The Budget Subcommittee of the Legislative Commission was called to order by Chairman William J. Raggio, at 10:14 a.m., on Monday, January 25, 1999, in Room 1214 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

SENATE COMMITTEE MEMBERS PRESENT:

Senator William J. Raggio, Chairman

Senator Ann O’Connell, sitting as alternate for Senator Raymond D. Rawson

Senator Lawrence E. Jacobsen

Senator William R. O’Donnell

Senator Joseph M. Neal, Jr.

Senator Bob Coffin

Senator Bernice Mathews

SENATE COMMITTEE MEMBERS ABSENT:

Senator Raymond D. Rawson (Excused)

Mr. Bob Beers

Mrs. Barbara K. Cegavske

Mrs. Vonne S. Chowning

Mrs. Marcia de Braga

Mr. Joseph E. Dini, Jr.

Ms. Jan Evans

Mr. David E. Goldwater

Mr. Lynn C. Hettrick

Mr. John W. Marvel

Mr. David R. Parks

Mr. Richard D. Perkins

Mr. Bob Price

Mr. Morse Arberry, Chairman (Excused)

Ms. Chris Giunchigliani

STAFF MEMBERS PRESENT:

Dan Miles, Senate Fiscal Analyst

Mark Stevens, Assembly Fiscal Analyst

Bob Guernsey, Principal Deputy Fiscal Analyst

Gary Ghiggeri, Principal Deputy Fiscal Analyst

Mary A. Matheus, Local Government Budget Analyst

Birgit K. Baker, Program Analyst

Jim Rodriguez, Program Analyst

Jean Laird, Committee Secretary

OTHERS PRESENT:

Steve DuCharme, Chairman, State Gaming Control Board

Donna L. Varin, Chief, Administration Division, State Gaming Control Board

Dennis Neilander, Chief, Corporate Securities Division, State Gaming Control Board

Jeanne Greene, Acting Director, Department of Personnel

Judy Holt, Administrative Services Officer, Department of Personnel

John P. (Perry) Comeaux, Director, Department of Administration

Robert E. Rose, Chief Justice, Supreme Court

Karen Kavanau, Court Administrator and Director of the Administrative Office of the Courts, Supreme Court

Gaming Control Board – Overview

Steve DuCharme, Chairman, State Gaming Control Board, discussed external issues facing the agency, mainly industry growth. He indicated the Governor pointed out during the State of the State Address that the pay scale for a number of state positions is about 17 percent below comparable positions in Clark and Washoe Counties. Mr. DuCharme added that the study performed by the State Gaming Control Board indicates Gaming Control Board positions are about 8 percent below comparable positions in the state system and said he would like to rectify that if funds become available.

Mr. DuCharme described the handout provided to the committee, "FY 2000 and FY 2001 Legislative Budget Presentation, State of Nevada Gaming Control Board," (Exhibit C). He said the first page shows the organizational structure and shows the three Gaming Control Board members who oversee the 429.5 authorized positions in seven different divisions in five offices around the state. He described the divisions as follows:

Senator Raggio asked who is serving as chief of the Electronic Services Division.

Mr. DuCharme said that currently Gregg Gale is the chief of Electronic Services and he also oversees the Audit Division. He said William A. Bible, former Gaming Control Board Chairman, conducted a recruitment drive about 18 months ago for a new Electronic Services Division Chief. He added that, based on the salary level, the advanced degree and the management skills required, the Gaming Control Board was unable to fill the position at the salary authorized. He indicated Mr. Gale has performed both functions for the last 18 months.

Mr. DuCharme indicated the cost of investigations is billed back to the applicants and the Gaming Control Board is recovering about 60 percent through these fees. Some of the functions not billable to the applicant include monitoring of independent agents (formerly known as junket representatives) and registering of sports books managers, which is necessary as a result of the new regulation changes.

Senator Raggio asked why it is not feasible to bill those costs back to the applicants.

Mr. DuCharme answered that many are special investigations, which result in disciplinary actions and fines. He added that money goes back to the General Fund in the form of fines, but the Gaming Control Board does not bill applicants for cost recovery of special investigations and routine monitoring activities.

Senator Raggio asked for clarification regarding the junket representative applications.

Mr. DuCharme responded that the junket representatives are only required to register and are not required to be licensed unless that person is called forward to stand for licensure. He added that if there is a call-forward, the junket representatives are charged for the investigation.

Mr. DuCharme said the Gaming Control Board bills back to the applicant about 50 percent of the cost of the Corporate Securities Division. He described the non-billable functions as monitoring of foreign gaming (any gaming conducted outside the state of Nevada). He explained there are reporting requirements for anybody with gaming operations elsewhere.

Mr. DuCharme then addressed factors that will affect performance during the coming biennium, including the addition of mega-resorts. He named the following examples:

• The Bellagio opened on October 15, 1998
• Mandalay Bay to open in March 1, 1999 (3700 rooms, of which 417 will be run by Four Seasons, and 2400 gaming devices)
• Spa resort-style casino in Summerland to open in April, 1999
• Spa resort-style casino at Lake of Las Vegas, to open next year
• Spa resort-style casino at Mountain Spa
• The Venetian (first phase) to open in April (3,000 rooms, 2,500 gaming devices and 114 tables)
• Paris, to open in September (2,900 rooms, 2,500 gaming devices)
• Hyatt Resort at the Lake of Las Vegas
• Aladdin Gaming to open the second quarter of 2000
• The Atlantis expansion in Reno to open in June 1999 (450 rooms and 500 gaming devices).

Mr. DuCharme returned attention to the handout, referencing the second and third pages, which are charts that compare staffing levels to gaming winnings and to General Fund collections. He said the charts cover 10 years, including the 8 years from Fiscal Year (FY) 1991 through FY 1999 and 2 projected years, FYs 2000 and 2001, using projections from the Economic Forum in November 1998.

Mr. DuCharme specified that for the 8 years from 1991-99, gaming winnings increased 50 percent and are projected to increase 61 percent over the 10-year period. For these 8 years, General Fund collections increased 48 percent and are projected to increase 57 percent for the 10-year period. For the same 8 years the number of gaming devices increased 37 percent and are projected to increase 42 percent over the 10-year period. And the number of casinos in groups I and II (which are the larger casinos) increased 28 percent over the 8-year period and are projected to increase 32 percent over the 10-year period.

Mr. DuCharme said staffing levels have increased 9 percent overall. He also conveyed that, in the Audit Division, staffing levels have increased 3 percent and in the Enforcement Division staffing levels have increased 6 percent. He said the agency is barely keeping up with the growth.

Mr. DuCharme stated that one of the Gaming Control Board’s significant budget requests is the credential payment program. He said this program was authorized by the 1995 Legislature to improve retention of professional staff; that is, persons who possess a current Nevada CPA certificate, a license to practice law, or a degree in engineering. He reminded the committee that when Mr. Bible requested this program in 1995 there was double-digit turnover in positions with these requirements. He added that since the credential payment program was authorized two sessions ago, the turnover rate has been reduced to 5 percent. Mr. DuCharme requested to keep the credential payment program to retain professional staff.

Senator Raggio asked where the credential payment program is funded in The Executive Budget. He said that previously it was in the unclassified salary bill. Joel Pinkerton, Principal Budget Analyst, Budget Division, Department of Administration, answered that it is part of the salary category. Senator Raggio said that if this program is funded it should be put back into the unclassified salary bill because of the special requirements necessary to qualify. He added it is important to maintain tracking and control. Mr. Pinkerton responded the unclassified salary bill is where the Budget Division originally had the program.

Mr. DuCharme addressed the Research Specialist position. He said this position was authorized in 1997 to assist Chairman Bible in his duties with the National Gambling Impact Study Commission. He conveyed that the position has proven invaluable and he would like to retain it. He said this individual would be responsible for developing a gaming research library on local and international gaming issues and policies to provide information for Nevada’s congressional delegation and for the Legislature. He said this person would also draft position papers for presentation to any federal or other panel that inquires about gaming in Nevada.

Senator Raggio asked whether this is an extension of the original duties for this position and if the position is currently being used for additional purposes. He questioned whether this position should be maintained beyond the life of the National Gambling Impact Study Commission if it were created to assist Mr. Bible, who is a member of that national commission. Mr. DuCharme answered that his agency had, in fact, extended the duties. He said they found that, in addition to Mr. Bible, other persons and entities had need for this type of issue research. He reiterated the Nevada congressional delegation uses it. He added that the position was instrumental in developing policy on problem gaming and instrumental in the promulgation of problem-gaming regulation (Nevada Gaming Regulation 5.170) that the Nevada Gaming Commission just adopted several months ago. He said there are a number of issues that are coming up, because of research being done by the National Gambling Impact Study Commission, which have not previously been addressed in Nevada.

Regarding the problem-gaming issue, Senator Raggio said the Interim Finance Committee (IFC) authorized a special appropriation of $150,000. He asked how that appropriation is being used. Dennis Neilander, Chief, Corporate Securities Division, State Gaming Control Board, responded that the money was appropriated to the Department of Human Resources to do a prevalence study. Charlotte Crawford, Director, Department of Human Resources, formed a committee to draft a request for proposal (RFP). Mr. Neilander said the committee consists of several people who are impacted by the issue. He said the draft RFP is in the final form and the committee is scheduled to meet again January 26, 1999. He added that the draft RFP would probably be issued within the next week. He pointed out that one thing which has changed since the Gaming Control Board appeared before the Interim Finance Committee is that the board felt at that time they would be able to get study results back within 3 months. He said that after doing an initial survey of some of the potential contractors, they now believe a more reasonable time frame is 6 months.

Mr. DuCharme addressed the request for four part-time Investigative Agents. He said the Nevada Gaming Control Board had originally requested three agents and a full-time supervisor to catch up on a backlog of key employee applications or licenses. He said the board tends to direct resources towards transactional licensing because entities need licenses to acquire interest or to execute their merger or acquisition. He explained that this means the board has not had an opportunity to license key employees. Mr. DuCharme noted there are licensees at the corporate level, but there is no one on the casino property itself who is licensed. He said the board would like at least one person on each property who is involved in operations, such as the local president, the general manager, or the casino manager, to be licensed.

Mr. DuCharme further stated that because of budget constraints, they could not get full-time investigators for employee licenses. Therefore, he said, the board developed a plan to utilize an existing pool of talent not utilized before. He described this pool as being made up of retired law enforcement or retired government employees who, because of their involvement with the Public Employees Retirement System (PERS), could not work for the board full-time. He said if the Gaming Control Board hires these retirees at 19.5 hours per week, their retirement benefits would not be impacted. He added they are already trained, already know the system and could work on short-term investigations. He said this would free full-time investigators to work the more complicated key-employee applications. He informed the budget subcommittee this would save money because most of the costs could be billed back. He also said the state would save on employee benefits because the employees would be part-time.

Assemblyman John W. Marvel referenced the list of casinos Mr. DuCharme said will be opening and asked how many casinos might be closing, considering California’s Proposition 5 (the Indian gaming initiative approved in November 1998). Mr. DuCharme answered that he did not know and that he hoped all of them will survive, but obviously it remains to be seen. He added the next segment of mega-resorts seems to be fighting for the high-end market. He opined there would be some trickle-down problem, where some of the middle-tier properties will run into difficulty. He said there are two properties possibly facing bankruptcy right now, but it is hoped they can be saved.

Mr. Marvel asked Mr. DuCharme whether he agreed with the Economic Forum’s forecast or whether his outlook is more positive. Mr. DuCharme answered that the Economic Forum considered the input of the Gaming Control Board and added that he thought the projections are attainable. Mr. Neilander added the Economic Forum projections were very close to the estimates of the Gaming Control Board and the legislative staff estimates. He noted that everyone is being cautious and indicated he believes the projections are accurate. He said the last two months have been very strong in terms of winnings and particularly in terms of collections. Mr. Neilander added that although there was a 24 percent increase in collections, which means a lot of credit play was settled, a lot of that credit play may come from the Asian markets. He suggested that it does not make sense to project a higher collection level when the Asian economy is down. He indicated the State Gaming Control Board will be back in May to present revised numbers to the Economic Forum.

Mr. Marvel asked whether there were any way to track the collectible money. Mr. Neilander answered in the affirmative and said that is why he hesitates to say there is a trend at all, because there has been such a swing in collections in those two strong months where the credit play was settled.

