Mr. Morse Arberry Jr., Chairman

Mr. Bob Beers

Mrs. Barbara Cegavske

Mrs. Vonne Chowning

Mrs. Marcia de Braga

Mr. Joe Dini, Jr.

Ms. Chris Giunchigliani

Mr. David Goldwater

Mr. Lynn Hettrick

Ms. Sheila Leslie

Mr. John Marvel

Mr. David Parks

Mr. Richard Perkins

Mr. Bob Price

Senator William Raggio, Chairman

Senator Bob Coffin

Senator Lawrence E. Jacobsen

Senator Bernice Mathews

Senator Joe Neal

Senator Raymond Rawson

Senator William O’Donnell

Ms. Jan Evans (Excused)

Mark W. Stevens, Assembly Fiscal Analyst

Gary Ghiggeri, Assembly Principal Deputy Fiscal Analyst

Daniel G. Miles, Senate Fiscal Analyst

Robert A. Guernsey, Senate Principal Deputy Fiscal Analyst

Jeanne Botts, Senior Program Analyst

Christina Alfonso, Committee Secretary

Mr. Stevens stated he would be reviewing the back language of the General Appropriations Act, noting the sections that were standard in every biennium and highlighting more thoroughly the sections applying only to the upcoming biennium. Section 30 was standard language indicating that the amounts were work programmed into two separate fiscal years. Sections 31 listed the budgets allowed to transfer funds between fiscal years. Section 32 was a new section requested by the Department of Administration and would allow monies to be transferred between fiscal years for information technology projects in excess of $50,000. There had been times in the current biennium in which money was provided in the first year of the biennium for work that did not get completed.

Section 33 was a new section. There were times when the administration and the joint subcommittees and full committees requested that certain portions of budgets be allowed to be transferred between fiscal years, which had not been done in the past. There were five areas that were provided authority to transfer portions of expenditures within a budget between fiscal years. The first was the Commission on Economic Development for the Train Employees Now program. Second, there were two items within the Department of Conservation and Natural Resources, one within the Division State Parks and one within the Division of Forestry. Third, there were two within the Division of Child and Family Services. The fourth was for the Clear Creek Youth Center and the fifth was for the Office of Veterans’ Services for the Veterans Home Account.

Sections 34 and 35 were standard. Section 36 allowed money to be transferred among the various budgets of the Welfare Division. Section 37 concerned the potential dental school, instructing the Department of Human Resources to incorporate dental services through the University and Community College System of Nevada (UCCSN) into Medicaid and Nevada Check-Up health service delivery plans. Section 38 was a Joint Subcommittee on Human Resources/K-12 recommendation to allow transfers of appropriated funds between the Special Children’s Clinic and the Maternal and Child Health Services. He thought the plan was to move positions from Maternal and Child Health Services, over time, to alleviate the backlog of service in the Special Children’s Clinic.

Section 39 would allow monies that were appropriated in Senate Bill 547 to provide signing bonuses and critical project bonuses to the Department of Information Technology (DoIT) related to the Nevada Operations Multi Automated Data Systems (NOMADS) project. Section 40 was a Joint Subcommittee on Human Resources/K-12 recommendation. The amount of money provided to the counties from the state to house juveniles in local detention centers while they awaited parole revocation hearings had risen dramatically from $200,000 to $800,000 per year. Section 40 indicated that any monies in excess of the amounts provided by the state to local governments in FY 1997-1998 would be used to enhance programs designed to reduce commitments to county and state detention and correctional facilities. It would enhance programs that would keep juveniles out of facilities so they could remain at home.

Section 41 allowed the Department of Prisons to transfer monies between budget accounts. Subsections 1 and 2 of Section 42 allowed monies to be transferred among the various budget accounts within the Department of Motor Vehicles and Public Safety (DMV/PS) due to public safety information services allocations within the department. Subsections 3 and 4 of Section 42 related to the reorganization of DMV/PS. If appropriated funds were necessary to be transferred between accounts due to the reorganization, Subsections 3 and 4 would allow that. Section 43 would provide language if legislation was passed related to the Transportation Services Authority and the Taxicab Authority, providing authority based upon passage of legislation for them to come before the Interim Finance Committee (IFC) by October 1 to reallocate staff.

Section 44 allowed monies to be transferred among budget accounts within the same department, up to the vacancy savings amount. That was designed for an agency that could not meet its vacancy savings target. Sections 45, 46, 47, 48, 49, and 50 were routine. Section 51 was a new section requested by the State Controller indicating that based upon the payroll checks provided to elected officials, it may not work out to the statutory required salary by a few dollars. The section indicated the State Controller’s office would not have to true up the salary to the absolute statutory amount. Section 52 would appropriate $1.7 million to the legislative fund, and was budgeted in The Executive Budget.

Sections 53 and 54 would allow temporary advances from the General Fund. In each case the Director of the Department of Administration would have to approve the advance, which would be based upon outstanding billings or a fixed amount of money that was known would be coming in at a later date. Section 55 had been in the General Appropriations Act for the last several legislative sessions and would allow the Division of Forestry an advance on the General Fund based upon forest fire suppression activities. Section 56 allowed monies to be paid to the National Guard, should it be called to active duty, and would be repaid from an allocation from the Emergency Fund from the State Board of Examiners. That had been in the General Appropriation Act in the previous session. Section 57 allowed an advance based upon receipts from the Federal Government for housing illegal aliens in the Department of Prisons.

