position of making another operation of the state look bad, which makes it very difficult for us to continue a proper working relationship."
Senator Glomb expressed regrets that she had put him into that position but reminded him she has a responsibility to obtain the information. Senator Raggio stated he would ask the Director of the Department of Personnel to get together with Mr. Sullivan to attempt to resolve the problem.
Senator Jacobsen asked which rural communities have the greatest need for assistance from NRHA. Mr. Sullivan said there is no longer a direct connection with the communities that helped set up the housing authority and who are served by NRHA. He repeated there is no analyst for the housing authority, although the position in the NRHA called "program development/rehab" may be able to provide more insight into the program. He averred, "Half our clients are senior citizens, half...are basically welfare women. We have a 50 percent turnover on our welfare women...."
Mr. Sullivan took pride in the fact many of those served by the NRHA do not require assistance for the "rest of their lives." He stated, "There is something in rural Nevada...an extra spark out there you won't find in...more urban areas. But in terms of need, you know the lower 20 percent of Nevada has just slid off the scale in the last 8 years." He declared there are unmet needs all over the state, people who cannot afford the housing available even though they are employed in places such as garages, beauty shops or casinos. He asserted his program is now designed by the federal government not to meet the needs of the middle-income, moderate-income or even low-income people, but only to target the very-low-income people.
Mr. Sullivan averred no amount of subsidies could help many people because their income is just high enough to prevent them from being eligible for assistance.
Senator Jacobsen asked if there was any relationship to the economy or to whether those people are employed by gaming or mining or other industries. Mr. Sullivan replied that every time a community has a "boom" the price of rent goes up, which puts constraints onto senior citizens and others. Then, he continued, when there is a "bust" landlords call the NRHA to remind them they have space available and ask to participate in the program.
Mr. Sullivan said, "In the I-80 corridor...it's been a tough go...for the past 6 years. There hasn't been much out there in terms of vacancies whatsoever."
Senator Raggio inquired what percentage of NRHA funds are allowed to be used for administration. Mr. Sullivan answered if any funds are leftover from the requirements to pay personnel, utilities, enterprise funds or other reserve accounts those funds must be returned to housing.
Senator Raggio repeated his question and asked whether there is a limit to funds that can be used for administrative purposes. Mr. Sullivan responded, "No, there is no limit, but that gives it the wrong aspect. ...there are some housing authorities, fortunately very few west of the Mississippi, that are in deep trouble. It is because the expense of running their programs far exceeds the `admin.' fees that they make."
Mr. Sullivan declared his administrative fee is the lowest in the state "because it's...unweighted average of all the counties based upon a rent." He continued:
Money that we make above and beyond that for personnel, lights and that sort of stuff, and our bread and butter program, can be recycled back on in. You can buy a staff person with that money. You can buy office equipment with that money.
Senator Raggio reiterated his query as to whether there is some limit and if under federal grants a certain amount of money must be given directly to subsidies. Mr. Sullivan responded:
That's the first straw. You will see in the budget...on the third page where it has outgo...most of the money that we have actually goes out. We have rent requirements to make. We have to pay the subsidized rent, so we have outgo of $5 million....
Mr. Sullivan continued to say:
Money leftover from that...is held in a reserve account to be utilized...as a dual signature basis between the housing authority.... If in fact the use of that residual money is determined by both parties to enhance housing then money is spent. For instance, that's how housing authorities go out and buy other dwellings or they leverage grants elsewhere for housing.
Mr. Sullivan said:
Senator Raggio, there is no ceiling as you were saying, but I want to be perfectly clear to say that is not an open-ended checkbook and there are vast amounts of money out there that are unspent.
Senator Raggio asked if there are audits. Mr. Sullivan answered, " Yes." Senator Raggio reiterated, "There is no limit on the amount of money for funds that can be used for administrative purposes in these grants? There is no limit?" Mr. Sullivan responded:
There's a limit relative--it's a business. The more efficiently you run, you might be able to squirrel away some extra money to recycle back into housing. Now in your back yard...that's how they've been able to work on some of these programs that deal with transitional housing. Those are funds above and beyond that of cost for the bread and butter program. You save it on up toward an objective and you reinvest it.
