The Assembly Ways and Means and Senate Finance Joint Subcommittee on General Government was called to order at 8:15 a.m., on Tuesday, April 20, 1999. Senator William O’Donnell, Chairman, presided in Room 2134 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List.

Senator William O’Donnell, Chairman

Senator Lawrence Jacobsen

Senator Joe Neal

ASSEMBLY SUBCOMMITTEE MEMBERS PRESENT:

Mrs. Vonne Chowning, Chairwoman

Mr. Bob Beers

Mrs. Marcia de Braga

Ms. Chris Giunchigliani

Mr. David Goldwater

SUBCOMMITTEE MEMBERS ABSENT:

None

STAFF MEMBERS PRESENT:

Dan Miles, Fiscal Analyst

Gary Ghiggeri, Principal Deputy Fiscal Analyst

Chairman O’Donnell called the meeting to order. It was noted that Assemblyman Goldwater was a member of two subcommittees meeting at the same time and he would be present when possible.

Jim Rodriguez, Policy Analyst, Legislative Counsel Bureau stated the closing sheets showed the result of the subcommittee’s request to have the courts review their budget again and return with a budget revision that represented an 11 to 13 percent increase in General Fund requests.

Staff made an attempt to address all the court’s General fund budget together. The accounts under review were General Funds Budgets:

• Budget Account 1494 – Supreme Court;
• Budget Account 1484 – Planning and Analysis;
• Budget Account 2889 – Law Library;
• Budget Account 1483 – Administrative Office of the Court; and
• Budget Account 1487 – Judicial Education.

Staff attempted to consider the court’s priorities and build upon the priority requests until the percent of increase reached 13 percent. The closing sheets represented the eight top priorities as identified by the court. Unfortunately when the subcommittee gave directions to the court for the review of those budgets, there was some confusion as to the intent of the subcommittee. The courts had provided staff with their revision that was considerably higher than the figures arrived at by staff. The courts had interpreted the subcommittee’s direction to mean 13 percent of their overall budget including those accounts that were statutorily controlled and not part of the adjusted Base budget process. Mr. Rodriguez stated the statutorily controlled budgets included District Court judges’ salaries and pensions.

The net effect of considering those statutory budgets in computing the increase would be to apply the 13 percent increase factor overall for a total of about
$15 million. The application of that 13 percent would be to shift statutory funding over into the courts’ operating budgets.

Staff had informed the courts that was not the intent of the subcommittee. The intent of the subcommittee was to address the 12 to 13 percent budget needs on the operating budgets only, which were under the control of the subcommittee. Since that time the LCB and court staff members had met to come to some type of agreement of what constituted the Base budget. Court staff was present to provide their latest revision that was slightly higher than what LCB staff provided in the closing sheets.

The closing sheet figures represented a 13 percent growth in General Fund requests, not adjusting any of the assessment fee accounts other than operating and technical adjustments. The difference in total effect was that LCB staff had arrived at a General Fund budget increase overall of about 13.3 percent.
Mr. Rodriguez felt that the courts’ staff would present a budget that fell closer to 20 percent and the real decision of the subcommittee would be that of what level of funding was appropriate.

Chairman O’Donnell asked if the courts had computed their revised budget by adding into the Base budget 13 percent of all the judges’ salaries. Karen Kavanau, Administrative Officer of the Courts (AOC), replied that was correct. During the budget hearing on April 1, 1999 the courts thought they had clarified the understanding of what directive the subcommittee was giving the courts.

After the budget hearing two of the AOC employees called Mr. Rodriguez to verify again precisely what the subcommittee directive was. The courts had felt confident based on the information exchanged in the telephone call that they understood the assignment. Ms. Kavanau stated, with that said, on April 19, 1999, court staff had slashed another $1.5 million from their budget requests. Overall, the courts had cut $3 million out of the General Fund requests for the three budget accounts.

The courts cut two-thirds of their position requests and eliminated or drastically reduced every other decision module in the budget. The court felt what was left in their budget requests was what it needed to manage operations effectively, if not as efficiently as it had hoped.

Chairman O’Donnell asked what the difference was between LCB staff’s proposed budget revisions and that of the court. Ms. Kavanau replied her understanding was the difference was approximately $300,000 per year. Chairman O’Donnell asked hypothetically if he were to eliminate $600,000 from the budget, what elements should be removed. Ms. Kavanau replied the difference was spread between Budget Account 1494, the Supreme Court operating budget and Budget Account 1484, Planning and Analysis and a small portion in Budget Account 2889, the Law Library.

Chairman O’Donnell reiterated there was approximately $600,000 difference between what staff was recommending and what the courts were requesting. He noted the courts had used all of the district court judges salaries in the Base budget from which to calculate an increase of 13 percent. Ms. Kavanau replied

The courts had used the district judges salaries in their original recalculations but as of the previous day they had cut all of that out of their calculations. That had resulted in an additional $1.5 million cut from their budget on the previous day.

Chairman O’Donnell stated the subcommittee was actually hearing all of the courts budgets as a whole. Ms. Kavanau stated Budget Account 1483 was an assessment-based account. The Chair stated the budget accounts under consideration were those accounts that affected the General Fund. He added the court system needed to "make their case" as to why they needed $600,000 above the 13 percent as calculated by LCB staff.

Karen Kavanau explained the court was requesting 7 positions, which was a cut from the 20.5 positions requested in the original budget. The first four positions comprised two lawyers, a deputy clerk for the clerk’s office and a judicial education secretary and were specifically tied to caseload growth. The caseload had an anticipated growth rate of 12.5 percent average increase per year. The four positions were directed to caseload and addressing the work backlog in the courts. They were also the four positions that were originally requested in 1997. The legislature had asked the positions to be deferred until the 1999 Legislative Session because the changes in the courts that required the additional employees were not going to occur until January 1999. Two justices were added to the Supreme Court in January.

The other three position requests were for technical staff that included two internal and one external technical assistance staff. The court case management system had never had any technical assistance and that might have been part of the reason it had taken the courts 8 years to install the system. The system was currently in use on a limited basis because it needed a major overhaul. One requested technical position would support the caseload management system. Another technical position would be an overall information technology planner and implementer for the Supreme Court. The court only had two network administrators and had no one qualified, skilled or educated to make any kind of recommendations to the court in terms of what kind of technology should be considered in the future or assist with the current implementation projects. That position was a case management application support person. In 1997 the Administrator of the Court who was responsible for the infrastructure at the Supreme Court did not ask for any new positions.
Ms. Kavanau did not know why.

Chairman O’Donnell stated 25 positions were given to the court system during the 1997 session. Ms. Kavanau stated the courts actually got 21 positions that were lawyer or lawyer support. The other four were judges and the courts had not received any infrastructure positions.

The final technology support position request was for a statewide technology person for the Uniform System for Judicial Records. That position was desperately needed to analyze data that the courts would soon be receiving and produce the reports mandated by law.

Ms. Kavanau stated the courts had a very short list of decision modules. The largest decision module was for caseload growth to cover the operating expenses in Budget Account 1494. That increase simply reflected the anticipated caseload growth and supplies for the Settlement Conference that was so successful. Chairman O’Donnell stated the subcommittee and the courts had agreed to an increase of 13.5 percent. He understood where there could be some confusion but asked if the courts would be able to live with only one additional position. Ms. Kavanau asked which position the Chair was proposing should be retained. The Chair stated the courts had provided a list of twelve prioritized position requests and his proposal was to retain the first priority position. Chairman O’Donnell stated he thought the courts were requesting 12 positions and Ms. Kavanau stated the courts had requested 12 positions at the hearing on April 1, 1999 and since that time they had reduced that number to 7 positions.

Nevada Supreme Court Justice Bill Maupin stated because of an understandable misunderstanding the AOC came to the justices and indicated that to all practical purposes the court’s budgets were ready to be closed on the basis of a 12 percent increase. The assumption was that the 12 positions were included in that increase. The courts had reduced their staff requests to seven positions and Justice Maupin emphasized the courts had hoped to receive two to four additional lawyers because since the new central staff positions were allocated through the 1997 Legislature, the courts were currently able to stay on top of caseload increases, but they stood to fall behind again as caseloads increased. Justice Maupin stated there was "still a big pig in this belly (referring to the backlog) going back 5 or 6 years now of 2,400 cases, I think its closer to 2,000 based upon our productivity in the last couple of months." The central staff of the Supreme Court was maximally committed to the caseload but could not assist in other areas of reform the courts wished to undertake. Some examples were expanding the Settlement Program into district courts, reconciling the State Rules with the Federal Rules of Civil Procedure, and an appellate handbook for use by the bench and bar in terms of more effectively litigating cases through the Supreme Court. None of those programs could move forward due to current central staff commitments.