Senator Mathews mentioned the growth in the industry and that the Gaming Control Board staff will need to function between now and when the projected downturn occurs, if it does occur. She asked why the Gaming Control Board was asking for so few positions and whether they can manage with what is in The Executive Budget. Mr. DuCharme answered that the board had asked for some position enhancements for the Audit, Enforcement, and Investigations Divisions, but with the current financial climate and after discussion with the Governor’s staff they determined they could maintain the same level of regulation as in the past with minimal additional staff. He said the Audit Division has implemented a risk analysis committee which considers a number of risk factors to judge when properties may be facing trouble. He added that some of the properties need closer scrutiny and oversight when they experience financial difficulties because they tend to focus on marketing rather than on asset protection.

Senator Mathews said there has already been an economic downturn in the north and suggested that auditing might pay for itself. Mr. DuCharme said that was not necessarily true, because all the taxes that are due to the state are collected. He added that because the Audit Division is on a 3-year cycle, there may be a delay. But he assured her all the taxes are eventually collected.

Senator Neal asked why the money for the gaming study went to the human resources department. He asked whether it was because the Gaming Control Board did not have the specialist on board at the time. Mr. DuCharme answered that the board has never regulated patron conduct and said prevalence studies are outside their regulatory expertise. He said Charlotte Crawford, Director, Department of Human Resources, was a member of the task force to address problem gaming and participated in the original recommendations. He said the Department of Human Resources had the necessary expertise to determine the methodology needed for that kind of survey. He indicated this was the reason the Gaming Control Board did not receive those funds directly.

Senator Neal asked whether that contract would come back to the Gaming Control Board once the specialist is on board. Mr. DuCharme answered that once the study is done, the results will be presented to this committee and to the Governor. He said the Research Specialist, which is recommended in the Gaming Control Board budget, is an entirely separate issue. He clarified the person in that position did do a significant amount of work on the issue of problem gaming but said that is just one of the functions of the position. He added the reason that position is requested is that once the National Gambling Impact Study Commission concludes its work, there will still be ongoing issues to address. Mr. DuCharme said there has been another study group formed in the last month which is looking at the same issue, perhaps more from a state perspective. He said he had noticed in the previous day’s paper a U.S. Congressman has requested the General Accounting Office (GAO) to conduct an additional study. He concluded this will be an ongoing thing and the Nevada Gaming Control Board will have to respond.

Senator Neal observed that the performance indicators show the Gaming Control Board processed about 75,000 work permits and asked whether fees are charged for work permits. Mr. DuCharme said the local jurisdiction, which issues the work card, charges the fee. Senator Neal asked who keeps the record of the work card. Mr. DuCharme answered the work card information is filed with the local jurisdiction, who forwards the work card application to the Gaming Control Board. He said the Gaming Control Board has 90 days to enter an objection, should they decide to do so. He reiterated that the original holder of record would be the local jurisdiction and the Gaming Control Board also holds copies.

Mr. Neilander said the Gaming Control Board has not been able to assess the impact of California’s Proposition 5. He said it is too soon and there are many legal uncertainties that will drive what the impact will be. He explained that Native American gaming in California is status quo for two reasons. He said the first reason is that there are a number of lower-court rulings in California which declare slot machines illegal under the existing statutory scheme, which is essentially a lottery. He added that the U.S. Court of Appeals for the Ninth Circuit enforces those lower-court rulings and they have kept the status quo. The second reason he described is that the California Supreme Court has issued an injunction prohibiting Proposition 5 from being effective. He said the purpose of the injunction is to give the parties an opportunity to litigate the issues.

Mr. Neilander said there are approximately 15,000 slot machines operating in California right now and Nevada has already felt the impact of those operations. He said a few properties in the north have struggled and a few have closed. He did not know whether those closures are directly due to California’s Proposition 5. He reiterated the results of the future litigation will determine the impact on Nevada. Mr. Neilander said there will eventually be different impacts for different marketplaces in Nevada and those areas that rely heavily on repeat visitors will have the most impact. He emphasized it should not be assumed that Nevada’s market would decrease by the amount of increase in California’s market. He said with some of the new resorts that are coming on line in Las Vegas, there would be a number of first-time visitors who are going there to see those resorts.

Mr. Neilander pointed out that the financial markets are reluctant to grant conventional financing to the tribes in California until the legal issues have been worked out. Once these legal issues are worked out, more conventional financing is likely to be available to finance larger-scale operations than what exists in California now.

Assemblywoman Marcia de Braga asked whether the California gaming on Indian reservations is limited regarding the types of games. Mr. Neilander said they are not limited. He said there have been several rulings that the only type of gaming allowed is similar to the California lottery and there are certain machines that may or may not qualify as a lottery device. However, he said, because of the uncertainty with Proposition 5, there has been no enforcement. He noted there are several Nevada-style slot machines operating in California now. He said the tribes argue they are legal and others argue they are not. He added that certain lower courts have ruled they are not legal, but there is currently no enforcement of those court rulings.

Mrs. De Braga asked whether there were any way to measure what the impact has been at this stage, especially in northern Nevada. Mr. Neilander answered that the Gaming Control Board does not keep the statistics necessary to break that down. He said to do that properly, there would need to be interface with the various local convention and visitors bureaus and a narrow, specific study to determine the exact impact.

Senator Mathews noted that the Audit Chief position has been eliminated in The Executive Budget. She asked how the Gaming Control Board will function given that it says it needs to do more auditing, particularly in those places that are having problems. Mr. DuCharme said the board was unable to fill the Electronic Services Division Chief position because of the requirements of that position for advanced degrees and advanced management skills and because of the salary level provided. He said the board therefore moved the Chief of the Audit Division to the Electronic Services Division Chief position with the understanding that person would function in a dual role until a qualified person could be recruited for the Electronic Services Division Chief position. He said that since the position was vacant for 16 or 18 months it was removed from the Audit Division’s budget.

Senator Mathews asked whether the board was paying the individual for both jobs or just for one. Mr. DuCharme answered the person only gets one salary, that of the Electronic Services Division Chief, which is the higher salary. Senator Mathews noted that a person who is "spread too thin" does nothing well and asked whether Mr. DuCharme was comfortable having that one person overseeing both divisions. Mr. DuCharme answered the Gaming Control Board members would be more comfortable if they could find a qualified person and fill both positions. Senator Mathews indicated it is a concern. Mr. DuCharme added the board has not asked for a lot of enhancements. He reminded the budget subcommittee that Mr. Bible did consistently operate on a lean budget, but he recruited a very professional staff that does an excellent job. He added the Nevada Gaming Control Board is generally rated as the premier gaming regulatory agency in the world. He said the board entered into partnership with the University of Nevada, Las Vegas (UNLV) and has trained over 1,000 agents worldwide.

Mr. DuCharme assured the committee that staff can control and regulate gaming in a manner consistent with past practices at this staffing level, but he asked the legislators to keep in mind that if funding becomes available, they need to increase some salaries.

Assemblyman David Goldwater asked for an explanation of what the Gaming Control Board’s role will be if and when Nevada companies are involved in gaming on Indian reservations. Mr. Neilander answered that situation exists now and essentially the companies must comply with the provision of the Nevada Gaming Control Act that govern foreign gaming. He added the foreign gaming provision was adopted in 1993 by the Legislature when it repealed the requirement for prior approval from the Gaming Control Board to go into those other jurisdictions. He said now there is a reporting requirement instead, but along with it the law allows the board to take disciplinary action against a Nevada entity that is doing business outside Nevada, whether it be on tribal land or just in another legal jurisdiction.

Mr. Neilander further explained that the foreign gaming act requires those Nevada companies to comply with the laws of Nevada and with the laws in the jurisdictions where they are operating. He said once those filings come in, a Gaming Control Board agent reviews them for compliance with Nevada law and monitors on an ongoing basis. He said it is different for manufacturers and distributors because the board has taken the position that gaming devices cannot be distributed or sold in jurisdictions where they are either not legal or it has not been determined whether they are legal. He said as the legalities of these circumstances become more concrete, there will be additional manufacturers and distributors trying to sell devices in those areas.

Mr. Goldwater asked whether the Gaming Control Board is having any trouble with what is actually compliance; that is, he wondered, are the laws different on the tribal lands and is it more difficult to evaluate compliance? Mr. Neilander said it has not been a problem to date, but he said the laws are very different and vary from tribe to tribe. He said the differences are difficult to stay on top of. He said it has not been difficult overall because the Nevada companies engaged in those activities have only done so with tribes where it is clearly legal and where there is a compact between the state and the particular tribe governing those operations. Mr. Goldwater asked whether there would be any impact in this area on the Gaming Control Board’s budget, personnel, or ability to regulate Nevada companies. Mr. Neilander said it would depend in part on which type of gaming is legalized and how many and what sizes the operations are. He said If it becomes big enough, it would have an impact on the board’s resources.

Mr. Price asked whether, from a procedural point of view, it would only be possible to make an official determination that someone had violated another jurisdiction’s law if in fact the violation had already been decided by that other jurisdiction. Mr. Neilander said even though regulations and laws might be less stringent in another jurisdiction, the Gaming Control Board would conduct itself in a manner at least consistent with that required in the state of Nevada. He said the Gaming Control Board could still hold a violator accountable, even though the company did not receive disciplinary action from the other jurisdiction.

Donna Varin, Chief, Administration Division, State Gaming Control Board, addressed the need for position upgrades. She said the issues are appropriately addressed in the unclassified pay bill and are not included in the general budget. She noted salary issues are part of the Gaming Control Board’s strategic plan and are critical to the agency’s achieving its mission. She said salary upgrades for classified positions can be accomplished through the Department of Personnel and the interim finance process, but salary upgrades for unclassified positions can only be accomplished through the unclassified pay bill and the biennial legislative process. She indicated there are 14 positions for which the board is asking for changes. She said the position requests generally address issues like supervision of staff at the same level, responsibility for statewide programs, increased complexity of assignments, and the ability to provide for additional supervision or management for the appropriate division of staff to increase their ability to monitor investigations and caseloads.

Senator Raggio asked what is included in The Executive Budget in decision unit M-300 and whether it will be in other budgets as well. Mr. Pinkerton answered that M-300 covers fringe benefit adjustments, including items such as group insurance adjustments. Senator Raggio asked Ms. Varin whether the salary additions she was describing are in The Executive Budget. Ms. Varin said they are not. Senator Raggio asked whether Ms. Varin had an outline of the salary needs in written form. She answered that the agency has the information both by general salary level and as specific salaries for each one of the positions in the unclassified pay bill. She said the agency did present this during preparation of its budget but was asked to hold back and determine what additional revenues might be available because this was not eligible to be funded under the Governor’s plan.

Senator Raggio said that in the last session the Legislature granted the credential pay and an additional cost of living increase based upon the representation that it was essential to maintain the necessary level of expertise. He asked that someone address the effect of those increases and whether there has been a reduction in turnover. Ms. Varin responded that the credential pay, which was authorized in the unclassified pay bill, has reduced turnover from 12 percent to 5 percent in the Audit Division.

Ms. Varin said the Gaming Control Board has an average 8 percent turnover rate, but in some divisions there are double-digit turnover rates. She said the Investigations Division is at 19 percent and has only one or two persons involved in the credential payment program. She compared that to the Audit Division, in which 60 percent of the positions are involved in the credential payment program. She added the program has been very effective in reducing turnover for the divisions that qualify for it. Ms. Varin said the pay issue is separate from that and although the Legislature has provided an additional increase for the last two sessions, there is still significant disparity. She said the agency asked the Department of Personnel to conduct a salary survey in 1996. Using the information obtained from the survey, the Gaming Control Board updated the salary levels to the 1998 level; but the disparities continue. Ms. Varin said this does not take into account the recent State Personnel study that shows state employees in general are 17 percent behind employees in the Nevada marketplace.

Ms. Varin said what has the Gaming Control Board very concerned is that they are even behind other state employees in comparable positions. She said in a majority of the Gaming Control Board’s unclassified positions, the supervisors are lagging an additional 5 percent, lead agent positions an additional 6.5 percent, and journey-level agent positions an additional 9.4 percent. She pointed out that means 57 percent of the board’s unclassified staff are paid 25 percent less than professionals in the Nevada marketplace in comparable positions. She said this is seen most significantly in the Gaming Control Board’s high turnover areas, such as the Investigations Division. Additionally, she noted a disparity in salaries wherein the financial auditors of the Public Utilities Commission of Nevada (PUCN), who are also in the unclassified service, are paid 35 percent more than Gaming Control Board auditors. She also said Legislative Counsel Bureau (LCB) auditors are paid nearly 30 percent more.

