The Committee on Ways and Means was called to order at 8:05 a.m., on Monday, March 22, 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

Mrs. 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. John Marvel

Mr. David Parks

Mr. Richard Perkins

COMMITTEE MEMBERS ABSENT:

Mr. Robert Price (Excused)

STAFF MEMBERS PRESENT:

Mark Stevens, Fiscal Analyst

Chairman Arberry announced the first item for committee review would be A.B. 268.

Chris Giunchigliani, Assembly District 9, explained A.B. 268 was a bill introduced by the Committee on Elections, Procedures and Ethics. She indicated she had requested the legislation over a year ago, and it dealt with the Economic Forum. Prior to passage of the 120-day session, she had not anticipated that the original May 1 date, Section 1, number (e), would be too late for the legislature to access numbers and make decisions. The bill was, therefore, amended based on testimony from Carole Vilardo, Nevada Taxpayer’s Association, who suggested a two-tiered date, the first being February 25, which was moot at this point in time, and the second April 25, which would capture the first and second quarter report. The change from May 1 to April 25 might not seem to be a significant difference, however, it would allow staff time to process the numbers. Also, explained Ms. Giunchigliani, the current language of the bill allowed a 5-day "breather" on either side, up to or including the actual due date, i.e., "After February 20^th but on or before February 25^th***." That same language applied to the April date in Section 1, number (f). The bill was also amended to include a startup date upon passage and approval.

Vice Chair Evans stated she was pleased to see such legislation, because the legislature was concerned that the information from the Economic Forum was not available until May 1, and staff would need all information by mid-May if the session was to meet the 120-day requirement. While the April due date appeared appropriate, she asked what would be achieved by the February due date, since that was not long after the Economic Forum met.

Regarding the April date, Ms. Giunchigliani stated the due date should not be pushed ahead too far because the report might not be complete and staff would be unable to utilize it for the necessary information. The February date was included due to Ms. Vilardo’s testimony, which suggested inclusion of a secondary date for reporting, whereby Legislative Counsel Bureau (LCB) staff could capture first and second quarter figures. Vice Chair Evans asked if the idea was to catch the second quarter of the fiscal year in February and the third quarter in April; Ms. Giunchigliani stated that was correct.

Mr. Marvel inquired if Ms. Giunchigliani had discussed the legislation with Budget Office or LCB fiscal staff. Ms. Giunchigliani replied LCB fiscal staff reviewed the bill and were concerned with the dates contained in the original version of the bill. That was the reason for the change from a set due date of April 25 to a due date of, "After April 20^th but on or before April 25^th***." There had been no objection regarding the addition of the February date. Mr. Marvel felt if the information was available, it would be helpful to access the second quarter figures, and would keep the legislature up-to-date with projections. Ms. Giunchigliani stated she felt it would establish a pattern, which was what Ms. Vilardo wanted to accomplish, in order to provide the legislature with a "window" to view February numbers.

Vice Chair Evans advised another consideration, in terms of the February date, was that while the Economic Forum used information regarding the status of tax revenue, it also solicited information from both Budget Office and LCB staff. So, at a time when Budget Office and LCB staff was extremely busy with legislative matters, i.e., January and February, she was concerned the February date would overburden their workloads. Vice Chairman Evans suggested the committee weigh the usefulness of those February figures; she stated she was 100 percent behind the April due date, which would allow the legislature to capture additional time to utilize that report.

Ms. Giunchigliani suggested perhaps LCB staff could respond regarding the February due date; she did not feel the Committee on Elections, Procedures and Ethics would voice any objections regarding removal of that date. She felt moving the original due date to April was the key part of the bill.

Mr. Dini inquired when gaming revenue reports were due. Mark Stevens, LCB Fiscal Analyst, replied gaming revenues were due on April 24, so LCB staff would be unable to capture a ballpark figure for the last month of the quarter. Using a later date in April would provide availability of sales tax figures, plus a ballpark figure on gaming revenues. There would be some advantage to an earlier due date, as the legislature would have additional time to react to the projections. As far as the February projection, he felt that should be a committee policy decision, and it should also be reviewed to determine what value that report would provide to the legislature. He advised staff was very busy during that period of time and it would be difficult to compile the figures necessary to appear before the Economic Forum with revenue projections. Even though the process required much work, if the information would be valuable to the committee, Mr. Stevens advised LCB staff would comply.

Ms. Giunchigliani inquired of Mr. Stevens if the language in the bill regarding the April date would allow staff to capture those projections. Mr. Stevens stated use of the April 20 to April 25 due date would allow staff to secure the initial gaming numbers, and he suggested perhaps the Taxation Department could provide the sales tax figures a few days early. Ms. Giunchigliani stated, based on LCB staff concerns, and if the committee wanted to process the bill, she did not feel there would be any objection to eliminating Section 1, number (e).

Mr. Perkins asked if the legislature could request the report on the gaming revenues to be completed any earlier. Mr. Stevens advised that would be difficult and explained LCB did not currently have the official information from gaming, because of required adjustments, and the official numbers were not available until the beginning of the following month. If the report provided estimates of revenue, in percentages, that would assist LCB and Budget Office staff in projecting revenue figures.

There being no further testimony forthcoming on A.B. 268, Chairman Arberry closed the hearing, and opened the hearing on A.B. 323.

Joe Dini, Jr., Assembly District 38, indicated he sponsored the bill because of his continuing support for agriculture. Last session, the legislature created the Advisory Council for Organic Agricultural Products, with an appropriation of $15,000 for salary and per diem. The committee would hear testimony from persons who were experts in the organic agricultural area regarding the help needed to continue the council. Mr. Dini stated organic agriculture was a new field in Nevada, and he wanted to guarantee that when a person bought produce labeled organic, they were indeed purchasing organically grown food. He asked for the committee’s continued support by the appropriation of $15,000 for per diem and travel expenses for council members, and also for program support, promotion and public outreach, so it could educate the people of the State of Nevada regarding organic foods.

Paul Iverson, Administrator, Division of Agriculture, advised the committee that present with him at the hearing were Randy Bradley, manager of the organic program in the division, Virginia Johnson, chairperson for the council, and Larry Hendrickson, a member of the council. Mr. Iverson stated the division was very pleased with the progress made in the organics program during the last biennium. It required a great deal of time to create an operational program, and it could not happen overnight, as the committee was well aware when it approved the funding for the council last session. The council members authored regulations which were presented at public hearings and ultimately adopted. Mr. Iverson noted there were 12 producers currently certified in Nevada. Division staff had been through organic certification inspection training, and would teach individuals what needed to be accomplished before they could be registered as an organic grower. The division received applications on a daily basis for organic grower status, and it took a great deal of time to review records, inspect sites, and actually present an organic certification.

According to Mr. Iverson, the organic program in Nevada had a very bright future and was a very important "nitch" for growers; there were many individuals currently interested in organic products. He advised one of the problems was funding. The appropriation of $15,000 from the last legislative session was specifically allocated for per diem and travel costs for council members. The division had no funding whatsoever for outreach or education programs. The request contained in A.B. 323 would provide the council with the necessary funds to maintain an outreach program to advise the citizens of Nevada about available organic food sources, and also what was necessary for producers to gain certification as an organic grower. Mr. Iverson indicated organics in the state would be a matter of supply and demand, i.e., if persons were asking for additional products, farmers and ranchers would produce more products.

Mr. Marvel asked if funding was not provided, would the program be disbanded, or was there a possibility it could be funded by the producers, or self-funded. Mr. Iverson replied the organic program was very much like the education program in that the division was not going to let it disappear, and would maintain the program as best it could. The problem was if the council did not receive funding, it would be difficult to maintain operations, because members volunteered much of their own time, and when actual meetings were scheduled, he felt they should be reimbursed the same as other board and council members. According to Mr. Iverson, the regulations were on the books, and an organic program had been established, which would continue to grow. The division would not allow the program to terminate, but without sufficient funding for outreach and maintenance of the council, the program would not have the potential for growth that it needed.