Justice Maupin stated staff attorneys were a very important segment of the proposed budget. Of the seven requested positions only two lawyers were included and that was a major reduction in what they had hoped for.
Ms. Kavanau explained Justice Maupin was referring to the first four positions in the priority request list deferred from the 1997 Legislature of which two were for attorneys.

Chairman O’Donnell asked exactly what seven positions were being requested. Ms. Kavanau re-stated four position requests were left over from the 1997 Legislature that included:

• A principal attorney;
• A staff attorney;
• A deputy clerk; and
• A judicial assistant.

Those positions were backlogged caseload driven. The three remaining positions included:

• The case management system support person – no one currently on staff could perform that function; and
• A Management Information System person – to help the court move into the Twentieth Century.

She explained the court anticipated being asked to research use of teleconferencing and was not yet up to speed for the twentieth century even though the twenty-first century was just around the corner.

• The final position being requested was the court statistics person to analyze the court statistics that would be gathered through the Uniform System for Judicial Records. Those were the only seven positions currently being requested.

Chairman O’Donnell asked what the $600,000 increase above what LCB staff recommended would be used for. Ms. Kavanau replied she was not sure how LCB staff got to their figures. The courts, in their proposal, were requesting the seven positions, and some funding in decision modules discussed earlier that equated to $300,000 in each year of the biennium. There were about
20 specific items included in the $300,000 request. The largest item was funding for supplies, telephone and postage, and settlement judge costs because of the increased caseload. Those items totaled $85,000 in the first year and $145,000 in the second year of the biennium. The remaining funding requests were minimal. All major items were cut such as the Court Management System Study and reduction of copier requests from four or five to one. Some mandated training was anticipated and some funding was requested for that. Personal computer replacements were cut in half.

Ms. Kavanau stated the courts had hoped to produce a pamphlet similar to what the Legislature used so the original request for that was $55,000 and had been reduced to $10,000 in the revisions. The courts felt they had cut everywhere they possibly could without endangering the courts’ ability to do their job effectively.

Chairman O’Donnell asked if the courts had an Internet web page and
Ms. Kavanau stated they did not. The Chair suggested the requested $10,000 for pamphlets should instead be used to establish a web page and produce a pamphlet on the web page for people to copy. Ms. Kavanau responded that was an excellent idea, unfortunately the Supreme Court received thousands of visitors each year such as schools that ask for a little information to take away with them.

Senator Neal referred to Budget Account 1484, Planning and Analysis, and noted the Research Budget seemed to be dealing with the same activity, namely, the Uniform System of Judicial Records. Those two budgets combined amounted to $2.1 million. He asked if the two budgets could not be combined. Ms. Kavanau explained Budget Account 1484 was a General Fund agency for planning and analysis that gathered statistics. Budget Account 1486 was the Uniform System for Judicial Records which reflected a "pot of administrative cash" available to the 91 trial courts statewide to implement technology. For most of those courts that was the only source of funding they had. While Budget Account 1486 increased, it received approximately $400,000 per year through administrative assessments from the courts. An equal amount was passed on to law enforcement. That funding needed to be reserved for technology, specifically hardware, software and communications.

One position was currently being paid through administrative assessments because it was so desperately needed approximately one year ago. The courts went through the Interim Finance Committee and received approval for a person to travel to the 91 courts and provide them with advise and support in trying to implement technology that was consistent with the new standards established by the Planning and Analysis Division. The funds in Budget Account were not perceived by the court as money available to the Supreme Court.

Senator Neal asked what progress had been made in implementation of technology. Ms. Kavanau replied the courts were a lot further along at present than they had been one year ago. The court system had just completed an agreement between all the courts on what data would be collected and the definitions of the data. Senator Neal asked if the Supreme Court could order adherence to the Statistical Data Model. Ms. Kavanau replied the Supreme Court would be doing just that during the summer. Once the State Judicial Council had finished with the model which was expected in June 1999, the model would be presented to the Supreme Court with a recommendation to order compliance. She noted issuing the order and the court’s ability to comply with the order were two different things. The funding in Budget Account 1486 would assist in that effort.

Chairman O’Donnell asked Ms. Kavanau to review each of the budget requests for the subcommittee above and beyond the 13 percent increase to determine if they were justified. Ms. Kavanau replied the first item was Caseload Growth costs for operating, meaning supplies, postage, telephones, and copiers. It was a function based on an increase in caseload.

Chairman O’Donnell asked if that was represented in decision unit M-200 at $85,091. Ms. Kavanau replied other items were included in that figure. The caseload operating costs were $71,498. The remainder would be costs attributed to the increased number of cases being handled by the settlement judges.

Chairman O’Donnell asked for a justification of the request for a Kodak copier. Steve Bremer, Manager of Budgets and Finance, explained the Kodak copier cost was estimated at $37,960 to replace one machine over the biennium.
Mr. Bremer explained due to the budget cuts the number of copiers requested had been cut to one copier. Senator O’Donnell asked how badly the copier was needed. Mr. Bremer stated based on his experience, it was badly needed. The current copier broken down consistently during high volume times. During the week preceding "court week" when all the files were copied for justices and staff many thousands of copies were needed in a very short time period. It seemed every time the copier was needed it broke and hours were spent trying to fix it or get a technician to service it. Sometimes that took 1 or 2 days and in the meantime staff was scrambling all over the building trying to find a copier that worked.

Assemblywoman Chowning noted the closing sheets only indicated lump sum amounts, and asked how much of the funding request represented the copier and how much was related to microfilming. She asked if the microfilming could be deleted. Ms. Kavanau stated the budget figure for microfilming was $19,000 annually, which was one-half of the original budget request. The clerk’s office had fallen behind in microfilming by years worth of documents. A large storage room in the basement was stacked full of documents that could not be destroyed and consumed a large volume of space. In the long run it was more cost-effective and efficient to microfilm them than to allow them so much space. Some boxes were even stored in the court.

Assemblywoman Giunchigliani suggested the subcommittee "cut to the chase." The subcommittee had requested the courts to limit their budget increase to
13 percent. That cut appeared to have been done for the positions, but it was her understanding the rest of the items being discussed might have been retained at a 20 percent increase level. She asked where the $600,000 difference was between what the courts were still requesting and what had been proposed by LCB staff based on the 13 percent. Ms. Kavanau stated
LCB staff and the courts had really never come to an agreement regarding requested positions.

On April 16, 1999 the courts were still under the impression they had more money to work with. On that evening LCB staff and Ms. Kavanau had worked to include the eight position requests that the courts had felt was the minimum position increase they could live with. LCB staff had informed her in an attempt to fund all eight positions; staff had dropped every other decision unit in the budget. The court had suggested one position be cut and the decision units be retained. The courts were never at a point where they intentionally left items in the budget regardless of the effect. The AOC and the justices reviewed every single item on the budget list. What had been submitted was a fraction of what had originally been requested.

Assemblywoman Giunchigliani acknowledged the efforts made, but the subcommittee was at the point in time where they had wrestled with many budgets that had been grossly underfinanced through the years. The problem was the current budget cycle was very tight. She stated she was just trying to understand where the courts felt they had $600,000 that LCB staff did not think was available. Ms. Kavanau stated the difference was somewhere in the decision units other than personnel. Assemblywoman Giunchigliani asked if the subcommittee closed the budgets at 13 percent as was agreed, with staff recommendations, if that would work and let the courts address their needs without inclusion of the $600,000. Ms. Kavanau stated for the record, "When the subcommittee asked the courts to come back with 13 percent the courts agreed they would try to do that, but for Assemblywoman Giunchigliani, the court never came to an agreement of 13.5 percent. The court never agreed to that. They said they would do everything they could to get down to that number." Assemblywoman Giunchigliani stated the courts came in with a budget growth of 40-some percent and the subcommittee appreciated the cuts that had to be made.