She pointed out that the Gaming Control Board issues are unique, including the fact the board works in a worldwide setting and has unique regulatory functions, the number of staff who are CPAs or attorneys, the intense background investigation prior to hiring, and the statutory cooling-off period when employees leave. Ms. Varin said that the Gaming Control Board is one of the largest employers of unclassified staff. She added that, while most state agencies have only their top administrators unclassified, 78 percent (337) of the Gaming Control Board staff is unclassified. She added that it is important for the board to be able to maintain internal consistencies on salary, but it is also important to recruit fairly and equally with other employers in the state.

Senator Raggio again requested the Gaming Control Board to make available to legislative staff the backup salary information referred to. He cautioned that in all the budgets there will be requests, but added that, in the event additional funding becomes available, there will be another opportunity for consideration of these contingent requests.

Senator Mathews asked what the Gaming Control Board does to help properties that are having some difficulty or are on the verge of closing. Mr. DuCharme said the board tries to assist the companies in asset protection because sometimes the company’s focus is more on bringing in more revenue. He added they do try to expedite transactions that are time-sensitive.

Senator O’Donnell recalled that Mr. DuCharme had testified earlier there were two properties on the brink of financial distress. He asked for a description of the tiered level of gaming tax. Mr. DuCharme responded it is based on gaming revenue per month. Senator Neal interjected it is 3 percent for the first $50,000, 4 percent from $50,000 to $134,000, and 6.25 percent over $134,000. Senator O’Donnell asked whether that is based on total gaming revenue. Mr. DuCharme answered it is based on the win, which is like net revenue. Senator O’Donnell asked whether there is any appetite to revisit the tiers in light of these hotels going under because of the diversification of Indian gaming. Mr. DuCharme responded, "That is a tax issue." Senator O’Donnell indicated the tier may be fine for the upper level, but suggested that the Gaming Control Board take a second look at the lower level. He said he would hate to have casinos in Nevada go under just because they cannot pay a 3 percent tax. Mr. DuCharme said they reach the 6.25 percent very rapidly, so most of the properties in groups II and III are already at 6.25. He said there would be very few at the 3 percent level on all their gaming revenues.

Senator O’Donnell expressed concern that the Information Services position had not been filled because of salary constraints. He asked whether the Gaming Control Board has any mechanism to come to the Legislature for an increase in salaries. Mr. DuCharme answered that would be the only way to fill the position because of the market demand on people with those types of degrees. He added the private sector could pay entry-level employees twice what the Gaming Control Board pays their senior managers. Senator O’Donnell emphasized that state data processing staff are woefully underpaid, that the state is seriously losing out and is going to do itself a big disfavor if it continues down this road.

Senator Raggio suggested that Mr. DuCharme discuss with the state budget office retaining the Audit Chief position in the budget with appropriate offsetting vacancy savings requirements.

Senator Neal noted that the agency request for FY 2000 is 447.5 FTE (full-time equivalent) positions and the Governor recommended 432.53, which is approximately 16 positions fewer than requested. The agency request for FY 2001 is 454.5 and the Governor recommended 432.53, which is approximately 22 positions fewer. The senator said that since this is a gaming agency and it is critical to the state’s economy, he had concern that "it will cause problems." He said the agency must have had reasons for recommending the additional staff. Mr. DuCharme said their goal had been to reduce the audit cycle to 2.5 years and to increase the licensing investigation staff. He reiterated that if the Gaming Control Board takes additional steps such as the risk analysis committee and maintains the audit cycle at around 3.25 years, they could still maintain the integrity of the industry. He added that the four part-time positions the Governor recommended would help to license key employees. He said it is not optimum staffing, but it will allow the Gaming Control Board to adequately do the job.

Department of Personnel - Overview

Jeanne Greene, Acting Director, Department of Personnel, recited the mission of the Department of Personnel: To administer comprehensive personnel services in an accessible, efficient manner to state agencies, employees and the public; provide fair and equitable opportunities to all persons for employment and promotion; provide and promote staff development; and promote an environment which values its employees and encourages the retention of a quality work force in the state’s classified service.

Ms. Greene added the department is organized into three divisions: Technical Services, Field Services, and Administrative Services. She said there are offices in Carson City and Las Vegas which are staffed by 73.5 permanent positions, 55.5 in Carson City and 18 in Las Vegas. She added there are 3 temporary positions in Carson City which will expire June 30, 1999. She said the Personnel Commission, consisting of three members appointed by the Governor, is responsible for adopting personnel regulations and reviewing contested classification actions. She described the divisions as follows:

Ms. Greene said the Department of Personnel faces many challenges in the next biennium. She said there is a nationwide shortage of skilled candidates in the field of information technology caused by the explosion of technology in the workplace and Year 2000 complications. She added the state continues to experience difficulty in recruiting and retaining correctional officers for the Lovelock and Ely prisons and highly trained professionals, such as nurses, psychologists and clinical social workers. She said the department has implemented various means of alternative recruitment sources, including the Internet and community job fairs, and will continue to work closely with the hiring agencies in exploring other recruitment methods.

Ms. Greene added the department is continuing its efforts to identify and revise statutes and regulations, which are barriers to an efficient personnel system. She expressed the agency’s goal to simplify the rules and regulations for personnel administration, making them more easily understood by managers and employees.

Ms. Greene indicated another ongoing goal is to improve employment examinations and test-validation methods. She said the department remains committed to the implementation and success of the personnel payroll portion of the new integrated financial system (IFS).

Ms. Greene informed the committee that during the last biennium the Department of Personnel conducted occupational studies for custodial and domestic services, nursing services, lab services, psychology and social services, and activities therapies. She said these studies represented 188 classes, encompassing 1,829 positions.

Ms. Greene referenced Exhibit D, "State of Nevada 1998 Salary Survey", which is on file at the Research Library. She said Exhibit D compares the State of Nevada salaries with the collective salaries of all employers surveyed. She said this includes public and private sector employers within the state and other Western state governments.

Assemblywoman Barbara Cegavske asked whether the Department of Personnel conducts studies to identify job areas where employees are needed. Ms. Greene responded that they do not.

Assemblyman Lynn Hettrick asked how the Department of Personnel handles benefits, vacation time, and so forth, in the salary survey. Ms. Greene drew attention to pages 25 and 26 of Exhibit D, which summarize benefits survey results. Mr. Hettrick asked whether the graphs, which identify midpoints for salaries, include benefits. Ms. Greene responded those are based on compensation only and do not include benefits.

Judy Holt, Administrative Services Officer, Department of Personnel, explained that the Department of Personnel is funded entirely by personnel and payroll assessments. She said the personnel assessment is a uniform assessment made on the legislatively approved salaries of all classified employees in state employment, about $5 million. She said the payroll assessment is a uniform assessment made on the legislatively approved salaries of all employees who are paid through the central payroll system, about $1 million.

Ms. Holt provided a status report of the new personnel/payroll system. She said the department had planned to go live with the new system with the first paycheck in January of 1999 but has not done so. She explained that the acceptance testing necessary to validate the system was more extensive and time-consuming than the original plan allowed for. She said the department delayed implementation by one quarter to allow six or seven mock payroll runs to do comparisons with actual totals in the current systems. The department administration anticipates that conversion of data into the new system will occur in March and that the first paycheck from the new system should occur April 2, 1999. Ms. Greene said the department trained about 1,500 employees on the capabilities of the new system. She added that because of the time lag, there will be four days of refresher training for primary personnel representatives and payroll clerks.

Senator O’Donnell asked whether agencies are having difficulty filling positions in the area of information services. He also asked whether current state information services personnel are migrating from one agency to another, but the state is not able to hire any new people. Ms. Greene responded that it is difficult to recruit qualified individuals into the information technology positions. She said there is some movement of individuals from one agency to another. She added some agencies are bringing people in at a training level and providing them with the specific skills for the programs they deal with. She added the Department of Personnel is doing a lot of advertising on the Internet, focusing on the quality of life in this area, since some people want to work in a smaller environment. She said they are making some progress, but there are still vacant positions they have not been successful in filling.

Senator Raggio asked whether the Governor had mentioned in his State of the State address that he intended to move the payroll function from the Department of Personnel to the Office of the State Controller. John P. (Perry) Comeaux, Director, Department of Administration, answered that was his understanding, but since there were other, higher-priority issues to address, there had not been opportunity to discuss this with the Governor. Senator Raggio indicated he had not seen it in the budget and said the budget subcommittee needs to be apprised of whatever direction will be recommended. Mr. Comeaux indicated his intention to discuss this with the Governor as soon as possible.

Assemblywoman Jan Evans recalled the Governor had also indicated in the State of the State address his intention to pull together all seven payroll systems into one. Mr. Comeaux said essentially two of them had already been combined. He said the new integrated financial system pulls the Nevada Department of Transportation (NDOT) in with the central payroll system. He added that still leaves five other payroll systems out there. He said that is something he has been able to discuss with the Governor very briefly, but he knows the Governor wants to look at that from an efficiency standpoint. Ms. Evans asked for a list of the different payroll systems. Mr. Comeaux named the following:

University System, north

University System, south

Legislative Counsel Bureau (LCB)

Public Employee Retirement System (PERS)

Central payroll system

Nevada Department of Transportation (NDOT)

Employers Insurance Company of Nevada

Assemblyman Bob Price asked whether anyone surveys unclassified positions for comparison of salaries to comparable positions outside the state system. Mr. Comeaux said they do not. He added the Department of Personnel did conduct a study reviewing which state positions should be unclassified and which ones should be in the classified system. He said recommendations from the Governor resulting from review of the study will be presented towards the end of this session or for the next session.

Senator O’Connell asked whether the 1998 Salary Survey considers population size and local or regional cost of living factors. Ms. Greene said no, but that it was broken out by northern Nevada and southern Nevada.

Assemblyman Bob Beers asked whether the Department of Personnel provides personnel services to those agencies that do their own payroll. Ms. Holt responded yes. Mr. Beers asked whether both the personnel and payroll assessments are applied to those agencies. Ms. Holt said the Department of Personnel assesses personnel services on all classified employees regardless of where they receive their pay, but the payroll assessment is only applied to agencies for which the Department of Personnel provides payroll services. Mr. Beers asked for an estimate of employees by payroll center. Ms. Holt estimated as follows:

Central payroll 12,600

NDOT 1,500

University system 2,500

Employers insurance 950

PERS 42

LCB 150

Mr. Beers asked how much social security tax a state employee pays. He added he pays 7.5 percent and his employer pays 7.5 percent. Ms. Holt said those assessments are the same for state employees who contribute to social security, but some do not. She added the state has a public employees retirement system and only employees who are ineligible to belong to the system contribute to full social security. She said most employees do contribute to Medicare (anyone hired after April 1, 1986). Mr. Beers asked what percentage an employee who belongs to PERS pays into the system. Ms Holt responded that if the employee is participating in the employer-paid plan, the rate to the employee is 18.75 percent for regular employees and slightly higher for police/fire employees. She said this is a reduction to the employee’s gross income. Ms. Holt said an employee who participates in the shared plan will pay 10 percent and the employer will match with a 10 percent for regular employees and slightly higher for police/fire employees.

Mr. Beers asked whether the personnel department tracks percentage of gross payroll paid that is for overtime. Senator Raggio indicated Larry Peri, Senior Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, prepares a comprehensive report on overtime. He said the legislative directive was to determine whether policies could be implemented that would control overtime, such as requiring department heads to approve overtime before it is worked.

Mr. Parks asked, in light of the testimony from the Gaming Control Board and the Department of Personnel, when the Department of Personnel last conducted a full-blown classification and compensation study and whether one is planned for the future. Ms. Greene responded occupational studies are done on several occupational groups at one time, but not all groups. She added they are done on approximately a 10-year cycle. She said a salary survey is done concurrently with the occupational study.

Ms. Holt identified the four new positions recommended in The Executive Budget. She said two of them are clerical support positions, one in central payroll and one in the records management office. These would replace contract positions and converting them to permanent positions will reduce costs. The other two positions recommended are part of the IFS. One is a temporary position that will act as the hotline support during the decentralization of the new system. This is a temporary position that would expire June 30, 2001. Ms. Holt said the other position would be the system administrator for the IFS personnel/payroll system and would be permanent. She said that person would be responsible for the administration of the security of that system and the accuracy of personnel rule implementation in the system.

