The Committee on Government Affairs was called to order at 8:15 a.m., on Monday, March 29, 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. Kathy Von Tobel

Mr. Wendell Williams

COMMITTEE MEMBERS EXCUSED:

Ms. Sandra Tiffany

GUEST LEGISLATORS PRESENT:

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

Chairman Bache said several of the bills were Mr. Neighbor’s and he would take A.B. 528 first.

Assemblyman Roy Neighbors, District 36, introduced Senator McGinness who was also a sponsor of the bill. As several people in the audience wished to testify he would keep his remarks brief. He read a letter from the Nye County Board of Commissioners who were in complete support of the bill allowing depressed communities to compete for business (Exhibit C).

Senator Mike McGinness, Central Nevada Senatorial District, testified rural Nevada communities faced enormous challenges in attracting economic development. The bill was a joint effort and an opportunity for rural areas to help themselves, so he was in full support of the bill.

Ms. Segerblom asked if the language referring to "by the test site" included Beatty. Senator McGinness said the corridor actually ran from Tonopah down to the Clark County line, and also a portion of Lincoln County was included in the proposed legislation.

Tim Carlson, president and CEO of the Nevada Test Site (NTS) Development Corporation, read from his prepared testimony (Exhibit D). The testimony basically pointed out a way to expand and enhance economic diversification efforts within the state, particularly the rural counties of Nye, Esmeralda, and Lincoln. Many workers were laid off when the Nevada Test Site closed and the proposal would greatly enhance reemployment. NTS had been working with representatives from Nye, Lincoln and Esmeralda in developing a plan that established a public/private partnership. The process would give the counties a chance to resurrect their economies and create an expanded tax base with the proposed industrial parks resulting in a winning situation for the counties.

Mr. Mortensen questioned the number of workers affected by the closure. Mr. Carlson stated there had been a 65 percent decline in work force at the Nevada Test Site. He indicated when Mr. Mortensen worked there, the employment was probably around 13,000, presently there were only about 2,500 employees.

Mr. Carlson went on to say many professionals in the southern Nevada region had participated in the decision making process. He had blowups of the information provided in (Exhibit E) and would walk the committee through them. What they were trying to do was to help the rural counties by spending some of the development corporation’s money. The test site was viewed as an asset, and in order to develop that asset, partners were needed. The corridor being developed started up in Tonopah, went down through Beatty into Amargosa Valley to Indian Springs (map included in the handout (Exhibit E). There was also a segment going into Pahrump. One industrial park at Lathrop Wells, named the Amargosa Valley Industrial Park, was under development and included the science museum. There was also an industrial park proposed for Caliente. He pointed out $1.4 million had been expended for development and produced studies and programs which would be further pursued.

Ms. Segerblom said there had been discussions about having a solar power plant in the Lincoln area and asked if it would be located in the test site. Mr. Carlson stated one had been proposed and there were serious ongoing discussions with solar firms, but nothing was as yet confirmed.

Ms. Berman interjected 8,600 jobs were lost and asked how much funding NTS would contribute to the project to attract new businesses. She also wondered what NTS expected new businesses to contribute if NTS was putting in funding. Mr. Carlson responded most of the jobs lost were high paying jobs, to date NTS had put 1.4 million into Nye, Esmeralda, and Lincoln counties in developing the partnership between the counties and NTS. He believed the three counties, along with Clark County could develop a partnership that would enable industries to provide a lot of different types of variables. Presently well over 12 different companies were seriously considering the test site as a location for their business. Two of the companies, Kistler Aerospace and Lockheed Martin’s Venture Star, had a potential of changing Nevada’s future regarding high tech type jobs. Kistler on March 31 would be signing the final agreement with NTS, permitting 12,000 acres as a site for their reusable launch vehicle and hopefully the facility would be fully operational in about 18 months. Satellite manufacturers would need locations close to the launch site, which in turn meant they needed industrial sites located close to the main company. Those companies would also invest money into those projects as well as building on property either bought, leased or rented at the site. Not only would that bring in tax revenue, it gave a return on the investment that the partnership between the counties and NTS had.

He had indicated Kistler Aerospace permitting 12,000 acres, and Ms. Berman questioned what permitting meant. Mr. Carlson responded the land was on the test site itself. The Department of Energy (DOE) permitted 12,000 acres to the development corporation, who then sub-permitted the acreage to Kistler Aerospace for their launch and landing site. That industry would build a $50 million facility on the acreage, creating at least 500 jobs to operate the facility and would bring in spin-off industries locating in other parts of the test site. So the money NTS put into the project was miniscule compared to what other companies would be putting in for improvements to their operations.