Section 58 was routine language providing for the Director of the Department of Administration to report to the Board of Examiners if there was a shortfall resulting in the Unappropriated General Fund balance falling below $40 million. Section 58 also outlined the procedure for the Governor to reserve funds if that was necessary, and required legislative or IFC approval. Chairman Raggio stated Section 58 addressed a shortfall situation, such as occurred in 1991. Mr. Stevens said that was correct and noted statutory language was also established. The last time there had been a shortfall was after the 1991 Legislative Session. Chairman Raggio said it was highly unlikely that would happen, but at that time there were objections and challenges made to the Governor’s authority. Mr. Stevens agreed.

Section 59, Mr. Stevens continued, allowed payments to be made based upon the Cash Management Improvement Act of 1990, if monies were owed to the Federal Government due to the State of Nevada holding federal dollars in excess of the time allowed by the Federal Government. Section 60 was routine language for the Challenge Grants program in the Council of the Arts. Section 61 stated when certain sections of the Appropriations Act became effective.

Ms. Giunchigliani said regarding Section 42, she believed with the DMV/PS reorganization there was an accompanying bill, Assembly Bill 679. She asked if the additional language would be contained in the bill. Chairman Raggio said the bill required the Governor to review the reorganization and notify the IFC before January 1 of his determination of whether the reorganization required any additional changes. Any changes included in the Governor’s determination would be made upon approval of the IFC. The governor had been shown the bill and was agreeable to its requirements.

Ms. Giunchigliani said she found the language in Subsection 1 of Section 43 somewhat disconcerting. Mr. Stevens said the language would become effective, should legislation pass reorganizing the Transportation Services Authority, to allow appropriated funds to be transferred between the Transportation Authority, the Southern Taxicab Authority, and the Northern Taxicab Authority. It was not known whether appropriated funds would be transferred to those entities. Subsection 2 would allow the entities to come before the IFC before October 1, 1999 and allocate those budgets. Ms. Giunchigliani asked whether Section 43 would be removed if the legislation was not passed. Mr. Stevens replied the section would be moot, as the legislation would have to be adopted in order for the section to be effective.

Ms. Giunchigliani said regarding Section 57, a letter of intent would request the Director of the Department of Prisons to not have to have the forensics positions continue to qualify for firearms training, but that would not effect their status as Peace Officers. It relieved that as one of their burdens for forensic positions, which the director could address by regulation. Privatization would be addressed through a letter of intent instead of in the Appropriations Act. The department would not privatize unless it came before the IFC.

Mr. Price disclosed his wife was a member of the Nevada Air National Guard. Senator Rawson disclosed he was an employee of the University and Community College System of Nevada (UCCSN).

Chairman Raggio explained the General Appropriations Act pertained to the direct appropriations made by the legislature from the General Fund and the Highway Fund. The General Authorization Act authorized expenditures of various government agencies from sources other than the General Fund or the Highway Fund, such as the Federal Government.

Mr. Miles explained Section 1 of the General Authorization Act listed the amounts authorized by various budget accounts, agencies, and programs. The amounts had been agreed upon in budget closing by the Assembly Committee on Ways and Means and the Senate Committee on Finance. The remaining sections were the back language of the Authorization Act.

Mr. Miles stated Section 2 was the authorization of General Fund dollars to the State Gaming Control Board and was contained because Nevada Revised Statute (NRS) 463.330 required an authorization, as opposed to an appropriation. Section 3 was standard language requiring the agencies to abide by the provisions of the budget act. Section 4 addressed augmentations that occurred. Authorized funds could be augmented during the course of the year if new or additional funds were found, and the section required that to be done in accordance with the State Budget Act. Section 5 was a standard clause on reversions. If a budget was funded from both the General Fund and other funds, and other funds exceeded what was anticipated, the General Fund would be reduced, requiring the reversion of the additional amounts.

Section 6, Mr. Miles continued, was a standard section allowing the UCCSN to augment for fees earned in excess of what was budgeted in each campus budget during the course of each fiscal year. Section 7 was a standard section allowing the Division of Wildlife to borrow against the General Fund for a portion of its license receipts in advance. The division had a cyclical cash flow and Section 6 allowed it to get through the fiscal year. Section 8 authorized the expenditure from the UCCSN Endowment Fund of estate tax monies. The bulk of the expenditure was in the special projects account. Section 9 allowed the Budget Division to assess professional licensing boards for their share of the cost of a Budget Analyst position. Section 10 required the Department of Administration to conduct a statewide cost allocation study. Section 11 allowed the State Public Defender to assess the counties that were using his services an amount to support his budget in each fiscal year, and had been in the General Authorization Act for many years.

Section 12 required the income from the motor fuel taxes attributable to boats to be split equally between the Division of Wildlife and the Division of State Parks, and was standard language. Section 13 required, after July 1, 1995, the Division of Wildlife to account for its obligated reserve in a separate account, which was not mixed with its unobligated reserve. Section 14 was a companion to what was included in the General Appropriations Act concerning the Department of Human Resources working with the UCCSN for dental services. Section 15 had a corresponding section in the General Appropriations Act and allowed funds intended for technology projects greater than $50,000 to be transferred to the next fiscal year if they were uncompleted in the first fiscal year of the biennium.