Senator Raggio said The Executive Budget recommends an increase in the personnel assessment from .79 percent to .94 percent and no change in the payroll assessment. He asked Mr. Comeaux whether the proposal is for the General Fund to advance the approximately $7 million for the IFS costs and the General Fund will be reimbursed over a period of 15 years. Mr. Comeaux nodded "yes."

Senator Neal asked whether the Department of Personnel generates the occupational studies conducted on a 10-year cycle. Ms. Greene responded that is correct. Senator Neal asked whether there are laws or rules governing the process of selecting occupational groups for study. Ms. Greene responded there is nothing in statute or regulation that governs. Senator Neal asked what occurs when there is a request from an agency to review or upgrade a position. Ms. Greene responded that an individual or agency could submit a request for an individual position study at any time. She added the request must be based on a change in the duties of the position, either gradual or due to reorganization. She said those are addressed on an immediate basis. Ms. Greene said the Department of Personnel performs about 900 of those reviews per year in addition to occupational studies of classes.

Senator Neal noted that on the performance indicators for technical services, 188 studies are projected for this year, but only 62 for FY 2000 and only 62 for FY 2001. He asked why there is such a decrease. Ms. Greene said that over the next two years the Department of Personnel would be studying the clerical classes. She added those are high-volume classes and although the department will be reviewing fewer classes, it will review more positions. Senator Neal asked whether the salary survey in Exhibit D covers classified positions only. Ms. Greene answered yes. Senator Neal asked to whom the salary comparisons were made. Ms. Greene answered that the Department of Personnel surveyed the 10 western states and both public and private employers within Nevada. Senator Neal asked whether this is where it is represented that the minimum is 17.6 percent behind, the mid-point is 14.3 percent behind and the maximum is 9.35 percent behind. Ms. Greene said that is correct.

Don Hataway, Deputy Budget Administrator, Budget Division, Department of Administration, called the committee’s attention to the definitions in the introduction of The Executive Budget. Noting that several questions had come up at this hearing in regard to rates and changes, he said that on page INTRO-5 is the outline of retirement rates used to construct The Executive Budget. He said that each year the Public Employees Retirement System conducts a study on retirement rates. He informed the committee there is a recommended decrease in the employer-employee regular plan from 10 percent to 9.75 percent. All other rates stay the same. Mr. Hataway said that beginning on page INTRO-9, there is an outline of the occupational studies. He said M-300 includes not only the fringe benefit adjustments but also changes resulting from occupational studies. He listed the five occupational classes included in the 1998 salary survey:

Custodial and domestic services

Public health medicine and nursing services

Activity therapy services

Psychology and social science services

Laboratory services.

Mr. Hataway said the Department of Human Resources and the Department of Prisons were the most affected by those changes. In the budgets that are impacted, M-300 will include both fringe benefit adjustments and occupational study adjustments. Mr. Hataway said he had provided LCB staff with a detailed list. Senator Raggio asked whether correctional officers were on that list. Mr. Hataway said no.

Mr. Hataway said the budget office is currently revisiting the rate change in the personnel assessment. He said the salaries of the university system may have been excluded and if that is the case, the rates may be adjusted downward. He said if adjustments are needed, the Budget Division will give the budget subcommittee a revised rate structure with the fiscal impact by budget account.

Senator Raggio referred to an article in a recent issue of Governing magazine, which indicated that Nevada state salaries ranked tenth in the nation. He said this seems to be at odds with what the salary survey indicates. He suggested the Department of Personnel review the article. Ms. Greene responded that when Nevada state salaries are compared to the 10 western states, Nevada is only 2 percent behind. She added Nevada is very competitive with other states. Senator Raggio reiterated Nevada is tenth among the states.

Senator O’Connell asked for the total cost of a holiday to the system. Ms. Holt said the department would provide that information.

Ms. Holt commented that the equipment budget is just minimal replacement and includes some new computers to replace the ones that are not Year 2000-compliant.

The chairman called a recess at 11:55 a.m. He called the meeting back to order at 1:47 p.m.

Department of Employment, Training and Rehabilitation - Overview

Senator Raggio noted that Carol A. Jackson, Director, Department of Employment, Training and Rehabilitation (DETR), had sent the budget subcommittee a memorandum (Exhibit E) indicating her regret at being unable to attend the hearing because of hospitalization. Senator Raggio conveyed the committee’s best wishes for her.

Harry Bradley, Assistant Director, Department of Employment, Training and Rehabilitation, said the mission of the department is to promote economic self-sufficiency and independence for Nevada’s workforce by providing quality and timely employment, training, and rehabilitation services to all Nevada’s citizens. He said the department consists of the Director’s Office and five divisions, which are the Employment Security Division, the Job Training Division, the Rehabilitation Division, the Nevada Equal Rights Commission, and the Division of Information Development and Processing.

Mr. Bradley said DETR has two major issues:

1. The signing of the Workforce Investment Act by President Clinton in August 1998.

2. The insurance of the Y2K project and the General Unemployment Insurance Development Effort (GUIDE).

Mr. Bradley stated the purpose of the Workforce Investment Act (WIA) is to provide states the framework for a unique workforce preparation and employment system. He said that in October 1998, former Governor Bob Miller amended the executive order that established a workforce development board. The amendment was to establish Nevada’s Workforce Investment Board as required by the WIA. The act requires a majority of the board members to be representatives of business and the chairperson of the board to be a business representative. Mr. Bradley said that in November 1998, former Governor Miller designated DETR as the single state agency in Nevada responsible for statewide employment statistics as required in the Workforce Investment Act. The Governor also designated DETR as Nevada’s workforce investment lead agency for the implementation of the WIA. Mr. Bradley said DETR has taken an active part in working with the U.S. Department of Labor and other required workforce investment state agencies in Nevada. He added that a critical process in the implementation of the WIA is the development of a state unified plan. He said this unified plan is in process with all the required 14 partners of the WIA, working together to implement the plan.

Mr. Bradley said the chairperson of Nevada’s Unified Plan Task Force Committee, Karla McComb, is a member of the state Workforce Investment Board. He said Nevada plans to be an early-implementation state, with the first phases of the act to be implemented in July 1999. The act requires all states to have the Workforce Investment Act implemented by July 2000. Mr. Bradley informed the committee the final regulations for the Workforce Investment Act should be published by the U.S. Department of Labor in February 1999.

Bill Vance, Administrator, Division of Information Development and Processing, Department of Employment, Training and Rehabilitation, provided a project status report on the GUIDE system. He said the core components of the Year 2000- compliant unemployment insurance system, known as GUIDE, went live on October 2, 1998, as scheduled and within the original budget. He said the system has been successfully paying unemployment claims for three months and has continued to operate without interruption, but the project is not complete. He further stated that DETR continues to work with the vendor, SCI Consulting, to install remaining components, to resolve problems within installed components, and to finish out the system. Mr. Vance said GUIDE replaced a 30-year-old system; conversion problems were expected, and they did occur. He indicated SCI Consulting is committed to making the State of Nevada a satisfied customer. He said that because the GUIDE contract is well-written and based on deliverables, DETR is confident the final product will be within budget and as contracted for.

Mr. Vance added that some of the system GUIDE components will be implemented later than originally scheduled, but with little or no effect on the business function and no additional cost. Noting the total contract is $4.8 million, he said $437,000 is for contingency and change orders, with zero of that amount having been obligated to date. He added that $3.3 million has actually been paid to the contractor. The remaining $1.1 million is the sum of holdbacks, which is about $275,000; and discounts for prompt payment, $8,000; the remaining deliverables total about $781,000. He said that among the future deliverables are daily report code development, technical assistance training and documentation, bridging of interfaces to the appeals system and claims auditing subsystems, final system documentation, and four months of system maintenance.

Mr. Vance said Year 2000 compliance was of course a GUIDE requirement from the start, but in a continuing effort to guarantee uninterrupted service to clients of DETR, the department has hired the services of a consultant to independently validate the unemployment insurance system for Year 2000 readiness. He informed the budget subcommittee the GUIDE system has been working with Year 2000 dates since the first week of this month, when claim expiration dates went beyond January 1, 2000. He added that although full system compliance and continued operation are expected, DETR has prepared contingency plans for all critical unemployment insurance benefit processes to insure continuity should system problems beyond DETR’s control be encountered. Mr. Vance said a copy of this very detailed plan was provided to the Department of Information Technology in November.

Mr. Vance highlighted the factors to which he attributed the success of the project:

Senator Raggio asked whether the GUIDE system is in place. Mr. Vance said it is in place and has been functioning since October 5, 1998. Senator Raggio asked about the status of the interfaces yet to be completed. Mr. Vance said they are in progress and on track.

Marty Ramirez, Deputy Chief Financial Officer, Department of Employment, Training and Rehabilitation, said the department has 21 separate budget accounts and has responsibility for administration of the Unemployment Insurance Trust Fund. He added that at the end of calendar year 1998 there was a balance of about $425 million in the trust fund and expenditures for calendar year 1998 were approximately $190 million. He said DETR currently has 872 permanent positions and approximately 60 intermittent positions. He noted The Executive Budget includes 25 new positions and 13 positions which will sunset July 1, 1999. Mr. Ramirez said the Governor has recommended $18.2 million in General Fund appropriation over the biennium, which equates to an increase of $929,000 or 5.4 percent. He said the total operating budget for DETR is $247.7 million.

Mr. Ramirez added that the Governor has recommended a total of three new positions for administrative services and information development and processing. He said that for DETR Administrative Services budget account 101-3272, there is a Personnel Technician to provide support to the department in the area of recruitment.

In budget account 101-3274, Information Development and Processing, two new positions are recommended: a Property Inventory Clerk to track hardware, software and communications lines, and an Information Systems Specialist II to support the design, installation and maintenance of the department’s wide area network (WAN). Mr. Ramirez said the most significant enhancement in this budget is the creation of a new budget account 101-3273, Research and Analysis.

Senator Raggio asked why the new budget is necessary. Mr. Ramirez said it would facilitate a more efficient and accurate accounting of complex U.S. Department of Labor and U.S. Bureau of Labor Statistics cooperative programs. Senator Raggio asked whether the overall positions are the same. Mr. Ramirez said there is no change in positions, and the funding is the same and has no effect on cost allocation.

Mr. Ramirez said the final significant change in budget account 101-3274 is on page DETR-13 of The Executive Budget. He said this is the elimination of the charging for the Career Information System software. He said DETR is proposing to fund the cost of providing the software to schools and service providers through the State Occupational Information Coordinating Committee (SOICC) Basic Assistance Grant and the Claimant Employment Program (CEP).

Mr. Ramirez said budget account 101-4772, One Stop Career Centers, was created by the Interim Finance Committee (IFC) in FY 1998. Senator Raggio asked whether this budget is a grant from the U.S. Department of Labor, with a 3-year implementation. Mr. Ramirez said that is correct. He added that on July 1, 1994, the Department of Labor announced availability of funds to states, and in July 1997 Nevada received a 3-year, $5.4 million award. He said the first allocation, in the amount of $2 million, was used to develop an information delivery system and communications network through a series of community resource centers. The second allocation, $1.7 million, is currently being used to complete the communications infrastructure and facilitate the expansion of career centers to non-DETR partners through the request for proposal (RFP) process. The final allocation, which is also $1.7 million over both years of the biennium, is planned to continue the RFP process and make those funds available to non-DETR partners. Mr. Ramirez said that with the passage of the Workforce Investment Act, the major shift in the development of a one-stop system has been shifted from the state level to the local level. He indicated DETR has constructed this budget account to make as many of the funds available to non-DETR partners as possible.

Senator Raggio asked how this program works, how it serves the public, where the centers are, and who the clients are. Mr. Bradley responded that the one-stop centers are going to be located throughout the state. He said the Workforce Investment Act requires one in northern Nevada and one in southern Nevada. There will also be affiliated sites, which are satellite locations. The two centers required under the act must have all the partners physically on site. Mr. Bradley said the affiliated sites can have electronic connections. The resources provide a service to job seekers that would allow them to build their resumes on site if they need assistance.

Senator Raggio asked whether someone looking for a job who comes in empty-handed, would get full assistance from staff in preparing a resume. Mr. Bradley answered yes. Senator Raggio asked what other services are provided to the individual. Mr. Bradley answered people can also search the Internet for jobs they may qualify for. He added that if their skills need to be upgraded, there will be training programs provided for them, depending on the type and level of service the individual needs. Senator Raggio asked how many centers have been established. Mr. Bradley said that there are no centers established so far under the Workforce Investment Act; those are in the planning stages. He said there are co-located facilities throughout the state that are DETR-run which do have resource centers that are operational today. He said there are 36 total.