Senator Raggio said he understood that if enough funds are saved those funds can be used in other programs. He reiterated, "I'm just trying to ask...if there is no ceiling, that's fine. That's all I want to know." Mr. Sullivan said, "What I'm telling you, sir, that the answer is in between there. ...We get $45...in our bread and butter program per month per subsidy to operate the program."
Senator Raggio asked, "Is the $45 a limit?" Mr. Sullivan answered, "Yes."
Senator Raggio asked if the budget proposes any salary increases. Mr. Sullivan replied it does not, although he feels salary increases are needed. He said at the time he joined the housing authority the rural housing manager served about 480 subsidies through a single program. He stated there are now four complex programs with double the work load, but the personnel have been kept at the same grade. He offered the opinion that is not "correct."
In the absence of further questions regarding rural housing, Senator Raggio turned to budgets relating to the Department of Employment, Training and Rehabilitation.
Office of Protection and Advocacy - Page 1095
Kevin Christensen, Acting Director, Office of Protection and Advocacy (OPA), pointed out he was going to present two budget accounts, the first being for the Office of Protection and Advocacy. He declared the duties of the office are to provide protection and advocacy for people with developmental disabilities. He affirmed the budget is federally funded by grants through the Developmental Disabilities Assistance and Bill of Rights Act, which amounts to $214,000 per year at the present time. He said there are additional federal funds included in the budget.
Mr. Christensen said he was also presenting budget 3822 (set forth on page 1099 of the Executive Budget) for the protection and advocacy of mentally ill individuals which is funded by the Protection and Advocacy for Mentally Ill Individuals Act enacted by the United States Congress. That grant amounts to $230,000 per year, and there are also additional federal funds used for that budget, he said.
Mr. Christensen called attention to a memorandum (Exhibit J) he had written indicating the request for an increase for legal services. Senator Raggio interjected he would prefer to complete the discussion of budget 3812 on page 1095 before going on to a new budget.
Mr. Christensen said the budget for the OPA will provide funding for an office and existing staff in both northern and southern Nevada to help persons with developmental disabilities. He explained, " There are some changes in this budget as opposed to the last one that you looked at in that we are splitting one program assistant position between the two budget accounts and decreasing the number of positions in 3912."
As the result of a program audit review by the federal government and subsequent efforts by Carole Rankin of the Department of Protection and Advocacy, and with help from Larry Struve, Director of the Department of Commerce in 1991 and 1992, Mr. Christensen discovered there was a savings of $191,000 built up over a period of years in unobligated federal funds left in budget 3812. He said those funds have been placed into a reserve account for fiscal year 1993 in addition to the anticipated grant amount of $214,000. He said those funds will roll over into budgets for 1994 and 1995 where they will be available for legal services or other direct services to clients of the program.
Mr. Christensen announced the intention to add those funds to the budget in a reserve category and then to return to the Interim Finance Committee (IFC) later as needs arise. He indicated those funds of $191,000 do not appear in the budget before the committee.
Rochelle Summers, Principal Budget Analyst, Budget Division, Department of Administration, stated "I've asked the Office of Protection and Advocacy to give me a work program that will place the money in a reserve category." She indicated the money will go into a reserve account and be carried as a balance forward until such time as it is earmarked for expenditure.
Senator Raggio asked if that would mean a work program could be set up in a short time. Ms. Summers responded, "The work program is here with us, and they're putting it in reserve until they come up with an expenditure plan." She said part of the problem is due to the fact the surplus is similar to a one-time program. She reminded the committee the standard grant will remain at $214,000, which means the Office of Protection and Advocacy will have to be careful how they plan the expenditure of the extra $194,000.