Section 16 had a companion provision in the General Appropriations Act, as well, and allowed money to be transferred between the Maternal Child and Health Services budget and the Special Children’s Clinic budget. Both General Funds and authorized revenues would be transferred upon approval of the IFC. Section 17 allowed the State Fire Marshall to balance forward excess revenue from the current year into the next fiscal year, in order for the Fire Marshall to become self-supporting, beginning in the next biennium. Section 17 amended Section 5 of the General Authorization Act of the 1997 Legislative Session to allow that to occur, as the monies would revert to the General Fund under the old provisions. Section 18 was standard and authorized funds for the Division of Forestry to be expended for the extraordinary costs of fire-fighting costs. Section 19 was complimentary to A.B. 679 and gave the authority for the budget transactions pursuant to the reorganization of the DMV/PS. Section 20 corresponded to Section 43 of the General Appropriations Act, and concerned the Transportation Services Authority and the Taxicab Authority, should reorganization be approved by the legislature.

Jeanne Botts said she would explain the suggested bill draft for the Distributive School Account (DSA). Section 1 amended Chapter 387 of NRS, requiring the Department of Education (DOE) to conduct annual audits of the count of pupils for apportionment purposes. The DOE would also be required to conduct annual audits of student-per-teacher ratios in the class-size reduction program. Section 1 also required the DOE to review each school district’s report of the annual audit conducted by the outside accounting firm and the annual report prepared by each district pursuant to NRS 387.303. In addition, Section 1 required the DOE to report any findings or recommendations for legislation, revisions to regulations or training needed by school district employees. The report shall identify failures to comply with NRS, long-term obligations in excess of the general obligation debt limit, deficit fund balances or retained earnings in any fund, deficit cash balances in any fund, variances of more than 10 percent between total General Fund revenues and budgeted General Fund revenues, and variances of more than 10 percent between total actual General Fund expenditures and budgeted total General Fund expenditures. In preparing the request for the DSA for inclusion in The Executive Budget, the DOE was required to consult with the superintendent of schools for each school district, or a person designated by the superintendent. Subsection 2 of Section 1 required the DOE, when administering both state and federal money, to administer that money in a manner designed to attain the goals of the legislature regarding educational reform.

Section 2 amends the definition of a special education program unit to broaden the definition to include licensed professionals that were not related to the instructional component. Section 3 stated that the amount computed for local funds available would be changed. Local funds available were computed by multiplying 0.0025 by the assessed valuation of the school, which was the 25-cent portion of the property tax for school operations that was considered inside the Nevada Plan. In an attempt to help school districts that were dependent on revenue from the tax on net proceeds of minerals, which fluctuated wildly, the amount computed under Subsection 1 of Section 3 that was attributable to the tax on net proceeds of minerals would be held in reserve and not considered as local funds available until the succeeding fiscal year.

Section 4 concerned the 75-cent portion of the property tax that was earmarked for school operations, and stated the tax collected from the net proceeds of minerals would not be considered available to pay liabilities of the fiscal year in which the tax was collected, but must be deferred until the subsequent fiscal year. The annual budget for the school district must only consider tax on the net proceeds of minerals that had been collected in the prior year as an available resource. The school districts would receive a General Fund appropriation for the amount needed in the first year of the biennium and, thereafter, would reserve the money as it came in, and spend it in the succeeding year.

Section 5 listed the basic support guarantee for the school districts. The statewide average was $3,806, which was close to the $3,804 in the current year. A separate basic support guarantee was also listed, which was calculated for each district, using the Nevada Plan formula that considered the economic and geographic characteristics of each district.

Chairman Raggio asked if the basic school support guarantee figures had been confirmed with the DOE. Ms. Botts replied yes and continued, explaining the differences in the amounts for each district were due to variations in the cost of living, variations in the cost of providing education as a result of school and district size, and variations in the cost per pupil of administration and support services. The formula also recognized each district’s historical transportation cost by including 85 percent of actual historical costs, adjusted for inflation. Further, there was a wealth adjustment based on each district’s ability to generate revenue, in addition to the guaranteed level of funding.

Section 6 contained the basic support guarantee for the second year of the biennium, with a statewide average of $3,804 per pupil. The section explained the adjustment made in the second year to take into consideration changes in enrollment and changes in assessed valuation. An estimate of the support guarantee per pupil was listed, and would be calculated after the Department of Taxation certified the assessed value for the second year of the biennium. Section 6 also included a provision for an estimate of the net proceeds of minerals to be taken into consideration when finalizing that adjustment.

Section 7 concerned Special Education Units. The Governor had recommended that funding for program units be combined in the per-pupil basic support, but the joint subcommittee recommended against that. The amount per unit was $28,813 in FY 1999-2000 and $29,389 in FY 2000-2001. A chart listed the number of units allocated to each school district. The Board of Education held 40 units in reserve for unexpected circumstances. There were 2,186 units in FY 1999-2000, totaling $63 million, and 2,291 units in FY 2000-2001 totaling $67 million. Five special education units were added for gifted and talented students for instructional programs incorporating educational technology, totaling $144,000 in FY 1999-2000 and $147,000 in FY 2000-2001.

Section 8 contained the overall General Fund appropriation for the DSA, which was $463 million in FY 1999-2000 and $477 million in FY 2000-2001. She noted that in a separate bill, there was also approximately $83 million in FY 1999-2000, and approximately $87 million in FY 2000-2001 for class-size reduction. The General Fund appropriations within the DSA were available for use in either fiscal year, and any remaining balance from the first year of the biennium would be balanced forward to the second year. At the end of the second year, the balance would be reverted to the General Fund.