Ms. Berman asked about the sub-permit, as she had never heard the expression. Mr. Carlson asserted it was a new program within the Federal Government. Permitting property on federal land did not exist in the past. It was a new program started through the DOE and was similar to a utility permit. The sub-permit was basically saying NTS was the facilitator, but NTS wanted the client to be in charge and responsible for the actual permit. The user then had all the rights and responsibilities of the land.

Ms. Berman asked what Kistler was paying for the 12,000 acres. Mr. Carlson replied they were being paid from three different funding sources. There was an annual fee of $200,000, a launch fee of $50,000, and they had been granted stock options totaling 160,000 shares. After operation actually began there would be 40 launches per year. Those 40 launches, times $50,000 was what NTS would receive, but the amount could not exceed $2 million. If Kistler was a successful operation the stock shares could be valued at $32 million dollars if the stock went to $50 a share.

Ms. Berman wondered how much the shares were presently worth. Mr. Carlson replied they were not yet issued. As a non-profit corporation the idea was to put the revenues back into the community and the corporation was doing it as a commercial venture and not asking the state or Federal Government for funds.

Mr. Mortensen queried where the 12,000 acres were to be located on the test site. Mr. Carlson responded it was right before entering the Paiute mesa area in the top portion of area 18. Mr. Mortensen questioned if the Engine Maintenance & Disassembly (EMD) area had been considered. Mr. Carlson stated it had to be rejected because of the trajectory of the rockets. However, it was being considered as a site for another company called Fluidtech, which would occupy approximately 30 percent of the facility and hopefully they could find another industry that would want the entire building.

Rachel Nicholson, attorney at law, working with Nye County on a consultant basis said she was appearing to respond to technical questions regarding language in the bill. She indicated the bill only addressed those communities within the 125 miles of the test site. As the bill was presently written it would allow communities within Clark County with less than 100,000 to participate and Indian Springs or North Las Vegas could be affected. However, her understanding was Clark County requested that figure be changed.

Mr. Carlson stated he wished to add to his comments. Many people were involved in the process and included in the packet (Exhibit E) were letters from people in the various counties who had participated including Somer Hollingsworth, president of the Nevada Development Authority. The amendments in (Exhibit F) were requested because Clark County wanted to see how the program worked in rural counties before Clark County tried to do something similar within their county.

Speaker Joe Dini, Assembly District 38, testified he was in support of the bill and wished to disclosed he was a member of the board of directors of NTS. He felt the bill was good for economic development in the central area of the state, which badly needed support. As one of the sponsors of the bill he thought a lot of rural areas would be helped by the legislation.

Steve Bradhurst, president of Nevada Science and Technology, testified an interactive science museum was proposed at the intersection of Highway 95 and Highway 373 at Lathrop Wells. An overview of the non-profit center was included in his handout (Exhibit G). It would be a world class science museum having 100,000 square feet including an IMAX theatre, Digistar planetarium, inter-active theatre, and outdoor exhibits. The project was now being considered for a desert space station, and to make it a reality A.B. 528 must be adopted. The project was proposed for the Amargosa Valley Science and Technology Park, and the land surrounding the facility could be developed with high-tech type industries, and he believed the facility would be a magnet for those types of businesses. Fundraising was underway with the hope of collecting $35 million for the project. He pointed out discussions were also being held to incorporate solar energy facilities into the project. He felt economic development was imperative in rural counties because without economic diversification, revenues would not support the influx of people into the rural environment. Mr. Bradhurst added the center would be the highlight of the development proposed in Amargosa Valley.

Ms. Segerblom questioned if it was similar to the Fisher Space Pen being planned for Boulder City. Mr. Bradhurst replied the project would go beyond that. The top floor would be an outer space theme with hands-on interactive exhibits where children would feel they were in a space shuttle going into outer space. The second floor would contain airplane type exhibits, with the ground floor devoted to a mining type natural environment.

Ms. Segerblom stated she would like to see the renewable energy part of the project take place. Mr. Bradhurst pointed out discussions were underway in making a solar energy park a reality.

Bob Davis, Nye County commissioner, testified he was appearing in support of A.B. 528, as it was very important to the communities in his county.

Jeff Taguchi, Nye County Commissioner, stated a lot of the activity along the corridor was within Nye County where economic decline was a large problem since the mining facilities were closing within the next 18 months. The technology corridor would give an opportunity for economic diversification, in particular the reuse of the Barrick-Bullfrog facility which would allow for different types of operations such as automobile research, magleft mining, and those types of installations. It also would help the tax base in that area giving the county a more secure future.