Assemblywoman Giunchigliani asked if Mr. Rodriguez could explain how the budget would be closed under the suggestions she had made. Chairman O’Donnell instead asked if the courts could live with a split of the difference between what staff had recommended and what the courts absolutely had to have. The state had many needs and those needs had to be balanced with the needs of the court. He asked if the court could live with an increase over the 13 percent directive of $300,000.

Assemblywoman Chowning commented that she appreciated the needs expressed by the courts, but there were so many budgets because of the budget restrictions that only had increases of between .5 and 3 percent. She noted it was not just one budget but many that came in with very small increases. A 13 percent increase seemed like a large increase given the budget situation. She noted the budget appeared to include items like modular furniture and remodeling and she asked why they could not be funded in another manner. Ms. Kavanau replied all the items Assemblywoman Chowning referred to had been cut from the budget already. Assemblywoman Chowning stated the budget sheets presented to the committee showed those items and the subcommittee could not close the budget without the details of what actually remained in the budget requests. Ms. Kavanau responded LCB staff presented a budget based on their recommendations the representatives from the AOC were talking to the revised budget they submitted.

Justice Maupin stated in terms of the nature of subcommittee members questions, representatives of the court were at a disadvantage, particularly because the budget issues had been discussed 4 days ago at length between court staff with all the department heads present and they were operating under a series of assumptions at the time but the assumptions were based on "apples" and at the subcommittee hearing the budget was being discussed as "oranges." Justice Maupin recommended the courts’ budgets be deferred for a couple of days so that a better analysis of budget requests from both LCB and the courts could be done. He noted the budget process was very important to the courts because the Supreme Court of the state was charged with operating the overall court system and the time frame within which cases were commenced to final resolution was totally unacceptable. The courts had done everything they could to deal with the problem. The members of the legislature had worked with the courts but the current budget deliberations were very critical issues that could mean the difference between the increase in productivity contemplated in 1997. Justice Rose would have attended the hearing but the Chief Justice had been under the impression the budget could have been closed based on the budget as revised by the courts.

Chairman O’Donnell acknowledged Assemblywoman Giunchigliani had made a suggestion and the Chair had a suggestion. He recommended the hearing on the Supreme Court budgets be recessed and asked the courts to meet with
LCB staff, put the gloves on, and land on a budget number that was about halfway between the two budget proposals. He requested the courts to return on Friday April 23, 1999 to attempt a budget closure. He apologized the agencies were dealing with "apples and oranges," but maybe by working on the budgets again the entities could make some kind of "fruit salad" out of the budget.

Assemblywoman Chowning noted it was very difficult not having the budget reviewed in the first cuts by the executive budget division and perhaps that should be a consideration.

Chairman O’Donnell closed the hearing on the court budgets and opened the hearing on the Printing Budget.

Senator Jacobsen offered the subcommittee’s thanks to the Printing Office for the excellent job they had done in the past few days of printing all the material needed for major legislative deadlines. Chairman O’Donnell agreed.

Don Bailey, State Printer represented the Printing Division of the Department of Administration. He stated he was present to answer questions regarding the proposed quick print operation to be established in Las Vegas at the Grant Sawyer Office Building. He had worked with LCB staff Brian Burke on the new assessment sheet provided to the subcommittee members.

Brian Burke, LCB Policy Analyst referred members to page 15 of the closing sheets that stated the main issue for which the budget was held from the last subcommittee was the quick print satellite office. The subcommittee had asked for a dollar savings estimate. The initial information provided had been a percentage of per-copy savings.

The Printing Division had provided the requested information. According to that information there would be savings of $82,043 in FY 2000 and $96,840 in
FY 2001 for a total savings of $178,883 over the biennium. That savings would be realized through the availability of quick print. Those estimates were built by comparison of the quick print cost per-copy of 3 cents in FY 2000 and 3.25 cents in FY 2001. Commercial printing was at 3.8 cent and 4.1 cent respectively. That represented a savings of approximately 27 percent, a lot lower than some of the previous percentage estimates but the savings were still significant.

Assemblywoman Giunchigliani stated she approved of the concept of a quick print satellite operation, but she still had a problem. Of the 92 agencies currently using outside vendors, the Printing Division had stated 34 were in the

Grant Sawyer Building and 36 at the Bradley Building. She asked if Printing really believed staff would drive over from the other buildings to have their quick print functions done. Mr. Bailey stated his agency hoped all the agencies using outside vendors would use inter-department mail for their requests and then the agency making the order, would only have to pick them up when the job was complete. He noted the budget did not include funding for delivery services. Assemblywoman Giunchigliani said budgets could not be built on "hope."

Chairman O’Donnell stated the other option would be that Printing had to physically box up orders to send to the agencies. Assemblywoman Giunchigliani stated she was trying to get a handle on whether a policy shift was involved with southern agencies no longer shipping orders to Carson City but requested a breakout of what savings were being based on. Mr. Bailey replied by law, state agencies were required to use state printing facilities. In the past, the State Printing Office had not been convenient for southern agencies’ printing needs so the agencies went to outside vendors which was understandable. Once the State Printing Office provided the quick print service in the Las Vegas area it was expected the agencies would travel to the Printing Division for the service as they did in Carson City and Reno. The Printing Office did not offer delivery unless the quantity was 5 boxes of material or more, and that practice helped keep costs down.

Mr. Bailey stated there were 30-some agencies in the Grant Sawyer Building who would be the direct contacts but agencies were located all over the Las Vegas area. The Printing Office had tried to determine how many agencies were in the area but they did not have a solid count as yet. His agency hoped to get memos out requiring the agencies to use the state quick print facility. It appeared the southern agencies were spending approximately $390,000 between what they could do currently with the Printing Office and outside vendors. The State Printer tried to be competitive with private industry. Assemblywoman Giunchigliani asked if the $82,000 and $96,000 in each year of the biennium would be the savings on the shipping. Mr. Bailey replied savings were anticipated on the difference between the Printing Office cost of
3 cents versus other vendors’ cost of 3.8 cents. Another anticipated savings were the folding and boxing mechanisms that would also be savings to the agencies. Mr. Bailey stated the big factor was the cost per copy. Assemblywoman Giunchigliani asked if there was a way to track actual savings if the Las Vegas Quick Print satellite was approved as a 2-year pilot project. Mr. Bailey stated the savings were already tracked through performance indicators and if the Las Vegas operation was approved that facility would be added to the performance indicators. Assemblywoman Giunchigliani asked if mileage and shipping could be broken out as well.

Assemblywoman Giunchigliani confirmed if the Las Vegas project was done as a 2-year pilot, the Printing Office could track costs so that LCB staff would know whether or not a savings occurred and memos would be sent to the Las Vegas state agencies. Mr. Bailey replied he would send memos to all the agencies they could identify and he planned to request the Director of the Budget Office to send memos as well. Assemblywoman Giunchigliani stated she still had a discomfort with the fact the Printing Office could not break out the cost saving areas of the budget currently and wondered how they would do so in 2 years.

Assemblyman Beers focused on FY 2000 figures on the spreadsheet provided by the Printing Office (Exhibit C) and stated his understanding that the variable costs were copy charges, other charges were for stapling and folding and shipping. The sum of those items was on line 4 which reflected a per unit charge times 9,273,268 impressions. The $240,888 was a fixed figure reflecting a machine and the person to run it. Assemblyman Beers stated the Printing Office was hanging the viability of the product on the 9,273,268 impressions. He stated if that number dropped significantly, the project would not be nearly as viable.

Assemblyman Beers stated he was concerned whether there was sufficient momentum within the Las Vegas-based agencies because there was a fair amount of behavioral modification to be accomplished and that was an inexact science. He commented some budgets presented by various state agencies had requested the purchase or lease of copiers. He asked how many Las Vegas-based offices, in the absence of a quick print office, already had copy machines and were handling a substantial portion of the estimated 9,273.268 copies internally. He was concerned those issues might cause the impressions forecast to not be achieved and the financial viability of the project rested on that forecast. Mr. Bailey stated the 9 million impressions was a low estimate of the forecast and agreed with Assemblyman Beers that if the number of impressions went below that, less revenue would be received. Mr. Bailey stated behavior modification was a task between the Governor’s office, Printing Office, and the legislative body. He stated if a 2-year pilot was approved, it would be up to the State Printer to get the behavioral pattern changed. The Printing Office had met with a number of the agencies already in the Sawyer and Bradley buildings and those agencies were anticipating the opening of the quick print operation. The planned equipment would do the larger jobs currently being sent out. It was hoped the individual copiers could be reduced but nothing was a guarantee. The Printing Office shared a controlling factor of the copiers with the State Purchasing Division. Any agency requesting a copier was required to make the request through the office of the State Printer for authorization. Once approval was granted the request was forwarded to State Purchasing. Controlling factors were provided in law for the services and if the pilot was approved, it was up to Mr. Bailey and his staff to get control of behavior modification during the 2-year pilot. As a businessperson, Mr. Bailey would be the first one to return and state the project had not worked because he did not want to run an operation that did not at least break even.

