The Committee on Ways and Means was called to order at 7:50 a.m., on Wednesday, February 10, 1999. Chairman Morse Arberry Jr. presided in Room 3137 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List.

COMMITTEE MEMBERS PRESENT:

Mr. Morse Arberry Jr., Chairman

Ms. Jan Evans, Vice Chair

Mr. Bob Beers

Mrs. Barbara Cegavske

Mrs. Vonne Chowning

Mrs. Marcia de Braga

Mr. Joseph Dini, Jr.

Ms. Chris Giunchigliani

Mr. David Goldwater

Mr. Lynn Hettrick

Mr. David Parks

Mr. Richard Perkins

Mr. Robert Price

COMMITTEE MEMBERS ABSENT:

Mr. John Marvel (Excused)

STAFF MEMBERS PRESENT:

Mark Stevens, Fiscal Analyst

Gary Ghiggeri, Deputy Fiscal Analyst

Chairman Arberry stated the first items for review were the final budget revisions as presented by Don Hataway, Deputy Administrator, Budget Division.

Mr. Hataway advised he would briefly explain the budget revisions for review by the committee:

• The Motor Pool one-shot revision involved 14 additional vehicles for the Parole and Probation Department; $214,000 would be added into the one-shot appropriation available in FY 1999, in addition to the amount reflected in The Executive Budget.

• The amendment proposed to Budget Account 4718, the Department of Motor Vehicles and Public Safety (DMV/PS), Registration Division, consisted of expenses eliminated from the base budget and not picked up in other decision units within the budget. Consequently, a reduction was necessary in the Other Funds budget category in the amount of $18,057 and $17,881 in each year of the biennium respectively.

• In Budget Account 3775, DMV/PS Training Division, vacancy savings costs were transferred to the new Training Division from Nevada Highway Patrol (NHP), Budget Account 4713, and Nevada Division of Investigations (NDI), Budget Account 3743. Because vacancy savings did not apply to the Training Division, those costs would need to be deleted. Also, in the NHP budget, instate travel had not been addressed in its entirety when the budget was compiled, and an increase of $6,373 and $6,454 respectively was added in the Other Funds category.

• Budget Account 4713, NHP, contained some duplicate budget reductions in the Training Division transfers and there needed to be $36,638 and $36,692 added in each year of the biennium respectively.

• The amendment to Division of State Lands, Budget Account 4173, consisted of an agency request for acceleration of the hire date for the position with the Lake Tahoe Initiative funded by Tahoe Bond Fund interest. The agency was requesting acceleration to July 1, 1999 instead of October 1, 1999, the normal hiring date. The Budget Office concurred with that request. The cost would be $15,715 in the first year of the biennium in the Other Funds category.

• After the budget was completed, the Budget Office ascertained that classified salaries for the University System had not been included in the calculations for the personnel assessment rate. The budget was built on .0094 percent of classified salaries, and by including university salaries, it would drop to .0080. The General Fund savings would be $523,000 in the first year of the biennium and $626,000 in the second year; savings in the Other Funds category would be $329,000 and $394,000 respectively.

• Budget Account 3743, NDI, would require revision because when positions were transferred back to the Registration Division and removed from the NDI budget, highway funds were no longer applicable. That created an addition of $3,059 and $3,207 respectively to the General Fund, and a deduction from highway funds for identical amounts.

• State Parks, Budget Account 4162 had duplicate entries in categories 04 and 07 during the original budget process, which created a General Fund savings of $2,500 and $2,100 in each year of the biennium respectively.

• DMV/PS, Automation, Budget Account 4715, failed to include funds for contract uniform services for protective clothing, and the amount of $57,184 in each year in the biennium was the proposed addition in the Other Funds category.

• Budget Account 4727, DMV/PS, Capitol Police, failed to provide proper information in the budget request for Motor Pool requirements and the revision was based upon the latest information from the agency. It amounted to a Motor Pool cost adjustment of $2,514 in each year of the biennium.

• There were two amendments to DMV/PS, POST, Budget Account 3774, one for rent adjustment in the amount of $23,040 each year of the biennium, and a first year adjustment of $837 for the initial outlay related to uniform allowance.

• Next was an adjustment to the Division of Forestry, Budget Account 4195, due to a transposition error in the expense entry for Decision Unit M-300, which would create a savings to the General Fund of $4,000.

• The last revision was merely a change from a one-shot appropriation to a budget account in the director’s office of the Department of Conservation and Natural Resources, Budget Account 4150. That consisted of $200,000 in legal defense funding for the Truckee River and other river systems in the state, as addressed by A.B. 48 and A.B. 151. The Governor would prefer to simply add the $200,000 for legal services to the department director’s budget in lieu of passage of either of the proposed Assembly Bills.

Chairman Arberry queried committee members regarding possible questions on the proposed budget revisions. Hearing none, he opened the hearing on Budget Account 1030.

Attorney General Frankie Sue Del Papa introduced Gene Etcheverry, Chief Financial Officer for the Attorney General’s (AG’s) Office. She noted also present in the audience were Frederick Schmidt, Chief, Bureau of Consumer Protection; Mike McCormick, Executive Director, Prosecution Advisory Council; Jon Hansen, Claims Manager, Litigation Division, who would address the Tort Claims Fund; L. Timothy Terry, Director, Medicaid Fraud Unit; Kevin Higgins, who was in charge of the Worker’s Compensation Fraud Unit; and Thomas M. Patton, First Attorney General.

Preliminarily, to set the stage, Ms. Del Papa explained Nevada continued to face tremendous growth in public safety issues on a number of fronts. The AG’s Office represented, with few exceptions, all of the executive departments of state government, including over 200 agencies, boards and commissions. In addition, it had criminal jurisdiction over a variety of offenses, among those were state employees who violated the law, crimes committed by state prisoners, and white-collar crimes. Ms. Del Papa noted in many instances the AG’s Office was the sole prosecutor for many fraud crimes, including Medicaid, workers’ compensation, insurance, telemarketing and securities fraud; it was also the primary prosecutor of consumer and employment security fraud. Her office also provided assistance whenever possible to the 17 District Attorneys of the state, and also served as the death penalty case coordinator, handling a number of death penalty cases.

Ms. Del Papa went on to explain her office was divided into 11 divisions, Administration, Litigation, Human Resources, Gaming, Civil, Bureau of Consumer Protection, Transportation and Motor Vehicles, Investigations, Information Services, and the Reno and Las Vegas offices. Also part of the AG’s Office was the Private Investigators Licensing Board. The AG’s Office also served as the extradition and tort claims coordinator for the State of Nevada, and acted as the Advocate for Missing and Exploited Children. The latest responsibility assigned to the AG’s Office was the State Prosecutors Advisory Council.

Ms. Del Papa advised due to growth in the state, along with the growth in litigation and other legal matters, over 13,000 cases were opened and closed during the last biennium, which constituted a 77 percent increase in the total number of cases handled over the previous biennium. FY 1998 ended with 6,121 cases pending. In dealing with those cases, the AG’s Office filed 21,248 pleadings, including motions and briefs, attended 624 trials, and made 10,776 other formal court appearances. The litigation activity resulted in judgments totaling over $13 million being awarded to the state. Last biennium her staff successfully defended the state against claims in the amount of $52 million, and also collected funds from judgments and other litigation which totaled over $24 million. Ms. Del Papa advised the foregoing information was just a brief recap, and obviously the office had been involved in other activities as well. She stated the majority of requested budget items were because of requests from clients or other agencies, which she would explain in detail as each budget was presented.

Ms. Del Papa indicated she wanted to make one preliminary comment in terms of the budgetary crisis facing the state. The AG’s Office had attempted to do its share in terms of reversion of funds as requested. One of the issues she felt needed further review was the method used to budget the AG’s Office, and the fact it included several individual budget accounts. According to Ms. Del Papa, if a way could be found to provide additional flexibility between the individual budget accounts, the state would benefit from that flexibility. Each division experienced period of "peaks" and "valleys" in workloads, making predictions impossible. For example, she explained, the Bureau of Consumer Protection might request additional resources one week and the following week it could be a different division seeking assistance.

According to Ms. Del Papa, the current method used for budgeting the AG’s Office often caused constraints. Even though the divisions made every effort to remain within their budget categories, additional flexibility would be very helpful, and would also benefit the state, given the current budget crisis.

Vice Chair Evans asked what the legislature could do to assist the AG’s Office in the area of shifting workloads in terms of budgeting. While she felt committee members could certainly understand the pressures of workloads that changed from week-to-week, she was unsure how the issue could be addressed.

Responding, Ms. Del Papa stated because the AG’s Office contained so many different budget categories, and there were restrictions against moving funds between those categories, some of the smaller programs were often shortchanged. She felt it would be helpful if the legislature considered not only each budget category, but also the agency budget as a whole. Ms. Del Papa explained the AG’s Office functioned as a team. When she was first elected, the agency was housed in 14 different physical locations, and she had attempted to consolidate as much as possible. Further, every attempt was made to share resources in order to eliminate duplication.

For example, stated Ms. Del Papa, the Missing Children’s Unit was a small budget, and if circumstances arose which caused that unit to require assistance, funds could not be transferred to it from a different unit’s budget. That often hampered efforts to assist the various divisions. She advised the Governor had asked for greater flexibility in his own budget, and she felt it was a very good idea. If it were possible for the legislature to assist in the area of flexibility, it would be in the best interest of the state to proceed. The budgets for the smaller entities within the AG’s Office, such as the Missing Children’s Clearinghouse were completely General Fund-based. Due to the budget crisis, the Governor and the Budget Office were very restricted in terms of General Fund spending, and many small entities reliant upon that funding were hard hit.

Continuing her testimony, Ms. Del Papa explained the Workers’ Compensation Fraud Unit, for example, would suffer drastic changes come July 1999. Because of the workload "peaks" and "valleys" suffered by the divisions, the AG’s Office wanted to be able to move and use its resources to maximum capacity whenever possible. Under the current situation, it was very difficult to assist the divisions warranting that type of consideration. Ms. Evans asked Ms. Del Papa to submit her proposal to the committee for consideration.

Mr. Hataway stated the current Appropriations Bill allowed transfer of funds between budget accounts on a very limited basis. The Nevada Department of Prisons (NDOP) was one example, and other agencies could transfer up to the maximum limit of their vacancy savings. The action proposed by the Budget Office in the Appropriations Bill was, with Interim Finance Committee (IFC) approval, an agency would have the ability to transfer funds between its internal budget accounts. Mr. Hataway informed the committee the Budget Office did not want those transfers to happen on a "willy-nilly" basis, but for legitimate, documented reasons, that office would be happy to assist agencies with such transfers.

Ms. Del Papa continued her presentation by addressing the performance indicators contained on budget page Elected-24 of The Executive Budget. Those indicators were based on collections and savings to the state through litigation, however, she stated the AG’s Office had always struggled with the request for performance indicators. One of the challenges facing the state’s law firm was the difficulty in predicting with any degree of accuracy what future lawsuits the state might face. According to Ms. Del Papa, there were many internal examinations done, but the AG’s Office, as a law firm, was slightly hampered by a different set of rules. She felt the performance indicators showed, at the very least, how active the office had been and that activity was also supported in budget narrative documentation.

Chairman Arberry inquired about the cost allocation plan, which indicated the AG’s Office anticipated receipt of approximately $5.7 million from assessments against state agencies that receive legal services from the AG’s Office. Chairman Arberry expressed concern regarding that figure, because the amount recommended in the various state agency budgets for the cost allocation plan equaled only $4.7 million. Therefore, it appeared there was a $1 million difference between the revenues to be received by the AG’s Office and the assessments charged other state agencies.

Electing to respond was Mr. Hataway, who explained the ultimate assessment numbers would be based upon the cost allocation plan currently being developed by David M. Griffith and Associates. That plan should be available to the Budget Office soon, to facilitate completion of its final revised recommendation for the cost allocation plan. Mr. Hataway indicated he had asked the AG’s Office to give him, on a position-by-position basis based upon actual hours, a percentage breakdown between the four major revenue sources contained in the budget. Budget sources were appropriations, agency reimbursements, district court assessments, and board and commission charges. Mr. Hataway reported the personnel costs were allocated based upon that overall percentage, along with operating, travel and other cost categories. The exceptions would be for specific General Fund categories, such as tobacco enforcement.

All other non-personnel costs were allocated based on the same percentage basis, and Mr. Hataway stated he did not have any roll-forward debit and credit figures, however, the report from David M. Griffith and Associates would provide that information. Regarding cost allocations, the current method was to "guess" what the actual cost would be for the year 2000, and the Budget Office would not know the actual cost for the year 2000, or the roll forward adjustments until the beginning of that year. The $5.7 million was the best "guesstimate" of what the cost would be with the revenue from those four major revenue sources. The Budget Office was targeting March 1 as the deadline for submitting the revised budget recommendations to the legislature. Ms. Del Papa advised the AG’s Office staff would continue to work closely with that office. Obviously, there were challenges when projecting future budget figures, particularly when situations arose without the prior knowledge of the agency.

Mark Stevens, Fiscal Analyst, advised the current budget figure was $5.7 million for revenue built into the AG’s budget, but other state agencies only had $4.7 million built into their budgets to reimburse the AG’s Office. Mr. Hataway would provide some revised numbers, stated Mr. Stevens, which could or could not present problems; at the present time, the budget was $1 million short. Once the numbers were provided a revision would be required to the AG’s budget, or possibly the other agency budgets, in order to "marry" those two figures.

Mr. Hataway noted the original budget instructions provided to state agencies by the Budget Office advised them to extend their FY 1998 actual statewide and AG cost plan figures into the FY 2000–2001 biennium, and the Budget Office would ultimately reconcile those figures for the committee.

Ms. Del Papa called the committee’s attention to budget page Elected-25, and explained she had been informed there was a newspaper article that referred to a percentage increase in the AG’s budget for the next biennium, based on the figures in The Executive Budget. The Governor’s recommendation for FY 1999-2000 was $16,828,966, however, that figure included federal grant money in the amount of $2,191,844, the actual figure used for FY 1998, and carried over in the current budget. That money was not for agency use, advised Ms. Del Papa, and was from an Alien Reimbursement Grant which the AG’s Office secured on behalf of the NDOP. The funds were included in the AG’s budget, however, it was basically a "pass through" transaction, and the AG’s Office did not use those funds. To arrive at an accurate figure, the amount from that grant should be subtracted from the total budget.

The committee was in receipt of a handout entitled "Office of the Attorney General – Federal Grant Programs," (Exhibit C), which recapped all grant activity the AG’s Office had been engaged in over the past several years. Ms. Del Papa explained that document also showed the additional revenue her office had secured for the state over the last several years, which amounted to over $19 million. Further, she stated, either actually received or pending receipt was an additional $6 million from the Domestic Violence Program. Exhibit C outlined the various grant programs for the committee. One item in the AG’s Office budget was a request to increase one of the current half-time positions to a three-quarter time position, in order to offer additional support in grant administration because so much paperwork and reporting requirements were attached to the receipt of grant funds. Ms. Del Papa felt it was still an advantage to the state to receive that revenue, and it was a service her office was happy to provide.

Mr. Hataway advised when the AG’s Office submitted its budget, it was not known if the Federal Illegal Alien Incarceration Assistance Program would continue. When the President’s budget was published, it was assumed he would recommend a continuation of that program, but the amount was not known. The Budget Office, therefore, projected the same amount as FY 1998 in the current AG’s Office budget, and in the NDOP Director’s Office budget there was a corresponding transfer of those funds to help offset General Fund costs. However, reported Mr. Hataway, since that time the AG’s Office had received the notice of a grant award for FY 1999 in the amount of approximately $2.6 million. Consequently, Mr. Hataway felt it was safe to say there would be roughly $500,000 more which possibly could offset the NDOP Director’s Office budget for revenue flow into the next biennium. The Budget Office would transfer $2.1 million to the NDOP budget and revert the remainder to the General Fund.

Ms. Del Papa indicated she would briefly go over the budget items requested by her office, and also review the Governor’s recommendations. In the administration budget, the AG’s Office had requested three support staff positions. One position was given to the agency for Carson City, however, that position would be transferred to the Las Vegas office. Also received was a half-time social worker deputy AG position, however, a proposed student worker position was not approved.

According to Ms. Del Papa, one of the challenges faced throughout the AG’s Office was tremendous statewide growth, particularly in Clark County. In transportation, the AG’s Office was responsible for representing the Transportation Safety Administration (TSA) and she reported the workload had been incredible, involving a great deal of litigation. Two deputy AG positions were strongly recommended by the entire TSA Board. The Attorney General did receive a deputy attorney general for construction claims, a half-time administrative aid and a half-time DMV/PS position.

According to Ms. Del Papa, she was questioned by the Senate Finance Committee about in-house information services personnel, who were currently working on a ratio of 1 to 135. The AG’s Office had requested three Computer Network Specialists, and one Information Supervising Specialist. The Executive Budget recommended only one Computer Network Specialist and one Information Supervising Specialist. Ms. Del Papa stated her office had made every attempt over the last 8 years to computerize the law office. When she was elected Attorney General, there were only 6 computers in the entire office, and she felt computerization of the office was, and continued to be, a priority.

Ms. Del Papa went on to explain much effort had been put forth regarding high-tech crime, and thanked Anne Cathcart, Sr. Attorney General, and Kevin Higgins, Chief Deputy Attorney General for their leadership in that area. The AG’s Office had partnered with other law enforcement entities and the private sector in that endeavor. She explained business on the Internet was doubling every 100 days, consequently, there would be more and more high-tech crime. Her office had attempted to get ahead of that curve internally, with personnel and task forces in place to manage that area.

The AG’s Office was visible on many fronts, stated Ms. Del Papa. One of the sad things to note was due to budget constraints and other problems, the office had never been able to put in place an actual case tracking system. She noted personnel had considered using the software from the Texas program, which seemed to be a very reasonable approach, but unfortunately, that entire system crashed internally. While she felt the AG’s Office had faced its own challenges, she was very appreciative of the assistance with the tracking system.

Chairman Arberry stated information provided to the committee indicated the AG’s Office had one computer staff position for every 97 computer devices, and the office was requesting two additional computer positions, which would make the ratio even higher.

Ms. Del Papa advised the Senate Finance Committee had also received information regarding the ratio, which she felt was erroneous, and indicated no effort had been made to contact her office for information. The AG’s Office currently had two Computer Network Technicians who supported over 330 computers at a ratio of one to 165. There was the Wide Area Network (WAN) person, the northern Local Area Networks (LAN) administrator, and also a Las Vegas LAN administrator. One person served as the data processing manager for networking program development and forensic processing. Of importance to the committee, continued Ms. Del Papa, was the analysis completed in conjunction with the National Association of Attorneys General, surveying staffing levels within that category. Of the 33 states responding, 16 had a support ration of 1 to 50, four had a support ratio of 1 to 60, four had a support ratio of 1 to 67, and nine states had a support ration of 1 to greater than 68. The lowest support staff ratio was 1 to 15, and the highest was 1 to 135.

Ms. Del Papa advised her office had also contacted persons at the Department of Information Technology (DoIT), who also had a very high ratio; she felt it was a challenge for the entire state. The pay scale for state computer positions also created a challenge, and filling positions in Las Vegas was particularly difficult. Considering the various challenges facing the DA’s Office, Ms. Del Papa felt the computer area warranted serious review. Once again, she advised she did not know where the ratio information originated, but stated it was inaccurate.

Chairman Arberry advised the information was provided by staff for comparison. He noted the Welfare Division was a larger agency and had one staff position for every 257 devices, and DoIT had one position for every 300 devices; that was the reason the AG’s ratio stood out so clearly.

Responding, Ms. Del Papa said she was unfamiliar with the Welfare budget. Her office was not given any information or the chance to respond regarding the ratio of personnel to computer devices, and she would be happy to provide any additional information requested by committee. She pointed out that she did not feel the AG’s Office should be compared to Welfare due to the many millions of dollars spent with reference to the Nevada Operations Multi Automated Data Systems (NOMADS). Chairman Arberry explained he was mainly asking about support staff.

Assemblyman Beers inquired if Ms. Del Papa was seeking someone to develop a data base for the AG’s Office, to which she replied in the negative. Ms. Del Papa indicated her office was seeking a Computer Network Specialist and Information Supervising Specialist. Mr. Beers then asked what duties an Information Supervising Specialist would perform. According to Ms. Del Papa, that position would assist with overall computer programming. Since she was not the most capable person to answer those questions, she would provide the committee with a total analysis of the current computer system. Mr. Beers then made an observation that the agencies who had more successful technology stories to tell, went out and purchased another agency’s system, and then "bent" it to fit their needs. However, those agencies that caused taxpayer "horror stories" were those who attempted to introduce their own systems. He indicated he would encourage the AG’s Office to complete a comprehensive search for systems operating successfully in other states and use that technology rather than start from scratch.

Ms. Del Papa replied that her office had done just that. She invited Mr. Beers, since he had an obvious interest in computer programming, to visit the AG’s Office, where her staff would be more than happy to show him the current system. One of the problems encountered was because her office had attempted to do exactly what Mr. Beers suggested, and was confident it had found the answer with the tracking system used by the State of Texas, with much time invested in that venture. It would have been a much less expensive path to follow, but unfortunately after many months of working with it, the system failed. She was unable to give the details surrounding the failure, but it put her office basically back at ground zero. She assured the committee any time the AG’s Office could borrow technology from another state, or even a sister agency, it would certainly do so, as her agency was not one that felt it had to "reinvent the wheel." Ms. Del Papa advised committee members that Chuck Moltz, Data Processing Manager I for the AG’s Office would be instructed to provide additional information and/or explanation to members.

Continuing her presentation, Ms. Del Papa stated in the human resources area, the AG’s Office asked for and received Deputy AG’s for child support and health care, however, did not receive the requested positions for rehabilitation or child and family services. The office did receive one legal researcher, one legal secretary, and one management assistant position. When the percentage of the state budget given to human resources was reviewed, along with the additional workload, the AG’s Office was still feeling the effects of the Welfare Reform Act, and the continuing programs it generated. Human Resources was an extremely busy area that included outreach programs; the ratio of work generated was extraordinary. Human Resource staff was an area originally hit hard by the Budget Office, however, after appeal from the AG’s Office, additional positions were added in that category.

Ms. Del Papa disclosed her office had asked for a Sr. Deputy AG position under litigation, to handle appellate cases. As that workload became more substantial and complex, the AG’s Office wanted to gradually move toward having one individual in charge of litigation, and the same was true of the appellate area. She explained in the appellate area, because it was a different function, the line deputy who took the matter through the appeal stage had to "switch gears" once that stage was reached. It would be more efficient if the AG’s Office had an appellate division, which was not included in the budget, due to the condition of the State’s General Fund. An additional legal researcher for litigation was approved, however, legal secretary assistance was not approved.

Further, advised Ms. Del Papa, her office was able to obtain the maintenance contracts for computer equipment, software upgrades and the circuit to Las Vegas. A Deputy AG position was requested specifically for contracts, however, it was not approved. Working closely with the Budget Office, the AG’s Office had completed a survey regarding contract review, which Ms. Del Papa felt was a vulnerable area for the state considering the very high dollar and complex contracts it was being asked to enter into. Thresholds had been established along with a format, in order to ascertain the state was protected when entering into a contract. Unfortunately, the additional contract deputy position was not approved, nor was the legal researcher, legal secretary, and a Grants and Project Analyst position.

Ms. Del Papa stated there had been an upgrade on personal computers from 75 percent to 100 percent, with no other upgrades in that category. The AG’s Office was requesting payment of bar dues across-the-board for its deputies, as it was one of the few public entity law firms which did not pay bar dues for its attorneys. It was a relatively small item comparatively speaking, however, from a morale standpoint, it was important to the deputies. Also requested were training officer positions, publications, an interactive courtroom compact disc, and software upgrades, all of which were disapproved. According to Ms. Del Papa, her office was granted $600 for glare screens to comply with the American’s With Disabilities Act. She also explained the request for a Deputy AG in the Real Estate and Financial Institutions category was disapproved. She felt with the crisis that faced the AG’s Office, particularly in Clark County, due to the additional work in that category, it was one deputy position which needed to be reassessed. At the end of the calendar year, Ms. Del Papa advised she had pulled the Open Meeting Law deputy off those cases and reassigned him to bond closures due to his background in banking. That action was taken because there were so many bond closures with so much at risk, which needed to be completed before the end of the year.

Obviously, advised Ms. Del Papa, her office attempted to be as flexible as possible and pull people whenever possible as backup. There was a backup system currently in place within the AG’s Office, and staff worked very diligently with that system. Her office had also asked for two deputies for the Recovery Unit, a legal secretary and an upgrade, neither of which was approved. Although none of the agency requests were granted for the Taxation Department, Ms. Del Papa wanted to explain the impact on the state. Internal statistics proved that each Deputy AG assigned to represent the Department of Taxation generated approximately $2 million in revenue. Ms. Del Papa explained cases in the tax area had become much more complex, with a higher dollar rate at stake. She indicated it was difficult for attorneys, who were already carrying very heavy caseloads, to assume additional responsibility in the tax area when there was so much at risk for the state. She informed the committee she was painfully aware of the challenges all agencies were facing in terms of the budget crisis, however, she felt that requested position deserved review. If additional resources were given to the AG’s Office in the tax area, it would generate financial gain for the state, which would more than cover the expense.

Continuing, Ms. Del Papa explained when the AG’s Office had specialty attorneys, particularly tax attorneys, who had the ability to earn a great deal of money in the private sector, it would be unwise not to keep the expertise of those attorneys in the tax area. Therefore, an upgrade had been requested for those positions, and she felt it was an area deserving of some consideration.

Ms. Del Papa stated replacement equipment, chairs, phones, desks, et cetera, were approved and of the 190 computers requested, 100 were approved. Also approved was additional office equipment such as fax and copy machines. The AG’s Office had asked for an existing Sr. Deputy AG position to be reclassified as an Assistant Chief, which was not approved. There were a few reclassifications approved in the computer area such as the Information Specialist and Computer Network Specialist. Ms. Del Papa felt those reclassifications were very necessary in order to be competitive, particularly in Clark County. An upgrade to Sr. Deputy AG was also requested for three current deputy positions, given the length of service of the incumbents and the substantial amount of work required from those positions, however, that request was not approved.

Ms. Del Papa advised that completed her presentation for the Attorney General Administrative Fund, Budget Account 1030, and she would be happy to answer any committee inquiries prior to commencing with the remaining budget accounts.

Chairman Arberry inquired about Decision Unit E-125, which recommended funding for one new Grants and Projects Analyst position, and asked Ms. Del Papa if her office anticipated receiving additional federal grant funds.

Ms. Del Papa called the committee’s attention to the document entitled "Office of the Attorney General – Federal Grant Programs," Exhibit C, which explained the status of the various grant programs. According to Ms. Del Papa, the AG’s Office aggressively pursued grant funds on all fronts. She praised the work of Michael McCormick, Executive Director, Nevada Prosecution Advisory Council, for his work in that area. The AG’s Office had collected over $19 million in grants during the past 8 years. Unfortunately, she noted, there were often restrictions assigned to the use of grant funds, which left little leeway or flexibility in terms of using the funds for staff positions. The use of agency personnel for preparation of grant applications was one of the areas where the agency attempted to be flexible in order to gain additional returns. The returns to the state had been phenomenal, advised Ms. Del Papa, especially considering the limited staff resources available for preparation of the applications.

Also, explained Ms. Del Papa, the Violence Against Women Grant Program funded projects pursuant to the Violence Against Women Act (VAWA), and there was a significant amount of paperwork that went along with the grant application. She felt it was in the state’s best interest to spend the time required in preparation of those applications due to the financial gain. Ms. Del Papa explained there was very little General Fund money expended statewide on domestic violence, which she felt was becoming a public health epidemic. The AG’s Office was fortunate to attain grant awards, and simply needed assistance in order to continue to bring those grant funds into the state. In the long run, stated Ms. Del Papa, it would be of benefit to the state to have a specific person working on grant applications within the AG’s Office. She noted the rural areas were oftentimes at greater risk, and it was very important for the AG’s Office to continue outreach programs regarding domestic violence in rural Nevada.

Assemblyman Goldwater stated Ms. Del Papa justified the needs of her office very well, but he wanted to articulate his concerns. Ms. Del Papa indicated her office needed a position for a specific deputy AG to do a specific piece of work, and he felt that would be a budget difficulty. If the committee budgeted accordingly, that attorney would not be allowed to help other divisions within the AG’s Office. Mr. Goldwater noted that many bills reviewed by the committee covered a specific subject area, and also contained a fiscal note requesting an additional Deputy AG position. While it appeared the workload for some Deputy AG’s was light, others had incredibly heavy workloads. He inquired if, for instance, there was a deputy AG working as a real estate specialist, could he also assist another deputy working in the financial institutions area? Was there any way, asked Mr. Goldwater, for the committee to assist the AG’s Office in the area of shared workloads, so it would be comfortable in the knowledge that the AG’s Office had the flexibility to hire attorneys with the ability to cover several different areas.

Ms. Del Papa stated Mr. Goldwater had an excellent point, and as she understood Mr. Hataway’s earlier testimony, the Budget Office was going to recommend additional flexibility so agencies could actually make transfers between budget accounts. That alone would really help the AG’s Office, as there were times when it could not provide assistance to entities because of budget constraints, and her office would offer assistance within the parameters of such an action. For example, explained Ms. Del Papa, the Deputy AG positions assigned to taxation did only tax work, and only under extraordinary circumstances would they be moved from that area due to the workload. Her office did provide backup systems, as she had informed the committee earlier with the example of the Open Meeting Law deputy who also assisted with bond closures. According to Ms. Del Papa, her office moved its people as best it could, given the constraints of the current budget method.

Another complicating factor was the federal funding for the Nevada Department of Transportation (NDOT), which added restrictions in terms of transferring deputies. Ms. Del Papa informed the committee her office adopted a policy stating if a deputy was borrowed from NDOT, his time needed to be repaid.

Mr. Goldwater asked if the AG’s Office was similar to a private law firm in terms of assignment of workload, and did it contain the necessary level of associates to "float around" and assist in different areas. Ms. Del Papa advised the legal world was becoming increasingly specialized into particular areas. The AG’s Office had been somewhat of a "hodge-podge" over the years based on funding sources. For instance, she explained, it was always easier to gain approval for a position not based on General Fund monies. Ms. Del Papa stated several years ago she had made a plea for an additional deputy before the Interim Finance Committee (IFC) because the Architectural Board, a fee-based board that paid for services, wanted to purchase additional services. The AG’s Office could not deliver additional services without an additional position. Even though the board was fee-based, the IFC would not approve the position because there was a budget shortfall, and members did not feel it would be fair to approve a position for the AG’s Office and not other agencies. According to Ms. Del Papa, such thinking did not help provide the legal services needed at the time.

Ms. Del Papa advised she used the example of the tax deputies because they were known, quantifiable revenue producers for the state. She advised she understood the budget crisis facing the state, but the AG’s Office was complicated because of the funding sources. There were some agencies that paid 100 percent for AG services, others on cost allocation, and it was further complicated internally by the funding method. Added to that was the federal component with specific complications placed on federal funds requiring restriction to specified areas. The AG’s Office took great pains to make certain all federal requirements were followed.

One of the most helpful things the legislature could do for her office, stated Ms. Del Papa, would be to provide additional budget flexibility. Given the nature of the AG’s Office as that of a law firm, it should be able to share more resources amongst its divisions. She advised her office did try, to the best of its ability, to marshal and move resources where they were most needed.

Mr. Hataway informed the committee the revenue stream was put together as mandated by the Federal Government. Prior to 1993, the Budget Office projected figures based upon what it estimated the dollar amount would be for services provided by Deputy AG’s to various state agencies. For example, the Welfare Division case caused a disagreement with the Federal Government, and resulted in a policy change. The Budget Office anticipated the Welfare Division would need three attorneys and billed the agency accordingly. The Federal Government disagreed with that method and indicated the billing should be done according to actual hours charged, similar to billing by law firms. If, for example, the AG’s Office provided an agency with 3.25 attorneys and documentation of the actual hours worked was provided, the Federal Government would pay the fees. Mr. Hataway explained in 1993 the state switched to the hourly fee billing method for all AG legal staff. That staff now kept hours just like a private law firm.

In projecting figures for The Executive Budget, stated Mr. Hataway, the Budget Office was guessing that the Real Estate Commission would receive 1,000 hours of service during the next biennium. Two years from now, it would take the actual time records, and whether real estate received 975 or 1,050 hours, its budget would be adjusted by a roll-forward credit or debit. Mr. Hataway felt Ms. Del Papa was correct in her assessment of Deputy AG’s who were specifically "pigeon-holed" into NDOT or the Department of Taxation, et cetera. If a particular agency needed legal service, the AG was obligated to provide it. The attorney would keep track of the hours spent working for that agency and during the next budget cycle, the billing would be adjusted in the agency’s budget for services received. There was some flexibility within federal law, stated Mr. Hataway, which worked fairly well, and while the concept of roll-forward adjustment was sometimes difficult to grasp, that was the method used by the Budget Office.

Mr. Goldwater stated that seemed almost in conflict to what Ms. Del Papa had stated. For instance, if the workload for financial institutions was incredibly heavy, Ms. Del Papa had the authority to pull a Deputy AG from one of the other divisions, and as long at that attorney billed the hours to financial institutions, it could be done. Mr. Hataway explained Ms. Del Papa did have the authority to do that, however, billing was not directly paid at the time, but rather was a "catch up" at the end of the two year budget cycle. Mr. Goldwater stated that did not matter, the attorney was still paid the same, so it was just a "catch-all."

Again, Mr. Hataway stated that was true, but it also leveled out the legitimate cost to each agency that received services from the AG’s Office. For example, he explained, the Budget Office was recommending one additional Deputy AG position for the Division of Health Care, Finance and Planning (HCF&P). The block of hours that additional attorney position represented would be added to the actual hours spent and the cost to that agency for the upcoming biennium would be billed accordingly. Two years from now, explained Mr. Hataway, the Budget Office would know what those actual hours were, not only for existing Deputy AG positions, but also for the new positions recommended. If there was not full-time additional deputy service provided to HCF&P, it would be provided somewhere else. It was readjusted every 2 years as the biennium progressed. Mr. Hataway noted from the Federal Government’s point of view, under whose rules and regulations the state operated, the plan had to be approved by the Division of Cost Allocation, U.S. Department of Health and Human Services. Consequently, the state followed their directions, and there were hourly records kept for all attorneys for every agency they served.

Mr. Goldwater advised he understood the process, but it seemed like one of those "silly little government stories," and it was hard to believe it was actually done that way. Mr. Hataway advised the Federal Government provided much support, not only for the AG’s Office, but also to the statewide cost plan. If the state wanted to receive federal funds, it must follow federal procedures.

Vice Chair Evans asked for clarification from Ms. Del Papa regarding whether or not her office anticipated an increased level of grant activity, either application for, or receipt of grant funds, because in Decision Unit E-125, there was an increase for the position of Grants and Projects Analyst. Also, she added, it appeared funding was going through the cost allocation plan, and inquired if federal funds would be paying the support for that position? Could Ms. Del Papa assure the committee federal funds would be used?

Ms. Del Papa advised Exhibit C spoke to grant revenue and not position funding. However, on budget page Elected-27, the request for 1.25 full-time employees would increase one existing .75 position to full-time. That would basically be a "catch up" position, as the AG’s Office was already performing grant work. She reported her office was "stretched to the max" and, in fact, she had borrowed from administrative services in order to provide assistance in the grant area. The positions were recommended based on the condition their existence was tied to the availability of continued federal funding support. That condition was noted in the budget with her approval. The AG’s Office had been, and would continue to be, very aggressive in terms of grant applications. She felt grant funding was very successful because of team effort. For example, John Albrecht, Deputy Attorney General, had been very successful in securing a $250,000 contract from the Food and Drug Administration (FDA) which basically paid for enhanced tobacco youth enforcement. The AG’s Office had been very successful on many different fronts, but that success was tied to continued federal funding.

Vice Chair Evans stated that was part of the question, did Ms. Del Papa feel there were sufficient internal controls to follow the procedure, to which Ms. Del Papa replied in the affirmative.

Ms. Del Papa stated the Special Litigation Fund was a simple budget account. It was the fund established to pay the expenses directly related to investigation, preparation, prosecution, and defense of lawsuits. The AG’s Office had requested an increase in the base budget, however, that was not approved. The recommended base was the equivalent to FY 1997-98 actual expenditures.

Vice Chairman Evans asked for an explanation regarding discontinuation of funding for the Nuclear Waste Project Office, and would the AG’s Office have any reimbursable costs during the new biennium. Ms. Del Papa responded it was her understanding funding for that office was being handled through a separate Governor’s recommendation.

Ms. Del Papa advised she was very pleased to see the Governor make such a strong commitment to the Nuclear Waste Project Office, and the AG’s Office had provided legal counsel to that office for quite awhile. She felt there would be additional public information available soon. Although there was always activity in that area, the principal focus had been on what action Congress would take. There was a real need to maintain the funding level for that office. If and when Congress ultimately made a decision, in all likelihood substantial additional litigation would follow.

Ms. Evans inquired if the AG’s Office was involved in any litigation at the current time in an attempt to regain federal funding for that office. Ms. Del Papa answered in the affirmative, stating she believed the litigation was against the Department of Energy (DOE) in terms of their restriction or actual stoppage of funds to the Nuclear Waste Project Office.

Ms. Giunchigliani inquired if there were any time lines governing the resolution of that issue and what financing was anticipated? Ms. Del Papa replied she did not have those figures available but would be happy to provide specifics to the committee, however, she did not feel the amount was substantial. Ms. Giunchigliani stated she did not feel the question was whether the state would fund the office, but rather how the office would be funded. Mr. Hataway stated the amount under discussion was approximately $700,000 in the Nuclear Project budget. The recommendation was to match the dollar amount that used to be received in federal funds with funds from the state General Fund and the state Highway Fund.

According to Ms. Del Papa, Insurance Fraud was a fairly limited budget due to the fact there was proposed legislation which would provide enhancements in the insurance fraud area. The AG’s Office had been very active during the past several years working with the insurance community, and partnering with agencies who could provide additional information regarding the ability to fight insurance fraud in the State of Nevada. The principal request would, therefore, be put forth via the proposed bill.

Ms. Del Papa reported in terms of actual activity, the Insurance Fraud Unit for the AG’s Office had received approximately 800 new complaints since 1996. It had reviewed, screened, or closed 794 cases through February 9, 1994. Currently there were 356 open referrals that needed to be reviewed, screened, closed or investigated. The AG’s Office had filed a number of complaints, and arrest and conviction figures were up, along with an increase in court appearances. The insurance industry, itself, had been very appreciative of the Insurance Fraud Unit’s efforts, which acted as a deterrent. The industry would continue to assist enhancements for the Insurance Fraud Unit, and via proposed legislation, the industry would agree to provide additional funding.

Ms. Del Papa advised L.Timothy Terry, Director of the Medicaid Fraud Unit was present and would address the committee. By way of introduction, Ms. Del Papa explained she was very proud of the Medicaid Fraud Unit. Nevada was the fortieth state in the country to actually implement such a program. Because the proportion of the state budget allocated to Medicaid was significant, it was critical to have such a unit in place. It was also noteworthy that 50 percent of the unit’s responsibility was assigned to patient abuse, both fiscal and physical. She indicated Mr. Terry had done an excellent job in that regard. He would walk the committee through the budget and report the success story regarding General Fund reversions. In addition to providing tremendous public protection, Ms. Del Papa felt the unit had more than paid for itself in terms of revenue.

Mr. Terry introduced himself, and called the committee’s attention to the handout entitled "State of Nevada – Office of the Attorney General – Medicaid Fraud Control Unit," (Exhibit D), which was a synopsis of the Medicaid Fraud Control Unit’s activities. Mr. Terry stated he would review the exhibit, beginning with the organizational chart which depicted the placement of 13 staff members between three offices in Reno, Carson City, and Las Vegas. The Mission Statement explained the unit was charged primarily with two responsibilities:

• Investigating and prosecuting provider fraud in the Medicaid program; and
• Investigating and prosecuting allegations of patient neglect or abuse at facilities that received Medicaid funds.

The Medicaid Budget presently was approximately $600 million with over 7,000 providers, and, as previously stated, his unit consisted of 13 staff members. In terms of ratios, Mr. Terry felt his unit would be at the "far end" of such a comparison.

Continuing his presentation, Mr. Terry addressed the page in Exhibit D entitled "Recoveries Compared to General Fund Appropriation," which showed the recoveries achieved by the unit under the Civil Monetary Penalty Law, Nevada Revised Statutes (NRS) 422.580. The figures covered FY 1992 to FY 1999, and showed that recovery figures for each fiscal year had exceeded the amount of the General Fund contribution for the state’s share of the unit’s grant. The exhibit page entitled "1998 Calendar Year Information" contained statistics regarding referrals, investigations opened or closed, convictions, and Civil Monetary Penalty Law cases settled. Lastly, explained Mr. Terry, Exhibit D contained four pages depicting pie charts which showed the status of the unit’s cases, what the sources of referrals were, and the percentage of cases divided between criminal and civil proceedings.

Ms. Giunchigliani asked about the pie chart contained in the exhibit which addressed abuse and neglect, inquiring about the source of the percentage figure. She asked if it was derived from hospital or nursing home care, and if not, who referred those cases to the unit. Mr. Terry explained referrals could be made from any facility that was a recipient of Medicaid funding, and typically it was a nursing home or hospital. Proposed federal legislation would expand the unit’s jurisdiction to look at any environment which housed patients, including boarding care and residential treatment facilities.

According to Ms. Giunchigliani, she sponsored legislation this session to bring some regulation to the area of abuse and neglect, and would contact the fraud unit for assistance. She advised she had worked with the unit on other legislation for researching the possibility of referral whether or not a facility received Medicaid funding. Abuse and neglect produced a burgeoning impact on the Aging Division due to the number of investigations for elder abuse. Ms. Giunchigliani felt legislation was needed to ensure those individuals were well protected. Mr. Terry pointed out there was also a proposal to expand the unit’s provider fraud jurisdiction to include not only Medicaid, but to include every federally funded program, such as Medicare or other federal health programs.

Ms. Del Papa stated her office had been very aggressive in attempting to pursue additional flexibility at the federal level in that area. Again, because of the federal component, the AG’s Office had been restricted by the budget in terms of exactly how far it could go. The office had lobbied strenuously to achieve additional flexibility in the area of neglect and abuse.

Chairman Arberry stated the Medicaid Fraud Control Unit showed minimal recoveries in FY 1998, and asked if there was a declining reimbursement to the Medicaid program. Mr. Terry explained the recovery amounts referred to were just the amounts of money recovered through the Civil Monetary Penalty Law. During the first 3 to 4 years of the unit’s existence, almost all its resources were devoted exclusively to provider fraud. Since then, the unit had expanded with additional personnel who dealt with patient abuse and neglect cases. Mr. Terry stated the unit had some years with large recovery figures and other years with somewhat lower figures. Typically, he explained, a provider fraud case would take from 12 to 24 months to investigate and bring to a successful conclusion.

Chairman Arberry advised the information provided to the committee indicated the unit had recovered Medicaid reimbursements of roughly $320,000 in FY 1996 and $145,000 in FY 1997. Mr. Terry felt that information was incorrect and referred to Exhibit D, which showed the unit had approximately $433,000 in recoveries in FY 1997 and in FY 1996 approximately $500,000 in recoveries. Mr. Terry explained those figures referred to everything recovered in either criminal or Civil Monetary Penalty Law cases, which included elements of restitution for Medicaid, costs of investigations, and penalties as allowed under NRS.

Chairman Arberry pointed out his concern was regarding specific Medicaid reimbursements, not the total amount recovered. Mr. Terry stated the figures contained in Exhibit D did show total amounts recovered in all categories, and he would be happy to provide the committee with specific details; Chairman Arberry asked him to please do so.

According to Ms. Del Papa, it was very difficult for her office to predict when a recovery case might conclude, because when litigation was involved, the case could bridge beyond one fiscal year. Further, she advised it was her decision to prepare the recovery rates in total, compared to General Fund appropriations, from the unit’s inception to date. She advised there were always cases pending, however, and those could not be brought to fruition any faster than the system would allow. Once again, she informed the committee, cases often bridged fiscal years.

Mr. Hettrick stated he presumed when the term "recovery" was used, it literally meant money in the bank, and where did the state stand on collection; also, were the recovery figures shown in Exhibit D 100 percent collected. Mr. Terry stated the unit dealt with "cash-on-the-barrel-head" when a case was settled. There were a few exceptions where a provider would be on payment programs, however, of the total amounts shown in the exhibit, probably only about $50,000 went unrecovered throughout the unit’s history.

Mr. Hataway stated that information would be of interest to him in terms of other budgets that dealt with recoveries as well. Unfortunately, collections were a problem throughout state government, and it appeared the fraud unit was doing better than most. The Budget Office would like information regarding recovery of funds so it could perform the necessary follow-up procedures.

Mr. Hataway explained there was one procedural change recommended in The Executive Budget, and that was a substantial decline in the appropriation for the Medicaid Fraud Unit. In the past, it had used appropriations in both years of the biennium, however, it was a fiscal year by fiscal year problem. The unit did not collect recoveries on a uniform basis over the biennium and the Budget Office recommended in the Appropriation Bill that the unit be authorized to secure an advance from the General Fund to meet its cash flow requirements during the fiscal year. By allowing such an advance, Mr. Hataway felt the unit could survive even with the recommended decline in appropriations. Secondly, Mr. Hataway pointed out the unit reverted 100 percent of its appropriation in FY 1998, and it appeared that would also be the case for FY 1999.

Continuing her presentation, Ms. Del Papa stated Kevin Higgins, Chief Deputy AG, and Director of the Workers’ Compensation Fraud Unit since its inception, was present and would present the budget overview to the committee. The unit experienced its fifth anniversary last August, stated Ms. Del Papa, and had been very active throughout the state. Mr. Higgins would explain not only the progress he had made, but also where he expected the unit to go with the impending changes.

Mr. Higgins addressed the committee and presented a handout entitled "Office of the Attorney General – Workers Compensation Fraud Unit," (Exhibit E), which explained the unit’s progress during the past few years, and its direction for the future. The unit was originally created as part of the Employer’s Insurance Company of Nevada, formerly the State Industrial Insurance System (SIIS), reform package in 1993. It was made responsible for prosecuting all workers’ compensation fraud, providers, claimants, and employees, throughout the State of Nevada. That basically was the unit’s role and with the degree of "white collar" crime, staff usually could not handle the caseload.

According to Mr. Higgins, the unit would face some challenges in the upcoming biennium, one of which was the advent of 3-way insurance. He stated he thought the unit would have already handled more cases because of the new insurance program. Most insurance companies operated on the profit idea and because of that, they were very interested in prosecuting fraud, and all had special investigative units. Mr. Higgins stated the unit’s major client, in a sense, would be the Employer’s Insurance Company of Nevada, the source of most of the unit’s cases. In the future, the unit’s clients would also include the 100 or more insurance companies writing workers compensation insurance.

In anticipation of those changes, Mr. Higgins stated legislation was passed last session which would go into effect in July 1999, and would necessitate the posting of proof of insurance by employers. One problem suffered by other states that Mr. Higgins wanted his unit to avoid was trying to figure out with which company a business was insured. He explained by posting proof of insurance, his personnel could walk through the front door of any business such as a "mom and pop’s" pizza parlor and tell what company provided insurance for that business. Further, Mr. Higgins stated the mandatory reporting statute and indexing system for claimants would also be quite helpful.

Mr. Higgins reported last year his unit was actually recognized by the Coalition Against Insurance Fraud as being the most active Workers Compensation Fraud Unit in the country. The unit arrested and prosecuted nearly twice as many workers compensation fraud cases as its closest competitor, the State of Texas. Mr. Higgins noted the unit’s caseload also went up and down and it was difficult to predict funding. For example, he stated he had been worried about the figures for this year, however, recently received a call about a settlement for approximately $1.5 million. That case had been in litigation for over 5 years, and the state would finally be able to recover the money defrauded from the workers compensation system.