Les Bradshaw, representing Nye County Department of Natural Resources and Federal Facilities encouraged the committee to support A.B. 528 as a way to help rural counties help themselves. As was indicated the three counties banded together on a common issue because they believed it benefited all the rural communities.

Harry Swainston, representing himself said, as the bill was presented he had no problem with it. However, one issue that had not addressed was the fact the bill was too open-ended. He spent 10 years at the Nevada Test Site and knew the territory and then worked for the Attorney General, mostly on issues involving the test site. Many of the issues affected all of Nevada, mainly high-level active waste and storage of spent fuel. There were two bills pending in congress for interim storage at area 25 of the test site. As everyone was aware, the Department of Energy had been studying Yucca Mountain for close to 14 years as to the suitability for a permanent repository of spent fuel and high level radioactive waste. In his view the bill allowed the counties to enter into contracts for the storage or disposal of high level radioactive waste. He felt the bill could be amended to express the exclusion of any activity, which had anything to do with the transportation, storage, or disposal of high-level radioactive waste, to assure it was not an invitation to disaster.

Mr. Mortensen questioned how Mr. Swainston thought it should be amended in order to preclude what he perceived as a problem. Mr. Swainston suggested a section be added at the end of the bill, stating something similar to, "This bill expressly excludes any activity, which would directly or indirectly affect the transportation, storage or disposal of high level of radioactive waste or spent fuel at the Nevada Test Site."

Mr. Neighbors indicated the bill had been around quite a while and asked if Mr. Swainston had contacted either Mr. Carlson or Mr. Bradhurst with his concerns. Mr. Swainston replied, as a private citizen he was not aware of who was involved with the bill. He had read the bill and did not see either of the gentlemen’s names mentioned.

Mr. Neighbors stated there were several amendments proposed to the bill and asked Mr. Swainston what particular section of the bill was the most distasteful to him. He responded it was the broad range of authority in creating corporate entities under supervision of a county ordinance that would permit the county to be involved in various activities, and nothing prevented the storage of radioactive waste or spent fuel.

Mr. Neighbors thought it was a good bill. He had worked at the test site for 10 years and did not see it as even involving radioactive waste or spent fuel and asked Mr. Carlson to address the concern.

Mr. Carlson declared it was very hard to link the bill with nuclear waste. What his group was trying to do was bring economic development to rural counties, replacing jobs that were lost at the test site due to downsizing. He thought it could be assumed because it was the Nevada Test Site Development Corporation there could be a link between the corporation and Yucca Mountain. He added he could assure the committee, the 60-member board of the corporation would have nothing to do with waste storage at Yucca Mountain. In fact at the beginning of the formation of the corporation, the board made a resolution not to deal at all with that particular issue and Assembly Speaker Dini would never have signed on to the bill if it was to open the door to nuclear waste.

Mrs. Freeman stated although she represented northern Nevada there was great concern regarding radioactive waste throughout the state. She questioned if there was any objection to adding an extra section defining legislative intent. She felt rural economic diversification was important, but she could not support the bill if there was even the smallest question about nuclear waste. Mr. Carlson indicated he had only meant by his comments to assure the committee there was no connection between his company and Yucca Mountain.

Mrs. Freeman said she had real problems with her constituents if they thought she was even considering supporting a bill that might include radioactive waste, and asked that an amendment be added to the bill specifying it was not to be considered. Mr. Carlson said he would defer to the attorney who had helped draft the bill.

Ms. Nicholson related if the economic viability of the area was increased, there would be less acceptance of any kind of waste coming into the area. The bill was meant to work in favor of helping the whole area in becoming economically viable and thriving in spite of Yucca Mountain, and she felt adding an amendment would help everyone realize that was the full intent of the bill.

Mrs. Freeman stated legislative intent needed to be made very clear especially with major issues such as the one before the committee. Mr. Carlson referred to page 3 of the 4 page document (Exhibit E), "Answers to Potential Questions" section). Their position was the bill had no ties, direct or otherwise, to the proposed interim or permanent storage of nuclear waste on the Nevada Test Site. He felt it was appropriate for the bill to be modified to include additional specifications.

Chairman Bache agreed bringing business into the area would be incompatible with nuclear waste storage, and perhaps Yucca Mountain would stop being considered by the Federal Government. As there was no further testimony the hearing was closed on A.B. 528.

Assemblyman Roy Neighbors, District 36, introduced Bob Gagnier, State of Nevada Employees Association (SNEA) and Danny Coyle, SNEA/Association of Federal State Counties & Municipal Employees (AFSCME). Mr. Neighbors testified the bill created a local government committee on employee health insurance and a professional staff for the state Committee on Benefits. There was nothing compulsory about the local government body, but the concept was to restrict the state employee plan to state employees. A.B. 529 would provide the state plan with professional staff, and if the staff were properly selected and monitored, it should resolve many of the past problems with the state plan as pointed out by the Legislative Counsel Bureau auditors. The bill was requested by SNEA, because during the interim he received many phone calls from his constituents on insurance matters, so he was in full support of the legislation.