Randy Bradley, Division of Agriculture, stated he would provide additional information about the organic program. The council adopted regulations which went into effect in April 1998, however, that did not provide much of an advance on the growing season, and as word of the program spread, more and more participation was anticipated. Mr. Bradley indicated, based on applications and inquiries already received over the past few months, the council could anticipate an increase in applicants, which he felt would continue throughout the course of the year. The six members of the advisory council had been appointed;

• Four members represented organic growers;
• One member represented the retail industry; and,
• One member represented conventional agriculture.

He reported the council had been very active in supporting the organic program via policy recommendations and public education regarding organic growing and certification. Recently, Mr. Bradley stated, an employee of the division had undergone a very intensive training program for organic inspectors. The division developed a web page specifically for the organic program, and used that site to provide information on the program, as well as providing division and grower contacts. The last year was the first full year of operation for the council, which had anticipated receiving approximately 10 to 15 applicants, and ended the year with 12. Mr. Bradley indicated the State of Idaho began with less than 20 applicants during its first full year of operation.

According to Mr. Bradley, there was a time lag between establishing the program and determining eligibility for the many growers. It was not a program that growers could convert their crops to overnight due to the stringent requirements. He explained the plan for the current year was to concentrate on additional education regarding the program, not just grower certification, and also what the consumer could expect when buying produce labeled as organic.

Mr. Iverson once again addressed Mr. Marvel’s inquiry regarding the possibility of the program becoming self-supporting. He advised the whole focus of the program was to become self-supporting. There would come a point where the program either worked or it would need to be discontinued. It was the intent of the division and the council to ensure that the program became self-supporting as far as payment of council members’ stipends, salary, and per diem, plus any costs associated with the program incurred by the division.

Mrs. Chowning noted Nevada inspectors were not fully trained at the present time, and asked how consumers would know that products were truly organically grown unless they had been inspected in other states. When consumers entered a store such as "Wild Oats" in Las Vegas, exactly how were they assured the products had been organically grown, did the division depend on other states for the inspection process and, if so, was there a seal that indicated such inspection.

Mr. Bradley advised that nearly every state had a certification program for growing and processing products sold as organic. Some were private and some public organizations, however, each agency completing inspections had a set of standards, all of which were similar, and those agencies issued a seal and other documentation which indicated the product had been produced and handled under the organic standards. When a vendor sold those products, they were required to display information demonstrating that the products were certified as organic. Mr. Bradley stated the inspector training had been completed and the division was in the beginning process of examining some products on the market to make sure they did comply with the standards under which they were certified.

Mr. Marvel asked what constituted organic growing and what type of fertilization could be used. Mr. Bradley replied it was a complicated procedure, and there was a very long list of materials including fertilizers, chemicals or other synthetically derived substances that could not be used in the growing or handling process. That list had been developed over the years as a result of a consensus among the organic community regarding substances that should not be used. Eventually the federal standards, which were still in the process of being adopted, would dictate exactly what could or could not be used by organic growers. In the interim, Mr. Bradley explained, the regulations adopted by Nevada were on a par with those existing in other states. There was an organization based in Oregon that reviewed brand name products for eligibility for certification, and Nevada had recently become a member of that organization. Other than that, he stated, most synthetically derived fertilizers, as well as pesticides, were not allowed. Mr. Marvel then inquired what fertilizers were utilized in organic growing. Mr. Bradley stated organic growing basically used the same elements used in conventional agriculture, but not in the same form. He explained fertilizers were typically used in the form of compost, or mined materials, and practically anything not synthetically produced was eligible for use.

Appearing next before the committee was Virginia Johnson, who advised she and her husband owned Custom Gardens, a certified organic produce farm in Silver Springs. They were small producers that had been in business for approximately 10 years and had been in line for certification with the onset of the program. She advised she was chairman of the council, and wanted to address the current need for continuing support from the legislature. Ms. Johnson stated the council had held meetings throughout the state and was proud of the fact there were 12 organic growers certified during the first year. Even though it had been 2 years since last session, the certification program had only been in place for 1 year.

As mentioned earlier, Ms. Johnson stated, as the council researched organic programs, it found many states began programs with only a handful of producers. She felt once news of the program spread, more and more producers would come on board. Ms. Johnson indicated the council had received many inquiries, however, a grower could not become certified overnight. Further, she explained the decision by a grower not to use chemical or synthetic pesticides did not ensure entry into the program. The requirement was for a 3-year period without using the chemicals before certification, and the rules, regulations and record keeping were very stringent.

Ms. Johnson stated the council had enjoyed good attendance at its meetings from those interested in the program from the general public, consumers, and extension persons. The meetings were very informative and the council was happy it had the per diem allowance necessary to hold those meetings. Without public outreach money, without being able to publish a brochure, and without being able to reach producers statewide to let them know the program was available, it would not progress as quickly as the council would like.

Next to address the committee was Larry Hendrickson, an organic apple grower from Washoe Valley. He stated he felt A.B. 323 was a "win-win" situation, because it was good for the producer and also the consumer. The organic food industry was one of the fastest growing segments of the economy, growing by 20 percent a year. The "Wild Oats" store in Las Vegas was recently able to open its third organic food outlet. The bill would help Nevada producers receive a share of the "nitch" industry by not importing organic food from out-of-state.

Mr. Hendrickson then referred to an article from "The Grower" magazine, March 1999 issue, which indicated the United States Department of Agriculture (USDA) had recently completed a survey of produce in supermarkets around the country. That survey indicated 70 percent of the fresh produce contained at least one detectable residue of a pesticide, and 6 percent contained a pesticide that was not approved for use on that particular produce. Detectable amounts referred to extremely small amounts, and the conclusion from USDA scientists was that the produce was safe. He stated the organic industry continued to grow because people wanted to make their own decisions about safe produce rather than relying on the government’s decisions. Mr. Hendrickson felt the bill would help in the area of outreach, would provide additional consumer protection, help police the program, and help ensure that Nevada growers got their share of the "nitch" industry. He urged the committee to pass the bill, which would allocate the funds necessary to initiate the outreach program and provide the "seed" money during the growth period in Nevada’s organic agriculture.

There being no further testimony regarding A.B. 323, Chairman Arberry declared the hearing closed. The next item for committee consideration was A.B. 370.

Bonnie Parnell, Assembly District 40, advised A.B. 370 would determine the amount the state paid for its active and retired employees’ health insurance package. Although The Executive Budget did include rates, it was necessary to pass legislation or those rates would drop to zero on July 1, 1999, and the bill would ensure that did not happen. The current amount paid by the state was $264.51 for employees and $149.02 for retirees. A.B. 370 would raise the rates during the first year of the biennium by 24 percent to $328 and $185 respectively. The bill would further raise the second year amount by 12 percent to $367 and $207 respectively.

According to Ms. Parnell, those amounts were only slightly different than those contained in The Executive Budget. She called the committee’s attention to the handout, Exhibit C, which showed a breakdown of amounts requested by the budget compared to the bill request for both years of the biennium. The legislation was requested by the State of Nevada Employees Associations (SNEA), and Ms. Parnell stated Bob Gagnier, Executive Director, SNEA, was present at the hearing, and would present testimony on A.B. 370.

Mr. Gagnier thanked Ms. Parnell for introducing the bill, and reminded the committee that last session similar legislation was almost lost in the "shuffle" and was not introduced until late in the session. Even though the allocation was included in The Executive Budget, Mr. Gagnier advised a bill also had to be passed in order to accomplish the funding. He noted the amounts appeared to be substantial rate increases, but there had been much previous discussion about the problem with the state health plan and the need for rate increases. Mr. Gagnier stated he assumed the committee would want to wait until much later in the session to address the bill, in order to amass as much information as possible regarding the status of the state’s health plan, which might necessitate minor adjustments to the bill.