Senator Raggio asked whether the department has spent the $2 million authorized in 1997, and if so, how it was spent. Mr. Ramirez responded that the awards come in the form of modifications, so when it is reported it is just a cumulative expenditure total that the department reports to the U.S. Department of Labor. He said DETR spent the entire $2 million and is now working on the second allotment of $1.7 million. Senator Raggio asked why, since the $2 million has been spent, the centers are not in operation. Mr. Bradley responded that the Workforce Investment Act was signed by the President and became law on August 7, 1998. Senator Raggio asked what DETR did with the $2 million from the 1997 grant if there are no centers. Mr. Bradley said the department does have centers, but they do not meet the definition of a "one-stop" under the act. Senator Raggio asked whether, during this time, people have been able to go to a center and get the assistance described earlier. Mr. Bradley answered yes.

Senator Raggio inquired what has been lacking that is now required under the new act. Mr. Bradley answered, "The other partners." He said the centers were developed within DETR, which will now be working closely with the State Department of Education, through the community college system, and also the Welfare Division of the Department of Human Resources. He added that Housing and Urban Development (HUD), which is a federal agency, is one of the partners working with DETR employment and training staff. He said all participating agencies will all come into the centers to provide a more seamless service (no "wrong-door" approach), where resources can be shared. He said DETR is in the process of developing common intake documents, which should reduce duplication among agencies.

Senator Neal asked for explanation of the contradiction between the number of one-stop centers mentioned today (36) and the number in performance indicators 1 and 2 in The Executive Budget on page DETR-28. Mr. Ramirez explained the performance indicators number 1 and 2 refer to DETR-only sites, whereas the number 36 refers to all the community resource centers that have taken one-stop funds and perhaps bought equipment or software and had it installed. He added that some of the locations are non-DETR-related. Senator Neal asked whether "we are essentially speaking of something not in the budget." Mr. Ramirez said that is correct.

Assemblywoman Chowning indicated there was considerable confusion and she wanted some answers. She wished to know where, in her district and in southern Nevada, the centers are, whether they are part of the Las Vegas Family Resource Centers, whether United Way is a partner, and what has been spent where. She said she would like to be able to tell her constituents where they can go to get job information. Mrs. Chowning said most of her constituents think they should go to the Department of Employment, Training and Rehabilitation for this information. She said, however, that those services are increasingly available in the community with the Family Resource Centers and through United Way. She said DETR has spent a lot of money and she wants to know where. Mr. Ramirez said he had with him a list of where the department has electronic connections and resource centers. He added it is a couple of pages long and offered to provide it in written form after DETR’s presentation. Senator Raggio said that was satisfactory.

Mr. Ramirez said the Claimant Employment Program, budget account 205-4767, in FY 1998 wrote training contracts for 5,294 individuals at a cost of approximately $3.2 million. He added that the average cost of each contract was about $600 and the department was able to return 4,750 people to work at an average salary of $9.10 per hour. He said at this wage, these workers would contribute over $90 million to the economy if they were to remain fully employed. Mr. Ramirez said the Claimant Employment Program (CEP) has established partnerships with a number of agencies, such as the Boys and Girls Clubs of Las Vegas and the State Job Training Office. He added that they recently began working with Lieutenant Governor Lorraine T. Hunt, Senator Mark James, and Robert E. Shriver, Executive Director, Division of Economic Development, to establish a partnership with the Commission on Economic Development.

Continuing, Mr. Ramirez said CEP works with the University and Community College System of Nevada to customize training for employers. He said the Governor’s recommendation for CEP is on page DETR-54. It calls for an increase in client services of approximately $1.1 million the first year of the biennium and $1.3 million the second year. This additional authority would allow a projected 570 individuals to reenter the workforce each year. Mr. Ramirez added this request would also provide approximately $400,000 a year for welfare clients, $150,000 a year for the Nevada Career Information Program, $100,000 a year for School to Careers, $15,000 a year for vocational assessment referrals, and approximately $200,000 a year for other vocational activities. He said also recommended were 8 new staff, 6 the first year of the biennium and 2 the second year. Mr. Ramirez said these staff will assist clients in using the placement tools in DETR’s resource centers and dealing with difficult clients who are either highly educated, highly skilled, and well trained or poorly educated, minimally skilled, and poorly trained.

Mrs. Chowning noted a lot of the performance indicators in the DETR budgets cite the number of participants who are satisfied with the service. She asked how that information is derived. Mr. Ramirez responded that a survey is sent out each year and the statistics are compiled by the Research and Analysis Bureau of DETR’s Division of Information Development and Processing.

Assemblyman Goldwater asked for explanation of the program funding through the 5-cent surcharge. Mr. Ramirez answered that the funding for the CEP is an offset to the unemployment insurance contribution. He said it is .05 percent. Mr. Goldwater asked whether DETR spends all the revenue from that share or whether it is in the reserve. Mr. Ramirez said the Nevada Revised Statutes (NRS) currently require that any reserve in the CEP budget over 90 days’ operating cash must be reverted to the trust fund. Mr. Goldwater asked what the balance of that trust fund is. Mr. Ramirez answered it is $425 million.

Senator Raggio asked where the School to Careers program is in The Executive Budget. Mr. Ramirez indicated it is in the client services category in M-200 on page DETR-54. Senator Raggio said the narrative indicates this is a maintenance module and is funding 8 new positions. He asked how that attains the goals now being presented, such as providing reemployment for a certain number of persons. Mr. Ramirez said the 8 additional positions would allow client services to be provided to an additional 570 clients in addition to the 4,750 receiving services in 1998. Senator Raggio asked how the hiring of 8 new positions results in that many more; that is, was it based on a staffing ratio? Mr. Ramirez responded that the staff in this decision unit are intended to assist the clients in the resource centers and in using the placement tools available. He added that right now, when an individual comes into a resource center and wants to learn how to use the resume writer software or get on the Internet to look at the DETR job bank, there is no full-time person to assist the person. He said the requested increase would provide staff to be available in the resource centers.

Senator Raggio asked what the status of the School to Careers program would be should this budget be approved. Mr. Ramirez answered that the State Department of Education received the School to Careers grant and CEP only contributes to the effort. He said to receive that grant, the state needed to meet the match requirements. He added that when the State Department of Education applied for the grant, DETR had earmarked approximately $1.6 million of activities that were related to School to Careers functions. The funds being referred to here are part of those state matching dollars.

Assemblyman Goldwater referred to the Employment Security Trust Fund, which funds the unemployment insurance checks. He asked how often DETR has reverted surplus to the trust fund. Mr. Ramirez answered, "Just one time."

Mr. Ramirez referred the committee to the Employment Security Division Budget Account 205-4770, page DETR-47, decision unit E-126. He said the Governor has recommended the development and implementation of a fully automated telephonic initial claim-taking process for northern Nevadans. He added this center is to be implemented in the second year of the biennium, FY 2001, and it may be in the form of a separate center for northern Nevada or an extension of the southern Nevada center through the use of toll-free numbers. Mr. Ramirez said their estimates for initial claims in FY 2001 are approximately 110,000 in southern Nevada, 40,000 in northern Nevada, and 14,000 in rural Nevada. He said DETR will appear before IFC to report what has been learned from the southern center prior to committing any funds.

Stan Jones, Administrator, Employment Security Division, DETR, provided an overview of the telephone initial claims center opened in Las Vegas. He said the center ended the year 1998 on a very positive note. The pilot project opened December 14, 1998. The center is currently staffed with 13 claims examiners and is located in the office on Maryland Parkway in Las Vegas. Mr. Jones said the Nevada Job Link office is intended to lead the Employment Security Division (ESD) into the year 2000. He noted that public reaction to the telephone claims center has been receptive to this date. He said the division’s greatest challenge at this time is the fact that a growing number of people desire to file initial claims by the telephone. There are more and more people who are wanting to file their initial claim by telephone.

Mr. Jones said the system was brought up at a most appropriate time when the large temporary reduction of staff was taking place in the Las Vegas area and all 700 of those temporarily laid-off employees were able to file their initial claim via this telephone initial claims center. He said the system is very user friendly in that a claim can be filed from a person’s home and does not require any travel inconvenience or any cost to the person filing the claim, such as gas consumption or bus fare. He informed the committee DETR staff had visited Utah and Colorado to learn how those two states had implemented their telephone claims centers. He indicated DETR is now experiencing some of the same pilot problems the other two states experienced. Mr. Jones added the claims center is also responsive to the federal emphasis to automate the initial claim process. He said the telephone claims center will remain a work in progress over the next few months as they expand it to its fullest capacity.

Senator Raggio asked whether, in Mr. Jones’ opinion, this program has been successful. Mr. Jones responded it has been. Senator Raggio asked whether it is serving more clients with fewer positions. Mr. Jones replied DETR has not served more clients with fewer positions. He added the division is in a start-up mode. He reiterated the center only opened in mid-December and it is not yet up to full capacity.

Senator Neal asked whether this project is totally funded by the federal government. Mr. Jones responded that it is. Senator Neal asked what the extended funding will be to keep this program going and whether Nevada can expect the federal government to provide the $81,595 next year. Mr. Jones answered that the funding is in place for the continuation of the telephone claims center.

Assemblyman Beers asked whether claimants can enter any of their information electronically now with the touch tone telephone. Mr. Jones said that is how they enter their initial claim. Mr. Beers asked whether the total process is electronic or whether there is human intervention. Mr. Jones said the claim information is compiled by the claims processor and is mailed to the claimant. Mr. Beers asked whether this is all done without talking to the individual and Mr. Jones said that is correct. Mr. Beers asked whether that is how the system is working now. Mr. Jones said yes. Mr. Beers asked what is not working yet. Mr. Jones said ESD is not taking all the claims the division would like to take and added they still have three offices in southern Nevada that are taking their initial claims via paper process. He said it is the goal of DETR to take all initial claims electronically.

Mr. Ramirez said the most significant recommendation in the Employment Security Special Fund, budget account 235-4771, is a transfer of approximately $3 million from reserve to fund the phase II modification to the unemployment insurance contribution system. He said phase I, as approved in the 1997 Legislative Session to make the system Year 2000-compliant, is currently in progress. He noted Senator O’Donnell at that time recommended the project be split into two phases to allow ample time for the planning and development of phase II and to insure that GUIDE became operational on schedule. Mr. Ramirez indicated phase II is a complete rewrite of the system. He thanked Senator Raggio, Senator Rawson, Assemblywoman Giunchigliani, and Marlene Lockard, Director, Department of Information Technology, for their support on the GUIDE project last session.

Mr. Ramirez stated that also recommended in the Employment Security Special Fund is the onetime cost for the Employment Security Division’s telephonic initial claims center and the Micro Scan system, on page DETR-61.

Mr. Ramirez noted a $4.9 million balance at the end of the biennium is projected for this budget account. Senator O’Donnell asked whether that is unused money that will go back into reserve. Mr. Ramirez said that would be in reserve.

Mr. Ramirez said that included in the budget for the Services to the Blind and Visually Impaired, budget account 101-3254, page DETR-93, is $365,000 over the biennium for three positions and additional client services. He said these positions are a Rehabilitation Technician to assist with caseload growth in the recently opened Elko office, an Assistive Technology Specialist in Las Vegas to provide assistive computer technology and low-vision aids to blind and visually impaired, and an Employment Specialist in Las Vegas to provide job placement services to 30 to 40 clients annually with a projected 50 percent placement rate.

Mr. Ramirez further testified that also included in this budget is a recommendation to replace $526,000 Title XX funds with general funds. He said this would prevent the elimination of 1.5 positions. Currently the persons occupying these positions have caseloads of approximately 90 clients each, providing services for independent living skills, assessment, and orientation. Senator Raggio asked what, if anything, has been cut from this budget. Mr. Ramirez responded that two positions requested by DETR to be placed in Las Vegas were eliminated and there were some minor changes to equipment. He said that additionally DETR requested $42,000 per year Medicaid funding to supplement Title XX funds, and this was also cut. Senator Raggio asked whether that was a request, not an existing amount. Mr. Ramirez said this was an agency request and added that all Title XX funds were removed from this budget.

Mr. Ramirez noted the budget for the Vocational Assessment Centers, budget account 101-3264, includes a new position, a Workshop Assistant, to provide additional support in the Las Vegas Vocational Assessment Center Work-based Services Unit, page DETR-83. He said that also on page DETR-83 is a recommendation for two new positions to provide expanded vocational assessment services to rural Nevada. This would allow DETR to provide vocational testing, group and individual testing, technical assistance and situational assessments. These personnel would work on an itinerant basis out of Reno until a permanent site is located, and DETR anticipates these positions will complete seven assessments per week.