Bob Gagnier, executive director, SNEA, testified the bill addressed several different issues. The language in section 2 set up a separate local government health plan. It would be available to any local government who wished to participate and removed local government employees from the state employee’s health plan. Both active employees and retirees experienced many problems with the state plan. There were 777 local government employees in the state plan who had originally been accepted into the state health plan because very small local groups could not obtain insurance on their own. A committee was set up to administer and choose coverage. The makeup of the committee included various representatives of local government employers and employees appointed by the governor. Mr. Gagnier stressed the plan was optional for local governments, and they could either set up their own plan or join the local government health plan.

He added page 2, section 4, was designed to specify for the first time in statute, the state Committee on Benefits would have professional employees working for them. There would be an executive officer and a chief accountant. He felt it was important to have a Certified Public Accountant (CPA) working for the committee who could monitor the plan, as in the past there was a lack of proper accounting. Another of the problems was the lack of executive experience required for administration of the plan. Previously, the Risk Manager administered the plan, and his position was never designed to be involved with health insurance. He pointed out page 3, section 5, allowed the committee to employ necessary professional staff to carry out the administration of the state’s program and processing of claims for benefits. Part of the problem the plan was experiencing was due to the fact an outside contractor was paying claims with no tracking at the state level.

Mr. Gagnier said the remainder of the bill made it clear the intent was to remove local government retirees from the state plan and place them under local government retiree plans. There were over 5,000 local government retirees in the state plan, and if the actuarial was accurate, the retirees cost the plan almost 160 percent of their premium. For every dollar retirees put into the plan they took out $1.60, and someone had to pay that. He questioned why the state employees should be subsidizing local government retirees because they were already subsidizing their own retired state employees. He reasoned local governments should be subsidizing local government retirees.

Mr. Gagnier stated another issue was when Clark County school administrators pulled out of the state plan, they left their retirees in the state plan. There were 134 Clark County school administrator retirees in the state plan, which made it quite obvious a local government group could pull out and enroll in a better plan for less money elsewhere without their retirees.

Ms. Segerblom asked if the Clark County teachers had pulled out of the state plan. Mr. Gagnier replied it was only the administrators not the classroom teachers who had their own health plan.

Ms. Segerblom questioned if the retirees were removed from the state plan where would they go. Mr. Gagnier responded there would have to be a transition period where employees could either return to their former plan or join the local government plan being created within the bill.

Ms. Von Tobel was confused because she understood when a retired teacher chose the state Preferred Provider Option (PPO), they paid their full premium and were not subsidized like a state employee. The premium was higher than the other three plans they could choose, and if they had selected the state PPO they chose the most expensive plan, and if the bill passed, they would have wait for open enrollment. Mr. Gagnier indicated he was not sure if retirees from local government had the option of choosing plans during open enrollment other than what the state offered. If a retiree from the Clark County School District wanted to return to the Clark County plan, he was not sure it could be done. He indicated most local governments were large enough to have their own plan but for those who did not, they could participate in the plan created by the bill. What the bill was trying to do was to make all the plans uniform.

Ms. Von Tobel stated she was amazed any retiree stayed in the state PPO because of the new $15,000 carve-out that meant the retiree had out of pocket expenses of $3,000 before anything was paid. She didn’t think retirees were hurting the plan but felt they should all want to get out of the plan because of the costs.

Danny Coyle, president SNEA retiree chapter, approved the remarks on the proposed setup of the Committee on Benefits and thought most of the problems centered around the third party administrator. He felt if there were in-house staff to pay claims and oversee problems, most of them would be eliminated. In reply to Ms. Von Tobel’s remarks about the carve-out when you looked at the cost of buying a private health plan, he thought the state cost was appropriate. Although it was expensive, it was cheaper than most plans in the private sector.

Ms. Von Tobel clarified she was married to a retired teacher so they had been through the process and selected their plan based on what the premium was. During open enrollment they were able to choose whatever plan they wanted. Currently, there were other plans beside the PPO that offered more to retirees than the PPO, and felt the carve-out was a slap in the face to retirees.

Karen Parker, representing the Management Council and classified staff of Western Nevada Community College and the faculty and classified staff of Great Basin College, testified state employees had a great deal of concern about health insurance and the Committee on Benefits. After the committee was formed they had contacted various community colleges and universities and found everyone was universally concerned about their health care, and when the bill was presented they thought it was important to make a statement which supported the bill (Exhibit H). She knew there were other bills in the legislature addressing the same issue and the community colleges were in support of anything that helped the employees with their health care.