Senator Raggio asked what plans were under consideration for use of the funds, assuming those funds are available only for a limited time. Mr. Christensen responded the top priority would be for legal services for individual clients. He said the second priority would be expenditures for professional contract services "to support legal service needs as well as consultation for the Office of Protection and Advocacy." He continued to say it is often necessary to employ the services of certified psychologists, psychiatrists, social workers and others qualified to give professional evaluations of the clients.
Senator Raggio pointed out the danger of including something like the $191,000 reserve funds into a program since additional funding may not be available in the next biennium. Mr. Christensen agreed that is a dilemma but another problem arises because those funds will revert back to the federal treasury if they are not expended. He asserted the funds could be used to offset unmet needs for appropriate legal, educational and rehabilitation services for some of the clients.
Senator Raggio inquired when Mr. Christensen anticipated having the enhanced work program formulated. Mr. Christensen replied he expected it to be ready by the end of March. He agreed to provide the committee with the information at that time.
Senator Glomb asked for an explanation of the difference between the Office of Protection and Advocacy and the Mentally Ill Individuals Program. Mr. Christensen explained both programs are under the "umbrella" of the Office of Protection and Advocacy, the first covering people with developmental disabilities and the second covering persons who have been diagnosed as mentally ill.
Senator Glomb inquired if the mentally ill program is funded partially by general funds while the protection and advocacy program is not. Mr. Christensen affirmed her query.
Senator Glomb asked if the office would also advocate for special education, which Mr. Christensen also affirmed. He averred that free and appropriate educational service constitutes one of the primary needs of his clientele. He said his office employs two well-qualified advocates who provide services throughout the state.
Senator Glomb wanted to know where the Office of Protection and Advocacy will be housed under the Governor's proposed reorganization plan. Mr. Christensen told her his office is presently attached to the Department of Commerce and it is scheduled to be placed under the Department of Employment, Training and Rehabilitation.
Senator Glomb stated there has been mention of a conflict resulting from having the state monitor advocacy. She said some people have suggested the programs be removed from state government. She asked for comment. Mr. Christensen offered the opinion government exists "for no other purpose...than to protect the citizens." He submitted that an agency of the state would have access to some things that a private, nonprofit organization would not. He cited such things as easy access to facilities and easy access to the bureaucracy of state government in order to resolve problems.
Senator Glomb asked if there was a federal mandate in order to advocate for people tied to the funding which included such things as easy access. Mr. Christensen responded, "Not necessarily.... Access is defined differently in various states." He explained many of his colleagues in other states in nonprofit agencies find it difficult to acquire the same access to facilities, clients and records that Mr. Christensen enjoys. He pointed out state law in many other states defines "those accesses" differently than does the State of Nevada.
Senator Glomb repeated her question as to whether there may be an inherent conflict. Mr. Christensen replied:
Certainly...there is a possibility of that, but I think...if you would take a look at some of the proposals that the OPA reform committee has made...one of the proposals is to create an 18-member board of directors which would have representatives from the various service providers such as WARC [Washoe Association for Retarded Citizens], such as Opportunity Village, such as the Alliance for the Mentally Ill, which receives money from private proprietary mental health facilities.
In response to Senator Glomb's query, Mr. Christensen described the OPA reform committee as the group that has been discussing "getting this agency redesignated."
Mr. Christensen opined there probably would not be total independence nor avoidance of some conflict of interest no matter how the office was administered. He reminded the senator there are many competing interests that could cause the Office of Protection and Advocacy to be less effective than it is at present, or that might have priorities that would not be wanted by everyone.
Mentally Ill Individuals Program - Page 1099
Mr. Christensen reported he was requesting and anticipating approval from the Budget Division for augmentation of the work program in fiscal year 1993 that would place approximately $209,000 in unobligated federal funds into the reserve category. His avowed plan would be to draw upon those funds as needs arise. Otherwise he portrayed the budget as one basically maintaining the status quo with plans to increase legal services.