Section 9 referred to the authorized revenues (the other revenues that were deposited to the DSA), which were the 2.5 cent tax on out-of-state sales, the annual slot tax, mineral land lease revenue, interest earned on the permanent school fund, and beginning in the coming biennium, estate tax revenue. Those amounts totaled $130 million in FY 1999-2000 and $135 million in FY 2000-2001. As in most budgets, the revenues were considered to be expended before any appropriation.

Section 10 was standard language. Section 11 authorized the DOE to spend approximately $13 million per year for adult high school diploma programs, for both regular and prison programs. A change was made in allocation of those monies through the DOE’s workforce education team. It was hoped that the team would develop a formula or plan for allocating the money equitably and in a manner that permitted accounting for the expenditures of the school districts.

Section 12 was in response to the Governor’s recommendation to roll 50 separately funded elementary school counselors into the DSA. Some of the small districts were concerned that would not provide enough money to retain their counselors. Therefore, Section 12 provided each district with $50,000 to support special counseling for elementary school pupils at risk of failure, totaling $850,000.

Section 14 began the special authorizations within the Act. S.B. 60 had been rolled into the bill, providing $3.5 million in each year of the biennium to establish and operate regional training centers for the professional development of teachers and administrators. The four centers would be located in Clark, Douglas, Elko, and Washoe Counties. Subsection 8 of Section 14 stated each training center would have a governing body consisting of: the superintendent, or a designee, for each district included in the region; teachers who were considered masters; representatives of the UCCSN; and a non-voting member who was an employee of the DOE. In addition, Section 8 contained language concerning model programs that the regional centers should follow, most notably the Geographic Alliance in Nevada (GAIN) model. Primarily, the centers were designed to help teachers teach to higher standards, but there was also training for assessments and measurements of pupil achievement, as well as training to teach basic skills. The training provided must include follow-up training and must address the educational needs of pupils with disabilities and pupils whose primary language was not English. It was also hoped that the centers would include model classrooms that would demonstrate the use of educational technology for teaching and learning. For the evaluation of the program, $50,000 was set aside per year to hire an outside independent consultant to conduct the review.

Section 16 authorized $3.3 million in each year of the biennium for remedial education, and was basically the language contained in S.B. 70. In June of 1997, the IFC allocated approximately $2.8 million to the 23 schools that had low academic performance. In the coming year, only eight schools fell into that category. Section 16 opened up the pool of remedial funds to schools that had too few pupils to be designated, but had test scores indicating the school would have received a designation of needing improvement, had the school been ranked. Remedial funds would also be available to schools that were failing in three of the four subject areas tested and to all schools that were designated as needing improvement in the immediately preceding school year. The procedure for schools to follow to access that funding for approved programs was the same procedure followed in the previous session.

Section 17 was a new concept, authorizing $1 million per year for remedial education programs or tutoring for pupils who need additional instructional time in order to pass the high school proficiency exam or to reach a level considered proficient on other tests or assessments. The programs would be approved by the department as being effective in improving pupil achievement or approved tutoring programs. The programs would be conducted before or after school, on weekends, during the summer, or between sessions in schools with year-round school calendars. The process was much the same as the previous section.

Section 18 authorized $300,000 in each year of the biennium to purchase or develop criterion-referenced tests that were tied to the standards. The Council to Establish Academic Standards had recommended that those exams begin in grades three and five in English and math, commencing in the spring semester of 2001. The exams would be pilot tested in the spring semester of 2000. There was a requirement that the Board of Trustees in each district analyze the results of the exams to identify any training teachers might need, and also review the curriculum of the school to determine how it related to the standards.

Section 19 provided $900,000 in each year of the biennium for the DOE to contract with a nationally recognized testing company to take over the development, printing, administration, and scoring of the high school proficiency exam. The language called for the new standards to be gradually phased into the high school proficiency exam for pilot testing of test items in the fall of 2000. In concert with S.B. 104, the class that enters ninth grade in the fall of 1999, and would graduate in 2003 would be the first class to be expected to pass tests that fully incorporate the standards.

Section 20 amended transitory language from the 1997 Legislative Session concerning the Statewide Management of Automated Record Transfer (SMART) Advisory Board, which consisted of representatives of school districts, the Board of Education, the Budget Division, and the legislature. In the bill that passed in 1997, there was no provision for legislative members to be compensated for their efforts on the advisory board, which was added in Section 20.

Section 21 provided money for the Clark County School District to continue implementing its SMART system. The other 16 school districts in the state should be finished by the end of June 1999. According the Clark County’s estimates, it needed $9.7 million and would be receiving $3.4 million over the biennium, so it was not expected to be enough to get the county fully operational, but should be enough for the county to continue to make progress. In order to receive the money, the county must enter into a written agreement with the DOE prescribing the duties and responsibility of each party to implement and maintain the automated system. Subsection 4 of Section 21 authorized $300,000 in each year of the biennium for the DOE to pay for contractual services necessary to plan and install SMART and to pay for the advisory committee. Subsection 6 required the superintendent of public Instruction to report semiannually to the IFC and annually to the Legislative Committee on Education concerning expenditures for SMART.

Section 22 contained a number of one-shot appropriations. For the Commission on Educational Technology to grant to local districts that were unable to reach the minimal level of educational technology for the classroom or computer laboratory recommended by the commission, $1.3 million was funded for FY 1999-2000 and $1.4 million was funded for FY 2000-2001. For the Commission on Educational Technology to grant to school libraries for licenses to access research databases and other on-line resources appropriate for pupils, $500,000 was funded in FY 1999-2000. For the Commission on Educational Technology to grant to local school districts to pay for maintenance contracts for software, $500,000 was funded in each year of the biennium. For transfer to the Clark County School District to continue implementing the uniform, statewide satellite downlink project, $400,000 was funded in each year of the biennium. For the school-to-careers program, $1 million was funded in each year of the biennium. For grants to school districts and community-based organizations for early childhood education and family literacy programs for pre-school children and their parents, $500,000 was funded in each year of the biennium.