Tom Grady, representing Nevada Association of Counties (NACO) and Nevada League of Cities, addressed Mr. Gagnier’s remarks and would like to explain the League of Cities plan. The plan had just over 900 participants and was started in 1963. Since 1996 there had been no premium increase until 1998 when there was a 5 percent increase, compared to the 24 percent the state faced in 1999. He questioned why anyone would consider leaving their present plan, to enroll in a plan with a 24 percent rate increase. For informational purposes, the plan covered the cities of Lovelock, Winnemucca, Carlin, Yerington, Caliente, Wells, Boulder City and Lyon, Pershing, Humboldt County, Lovelock Meadows Water District, Pershing General Hospital, U.S. Board of Water Commissioners, Nevada Association of Counties, Western Nevada Development District, Esmeralda County School District, and the Nevada League of Cities. Many other larger cities and counties were covered by self-insurance. The retirees in their plan numbered 62 people and 17 spouses, and with NACO’s plan when an entity left their retirees went with them, which he felt was only fair.

.

Mr. Grady added they had left L & H Administrators in July of 1997 before the state got into problems with them and fortunately without the impact on the plan the state encountered. He was there to mainly to assure NACO members that any self-insured program handled by a city or county was not affected by A.B. 529.

Bob Hadfield, executive director, Nevada Association of Counties, apologized for not signing in as he had not planned on speaking, but he wanted to make it clear the state plan was not being used by local governments as a dumping ground for retired employees. Local governments had their own health insurance plans including retirees; however, some local governments had been in the state plan in the past, and it was their right to do that. One of the most disturbing things he had seen, was as the population aged with more people retiring, more effort was made to segregate out different groups of employees into their own pools. He felt that ran contrary to the whole concept of pooling where the good was taken with the bad, and spread the cost over as large a group as possible. If the plan was poorly administered and under-priced it was not the fault of the beneficiaries of the plan, and it saddened him that a solution would be to imply local government retirees had somehow dragged the state plan down. Perhaps the actuary should have been reviewing the numbers earlier so the rates could have been adjusted more frequently. If the plan was priced correctly, it should make no difference who had participated in the plan.

Jim Costa, representing the Retired Public Employees of the State of Nevada (RPEN), testified he was one of the people in the state health plan retiring from another government entity. He also felt it was not the employees who caused the problems, and if the actuary had priced the plan correctly or had better management the plan probably would not have had so many problems. Certainly 1000 non-state retirees did not cause a $25 million loss. Mr. Costa pointed out Mr. Gagnier used the figure of 5,000 non-state retirees in the plan, that was incorrect there were only 1,000. Last December the Legislative Counsel Bureau issued a report saying there were 974 retirees in the plan whose premiums were being paid through PERS. There were not enough hard facts to support the notion any one group in the state plan caused the financial problem, not one of the actuaries seemed to be able to produce accurate figures for more than 6 months at a time. He did not feel any decisions should be made until the numbers were verified for accuracy.

Another point he wanted to make was the plan seemed to ask for claims to be possessed at the state level. However, there was no fiscal note attached to the bill. He questioned if payments would be paid out of the premiums of the people in the plan or if there would be some other charge to cover the expense of the claims officer. His group wanted to stay in the state plan and did not feel they had anything to do with the problems with the program. He added, for employees over 65 years of age Medicare paid for 80 percent of the medical expenses with the state plan paying 80 percent of the remaining 20 percent. Under the changed plan there would be no help from the state until $15,000 worth of medical bills were paid out, and that was the carve-out Ms. Von Tobel mentioned. The change was made in one day, at one meeting with a computer from the actuary who decided what the premiums would be based on information that was inadequate and inaccurate and most of all with no input from participants in the plan.

Mrs. Freeman questioned if the other bills addressing the issue were in the Assembly. Mr. Costa replied there were several that had been introduced and were coming up for hearings in several committees both in the Senate and Assembly. All were somewhat different than A.B. 529.

Mrs. Freeman felt one of the reasons for the problems with the Committee on Benefits was due to the fact there was no professional expertise at the state level reviewing the claims and asked how he felt about that provision in the bill. Mr. Costa responded there was a Senate bill that had a complete rundown on qualifications and competency of the people appointed to the committee. When the Legislative Counsel Bureau completed their audit it became obvious more monitoring was needed.

Ms. Von Tobel stressed she wanted the committee to understand the full extent of what happened to the retirees. If the decision was made in 1 day for the carve-out causing any retiree, upon entering the hospital, to pay out $3,000 up-front before anything was paid by the state plan, and felt it was a travesty. She thought it was a way to tell retirees they were not wanted in the state plan. They had no alternative to change plans because there had not been an open enrollment since it happened and when the last open enrollment was held in October the retirees were not aware of any problems.

Jonnie Pullman, deputy city manager, city of Sparks, stated she was responsible for the risk management and self-insurance programs for the city. The city was self-insured so at first glance the bill would have no affect; however, she did want to point out concerns of self-insured local governments. She and two others had testified before the committee earlier asking for authorization to pool and purchase services in the public/private partnership, which had been established in the Truckee Meadows. In listening to the testimony she requested the committee to consider the following comments. It was true the state and local government health plan were separate. The reason pooling was done on a statewide basis, was because of the nature of populations in local governments. When retiring from Sparks or any local government a person may continue to remain in the program by paying the premium or whatever was negotiated by the entity, but there was also the option of joining the state health plan. The difficulty retirees had who served only in local governments, were not necessarily covered by Medicare. If a person had worked their entire life in government employment there was no coverage until Medicare actually started, which could be up to 15 years. State requirements mandated the same coverage for retirees as for current workers, so when a person retired from the city their benefits could not be reduced.

She felt the bill was trying to address two disparate issues. One was how the Committee on Benefits and the state plan was managed, and the other was the retiree issue. When retiring they may move somewhere else in the state that had no affordable health care, so pooling was the issue. She suggested the retiree issue should be studied during the interim to establish what the real impact was, because if retirees were required to have separate actuarial rates, it was defeating the initial purpose of having current employees and retirees receiving the same benefits.

Mr. Neighbors questioned if the retirees not qualifying for Medicare had stayed with the city plan or gone to the state plan. Ms. Pullman replied most had stayed with the city plan, but there had been a few who went to the state plan. There were 2,000 participants in the city plan because of dependent coverage, and there were less than 20 retirees who transferred to the state plan.

Henry Etchemendy, representing the Nevada Association of School Boards, just wanted to clarify one issue. All local governments already had the authority to enter into inter-local agreements. If they wanted to form a system for a small group they had the power to engage in that practice. He did not feel there should be any mandate by the state insurance committee, so he requested the bill not be processed.

Gary Crews, legislative auditor, Legislative Counsel Bureau introduced Rocky Cooper an audit supervisor with LCB audit division. Mr. Crews pointed out most of the bill was policy oriented. He was not taking a position on the bill but some points needed addressing from a technical standpoint, should the committee decide to process the bill. In section 4 where it stated the committee could appoint a chief executive officer and a chief accountant, he felt the duties of the chief accountant should be clarified. If the position was meant to be one of monitoring, it should be designated as more of an audit position. If it was more of an accountant position, that position should be reporting to the executive director, so the duties needed to be clarified in the bill. On page 6 of the bill the appointment of "an independent certified public accountant to conduct an annual audit of the plan" was being deleted and LCB felt that was a function that needed to be continued. The recommendation originally came from LCB in the 1980’s because LCB was not appropriately staffed to engage in a detailed audit of the plan.

Jim Richardson, representing the Nevada Faculty Alliance Chapters, wanted to make a few comments, and indicated he had passed out a letter to the governor’s staff and a memo from the University of Nevada, Reno (Exhibit I). When he chaired the Committee on Benefits back in the 1980’s he did have something of a philosophical difference with Mr. Gagnier on non-state entities joining the plan. He had envisioned a very large public employee health plan adequately covering employees with a better plan by pooling employees and retirees. He acknowledged the plan had gotten into trouble over the years and not nearly as good as it had been. The chapters started became concerned in fall of 1998 about retiree dumping and asked if that was why the plan was in trouble. He had talked to people in risk management and the Committee on Benefits and finally went to Senator Raggio who brought about the study done by Debbie King at LCB entitled "Local Government Retirees Participation in the State Health Plan." One of the attachments to the study included a list of 83 non-state entities having retirees in the state plan for a total of 947. He pointed out Clark County had the largest enrollment with 274 which was a little more than 10 percent of the retiree group. That meant around 90 percent stayed in their own plan. Mr. Richardson added there was going to be a hearing in Senate Government Affairs where the governor’s bill, S.B. 544, would be heard as well as Senator O’Connell’s bill, S.B. 79, in restructuring the committee.

Mrs. Freeman stated health insurance was a complex issue, but there was no one at the state level giving advice to public organizations so employees could make informed choices. She saw a real need to have someone or someplace where employees could obtain proper information and she knew Assemblywoman Buckley had a bill pending to appoint an ombudsman. She agreed with Mr. Richardson and was supportive of obtaining executive level staff to administer the state health program.