Senator Glomb called attention to the Performance Indicators on pages 1098 and 1102 for the two budgets. She interpreted them to say the number of clients served were decreasing from 1992 to 1994 and 1995. She asked why that was taking place and why it was not possible to serve more people with a half million dollars.
Mr. Christensen argued under federal law his office is required to prioritize services. He added due to the state hiring freeze some positions went unfilled for the better part of the year. He said, "In prioritizing our cases, we looked at...allegations of abuse, neglect and exploitation. Many of these cases are very difficult, very time-consuming and require a lot of diligence on the part of our staff."
Mr. Christensen asserted the cases his office has faced in the past year or two have been much more difficult than those of prior years. He said these cases take up more staff time. He said, "We might do a great deal of information and referral and supervised referral and not necessarily open a case on that matter. And you will see a fairly high number of inquiries here, 6,352 for one program, and 6,104 for the other... for `92."
Mr. Christensen predicted by the end of the 1993 fiscal year inquiries, supervised referral and information and referral will exceed those of the last year.
Senator Glomb noted there are five staff members in one program and four in the other. She asked if more staff was being requested for either program. Mr. Christensen responded it was not possible to make that request this year. He admitted there is a small amount of money in one budget which could be used for staff, but he did not believe it would be wise to use the reserve federal funds for new positions and then risk losing the positions in 2 years.
Senator Glomb asked if all 11 positions are filled, and if not, whether they will be filled in the next biennium. Mr. Christensen answered they are not all filled, but he hopes to fill them after the beginning of the next fiscal year. He explained there is a lack of qualified individuals who are willing to take the positions. He voiced his intention to pursue aggressive recruiting not only statewide but also nationwide.
Responding to another question by Senator Glomb, Mr. Christensen said three positions in Las Vegas are filled leaving one vacancy, and there are five positions filled in Reno and one vacancy there which is not funded.
Senator Glomb stated she has difficulty understanding why the positions are not being filled when most of the budget is financed by federal funds. Mr. Thorne interjected one position had been approved recently.
Senator Glomb maintained she was not particularly interested in a specific answer but rather she wanted to know the philosophy behind the failure to fill the positions. She stated, "These two budget accounts serve clients who need protection and advocacy, and most of the funding is federal dollars. So why aren't we filling these positions to the `max' to serve the client?" She drew attention to the Performance Indicators which show need for more service.
Senator Raggio proposed separating discussions of the two budgets for better clarification. He remarked the source of the funding for the Office of Protection and Advocacy budget is entirely federal. He asked if that was subject to the freeze. Mr. Christensen replied that it was.
Senator Raggio noted there was a General Fund reversion of $24,420 in FY 1992 for the Mentally Ill Individuals Program budget and a reversion of $48,847 will be required for FY 1993. He inquired how those reductions will be generated. Mr. Thorne responded:
All the state's positions were part of the freeze process where they could request to have the positions filled and those approvals came through. Generally speaking, those that had either all federal funding primarily other than non-general fund sources, the process may have slowed down the hiring process but the positions were typically approved for hire. When the first round of position cuts hit in 1992 we were faced with layoffs. One of the concerns there was a freeze on positions so we could absorb the layoffs. The freeze continued with all positions coming through the approval process, but the ones that are typically approved most quickly are those that are non-general fund...
Senator Glomb interpreted the budget to provide for ten positions during the next biennium for both the Office of Protection and Advocacy and for the Mentally Ill Individuals Program. She reiterated her query as to whether all those positions will be filled in July. Ms. Summers declared there had been some cuts in the budget. She explained when members of the Department of Commerce analyzed their budget they determined to apply the General Fund cuts to the OPA budget as well as other budgets in order to meet their budget targets. She pointed out one-half of a position was eliminated in order for it to be used as vacancy savings while the other nine and one-half positions will be funded. She asserted there is difficulty finding a person to fill a part-time position as compliance investigator, because, she alleged, "People at that level want to work full time."