Section 23 provided that the sums appropriated or authorized in certain sections must be accounted for separately, may not be used to settle or arbitrate disputes, and may not be used to adjust district-wide schedules of salaries and benefits.

Section 24 needed to be changed from "appropriated" to "authorized" because the amount was in the total appropriation mentioned previously. Approximately $3.7 million would be apportioned among the school districts for FY 1999-2000 to replace the revenue from the tax on net proceeds of minerals that would be reserved for the second year of the biennium.

Section 25 provided that estate tax receipts shall be deposited into the DSA until the total amount received reached the budgeted amount, $13,891,737. Any estate tax received in excess of that amount would be deposited into the fund for school improvement (the renamed fund for class-size reduction).

Section 26 amended Section 55 of NRS Chapter 473. The DOE received approval from the Budget Division to spend a portion of the money that had been reserved for reversion that was appropriated in the 1997 Legislative Session for developing, writing, and printing the standards-based exams. The Budget Division authorized up to $70,000 to pay the costs incurred by the DOE for writing test questions and developing additional forms of the high school proficiency exam.

Section 27 provided that each school district shall expend the revenue made available through the act, as well as other revenue from state, local, and federal sources in a manner designed to attain the goals of the legislature regarding educational reform, especially with regard to assisting pupils in need of remediation and pupils who are not proficient in the English language.

Referring to Section 17, Mr. Arberry said he thought when the remedial education funding was originally discussed, the language was supposed to be for after school, in between school, and summer school remediation. But Subsection 1 indicated the funding would be used for additional instruction time in order for students to pass the high school proficiency exam or to reach a level considered proficient on other tests or assessments. Ms. Botts said perhaps she should not have written the act with so much emphasis on the high school proficiency exam.

Chairman Raggio said he thought the additional $1 million funded in each year of the biennium, above the $3.3 million, would be applied to all students, including those needing to pass the high school proficiency exam, as well as other assessment tests and could be used for programs before or after school, on weekends, during the summer, or between sessions in schools with year-round sessions, as was stated in the act. Ms. Botts said the concern was that there may be too much emphasis on the high school proficiency exam, which could be reworded if the committee wanted her to do so.

Ms. Giunchigliani suggested deleting from Subsection 1 "for pupils who need additional instructional time in order to pass the high school proficiency examination or to reach a level considered proficient on other tests of assessments." She suggesting adding to paragraph 2 of subsection 1 "for remedial programs and to assist students in passing examinations." Chairman Raggio said his understanding was that the funding would not be limited to only that purpose. Section 16 stated $3.3 million in each year of the biennium would be provided for remedial programs for schools that had been designated as needing improvement and for schools that had been designated as demonstrating adequate achievement. The additional money funded in Section 17 was to allow tutoring (in addition to other monies put into that as a result of the amendment to another bill) for both high school proficiency exams or other assessments.

Mr. Arberry said his understanding was that the additional funding provided in Section 17 was not intended for only high school proficiency exams, but it appeared that way in the act. Chairman Raggio said he did not think the language indicated that, but said "the high school proficiency examination" could be deleted from the first paragraph of Subsection 1, as the remaining language accommodated the high school proficiency exams. Ms. Botts said she would rewrite that portion, deleting the portion indicated.

Ms. Giunchigliani said the lead-in portion referencing proficiency on tests narrowed the manner in which the money could be spent. There were currently eighth grade students who could not graduate to high school if they did not pass certain classes. She felt the rewording would not allow for those students to be remediated. Ms. Botts said Subsection 1 would read "…for pupils who need additional instructional time in order to pass or to reach a level considered proficient." She clarified "on other tests or assessments" would be deleted from the draft, as would "the high school proficiency examination," so the student Ms. Giunchigliani referenced would still be able to receive additional instructional time. Ms. Giunchigliani said that addressed her concern.

Mrs. Chowning said she thought Section 17 tied in with Section 27, which stated specific goals of the legislature and was a significant enhancement.

Mr. Goldwater asked whether the per-pupil basic support referenced in Section 6 included the line-item in the DSA for the purposes of the fund for school improvement. Ms. Botts replied no and explained the fund for school improvement was now a separate fund that would receive the excess estate tax money. The basic support would be funded at about the current level because there was growth in the revenues outside of basic support, namely property tax, so it did not include the fund for school improvement. Mr. Goldwater asked if the fund for school improvement was essentially for class-size reduction. Ms. Botts replied yes.

Mr. Goldwater asked for the purpose of the language in Section 23, as it was not familiar to him. Ms. Botts said typically with one-shot appropriations or separate special appropriation, that language was included. The 1999 DSA would be the first time, to her knowledge, that those kinds of expenditures had been rolled into the DSA, such as SMART and the grants for educational technology. In the past, those types of programs would have typically been funded as one-shot appropriations. Section 23 did not apply to the general basic support.

Chairman Raggio said the joint committee indicated those items would be "fenced" items and there were other items in the account that were not as limited, such as the inflationary costs for textbooks. The items referenced in Section 23 must be utilized for the purposes indicated. Mr. Goldwater said he had not recalled that discussion from previous meetings and thanked Ms. Botts and Chairman Raggio for the clarification.

Referring to Section 1, Ms. Giunchigliani said she believed Elko County had been allowed to experiment and asked how the annual report would be modified so it would not skew the numbers of the actual class sizes. Chairman Raggio said Elko County would have to make a special report, as it was authorized to conduct a pilot program for grades one through five. The county would report back to the legislature. The county had indicated the purpose of the pilot program was to determine whether the county could eliminate team teaching. The program would not alter the ratio, otherwise, in the law. Ms. Giunchigliani said that was her understanding, as well, but was concerned that each school district was referenced and having Elko County School District counted in that could skew the actual accountability report.

Ms. Giunchigliani asked for a clarification of the language change in Section 2, and whether it added para-professional or whether it simply added psychologists, speech therapists, occupational therapists, and physical therapists. Ms. Botts said speech therapists were already included, and the amended NRS would include occupational therapists, physical therapists, psychologists, but would not include teachers’ aides. Ms. Giunchigliani asked if there was a commensurate dollar increase to accompany the inclusion of those related services. Ms. Botts replied no. Ms. Giunchigliani asked if that was an additional unfunded mandate to local districts. Chairman Raggio said it was not an unfunded mandate, it was what the districts had requested. Ms. Giunchigliani said she appreciated that, but special education had never been fully funded, though she agreed that districts had asked for the inclusion of related services.

Ms. Giunchigliani asked what was meant by "other appropriate licensing body," as stated in Subsection 3 of Section 3. Ms. Botts replied that would be the body that licensed physical therapists or psychologists, which had been suggested by the DOE.

Referring to Section 7, Ms. Giunchigliani said each special education program unit was funded at approximately $29,000, which was underfunded by $10,000 to $12,000. She stated she had asked that the DOE study the issue of how many special education units were being diverted to gifted and talented programs, which were not mandated by IDEA. Ms. Botts said she recalled approximately 70 units were being deferred, but would provide that information to her. Ms. Giunchigliani said she would like that broken down because as special funding was considered in the following session, she hoped it would be fully funded, and thought it should be noted that special education was losing money to programs that were not even mandated by federal law to be covered, which added to the burden on school districts.

Regarding Section 12, Ms. Giunchigliani asked if there had been a minimum threshold so the districts would not lose the counselors that had already been dedicated. She asked if the $50,000 would hold them harmless. Ms. Botts replied she believed the DOE had been providing approximately $47,000, so she rounded that amount to $50,000. Chairman Raggio said it had been the committee’s understanding that no district would lose its counselor. The other proposed action would have caused some of the smaller school districts to lose a counselor.

Regarding Section 14, Ms. Giunchigliani said she was still concerned about the use of the terminology "regional training center." She understood some rural districts would need a center to go to, but no funding was allocated for travel. She asked if section 14 would allow for training on campus or whether teachers had to be in a regional training center. Ms. Botts explained that in the original request, both Douglas and Elko Counties had indicated a desire for modular units, but those were no longer included. She agreed "center" was a misnomer because training would be conducted at schools or at high tech centers; no buildings would be constructed. However, money was included for travel expenses for teachers who attended the center and for trainers who traveled to a school. Using the word center implied there would be actual sites for the training, when something more cost-effective and less bureaucratic could be done. Ms. Botts agreed the use of the term was misleading, but all districts were using the "train the trainer" model and all planned to go to sites. Specifically, the Clark County region planned to travel to Lincoln, Nye, and Esmeralda Counties to conduct training and have follow-up visits. Ms. Giunchigliani said she felt more comfortable with that and asked if the language could be changed to state "attend either a regional training center or participate in professional development training," which would give the districts flexibility. Ms. Botts said she would change the terminology from "regional training center" to "regional training program."

Chairman Raggio said it was well understood by those who would be participating that region training center did not necessarily mean another site, but the language could be changed as indicated by Ms. Botts.

Ms. Giunchigliani referred to Section 21 and stated SMART was a wonderful program, but noted Clark County teachers were being told that all computers with the SMART documentation would be removed from schools starting in the following week. She asked why that would be occurring. Ms. Botts said she was not aware of that and would look into that for Ms. Giunchigliani.

Chairman Raggio said the purpose of the funding was to address Clark County’s implementation of the SMART system. It must be used in accordance with the program established under SMART, referenced as NRS 386.650.

Ms. Giunchigliani asked, referring to Section 25, when the decision had been made to change the name of the class-size reduction fund to the fund for school improvement. She believed when the class size reduction was rolled into the DSA, a line-item would be maintained in the budget for spreadsheet purposes. Chairman Raggio said he thought that was the case, but the committee had also agreed to put the new budget account for the estate tax that was received in excess of the amount required into what was now called the fund for school improvement. Ms. Giunchigliani said that was her understanding, but she had not realized it was being renamed from the class-size reduction fund, and hoped the money was utilized to reduce class sizes. Chairman Raggio said it was clearly identified as such in Section 25 and noted there was also a separate bill for the class-size reduction program, which the committee would be discussing next.

Ms. Botts clarified that Section 16 pertained to remedial education, but was not clearly stated as such, and noted she would make that change.