Chairman O’Donnell stated his sense that the subcommittee would like to approve the project as a 2-year pilot. He asked staff to recap their closing documents.

Staff stated the only other issue was that of overtime. Some overtime had occurred in 1997 and 1998. He asked if the agency could live with a funding reduction in overtime from $186,000 to $150,000. Mr. Bailey agreed and stated he would work with LCB staff during the interim.

Assemblywoman Chowning stated the overtime requests were for $13,000 and $21,000 and she did not see how the $150,000 was computed.

Brian Burke, LCB staff stated the $13,805 in FY 2000 and $21,805 in FY 2001 was the addition in overtime the agency was requesting over the Base budget. The Base amount was $186,696, the amount spent in FY 1998. The Chair commented $150,000 would actually cut the overtime below the Base amount because of the quick print office.

Rick Combs, LCB Program Analyst stated there were a number of reorganization issues in the Division of Agriculture accounts. The Plant Industry account was discussed together with the reorganization at the hearing on April 13, 1999.

Technical adjustments to the account included adding reimbursement revenue from the Nevada Beef Council. The Nevada Beef Council had originally requested removal from state government but the bill draft did not get approved. The Division of Agriculture had administered the account in the past and thus the reimbursement for those services were added.

Another technical adjustment was made to remove a software training video in decision unit M-200 because it duplicated the video in the Veterinary Medicine account. Hardware and software costs had been reduced based on updated pricing information from the Purchasing Division.

The cost of the network server recommended in decision unit E-720 had been allocated across all of the Division of Agriculture accounts as had been discussed in the subcommittee hearings.

Mr. Combs stated technical adjustments were made to the allocation of revenues in the base and decision unit M-300 to ensure all the Department of Motor Vehicles and Public Safety (DMV) Pollution Control funds went into appropriate accounts if the reorganization was approved.

M-200 recommended a new Management Assistant to serve as a receptionist and provide clerical support to the administrative staff in the Reno office.

M-201 recommended two new Agriculturist II positions. Those positions were to inspect nurseries to ensure dangerous insects were not imported into Nevada, and to monitor Pest Control Operators. Amendment #96 to The Executive Budget recommended changing one of the two positions from a start date of October 1999 to a start date of July 1999 and recognizing that position as the person who would work with the Africanized Honey Bee problem in Nevada.

The subcommittee, in previous hearings had asked the agency to go back and determine whether the positions could be funded from fees paid by the industry. The agency provided a figure of $97,130 in the second year of the biennium. If the budget were approved with the fee-funding, legislative action would be necessary to amend the fee amounts in the statutes or to remove the fees from statute and place them in administrative regulation. Chairman O’Donnell stated he thought a bill to make the change was currently in the Senate. Staff indicated the change would need to be made through separate legislation.

Assemblywoman Chowning stated a committee bill draft request would be needed if the subcommittee agreed the fee setting should be taken out of statute. She requested the Budget Office to explain how they felt the raising of fees would be received. Much discussion had occurred in the subcommittee regarding the drastic needs regarding the Africanized bees and the pest control problem. Chairman O’Donnell stated Senator Porter also had a bill to appropriate $10,000 for the eradication of the Africanized bees.

Paul Iverson, Director, Division of Agriculture, stated he had talked to the Governor’s office about the change from statute to regulation. The Governor appeared to have no problem, especially since the agency had talked to some of the industry representatives and they did not appear to have a problem with the change either. There would be plenty of opportunity through the public process for comment.

Mike Nolan, Budget Office, stated he had discussed the issue with Mr. Perry Comeaux who basically reiterated the same position. The Governor had agreed with the change as long as the industry concurred with the need to increase fees. The Budget Office was requesting the agency to get written confirmation from the pest control and nursery organizations to substantiate any increase. Mr. Nolan added changing the fees from statute to regulation had a direct impact on the agency’s ability to come forward with their funding plan for the next biennium. There was a timing issue for fee increases going to the public and if the legislature waited until the next biennium it would create further havoc.

Assemblywoman Chowning asked what type of confirmation Mr. Iverson was expected to provide from the industry. Mr. Nolan replied his understanding was that there were pest control and nursery operator trade group associations that represented the industry as a whole and concurrence from those associations was what was being requested. The Chair clarified the Governor was looking for a consensus of the industry in writing. He commented there was a very large problem with the Africanized bees and that was very serious in a tourist economy.

Assemblywoman Chowning asked if the need for a bill draft request had been determined. She added she would like to request it, if one was needed.

Assemblywoman Giunchigliani stated she understood the issue with the regulation versus statute was that, if a bill was requested the fee should be placed in the bill that would allow the Budget Office to work on the issue during the interim. Mr. Nolan stated the agency had asked to have all fees taken out of statute and placed in regulation. The agency would then go through the Board of Agriculture and the public process. A funding policy had been requested for the agency to cost allocate and cover their budget in FY 2002 and FY 2003. Due to timing constraints in the regulation process for establishment of fees, if it was not removed during the current legislative session, it would delay the agency’s process and impinge on the ability and flexibility to arrive at a viable funding program for the next biennium. Mr. Iverson stated he had a problem regarding the request for the agency to get a written comment from the industry. Only 35 out of 400 pest control companies were members of an association. Very few nurseries were in an association. The members of the State Board of Agriculture would have the ability to look at the issue. He noted if he went to the industry and asked it to support a fee increase the response would probably be a resounding no. But, if he could go back to the industry in the interim and say, "Here is what the costs are associated with testing and inspections and we need a fee increase to pay for that service," he did not see a problem with the industry. The Board of Agriculture agreed the fees were low but Mr. Iverson stated the agency needed to do a cost analysis and determine what the fees should be. That was exactly what the audit had proposed.

Assemblywoman Giunchigliani agreed with Mr. Iverson and stated she had understood the Board of Agriculture could be the vehicle to take a position but she did not know if that would be satisfactory to the Governor. The public hearing process would allow public involvement. She confirmed if there was no fee increase, a position would have to be eliminated. Mr. Iverson responded if a fee increase was not realized the agency would have to return to the Interim Finance Commission (IFC) and ask for General Fund monies or eliminate the position.

Mr. Iverson stated he would not be comfortable eliminating the position. He noted the whole discussion centered on asking the industry to pay for the position in the second year of the biennium. The bee problem would not get any smaller.

Assemblyman Beers commented he had received a picture from the agency showing the underside of a doghouse in Henderson with a beehive on it. The bees were being shipped to the bee inspectors to determine if they were the Africanized bees. He asked if a result had been received yet. Mr. Iverson replied the results were not in yet but there was a 99 percent chance they were Africanized bees because the hive was so low and the cone was the right shape. He added another picture was coming of an eradication of a large swarm the day before in the Fremont Experience in Las Vegas. It was right underneath the canopy outside the McDonalds restaurant.

Assemblyman Beers asked if it had been there long. Mr. Iverson replied, no, it was a swarm, not a colony and the staff of the Fremont Experience shut down and called the agency.

Chairman O’Donnell asked what Mr. Iverson meant by eradication of the bees. He asked if they all died or if they moved on to somewhere else. Mr. Iverson explained when a pest control company eradicated a hive or swarm the bees were killed. In a colony that could mean anywhere from 10,000 to 100,000 bees. The agency never expected to be able to eradicate all the Africanized bees in Clark County. The only way that could happen under current circumstances was if "Mother Nature" eradicated them. Thus the program had changed to a public safety program of educating the public.

Senator Jacobsen stated he had worked with bees for a few years. They used to go to the pharmacy and get a powder by prescription and one teaspoon would kill a whole colony. He asked if Mr. Iverson knew what that was.
Mr. Iverson stated he had no idea, but it was probably no longer available. He explained the current method of eradication was with a spray of dish soap and water. The soap took the wax off the bees’ wing undersides and they suffocated.

Staff verified that by closing the budget in the manner the subcommittee had, it had approved the recommended reorganization of the division into two new bureaus, the Bureau of Administration and the Bureau of Weights and Measures had been approved.

Mr. Combs explained the technical adjustments. The expenditures for in-state travel in decision unit M-200 had been adjusted for the October 1 starting date of the new positions recommend in that decision unit.

The software costs were reduced based on the updated pricing information received from the Purchasing Division.

In decision unit E-710 one computer was removed based on the Executive Budget Office’s indication that they were approving a Work Program to replace the computer during FY 1999.

Decision unit E-802 was added to provide for the transfer of Budget Account 3537’s portion of the costs of a computer server recommended in decision unit E-720 of the Plant Industry account.

M-200 recommended funding for two new chemists. The division had indicated the current laboratory staff was unable to keep up with the number of tests they would like to perform on petroleum products in the state.

E-710 recommended replacement of a computer in FY 2000, a computer monitor in each year of the biennium, and various laboratory computer software upgrades.

E-720 recommended a new vapor-liquid tester and a quad BTU analyzer for each of the agency’s two petroleum laboratories. The subcommittee had asked the division whether it would be possible to limit the purchases to having the equipment in only one laboratory. The division indicated the cost of shipping petroleum samples from one end of the state to the other would be cost prohibitive.

E-903 recommended the transfer of two Weights and Measures Inspectors currently in Budget Account 4537 to the new Bureau of Weights and Measures account created through the subcommittee’s approval of Budget Account 4540. Although the positions were currently funded entirely through petroleum inspection fees and a transfer from Department of Motor Vehicles (DMV) Pollution Control Account, The Executive Budget recommended more than
74 percent of the costs of the positions be funded with General Fund dollars when they were transferred to the new account. Staff recommended closing the budget with the positions funded as they had been in the past through inspection fees and the DMV transfer. Mr. Combs explained the Division of Agriculture, as indicated in earlier testimony, had not completed their funding policy review. There was not enough information on what their funding policy would be at the present time.

Mr. Combs explained all the technical adjustments were the adjustments made in the Plant Industry account before the positions were transferred. One additional decision unit, E-801, would transfer funds from the Gas Pollution account the subcommittee had just closed, to the administration account to offset the costs of providing administrative services for the Gas Pollution Control account. The Gas Pollution Control account was the only account the division had that was readily able to contribute to the cost allocation plan in the current biennium.

Mr. Combs suggested a possible letter of intent regarding the account. The subcommittee had asked the division to determine whether a cost allocation plan could be implemented to fund the administrative services of the division. LCB staff had worked with the agency and discovered it would be a difficult process in the current biennium. A letter of intent requiring the agency to base their budget requests in the 2002-2003 biennium on such a cost allocation plan and requiring the agency to submit semi-annual reports to IFC regarding progress in implementing the plan would address the subcommittee’s request. He suggested the subcommittee might even want to set a deadline by which the plan must be completed and presented.

She explained that was consistent with requests to DMV as well. It would provide a final report to IFC before the agency worked on their next budget cycle.

ASSEMBLYWOMAN DE BRAGA SECONDED THE MOTION.

THE MOTION PASSED UNANIMOUSLY WITH ASSEMBLYMAN GOLDWATER NOT PRESENT FOR THE VOTE.

BUDGET CLOSED.

Mr. Combs stated Budget Account 4551 was a new account and most of the technical adjustments in the account had been approved with approval of the Plant Industry account.

Decision Unit E-805 was added to recommend placement of the Weights and Measures bureau chief in the unclassified service of the state with an increase in salary. The reasoning for the recommendation was that approval of the reorganization created a new Bureau of Weights and Measures. The technical adjustment would place the manager of that bureau on the similar level with other bureau chiefs of the division.

Chairman O’Donnell asked if the proposal would mean approximately a $17,000 increase. Mr. Combs replied that was correct over the biennium.

Mr. Combs stated based on questions the subcommittee posed at the
March 9, 1999 hearing, the division had indicated the funds that were projected from the Federal Environmental Protection Administration grant in Budget Account 4545 were not properly allocated among the grant expenditure categories. The division had submitted an adjustment to the grant expending in the amount of $17,543 in FY 2000 and $16,395 in FY 2001.

The cost for computer software was adjusted based on updated pricing from the Purchasing Division.

E-802 was that account’s portion of the cost for the computer server approved in Budget Account 4540.

M-200 recommended approval of a new Chemist II position for the pesticide laboratory in the Reno office to inspect an increased number of pesticide samples. The subcommittee should be aware that due to a display error in
The Executive Budget, the budget indicated a negative reserve in the account in the second year of the biennium.

Mr. Combs recomputed the figures and it appeared there would be a $90,000 reserve in the second year of the biennium based on the Governor’s recommended budget.

The problem in the account was based on the answer from the division regarding the grant funds. There were insufficient fee revenues in the account to fund the new position being recommended beyond the second year of the biennium.

Mr. Combs said the division indicated it would like to provide an alternative proposal, which was attached as Exhibit D. The proposal would raise pesticide registration fees already set in regulation. The fee would raise from $40 to $50 and the fee for Restricted Use – Pesticide Seller Registration would increase from $10 to $250. A third fee assessed by statute could also be amended to provide additional revenue to fund the program. Mr. Combs stated from information provided by the division, it appeared enough revenue could be generated through the two regulatory fee increases to retain the position.

Mr. Combs provided the subcommittee with two options:

E-710 allowed the replacement of four personal computers, four computer tables and monitors.

E-720 would pay for Internet access of one position in the account.

Mr. Combs concluded the primary decision before the subcommittee was the funding of the additional position in that budget.

Assemblywoman Chowning asked the Budget Division to provide their comments on the budget fee increases. She stated the position was well justified but the funding would be based on fee increases. If Mr. Iverson had to get prior commitment from the industry she was not sure it was possible. One fee was new and thus was an unknown entity as yet. In the case of the pesticide seller registration, it was unknown what sellers would be coming into the industry. Mr. Iverson stated there were currently 7,237 pesticides registered. The numbers of pesticides were not decreasing. The only reason a pesticide would be taken off the market would be through some Environmental Protection Agency (EPA) requirement. New pesticides came about as new chemicals and new formulas were discovered. The fee was last increased in 1993 through regulation. A $10 increase in the fee would generate approximately $72,000 in revenue.

Fertilizer registration was last increased in 1977. With the amount of chemicals and technology in society currently, the fertilizers were also on the increase. Currently there were 1,745 registered fertilizers at $25 registration fees. The proposal was to increase that fee to equal that of pesticides, or $50. The fees were based on costs.

The Restricted Use Pesticide Seller Registration was probably a little high but those fertilizers were the ones farmers and ranchers were selling and those pesticides were extremely expensive because of the training and labeling requirements. The agency did not feel it was appropriate that the individuals selling the pesticides only pay $10 per year in registration fees.

Chairman O’Donnell explained the legislature was operating under an edict that no fee could be raised unless there was a consensus for an increase within the industry. He asked if the division had a consensus from the industry to raise the fees. Mr. Iverson replied the agency did not. He added the agency would have to determine their costs for the program and present the proposal through the public hearing process.

Mr. Nolan, Budget Office, stated his understanding that it was acceptable when fees were already in regulation and went through the public process to determine a new level of fees based on assessed costs. That would have to be done by the agency as part of the funding policy for the upcoming biennium. A letter of intent to that effect had already been discussed. Sufficient funding was present for the current biennium. That gave the agency 24 months to generate a funding mechanism for the position. The Chair confirmed it was not all right to increase fees in the current budget but it would be all right in
2 years. Mr. Nolan responded that was not what he had said. As with everything else, the fee increase was part of the public process. The one fee had not been increased in nearly 20 years and if the agency went through the regulatory hearing process, they might not be able to take the fee to $250 but it would appear they could obtain some kind of increase before the upcoming biennium because the fees were set by regulation.

Mr. Combs reviewed technical adjustments.

The costs of computer training for the vacant Bureau Chief position had been removed from decision unit M-200 based on the fact that the division had not indicated it was going to fill the vacant position anytime within the biennium.

The costs for computer software in decision units E-710 and E-720 were adjusted based on updated pricing from the Purchasing Division.

Decision unit E-802 included a transfer from that account for that account’s portion of the costs for the server approved in Budget Account 4540.

Decision unit M-200 funded costs for producing training videos for the Seasonal Livestock Inspectors and computer training for members of the permanent staff.

Decision unit M-210 was the conversion of intermittent employees to legislatively approved positions. That conversion was for accounting purposes and the costs for converting the positions to legislatively approved positions were offset by reducing the amount budgeted for seasonal salaries.

Decision unit E-150 funded travel and registration for two employees to attend the International Livestock Identification Association meeting and funding for uniforms and a quarterly uniform allowance for eight full-time positions. The inspectors were required to go onto private property on a regular basis. The positions were certified by Peace Officers Standards and Training (POST) as peace officers. The division hoped it would allow the employees to be made more recognizable to the public. Mr. Combs indicated that the recommendation for uniforms was reasonable but the funding for out-of-state travel was questionable based upon the historic revenue concerns in that account.

The account for Livestock Inspection had been in serious financial trouble in the past and continued in financial difficulty. The bureau chief was still unfilled. The position was left vacant because funding was insufficient. The decision before the subcommittee was whether it made sense to approve out-of-state travel for an account having those types of funding problems.

Decision unit E-710 recommended a variety of replacement equipment that included:

• A modem line;
• Replacement of an electric clipper;
• A typewriter; and
• Two computers.

Mr. Combs stated decision unit E-720 would provide Internet service for the Elko office, two new computers, a paper shredder, hand clippers, a video camera, a TV/VCR, and a slide projector. The slide projector and TV/VCR would be used to conduct training for the many seasonal employees of the division. The video camera would be used in investigations of livestock cases to collect evidence. Staff stated those recommendations appeared reasonable.

The only decision before the subcommittee was the issue regarding out-of-state travel.

Chairman O’Donnell asked if the agency would make a commitment for the record. Mr. Iverson stated for the record, "There would be no out-of-state travel until the division had the funds appropriate and sufficient to know that the budget would be solid at least through his tenure with the Division of Agriculture."

Assemblywoman Giunchigliani stated she assumed the division was building a long-term state plan for review by the legislature concerning fees overall.
Mr. Iverson replied the division was building a long-term plan. Starting in January, the bureau was going through a re-recording process. The bureau budget should make it to that point and then the agency would build a long-term plan. He stated "You’ve all stuck with us for four years and we owe you that."

THE MOTION PASSED UNANIMOUSLY WITH ASSEMBLYMAN GOLDWATER NOT PRESENT FOR THE VOTE.

BUDGET CLOSED.

Mr. Combs reviewed the technical adjustments.

The amount budgeted for seasonal salaries in the Base was inadvertently increased from $38,210 in FY 1998 to over $84,000 in each year of the biennium. Based on that and discussions with the division, the Base amount for seasonal salaries was adjusted to $38,677 as indicated to be necessary by the division to conduct the various programs.

Decision unit M-210 had been eliminated. It was based on the adjustment to seasonal salaries that was made in the Base. Decision unit M-210 could have required the use of some of the funding that was deleted in the Base to change certain seasonal employees to legislatively approved employees. After the adjustment to Base there was no longer sufficient funds to convert the positions to part-time FTE’s.

M-200 recommended funding to approve computer training courses, videos and funding for the LCB review of administrative regulations (NAC). The division indicated the State Veterinarian would propose amendments to NAC regarding diseased animals during the biennium.

E-710 recommended funding Internet access, replacement of a refrigerator, a hot-plate stirrer, a color printer, a computer and funds to upgrade computer software for two employees.

Decision unit E-720 recommended the purchase of a laboratory dishwasher. The subcommittee received testimony that laboratory equipment was currently being washed by hand by a grade 31 position. Staff believed the recommendations were reasonable.

Staff reported there were no decision units in the account and recommended closing with Governor’s recommendations.

The in-state travel requests for vehicle operations were costs for the new position of Field Assistant in unit E-375 and adjusted for an October 1 start date.

Decision unit E-901 was eliminated. In discussions with the Budget Office an agreement had been reached that the M-300 costs had already been transferred and the decision unit was duplication.

M-100 recommended additional reimbursement to employees for the use of their horses, dogs and all-terrain vehicles in the performance of their duties.

E-250 recommended approval of $800 for increased hazardous duty pay for agency employees who acted as gunners from aircraft. It also recommended funding $1,836 for employee overtime during the lambing season. Staff believed the recommendation for gunner pay was reasonable. The overtime request was for a small amount, but overtime was normally not a budgeted item for agencies that did not have 24-hour operations.

Decision unit E-375 approved funding for a new Field Assistant to serve Clark County and the surrounding areas. The cost of the position would be funded
50 percent through a transfer from the Clark County Desert Conservation Plan and 50 percent through General Fund dollars. The division had indicated in written correspondence that the position’s time would be spent 50 percent in response to predatory animal complaints in the Las Vegas area and 50 percent on issues protecting threatened and endangered species.

Decision unit E-900 recommended transfer of an existing half-time position in the Woolgrowers Predatory Animal account into the Predatory Animal and Rodent Control (PARC) account. The only issue involved was whether or not the position would continue to be funded through the current source of funding, which was a per-head tax on sheep. PARC had indicated in writing and in testimony that the position would continue funding through the per-head sheep tax. Thus staff felt the transfer appeared reasonable.

Chairman O’Donnell asked for further clarification of the overtime and gunner funding. Staff explained the $800 for hazardous duty was all that was being requested for the gunners. Their work involved firing weapons from airplanes. The agency was expecting an increased level of activity in that area because an additional federal aircraft had become available to the bureau. That request appeared reasonable.

The requested overtime was for the lambing season. The agency staff received numerous calls during the season and they had to go out to ranches. Rather than making several trips they sometimes had to stay over in the area of activity. Staff believed many agencies incurred costs for overtime and were not prohibited from paying overtime. It was not normally a budgeted item except for 24-hour institutions.

Assemblywoman Chowning asked if the overtime was not approved, especially since it was an unusual request, could the agency still pay the overtime through salary savings. Robert Beach, PARC Administrator replied overtime had been covered in the past through use of compensatory time and salary savings. The reason the bureau had requested budgeted overtime was because of questioning from budget staff concerning recurring use of compensatory time. The overtime could be covered with compensatory time and salary savings in the next biennium. Chairman O’Donnell stated in the tight fiscal times for the state that would be a good thing to do.

Staff stated the budget would be easy to close due to the subcommittee’s elimination of the account from The Executive Budget by transfer of the half-time position to the Predatory Animal and Rodent Control account.

Chairman O’Donnell asked how the department’s computer system was working. Carol Jackson, Director, DETR, replied it was working fine but there was still more to do.

Birgit Baker, Program Analyst reviewed the budget closing recommendations. She noted she had summarized the Governor’s recommendations on each budget account but would not go over them in the hearing.

The director’s budget and several others in the department had a cost allocation process for funding. The Governor’s budget included a contingency reserve for state employee salary increases. Since the Governor had not recommended salary increases staff recommended the decision unit be removed. The result was a reduction in cost allocation requirements for the department’s program.

In the last hearing, the agency had a rather large personal computer (PC) replacement request. During the last biennium the agency began a computer-recycling plan and had reevaluated their personal computer needs. They were able to eliminate 46 PC’s throughout the department’s budgets. One PC would be eliminated in the Director’s office budget.

She thanked the department for the elimination of the 46 PC’s and hoped that would allow them to continue to do their work efficiently. The department agreed.

Staff stated the budget contained the three units of Financial Management, Human Resources, and Office Services Sections. The Governor’s budget included a new Personnel Technician II position. Discussion was held at the last hearing about the Department of Personnel’s function pursuant to cost allocation versus the DETR internal human resources office. The agency provided a justification for the position. Ms. Jackson had indicated the agency had transferred as many of the responsibilities they felt were warranted to the Department of Personnel and in spite of that the new position was needed. The new position would provide a ratio of 100:1 employees/personnel staff.
Ms Baker provided subcommittee members with an organization chart
(Exhibit E). The positions to the left served the personnel function and the new position was shaded.

Staff recommended removal of the contingency reserve for salary adjustments.

Five of the 46 PC’s to be recycled would be eliminated in
Budget Account 3272.

Ms. Baker stated there were several technical adjustment recommendations in the budget, however, the primary one was to eliminate eight PC’s through computer recycling. The salary contingency reserve would also be eliminated.

E-129 contained some duplicate expenses for maintenance of the interactive voice response unit that were recommended for elimination from the budget.

Staff noted the in-state and out-of-state travel and training categories had been increased over 100 percent in that budget. The agency had provided a significant amount of justification which staff had summarized for the committee.

The agency indicated that due to the upcoming responsibilities under the Workforce Investment Act (WIA), servicing the one-stop centers, and an increase of in-house programming would result in a need for enhanced training to keep programmers current with technology. Staff made no recommendation.

Chairman O’Donnell asked how staff recommended the budget closure.
Ms. Baker replied she had not reduced the travel and training enhancements but had provided information for subcommittee discussion.

Carol Jackson explained the training was targeted to the data processing staff because they would be moving to Oracle, which was a new programming language and staff had not been trained. To meet all the requirements of WIA a substantial amount of money was being spent on a tracking system so that when the agency returned to the Legislature in 2 years the agency could supply information the agency needed on clients who had gone through any one of the offices.

The system would also track a client across the United States to ascertain if a client was retrained in Nevada, how that training was benefiting him in another state. She stated Bill Vance, Administrator of the Information Development and Processing Division believed the training was critical to such a large undertaking as well as keeping staff current in technologies. She noted other agencies such as the universities and college systems spent significant amounts of funds on keeping their staff trained.

Ms. Jackson stated she was very negotiable on the travel portion of the budget.

She had discussed with fiscal staff that perhaps 50 percent of what was requested would be acceptable. Chairman O’Donnell asked if she would accept 30 percent of the requested travel. Ms. Jackson explained the Research and Analysis Bureau was required to go into communities and solicit contracts and the only way they would stay in business was if they had contracts. In soliciting those federal contracts for ALMTS (Americ’s Labor Market Information System and the Bureau of Labor Statistics there was a requirement to conduct training and travel with other states. She stated in an effort to make the bureau self-sustaining, 30 percent of the requested travel budget would be acceptable to the agency. They would return to the Legislature at the next biennium with a better idea of what additional travel might be needed.

Assemblyman Beers stated he had been pretty amazed at the low level of funding the state provided for its information technology (IT) professionals. Training was probably more important than salary in keeping IT professionals happy. He opined that as a group, those employees were addicted to learning. The Chair commented travel only; not training was being lowered. He added the proposal was to cut both in-state and out-of state travel enhancements but no cuts would be made to the Base.

Ms. Baker provided a list of the Nevada Career Information System (NCIS) software that was being charged for in the current biennium that would hence be provided to the entities at no cost based on the Base budget adjustments (Exhibit F).

Ms. Baker, fiscal staff, noted the budget included about $480,000 per year that would be available for implementation of the Workforce Investment Act. Another $291,000 each year was provided for the completion of the One Stop Career Center System through continuation of the request for proposal process that was started during the current biennium.

The subcommittee broke at 10:20 a.m. and reconvened at 10:30 a.m.

Ms. Baker stated the budget of the State Job Training Office contained a series of technical adjustments based on the agency’s testimony that the funding in the current year had been cut by approximately $1.7 million.

The budget also included funding for the implementation of WIA beginning July 1, 2000. Budget Account 1006 would be phased out in the second year of the biennium and those reductions were reflected in FY 2001. Staff reminded subcommittee members WIA funding would then be placed into a new budget account. Unfortunately, the U.S. Department of Labor had not provided sufficient information for the department to bring a new budget account to the 1999 Legislature. A budget proposal would be taken before the IFC during the upcoming biennium.

The current budget contained seven positions that would normally be transferred to the new budget account. Since one was not available, the agency requested the subcommittee to issue a letter of intent that the existing positions would be transferred to the WIA budget through IFC when the new budget was available.

Staff stated the budget was funded at the 1998 actuals level containing
20.5 positions and some minor training and equipment enhancements.

Assembly Bill (A.B.) 311 was pending which would expand the responsibilities of the commission to include investigations of complaints of employment discrimination based upon sexual orientation. The agency had testified in the Assembly that depending on the number of claims generated, the agency would need at least one new investigator position. Staff understood because the federal contract did not cover those types of complaints, the funding for the position would have to be from the General Fund. A.B. 311 passed out of the Assembly and contained no appropriation for the position.

Carol Jackson stated the agency would like to have one new staff person if A.B. 311 passed. Bill Stewart, the Administrator had submitted documentation that he would need one additional investigator. The agency would like an opportunity to see how many new cases might be generated. They had checked with other states and could find no other states with similar situations. Ms. Jackson requested permission to return to IFC after the bill had been in effect for 6 months to a year and see what the impact would actually be.

Assemblywoman Giunchigliani stated testimony in the Commerce and Labor Committee had shown there were some states with similar legislation and from testimony there had not been an impact on equal rights. She agreed with the suggestion to hold staffing at current levels and allow the agency to return to IFC if a greater impact was felt than what had been anticipated.

Ms. Jackson stated for the record that the Equal Rights Commission had received a cut of approximately a $54,000 to $60,000 when the Governor was going through budget reductions. In addition, the federal contract came in lower by approximately $45,000 than what was anticipated. Thus the commission had already taken about a $100,000 budget cut. Two staff positions were not being filled for that reason.

Chairman O’Donnell confirmed Assemblywoman Giunchigliani did not feel, based on testimony before the Assembly Commerce and Labor Committee, that there would be a significant impact on the commission. Assemblywoman Giunchigliani agreed.

Ms. Jackson stated the Administrator of the Equal Rights Commission had received a large amount of inquiries on the bill but until A.B.311 was passed and in effect the agency would not know the actual impact. Chairman O’Donnell asked if it was possible the bill would pass and there would be no provision to enforce that policy. Ms. Jackson responded the agency would enforce the bill with existing staff if necessary, although the response to complaints might be slower than if additional staffing was in place.

ASSEMBLYWOMAN CHOWNING SECONDED THE MOTION.

THE MOTION PASSED UNANIMOUSLY WITH ASSEMBLYMAN GOLDWATER NOT PRESENT FOR THE VOTE.

BUDGET CLOSED.

Staff noted Budget Account 4770 contained several technical adjustments.

One technical adjustment was for a reduction of $55,340 in FY 2000 and $2,340 in FY 2001 for rent expense of the new Reno unemployment office. The agency had been provided some incentives of free space in the first year of the biennium.

A second adjustment to Base was attributable to the expiration of the Job Training Partnership Act (JTPA). The Rapid Response program was currently funded through that budget and the adjustments merely switched the funding from JTPA to WIA.

The agency had testified about the new unemployment insurance telephonic initial claims center recently opened in Las Vegas. Originally the agency had requested to open a second center in Northern Nevada in the second year of the biennium. However, the director provided a letter requesting that the decision unit for the second center be withdrawn until the agency had a chance to conduct a comprehensive evaluation of the southern center. If that center proved successful, the agency would bring the proposal for a northern center back to the next session of the legislature.

Staff noted the budget was one of the larger budgets for the agency and there were several issues for the subcommittee to discuss.

The subcommittee had requested outcome measures from the agency and several had been provided relating to Employment Service and Unemployment Insurance Benefits. However, there were a number of other functions within the agency including Employer Audit and the new Telephonic Claims Center. If the subcommittee approved some of the other options such as the Microscan Imaging System and the Electronic Funds Transfer proposal, to determine if those were effective proposals the subcommittee might wish to request a letter of intent asking the agency to provide some additional indicators during the upcoming biennium and report back to the 2001 Legislature.

Decision unit E-806 recommended the reclassification of eight vacant Employment Service (ES) positions to Unemployment Insurance (UI) positions. The agency’s justification indicated that the ES grant would no longer support the positions but the UI program had additional needs. The subcommittee requested the agency to provide a justification for each of the positions. The justifications were provided to the subcommittee. Based on staff’s analysis, the only positions that could truly be analyzed were the auditor positions because a desired level of achievement or standard had been provided. Based upon that analysis, the two auditor positions were really not justified. The other positions had not been provided with standards so an analysis could not be done and staff did not have a recommendation for the subcommittee.

Ms. Baker had talked to Ms. Jackson and the agency had been able to perform the analysis within the last few days and provided some additional information on the remaining six positions.

Ms. Jackson testified Ms. Baker made the agency "jump through the hoops," but she was absolutely right. The agency had requested two auditor positions and after meeting with Nancy Sammon, Chief of the Contributions Section and Marty Ramirez, Deputy Chief Financial Officer, the agency came to the conclusion they could not justify the two auditor positions because the auditors were not meeting the 880 audit standard currently required. Ms. Jackson had determined to meet monthly with Ms. Sammon to assure the audit standards were being met.

Ms. Jackson stated the agency could justify two Contributions Examiners, which would take the Collections Unit from eight staff to nine, and the Status Unit from four staff up to five. She also requested the two Administrative Aid positions. The Status Unit workload had increased and it did not make sense to use a Contributions Examiner to perform some of the functions an Administrative Aid could do. The agency requested a reduction in the number of positions requested from eight to five, that could be justified.

Staff said one further consideration for the subcommittee was that the Employment Security Division (ESD) was one of only a few state agencies that was receiving and processing cash and checks from employers rather than using a lock-box system. The agency had provided an analysis requested by the subcommittee on a lock-box system. In working with Bank of America, the agency had been provided some new improved technology information on an electronic benefits transfer proposal.

The three proposals were summarized. To fund just a lock-box system would not save a significant number of staff because staff at ESD would still be required to enter the data. That proposal would actually incur a cost to the agency.

The second proposal was for the lock-box vendor to process the checks and process the tax returns. Under that proposal there was still an agency cost incurred because the vendor costs would exceed the current funds required for the work to be done within the agency.

The last proposal of an electronic funds transfer process, which Bank of America felt was most appropriate for ESD, would result in a projected net savings of approximately $22,000 in the first year of the biennium and $21,000 in the second year of the biennium.

Assemblyman Beers noted the proposal for electronic funds transfer was somewhat speculative because the projected savings were based on an unknown number of vendors who would use the service.

Assemblyman Beers asked if both the bank charges and the savings in staff were commensurate with use. Or was part of the bank charge a substantial fixed investment to enable the system followed by a small incremental increase in the charge based on use. Marty Ramirez, Deputy Chief Financial Officer, ESD, responded when the agency got the proposal from Bank of America, there were a number of items the bank was going to charge to implement the electronic funds transfer system. Virtually all of them were based on an employer by employer sign-up basis. If the agency achieved the 35 percent first year sign-up that was hoped for then the savings would be exactly what had been discussed in the subcommittee. The savings would be reflected in a reduction of seasonal, part-time, and intermittent staff. Staffing could be adjusted based on the actual workload received by the Contributions Unit.

Assemblyman Beers asked if the amount paid to Contributions by each employer varied from period to period. Mr. Ramirez responded the funds were paid by the employers as a payroll assessment up to a cap.

Assemblyman Beers stated the program would really be an "employer push to the agency rather than an agency pull from the employer." Mr. Ramirez agreed. He added the agency also had a test proposal they were working on with Bank of America to incorporate an Internet solution in the project. If ESD became a pilot for the program, costs to the agency might be reduced even further.

THE MOTION PASSED UNANIMOUSLY WITH ASSEMBLYMAN GOLDWATER NOT PRESENT FOR THE VOTE.

BUDGET CLOSED.

Staff reported the budget had only one technical adjustment at the request of the agency.

The technical adjustment would delay the start date of the UI Contributions re-write (tax system) to the second year of the biennium.

Staff reported the Governor was recommending eight new positions in the account to serve in the resource centers and accommodate the growth in number of individuals to be trained.

The only technical adjustments in the budget were for the computer-recycling program that resulted in a reduction of six personal computers in the first year of the biennium.

Chairman O’Donnell asked what budget savings were achieved in the account. Ms. Baker replied there was a savings of $13,800 in the first year.

Assemblywoman Chowning commented she appreciated the direction the agency was going by leaving the central office and taking job opportunity education into the communities through the resource centers.

Staff stated there were very few enhancements in the budget. The dental grant had been cut out of the Base budget. However, according to testimony provided by the agency they would use the developmental disability grant funding with a commitment from the Blue Cross/Blue Shield Foundation to expand the program to include low-income children, people with disabilities and medically-fragile persons so the program would continue under that funding source.

The only issue the subcommittee might recall was that in the current biennium there was a one-shot appropriation of $500,000 from Senate Bill 433 of the 1997 Legislature that authorized completion of the Medicaid Waiver for the severely disabled. That waiver was still pending and the funds had been placed in reserve for reversion based upon the General Fund shortfall that occurred in the fall of 1998.

The subcommittee had requested a significant amount of information regarding the waiver and its funding. The information had been summarized for the committee.

Staff explained the funding for just the pilot Medicaid Waiver program was sitting in reserve for reversion in the current biennium. Based upon the information provided through staff there was actually a potential for the program to have a significant cost to the state. Ms. Baker stated it would not affect the budget for the upcoming biennium because if the Medicaid Waiver proposal was approved it would be placed in a separate budget account. Assemblywoman Giunchigliani stated she did not want the $500,000 to revert or there would be no option at all. Staff stated to keep the $500,000 from reverting there would have to be legislation to lift the reversion date. Assemblywoman Giunchigliani asked the subcommittee members to comment on the issue.

Assemblywoman Chowning stated she also did not want the $500,000 to revert. However, the issue was not that simple. The true cost for 48 clients was $2.5 million of new money. She recommended the Medicaid Waiver of $500,000 be placed on a priority funding list. There were 162 clients currently on a Medicaid Disability Waiver list so 48 clients did not solve the whole problem. Chairman O’Donnell stated the cost would be $52,000 per individual on the program. He suggested the subcommittee allow the $500,000 to revert, the Governor would propose in the next biennium a total analysis the state’s tax structure, and perhaps at that time the Legislature could revisit that issue. He stated that would allow the $500,000 in reserve to meet other needs.

Assemblywoman Giunchigliani said she believed the disabled community was a very needy community. For budget closing purposes she changed her motion.

Chairman O’Donnell asked what the bill draft would accomplish. Assemblywoman Giunchigliani replied that it was needed in order to extend the reversion date. Then the Legislature could debate whether to move forward with the issue, but at least the $500,000 would still be available.

Senator Neal asked if a bill draft was required to extend the reversion date. Assemblywoman Giunchigliani stated Mr. Gary Ghiggeri, LCB staff had explained a bill draft was needed because the $500,000 had to be carried forward from the current fiscal year.

Assemblywoman Giunchigliani stated, with no disrespect to the chairman, that her motion would be not to allow the $500,000 to revert.

Senator Neal asked if it was contingent on the Medicaid Waiver not being received. Chairman O’Donnell replied it was to place $500,000 in an account that in all likelihood would not be used in hopes some other funding would be found.

Lori Bagwell, Budget Division testified the $500,000 was originally appropriated to get the program started. With the analysis done by DETR, the Budget Office and Medicaid it was determined that the program could not be implemented for $500,000. Moving the funding to the next fiscal year would not accomplish anything without the remainder of the $2.5 million necessary to fund the program. She added it was not that no one wanted to help the disabled, there was just no sense in tying up $500,000 if it would not accomplish the goals for which it was requested.

Staff noted the budget had some small technical adjustments. Moving expenses would be removed because the agency would not be moving from the Kincaid Building as originally anticipated.

A technical adjustment to remove a contingency reserve for salary increases was to be eliminated.

A.B. 181 included a proposal to transfer the Bureau of Alcohol and Drug Abuse from the Department of Employment, Training, and Rehabilitation to the Department of Human Resources effective July 1, 1999. The agency had provided a fiscal note that would result in a minimal impact to DETR because they would move positions within their cost-allocated accounts into the Bureau of Alcohol and Drug Abuse. Staff was requesting that if A.B. 181 passed those minor technical adjustments could be made after the budget was closed.

Chairman O’Donnell asked what the budget savings were in the budget.
Ms. Baker replied a small amount of approximately $4,500 in General Fund had been saved.

Assemblyman Beers stated for the record:

I have been advised by our legal counsel to disclose this information to you and the committee. I ask that my disclosure be included as a part of the committee’s minutes."

There being nor further business before the subcommittee, the meeting was adjourned at 11:08 a.m.

RESPECTFULLY SUBMITTED:

Cindy Clampitt,

Committee Secretary

APPROVED BY:

Senator William O’Donnell, Chairman

DATE:

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