Also included in Exhibit E was statistical information which indicated the unit had investigated 5,424 complaints since 1993, had made 527 arrests with 457 convictions, accounting for over $9 million in savings to the state in various ways. Mr. Higgins went on to explain there was a copy of the unit’s quarterly report to the IFC in Exhibit E. Budgetarily, Mr. Higgins advised, the unit had asked for no new positions, but had asked for equipment replacement. One idea being reviewed quite seriously was pooling the investigators from the different fraud units, which he thought might require legislative action to accomplish. That action would enable the units to share investigators when one unit was extremely busy and the other was not. Such sharing of resources would be possible as long as it was allocated appropriately at the end of the fiscal year.

At the end of the year, stated Mr. Higgins, if the Workers Compensation Fraud Unit comprised 30 percent of the budget, Insurance Fraud 20 percent, and Security Fraud 10 percent, the AG’s Office would need to ensure that investigative time had been distributed accordingly during the year. He felt there would always be investigators who specialized in one particular area, but pooling staff would even out the "peaks" and "valleys" suffered by all units in a more efficient manner. The units shared investigators as best they could, but with discrete funding sources there was always the worry that the employers in Nevada who fund the unit through premiums thought investigators were not putting in enough time, thereby causing budget questions. Also, if the Insurance Commissioner thought the insurance fraud investigators were spending too much time elsewhere, there would be a disagreement in allocation of resources.

Mr. Hettrick stated he had much respect for what Mr. Higgins had accomplished with the Worker’s Compensation Fraud Unit, but he had received some questions from a constituent that he felt required a response:

• How was the money allocated from the Employers Insurance Company of Nevada into the unit’s budget;
• How was the allocation determination made, was it based on premiums, or another source; and
• What happened to the balance of the money if the unit did not spend it all.

Mr. Higgins explained the money received by the unit was part of the premium assessment for businesses and that would not change. It would be spread out much differently when businesses insured through different companies, but the Division of Industrial Relations (DIR) assessed those premiums and the fraud unit received a percentage. It was Mr. Higgins’ understanding that funds not spent at the end of the year were reverted to DIR.

Mrs. Chowning stated Exhibit E contained information regarding a misdemeanor ticketing program, and would Mr. Higgins please explain that program to the committee, as it seemed like a very innovative method to "capture" funds through fines and avoid costly court cases.

Mr. Higgins explained first time employer fraud was a misdemeanor, and the current procedure to prosecute that offense involved a complaint filed with the Municipal Court, with a hearing and full Municipal Court-type trial being held. If the unit set up a ticketing program, a greater challenge that first anticipated, the investigators could write a ticket to a business, which would indicate the owner could appear in court on a certain date or, in lieu of a court appearance, could simply remit the indicated fine. Investigators reported when most people were presented with that type of situation, as being done informally by the unit now, they would simply pay the fine and costs with the understanding the next offense would be considered a felony. With the posting of proof of insurance in each business in Nevada, the fraud investigators could basically walk door-to-door to verify insurance.

If a business did not have insurance, stated Mr. Higgins, it was also supposed to post a notice informing of that status. Either way, investigators could write a ticket when necessary, and more often than not, businesses would pay the fine rather that appear in court. The challenge had been producing tickets with set court dates in each court. The AG’s Office would have to enter into an agreement with each court statewide, and select a day to be set aside as worker’s compensation day. Accommodating that requirement across the state had certainly been a challenge, but Mr. Higgins informed the committee that was still the plan.

Ms. Del Papa stated Frederick Schmidt, Chief Deputy AG, had done a tremendous job in the reorganization of the Bureau of Consumer Protection. It was a very important unit of the AG’s Office and something Ms. Del Papa was very strongly committed to personally. Under Mr. Schmidt’s leadership, the bureau had done a tremendous job for the State of Nevada.

Mr. Schmidt advised committee members they were in receipt of a handout entitled "Office of Attorney General – Bureau of Consumer Protection," (Exhibit F), which was an overview of the bureau. He went on to explain last session the legislature had done something very important for the State of Nevada and its consumers by preparing the state to deal with the transition of utilities to a more competitive environment, and to bolster the state’s efforts to protect consumers from basic fraud. The legislature allowed the AG’s Office to combine and create one unit from the Utility Consumers’ Advocate, which had existed for 18 years, the Telemarketing Consumer Fraud Unit, in existence for 5 years with a small General Fund budget, and Securities Fraud and Antitrust Unit. Also added to the resources of the AG’s Office for the first time was a full-time Antitrust Unit, albeit with one attorney.

According to Mr. Schmidt, although the bureau had only been in operation since October 1997, he wanted to explain how the bureau was organized, what it had accomplished, and to relate some success stories. Also, he would provide summaries related to numbers in terms of how that success had exceeded even his and Ms. Del Papa’s expectations of what could be accomplished by the consolidated bureau. Mr. Schmidt stated the first 2 pages of Exhibit F contained a brief narrative of the budget items requested by the bureau. The next page of the exhibit contained the bureau’s mission statement which explained what the bureau’s objectives were in terms of embarking on the new mission of being a broader consumer protection unit for the state. Contained in the mission statement was information regarding the mission of the three units of the bureau, the Utility Consumers Advocate Unit, the Telemarketing and consumer Fraud Unit, and the Antitrust and Securities Unit. There was also a strong influence of cross utilization of resources in the bureau’s mission statement.

Mr. Schmidt referenced the bureau’s organizational and staffing chart in the exhibit, which included the breakdown of staff for each unit. In the Antitrust Unit there was only one Deputy AG, however, Ms. Del Papa had given a paralegal position approved by the 1997 legislature to the bureau, and Mr. Schmidt explained he had added that position to the Antitrust Unit. Also contained in Exhibit F were the specific strategic plans developed by the bureau as the units were formed and staffed, along with a focus of operational goals for the first 2 years of operation. Mr. Schmidt offered to present testimony regarding the unit goals at the prompting of the committee.

Chairman Arberry advised Mr. Schmidt the committee’s major concern was the suggestion of an increase in the mil assessment to the statutory cap of .75 mils, and was that the bureau’s intention.

Responding, Mr. Schmidt explained the mil assessment had not been increased, however, The Executive Budget was built based on utilizing the cap as indicated by statute. Although The Executive Budget was based on raising the assessment to .75 mils, Mr. Schmidt indicated that he did not believe it would need to be raised. He advised the bureau had never fully utilized that statutory cap during his 10 years as Consumer Advocate. The bureau had always maintained a good reserve for a "rainy day," and that day was indeed coming. He stated he would appear before the IFC in March asking to tap into the reserve due to three large unexpected rate cases which would require processing beginning in March in southern Nevada and in both the north and south in approximately 2 months. Those cases involved electric and telephone utilities.

Mr. Schmidt explained the mil assessment cap of .75 was utilized in the budget because the Public Utility Commission based its budget on an expectation there would be no revenue growth in the utility industry over the next 2 years, whereupon an increase in the mil assessment would apply. Rather than disagree with that assumption, which had not proven true over the last several decades, Mr. Schmidt based his budget on the same assumption, that there would be no increase in the amount of utility revenue to which the mil assessment applied. As utility revenue increased with growth of the state, the revenue for the bureau would also increase, as it had historically.

Because he had made that assumption, Mr. Schmidt indicated it was difficult to fit within the current mil tax in order to maintain the level of resources enjoyed by the bureau today. There was no increase in personnel in the Utility Unit and there was a continued and effective cross-utilization of resources between the Consumer Protection Enforcement and Utility Units in helping each other. For example, in the last year, the first successful "slamming" case had been prosecuted against a company who "slammed" telephone customers. That company received a fine, as reflected on the chart contained in Exhibit F. The case was handled by Consumer Protection Unit attorneys rather than Utility Advocate Unit personnel.

Chairman Arberry stated it was his understanding the bureau’s budget was based on the mil assessment being increased to .75 cap, and would Mr. Schmidt please clarify.

Mr. Schmidt advised the budget was based on an increase of the mil assessment to the .75 cap because no increase was projected in the revenue level. Mr. Schmidt did not think that would happen, because he felt there would be an increase in revenue, in which case the mil assessment cap would not be raised. It would only be raised if the revenue flattened. When the budget was prepared in August of 1998, it was based on the growth and revenue amounts from the previous year. In the first 6 months of the new fiscal year, revenue was up $150,000 over projected figures for the work program, which generated reserve money. Mr. Schmidt felt that trend would continue, which meant the current mil assessment level of .65 would not have to be increased. He advised that he had set the assessment level in May 1998, and that figure would carry through to May 1999. Beginning in July 1999, the budget was projected to increase the mil assessment to .75. Once again, Mr. Schmidt stated he did not know if that increase would be necessary, and hoped it could be avoided.

Chairman Arberry asked Mr. Schmidt if the bureau had made any substantial budget requests, and if so, please explain.

Mr. Schmidt responded he had asked for additional resources in several areas which were not approved. Those additional resources would have been very helpful to the bureau in the area of restitution and collections. In Exhibit F, there was a chart which showed restitution in the actual amounts recorded and tracked, where persons received money back; in some instances, the dollar amount was unknown, and the figures were understated. The restitution figure was approximately $5 million in the first 15 months of operation of the unit. Also shown was the money collected from fines, and the figure represented in the exhibit was the actual amount placed into the General Fund. That was money which had actually gone into the General Fund from October 1, 1997 through December 31, 1998. The saving depicted by the chart was the traditional number on utility cases handled during the last year. The most successful was a Nevada Bell case where there was actually a $32 refund credit on every northern Nevada Bell customer’s bill due to the bureau’s negotiations. There was an additional saving in terms of dollar investments that Nevada Bell would make throughout rural Nevada.

Mr. Schmidt advised the resources sought and not approved were additional positions that included an investigator and deputy AG for the Consumer Protection Unit. One of the problems facing the bureau was that investigator staff barely equaled a one-to-one ratio to attorneys. That limited the number of consumer protection cases the bureau could pursue. Unfortunately, the bureau was not able to handle many individual calls or complaints; those were referred to consumer affairs. Direct contacts were not ignored, explained Mr. Schmidt, but most individual complaints were not pursued, unless it could be developed into litigation. Even those that could be litigated and might result in additional money for the state were not often pursued, because there were only a handful of investigators in the unit.

According to Mr. Schmidt, during the 1997 session, he argued for the ability to utilize the utility resources and General Fund resources in a combination that would allow the units to cross-assist each other. That was being done very effectively in both the utility area and the non-utility area. The bureau was very careful not to cross-utilize funds, as there were two separate units in Budget Account 1038. Dollars spent on utility-related matters were only paid for with utility mil assessment funds and dollars utilized from the General Fund could not involve utility matters. However, he explained, the bureau could be more creative with personnel. Tracking mechanisms were in place to ensure utility funds were not being used for non-utility matters, but the bureau was limited by virtue of the positions allowed in the budget. The bureau needed more investigators to do more consumer protection work, as indicated by the numbers show on the chart contained in Exhibit F.

Mr. Schmidt stated the Telemarketing Consumer Fraud Unit, the General Fund component of the budget, never generated more than $250,000 in a single year, and never generated $1 million in restitution in any prior year. It was not always a cost effective practice to go out and protect consumers, however, with emphasis on the financial side, the bureau had continued a level of prosecutions and convictions which were consistent with prior years. In fact, the bureau generated over $1 million for the General Fund. Mr. Schmidt did not feel his bureau could do much more than that if he was not given additional investigator positions, and urged the committee to reconsider his request. If his unit generated $1 million for the General Fund, there would be no additional cost to the state to enhance the unit. All items in the bureau’s budget that were mil assessment funded were granted, however, on the General Fund side the request for new personnel positions was not granted.

Chairman Arberry advised Mr. Schmidt his budget performance indicators did not reflect that need, and suggested he submit supporting documentation to the committee to justify approval of those positions.

Ms. Del Papa explained that budget was also the Missing Children’s Clearinghouse, and part of its responsibility was to locate missing children and protect them from exploitation. The unit investigated a huge number of parental abduction and runaway cases. The performance indicators listed in the budget indicated the number of children recovered or located, the number of cases opened and the number of public contacts and complaints. The unit had been very active and was the unit that interfaced with The National Missing Children’s Clearinghouse. If there was a parental abduction and the child was taken overseas, that unit would deal with the State Department; it was a very active unit. Nevada’s efforts in that regard had been recognized nationally. At the Comdex Computer Conference in Las Vegas 2 years ago, the Crime Prevention Unit held a press conference, and Nevada was the first state in the country to go online with actual photographs and information regarding missing children.

The unit was, unfortunately, a General Fund-based budget, explained Ms. Del Papa, and additional assistance was requested because of the limited nature of statewide resources available. Those resources were based in Las Vegas, due to the population, and coverage in other parts of the state was not as good. The AG’s Office had hoped to secure an investigator or management assistant in the north for the unit, however, no new positions were granted in The Executive Budget. According to Ms. Del Papa, those persons who worked the unit were extremely dedicated, computer literate and did a tremendous job for the State of Nevada.

Ms. Del Papa stated The Executive Budget recommended approval of the Tort Claim Fund budget as submitted. The fund was established for payment of claims that were the obligation of the state, including claims against the state such as automobile accidents, injuries on state premises or highways, and damages claimed for violation of civil rights, et cetera.

Jon L. Hansen, Tort Claims Manager, Litigation Division was present at the hearing, advised Ms. Del Papa, and she was very proud of his performance in that area. He was knowledgeable in the Tort Claim Fund area, and active on behalf of the AG’s Office in terms of the Committee on Benefits challenges. He had done a tremendous job for the State of Nevada.

Mr. Hettrick asked if the Tort Claim Fund included the cost for lawsuits from inmates, and if it did, was Ms. Del Papa aware of the bill sponsored by Ms. Cegavske which stipulated all payments made to inmates had to be applied toward any restitution owing first. Ms. Del Papa replied she was aware of that bill, and her office was in full support. Mr. Hansen stated he also supported Ms. Cegavske’s bill because he felt it made little sense for the state to give money back to inmates when they owed large amounts of money for their defense, or for restitution to victims.

Mr. Hansen explained the Tort Claim Unit was a 2-man unit and had been so staffed for the past 8 years; he was not asking for additional personnel. The Executive Budget determined the current Tort Claim cap, which was $50,000 per cause of action. There was a bill before the Assembly, A.B. 119, which would remove that cap, and he contemplated removal would cost the state $2.5 million, more or less. According to Mr. Hansen, his unit covered general liability, automobile liability, civil rights complaints from both employees and the prisons, and medical malpractice exposures. The current budget figures were approximately $600,000 less than the unit’s actual projected needs. Mr. Hansen stated he had talked to Mr. Hataway regarding that issue and did not feel there was a problem because of the over $2 million reserve, which he felt was more than adequate.

Mr. Hansen noted the projected rates for the next biennium were $139 per full time employee for general liability and civil rights exposures and $117 for automobile exposures. The $117 rate was comparable with what would be paid for $50,000 worth of insurance on a personal automobile, or 25 percent of what it would cost from a commercial carrier. Also, he indicated his unit’s overhead was approximately 10 percent of the budget, and the remainder was paid out in claims. That 10 percent was approximately one-third the cost of a private insurance company doing the same kind of work.

Mr. Hettrick stated the 10 percent example would be a very good performance indicator and could be tracked year-to-year because the unit had absolute control over it. If the unit put such performance indicators into the budget, it would be very helpful to the committee. The other AG’s Office budgets could also contain such performance indicators, and the committee would then have a feel for what had been accomplished with previous allocations.

Mr. Hansen replied that was his intent in mentioning the previous percentage comparisons and to inform the committee he felt his unit was doing a very good job in that area.

According to Ms. Del Papa, the Extradition Coordinator budget was approved by the State Budget Office, with a few exceptions. The Uniform Extradition Law required Governors of each state to cause any person charged in another state who had fled that jurisdiction to be apprehended and returned for prosecution. The Extradition Coordinator budget had remained fairly stable, even though there was a great deal of expenditure. Ms. Del Papa stated her coordinator was a long-time employee of the AG’s Office and had done tremendous outreach throughout the state in the rural and major metropolitan areas, in an attempt to keep extradition costs down.

According to Ms. Del Papa, from 1991 to 1998 the highest amount spent on extradition was in 1994, when the total cost to the State of Nevada was $845,000. In FY 1998, that cost was $535,000. The coordinator had done a tremendous job in working with constituencies and, in fact, had scheduled future training sessions in Tonopah, Las Vegas, and Carson City. The only item not approved in the budget was the printing of training manuals and publications.

Ms. Del Papa noted in terms of money that could be saved for the State of Nevada, one of the areas shortchanged was training, and for a small expenditure the state could recapture the outlay. In essence, she stated, the budget was basically as recommended. Vice Chair Evans mentioned the performance indicators for the Extradition Coordinator budget were much better.

Mr. Hataway advised there was one procedural change recommended in that budget. Statutorily, the Extradition Coordinator had the ability to go to reserve for statutory contingency and draw additional money if needed. However, in order to minimize the impact on that fund, the Budget Office would recommend the unit be given authorization to use the appropriation in both years of the biennium.

Ms. Del Papa noted the Private Investigators Licensing Board was totally non-General Fund money and was recommended for approval as requested. Carol Hanna, Executive Director to the board was a long-time employee and very well thought of. The board enjoyed a good reputation around the state.

Several years ago, there was an agreed upon increase in Ms. Hanna’s salary voted by the board itself, however, she never received that increase. Ms. Del Papa asked that the committee review the matter when the Unclassified Pay Bill was under consideration. There would be no cost to the General Fund. Ms. Hanna was a long-time dedicated employee of the state and Ms. Del Papa felt she would be remiss if she had not brought the matter to the committee’s attention.

Ms. Giunchigliani stated she recently had a conversation with Ms. Hanna regarding legislative changes made which captured all businesses who dealt in the area of background checks and categorized them as private investigators. Many of the small businesses were not investigators, and simply handled such things as background checks for apartment complexes. She understood the board would like to segregate those businesses into a separate area so they did not have to meet the same standards as a private investigator. Ms. Giunchigliani inquired if that could that be done by regulation from the board or was legislation necessary?

Ms. Del Papa stated that issue would be addressed by a BDR request from her office, and she did not feel it would be terribly controversial. She would report the status of that BDR to Ms. Giunchigliani.

Ms. Del Papa introduced Michael McCormick, Executive Director of the Council and former District Attorney of Humboldt County. She stated his energy and enthusiasm were absolutely phenomenal, and he was basically a "one-man show." She indicated her office supplied whatever support it could to help Mr. McCormick, but he was totally committed to the council. Further, explained Ms. Del Papa, there had been major services extended to the rural areas. In the Reno area, Stewart Bell and Sheriff Kirkland participated in the program, marking the first time there was such a cooperative effort between the city attorney, district attorney, and sheriff’s office.

Mr. McCormick explained the council had been formed with the belief that statewide training and education of prosecutors would ultimately save tax dollars. As a former district attorney for 8 years, Mr. McCormick felt there was an absolute need for training of prosecutors. Historically, the state had somewhat ignored prosecutor training. It provided training for law enforcement officers through Peace Officers Standards and Training (POST), and trained judges through the Administrative Office of the Courts, but prosecutors had been left on their own. That lack of training ultimately hurt the system, the victims, the judges, and law enforcement officers.

