The Committee on Government Affairs was called to order at 8:14 a.m., on Wednesday, February 10, 1999. Chairman Douglas Bache presided in Room 3143 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All Exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Mr. Bache, Chairman

Mr. Lee, Vice Chairman

Ms. Berman

Mrs. Freeman

Ms. Gibbons

Mr. Humke

Mr. Mortenson

Ms. Parnell

Ms. Segerblom

Mr. Thomas

Ms. Tiffany

Ms. Von Tobel

Mr. Williams

COMMITTEE MEMBERS EXCUSED:

Mr. Neighbors

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

• BDR 23-786 - Makes various changes to public employees’ retirement system. (AB 189)

Chairman Bache stated he would entertain a motion on BDR 23-786.

MR. LEE MADE A MOTION TO INTRODUCE BDR 23-786.

MS. BERMAN SECONDED THE MOTION.

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John Crossley, Chairman, Nevada Deferred Compensation Committee, stated he had passed a handout to the committee members (Exhibit C) and said the purpose of the bill contained in Section 1448 of Public Law 104-188 paralleled the language of federal law. The key to the law was to hold the money in trust for the exclusive benefit of participants and their beneficiaries. He pointed out the legislation originally came about because of problems in Orange County, California, where almost all of the retirement money was lost. Before the Orange County problems the money in the retirement account was the property of the state, until a retiree started drawing benefits. Now, under new laws the money became the exclusive property of the participants. With legislation passed in 1997 all funds in the plan must be held in trust in accordance with state contracts. The purpose of A.B. 125 was to bring Nevada Revised Statutes (NRS) 287.320, the Nevada Deferred Compensation Plan, into conformance with federal law. He mentioned the Internal Revenue Service (IRS) considered any state plan as the key document in the federal 457 retirement plan.

ASSEMBLYWOMAN FREEMAN MOVED DO PASS ON A.B. 125.

ASSEMBLYWOMAN PARNELL SECONDED THE MOTION.

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Mr. Crossley stated he would also address A.B. 126 and had a handout (Exhibit D) in which an amendment was being requested. The thrust of the bill was to assist the participants in the Deferred Compensation Plan. Currently each participant was assessed $4 per year to cover the Deferred Compensation Committee’s administrative costs. The assessment was placed in the bank where it earned approximately 3 percent. During discussions with the state controller and state treasurer, it was determined the money could be deposited in the state general fund where 6 percent could be earned and credited to the deferred compensation account.

NRS 287.365 listed both ". . . necessary expenses . . ." on page 2, line 1, paragraph (b) and on page 2, line 5, paragraph (d) "To compensate the member of the committee . . .," he felt it should be made clear that both expenses and member compensation was paid from the $4 assessment, and should not be broken out separately. He added as an auditor the change would be for clarification in any future reference. On Page 2, line 18, section 2, the effective date should be July 1, 1999, as that was the beginning of the fiscal year.

Ms. Segerbloom asked if the money was put into the general fund, could it be spent on anything else. Mr. Crossley replied it would be credited to the Deferred Compensation Committee’s budget account. He explained each department had its own budget account within the general fund. A work program would have to be done to bring the funds from the general fund into the budget account, but only with the approval of the Department of Administration. The only difference would be the funds would show in a Deferred Compensation budget account in the general fund rather than being in a bank account.

Mrs. Freeman questioned although there would be 6 percent interest earned on the money in the general account, given what was going on in the stock market, she questioned how stable the 6 percent would be in the future. Mr. Crossley responded over the long haul that percentage had to be looked at, as it was a historical figure. Over the years the rate would go down a bit, but also up a bit, so it would even out. It definitely would be more than what the bank paid in interest, as their return was always lower.

ASSEMBLYWOMAN SEGERBLOM SECONDED THE MOTION.

Chuck Abbott, Executive Director for the Nevada Commission for Veterans Affairs, testified the commission was a state agency and operated under Budget Account 2560. As part of their duties the commission managed one veteran’s cemetery in Fernley and one in Boulder City, both received and dispersed funds. When they were established in 1990 wording in the statutes stated monies received by the director or deputy director for fees, allowances, appropriations, and donations should be deposited with the treasurer for credit to the account of state cemetery in the north or an account in the south. Since both cemeteries opened, monies were accounted for separately. All of the funds were recorded by cemetery in separate categories within the Veteran’s Affairs operating budget account.

He added, during a recent internal control review, it was learned expenditures were segregated by category. However, all revenues were recorded in the general ledger account. The recommendation was a bill to amend the law or establish separate budget accounts for each cemetery. The request before the Committee on Government Affairs was to amend the NRS as stated in A.B. 94. If the bill was approved there would be no change in the way the funds for each cemetery were accounted for. The funds collected and dispersed for each cemetery would remain autonomous. If the bill did not pass, the commission would have to go to the budget office and request a separate account for each cemetery.

ASSEMBLYWOMAN PARNELL MOVED DO PASS ON A.B. 94.

ASSEMBLYMAN HUMKE SECONDED THE MOTION.

Ms. Segerbloom disclosed, for the record, she was on the board of the southern Nevada Veterans Cemetery, however passage of the bill would not affect her one way or the other.

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Lt. Col. David Pennington, Attorney, Nevada National Guard, stated A.B. 99 was a housekeeping bill. It would increase the maximum retirement age for commissioned officers in the guard from age 62 to 64. The change would bring Nevada statute into compliance with federal law. He pointed out in the handout "Reserve Components" (Exhibit E) the federal statute established a maximum retirement age for various officers and senior leadership in the guard, particularly the Adjutant General. The bill would simply bring state law into compliance with federal law.

ASSEMBLYWOMAN VON TOBEL MOVED DO PASS.

ASSEMBLYMAN MORTENSEN SECONDED THE MOTION.

Chairman Bache interjected he needed to appoint a subcommittee for hearing on A.B. 62. He asked Ms. Tiffany, Mr. Humke and Mr. Thomas to serve on the committee, with Mrs. Freeman as chair. He went on to say the hearing would be scheduled for Tuesday, February 16 at 3:30 p.m.

There being no further business, Chairman Bache adjourned the meeting at 8:35 a.m.

RESPECTFULLY SUBMITTED:

Virginia Letts,

Committee Secretary

APPROVED BY:

Assemblyman Douglas Bache, Chairman

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