Don Hataway, Deputy Director of the Budget Division, said Section 25, as written, posed two problems. First, the Budget Division had envisioned the money being deposited into the fund for school improvement and transferring an amount up to $13,891,737 to the DSA for support. However, the language stated the first $13,891,737 would be deposited into the DSA and any estate tax received in excess of that would be deposited into the fund for school improvement. The problem was that in the $13,891,737, there was approximately $450,000 of interest that the Budget Division had projected earning in the fund for school improvement. If it was not in the fund for school improvement, it would not earn interest. The second, and more important problem, was that $130,000 had been allocated annually to the two Schools of Education at the University of Nevada, Reno (UNR) and the University of Nevada, Las Vegas (UNLV) for scholarships for teachers, but there would be no money to do that. Mr. Hataway suggested that the money be deposited into the fund for school improvement and up to $13,871,737 be transferred into the DSA. Chairman Raggio said that was reasonable and asked if Ms. Botts could accommodate that. Ms. Botts indicated she would change Section 25, as suggested by Mr. Hataway.

Senator Coffin said one of the reasons he voted against the subcommittee’s report was due to rolling the class-size reduction program into the DSA, and in his opinion, making it disappear gradually. He stated he was troubled by Section 23, which was precedent-setting and included the "fenced" items. The legislature was entering into an era where funds were being fenced-off from negotiations, as was done in Section 23. Sections 14 through 19, 21, and 22 did not include a lot of money, in terms of the total size of the DSA, but because it was precedent-setting and because the employees of the school district had collective bargaining agreements, if the legislature statutorily interfered with those agreements, it may not be a huge issue in the current session, but could allow the legislature to set aside large sums of money in future sessions. For example, the drafting of the DSA named specific programs that were fenced, but he did not see what would keep that from being done with other, much larger, more expensive programs. That may be the goal of some people, though he did not think it was a malicious goal, but that precedent was being set.

Chairman Raggio said the "fencing-off" of programs was not precedent-setting. Senator Coffin said it had been done with one-shot appropriations and Chairman Raggio said the items being fenced-off in the DSA were essentially one-shots. It had been done in previous sessions with large sums of money, such as the $35 million that had been allocated for technology, the $20 million that had been allocated for school improvement equipment. The limitation had previously been included in portions of the DSA in order to require that allocated funds were used for the purposes specified. It had been agreed not to put those limitations on other funding that had been approved in the DSA. Senator Coffin said the current language was significantly stronger than had been used in the past. Also, items such as the technology allocation had been truly one-shots. A number of appropriations that had been earmarked in Sections 14 through 19, 21, and 22 were the kind of things that would not be funded just once.

Senator Coffin explained he was concerned that the language would invite lawsuits because school employees legally had power to collective bargain. If the legislature tried to defeat that by means of fencing language, such as in Section 23, it could be inviting trouble. Ms. Botts pointed out the language in Section 23 came from the class-size reduction bill that had been used for many years. The programs that were fenced in the current DSA were the type of programs that had been funded as one-shots in the past.

Senator Coffin asked if, in the past, salaries for general teachers had been paid out of the class-size reduction fund. Ms. Botts replied no, the class-size reduction fund had been used only for salaries of teachers hired to reduce the student-to-teacher ratio. Senator Coffin asked if the teacher had been allowed to bargain for the money from the class-size reduction fund. Ms. Botts replied no, and explained the teacher received an allocation from the DOE. Senator Coffin said the language was being moved in a new fashion into the DSA.

Senator Rawson said the programs referred to in Section 23 were handled as one-shots by the subcommittee. He appreciated Senator Coffin’s caution, but noted that should not keep the committee from moving forward. For example, the satellite downlink would not be able to be finished and the state would not be able to get as much out of early childhood programs if the money was diverted to other things.

Chairman Raggio said there had been ample discussion and there was clear indication that if the state was going to move ahead with education reform, the raising of standards, and the raising of teachers’ capabilities, there was earmarked in the DSA, for the first time, funding for remediation programs, school improvement (which included the teaching and training of teachers), assessments, and testing.

Ms. Giunchigliani clarified that when teachers bargained for salaries, it was bargained for all teachers, not just those hired for the purpose of class-size reduction. She stated she believed teachers should be able to bargain for whatever salaries from whatever revenue they felt appropriate.

Ms. Botts explained the committees had wanted the class-size reduction program to be in a bill separate from the DSA. The preamble was similar to what had been used in the past and indicated the goal of the legislature and existing statute required pupil-teacher ratios of 15 to 1 in kindergarten through grade three. Available money was estimated to provide a sufficient number of teachers to achieve a 16 to 1 ratio in grades one and two, and in selected kindergarten classrooms considered at risk of failure and to maintain the current ratio in grade three of 19 to 1.

Section 1 amended NRS 375A.700, which was law requiring that the K-12 half of estate tax be credited to the fund for class-size reduction. Subsection C stated it would be credited to the DSA, to the limit authorized by the legislature, with any excess credited to the fund for school improvement. However, based on the action taken in the DSA, she would change that to have it credited to the fund for school improvement.

Section 2 would amend NRS 388.730 and change the fund for class-size reduction to the fund for school improvement. The subcommittee’s closure on the item was that the money would be reserved for programs of school improvement identified by the legislature. No expenditure could be made until approved by the legislature in an authorized expenditure act or by the IFC if the legislature was not in session.

Mrs. Chowning asked Ms. Botts whether Subsection 2 of Section 2 would hamper school districts too much. The total amount of money could only be used to carry out programs of school improvement identified by the legislature and questioned whether the legislature had detailed those specific programs. Ms. Botts said there was no money in the fund and estate tax had not come in as expected in the current biennium, which was the reason for the two supplemental appropriations to the class-size reduction program. In the coming biennium, approximately $14 million per year in estate tax revenue went to help fund the DSA and the excess would be available for school improvement programs. Because no money was currently available, no programs had been identified, other than the scholarships for university students, which was a 12- to 15-year old program. It was hoped that if estate tax revenues exceeded $28 million over the coming biennium, then there would be money in the fund for the 2001 legislature to identify programs to fund.

Mrs. Chowning asked if the money was interest and would be used for programs of school improvement to be identified by the legislature in the future. Chairman Raggio said that was correct, and noted school improvement included training for teachers, as well.

Ms. Giunchigliani asked if the school improvement fund, which was formerly titled the class-size reduction fund, would be funded through only estate tax revenue or a combination of estate tax revenue and the General Fund. Ms. Botts clarified the school improvement fund would be funded with only excess estate tax revenue, if there was any, and the class-size reduction program became funded essentially 100 percent from the General Fund. Ms. Giunchigliani asked what the class-size reduction program would be titled, and Ms. Botts said it was now part of the DSA. It was a line-item in the DSA titled class-size reduction. Ms. Giunchigliani said perhaps that ought to be clarified in the bill, as the titling was confusing.

Chairman Raggio asked if, in order to accommodate the concerns raised by Ms. Giunchigliani, there was any reason it could not be clearly stated the appropriation would go to the DSA to fund the class-size reduction. Ms. Botts said she would do so.

Ms. Botts explained Section 3 contained the appropriation for the class-size reduction program for the first year of the biennium, approximately $83 million, which would pay for the salaries and benefits of 1,786 teachers employed to reduce pupil-teacher ratios. Section 4 contained the appropriation for the second year of the biennium, approximately $87 million, to employ 1,826 teachers, also to reduce pupil-teacher ratios.

Section 5 stipulated the money must be used to pay salaries and benefits of the additional teachers employed by the school districts to continue reducing the ratio, and was the same language as used in the past. School districts were required to file a plan with the state superintendent describing how they would utilize those funds and must describe the method to be used to evaluate the effectiveness of the program. As had been done in the past 3 fiscal years, flexibility was allowed in the use of those funds to carry out alternative programs of remedial education that had been found to be effective in improving pupil achievement. In the past 3 years, school districts had been allowed to use the monies authorized for third grade class-size reduction for those alternative uses, and they would now be allowed to use any of that money for those uses.

Section 6, Ms. Botts continued, included requirements that had always been included in the class-size reduction law. It required the money to be used to reduce pupil-teacher ratios and must be applied first to pupils considered most at risk of failure, must be accounted for separately from any other money received by the school districts, and must be used only to pay the salaries and benefits of teaching positions. The funds may not be used to settle or arbitrate disputes and may not be used to adjust the district-wide schedules of salaries. Subsection 2 stipulated that a district may not receive the money unless it had filed a plan with the DOE and demonstrated that from resources of the school district, other than those allocations, a sufficient number of classroom teachers had been employed to maintain the average pupil-teacher ratio that existed for the grade in the school district for the 3 school years prior to the start of the program in the 1990-1991 school year.

Section 7 addressed the supplemental appropriations needed to finish the current fiscal year. First, $856,633 was funded to cover a shortfall in the estate tax revenue in FY 1997-1998. The school districts had not received their full allocation and that had been overlooked when the DOE requested the first supplemental allocation.

Section 8 appropriated an additional $4.2 million for class-size reduction in the current fiscal year. S.B. 278 already appropriated $15.4 million. The $4.2 million appropriation was also due to the shortfall in estate tax revenue.

Section 9 authorized the Elko County School District to use funds appropriated by Sections 3 and 4 to implement a demonstration project wherein pupil-teacher ratios of 22 to 1 would be established in kindergarten and grades one through five in order to eliminate team teaching. The district was required to evaluate the effectiveness of the project and report its findings to the legislative committee on education during the interim and present a final report to the 71^st legislature.

Section 10 stated any money remaining in the fund for class-size reduction would be transferred to the fund for school improvement. Section 11 concerned a program that had been funded with estate tax revenue since 1987. Scholarships for prospective teachers enrolled at UNR and UNLV were funded at $130,000 per year.

Mr. Goldwater said he had voted against Subsection 2b of Section 5 when it was presented to the subcommittee. The section provided flexibility in the use of funds earmarked for grades one and two, where it did not previously exist. He felt the flexibility was ill-defined. He stated he was comfortable with the arguments made by Senator Coffin, who said the unique policy needed time to prove itself either worthy or unworthy. Chairman Raggio pointed out that the Section did not in any way change the required class-size ratio. It did not change the commitment of the state, the funding, or anything else required under the existing class-size reduction program. Further, a written plan must be submitted and approved by the state superintendent.

Mr. Beers stated he was a parent of children in the public school system. His daughter’s fourth and fifth grade classrooms had a ratio of 34 students to 1 teacher. For the second and third grades, there had been a ratio of 32 students to 2 teachers. He had been unimpressed with the consequences, though unintended, of the collective action of the legislature over the past 5 to 8 years. His daughter’s class had been one of the first to undergo the class-size reduction program and her group did no better on achievement tests than those before them.

There being no further business to come before the committee, Chairman Raggio adjourned the meeting at 7:45 p.m.

RESPECTFULLY SUBMITTED:

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Christina Alfonso,

Committee Secretary

APPROVED BY:

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Senator William J. Raggio, Chairman

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Assemblyman Morse Arberry Jr., Chairman

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