Senator Raggio asked how this program differs or how it works with the one-stop centers and if it has or should have some nexus. Mr. Bradley answered yes, the Rehabilitation Division is definitely a partner that will participate in the one-stop delivery system, which is important to address the special needs of the Rehabilitation Division customers.

Mr. Ramirez addressed the Vocational Rehabilitation budget, 101-3265, on page DETR-73. He said the Vocational Rehabilitation Bureau has 14 offices located throughout the state, of which seven are colocated with the Employment Security Division. Those seven offices are in Henderson, Winnemucca, Elko, Ely, Fallon, Sparks and Carson City. Included in the recommendation are six new staff and $643,000 in additional client services. Mr. Ramirez noted the population in Nevada has grown by 8 percent a year and is projected to increase by more than 159,000 people between 1998 and 2000. He explained these new staff would provide the Bureau of Vocational Rehabilitation the ability to reduce the time necessary to implement and develop rehabilitation plans from the current 132 days to 93 days. He further explained the additional staff would be able to serve 633 clients and achieve 65 more closures. This would increase the performance indicator for closures to 935. Two of the staff would be bilingual. Senator Raggio pointed out that the performance indicators on page DETR-73 do not coincide with this testimony that an additional 633 clients will be served. Mr. Ramirez said he does not know why the performance indicators do not reflect the additional 633 clients and said he will have to get back to Senator Raggio. Senator Neal asked for explanation of the performance indicators which reflect the number of clients determined eligible, 2,256, and the number of clients achieving successful employment, 757. He noted a 34 percent success rate seems low. Mr. Ramirez said he would provide a response.

Mr. Ramirez addressed the Disability Adjudication budget, 101-3269. He said approximately $1 million is recommended to be added for continuing review of claims and medical determinations. He added this is based on the fact that workloads have increased approximately 5.7 percent over the last 6 years. The disability adjudication program currently oversees social security insurance payments, which amounted to approximately $93 million in 1997, and these were paid to 16,144 recipients at an average monthly payment of $484. Mr. Ramirez said this program also oversees social security disability insurance payments, which amount to approximately $244 million a year paid to 26,670 disabled recipients at an average monthly payment of $762. He said included in this budget is a recommendation for $70,000 for site preparation and installation of Redesigned Disability Software. Senator Raggio asked who heads this office. Mr. Ramirez responded that Sue Young is the bureau chief.

Senator Raggio indicated he receives a lot of calls regarding delays in making the adjudication. He noted the performance indicators indicate the mean processing time is currently 80 days, and 75 days are projected for the next 2 years. Senator Raggio asked whether some of the applications are taking a lot longer than the mean. Mr. Ramirez said a lot of the claims are a lot more difficult to adjudicate than they were in the past. He added the Disability Adjudicator positions are difficult to recruit for and there has been a significant amount of turnover. Senator Raggio asked whether there are vacancies in this budget. Mr. Ramirez said yes; in the last session the department requested 10 new positions, and he did not believe all those positions have been filled. Senator Raggio asked whether there are new positions requested in this budget. Mr. Ramirez indicated no, that the additional funding is for continuing review of claims and medical determinations; for example, payments to doctors. Senator Raggio asked for a report on existing claims or applications, the number, and the length of time those applications have been pending. He reiterated he receives calls from people who are frustrated because they cannot get these adjudications completed.

Assemblyman Hettrick referenced decision unit E-125, Accessible Flexible Responsible Government, and E-710, Replacement Equipment. He asked who the medical consultants are and whether they are state employees or an outside consulting firm. Mr. Ramirez responded these are contract doctors. Mr. Hettrick asked how big the conference room is and noted the $21,500 for a table and chairs. Mr. Ramirez said the agency would provide a response.

Mr. Ramirez addressed budget account 101-3170, Alcohol and Drug Rehabilitation, page DETR-105. He said this bureau currently funds 76 community-based prevention programs and 44 community-based treatment programs. During calendar year 1997 over 9,000 individuals received treatment services and over 67,000 received prevention services. Prevention information was disseminated to approximately 307,000 individuals through clearinghouses and funded programs. Mr. Ramirez said Nevada will be receiving an additional $4.8 million of Substance Abuse and Prevention Treatment (SAPT) federal funding over the biennium as a result of a change in the allocation methodology at the federal level. He said the Governor has recommended an increase of approximately $4 million in grants to Bureau of Alcohol Drug Administration (BADA) subrecipients, shown on page DETR-107. He said that of the increase, 20 percent, or $960,000, must be utilized for prevention service programs. Of this amount, $560,000 was recommended for alcohol and drug prevention programs for at-risk youth in Nevada’s nine judicial districts. Mr. Ramirez said this is the result of the recommendations of the Legislative Interim Study Committee on Juvenile Justice in Nevada, chaired by Assemblywoman Jan Evans (budget page DETR-109). He added the bureau has contracted with the University of Nevada, Reno to conduct studies at 3 months and at 6 months to demonstrate the long-term value of treatment.

Senator Neal asked whether this was one of the programs being cut. Mr. Ramirez answered no. Senator Neal asked why, then, the first performance indicator shows "N/A" for FY 2000 and FY 2001. Mr. Ramirez indicated that the first performance indicator is being eliminated and performance indicators 2 through 8 are new. Senator Neal asked how many clients this program serves. Mr. Ramirez said he did not know but would provide that information.

Senator Raggio noted for committee members that at the last session the committees requested new performance indicators be in place for this session. He added that is why there will be performance indicators for which there is no history. He said a lot of the information that has been provided at this hearing is not included in the performance indicators and should be. He suggested additional performance indicators may be needed.

Assemblywoman Evans noted this budget has new federal funds, but General Fund contributions are flat. Mr. Ramirez answered that the General Fund contribution is flat, but it satisfies the maintenance of effort required for BADA and for receipt of the SAPT funding. He added it is also sufficient to maintain the 5 percent administrative cap. Ms. Evans said one of the requests the Interim Study Committee on Juvenile Justice made of DETR’s director was to enhance funding for the juvenile programs. She noted the interim study committee received a lot of criticism that the state had not done an adequate job. She reiterated there is additional federal money, but asked whether there has been discussion on the state’s making a greater commitment to juveniles. Mr. Ramirez said the original decision unit was "all General Fund," but as the budget process evolved, it was apparent there was a shortage of General Fund money. He said this was an alternative funding source which satisfied all the federal requirements regarding maintenance of state effort and which funded the program.

Ms. Evans asked whether DETR would have requested general funds if these federal funds had not been available. Mr. Ramirez said yes. Ms. Evans said that because of a lot of criticism about how the funds were being allocated from BADA to the districts, she needs to see the plan regarding the basis on which money will be granted to judicial districts. She added the interim committee had issues with "the way it was being done" and will not be satisfied without changes. Ms. Evans asked the name of the BADA chief. Mr. Ramirez said an acting chief, Rob Johnston, is currently filling that position. Ms. Evans reiterated her request for the agency to submit the plan. Mr. Ramirez said it would be provided.

On the subject of the telephone claims center, Assemblywoman Barbara Cegavske asked for a report to be provided regarding reliability of incoming calls, safeguards, and prevention of fraud. Mr. Bradley said that report will be provided.

An outline of the DETR presentation is attached to these minutes as Exhibit F.

Senator Raggio invited anyone wishing to speak to come forward. He indicated the committee had received written testimony from Mary Jean Thomsen, Community Advocacy Coordinator, Northern Nevada Center for Independent Living (Exhibit G). Ms. Thomsen read the text of Exhibit G, which addressed the needs of individuals with physical disabilities. She referenced Senate Bill 433

Ms. Thomsen said the bill contained a $500,000 appropriation to DETR. The appropriation was for the provision of community-based services necessary to enable a person with a physical disability to remain in his home or with his family and avoid placement in a facility for long-term care. The bill requires the Department of Human Resources to apply to the Secretary of Health and Human Services (HHS) for a waiver granted pursuant to 42 U.S.C that authorizes Nevada Medicaid to include as medical assistance under the state plan the following services for persons with physical disabilities:

• Respite care
• Habilitation
• Residential habilitation
• Environmental modifications
• Supported living
• Supported living habilitation
• Supported personal care
• Any other community-based services approved by HHS

The approved waiver would provide for federal financial participation in the cost of the above services. Ms. Thomsen informed the committee that the waiver is not in place and the appropriation from S.B. 433 of the Sixty-ninth Session is part of the budget cuts this year. She said Nevadans with physical disabilities have waited many years for the services this waiver would provide. She asked the committee to help her send a message to Governor Guinn and remind him that individuals with physical disabilities have the same rights as any other citizen.

She added her thanks to Senators Rawson, Raggio and Mathews for the help they have given individuals with disabilities in the past.

Senator Raggio asked whether someone from DETR could respond on the status of the appropriation and the waiver. Addressing his request for information, John P. Comeaux, Director, Department of Administration, said the $500,000 appropriated in S.B. 433 of the Sixty-ninth Session is scheduled for reversion at the end of this year. Senator Raggio asked whether the total appropriation is scheduled for reversion. Mr. Comeaux answered yes. Senator Raggio asked whether that was one of the targeted reversions. Mr. Comeaux replied that is was. He said the waiver is not in place and added that the state plan, which was prepared by the Department of Human Resources, was submitted for approval to the federal government. The federal government had questions about the plan and sent it back. The Division of Health Care Financing and Policy in the Department of Human Resources had some problems with the questions from the federal government. He said Nevada does not have a federally approved plan, but the draft plan indicated the program could cost up to $2.5 million a year in state support and due to the budget situation, it is not recommend for funding in the coming biennium.

Ms. Thomsen said it was her understanding the waiver did go to the federal Health Care Finance Administration (HCFA) and it was returned with questions. She said the Division of Health Care Financing and Policy had a revised plan ready to go; however, when informed the state General Fund support was to be cut, the division did not pursue it with HCFA. Senator Raggio said LCB would look into it.

Ray Bottrell, who identified himself as a consumer, said if it were not for this waiver program, he would be costing the state a lot more than he is right now. He said he would probably be in a convalescent home and would not be able to do the community service activity he does now. He stated he has been awarded two community service awards for what he does and said if it were not for the waiver he would not be testifying before the committee today but would be in a convalescent home. He said that for him the waiver program is a lifesaver enabling him to get out of the house and get into something more productive for him and for the community. Mr. Bottrell added he facilitates three support groups, does peer counseling, and volunteers a lot of time, just so he can be a more viable person for this community. Senator Raggio thanked him for being here and reiterated LCB staff will look into this.

Jim Boscacci, also a consumer, said he was presently receiving waiver services and was very thankful for the program, for it allows him to live independently and have a quality life. He added that without this program he would be in an institution. He said he was also testifying on behalf of other disabled individuals who could not come to express their feelings about how much this Medicaid waiver program means to all of them. He said that approximately three years ago he was in bed for three years because he had no assistance to get out of the bed, so he knows what it is like "to be there." Mr. Boscacci added that, on behalf of all of these individuals, they need the help and appreciate it very much. He said there is something about the waiver program that puzzles him. He explained that if someone is on the Medicaid waiver program list and through death, or perhaps disqualification, is removed from that list and taken out of the waiver slot, no one can fill that slot for the rest of the year. It seemed to him that if someone was in a slot from January through March and then left that slot, another qualified person should be able to fill the slot from April through December. Senator Raggio asked whether anyone from DETR had an answer to this issue. When no one came forward, Senator Raggio directed LCB staff to look into it. Senator Raggio thanked Mr. Boscacci for taking the time to testify at this hearing.

Supreme Court - Overview

Robert E. Rose, Chief Justice, Supreme Court, provided an overview of the Supreme Court budget. He said it is a new court, a seven-justice court with an optimistic "can-do" attitude. He added the court’s budget was submitted on time and in full compliance with the rules and requirements. Chief Justice Rose noted this was the first time in many years this court has done that. He said the court has made every effort to provide the committee and its staff with information and understanding of the Supreme Court’s operation and budget requests.