Mrs. Freeman questioned if Mr. Richardson as an ex-officio member of the governor’s task force was aware of the actual shortfall figures in the health plan. Mr. Richardson replied it was his understanding the governor’s executive budget contained a little over $26 million in a one-shot appropriation and $10 million over the biennium, and with the per month premium increases the plan would be placed on firmer ground.

Jerry McKnight, Nye County manager, wanted to take a moment to support Mr. Crews’ recommendation to maintain the audit provision. He added Nye county had used L&H Administrators, but over a year ago they moved away from that group and went to a fully insured program, just recently moving back to a self-insured plan. By doing that they had avoided the losses some of the other programs experienced. He added insurance was provided to employees of other entities in the county. He felt the pooling concept was appropriate and felt the acceptance of other retirees into the state program was a step forward. If there was now a choice to terminate that opportunity, he felt employees already in the program should not be excluded. He just wanted to make sure anything done in the bill did not negatively affect the Nye County program.

As there was no further testimony forthcoming, Chairman Bache opened up the hearing on the next bill.

Assemblyman Roy Neighbors testified Senator Jacobsen and Chuck Abbott, director of the Veterans’ Services Commission, would be addressing the bill. The bill evolved from a meeting held in Hawthorne with a large turnout, and during the meeting it was pointed out that under current law, the commission meetings had to be held in Las Vegas or the city in which the office of the executive director was located. With the proposed bill the meetings could be held anywhere throughout the 17 counties at the call of the chair.

Senator Lawrence Jacobsen, representing the Western District, stated he also served as chairman of the commission. In discussions between members it became clear meetings needed to be held in other areas where veterans were located, and that was why Hawthorne was chosen. The meeting was very well attended, and as it was already publicized and notices had been posted they decided to hold it, but no action could be taken because it was not a legal meeting. He felt it was common sense legislation, as the commission needed to hold meetings where the veterans could participate in a group that was basically for them.

Mr. Neighbors advised the committee he had asked Chuck Abbott to give some background about the make-up of the veteran’s commission.

Chuck Abbott, executive director, Nevada Commission for Veterans’ Affairs testified he had worked very closely with the Veterans’ Service Commission. The commission was directed by NRS 417 and provided advice to him and the director on veteran issues. The commission had nine members, one from the state Senate, Senator Jacobsen who was also the chairman, Assemblyman Roy Neighbors, one representative from each of the state veteran’s cemetery committees, two members from the general public, and three from veteran’s service organizations. The commission met quarterly, and was a public forum for the veterans in the state. The language that limited meetings to two areas passed during the 1997 legislature and was incorporated in the veteran’s home bill. Although they were aware of the language, the bill came up late in the session and rather than lose the entire bill they felt the language could be revised and brought back for the 1999 session.

He pointed out if a service commission meeting was going to be held in Boulder City to commemorate the opening of the new veteran’s home that could not be done. He added they had only been in compliance with the law on one occasion, and that was a service commission meeting held in Reno where his office was located. Their quarterly meetings were well within budget, so he felt there would be negligible fiscal impact.

Chairman Bache asked if additional meetings could be held in outlying areas and wondered if the limitation of six meetings should be increased. Mr. Adams replied they were authorized to hold quarterly meetings as well as two additional meetings with the stipulation those meetings must be held in either Reno or Las Vegas. He did not feel the number of meetings needed to be increased.

Chairman Bache added he was trying to give them flexibility to hold additional meetings if there was a particular issue of interest to a rural county. Mr. Adams said it would not be a problem as long as they had the flexibility to move out into the communities. What was being requested was giving the chairman the opportunity to hold the meetings as he saw fit rather than just two central locations.

Ed Gobel, president, Council of Nevada Veterans Organizations, testified that by resolution his organization had come up with an amendment requesting teleconferencing of meetings (Exhibit J). When the two sites of Reno and Las Vegas were established, it was due to the legislative videoconference capabilities. It had been brought out that one of the meetings held in Las Vegas had no videoconferencing available, effectively cutting out the rest of the state. Also in the amendment he was asking that no site may be selected more than once in any calendar year, allowing meetings to be held throughout the state. He had also been advised there were teleconferencing facilities at all the community college sites around the state, which allowed veterans around the state to participate.

Mr. Neighbors said he had no problem with the amendment. Mr. Abbott stated their concern was to give flexibility to the chairman in conducting the commission business. He felt if teleconferencing sites were included, a fiscal note needed to be attached, as he could not cover the cost within his current budget. He thought instead of placing teleconferencing in statute it should be left as a policy decision.

Mr. Gobel stated he had talked with Chancellor Jarvis and there would be no cost for videoconferencing and would actually reduce the overall meeting cost.

Darrel Mobley, state commander of Veteran’s of Foreign Wars, indicated he was in complete agreement in letting members participate throughout the state. He was not in complete agreement with teleconferencing, as some areas, such as Ely may not have that capability. He thought it was better for the commission to go the communities where veterans were located.

Mr. Neighbors interjected he had just passed out a proposed amendment to A.B. 528 and questioned if the committee concurred with it. Ms. Von Tobel pointed out the way it was worded, Indian Springs would be excluded and as she represented Indian Springs, she had no intention of excluding them. She felt that area was impacted even more than a lot of other areas when the test site closed. Mr. Carlson with NTS, had pointed out it was Clark County’s amendment, and perhaps she should contact them about the amendment, and they could all work it out together.

Chairman Bache stated they would take testimony on A.B. 67. School administrators, who had since withdrawn from the state health insurance program originally requested the bill. He had brought it before the committee as it addressed some of those issues on the Committee on Benefits. He would take testimony with the possibility of referring it to Committee on Ways and Means.

Warren Hardy, Clark County Association of School Administrators, testified they had asked for it to be drafted but subsequently dropped out of the system. His client had asked him to state they still thought it was the right thing to do and felt there should be non-state agencies on the board.

Bob Gagnier, executive director, State of Nevada Employees Association (SNEA) stated he was not speaking for or against the bill. One issue he wanted to point out was on page 2, lines 16 through 19, where it talked about the director of Department of Administration serving on the committee and may designate a representative to serve in his place or to attend a committee meeting in his place. He objected to that last phraseology as it seemed to allow the director to send a different person everytime there was a meeting. He suggested if the bill was processed, the language in section 2 be eliminated so some other person could serve full-time, but not from one meeting to the next.

Jim Costa, representing the Retired Public Employees of Nevada, testified they were not opposed to the concept of reorganizing the Committee on Benefits. He agreed with Mr. Gagnier on representation by the Department of Administration as they felt it should be the same full-time person attending the meetings for continuity. If the bill went forward, he would like to see an amendment so the two representatives from PERS would not hold office at the same time. He thought the bill did not go far enough in requiring competence and qualifications for the people who worked with the plan.

Chairman Bache informed the committee the reason two state employees were included in the bill was because there were currently two and there seemed no reason to remove them.

As there was no further testimony Chairman Bache closed the hearing on A.B. 67.

Frank Siracusa, chief of Division of Emergency Management, Department of Motor Vehicles and Public Safety, testified they were in support of A.B. 626 as it was basically a housecleaning bill affecting NRS 414 which was legislation mandating emergency management to perform its functions. Sections two and 3 defined "Disaster" and "Emergency." There were also some changes to the composition of the State Search and Rescue Board. They were proposing the board be increased from 8 members to 10 members, and change the composition so the member designated as Nevada Highway Patrol (NHP) be eliminated as they were not involved in search and rescue. They were requesting the two additional positions, as well as the one replacing NHP, to be members of the sheriff’s association. The reasoning behind the change was due to the fact that by statute sheriffs throughout the state had primary responsibility for search and rescue activities within their counties.

He wanted to add another assembly bill, A.B. 98 passed which also contained language impacting NRS 414 and wanted to be assured any language in A.B. 626 agreed with the language in A.B. 98.

Chairman Bache pointed out he had received a "notice of conflict" amendment so when the bill was processed the amendment would be processed with A.B. 626.

As there were no questions from the committee or testimony from the public, Chairman Bache closed the hearing on A.B. 626.

Ken West, chief deputy state controller implied the bill simply affirmed the controller’s authority to record revenues and receivables when satisfying the requirements of modified accrual or accrual basis set forth in NRS 353.311. It was needed because the old (Financial Management Integrated Reporting System (FMIRS) accounting system operated on a cash basis and adjustments were made at year-end. The new Integrated Financial System (IFS) was designed to incorporate better business practices, and the bill would allow the controller to take advantage of those practices.

Chairman Bache asked if the bill under consideration would help with problems the controller’s office experienced earlier in the year. Mr. West responded the problem earlier had been the difference between a trial balance and a balance sheet representing the state’s financial position on cash. A trial balance was taken and then adjustments made, so the bill would not help, adjustments would still be needed to record revenues agencies had deposited in the bank but not recorded on the books.

As there was no further business Chairman Bache adjourned the meeting at 11:10 a.m.

RESPECTFULLY SUBMITTED:

Virginia Letts,

Committee Secretary

APPROVED BY:

Assemblyman Douglas Bache, Chairman

DATE: