The Committee on Government Affairs was called to order at 8:10 a.m., on Thursday, February 25, 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. Douglas Bache, Chairman

Mr. John Jay Lee, Vice Chairman

Ms. Merle Berman

Mrs. Vivian Freeman

Ms. Dawn Gibbons

Mr. David Humke

Mr. Harry Mortenson

Mr. Roy Neighbors

Ms. Bonnie Parnell

Ms. Gene Segerblom

Mr. Kelly Thomas

Ms. Sandra Tiffany

Ms. Kathy Von Tobel

Mr. Wendell Williams

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

Robert Gagnier, Executive Director, State of Nevada Employees’ Association, pointed out A.B 257 had been requested to address a long-standing problem within classified state service. The proposed language of the bill would add two half steps to the employee compensation plan. Mr. Gagnier mentioned there was a fiscal impact; however, the Department of Personnel would be addressing the issue.

Mr. Gagnier explained at present classified state employees "topped out" in their seventh year of service receiving one full step for each year of satisfactory performance and barring a promotion would receive no further increases. If an employee’s performance fell below standard, no step increase was given. According to Mr. Gagnier, there had been no step increases since 1975 with 44 percent of current classified employees at step 15, which was the top step.

Mr. Gagnier stated each half step increase was approximately 2-1/2 percent. However, prior to July 1, 1970, the steps and grades were exactly 5 percent apart. Flat dollar pay raises were granted and the 5 percent differential was eliminated setting up a varied difference of approximately 4.7 percent for a full step. He pointed out the average number of yearly steps below the master’s degree level for teachers was step 13 as compared to step 8 for state employees who under the proposed bill would go to 10 yearly steps. Mr. Gagnier commented the State Department of Personnel had conducted a salary survey each biennium including 31 major private employers, 10 hospitals, and 17 local governments. In 1992, salaries lagged behind private employers by 11 percent increasing to 13.5 percent in 1994. The most recent survey indicated the lag increased to over 17.62 percent. Mr. Gagnier concluded the passage of A.B. 257 would correct the disparity over the ensuing years.

Denice Miller, representing the Office of the Governor, spoke in favor of A.B. 257 emphasizing the bill would provide an incentive to retain qualified state employees. According to Ms. Miller, the Economic Forum would be meeting on May 1 with revised estimates and a good possibility of additional money being available so the governor’s office requested consideration of the bill.

Jeanne Greene, Acting Director, Department of Personnel, addressed the cost impact analysis of A.B. 257. If implementation occurred on July 1, the cost for employees currently at step 15 would be $11 million the first year, and $12 million the second year. She said if the bill was amended for implementation based upon the employee's merit salary date, the cost should be reduced.

Assemblywoman Freeman questioned Ms. Miller in regard to the prospect of an increase in both gaming and sales tax revenue, and whether the governor’s office had received any preliminary figures. Ms. Miller replied monthly reports had been received indicating the numbers were improving; however, the predictions from the Economic Forum were still based on estimates and forecasts from the Legislative Counsel Bureau Fiscal Division, the gaming industry, and an independent forecaster.

Mr. Gagnier stressed Ms. Greene’s estimates were in total dollars not general fund dollars. Therefore, total general fund dollars would be half of the costs mentioned by Ms. Greene.

Ms. Berman expressed concern with implementation of the bill should it pass and if there was enough funding to cover the full amount. Mr. Gagnier reiterated the actual cost would be determined by whether it were implemented as stated in the bill or if it was phased in as Ms. Greene expressed. There were many various scenarios of implementation possible based on the amount of money to be spent; however, the proposed language in A.B. 257 was for the full amount.

Chairman Bache pointed out the bill was concurrently referred to The Committee on Ways and Means where money concerns would be addressed.

Assemblywoman Marcia de Braga, District 35, presented testimony referring to page 1 of the bill where the word "one" had been changed to the number "1." On the second page of the bill, the proposed language would allow state employees to carry forward all of their accrued sick leave, and the employees would be compensated for the total hours accrued at the time of retirement or termination of employment. Under existing law, there was a maximum amount could be carried forward, along with a maximum amount of monetary compensation. Ms. de Braga commented she had not received the fiscal note yet, and therefore could not address the estimated cost.

Assemblyman Neighbors noted as a former county manager, many employees abused sick leave, which necessitated calling in extra employees and paying them overtime. In his opinion, fiscal impact to the state might be balanced out and possibly help stop abuse of sick leave. Mr. Neighbors spoke in support of the bill.

Assemblywoman Von Tobel questioned if the bill included teachers. Chairman Bache indicated it only involved state employees.

Assemblywoman Parnell inquired if there was a ceiling on the number of accrued paid sick days for an employee. Ms. de Braga explained under the existing law there was a dollar ceiling of $2,500 after 10 years, $4,000 at 15 years and a maximum of $8,000 at 20 years.

Gary Wolff, representing the Highway Patrol Association, presented testimony in favor of A.B. 246. Mr. Wolff emphasized the bill was beneficial to both the employee and the employer.

Mr. Wolff pointed out in section 1, line 13 of the bill, "Upon the retirement of an employee through termination through no fault of his own or death while in public employment . . ." the excess of 30 days maximum was removed. Current law stated the formula would not be applied to an employee until after the first 30 days of employment. Mr. Wolff emphasized it was unfair for an employee who came to work and performed their assigned duties in a faithful, conscientious manner to be penalized by the employer by taking back part of an unused portion of the employee’s sick leave before compensation was made.

NRS 284.355 already addressed a reward for employees who left state service with unused sick leave on the books. The intent of the statute was to try and eliminate the abuse of sick leave by providing an incentive. However, according to Mr. Wolff, there were "strings attached" to the buyout, and employees were penalized by not being compensated for the entire amount of sick leave hours accrued.

Mr. Wolff alluded to (Exhibit C) which compared compensation for the accrued sick leave for a 25 year state employee at a grade 36 step 15, to a new hire employee at a grade 36 step 1. Mr. Wolff pointed out the difference in pay would be a salary savings back to the state over a 3-year period. So when paying a retiring employee’s sick leave there would be a salary saving when a new employee was hired at a step 1 replacing the step 15. The second example addressed a common scenario of an employee with a long-term illness who continues accruing sick and annual leave producing a net loss to the state.

In addition, Mr. Wolff commented A.B. 246 would also allow an employee the choice of rolling the compensation for accrued sick leave into their retirement system in order to retire at an earlier date. The proposed language also provided an option for rollover into medical premiums.

He pointed out under existing law the state could not replace an employee who was off work with a long-term illness. In conclusion, Mr. Wolff reiterated with the proposed formulas applied, the fiscal impact would be minimal and an incentive to stop abusing sick leave would be beneficial to the state.

Assemblywoman Von Tobel remarked the state had no liability risk account set up for sick days and until that occurred and no way to judge the fiscal impact. Mr. Wolff responded the fiscal note was not, in his opinion "very heavy" and since state employees would probably not be receiving a pay increase this year, the bill would be a morale booster with a minimal cost factor.

Assemblywoman de Braga expressed concern if sick leave were put into a risk or catastrophic pool for long-term illnesses, accrued leave could not be retrieved upon retirement.

Colonel Mike Hood, Chief, Nevada Highway Patrol, reiterated the current system encouraged employees to use sick leave unnecessarily in order not to lose it, which impacted the budget since the state in a sense paid for the leave when the employee was absent. According to Mr. Hood, long time employees felt cheated at the end of their career so rather than lose accrued sick leave many employees chose to use sick leave rather than not being compensated at all.

Steve Barr, Nevada Correction Association, testified in support of A.B. 246. Mr. Barr indicated the scenario Mr. Hood used was a good one occurring frequently at the department of prisons. Toward the end of their career many officers utilized earned sick leave because not enough time was on the books to receive compensation.

Jeanne Greene, Acting Director, Department of Personnel, stated the department was not opposed to the bill; however, a recently completed 3-year study indicated it would cost the department an additional $4 million.

Assemblywoman Parnell questioned if the analysis factored in replacing a long time retiring employee with an employee making approximately half the amount. Ms. Greene responded the study included only the additional pay out costs. Chairman Bache inquired if the amount was an annual amount or a cumulative amount. Ms. Greene indicated it was an annual amount.

Assemblyman Neighbors questioned if the study included the cost of hiring replacement employees or those paid overtime. Ms. Greene stated that had not been considered, and was unsure how those figures could be gathered. Mr. Neighbors inquired if a percentage of yearly used sick days were factored into the study. Ms. Greene answered it had not been part of the estimate.

Assemblywoman Von Tobel pointed out state policy offered sick leave days to employees and yet did not have an account to match all the days, thus creating an unfunded liability. Ms. Greene was in agreement and added the same policy applied to annual leave.

Chairman Bache reminded the committee of the joint hearing with the Senate on the presentation by Southern Nevada Strategic Planning in the afternoon at 3:30 p.m.

The meeting was adjourned at 9:04 a.m.

RESPECTFULLY SUBMITTED:

Virginia Letts,

Committee Secretary

APPROVED BY:

Assemblyman Douglas Bache, Chairman

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