Chief Justice Rose said he wished to present two caveats. The first was that the budget was prepared early, in late spring and summer, before the fiscal emergency alert was sounded. In response to that alarm, $150,000 was returned to the state coffers. The chief justice said that has made operations "tight," but the court has tried to respond in a meaningful way to the "crisis" in state government. The second caveat was that the court has asked all departments what they need to be able to keep pace with the rapidly expanding caseload, to significantly reduce the backlog and to provide enough cases for the three courts in the Supreme Court’s operation. Chief Justice Rose added that these requests are reflected in the budget and he indicated understanding that not all the requests can be met. He suggested the court discuss the requests with the committee to collectively define the most important needs and determine whether there are sufficient resources to meet those needs. He said this will determine how effective the Supreme Court will be in handling the additional cases appealed to the court and in chipping away at the backlog that is now about 2,200 cases.

Chief Justice Rose said two primary factors drive the Supreme Court’s budget requests: the increasing caseload and the legislative directives through legislation and audit reports. Regarding the expanding caseloads, Chief Justice Rose said that when he joined the Supreme Court a decade ago, about 900 cases were appealed each year. He pointed out that now about 1,900 cases are appealed each year and he noted this is a 100 percent increase in 10 years or less, or about 10 percent a year. He added that in the last 4 or 5 years, the cases have increased about 12.5 percent. Chief Justice Rose said the jumps in caseload have been sporadic in the sense that in 1993, 1994, and 1995 the Supreme Court had a caseload in the range of 1,250 to 1,300 cases. In 1996 it jumped by 650 cases and for two to three years the caseload has been in the 1,900 range. The court expects another major jump in the very near future. Chief Justice Rose concluded with the observation that whether the increase is 10, 12, or 15 percent per year, it means substantially increased work will be coming their way.

Chief Justice Rose said the Supreme Court now sits en banc (a full court of seven), and in two panels. He added the panels will handle 95 percent of the cases and the full court will handle just the major cases (5 percent). He said there are three courts operating at the same time, a full seven-justice court and the two panels. The chief justice pointed out this presents a "scheduling nightmare" and strains the ability of staff to prepare and present sufficient cases for the three courts and to assist in the disposition of those cases. He said this concern to sufficiently assist the three courts has led to the additional request for staff attorneys. He noted the central staff is divided into civil and criminal divisions, each requesting two additional staff attorneys and one paralegal to be shared; that is, five additional staff.

Chief Justice Rose said the increasing caseload has also had major impact on the clerk’s office, where everything is filed, where all the scheduling is done, and through which all dispositions are run. He said the clerk has requested a Deputy Clerk, a Supervisory Staff Attorney to act as an appellate commissioner. He explained that would be a person who would be a low-level judge, in effect, who would handle non-dispositive motions that take up a judge’s time and would be at the level of commissioner as opposed to full justice. He said the court clerk has also requested a part-time bailiff for the Las Vegas Office to keep order in the courts. Chief Justice Rose said the reason for the bailiff is that capitol police handle the outside of the courtroom and the building, but no one is inside the courtroom to keep order or to answer questions. He added the court is also requesting two Information Systems Specialists for the clerk’s office to maintain the computerized case management system.

Chief Justice Rose said the Administrative Office of the Courts (AOC) is requesting an Account Clerk and one addition to its judicial education function for the same basic reasons as those outlined above. He said the justices are requesting an additional judicial Executive Secretary to provide relief and assistance to the expanded court of seven justices. He explained there are now two relief secretaries, one assigned to the chief as his or her second secretary. With the expansion of the Supreme Court by two justices, the court is already feeling an excessive demand on their relief secretaries.

Chief Justice Rose summarized that these requested 13 positions are in direct response to the Supreme Courts increased caseload and the fact that they have three courts in action, not just one.

Chief Justice Rose said the second primary factor driving the court’s request for additional staff is the legislative directive to the court in the form of legislation and audit reports. The Legislature requires accurate and uniform records of the court systems in Nevada. The Chief Justice pointed out that the Nevada Revised Statutes (NRS) 1.360 requires the director of the AOC to annually compile these statistics and NRS 176.059 also requires the director to establish a uniform system to compile judicial records throughout the state. He said the 1995 legislative audit of the Supreme Court was critical because this record system had not begun and there was no indication that it would be provided in the future. He read the results of the 1995 audit:

Chief Justice Rose said he agreed with the audit comment. He added the audit recommendation was one of the reasons the Workload Assessment Commission recommended that a division of planning and analysis be established. He noted the 1997 Legislature again responded to the court’s needs and provided the funding for that new division, which included three staff to begin the process. Chief Justice Rose said the real backbone of a meaningful planning and analysis operation in a court system is the statistics, or the reliable court records uniformly kept. He said there are three reasons such an operation is so important. The first is that it is an essential tool of court management, the second is that it helps a judge or court district to judge its own performance, and the third is that it can promote accountability in the court system to the Legislature and to the public.

Chief Justice Rose indicated that implementation of a planning and analysis operation was briefly delayed, but a lot has been done since then. He said the court has made an assessment of the hardware and software as well as the technical abilities of the staff for each of the nearly 100 courts throughout the state. There have been a series of meetings throughout the state to determine what statistics the courts should keep. The chief justice said the proposed final report has been circulated and will be adopted in the next few months. He emphasized the importance for everyone to keep the same statistics in the same way.

Chief Justice Rose said that in the next year the Supreme Court will approve a statewide system for collection and dissemination of judicial records. He added that as soon as each court is equipped with the necessary technology and training, every court in the state of Nevada will generate uniform and reliable statistics. He said the Supreme Court also has continued the funding of court technology for other courts using administrative assessment fees when that funding is available. He pointed out that the director of AOC and the head of the planning and analysis division have found that the current number of personnel in the division is inadequate to handle this major statewide task. The chief justice added that this is the reason for the request for three additional positions for that division. He indicated the court has requested one Management Analyst to assist in the acquisition and installation of technology for all the courts in Nevada, and one analyst and a Management Assistant to compile and analyze those statistics from throughout the state. He said the extent to which the Legislature acts positively on this request will determine how effectively and quickly the Supreme Court can assist the courts throughout the state and finalize the compilation of reliable statistics throughout Nevada.

Chief Justice Rose said the court has also requested a position of Court Interpreter to establish a uniform program for certifying court interpreters throughout Nevada. He added there is presently no such program and the need for such interpreter qualifications is growing. He noted the Legislature has instructed the Supreme Court to do this when funding is available and said this budget requests funding for that position.

Chief Justice Rose remarked that in 1997 the Legislative audit was critical of the court, and particularly of AOC’s handling of money and purchases. He said the court has responded by adopting all the audit recommendations and has included additional safeguards on its own. He said he believes that an Internal Auditor for the court would help handle business as the Legislature requested and would also be a person available to assist them when reviewing the operation and the handling of money by other courts throughout the state.

Chief Justice Rose said these five positions will strengthen the court in areas identified by the Legislature (records collection, the court interpreter needs, and internal auditor) and would help them meet any weaknesses or deficiencies that may exist in each of those areas.

Chief Justice Rose addressed the case management system. He said that when he came to the court in 1989 he was struck that while the staff at the court had expanded a great deal, the actual processing of a case had not changed much in the 25 years. He added that technology had not been incorporated into the operation. He said he had voiced his concern and although he did not know anything about court technology, he did know that technology was very effective in assisting other businesses and governmental systems. The chief justice said he was immediately appointed to head a court technology committee and asked to devise a plan and come up with a system that the court could use; this was almost 10 years ago. He said this led to the lengthy process of identifying the court’s needs, devising a system to meet those needs, devising a prototype for handling of cases and then installing that system at the Nevada Supreme Court. He said that although it was a slow process, everything went well until the system was installed in late 1996 or early 1997.

Chief Justice Rose said the system worked well when two people used it, but if more than two people used it, it would collapse. After protracted discussions about the situation throughout 1997 and early 1998, the court finally reached agreement with the contractor that the contractor would provide the necessary technicians and the Court would provide the necessary court personnel and some technicians to work nonstop on this problem until it was solved. The chief justice indicated this repair process took four months, but last Friday the court accepted the system and discharged the provider from any further responsibility. He said the system did fail initially, but COMSYS, the provider, hung in there for over a year to make this system work. He concluded by reporting that the system is up and running and did not cost any more than the initial contract amount. Chief Justice Rose added that, as with every computerized system, it needs technical assistance to maintain it and to instruct the users. He said no such personnel are available at the court and explained that this is the reason for the request for two Information Systems Specialists for the clerk’s office. He added that the court is also requesting $150,000 in the second year of the biennium to further design the system and to implement the changes that have been made at the court.

Chief Justice Rose said statistics are critical and important and reflect what the court does, but they are not the end-all of a justice system. He indicated statistics track the quantity of work and do not reflect the quality of work, which is something the court would like to improve and will, if given sufficient time to work on the important cases. He mentioned that when one case comes in, it might appear there is one decision. He clarified that every case generates multiple decisions. Chief Justice Rose said that, for instance, there may be a jurisdictional concern or a motion to dismiss several of the counts because they were not included in the lower level proceedings. Or there may be a motion to expand the record. Each of these must be analyzed by staff. He said that although there is one case and usually one decision, there are multiple non-dispositive decisions along the way, so the processing of a case is not as simple as it may seem.

Chief Justice Rose said the Supreme Court’s budget also includes an attorney to assist district judges in handling death penalty cases. He added Nevada has the highest percentage of death row inmates and there is no sign that death penalty cases will be lessening any time soon. He said these cases are lengthy, technical and expensive and a whole body of law has evolved specifically related to the handling of this type of case. Chief Justice Rose noted that most district judges do not handle death penalty litigation on a regular basis and need expert assistance on procedures and the law to be followed. To meet this concern, several states have initiated programs to inform trial judges about death penalty law and to provide consultation when the trial is held. The experiments have been successful and it is reported that many errors are eliminated from the capital cases with this program. The chief justice said the court is requesting that one staff attorney position be created to assist trial judges with capital cases and hopefully avoid costly mistakes.

Chief Justice Rose stated the prosecutor certainly does not try to mislead the court, but he is trying to win a conviction. He said the public defender does not try to mislead the court, but his primary duty is to represent the defendant. He concluded that there is no one advising or assisting the district judge in this area of law that has become extremely technical. Chief Justice Rose said these other states have discovered it is important to have a person whose responsibility is only death penalty law and study to be available to district judges preparing to hear a death penalty case and to periodically communicate about the changes in death penalty procedures. He reminded the committee that one major mistake in a death penalty case could cost hundreds of thousands of dollars.

Chief Justice Rose addressed the proposal for an intermediate appellate court. He said the majority of the members of the Supreme Court believe the long-term final solution to the ever-expanding caseload is the establishment of an intermediate appellate court. He said the court is now receiving nearly 2,000 cases a year. He added that in 10 years, if the volume increases as it has the last 10 years, the caseload will be at 4,000 cases a year. He said that while the expanded seven-justice court will be able to handle some additional capacity, it will not be able to handle that type of volume. Chief Justice Rose indicated this is the reason the Supreme Court requested the court be expanded and requested passage in the 1997 Legislative Session of the joint resolution to create the intermediate appellate court. He said the Legislature passed that resolution. He explained the court was now asking the 1997 resolution be jettisoned and the resolution process begun anew. He said that would mean that the measure, if passed in the 1999 and the 2001 Legislatures, would be presented to the voters in 2002. He added this would mean that before the Legislature was asked to approve the joint resolution a second time, the panel system would have been in operation for 2 full years. He said the court system and the Legislature would be in a better position to assess the need for an appellate court and how that court should be structured.

Senator Raggio asked whether the proposal for the intermediate appellate court, passed last session, would not go on the ballot next year if it passes again this session. Chief Justice Rose answered yes it would, if the normal procedure were followed. Senator Raggio asked whether the chief justice was suggesting it be deferred. Chief Justice Rose said he is requesting the Legislature not act on the first resolution. He added the court has submitted a bill that is the same except it says this matter shall be submitted to the voters in 2002. It is therefore a new resolution, so it will have to pass twice. The chief justice added that the court is concerned about the wave of cases coming in but does not want to go to the intermediate appellate court unless it is necessary. He said the new system should run for 2 full years to assess how effective it is in handling the cases. He said the problem is that if a joint resolution is not passed this session, the intermediate appellate court will be 7 years out; by processing the proposal now it will be 5 years out and the court thinks it can hold the line for 5 years with the existing setup. He added that in 2 years the court should have a good idea of whether it can indeed hold the line, but they would not want to wait 7 or 9 years because if the volume of cases is at 4,000 it could be chaos. He said he thinks the most prudent and fiscally responsible approach is to ask the Legislature to not pass the resolution from the last session, but to start the process anew.

Chief Justice Rose commented about the court’s Las Vegas office and its increased presence in the Las Vegas area. He said the court has had an office in Las Vegas for some time and it is presently located at 316 Bridger Street. He said the office has moved several times and added the court is hoping to locate in the new regional justice center. The court requested and approval from IFC to be included in the planning and design as one of its tenants. Chief Justice Rose said that regardless whether this facility holds the court in its present panel structure or eventually an intermediate appellate court, the center will provide the most convenient and permanent location at the best price. He noted that this facility is not reflected in the budget and is the subject of its own bill draft. He indicated that at present there are two justices using the Las Vegas office as their chambers. This was made possible by the acquisition of a small additional amount of space and consolidation of some of the offices in that facility. The chief justice noted these offices are adequate, but certainly not luxurious. He said there is one unisex restroom to serve the entire area.

Chief Justice Rose said that since panels will decide the vast amount of cases, it is less necessary for the Supreme Court justices to live and work exclusively in Carson City. He added that having two justices in Las Vegas should also make the court better able to respond to emergencies in southern Nevada, such as the crisis involving Mike Tyson. He said it seemed unfair to require a justice from southern Nevada to move to Carson City before he or she has a 6-year term. He indicated the AOC would monitor this situation to determine whether the court’s effectiveness is in any way diminished. He indicated the justices will come to Carson City whenever necessary.

Chief Justice Rose remarked that he may have left a few points or positions out in this overview, but his intention was to express the primary thrust of the Supreme Court budget. He reiterated he had prepared the budget before the state’s financial crisis hit and the court understands they may not get everything they asked for. He asked to be able to discuss these matters further with the subcommittee to identify the court’s primary needs.

Assemblywoman Chowning asked Chief Justice Rose to identify for the subcommittee the items he considers most important with the priorities spelled out. She also asked whether all 25 positions authorized at the last legislative session to address the backlog are filled and how the backlog has been addressed. Chief Justice Rose answered the backlog is 2,200 cases; it had reached a high of 2,600, so the court has used that staff very effectively. He said new staff was reflected in one program, the criminal fast-track program, where the cases "on the criminal side" are analyzed to immediately eliminate the no-merit or marginal-merit cases and to determine what issues are really important. The chief justice added that is working very well. He also said the civil settlement program has been extremely successful. He explained that if a civil case is filed with the Supreme Court this program will require it be submitted to a civil settlement judge. He said the civil settlement judges are attorneys with training and experience in how to settle a case. They must write a five-page statement of the case and then meet with the settlement judge to try to settle the case. Chief Justice Rose said it is a quick process, usually closed within 6 months, and it is mandatory for all cases except those involving termination of parental rights. He added this process is settling 55 percent of the cases. This system requires no judicial time, because settlement judges are doing this at a maximum of $500 per case. This program has been very effective, the chief justice said.

Mrs. Chowning again asked whether all the positions had been filled. Chief Justice Rose answered they have been and added that without the new positions he believes the backlog would have grown from 2,600 to 3,500 or 3,800.

Senator Neal noted the Task Force on Racial, Economic and Gender Equality was not funded through the next biennium. He asked whether the work of that task force has been completed. Chief Justice Rose answered that a large portion of it has been, but it is not completely finished. Senator Neal asked why the task force was not recommended for funding. Chief Justice Rose said there were three reasons. He explained the task force was funded in 1995 and again in 1997 from the court’s administrative assessment fees. The purpose was to conduct a study and make a report to the court and the task force has done that. The chief justice described concern that the money to fund the task force has been coming out of the funds earmarked for judicial education, causing the court to cut way back on judicial education. He said the court has done this for four years and has made a strong commitment to the work of the task force. Second, he added, the court is now in the process of implementing the task force findings and recommendations and in some areas the court disagrees with the report. He said the task force would be establishing certain goals relating to areas that the court system oversees. For instance, the task force has recommended that the American Bar Association (ABA) stand on the death penalty be adopted and there is a conflict there. Chief Justice Rose added that is just one area where there is conflict and there are dozens like that. He said that in the implementation phase it would be difficult to have the task force within the court structure.

Third, Chief Justice Rose continued, it is difficult to supervise the operation. He said the task force has an office and calls itself the Supreme Court Task Force, but the court system has no control over day-to-day operations or expenditures. He said that for these reasons it is recommended the task force be put somewhere else in the budget, possibly in the executive branch. He said the work of the task force is good, the goals are laudable and achievable, and the court would like to see it go forward; but from the funding, supervision, and conflict of interest standpoints It should not be sponsored by the Supreme Court. Chief Justice Rose added the court has met its commitment.

Assemblyman John Marvel noted that the audit report said the collection of administrative assessment fees was so haphazard that every lower court had a different system for collecting it. He asked whether the court is developing a uniform collection policy. Karen Kavanau, Court Administrator and Director of the Administrative Office of the Courts, answered that the court statistics the chief justice mentioned earlier eventually will include information on collections. Therefore, there would have to be standardized definitions, policies and procedures. In the interim, the court has established a judicial task force for collections composed of about 16 judges and a variety of other court personnel, including people who have demonstrated highly successful collection processes.

Ms. Kavanau said the purpose of the task force is to identify and document best practices in collections. She said the AOC intends to document the findings for all the trial courts in Nevada and provide appropriate training necessary for them to implement. Mr. Marvel asked when that would be forthcoming. Ms. Kavanau estimated it would take about 2 years to finish the task force’s responsibilities. She said on the court statistics, the report that will be put out soon covers the first phase of statistical reporting. It covers types of cases and workload statistics and then collections will follow after that. Mr. Marvel said the audit report discovered that the state received little of the administrative assessment money and that the revenue was being retained at the local level.

Senator Raggio inquired whether Chief Justice Rose had completed his overview of all the budgets. He answered that he had. Senator Raggio said he was not sure all the new positions had been covered and requested discussion of the Appellate Commissioner position. Chief Justice Rose responded that person would be charged with signing and disposing of non-dispositionary matters, those motions to dismiss the case at the start or the jurisdictional matters or requests for expanded briefs. He said the position would handle issues that now come to the three justices to handle. He added the person filling the position would be an experienced attorney who could handle some of the minor matters now falling to the justices. Senator Raggio noted a requested high-compensation level and asked whether this would be a quasi-judicial position. Chief Justice Rose answered that commissioners are usually considered quasi-judicial. Senator Raggio asked whether that person would conduct hearings. Chief Justice Rose said that was not his plan.

Senator Raggio voiced concern regarding Chief Justice Rose’s characterization that the Supreme Court now has three courts and noted he had not heard that term used during testimony at the last legislative session. He said he was reluctant to hear Chief Justice Rose say the Legislature mandated the three courts and so therefore the court system needs a lot of extra coverage for the three courts. Senator Raggio said that is not the way it was presented at the last legislative session. It was presented that having roving panels would make the court system process much more cost-effective. The chairman added that a logical issue here would be the large increase in staff being requested. He said the question is, How cost-effective is it to have added two justices and roving panels? Chief Justice Rose said if there are two panels and the full court, there are three courts operating at the same time. He stated:

Chief Justice Rose asserted it is tremendously more cost-effective than a full intermediate appellate court, which he estimated to cost $4 million or $5 million. The chief justice said this approach has cost substantially less than that.

Senator Raggio asked whether the panels have been assigned. Chief Justice Rose said they have been assigned for the current 6-month period and they will rotate every 6 months. He said the process meets the legislative concerns that the panels are chosen at random and they "are not for a long period of time." Senator Raggio said the uniformly expressed concern was that if the court were going to assign panels, there must not be one body of law created for one section of the state and another for the other section of the state. He added that was the reason for the constant change among the panels. He asked whether that is still the court’s understanding and intent. Chief Justice Rose responded that it is and said that is exactly what the court is doing. He added that in April the court would be selecting the panel that will begin in July 1999 for another 6-month period.

Senator Neal asked how the "judicial officiality" of such a panel would be maintained. He said Chief Justice Rose is a constitutional judge and the Nevada Constitution gives him certain responsibilities. He asked how those responsibilities would be handed down to a panel that would be doing work now performed by the justices. Chief Justice Rose said the panels are part of the Supreme Court and the panel members are constitutional officers. He said they are charged with enforcing the law just as the current court is. Senator Neal asked how the "judicial officiality" of the requested positions to handle the ancillary matters of the court would be maintained. Chief Justice Rose said the requested Commissioner position would be under the direction of the chief justice and would only sign certain motions. He added that the motions would come through the chief justice for a limited time to assure the commissioner is acting within his or her discretion. He said there would be a process whereby any complaint on those preliminary or minor decisions could be brought to the panel to which that case is assigned. The chief justice said if the requested position is approved the duties will be clearly defined. Senator Neal expressed concern whether the constitution permits such delegation of authority, but concluded the chief justice, in the end, would rule on that.

Senator Raggio said $260,000 was appropriated for design of the regional justice center in Las Vegas and asked the status of the project. He also noted there is no funding for this project in the capital improvements portion of The Executive Budget. He added the Capital Improvement Program budget is already very tight and all the work is being done with bonding, not general funds. Ms. Kavanau responded that the design and planning are completed. She added the AOC is meeting with Clark County soon for cost information. She said the reason there is nothing in the budget for the regional justice center is that firm cost information has not been received from Clark County. Ms. Kavanau said a proposal has been submitted for a bill draft to permit the court to negotiate a long-term lease. She said that because the court would be a tenant in the building, it is not being treated as a capital improvement. Senator Raggio asked what would be the term of the lease. Ms. Kavanau answered that it would be 20 years. Senator Raggio asked for the anticipated completion date. Ms. Kavanau said the building is supposed to be available for occupancy by October 2001. Senator Raggio asked for an estimate of costs for the coming biennium over and above what is already in The Executive Budget. Ms. Kavanau said there are none, to her knowledge.

Assemblyman Price referenced the earlier discussion regarding the ABA’s policy on the death penalty and asked for clarification of their policy. Chief Justice Rose qualified his response by saying it is by recollection only. He said it was something to the effect that death penalties in the United States should be discontinued or suspended until there is racial and economic justice in the selection and processing of these cases. He added it is "a pretty liberal stand." Mr. Price added that many years ago he and the chairman worked on reinstating the death penalty, so it caught his attention.

Mr. Price referenced the requested position to assist the trial judge. He said there might be a procedural issue since the court is the highest level of appeal in Nevada. He said if someone under the jurisdiction of the court is providing advice to a lower level judge, the defense attorneys could have argument. He asked whether that has been challenged or looked at in other states. Chief Justice Rose said that in other states the position has been assigned someplace other than the Supreme Court. He said this position could be assigned to the AOC, which is an extension of the court, but at least one step removed. He agreed the court should have very limited control over this person because his or her work could be interpreted as the work of the court. He said another option would be for the Supreme Court to fund the position, but place it under the jurisdiction of the district court.

Senator Raggio asked whether the Chief Justice is aware of any requests for additional judges in the District Judges’ Salary budget, 101-1490. Ms. Kavanau responded that there is one bill draft being requested through the Supreme Court for one more judge. Senator Raggio asked whether the major counties are looking for additional judges. Ms. Kavanau said the Eighth Judicial District is requesting five family judges. Senator Raggio noted the reserve in the District Judges’ Travel budget, 101-1493, which is funded by peremptory challenge fees, is projected to be over $600,000 by the end of FY 2001. He said this was created by Supreme Court rule and asked whether there is any impediment to using some of the reserve for other purposes of the court. Ms. Kavanau indicated the AOC made those projections and she believes they are overstated. Senator Raggio asked what the AOC is currently projecting. Ms. Kavanau said it is projecting about half the amount reflected in The Executive Budget. Chief Justice Rose said he knows of no impediment to using the reserve for other purposes of the court.

Senator Raggio asked whether there is anything else that the court wished to present. Chief Justice Rose said the court representatives look forward to working with the subcommittee. Senator Raggio said he echoes Mrs. Chowning’s request to prioritize budget requests. Mrs. Chowning followed up regarding administrative assessments. She said there had been a particular problem with one court and she requested an update for the subcommittee regarding how collections are coming in for that particular court. She also asked for the history and projected increases for all the courts, as many budgets are based on those assessments. She indicated the court representatives should include discussion of procedures they are implementing to improve collections.

The chairman adjourned the meeting at 4:40 p.m.

RESPECTFULLY SUBMITTED:

Jean Laird, Committee Secretary

APPROVED BY:

Senator William J. Raggio, Chairman

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Assemblyman Morse Arberry Jr., Chairman

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