Mr. Christensen called attention to a blue folder which had been sent out to each member of the legislature the preceding week containing information about the Office of Protection and Advocacy. He asked members of the committee to feel free to refer people to his office. Senator Raggio agreed he had found the OPA to be responsive and timely regarding any inquiries.
Claire N. Perrigo, Associate Executive Director, United Cerebral Palsy of Nevada (UCPN), offered her unqualified support for any budget requests made by Mr. Christensen. Her written testimony is attached as Exhibit K. She corrected one figure on page 2 by saying those who may be eligible to be served throughout the state by OPA number 140,000, not 120,000. She concluded by urging the committee to support OPA requests.
Senator Raggio asked Ms. Perrigo if the UCPN felt the Office of Protection and Advocacy has been responsive. Ms. Perrigo replied:
Our response is generally through facilitation of services and negotiation.... That doesn't always mean that the consumer always gets what they want because the federal and state regulations and guidelines are very clear on what's authorized to be subsidized by the various systems, but prior to my coming to UCP of Nevada I was a program director at a large sheltered workshop in Reno...and again it isn't always what everybody wants, but general consensus and working towards what is a consensus through the team. Each system is represented by a team of professionals working with the individual consumer and consumer satisfaction and working towards progress I think would be a way of measure.
Senator Raggio repeated his query. Ms. Perrigo answered she had always found the Office of Protection and Advocacy to be responsive.
Senator Raggio asked if the Performance Indicators in the OPA budget seemed realistic. Ms. Perrigo concurred those figures, which project 5,000 inquiries in each program, seemed appropriate. She elaborated by saying, "It's not the most popular role within the system...but it's been my experience in work with families that the input and the feedback that I get from that office is tremendous in its level of cooperation."
Senator Raggio asked if Mr. Christensen worked with associations such as United Cerebral Palsy in anticipation of furnishing an enhanced work program. Mr. Christensen averred networking is the only way in which an agency such as OPA can survive and be effective, and the office does work with United Cerebral Palsy Association. He added a new federal grant proposal had just been announced called the Protection and Advocacy for Individual Rights on which he has been working closely with Ms. Perrigo and her southern Nevada executive director, Lonnie James.
Senator Raggio asked in how timely a manner Mr. Christensen was able to deal with inquiries regarding work programs, considering his limited staff. Mr. Christensen responded his office has an unwritten rule to deal with inquiries within 3 days when possible. Ms. Perrigo confirmed his statement.
Senator Raggio pointed to Enhancements amounting to $5,000 each year. He asked if an enhanced work program would be in addition to those Enhancements. Mr. Christensen replied, "It would be a total enhancement, a total of $20,000, not $5,000, $20,000 and whatever else was there." He explained the new program requested would raise the enhancement by $15,000 per year. Senator Raggio asked if the budget office had approved the request. Mr. Thorne answered, "Yes, Mr. Chairman."
Senator Jacobsen asked how it was determined that there are 20,000 students with developmental disabilities in need of assistance. Mr. Christensen replied the figures are set by the State Department of Education as determined by the number of students in special education. He said at any one time any of those individuals could become clients of the OPA.
Mr. Christensen illustrated how the needs of a special education student could arise. He said:
Let's say due to their disability they become a little rowdy on the bus, and they get thrown off the bus. ...The federal law says you have to provide a related service, and transportation is a related service. Often we find ourselves at loggerheads with school districts who throw children off the bus, and essentially make their parents take them to school, which might be a real hardship on a parent who lives 60...70 miles out from a school. So we would convene a due-process hearing and request that an independent mediator make a decision on how that should go. So those kinds of things are very time-consuming. We often face off a very expensive law firm on the other side...
Senator Jacobsen asked how it affects the children to be singled out. He suggested it might make the problem worse. Mr. Christensen agreed it sometimes does. He declared it is important for children who do have disabilities to receive the education they need to go further in life, and it is his intention to use whatever is permitted by state or federal law for his clients.
There being no further testimony on the two budgets under the Department of Employment, Training and Rehabilitation, Senator Raggio turned to the Department of Museums, Library and Arts.
Nevada Council on the Arts - Page 1177
William L. Fox, Executive Director, Nevada State Council on the Arts, characterized the Nevada Council of the Arts budget as "straight-forward." He summed up the budget by saying the forthcoming budget is $100,000 lower than in the previous biennium. He indicated the loss will be partly offset by an anticipated extra $50,000 to be received in federal revenues.
Mr. Fox explained the lower budget will mean the council will be unable to provide grants for two to four fewer grantees. He noted the new Urban Arts Program will be funded primarily with federal funds as depicted in the budget. He added some contractual funds for arts and education will be rolled over into a staff position.
Mr. Fox stated the Governor's proposed reorganization will not substantially change the operation of the Nevada Council on the Arts.
Senator Rawson inquired if Mr. Fox felt the rural grants will still be available. Mr. Fox declared those grants, from a new program started during this biennium, should still be available. He admitted during the coming year the agency will have to evaluate whether or not the rural constituents, such as the Churchill Arts Council in Fallon, will be eligible to receive grants for more than 3 years in a row. He explained that had been started as a pilot program, and because there are new applicants coming on-line, existing programs must be reevaluated. He foresaw no major shift in the rural grants.
Senator Coffin asked if Mr. Fox perceived that federal funding for the arts may be targeted for reduction by the federal government. Mr. Fox offered the opinion that so far federal funding for the arts would stay as it is at present. He admitted he had not seen projections for the Heritage Foundation endowments.
In response to Senator Raggio's request, Mr. Fox provided a list of grants made by the Nevada State Council on the Arts during the biennium FY 1992 and FY 1993 (Exhibit L). Senator Raggio inquired if Mr. Fox had increased solicitations from private foundations and other donors since the inception of the "budget crunch." Mr. Fox replied he had attempted to increase federal revenues by applying for grants from different programs sponsored by the National Endowment for the Arts. He said he had not sought funds from private sources in the State of Nevada "because our constituents tell us that competes with them." He explained, "They would rather go directly to the foundations and the corporations and have letters of support from us or have a regular grant from us acting as leverage."
Senator Raggio asked if the Nevada Council on the Arts was active in helping those constituencies seek private foundation grants. Mr. Fox responded the council provides those constituencies with copies of the Nevada Foundation Directory and with examples of grant requests that have been successful, and the council makes contacts for them. He indicated he had not noticed a perceptible increase in those activities in northern Nevada but he had in southern Nevada. He attributed some of the increase in solicitations for private grants simply to the growth of business in southern Nevada.
Senator Raggio disclosed he sits on an advisory board of a foundation which makes contributions to the arts, and he declared the advisory board has been very cognizant of the problems faced by those seeking grants. He said their grants and requests for grants have been increasing.
Mr. Fox agreed foundations nationwide have suffered increased requests for funds for education and social services. He said as a result grants to the arts have either stabilized or fallen somewhat due to the large number of requests for other programs.
Senator Jacobsen voiced concern the cowboy poetry gathering in Elko has been so successful many people who would like to attend have been unable to obtain lodging. Mr. Fox told him cowboy poetry events have been scheduled for Las Vegas, Carson City and Reno.
Senator Coffin requested a list of applications for grants which have been denied for one reason or another. Mr. Fox said the list he provided (Exhibit L) includes that information.
There being no further testimony, Senator Raggio concluded the hearing on the Nevada Council on the Arts.
Senator Jacobsen requested a large wall chart be made up which would depict the plans for mergers of various departments under the Governor's proposed reorganization.
The meeting was adjourned at 9:35 a.m.
RESPECTFULLY SUBMITTED:
Judy Jacobs,
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE:_______________________________
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Senate Committee on Finance
March 15, 1993
Page 1