Mr. Gagnier noted the reason the amounts in the bill were not exactly the same as those in the budget, was because the legislation was prepared long before the budget was submitted. He urged the committee to change the amounts to match those in the budget if it so desired. For those who thought the rates were extremely high, he explained that according to a Department of Personnel survey completed last fall, the average amount paid by Nevada public employers was $389 per month, which did not include any rate increases during the current year. The amount sought in the bill, even for the second year of the biennium, was considerably less than the average paid by public employers in the State of Nevada.

Mr. Marvel asked if the fiscal note on the bill was correct. Mr. Gagnier replied he had not seen the fiscal note, however, the amounts were in The Executive Budget. Mr. Marvel then asked if the bill would require modification. Mr. Gagnier replied he suspected by the end of the session there would be more detailed information regarding the status of the state’s health plan, and if there was a need for additional increases. The increases depicted in the bill matched the increase, percentage-wise, of that charged to dependents effective January 1, 1999. Depending on the state of the health plan by the end of the session, the amounts might need to be amended.

Danny Coyle, President, Retiree Chapter, SNEA, thanked Ms. Parnell for introducing the bill and urged its passage. He stated health costs were always first and foremost in the minds of retirees, as well as cost of living increases, so the bill was near and dear to the Retiree Chapter’s heart.

Marty Bibb, Executive Director, Retired Public Employees of Nevada, advised his organization’s members consisted of state, city, school district, and county retirees. In support of its state retirees, the organization supported A.B. 370, which considered the rising cost of health care, and the subsidy received by retired state employees. Mr. Bibb stated he recognized retiree premiums were part of the larger picture, which dealt with the state’s entire group insurance program.

Next to testify before the committee was Jim Richardson, representing the Nevada Alliance Faculty, who stated he also wanted to go on record supporting the bill. He indicated a bit of history might be helpful for new members of the committee, and advised he considered A.B. 370 somewhat of a "catch up" bill. Last session the committee did not allocate any increase during the first year of the biennium, and a 4.5 percent increase the second year. Because the medical Consumer Price Index (CPI) continued to rise, chapter members were quite dubious about those percentages. It turned out that those members were, in fact, correct. Mr. Richardson stated the current bill contained a proposed increase in the state’s share of insurance premiums for a number of reasons, and he felt one reason was to act as a "catch up" for the current biennium, because insufficient funding had been allocated to address the inflationary cost in the health care area last session. He advised a task force had been created with Assemblyman Parks as a member, and no doubt the committee would be hearing further testimony regarding the various health insurance problems.

Karen Gibson Parker, representing the classified staff and Management Council at Western Nevada Community College (WNCC), and the classified staff of Great Basin College in Elko, stated the staff at WNCC and Great Basin College strongly supported A.B. 370. The bill would increase the state’s share of the cost of premiums for the state group health insurance program during the next 2 fiscal years. Ms. Parker stated staff felt that was an important first step in addressing the immediate problem of adequate health care benefits for state employees. By adjusting the funding level to maintain the current system, the state would then be given the opportunity to explore various health benefit options and develop an improved and comprehensive health care plan for its employees during the next biennium.

When WNCC and Great Basin College staff first gathered as a committee, Ms. Parker advised one of the main concerns was the lack of information; staff had been hearing rumors and already knew that health insurance deductibles and co-payments had increased. According to Ms. Parker, staff became aware that the Governor and legislature effectively eliminated the Committee on Benefits, via receipt of a statement from the Nevada Faculty Alliance regarding the changes. The overwhelming response from staff was that everyone was very concerned about the health insurance problem, and health care benefits. Ms. Parker stated when staff realized the bill would be heard, she was elected to appear before the committee and present their views. She stated she knew state employees were very concerned about the issue, and college staff was using a proactive approach rather than complaining about the loss of benefits, and would attempt to work with all concerned to arrive at a viable solution.

Don Hataway, Deputy Budget Administrator, Budget Office, advised the committee that his office did support the bill, but encouraged the committee to change the figures to match the rates as reflected in The Executive Budget, or as finalized in the committee’s approved budget. The amounts in the bill were rounded to the nearest dollar, but with over 20,000 employees involved, the fiscal impact of those rates could have an effect on the budget. Further, Mr. Hataway explained he was not familiar with the genesis of why those specific rates were in statute, because as part of the fringe benefit package for existing and retired employees, rates were built into the budget via the fringe benefit rate structure. One option the committee might consider was amending the bill to include a generic statement, which indicated rates would be set on a biannual basis by the legislature. Regarding Mr. Marvel’s questions about the fiscal note, Mr. Hataway advised those numbers were correct.

With no further testimony to come before the committee on A.B. 370, the hearing was closed. Next for committee review was A.B. 398.

Mr. Gagnier informed the committee A.B. 398 was sponsored by Chairman Arberry, and he wanted to speak in favor of the legislation. SNEA had also sponsored legislation to increase longevity payments, S.B. 113, which was under consideration by the Senate Committee on Finance. The area of longevity pay for state employees was sadly behind counterparts in local government. He drew the committee’s attention to Exhibit D entitled "Comparisons of Various Longevity Pay Systems Within Nevada," which contained information relevant to longevity pay. Mr. Gagnier explained the first page of the exhibit showed the various longevity pay rates for a 10-year employee, with state employees receiving the lowest benefit at $250. The second page of the exhibit depicted how various local governmental entities arrived at longevity payment amounts for employees. Most entities used a formula based on percentages, however, the state had used a flat dollar amount since the career incentive pay was established in the mid-seventies, and the base amount had never increased. The only change ever made was the cap, which changed from 25 to 30 years of service.

Further, explained Mr. Gagnier, the third page of the packet, contained a comparison between various local entities and the state for longevity payments, at 10-year intervals, to an employee earning $30,000 per year. Mr. Gagnier reminded the committee that longevity payments also applied to unclassified employees, and not just classified employees. The last page of Exhibit D contained a comparison between the current law, and proposed legislation, S.B. 113 and A.B. 398. The senate bill proposed a larger payment up to 18 years of service, the same amount for 19 years of service, and lesser amounts from 20 to 30 years of service. The assembly bill contained a smaller fiscal note than the senate bill. Mr. Gagnier stated passage of either bill would address the problem of longevity pay and provide greater incentive for career employees.

There being no further testimony to come before the committee regarding A.B. 398, the hearing was closed. The next bill for committee consideration was A.B. 417.

John Marvel, Assembly District 34, thanked Mr. Dini for assisting with the introduction of A.B. 417, which would provide assistance to Lander County, and invited Mike Baughman, Ph.D., President, Intertech Services Corporation to address the committee.

Dr. Baughman stated he was present at the hearing to represent Lander County, and introduced Leon Aberasturi, Deputy District Attorney, Lander County, and Robert Estes, District Attorney, Lyon County. He explained the bill requested an appropriation in the amount of $200,000 to cover costs incurred by the trial of Kyle Ray and Colby Becker for the murder of Kyle Ray’s parents and sister. According to Dr. Baughman, it was a complicated case and the reason Mr. Estes was present was because, as Lyon County District Attorney, he would be prosecuting the case. The requested allocation was the amount of the expected expense for the case, which was an expense Lander County could not have anticipated, just as it could not have anticipated the crime itself. According to Dr. Baughman, in terms of Lander County’s financial status, it was in no shape to bear the burden of the expense, and he encouraged the committee’s support for the bill.

Mr. Aberasturi stated the reason Mr. Estes had taken over the role of special prosecutor in the case was because Hy Forgeron, Lander County District Attorney, was co-counsel on the defense when the case was first considered in May or June of 1998. That created a conflict for the District Attorney’s Office, and it had to find a special prosecutor for the case. Mr. Aberasturi then referred to the packet of information presented to the committee (Exhibit E), which he hoped would provide answers to possible questions. He advised he wanted to deal with the issue of the county’s inability to afford the trial costs, and explained it was a small county with a population of approximately 7,000. Given the state of the economy, it did not have access to the funds necessary to finance an event such as the trial. He explained the combined ad valorem tax rate was at the cap of $3.64 for the town fund. The county simply did not have the means to raise taxes, and there was no room to do so because of that $3.64 cap.

Mr. Aberasturi also explained Lander County was dealing with a number of unfunded mandates, with the major issue being its landfill dump site. The landfill project created a huge expense to the county because of changes mandated by the federal and state Environmental Protection Agencies (EPA). According to Mr. Aberasturi, Lander County was forced to close existing landfills and create new ones under the EPA guidelines, which were extremely stringent and very costly. The state required Lander County to put money away now for the construction of a landfill in 15 years. According to Mr. Aberasturi, that would amount to approximately $100,000 per year of taxpayer’s money allocated to a special trust fund to deal with that cost. The exhibit also contained the figures for unfunded mandates, listing the landfill operation as $337,000 per year, which was a specific figure and dealt with landfill operation contracts.

Further, stated Mr. Aberasturi, the State Fire Marshal had threatened to condemn Lander County’s existing jail facility, which necessitated prisoners being housed in other county facilities at quite a cost. Lander County was in the process of building a new jail, and was required to bond, which took 19 cents of the tax cap. He advised as the committee reviewed Exhibit E, it should note that Lander County had been hit with quite a few big budget items in the last several fiscal years. The other "kicker" in the situation was the drop in the price of gold, as Lander County was dependent on mine revenue. Mr. Aberasturi stated rural northern Nevada counties were all facing the decline in mining revenue, which also resulted in population loss because of mine worker layoffs. For example, a layoff of 200 persons might not seem like much, but with each 200 jobs lost went families, which could cause the county to suffer a loss of 800 to 1,000 people from its population. Such a loss meant a decline in sales tax revenue, along with the mining revenue decrease. He explained the most current statistics on sales tax showed a 20 percent decrease from one year ago.

Mr. Aberasturi noted Exhibit E also included the projected budget for the District Attorney’s Office, with the total budget being $433,816. Normally, he explained, the office only budgeted approximately $3,000 to $5,000 per year for expert witnesses. In a small county such as Lander, most crimes were not as severe as murder, and the Ray-Becker case would be only the second murder trial this decade. More often than not, expert witnesses used by the county would be Washoe County Crime Lab personnel testifying on DUI cases. Mr. Aberasturi went on to explain that also contained in the exhibit was a memorandum from the Lander County Manager, Bonnie Duke, a Certified Public Accountant, which pointed out that the projected ending balance for the county’s general fund was $409,580. That might appear to be a large amount, but when one considered that was less than 1-month’s operating revenue, it was not such a great amount. According to Mr. Aberasturi, the county’s ending fund balance had been slowly eroding over the last few years because of economic problems, and once the level of funding went below a 1-month reserve, the county would experience cash flow problems.

During the next fiscal year, Mr. Aberasturi felt the county would have a great deal of intervention with the Department of Taxation due to its concern over the cash flow. The money for the trial was really not available to the county; Mr. Aberasturi emphasized the county was doing the best it could and was not happy it had to approach the Assembly with a funding request.

Mrs. de Braga stated there had been several stories in the media recently about the possibility of the trial being moved to another jurisdiction, and inquired if that was likely to happen. Mr. Aberasturi advised he would defer to Mr. Estes for the answer to that question, and noted because the Lander County District Attorney’s Office had a conflict with the case, it was pretty much out of the "loop" with current happenings.

In response to Mrs. de Braga’s question, Mr. Estes advised he simply did not know whether the case would be granted a change of venue or not. Currently, one of the defense attorneys had filed a motion to change the venue, however, he did not think the judge was inclined to move the case.

Mr. Marvel asked if the venue was changed, would there be additional costs involved. Mr. Estes stated he would not be opposed to a change of venue to Winnemucca or perhaps Lovelock, as he felt the facilities in Lander County were inadequate for a murder trial, especially a murder trial as complex as the Ray-Becker case. If the case was transferred to Winnemucca or Lovelock, Mr. Estes stated he actually thought the expenses would be reduced. He explained more than half the witnesses, rather than coming from Battle Mountain, were from Carson City, Reno, Colorado and perhaps Idaho, and travel costs would be fairly significant in the case.

Mr. Marvel then inquired if there was a precedent for such an appropriation for a murder trial. Electing to respond was Mr. Aberasturi, who stated approximately two sessions ago, Pershing County had approached the legislature for an appropriation for a murder case, and he thought there were precedents set even prior to that case. Dr. Baughman stated there was a detailed breakdown of estimated costs on the second page of Exhibit E. Those were prosecution and court costs only, and he did not have a detailed breakdown for defense costs. He noted the costs were for two separate trials, as it was anticipated there would be two separate trials for the two defendants.

Who would be assigned as public defender asked Mr. Marvel. Mr. Estes stated the current public defender was Mr. Herrera from Lander County for one individual, and the second individual would be represented by a private attorney from Reno. Mr. Marvel then inquired if there was a possibility Mr. Herrera would be disqualified; Mr. Estes stated not that he knew of. Mr. Marvel then inquired if Lander County had Mr. Herrera on contract and Mr. Aberasturi replied in the affirmative. He went on to explain the current contract would terminate effective July 1, 1999, and was currently out to bid. Under the current Lander County public defender contract, the public defender had the right to apply to the court for special fees to cover expert witness testimony and travel expenses for witnesses. The cost breakdown contained in Exhibit E only included certain court costs and costs from the prosecutor’s side. The District Attorney’s Office had not yet approached both defense counsels, because they really should not divulge their strategy as to how many expert witnesses they would require. He felt the expert witness costs for the public defender would at least equal those of the prosecutor. When those costs were added, it would amount to approximately $150,000 to $200,000.

Mr. Marvel stated he was concerned that the case would end up as a previous Pershing County case, where the judge mandated the county pay for the defense, even though it had a contract with the State Public Defender’s Office. He stated he did not feel the county should be obligated to pay that cost. He asked if Lander County’s contract covered that eventuality. Mr. Aberasturi advised the salary portion of the defense would be covered by the contract, and the county was not seeking funds for salary, but rather for special additional costs the public defender would incur by bringing in witnesses. He stated he did not think any public defender contract would require the public defender to pay costs for expert witnesses out-of-pocket.

Continuing along the same line of questioning, Mr. Marvel then asked why the state should pay for both the prosecution and the defense. Mr. Estes replied most extra costs, especially in the case of a murder trial, were required statutorily. In a murder trial where the defendant was indigent, the court would always order psychiatric testing, expert witnesses, and investigators, as covered by statute. The only discretion offered the district judge was the allowance or disallowance of certain expenses. Even then, explained Mr. Estes, the court did not have much choice in the matter of costs for an indigent defendant. Mr. Marvel inquired if both Kyle Ray and Colby Becker were indigent. Mr. Estes stated yes and no; he had been informed that one defendant had retained an attorney, however, he had also been informed that all money available for the private attorney had been expended, and there would be no further payments. If that was the case, Mr. Estes stated the court would order additional expenses to be paid for both defendants.

According to Mr. Marvel, his worry was that there would be a supplemental request for funds; Mr. Estes stated that probably would not happen. When the expenses were prepared, some figures were on the conservative side, and others were based on the worse case scenario. For example, Mr. Estes explained, the pathologist, who would travel from Reno, was budgeted for 2 days of testimony during trial. Often, that could be reduced to 1 day, but other times it could not be reduced and, in fact, might go as long as 4 or 5 days. Mr. Estes stated there was always a possibility that the trial would not cost more than $10,000, as would happen in the event of a plea agreement or concessions, however, the judge had indicated the case would go to trial.

Would Mr. Estes be handling the prosecution alone, or would additional counsel be needed, asked Mr. Marvel; Mr. Estes replied no additional counsel would be necessary. However, the committee should know that counties had an "unwritten" agreement regarding special prosecutors, as conflicts frequently occurred. Mr. Estes related he had acted as special counsel for Storey and Churchill counties; Washoe County had provided special prosecutors for Lyon County, and Clark County had also provided special prosecutors for the smaller counties. That was a standard procedure between the different prosecutor’s offices and there was no additional charge for that service.

Mr. Aberasturi added a suppression hearing had been scheduled in the case on March 31, with an additional hearing scheduled for April 6, and the trial itself was scheduled to go forth the first 2 weeks of May. He stated it would be nice if the county could wait and see how things turned out and then approach the legislature for funding, but it did not have that opportunity due to the trial schedule.

Ms. Giunchigliani stated during one of the last two sessions, the same predicament had occurred in Pershing County. While she understood the issue of the tax cap, and the fact that counties were forced to the edge financially by such murder cases, she felt the policy issue had not been dealt with in the previous case. She then inquired at what point would the state cease bailing out counties in such situations. Previously, there was talk of creating some sort of contingency fund so the state was not constantly approached for funding for something that was basically a county obligation. She asked if that concept had been pursued or if staff had done any research in that area. Mr. Stevens advised nothing had been done as far as he knew.

Mr. Aberasturi stated during last session, counties were allowed to form "rainy day" and contingency funds, which would help the rural counties once they were over the "hump" with some of the large public works-type projects. He felt eventually Lander County would utilize such a fund, and perhaps after the landfill, sewer treatment plant, and the jail were completed, it could begin putting $50,000 to $100,000 per year into such a fund. That was his only answer to the question of a contingency fund.

Mr. Hataway advised the committee the Budget Division had no position on A.B. 417. Speaking to Mr. Giunchigliani’s question, when the basic support tax was created, there was a sum of money set aside to be used for certain purposes, and those funds had basically been sitting idle for a number of years; the funds totaled between $300,000 and $400,000. The Taxation Department requested that the Budget Division submit a bill draft on its behalf to redirect those funds to an emergency fund for local governments to use under certain circumstances. He advised the committee he had not yet seen the bill, but that legislation could provide assistance in situations like the one currently facing Lander County. Also, because A.B. 417 contained an estimated cost, and it would be impossible to determine the actual cost until the case was settled, the committee might consider appropriating the monies to the statutory contingency fund and authorize the county to submit requests for payments as costs were incurred.

With nothing further to come before the committee regarding A.B. 417, Chairman Arberry declared the hearing closed. The next item for committee consideration was A.B. 239.

Dennis Nolan, Assembly District 13, informed the committee the bill, in its original form, was a request for an appropriation in the amount of $200,000 to the Department of Motor Vehicles/Public Safety (DMV/PS) Criminal History Repository. Those funds would be used to establish a special account for the purpose of offsetting background investigation costs incurred by volunteers who worked directly with children. It was a pre-filed bill, and he had not spoken to representatives from the repository until the beginning of the current session, which resulted in A.B. 239 taking on a different format.

Mr. Nolan indicated he had been an advocate of child protection legislation during past sessions, in an attempt to encourage organizations whose volunteers worked directly with children in a one-on-one capacity, to have those volunteers submit to background checks, and implement youth protection programs. Those past bills failed because the fee for a background check was approximately $39 and nonprofit groups felt that additional cost to their volunteers might have a chilling effect on volunteerism. Mr. Nolan noted there had been several attempts to create language in past legislation that would alleviate the cost, however, it had been to no avail. The opposition to conducting background checks from most organizations was the cost, and he was attempting to assist those organizations by the establishment of an account. That, basically, was what A.B. 239 would do, explained Mr. Nolan.

According to Mr. Nolan, the bill should not have a fiscal note, however, as originally introduced it was an appropriation, and was referred to both the Committee on Judiciary and the Committee on Ways and Means, and had passed out of Judiciary unanimously as amended. The bill would establish an account within the Criminal History Repository, which might receive gifts, grants, bequests, donations or appropriations and would be used specifically to offset the costs of background checks for volunteers. Further, explained Mr. Nolan, the repository itself would be responsible for administering the account and also responsible for establishment of the policies and procedures by which the money would be fairly distributed to nonprofit organizations who were seeking to have volunteers submit to background checks.

Mr. Nolan stated the National Child Protection Act of 1993, recently amended by Congress and the Volunteer for Children Act of 1998, both strongly urged states to encourage nonprofit organizations to submit volunteers for fingerprint background checks. In addition, he noted ACR 33, passed last session, also urged nonprofit organizations to implement youth protection programs that included background checks. Mr. Nolan stated he was attempting to help nonprofit organizations find a way to sponsor background checks for volunteers. There had been no opposition to the bill and, in fact, it was supported by both the Boy Scouts and Girl Scouts.

Ms. Giunchigliani stated Parent-Teachers Associations (PTA) had voiced concern with the previous legislation, and asked Mr. Nolan what specifically had been changed to ease the opposition. Mr. Nolan replied the legislation proposed last session would have required organizations that used volunteers in a one-on-one situation with children in confined spaces to either implement youth protection programs or have those volunteers submit to background checks. The PTA’s objections were:

• If volunteers were required to submit to background checks, the cost incurred would have a chilling effect on volunteerism.
• Some volunteers who, while not supposed to work one-on-one with children, sometimes inadvertently ended up in that capacity.

• The spontaneity of some parents who responded to PTA needs and worked in classrooms would have been prohibited from those activities.

The current bill would simply assist those organizations that wanted to request background checks for its volunteers with the cost. It did not mandate background checks.

Ms. Giunchigliani asked if a group or organization wanted to have volunteers fingerprinted and those volunteers objected, was that decision up to the entity. Mr. Nolan replied in the affirmative, and explained if an entity decided it wanted to have its volunteers submit to background checks because there might be a risk involved, that would be a policy decision for the organization to make. Regarding the proposed account, Mr. Nolan stated at any given time, the balance of the account probably would not contain enough funds to offset the cost for all fingerprint checks for any given organization. For example, if the Boy Scout organization decided to mandate its volunteers submit to background checks and looked to the fund to finance that endeavor, there might not be sufficient funds available, depending upon the balance of the account and the rules which were implemented.

Ms. Giunchigliani then addressed Section 2, number 3 of the bill, which would allow for gifts, donations, or bequests, and inquired who would actually pay into the account. Mr. Nolan stated the funding would come as a result of charitable donations, possibly from large organizations, from businesses and industries, from private citizens, et cetera. She then asked if the funding would be from solicitations with no expense charged the organizations or individuals, why would the money go to the director of DMV/PS, and why in Section 2, number 5, would it not return to the General Fund. Mr. Nolan explained money received as gifts or donations for the account would go through the director. Any money left in the account, since it was donated and contributed specifically for the purpose of offsetting costs to volunteers and nonprofit organizations, should carry over in that account from year to year.

Returning to Section 2, number 3, Ms. Giunchigliani noted it read, "Any money appropriated by the legislature***," and since the legislature was not appropriating money, that language probably should be deleted from the bill. She felt other language contained in the bill stipulated to the acceptance of gifts, donations and bequests, however, it appeared the legislature was allocating money up front and anything left over, collected, or charged to the repository then would be left in the director’s account. She asked exactly what was the intent of the language. Mr. Nolan stated the bill did not request an appropriation, but simply indicated the legislature could, at some future date, appropriate money into the account. Mr. Nolan advised he would be willing to ask for a small appropriation to the account if the state’s economy was healthy, or perhaps the repository could ask for such an appropriation. A.B. 239 was not seeking an appropriation at the current time.

Ms. Giunchigliani stated the bill would create a budget account for the director for fees charged to the repository. Mr. Nolan advised those fees were dollar-for-dollar costs, and for every background check performed, the fee charged by the repository would be the actual cost incurred. Ms. Giunchigliani stated the committee should review Section 3 of the bill because she had some concerns with that section.

Chairman Arberry asked what was the balance of the reserve account for the repository, and invited Dennis DeBacco to address that issue. Mr. DeBacco, DMV/PS Criminal History Records Repository, stated offhand he did not know the specific status of the reserve, but did know it had been reduced in recent months. Chairman Arberry asked when he could provide that information to staff. Mr. DeBacco stated he would provide that information later in the day. Chairman Arberry stated there appeared to be some concern about Section 2, number 3 on page 2 of the bill, and asked Mr. DeBacco to address that section.

Mr. DeBacco stated as far as the mechanics of the bill, there would be a number of ways to administer the account, however he had not yet reviewed it closely. He was aware that individual corporations and so forth might make charitable contributions to an account that was set up within the department. The repository would draw from that account as it received requests for background checks relating to volunteers. Exactly how that would work mechanically, Mr. DeBacco did not know, and perhaps DMV/PS fiscal staff could address that issue. He noted DMV/PS would also be required to establish the regulations called for in the bill.

Ms. Giunchigliani stated, according to the language of the bill, the repository’s reserve would be used as the account for payment of requests for volunteer background checks. She inquired if gifts, grants, et cetera, were collected, would those then be used to repay the reserve. Mr. DeBacco stated initially that was how he had envisioned it working, but he did not know whether or not that was an appropriate way of handling the account. According to Mr. DeBacco, the program could be initiated from the reserve account and continue to reimburse it on a dollar-for-dollar basis. Mr. Giunchigliani asked what would happen if charitable contributions were not received, would the legislature then be required to allocate funds to pay for the background checks of volunteers. She stated she had some concerns about that policy portion of the bill, and the legislature had approved funds in the past which allowed agencies to collect dollars in a specific account, and once sufficient funds were in place, then allowed agencies to draw payments. Perhaps that would be a good starting point if the legislation moved forward.

Vice Chair Evans asked what was the source of funds paid into the reserve account. Mr. DeBacco stated there were a number of funding sources for the Criminal History Records Repository; the Court Administrative Assessment Revenues did not contribute to the reserve, but reverted to the General Fund at the end of each fiscal year. The reserve was funded by fees collected for licensing employment and regulatory purposes, processing fingerprint documents, and conducting background checks. Vice Chair Evans instructed Mr. DeBacco to enumerate the groups and organizations that used the services of the repository, asking for specifics as to the contributors.

Mr. DeBacco revealed the repository received approximately 70,000 requests per year for licensing, employment and regulatory purposes. That was an extremely broad-based user group, with many requests received from the gaming industry for background checks. The Department of Education, as well as individual school districts, also requested background checks. Also, he explained, fees were received from persons applying for various licensing in occupational groups whereby there were statutory requirements for a background investigation such as the State Board of Nursing, State Board of Occupational Therapists, physical therapists, funeral home embalmers, taxi cab drivers in southern Nevada, et cetera. The fee source was extremely broad in nature.

Vice Chair Evans then stated it would seem that those persons would be collectively underwriting the cost for volunteer background checks through the reserve account. Mr. DeBacco stated if it was envisioned in those terms, that would be correct, however, he assumed the reserve account would be reimbursed by the fund created for the contributions, gifts, et cetera. Initially, he advised, those persons might underwrite the volunteer background checks through the reserve account. Mr. DeBacco stated his concern was if there was a zero or very low reserve balance and no contributions were made into the special account, the organizations requesting background checks for their volunteers would be required to pay the fees.

Vice Chair Evans stated therein was the lynchpin to the program, because the one deterrent Mr. Nolan had struggled with in the past was the cost of the background check, which would cause a chilling or dampening effect on volunteerism. The committee was looking for a way to minimize the effect on volunteers and nonprofit organizations caused by the cost of background checks. According to Vice Chair Evans, the nonprofit organizations she worked and volunteered with were "boot strap" operations, and could not afford the added cost of background checks. She stated she was simply trying to sort out the reality of whether or not monies would come in from gifts, et cetera.

Responding to Vice Chair Evan’s concerns, Mr. DeBacco noted there certainly was a chilling effect; the repository’s fees were prohibitive in regards to conducting background checks for nonprofit organizations. He stated that was one of the biggest complaints he received on almost a weekly basis from various nonprofit groups. The organizations felt they already had difficulties finding people to volunteer their time, and with the added cost of a background check, the organizations were losing potentially good people. Mr. DeBacco sympathized with that, however, his program was user fee-based, and short of exempting the nonprofit organizations and asking for an appropriation, he had no answers.

Mr. Nolan stated with respect to Section 2, number 3 of the bill, he would be perfectly happy if the language indicated an account that supported itself, and would not draw appropriations from the reserve. If the committee wished to amend the bill to depict a stand-alone account, he would have no objections.

There being no further testimony forthcoming on A.B. 239, Chairman Arberry declared the hearing closed.

Chairman Arberry asked members to consider committee introduction for the following Bill Draft Requests (BDR’s):

• BDR 28-1603 – Revise provisions regarding the management of public works projects. (A.B. 664)

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• BDR 54-1614 – Revise provisions governing licensing of psychologists who work in the Department of Prisons. (A.B. 665)

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• BDR S-1436 – Reverts unused portion of state loan to Tricounty Railway Commission. (A.B. 663)

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• BDR S-1699 – Makes appropriation to Division of Agriculture for imported fire ant survey. (A.B. 662)

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• BDR S-1448 – Make a supplemental appropriation for DMV&PS Administrative Services for health insurance premium stale claim. (A.B. 661)

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• BDR S-1466 – Revise provisions governing employees of Governor’s Office. (A.B. 660)

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• BDR S-1682 – Makes appropriation to fund statewide AmeriCorp program. (A.B. 659)

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• BDR S-1445 – Make a supplemental appropriation for the Division of Parole and Probation. (A.B. 658)

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• BDR S-1450 – Make a supplemental appropriation for operating expenses for the Highway Patrol. (A.B. 657)

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• BDR S-1693 – Makes supplemental appropriation to Division of Insurance of Department of Business and Industry for projected salary, travel and operating costs. (A.B. 656)

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• BDR S-1684 – Makes appropriation for support of a statewide automated system of information and creates related advisory committee. (A.B. 655)

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• BDR S-1691 – Makes appropriation to Clark County for support of Greater Las Vegas Inner City Games. (A.B. 654)

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• BDR 23-1700 – Require reimbursement of certain training costs for law enforcement officer who resigns from state employment soon after completion of training. (A.B. 653)

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• BDR 40-1658 – Facilitate the use of the federal tobacco settlement. (A.B. 652)

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Chairman Arberry announced the committee would review and vote on the following bills:

Mr. Stevens advised the committee A.B. 175 would restore the balance in the statutory contingency fund, contained in The Executive Budget as an appropriation of $752,114.

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Mr. Stevens stated A.B. 234 was an administration bill included in The Executive Budget. Current statute reserved 5 percent of the net proceeds tax paid to the state. The current balance in that fund was approximately $2.6 million, and the budget assumed that the provision of Nevada Revised Statute (NRS) would be repealed, therefore, the $2.6 million was utilized as a funding source in the current budget.

Ms. Giunchigliani asked if there was proposed legislation that would repeal the provision in NRS. Mr. Stevens replied A.B. 234 would repeal NRS 362.173, and the funds would then become available for appropriation.