In reference to the performance indicators previously discussed, Mr. McCormick stated in his 7 months as Executive Director of the Council, that reference was the first he had heard regarding such indicators. He went on to explain during the past 7 months, the council had been pledged over $100,000 in grant funds, which could be used for both training of prosecutors and purchase of equipment. In reference to future grants, Mr. McCormick informed the committee President Clinton had announced a $22 billion grant for prosecution alone, which appeared to have a fairly good chance for passage. That grant application could obviously be handled by the AG’s Office in the same manner as the Violence Against Women Act grant.

Mr. McCormick advised in the past 7 months, the council had received approximately $72,000 from the Violence Against Women Act. He announced that was the first time in the State of Nevada there had been a collaborative effort between POST, the courts, and prosecutors to produce a statewide manual which would cover every aspect of domestic violence, from investigation to prosecution to sentencing. Additionally, there would be five regional training sessions for all three entities simultaneously, which would cover the statewide manual. Never before, stated Mr. McCormick, had the state ever had a collaborative effort and he felt it was heading in the right direction. Until legislation passed during the previous session, Nevada was one of only a handful of states which did not have a prosecutor coordinator training program.

Training was one of the main functions of the Council for Prosecuting Attorneys, noted Mr. McCormick, and it had already hosted three training sessions in the past 7 months. There were 9 sessions scheduled for 1999, (Exhibit G), which would cover training for domestic violence, juvenile violence, representation of local governments, and Driving Under the Influence (DUI) accident cases. Everything a prosecutor needed in the state would be covered in those classes.

Mr. McCormick explained the council was chaired by Ms. Del Papa, and members included Stewart Bell; Noel Waters, District Attorney for Carson City; Robert Estes of Lyon County; Patricia Lynch, Reno City Attorney; Bill Andrews, Boulder City Attorney; and Sheriff Kirkland from Reno was the law enforcement representative. The makeup of council members covered everyone in the state from rural to small and large cities, and even large counties.

Mr. McCormick stated he wanted to address several points:

• The issue regarding use of grant money to fund the executive director position was brought up, and he advised that could not be done. If the state attempted to secure a grant for that purpose it would be called "supplanting." Federal law would not allow that; however, he would continue to look for a private organization who wanted to essentially fund a state agency, but felt it would be to no avail because he had already searched high and low for such an organization.

• Registration fees could not be considered a significant source of funding for the program. The council charged a nominal fee for classes, and those fees basically covered the cost of the class, materials, speakers, et cetera, plus a small profit. If the state attempted to charge registration fees to support the council, it would not be successful because of the very limited training base. Nevada was too spread out with 17 counties, such as Elko and White Pine, where there were three Deputy DA’s.

• Legislative history did not support the Budget Office statement that funding for the council was a one-time appropriation. Mr. McCormick had discussed that issue with several people and, if anything, it was ambiguous at best. There was nothing that clearly indicated it was a one-time appropriation.

• The Governor did support the council, had called Mr. McCormick personally to advise him of that support, and wanted the program to continue. It was critical to continue the program for at least 2 more years.

Mrs. de Braga stated she had some excellent "performance indicators" in her office in the form of letters from various district attorneys and others urging continuance of the program. She asked what level of funding would be required to maintain the current level of service, and would it be necessary to expand that service and/or funding?

Mr. McCormick replied because of current fiscal limitations, he had been asked by the Governor to prepare some figures. The statute which created the Council for Prosecuting Attorneys was somewhat unique, in that it had a "no reversion" clause which seemed to have created somewhat of a stir with certain people. Any money not expended during the biennium remained in the council’s budget. The reason that clause was put into the statute, was in case the council did manage to "score" some private funding for training. The bottom line cost for the program was $100,000 per year, which covered Mr. McCormick’s salary, benefits, and provided nominal operational costs. That was the funding amount necessary to maintain the current level of training. At the end of the current fiscal year, the council should have approximately $83,000 left from the initial $200,000 appropriation. Therefore, the "bare bones" budget would be $118,000, combined with the aforementioned budget balance to maintain the program for the next biennium.

According to Mr. McCormick, the council provided a statewide program for training of municipal prosecutors, county prosecutors, deputy attorneys general, Legislative Counsel Bureau staff, and had opened the program to persons in public service. The program was just getting started and Mr. McCormick stated he wanted sufficient funds to "keep the ship afloat" during the next biennium. Yes, he would like to expand the program, however, with the limited revenues available for the next biennium he simply could not ask for that expansion. He noted the budget request for the council was approximately $340,000, which included the addition of a clerical position, and some additional training equipment. Mr. McCormick informed the committee he could get along without a secretary, if necessary, and would simply continue to perform his own secretarial functions because he believed in the program.

Mr. Hettrick stated he, too, had received several letters in support of the program. Regarding the issue of appropriate fees, however, from the letters he had received from the various district attorneys around the state, they were very appreciative of the program and felt it was very positive. There was a bill being considered which would give forfeiture fine money back to state government, and Mr. Hettrick wondered if, in lieu of such legislation, the counties were informed they needed to help fund the council. Further, he stated he already opposed the forfeiture fine money returning to the state and perhaps it would be very appropriate to use those funds to benefit the counties by using a portion of the money to provide funding for the council.

Mr. McCormick stated he appreciated Mr. Hettrick’s stand, and stated it would be excellent to have a funding source other than just General Fund money, such as forfeitures or assessments against criminal defendants.

Mr. Dini stated he wished to inform committee members two of the three district attorneys in his district had visited him, Robert Estes from Lyon County and Janet Hess from Storey County, to voice their strong support of the program. They both related they felt it was a necessity for the program to continue, and Mr. Dini wanted to make that part of the record.

Vice Chair Evans agreed there had been some important work done. She asked if Mr. McCormick would resubmit budget figures for the council so the committee knew where it would "land" regarding the dollar amount. Currently the balance forward was shown as all except $7,000 from the first year, but only reflected the personnel and out-of-state categories totaling $83,000, and the budget request indicated the council needed $340,000. Basically, she indicated she was requesting clarification and figures regarding the whole package, and the bottom line figures.

Ms. Del Papa responded she would be pleased to submit another budget page. She felt the bottom line figure, or what was needed to keep the program afloat at the current time, was estimated to be in the neighborhood of $118,000 over the biennium, given what would be remaining as a carry-forward. Again, she stated Mr. McCormick would pursue every known grant, but oftentimes grant money could not be used for salary.

Ms. Del Papa advised the committee that Budget Account 1042 was not an agency request, but had been added by the Budget Office. The Batterer’s Certification Committee, in conjunction with the Domestic Violence Ombudsman’s Office, based in the AG’s Office, oversaw standardization and other policy matters relative to domestic violence offenders and prevention, as well as assisting with statewide training. The base budget indicated funding for a .51 full-time employee/ombudsman, and that figure should read .75; that position had been filled and was based out of the AG’s Office in Reno. Operating expenses had been transferred from one program expense category to the standard operating category for better identification and tracking.

Mr. Hataway advised at the time the budget was prepared, the correct figure was .51, and at the last IFC meeting, additional revenue was brought in to increase it to .75, and it should be corrected in The Executive Budget. The AG’s Office needed to provide a revised budget page to the committee in order to sustain that .75 figure through the next biennium.

Chairman Arberry stated he needed to revisit Budget Account 1032, Attorney General Private Investigators Licensing Board. Decision Unit M-200 recommended eliminating expenditures for the board through the AG’s cost allocation plan. The Governor recommended the board pay for its legal services by the hour, in the same manner that other professional licensing boards paid for AG’s Office services. Further, it was noted that the budget also stated investigator services paid through the cost allocation plan were no longer necessary. Chairman Arberry asked for clarification of that issue.

Mr. Hataway replied the Budget Office worked with the executive director of the Private Investigator’s Licensing Board regarding that issue. All occupational licensing boards, with few exceptions, were billed for actual services provided by the AG’s Office. Those services were provided depending upon the particular board’s workload. According to Mr. Hataway, the Budget Office felt it would be more appropriate to put the Private Investigator’s Licensing Board in the same category as the other occupational licensing boards.

Ms. Del Papa stated the information she had received indicated by placing the board’s investigator position into its budget, there would be an increase in personnel expenses, however, those expenses would be directly offset by the decreased personnel expenses to the AG’s Administrative Fund. Approval of that Decision Unit of The Executive Budget would result in an actual budget reduction of approximately $97,000 for FY 2000 and $54,000 for FY 2001 when compared to the current fiscal year’s work program. Mr. Hataway explained the Private Investigator’s Licensing Board would still be paying for its legal services, but it would be on a direct billing basis and not an allocation basis. The intent was to place it on the same basis as other typical small occupational licensing boards.

One additional issue regarding that budget was the creation of an unclassified position last session for the executive director of the board. Mr. Hataway stated he was not sure if anything was lost in the translation, but that position would remain an unclassified position. If the director was not paid the full amount authorized in the Unclassified Pay Bill, it would be up the board to make a decision regarding a pay increase.

Ms. Del Papa advised she would submit a separate page regarding the increase in pay for the executive director of the board. She was informed the board itself voted to provide the director a salary increase and it was not reflected in the Unclassified Pay Bill. She knew there was a limit on salary caps, however, it was non-General Fund money, the board had previously voted for the raise, and it should be in a special consideration class.

Ms. Giunchigliani stated the same circumstance occurred last session, and so the AG’s request was not unprecedented; however, additional information would be helpful.

There being no further information to come before the committee, Chairman Arberry adjourned the hearing at 10:35 a.m.

RESPECTFULLY SUBMITTED:

Carol Thomsen,

Committee Secretary

APPROVED BY:

Assemblyman Morse Arberry Jr., Chairman

DATE: