The Joint Subcommittee on General Government was called to order at 8:15 a.m., on Friday, April 9, 1999. Chairman Vonne Chowning presided in Room 2134 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List.

ASSEMBLY COMMITTEE MEMBERS PRESENT:

Mrs. Vonne Chowning, Chairman

Mr. Bob Beers

Mrs. Marcia de Braga

Ms. Chris Giunchigliani

Mr. David Goldwater

SENATE COMMITTEE MEMBERS PRESENT:

Senator William O’Donnell

Senator Joe Neal

Senator Lawrence Jacobsen

COMMITTEE MEMBERS ABSENT:

None

STAFF MEMBERS PRESENT:

Birgit Baker, Program Analyst, Legislative Counsel Bureau (LCB), advised the committee Budget and Planning was the division primarily responsible for preparing The Executive Budget, and consisted of 28 positions. Module E-900 recommended the transfer of two additional positions into the budget, which currently provided personnel functions for the department in order to facilitate direct reporting to the director’s office.

The only outstanding identified issue concerned a Budget Analyst position currently funded by assessments to professional licensing boards. The Executive Budget recommended reducing that assessment and replacing it with General Funds. The committee might wish to consider whether or not to increase the assessment to professional licensing boards to include the projected salary for the full-time position, which would save approximately $66,000 in General Funds.

Chairman Chowning reminded the committee the original intent for creating the position was to assist and train licensing boards, and the proposed motion would result in a net reduction in General Funds of approximately $66,000. Such action would restore the allocation to the administrative charge to licensing boards, and would not constitute an increase in fees. Chairman Chowning stated it would be a technical adjustment.

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Ms. Baker stated the Office of Financial Management Training and Controls (FMTC) was responsible for training state agency staff in the development and documentation of internal and financial controls. A Legislative Audit identified several deficiencies in the reporting of internal controls to the Department of Administration. One result of the Legislative Audit was A.B. 255, which was passed out of the Assembly and was currently being considered by the Senate Government Affairs Committee. Ms. Baker stated FMTC would be responsible for implementing the Legislative Audit recommendations.

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According to Ms. Baker, the department was responsible for adjudicating contested workers’ compensation claims, currently for the Employers Insurance Company of Nevada (EICN), and also self-insured employers. Beginning July 1, 1999, that duty would be expanded to include private insurance companies with the implementation of the 3-Way worker’s compensation insurance system. The agency provided testimony that it was currently impossible to project the impact of 3-Way insurance on its caseloads. As a result, Ms. Baker explained, no additional staff positions were requested by the division for the upcoming biennium. However, she stated, the Workers’ Compensation Hearings Reserve Account, Budget Page ADMIN-113, did include four positions in the event the caseload increased for the Hearings Division. Those positions consisted of one Appeals Officer, one Hearings Officer, and two legal secretaries. The division would be required to address the Interim Finance Committee (IFC) for approval and release of funding for those positions.

Ms. Baker went on to explain S.B. 55 contained the recommendations of the Legislative Committee on Workers’ Compensation, which included:

• Requirement for certain qualifying experience for Hearings and Appeals Officers;
• Requirement that Hearings and Appeals Officers write their own decisions; and,
• Allow for the establishment of a three-member appeals panel.

In order to close the budget, Ms. Baker noted if S.B. 55 passed, any fiscal impact placed on the division would be via the Hearings Reserve Account. Further, she indicated, Perry Comeaux, Director, Department of Administration testified the agency had received $150,000 to design and implement a tracking and scheduling system in FY 1998, which had not been completed, and $115,000 of that amount was reverted to the Workers’ Compensation and Safety Fund. The division felt the lack of an automated system was the one shortcoming it would suffer with the implementation of 3-Way insurance. The Budget Office requested the $115,000 previously reverted in FY 1998 be placed in the Hearings Reserve account, which would allow the division to present a computer proposal to the IFC in order to release those funds.

Ms. Giunchigliani noted the committee would recommend the $115,000 reverted in FY 1998 be placed in the Workers’ Compensation Hearings Reserve, Budget Account 1014.

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Ms. Baker explained the Governor was recommending an increase in unit M-201, court assessments, to be used for payments to victims. Also, the budget reflected the receipt of federal grant funds, which had actually been approved by the 1997 Legislature through A.B. 110. When the agency applied to the federal granting agency, however, there was a conflict in Nevada law that needed to be resolved. Ms. Baker stated current legislation, A.B. 353, would remove the provision in Nevada Revised Statutes (NRS), that provided for different treatment of non-resident victims. Such action would then allow federal grant funds to be received and expended. The bill was passed out of the Assembly and was currently being considered by the Senate Judiciary Committee. Ms. Baker went on to explain the agency projected the grant funds to be approximately $890,000 in each year of the biennium, and the FY 1999 actual award was $705,000. That would result in a technical adjustment to reduce the grant award to the FY 1999 actual level in each year of the upcoming biennium, so that payments to victims were not overstated.

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Rick Combs, Program Analyst, LCB, informed the committee staff would recommend closing the budget as recommended by the Governor, with three adjustments.

• Decision unit E-710: Elimination was recommended, as the replacement equipment had been purchased during the FY 1997-99 biennium.

• Decision unit E-720: Required a minor adjustment to the cost of data processing equipment, in accordance with the most recent pricing information from the Purchasing Division.

• Decision unit E-276: Staff recommended reduction of requested in-state travel to Carson City for the legislative session in the second year of the biennium, based upon the reduced number of trips conducted during the 1999 Legislative Session. During the 1997 session, the division made 15 trips to Carson City, however, it appeared from past history that was a very unusual year; the division had only completed five trips during the current biennium. The proposed adjustment would fund nine special trips during the 2001 Legislative Session, with each trip allowing for an overnight stay.

Mr. Combs stated he would briefly address the decision units for the committee. E-125 recommended funding for imaging the division’s records, renewal of notary public registrations, and two legal-size filing cabinets in each year of the biennium. E-275 would increase out-of-state travel, provide pager service for three field auditors, and increase expenditures in in-state travel for conducting additional audits. The out-of-state travel increase was for the administrator and one employee to attend an annual Holder’s Seminar. Mr. Combs advised the division had been questioned regarding the need to send two employees to the same seminar, and it was explained there were a number of different classes offered, and it would be advantageous if two employees attended. The request for an increase in in-state travel was because the division participated in an audit in Las Vegas in FY 1998 that took approximately 2 months to complete. Since the division was housed in Las Vegas, it did not expend the normal amount of in-state travel, and the adjustment would bring the division back to its normal level.

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Mr. Combs advised there were two technical adjustments in the account. The first was training expenditures for the Compliance Investigator recommended in M-200. Those costs had been eliminated, and during talks with the division, it was confirmed that when the position was authorized by IFC at its December 1998 meeting, the costs for the one-time training were included in that work program. The adjustment in decision unit E-250 was based on updated pricing information from the Purchasing Division.

Decision unit M-200 also recommended the continuation of the Compliance Investigator position that was approved by IFC. Mr. Combs explained the duties of that position were related to complaints received from consumers who had manufactured homes installed, and also complaints regarding the manner in which dealers conducted their business. IFC approved that position based on the fact that compliance investigations had caused a backlog in other division functions. The Program Assistant positions would assist with clerical duties associated with increased licenses and examinations conducted, as well as the increased number of plans being reviewed by the Compliance Officer. Those positions also assisted in the review of titling documents and mobile home certificates, which had increased significantly over the biennium.

Mr. Combs went on to explain decision unit E-250 recommended another new Auditor II position, which would conduct a new program of auditing trust accounts within manufactured housing dealerships. Trust accounts were similar to escrow accounts in the sale of real property, and were basically the accounts where money was held on behalf of the parties while the deal was transacted. The division discovered the need for such a position when it was conducting investigations of consumer complaints and found numerous problems involving those trust accounts.

Decision unit E-710 recommended replacement of various equipment, computer hardware, and software upgrades; E-720 recommended an enhancement to the agency’s CD library system. Mr. Combs explained the CD server was called a "juke box," which would allow staff to utilize a number of CD’s without the necessity of putting them in and taking them out each time; it would also assist the records search capability. The software included in the decision unit would allow each of the office staff to access the CD library from their personal computers.

The final decision unit, E-900, recommended the transfer of a Program Assistant I from the Mobile Home Parks account to the Manufactured Housing account, and Mr. Combs indicated the duties would be solely related to titling programs. He advised he had confirmed with the agency that the position was no longer providing secretarial support for the two positions in the Mobile Home Parks account. According to Mr. Combs, the transfer appeared reasonable and appropriate under those circumstances.

Chairman Chowning apprised the committee that staff recommended closing the budget as recommended by the Governor, and it was an agency that handled consumer protection and worked with park owners as well. The agency needed the positions in order to do its job effectively.

Senator Neal asked for clarification regarding the "juke box" server. Mr. Combs explained it was used for title documents, which were put on CD’s. When staff researched titles, the "juke box," which held multiple CD’s, could access the proper title without the necessity of constantly changing CD’s. Senator O’Donnell advised the appropriate term for the server was "carousel."

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Mr. Combs reported there was one major decision unit in the account, E-710, which recommended replacement of an office chair, and two personal computers with network adapters.

Mr. Beers stated the Commerce and Labor Committee had passed a bill that would cause a reduction to the reserve in the Mobile Home Lot Rent Subsidy account, and asked if the committee needed to make an adjustment, or could it be handled through IFC. Mr. Combs indicated IFC would handle any adjustments through a work program if the bill ultimately passed.

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Mr. Combs stated there were two decision units for committee consideration; E-720, was a new computer and printer for the Landlord Tenant Investigator in Las Vegas, and E-900 was the transfer of the Program Assistant I position to the Manufactured Housing Administration account.

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According to Mr. Combs, there were two main decisions units in the Consumer Affairs account. M-200 increased funding in order to retain the services of a certified court reporting firm to provide certified transcripts for the division’s hearings, and also increased costs for use of the division’s toll-free telephone line. The division indicated there would be an increase in the cost for services of the court reporting firm because it was anticipated that a number of telemarketing cases would actually go to hearing during the biennium. Mr. Combs explained those cases could sometimes continue over a number of days, which would increase the cost for that service. The increased use of the division’s toll-free telephone line was in response to a trend of increasing calls it had received, attributed mainly to public service announcements that were approved by the 1997 Legislature. Mr. Combs indicated decision unit E-175 would provide funding for various software upgrades, computer instruction, and training manuals.

Chairman Chowning asked Patricia Jarman-Manning, Commissioner of Consumer Affairs, to come forward and explain the approximately $9,000 that was not spent from the appropriation approved by 1997 session for mediation arbitration and was, therefore, reserved for reversion. Chairman Chowning then asked if those funds could be added back into the division’s budget over the biennium, how would she anticipate the division using those funds for consumer education. Chairman Chowning stated there were several areas where consumer education was needed, such as the auto repair industry, the Consumer Bill of Rights, and telemarketing issues. Ms. Jarman-Manning had done an excellent job in saving the taxpayers a great deal of money by securing consumer education projects for free through the Nevada Broadcaster’s Association. Chairman Chowning stated the division had an enormous responsibility and, hopefully, the committee could allocate those funds back to the division for use in consumer education.

Ms. Jarman-Manning advised if the committee was so gracious as to reallocate the $9,000, the division would use those funds in public education. Further, she stated there were a number of issues which were mounting in terms of public education, particularly in the automotive repair area. As the committee was aware, the division worked very diligently in that area and had been very successful in spreading the word about how to be a better consumer. Ms. Jarman-Manning indicated she felt that was the correct method to use, proactive rather than reactive, and preventive rather than corrective. The division felt it was making strides inch-by-inch in that area. Mrs. Jarman-Manning assured the committee that if the division was given an additional $9,000 allocation, the funds could definitely be used in the public education area.

Ms. Jarman-Manning related the division was working closely with the Nevada Broadcaster’s Association, which was doing a splendid job. She explained for $16,000 in FY 1998, the division received over 3,500 television and radio "spots" throughout the state. That type of coverage would normally cost approximately $290,000 through regular channels, and she emphasized an extra $9,000 would give the division a considerable amount of coverage in terms of "getting the message out."

Senator O’Donnell noted he had heard one of the division’s public service announcements on the radio, and felt it was quite good. He knew the announcements were being heard, and were effective. He advised the committee he would have no problem with the reallocation of the $9,000 to the division.

Chairman Chowning stated via the Automotive Advisory Board, businesses were very supportive of the consumer education that had been done so far, and it also agreed that education was of good use and very necessary. The only decision the committee would be required to make would be the amount of the reversion, and staff could make that adjustment to the Consumer Affairs account; it was approximately $9,000. Further, Chairman Chowning advised, she did not feel the committee should "hamstring" the agency as far as how the funds were used, although the auto repair area was probably one of the biggest educational needs, however, telemarketing and other consumer issues should also be addressed.

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Mr. Combs reported staff recommended a minor technical adjustment regarding the cost of computers, which was revised based on updated information from the Purchasing Division. Decision Units M-200 and M-525 addressed the fact that the office was required to move from the Truckee Meadows Community College building last biennium, resulting in a slight increase in rent in M-200, and M-525 reflected the rental cost for a copy machine. Mr. Combs explained decision unit E-710 recommended a fax machine for the Las Vegas Office, and E-720 was for the installation and line charges for a new telephone line, two new computers, two new printers, and two new modems.

Chairman Chowning asked if a price comparison had been done on the computer items and, if so, was there a savings. Mr. Combs stated decision unit E-720 was where the technical adjustment was made.

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Mr. Combs explained staff recommended two technical adjustments. Pursuant to a request from the Dairy Commission, the revenue from the assessment on ice cream products was reduced by $107,776 in each year of the biennium. The commission voted to decrease the assessment on ice cream products, a decision that was made after the budget was submitted. According to the commission, the decision to reduce the assessment was based on the fact it had reduced expenditures by requesting the elimination of three positions in the base budget. Based on the reduction, Mr. Combs advised he checked the commission’s reserve balance, and found the balance was adequate to support its functions.

There was a registration fee recommended in decision unit E-250 for a third staff member to attend the annual International Association of Milk Control Agencies Conference. Mr. Combs said that was eliminated because the Budget Office and the agency determined the fee was already included in the base budget adjustment, and the agency would have the authority to send three persons to the conference.

Senator Neal asked if the commission was taking the assessment off ice cream, but leaving it on butter, yogurt, and other dairy products. Mr. Combs replied it was his understanding the assessment on ice cream products was not entirely eliminated, but reduced from 4 cents per gallon to 2 cents per gallon. All other assessments would remain the same. Senator Neal then asked how many positions were needed to run the Dairy Commission. Mr. Combs stated the information he received was that 14 staff was the adequate number to run the commission, and that was why the three positions were eliminated.

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Mr. Combs advised the only adjustment in the Energy Conservation budget was in decision unit E-352 which would transfer $20,000 from the Petroleum Overcharge Rebate Account into the Energy Conservation Account, and then to the Aging Services Division to address the transportation needs of Nevada seniors in rural areas. Those funds had been used for that purpose in past biennia, however, had not been used in that manner during the 1997-99 biennium. Mr. Combs stated it was a recommendation by the Governor to provide some funding from the rebate account to the Aging Services Account.

Chairman Chowning asked if that transfer would drastically cut the rebate account balance. Mr. Combs stated it would reduce the reserve in the Petroleum Overcharge Rebate Account by the $20,000 in each year of the biennium, and as previously discussed by the committee, there were some concerns regarding the dwindling reserves in that account. Mr. Combs explained those funds were intended to be used for grants issued to various programs, and the transfer was not an inappropriate use of the funds.

Senator Neal asked how long the state would continue to receive the petroleum rebate. Mr. Combs said it was his understanding the account was dwindling and would eventually run out of funds, however, unexpected funds were allocated to the account last biennium.

DeeAnn Parsons, Administrator, State Energy Office, informed the committee that her office had been told there would be no more money coming into the rebate account. There might be more settlements, however, she was unable to confirm additional funding. Ms. Parsons advised there might be one additional settlement coming in, however, supposedly the funds were closed out. She reported the office had been pleasantly surprised in the past by additional revenue.

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Mr. Combs stated staff would recommend closing the budget as recommended by the Governor; the account would provide $20,000 to the Energy Conservation Account for disbursement to the Aging Services account. The agency anticipated $56,000 in settlement income in the first year of the biennium, and zero in the second year because, as Ms. Parsons indicated, the funding was expected to run out.

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Jim Rodriguez, Program Analyst, LCB, reported Insurance Regulation was a main operating and administrative account for the Division of Insurance. There were two adjustments to the base budget. At a previous hearing, the committee requested the division review its internal cost allocations, specifically from the Insurance Examiners’ Fund, Budget Account 3817. Mr. Rodriguez explained the net effect reflected by using the new methodology for the division’s cost allocation would be a surplus of $3,242 in FY 2000, and $13,266 in FY 2001. That surplus would be used to offset the division’s non-state owned building rent. He explained the division’s lease would expire in December 1999, and indications were the rent would increase beyond current budget levels, therefore, the surplus would offset that deficit.

Chairman Chowning stated The Executive Budget currently allocated $1.05 per square foot for rental space, and inquired if there was any idea how much that figure would increase. Mr. Rodriguez advised the exact figure was not known at the current time, but indications were that significant capital improvements would be needed on the building, and those improvements would be absorbed in the lease. Chairman Chowning inquired if the surplus amount would be sufficient for that rent increase. Mr. Rodriguez stated the surplus would be used to offset the shortfall.

Senator Neal stated the legal expense contained in the budget work program for the current year was listed at $14,900, but no further allocations were listed, and inquired why that figure was so high in the current budget. Marilyn Espinosa, Administrative Services Officer, Division of Insurance, explained the division moved the legal expense category into category 04, operating expenses. Further, she stated there was no clear delineation as to why the categories had been separated. Ms. Espinosa explained the legal expenses had not been eliminated, but were simply combined with another category.

Chairman Chowning inquired if the division anticipated the need for legal funds. Senator Neal stated the way the figures were portrayed in the budget, it appeared there was a major case in the actual expense for FY 1997-98 and the work program for FY 1998-99. Ms. Espinosa explained after FY 1998-99, the category was combined with operating expenses. Senator Neal then asked if the division was allowed to show its legal expenses in a separate category. He stated if the Attorney General’s Office was performing legal work for the division, there would be an allocation in the budget for that service. Ms. Espinosa stated that was shown separately and the legal expenses in category 04 and category 10 were simply combined, because the division did not see a reason to separate those expenses. Further, she stated there was no allocation to the budget for Attorney General services, since it was funded by the General Fund. Senator Neal inquired if the division expected to go to court on a daily basis. Ms. Espinosa stated the legal expenses were hearing costs, mostly for transcripts and court reporting expenses.

Mr. Rodriguez stated the second base adjustment would decrease the General Fund need for the budget, resulting from a change in the division’s accounting of the cost of investigative examinations performed by Compliance Investigators. Historically, those costs were borne by the budget and were performed under the same authority as financial examinations, but Compliance Investigations targeted market misconduct. The division proposed that the cost of those examinations be reimbursed by the Examiners Fund, account 3817, which would reduce the General Fund support for the Insurance Regulation account. Additional revenue reflected in the account would be $8,106, with a similar reduction of General Fund need.

In M-203, Mr. Rodriguez stated, the division had adjusted the need for office equipment for its supervising legal secretary to a full office suite. In FY 2000, the funding need was adjusted from $1,432 to $3,396. Chairman Chowning asked for clarification of a "full office suite." Mr. Rodriguez explained it was the standard office furniture such as desk, computer, telephone, et cetera. The request had been changed from a secretarial unit to an executive unit.

Module M-501 was being adjusted simply to correct the insurance expense calculation in accordance with budget instructions. Mr. Rodriguez explained module E-712 dealt with the division’s computer equipment for its network. At previous subcommittee budget hearings, the committee discussed the fact that the division’s network had crashed. Originally there was a request for purchase of hardware and software in the budget, however, the purchases were accelerated so the system could be up and running immediately. The needs were adjusted downward, and the remainder of the hardware and software request originally contained in the budget was transferred to Insurance Cost Stabilization, account 3833.

Chairman Chowning inquired what the total fiscal effect of the adjustments would be. Mr. Rodriguez replied the total net effect of the change, accounting for the reduction in account 3813, and the increase in account 3833, resulted in a reduction of $50,538.

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Mr. Rodriguez reported the Insurance Examiners account was used to provide funds for financial examinations performed on insurance companies. There was a base adjustment regarding the reallocation of the overhead costs. As a result of the division’s cost reallocation methodology, the transfer from the Insurance Examiners account to the Insurance Regulation account was reduced by $61,223 in FY 2000, and $51,182 in FY 2001. Although the division’s new cost allocation methodology resulted in a lower transfer to budget Account 3813, Insurance Regulation, overall inter-divisional transfer into the Insurance Regulation Budget Account was increased.

Module E-125 made adjustments to reflect a change in the way the division accounted for costs associated with investigative examinations performed by the division’s Compliance Investigators. Previously, the costs for that type of investigation were not recovered because costs were absorbed in Budget Account 3813. Those costs would now be accounted for separately and charged in the Insurance Examiners account. Mr. Rodriguez indicated there was also a cost adjustment to reflect the division’s latest estimates associated with investigative examinations. The net effect of that change was an increased transfer to the Insurance Regulation account of $8,106 and an increase to reserves of $8,104 by the end of the biennium.

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Mr. Rodriguez stated the account was used to supply funds for educating the division’s staff, the insurance industry, and the public, in matters dealing with insurance. An adjustment was made to the account to reflect the division’s new inter-divisional cost allocation, which resulted in an increase in the transfer into the Insurance Regulation Budget Account, number 3813. The change in FY 2000 would be an increase in the amount of $18,251, for a total transfer of $23,261, and in FY 2001, the allocation to account 3813 would be $24,017, a net change of $18,375. The net effect on reserves resulting from that change would be a decrease of $36,626 by the end of the biennium.

Decision unit E-126 would eliminate funding that was set aside for the division to conduct insurance research activities, which was allocated to the account by the 1997 Legislature. Mr. Rodriguez stated, unfortunately, the division had been unable to develop a strategic plan to use those funds, nor would it be able to do so in the near future. The funds would be reverted to the reserve account until the division could devise a plan to utilize them.

Chairman Chowning noted in decision unit E-126, $25,000 was deleted and reverted to the reserve account, which showed a balance of over $300,000 for each year of the biennium. She asked why the $25,000 was not used for research since it was allocated to the division for that purpose by the 1997 Legislature. Chairman Chowning wondered if the committee should reallocate a portion of the reserve to the University/Community College System, so that some classes, internships, or scholarship programs might be offered. She explained she felt the funds could be used for consumer education in areas such as the graduated driver’s license program for youth. Also, she noted there were instances where persons purchased operator insurance instead of vehicle insurance, thinking the whole family would be covered, and when an accident occurred, found they carried the wrong type of insurance. Such a scenario created many victims, such as the person hit by the uninsured driver, and the driver who thought he carried sufficient insurance coverage. Those were but two areas where Chairman Chowning felt the funds could be utilized, and inquired if that would be possible.

Alice Molasky-Arman, Commissioner of Insurance, indicated the $25,000 allocated to the division for each year of the current biennium, was earmarked for research purposes. She explained the division did explore different types of research projects that it could conduct, however, found none that could have been supported by the $25,000 allocation. What the division considered were such things as the uninsured population. As an example of the costs involved, Ms. Molasky-Arman reported that the Interim Committee on Health Care expended over $100,000 in order to conduct its research.

Further, Ms. Molasky-Arman explained, the division had been asked to put together a comprehensive program to address the reserve balance and, quite frankly, the only excuse for not doing so was that the division had been overwhelmingly involved in the development of the 3-Way workers’ compensation insurance plan. The division’s education coordinator, as well as its technical staff, was involved in that endeavor in the area of regulations, and in the establishment of educational guidelines and courses for insurance agents and/or brokers. She stated the division had, however, approached members of insurance industry associations, who had the expertise and professionalism to put together courses.

Ms. Molasky-Arman indicated the division currently had a skeletal outline of a comprehensive course, which would target various insurance groups, i.e., youthful drivers, senior citizens, and small and large businesses. The program would address not only the explanation of insurance policies, but also the rights under those policies and how to obtain reparation. So far, the Nevada Independent Insurance Agents had put together a wonderful program in skeletal form, and she was planning to approach the Health Underwriters, because an educational forum should be presented that included all aspects of the insurance industry. According to Ms. Molasky-Arman, she did plan to have a more complete outline of the program within 3 to 6 months, which she would present to the IFC.

Chairman Chowning inquired if there was a position in the division dedicated to research and, if so, felt that person should have brought the various issues forward, rather than working on regulations. Ms. Molasky-Arman stated the person in that position was working on regulations concerning agent licensing. That person was responsible for reviewing the courses the licensees were required to take to meet the continuing education requirement; the position was also responsible for guiding the education of division staff, a program also supported by the budget.

Chairman Chowning stated since the $50,000 was being reverted back to the reserve account, it was apparent the division had not been prepared to use the funding during the past biennium; Ms. Molasky-Arman stated that was correct. Chairman Chowning then inquired if the division would approach IFC for funding approval if the anticipated program was completed within the 3 to 6-month time period. Ms. Molasky-Arman replied it was her understanding the division would be required to approach IFC for approval of reallocation of the funds, should the program develop. Further, she stated, the division had attempted to utilize the $25,000 for public service announcements in order to notify the general public of the availability of services offered by the Division of Insurance. The deputy commissioner sought the assistance of various advertising firms, and found that $25,000 was not sufficient to put together even a single public service announcement.

Chairman Chowning noted the division was not able to leverage those dollars as Consumer Affairs had, where for $16,000 that agency had been able to acquire approximately $250,000 worth of public service announcements. Ms. Molasky-Arman stated the Insurance Division had not been successful in that venture, and she would be amenable to discussing the matter with Consumer Affairs. Chairman Chowning suggested Ms. Molasky-Arman consult with Ms. Jarman-Manning, Commissioner of Consumer Affairs. Perhaps the committee could review the account during the next legislative session, suggested Chairman Chowning, with the idea of reallocating funds not used for research activities, then perhaps a bill could be introduced to divert those funds to other agencies.

Regarding the position within the division dedicated to research and education, Chairman Chowning asked for an explanation of why that person had been developing regulations, and wondered if the position needed to be reevaluated regarding job description. Mr. Rodriguez affirmed that the position had been functioning outside the education and research area, and it was his understanding since it was funded with an assessment for education and research, the primary duties should be dedicated to that purpose. Ms. Molasky-Arman emphasized the regulations that position was working on were completely related to the education of the division’s licensees with respect to workers’ compensation. She did not think the duties were outside the education field whatsoever. That person was responsible for certifying or accrediting all courses of instruction that fulfilled continuing education requirements for licensees.

Chairman Chowning thanked Ms. Molasky-Arman for her testimony, and instructed her to work with staff to generate a report for the committee which would assure it the position was working within the requirements.

Mr. Rodriguez stated the final adjustment to the account, E-127, would make an adjustment to isolate costs which were originally "lumped" into one general ledger, such as postage, telephone, and printing costs, so they could be tracked separately. Also, reductions were made in the amount requested by the agency for actual postage, adjusted from $10,000 to $8,000 per year. The 800-telephone number established by the division was adjusted down to approximately $200 per month, or $2,400 per year. That reduction to the account over the biennium would amount to $53,752.

Ms. Espinosa informed the committee one thing the division would like to do, in light of the current reserve balance, would be to allow it to continue to build, so the division could purchase integrated software. It would benefit the division’s agents by allowing them to research and more expeditiously process filings, and would also benefit the entire division staff. Chairman Chowning stated the Attorney General had issued an opinion that the reserves could be used for that purpose and asked Mr. Rodriguez to research the issue and report back to the committee.

Mr. Rodriguez advised the reserves would have to continue to build to a sufficient level that would allow the division to purchase the software. At the present time, based on the division’s estimate of $116,000 as the bottom line for the reserve level, it would need to build beyond $400,000 before sufficient funding would be available for such a software purchase. At that point, Mr. Rodriguez explained, the division could approach IFC and request funding for the software.

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Mr. Rodriguez stated staff recommended one adjustment to the base budget. The cost allocation would be adjusted upwards for transfer into Budget Account 3813. The transfer in FY 2000 would be $50,720, a net change of $35,698, and in FY 2001 the amount transferred would be $52,368, a net change of $35,441. Also, the training module, E-125, would be deleted because it was determined training and education would be funded from Budget Account 3824, a net reduction of $5,400 over the biennium.

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There being no further business to come before the committee, the hearing was adjourned at 9:30 a.m.

RESPECTFULLY SUBMITTED:

Carol Thomsen,

Committee Secretary

APPROVED BY:

Assemblyman Vonne Chowning, Chairman

DATE:

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Senator William O’Donnell, Chairman