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Mr. Stevens said the bill was heard earlier in the hearing, and would change the dates for the projections of General Fund revenues by the Economic Forum. Ms. Giunchigliani stated she would recommend amending the bill by striking lines 16 and 17 in Section 1, number (e).

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According to Mr. Stevens, the bill was a one-shot appropriation to LCB for the cost of reproducing volumes of the Nevada Reports, and was a traditional one-shot appropriation in The Executive Budget, and was included therein.

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S.B. 158 was a supplemental appropriation to the Athletic Commission, explained Mr. Stevens, and passed to the Assembly as a supplemental from the Budget Division. The Senate Committee on Finance added some language which would allow the commission to recoup any costs related to hearings regarding revocation of licenses.

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Mr. Stevens announced the Senate Committee on Finance was also closing budgets, and to facilitate the LCB Program Analysts, he would address the budgets as those analysts were present at the hearing.

Mr. Stevens stated staff had recommended the following adjustments to the budget:

• Module M-200, adjusted the budget to align with the federal grant authority.
• Module M-300, adjustments were made as requested by the Department of Education.
• The Executive Budget recommended a reserve of $88,447 in the first year of the biennium and $176,746 in the second year; staff recommended that money be transferred to school districts and not be held in reserve with the exception of $10,000.

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The following staff adjustments were recommended:

• Adjusted to pass through to local school districts unused federal authority.
• Module M-200 reflected the latest information on expected revenues from federal nutrition programs.

Mrs. Cegavske asked where the money was going from the soda and vending machines in the school. Also, she stated it was her understanding the schools could not receive federal money if there were such machines in use during the lunch hour.

Jeanne Botts, Sr. Program Analyst, LCB, stated generally the vending machines were quite good money-makers in schools with those revenues usually going to a particular class or activity fund, and were not used to offset nutrition programs. She stated she would ascertain if indeed there was a federal mandate regarding vending machines. Ms. Botts stated it was common practice in some schools to close off the vending machines during the lunch period, however, she would research that further.

Mrs. Cegavske stated last session the State Board of Education asked for health instruction regarding nutrition, and her concern was the contents of school lunches, and how children were being taught about nutrition.

Ms. Giunchigliani disclosed she was a public school teacher, however, none of the items included in the budget would affect her.

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Mr. Stevens reported the following:

• The Department of Education had advised him that additional funds would be available, $8,600 in the first year of the biennium and $2,900 in the second year.
• Approximately $3,000 would be added for contractual services based on staff recommendation, and remaining funds would be added to instructional supplies and indirect costs.

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Mr. Stevens informed the committee the department had provided new revenue estimates based on enrollment projections and identified "unbooked" federal expenditure authority. Most "unbooked" federal funds were passed through to the school districts. Mr. Stevens stated the committee might wish to send a letter of intent directing the Department of Education to include in its quarterly report to the Interim Finance Committee (IFC), information concerning the Chapter 395 program for out-of-district placements for children with disabilities. That information should include:

• The number of complaints received;
• The nature of each complaint;
• The length of time taken to complete each investigation;
• The disposition of each complaint; and,
• The name of the school district against which each complaint was made.

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Mr. Stevens stated the following adjustments were recommended:

• Expenditures had been aligned with the appropriate revenue source, with adjustment made to the base budget.
• Decision unit M-200 was added, which contained increases in federal funds and allocated that revenue to the proper grant categories, based on information received from the Department of Education.
• Unused federal revenue authority had been identified as passed through to local school districts, with the exception of $40,000, which was retained in reserve.

Also, he explained, there was a recommendation for a letter of intent, and Ms. Botts would provide information to the committee regarding that issue.

Ms. Botts reported the letter of intent concerned the Title I program. That program provided approximately $23 million per year for remedial education programs, and last session S.B. 482 provided an additional $3 million for remedial programs. Basically, she stated, the letter of intent would require the Department of Education to provide a report to the Legislative Committee on Education and to the next session of the legislature regarding how it maximized the use of federal money available for remedial programs, along with any available state money. National evaluations of the Title I program had shown that, by and large, those funds were not being used effectively. Further, Ms. Botts reported, where there was an increase in pupil achievement, there were generally some common elements which led to the approved program approach. The $3 million appropriated by the legislature last session and the new Comprehensive School Reform Demonstration Project money from the Federal Government required schools to adopt approved programs, and the letter of intent would simply focus on how the money was being used from all sources for remedial education.

Ms. Botts provided a Memorandum to the committee dated March 19, 1999, (Exhibit F), which addressed information requested by the committee at an earlier hearing. For the 23 schools designated as having "inadequate" achievement last year, almost all were Title I schools and some received Comprehensive School Reform Demonstration Project grant funds. The exhibit contained a matrix which depicted the amount of money allocated to each school and how it was used.

Chairman Arberry inquired if the word "inadequate" had been redefined. Ms. Botts replied there was pending legislation which would address that issue, and change the wording to "schools needing improvement."

Vice Chair Evans advised she wanted to call the committee’s attention to inclusion in the budget of the Even Start Program. The money for that program was provided via federal funding and, unlike last session, there was no recommendation for an outright appropriation for that program. However, she further explained the Joint Subcommittee on K-12, Human Resources was reviewing that issue carefully, because there was much community interest and input regarding continuation of the program. The Even Start Program not only assisted pre-school children, but also worked with families that suffered literacy problems, and included various other types of family programs. Many persons viewed Even Start as a type of remedial program. Vice Chair Evans noted she could not promise funding for the program, however, the subcommittee would continue its review.

Mrs. Chowning emphasized her support for the letter of intent, and requested the addition of a component which would not only describe the effectiveness of the programs in improving the academic achievement of pupils, but would also explain how the improvement was achieved among the different ethnic groups.

Ms. Giunchigliani asked if the Even Start Program was a duplicate of the Head Start Program; Ms. Botts stated she was unsure about the programs, and advised Head Start money did not flow through the Department of Education and she was, therefore, not knowledgeable about the sources. Federal Even Start funding through Title I had been in existence for a few years, and last session the legislature appropriated an additional approximately $828,000 in state funds; it was that state funding which was in question this session. Ms. Botts related she would research the Head Start Program and provide the requested information.

Regarding the letter of intent, Ms. Giunchigliani asked if it would be possible for the committee to receive a listing of the transient rates in those schools, along with what professional development courses were available. Ms. Giunchigliani explained she taught at a Title I school, which had undertaken some very good programs in the last couple of years, and she felt the committee should know what was being offered and what had been judged as valuable by school personnel, in order to determine future funding.

Ms. Giunchigliani stated Exhibit F indicated Cashman Middle School and Western High School were eligible, but were not serviced, and requested Ms. Botts furnish the committee with an explanation.

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Basically, stated Mr. Stevens, the staff recommendations would balance forward the reserve funds that were included in the work program. He explained rather than holding those funds in reserve, the monies would be sent out to the districts. There was also a potential letter of intent regarding the budget, and Ms. Botts would address that issue.

Ms. Botts indicated Mindy Braun, Education Program Analyst, LCB, had completed a review of the Adult Basic Education Program performance indicators, and it did not appear the federal outcome indicators and performance standards had been updated since 1995. Ms. Braun felt it would be important to determine customer satisfaction due to the low completion rates. Mr. Botts stated of the 5,656 who started the program, only 20 percent completed one or more levels and only 5 percent obtained a General Education Diploma (GED). Further, she reported 23 percent dropped out of the program and 57 percent remained in the program but did not complete a level. However, she noted, in the Adult High School Diploma Program, 14,134 students participated and 18 percent obtained a GED, which was a much better ratio. The letter of intent would ask the Department of Education to update its performance measures.

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Mr. Stevens stated the account would provide funding in the event a district judge retired or left office mid-term. Staff had reviewed the amount traditionally spent in the account, and felt it was over budgeted. There were a number of times where the judicial branch was required to appear before the IFC for an allocation from the contingency fund because an unexpected event had occurred. Mr. Stevens stated staff recommended that $5,800 be reduced in the first year of the biennium and a small amount in the second year, based on an 11-year average of actual expenditures.

Mr. Marvel asked how many vacancies needed to be filled. Mr. Stevens replied there were two or three at the present time; the budget was from July 1, 1999 forward, and he had not been advised an augmentation was needed for the current fiscal year.

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Mr. Stevens advised the account was in the Real Estate Division of the Department of Business and Industry, and staff recommended no adjustments.

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According to Mr. Stevens, staff adjustments consisted of matching the $40 licensing fee to the number of licenses the division projected it would issue, which would amount to an increase of $10,460 in the second year of the biennium. Those funds would actually be transferred to the Real Estate Education Account because there was a maximum amount which could be held in reserve in the Real Estate Recovery Account.

Mrs. Chowning disclosed she was a real estate licensee, however, closure of the budget would not affect that status; she and her husband paid the licensing fee each year, and she agreed with transferring the money to the education account.

Mr. Parks also disclosed he was a real estate licensee, and closure of the budget would not affect that status.

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Mr. Stevens advised staff recommended no adjustments to that budget.

Once again, Mrs. Chowning and Mr. Parks disclosed they were real estate licensees.

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Staff recommended no adjustment to that budget.

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Mr. Stevens announced staff recommended an adjustment in revenue in the second year of the biennium, based on updated balance forward information. The adjustment would allow grant levels in each year of the upcoming biennium to equal the grants awarded in FY 1998.

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Staff recommended the account be closed with no adjustments.

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Mr. Stevens advised the committee there was a question regarding the Indian Affairs Commission Budget Account 2600, and requested it be held until further notice.

Mr. Stevens stated the following accounts were all occupational boards, and staff recommended approval with no adjustments to the budgets. If the committee so desired, those budgets could be closed en masse as the Governor recommended.

• BOARD OF ACCOUNTANCY – BUDGET PAGE BOARDS-001

Mr. Beers disclosed he was a Certified Public Accountant and, as such, was regulated by the Board of Accountancy, however, that would not affect his vote on that budget.

Ms. Stevens stated of note was the fact there were a number of items which needed to be decided before final adjustments could be made to the occupational boards’ budget accounts, such as statewide cost allocations, Attorney General (AG) cost allocation, et cetera. One item, he explained, that would particularly impact the occupational boards were the recommended changes in the Department of Information Technology (DoIT) billing rate. That would impact all the boards, and was not yet reflected in the budgets. Once the legislature made its decision regarding the DoIT billing structure, staff would review the budgets and make the corresponding adjustments.

Mr. Beers asked if the additional DoIT funds would be listed in the "Other" category and were not included in the $2 million already set aside. Mr. Stevens answered in the affirmative.

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Mr. Stevens advised there were no adjustments recommended for the budget.

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Mr. Stevens informed the committee information had been received regarding the percentage paid to each county in that budget account, and staff would recommend approval with no adjustments.

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Mr. Stevens indicated the account was previously held pending receipt of information regarding the amounts allocated to hospitals around the state; that information had been received, and staff would recommend approval with no adjustments.

Mr. Beers inquired how the decision was made to award the funds. Mr. Stevens stated the account was administered by the Nevada Association of Counties (NACO), and he was unsure of the exact criteria it used to determine the allocations. If the committee so desired, Mr. Stevens stated, the budget could be held in order to allow NACO to present testimony regarding distribution of funds. Mr. Beers stated in reviewing the distribution between counties, it did not appear to represent population distribution ratios. Mr. Marvel indicated he did not think population made any difference, that allocation was dependant on the nature of the accident or illness. Mr. Dini stated the University Medical Center in Las Vegas was a trauma center, along with Washoe Medical Center in Reno, and most cases were funneled to those two hospitals, with funds allocated accordingly. According to Mr. Dini, the account never contained sufficient funds to cover all expenses.

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Mr. Stevens indicated that budget was not a General Fund account, and suggested a savings could be realized in Decision Unit E-710, which recommended funding for replacement software, including projected costs, which were approximately $300 to $400 higher than those contained in other budgets. He inquired if the committee wanted staff to review software prices included in The Executive Budget versus the actual cost. Also, there could be a savings in the hardware costs; he asked if the committee wanted to close the budget with the requested amounts, or wanted staff to attempt to reconcile the costs and, thereby, create a savings.

Mr. Hettrick asked for a "ball park" figure regarding actual savings, and would staff review only that budget, or was there a possibility of such savings in other budget accounts. Obviously, he indicated, staff could spend a great deal of time with such reviews. Mr. Stevens stated in the Commission for Hospital Patients account, the savings would amount to approximately $400, however, overall, it could generate a substantial savings; staff had not yet reviewed all possibilities, however, he felt with review of other budgets, the savings could grow to approximately $100,000.

Mr. Beers stated he noted the inflated costs regarding the "Microsoft Office," program, and asked if perhaps the committee should issue a letter of intent to the Budget Division in order to eliminate such inflated costs from future budget accounts. It was his understanding the Budget Division set the figure as $495 for each copy of "Microsoft Office" an agency requested. Mr. Stevens stated it would be necessary to review the application, network version versus stand-alone version, which could drive up the costs.

Mrs. Chowning requested that staff review for possible overall savings in that area, and also requested information on whether or not the Commission for Hospital Patients, as well as others, was participating in the recycling plan requested last session. She suggested perhaps the request for replacement of computer software and hardware could be recycled from another division.

According to Mr. Stevens, if the committee wished to close budgets, staff could still complete the reviews and submit a listing of accounts where savings could be realized. The committee could then make a decision regarding further action.

Mrs. de Braga asked if it was necessary for the software packages to be licensed by specific agencies, and was there some way to create savings in the purchase of identical software applications by multiple agencies. Mr. Stevens advised that was possible and he believed the Purchasing Division was currently working on such a plan. Mrs. de Braga once again asked about licensing to individual agencies rather than individual computers. Mr. Stevens indicated that would be reviewed as well by the Purchasing Division. Could there be a significant savings, inquired Mrs. de Braga; Mr. Stevens stated he did not know, however, staff would review the possibility.

Mr. Beers explained that generally licensing was done on a per site basis, and one software package could not be purchased for an entire agency. He advised the agency would be issued a site license for each unit licensed, which included a fee.

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Staff recommended closure of the budget without adjustments.

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Per Mr. Stevens, the recommendation from staff was to close the budget without adjustment.

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Mr. Stevens stated there were no adjustments recommended by staff. Mr. Goldwater asked that the committee hold the budget due to pending legislation which might affect the account. Chairman Arberry indicated the committee would hold the budget for further review at a later date.

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Mr. Goldwater asked that the committee also hold the Financial Institutions Audit budget for review at a later date due to pending legislation; Chairman Arberry stated the committee would do so.

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Mr. Stevens noted there was a technical correction in Module M-300, which recommended that fringe benefits for employees be financed 100 percent from the General Fund. Since there were a variety of funding sources (federal grants, licenses, and fees) in the account, the adjustment would allocate those costs proportionately to all revenue sources.

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According to Mr. Stevens, there was a recommendation for an adjustment which would directly impact the adjustment made by the committee in the Radiological Health budget. Part of the funding source allocated in M-300 in that budget was within the Health Radioactive Hazardous Waste budget account.

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Mr. Stevens advised the Rehabilitation Operations account contained an adjustment regarding a Federal grant award, which would slightly change the amount of revenue in the account.

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There were no adjustments recommended in the budget according to Mr. Stevens.

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There being no further business to come before the committee, Chairman Arberry adjourned the meeting at 10:55 a.m.

RESPECTFULLY SUBMITTED:

Carol Thomsen,

Committee Secretary

APPROVED BY:

Assemblyman Morse Arberry Jr., Chairman

DATE: