The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:10 a.m., on Wednesday, March 24, 1999, in Room 2134 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.

COMMITTEE MEMBERS PRESENT:

Senator William J. Raggio, Chairman

Senator Raymond D. Rawson, Vice Chairman

Senator Lawrence E. Jacobsen

Senator William R. O’Donnell

Senator Joseph M. Neal, Jr.

Senator Bob Coffin

Senator Bernice Mathews

GUEST LEGISLATOR:

Senator Maurice E. Washington

STAFF MEMBERS PRESENT:

Millard Clark, Committee Secretary

OTHERS PRESENT:

Senator Raggio said Senate Bill (S.B). 277 was heard in this committee on March 17, 1999. The committee took action to amend and do pass S.B. 277 at that time. Senator Raggio distributed the amendment to S.B. 277 and said, "If you recall, we had to make a change in the amount."

Dan Miles, Senate Fiscal Analyst, explained that the original bill as submitted was for a single supplemental appropriation within the Department of Museums, Library and Arts, for $1,550. When the bill was heard the Department of Museums, Library and Arts brought forward a revision to that amount. Mr. Miles said there were 4 different budget accounts that needed supplemental action, so the amendment makes separate appropriations to those four accounts.

Senator Raggio stated that the total add-on amount was $33,914. Senator Raggio stated that no motion was needed because the committee had already taken the motion to amend and do pass the bill. The senator said the amendment being submitted is Amendment No. 218 to S.B. 277, which allocates the additional amounts for the supplemental appropriation to the specific budget accounts.

Senator Neal asked whether the total was $33,914. Senator Raggio replied that amount was added onto the $1,550 in the original bill. Senator Neal noted the total amount was $35,464. Senator Raggio replied yes.

Senator Raggio stated the committee heard S.B. 15 on February 22, 1999. The senator said section 2 of this bill sets forth the membership for the testing advisory committee. He said there was some objection from the Nevada State Education Association, who felt there should be some guarantee a teacher would be named to the testing advisory committee. Senator Raggio said there is no such guarantee but teachers are not precluded from serving on the committee. The senator speculated the reason for not guaranteeing that a teacher is placed on the testing advisory committee is that when any committee members are designated, others may also be designated.

Senator Raggio said section 2 of S.B. 15 provides no exclusion of any kind in the makeup of the advisory committee. The senator said the school districts’ testing directors work in these areas on a daily basis and the appointing authorities testified they were concerned about getting people with experience in overseeing test administration.

Senator Raggio noted that section 5 of S.B. 15 included an appropriation of $384,825 for Fiscal Year (FY) 2000 and $371,648 for FY 2001 for the continued development, administration, and central scoring of a high school proficiency examination. The senator said the committee heard from the State Department of Education on plan B for salvaging high school examination program costs to cover 4 staff. The Legislative Committee on Education thought the cost of 4 staff was excessive.

Jeanne L. Botts, Senior Program Analyst, recalled that the State Department of Education actually had two plans. Ms. Botts said plan A was to contract out the high school proficiency tests and plan B was to hire 4 additional staff for the department to manage the tests internally. Ms. Botts stated that the Legislative Committee on Education picked plan B because it was less expensive. Senator Raggio said the Senate Committee on Finance is looking at the funding for these areas. The senator suggested deleting section 5 of S.B. 15 altogether and working it into the final agreement with the Assembly on the total funding for school improvement and for testing and assessments.

Senator Raggio identified that section 6 of S.B. 15 included a small appropriation to the State Department of Education: $30,000 for the per diem allowances and travel expenses of the advisory committee. He suggested the Senate Committee on Finance process S.B. 15 in the current form but delete section 5 by amendment. The senator said the bill would then be sent to the Assembly and any additional amendments to S.B. 15 could be discussed later.

Senator Neal clarified that section 5 of S.B. 15, containing the appropriation, would be deleted. Senator Raggio replied yes, explaining that the funding will be covered in other ways, "when the major appropriation for the primary areas is done."

Senator Coffin asked why a teacher would not be included on the advisory committee. He said the teacher would not have to be a member of an organization representing teachers as some legislation requires. The senator said it could be a mistake if the state did not avail itself of the services of the people who actually deliver the instruction to students. Senator Raggio replied that if a teacher were specifically added to the advisory committee it would be necessary to require certain experiences. He said this is the type of person who should be on the advisory committee. Senator Coffin commented that none of the legislators have that experience and he doubted that any of the parents have the experience either. He said it was good to have a businessperson on the advisory committee. He stated, "That it could not hurt to have one type of person with the experience desired specifically identified to be on the committee."

Senator Raggio replied that teachers with the desired experience are not precluded and are eligible for appointment. He said he did not want to create a situation where the bill is amended and sent to the Assembly and a laundry list of the types of people that should be on the advisory committee is created. Senator Coffin agreed and said he would also oppose that. He stated there appears to be an unfinished piece of business in the current bill that does not specifically identify that a teacher with the proper experience be on the advisory committee. Senator Rawson noted that the Legislative Commission on Education, which is bipartisan and includes members of both the Senate and Assembly, discussed this issue and developed the current suggested makeup of the assessment committee.

Senator Coffin recommended that S.B. 15 be amended to add to the advisory committee a teacher with experience in the area of testing and to delete section 5 of the bill.

Myla C. Florence, Administrator, Welfare Division, Department of Human Resources, stated that S.B. 398 was requested in order to comply with the requirements to distribute child support collections within 2 days as mandated by the national welfare reform law and distributed Exhibit C, a 3 page summary of her presentation and Exhibit D, a chart illustrating the work flow of the Child Support Collection and Distribution unit. She noted the bill proposes to create an agency fund for the collection and disbursement of child support. She said national welfare reform law requires the states to have a state disbursement unit in place by October 1, 1999.

Ms. Florence remarked that the state disbursement unit will be a central point for receipts of child support collections statewide. She noted the unit will provide both in-state and out-of-state employers, noncustodial parents, and other entities one location to submit child support payments. She further noted that examples of funds received from other entities include unemployment benefits, disability judgments, and child support payments collected by district attorneys’ offices in other states. She stated that the intent of the fund is to allow the state disbursement unit to efficiently receipt and disburse collections within the federally required 2-day time limit. The disbursement unit will be jointly operated with the Clark County District Attorney’s Office, she said. She noted the disbursement unit will be staffed with current child support processing personnel from Clark County and administered by a state project manager employed by the Welfare Division.

Senator Raggio asked whether there was an agreement with the Clark County District Attorney’s Office to staff the disbursement unit. Ms. Florence replied there is such an agreement. She explained that the Clark County District Attorney’s office and staff will represent 69 percent of the state’s child support program cases by November 1999. The remaining counties will be phased in by the end of Fiscal Year (FY) 2000.

Senator Raggio asked whether an agreement with the remaining counties would be used to phase them in by FY 2000. Ms. Florence replied the program operates through cooperative agreements with 15 of the 17 district attorneys. She said Clark County is currently disbursing the bulk of child support payments and the Welfare Division has worked out a plan with the county to use its staff to disburse all state child support payments received. Senator Raggio noted there was already a 2-day time limit for disbursing the funds received and asked how that requirement will be met in the other counties. Ms. Florence said all receipts statewide will come directly into the single state disbursement unit to be disbursed to the counties to distribute to the local entities.

Senator Raggio asked what income withholding payments are. Ms. Florence replied income withholding payments are payments withheld from the wages of individuals owing child support. Senator Raggio asked whether only Clark County would be using income withholding, initially. Ms. Florence replied that Clark County would be the first area in Nevada to use income withholdings for collections. Senator Raggio asked whether Nevada would be in compliance with the 2-day federal requirement. Ms. Florence replied Nevada will not meet the October 1, 1999, deadline but will be close enough that the federal government will be willing to work with the state. She noted that many other states are having difficulty establishing similar programs.

Senator Raggio sought to clarify that the payment is withheld from a person’s wages or comes in from some source and within 2 days must be disbursed to the recipient. Ms. Florence replied the disbursement must be made within 2 days to the custodial parent. She explained it is not only wage withholding, it is also child support payments from other sources. She stated the intent of the agency fund is to be able to process payments within 2 working days. Ms. Florence said working with the Budget Division and the Office of the State Controller has provided the Welfare Division the ability to segregate child support administrative expenses into budget account 101-3238 and county reimbursements into budget account 101-3239. She voiced her belief this will facilitate the ease of identification of revenue being received, client disbursement, program administrative costs, and county reimbursement costs.

Senator Raggio asked what ESD collections are. Ms. Florence replied they are Employment Security Division unemployment collections. Senator Raggio inquired whether all the collections will be deposited into the child support disbursement fund. Ms. Florence explained that the child support disbursement fund was an agency fund to handle the collections of the state disbursement unit. The senator asked whether the fund would be administered by personnel from the Clark County District Attorney’s Office. Ms. Florence replied the fund would be jointly administered by a manager from the state and Clark County employees.

Ms. Florence noted the Welfare Division currently processes about $16 million in child support payments on behalf of public assistance cases. She said now that all child support disbursements must operate through the Welfare Division, the total is estimated to be about $100 million a year. Senator Raggio clarified the estimated $100 million included both public assistance money and non-public assistance receipts. He asked whether the funds deposited into the state disbursement unit will collect interest. Ms. Florence replied the funds do have the ability to collect interest. The senator asked what will happen to the interest earned. Ms. Florence said the interest will flow through the state disbursement unit fund and potentially revert to the state General Fund.

Senator Neal asked what the turnaround period is. Ms. Florence replied the federal requirement is that the payments received be disbursed within 2 working days. Senator Neal noted S.B. 398 amends the Nevada Revised Statutes (NRS) 425.420 which states the interest earned must be deposited into the state General Fund. The senator asked whether the federally required 2-day turnaround allowed enough time to process the disbursements. Ms. Florence said she believes that by not processing the funds through the Office of the State Controller, the 2-day turnaround can be achieved.

Michael J. Willden, Deputy Administrator, Program and Field Operations, Welfare Division, Department of Human Resources, explained that the state disbursement unit fund was designed to accept deposits from all sources. Senator Neal asked Mr. Willden to explain S.B 398, section 3. The senator stated that according to this section, all money must be deposited in the state General Fund. Ms. Florence replied this would occur after all the disbursements, expenses, and reimbursements to the counties had been made. She clarified that after all of the provisions relating to operating and complying with the federal requirements for providing the services under the child support program have been met, anything remaining would revert to the General Fund.

Senator Neal asked where the statutory authority for creating the state disbursement unit fund can be found. Ms. Florence replied that S.B. 398 would provide the authority to establish the fund. She stated the $16 million in child support payments the Welfare Division currently makes is processed through budget account 101-3238.

Senator Raggio said that section 3 of S.B. 398 makes an exception for money to be deposited into the state disbursement unit fund rather than the state General Fund. He said this would reduce the time needed to make the federally required 2-day disbursements.

Senator Raggio asked whether S.B. 398 should be processed regardless of what may happen to the Nevada Operations Multi Automated Data Systems (NOMADS) project. Ms. Florence stated, "That is correct."

Senator Raggio asked for a brief statement identifying whether or not the state will have many sanctions on the NOMADS project. Ms. Florence reported there were about 5,000 eligibility cases and about 200 child support cases entered and operating in the NOMADS system. She said there have been numerous meetings with district attorneys discussing the plan to fully roll out all cases in NOMADS by September 30, 1999. She said the September 30, 1999, date does not appear to be possible based on the feedback from the district attorneys’ staff. Ms. Florence noted that the final phase of code has been delivered and cases are operating and being tested in the NOMADS system. She stated she believes the NOMADS system is functional, but the difficulty is in getting about 100,000 cases entered into the system between now and September 30, 1999.

Senator Raggio asked, "When can we feel reasonably secure, if at all, that we will not face either complete breakdown of the NOMADS system or some expensive federal sanctions?" Ms. Florence replied that all capacity performance tests appear to be within performance limits, in terms of sanctions. She stated that while the Welfare Division has not been officially notified, "we believe there is about $411,000 of sanctions looming for the past fiscal year and about $1.2 million for the current fiscal year." Senator Raggio asked whether there was still discussion at the federal level on some of these issues. Ms. Florence replied there was. Senator Raggio asked for a report summarizing the results of the federal discussions when they have been completed.

Senator Raggio closed the hearing on S.B. 398.

Senator Maurice E. Washington stated he was testifying in support of S.B. 40. Senator Washington stated that overwhelmingly the majority of teachers are competent, skilled, caring, and effective in their performance in this "most challenging, demanding, and inspiring job in the world." The senator said the teachers’ desire is to be paid the highest salary of any job in the world along with the best fringe benefits and pay incentives to attract and retain them in the classrooms. He continued:

Senator Washington said a recent national survey by the Association of American Educators found that 60 percent of the teachers surveyed agreed with the suggestion that schools should offer merit pay for teachers, while 40 percent disagreed. The senator said whether it is called merit pay, teacher incentive, rewards, or something else, the majority of teachers are in favor of this concept. He stated that this issue has nothing to do with factory workers but everything to do with genuine educational dialogue, teacher satisfaction, respect, retention, reward, and, most important, school reform. He noted that everyone must face the reality that school reform carries a heavy price, both in dollars and compromise.

Senator Washington said, "We must have the courage and the fortitude to examine all these parts of the equation with a professional and honest respect for this dialogue." He stated that S.B. 40 was introduced to enhance the retention of teachers and to attract teachers to Nevada. He noted the Legislature has passed several measures and recommendations from the Legislative Committee on Education, and said this bill provides one more opportunity to enhance that incentive package. Senator Washington stated that S.B. 40 does several things. It defines the program. Section 3 of S.B. 40 identifies that the superintendent of public schools administers the program for the award of merit pay to teachers. The bill also allows the superintendent to expand his administrative staff by 1 percent annually. The senator noted that section 4 of S.B. 40 allows the board of trustees to adopt rules, policies, and regulations. In subsections 1, 2, and 3 of S.B. 40 recommendations are made, the criteria are set, and the method is put in place for the award of merit pay to teachers.

Senator Raggio said it appears that each board of trustees of a school district would have flexibility to design the process, the criteria, and the method. He commented, "If it is done in that way, it would be different in each school district." Senator Washington said this has been voiced as a concern and a proposed amendment might allow the state superintendent to set the criteria, policies, and recommendations with some flexibility for the local school boards.

Senator Raggio noted it may be better to have a uniform system so there is no disparity among school districts; however, there may be reasons why there needs to be some differential in various school districts’ salaries. He said he was not suggesting changes were needed but the possibility for inconsistencies did catch his eye as he read through the bill. Senator Washington said he understood and it was a concern; it was intended that there would be some flexibility in the bill because each school district is not the same. He said each of the 17 different school districts has its own needs, criteria, and qualifications to satisfy.

Senator Washington noted that section 5 of S.B. 40 requires the recommendations be submitted on or before January 1 of each year, either by parents or by community members who are aware of the qualifications of the teachers. He said the board of trustees must approve the recommendation by March 1 of the year in which the recommendation was submitted and provide written notice to the superintendent of public instruction. The senator noted the written notice must include the name of the teacher and the reason for the approval.

Senator Washington said section 6 of S.B. 40 establishes that the amount of the merit pay must not exceed $1,000 per applicant each year. He stated the merit pay award is not to be included as part of a teacher’s salary, nor is it to be arbitrated or negotiated in settlements between organizations that represent licensed employees of the school districts and the school districts.

Senator Washington pointed out that a report must be submitted by the board of trustees of a school district receiving this money to the superintendent of public instruction on or before July 1 of each year. The report must include the number of teachers who were awarded merit pay in the immediately preceding year and an evaluation of the program.

Senator Washington acknowledged that there are many who are opposed to this bill. He said he is an optimist and he would like to see the bill passed, but he also understood the reality of the process. The senator acknowledged that the merits of S.B. 40 will be weighed "both for those who are supporting the bill and those against it." He said his expectations are that Nevada needs to recruit the best teachers possible. He noted one presentation he recently heard emphasized that the quality of teacher plays a significant role in the process of educating children. The senator commented that "we have bandied about the question; What is in the best interests of our children?" He speculated:

Senator Raggio asked how the suggested appropriation, which was $1.3 million for each year of the next biennium was computed. He asked whether the amount includes $1,000 each year for each teacher. Senator Raggio noted that the $1.3 million would accommodate 1,300 teachers each year. Senator Washington commented that if the committee so desires, the $1.3 million could be reduced to reflect the number that is appropriate given the current budget constraints. Senator Raggio asked whether a teacher would be eligible to receive this money each year for this award as a merit bonus.

Senator Washington concluded that most of the legislators were familiar with the teachers in the community and know the teachers that are doing a good job. The senator acknowledged that Channel 4 in Reno televises a program in his district which rewards and acknowledges a teacher monthly for doing an outstanding job. He recognized that this type of program is an effective way to thank the teachers for their work and for the time they are spending with the children.

Senator Jacobsen inquired whether teachers would be eligible for more than one type of reward program. Senator Washington replied that S.B. 40 does not preclude the teachers from being eligible for other reward programs.

Senator Neal remarked that teachers are not hired like laborers, they are hired by contract. He asked whether the merit awards would become a contractual item. Senator Washington replied, "Absolutely not." He said the merit award is supplemental to the teacher’s contracts and is a reward, an incentive for the effort the teachers have put forth; it is not to be negotiated in their contracts. Senator Neal wondered how the quality of the merit award would be handled. He asked, "How do we ensure they are dispensed on an equal basis?" Senator Washington answered the merit award was $1,000 per teacher. The superintendent of public instruction and the board of trustees for each school district would determine "the method, evaluation, and criteria of the award." The senator explained that the proposed amendment is to allow the state superintendent to set the parameters in which to work so there is some equity in the program.

Senator Neal inquired what would happen if a school district that employed 100 teachers had only $5,000 of merit award money to dispense, and 20 teachers met the merit requirements. Senator Washington replied that the school trustees would have to make their selection based on the qualifications they had set, and then go through the selection process. Senator Neal noted that parents with children in school, the superintendent, the principal, or teachers could recommend teachers for the merit award. He commented a situation could arise where not all of the teachers recommended for the merit award could be paid the $1,000 each. Senator Washington recognized that the possibility of this happening does exist but the parameters are set within the bill. He noted that the parents or community members would make the recommendations, the board of trustees would review the list of recommendations with the superintendent, and the trustees would award the money based on the recommendations, criteria, and methods they have set. Senator Washington drew attention to section 7 of S.B. 40 which states that on or before July 1 of each year, a report must be submitted by the board of trustees of a school district that received money for merit awards to the superintendent of public instruction to evaluate the program. The report must include the number of teachers selected to receive the award.

Senator Raggio commented the bill does not require the award to be $1,000, it reads the award must not exceed $1,000. He noted many teachers may be nominated but not everyone will win the award.

Senator Mathews commented that she taught for 25 years and merit pay was part of the system. The senator stated that the merit award can easily become a disincentive for teachers who do not receive the award. She explained that when 20 teachers are recommended but only 3 receive the merit award, the other 17 teachers may become disillusioned. She said she saw this happen in the system in which she worked. She said it is important to not discourage teachers from doing the good work they have been doing by rewarding some teachers that may not be the most deserving of the award. Senator Mathews emphasized that S.B. 40 is a good idea but caution must be used to not discourage the teachers who do not receive the award.

Senator Raggio acknowledged the concern but asked whether the Milken Family Foundation should be discouraged from giving the awards that it gives to outstanding teachers. He noted the Milken Foundation gives only one or two awards each year. Senator Washington answered that the competition for the Milken Foundation award is very different. The senator clarified that when an additional thesis or other additional work is required, the competition is in a different arena. Senator Mathews stressed that the arena is much different from the one in which the teacher in the classroom performing his or her day-to-day work is in competition with other teachers performing their daily work.

Senator O'Donnell said he does not believe the teachers awarded the Milken Foundation awards do anything different than other teachers, other than to get singled out for the good job they do. He said the winners of the Milken Foundation awards do not have to write a thesis, perform any additional work, or take any additional courses; they just get recognized for the good job they have been doing and they receive a $25,000 award. Senator O'Donnell stated there is no difference between the Milken Foundation award and S.B. 40. Senator Washington mentioned that his church started a reading program for young children who are unable to read and had fallen several grades behind in their reading level. He said he asked for help from the Washoe County School District and several teachers volunteered to help increase the reading and comprehension of the children in the program. The senator stated, "This is the kind of effort we are looking for to earn the merit awards, going above and beyond the call of duty to ensure that our children get a quality education."

Senator Washington further stated, "We are no longer the silent partner in education, we are the chief executive officer." The senator remarked that as an elected official he takes pride in the responsibility to "ensure, and make sure," that every child has at least an opportunity for a quality education. He stated, "If we can ensure quality in education by ensuring teachers that we recognize the effort they put forth in a small incentive like the merit award, we should do that."

Senator Coffin pointed out that the University and Community College System of Nevada has a merit award system which leaves a lot of room for subjective decision-making on the part of superiors. Senator Coffin questioned how the subjective decision-making is addressed in S.B. 40. Senator Washington said the merit award system in S.B. 40 will be subjective; but with parental and community involvement, the school board and the superintendent, within the parameters set by the state superintendent of public instruction, will minimize the subjectivity so the process is fair and equal.

Francis Gillings, Lobbyist, and Washoe County Chairman, American Independent Party, said he would like to add to S.B. 40 that "no teacher could be recommended for merit pay if less than 99 percent of their students could not perform at the proper grade level at graduation." Mr. Gillings noted there were students graduating from grades 6, 7, and 8 who could not read. He acknowledged these students may have entered their classes without the ability to read but asserted the teacher should be able to identify the children needing help. Mr. Gillings suggested if that were to occur, the students would be able to function at their appropriate level by the end of the school year.

Senator Raggio noted this would be impractical because the merit award is approved March 1 of each year. The senator noted that Mr. Gilling’s suggestion would require an entire change of the merit award bill. Mr. Gillings replied that he would like to see the merit award used because the teachers have performed well and the performance of the students prove it, not just because someone likes the teacher’s personality.

Lezlie Porter, Private Citizen, said she endorses the merit award bill because she knows that all teachers and administrators do not perform at the same level. Ms. Porter said she was concerned that given the fiscal constraints Nevada currently has, "perhaps we should take a baby step in the merit award direction." She noted that by statute the teachers and administrators are prohibited from having anything other than a satisfactory or unsatisfactory evaluation. She said this is like a pass or fail in the classroom. Ms. Porter encouraged the addition of a third category to statute which would allow the recognition of excellence. She suggested the merit award system may be one of the criteria or foundations which could be used as preparation for a bill to recognize excellence.

Janine Hansen, Lobbyist, Nevada Eagle Forum, requested consideration of a requirement that each school district establish a series of performance criteria using objective, independent criteria to make the recommendation for the merit award. Ms. Hansen suggested one of the criteria could be the improvement in student performance, so a goal could be established for each teacher to pursue. She said this would help prevent the merit pay award from becoming a popularity contest and ensure the award would be based on true merit. She referenced the National Education Association (NEA) handbook statement on merit pay. Ms. Hansen said the association believes performance pay schedules such as merit pay are inappropriate. She said this statement made her "feel bad" because if Nevada used the same philosophy or criteria for the students, it would mean that a child could graduate without passing a proficiency test. She asserted the only requirement of students would be just to show up for school. It would mean Nevada could not award scholarships based on performance or merit, and no one would win contests of sports, drama, or speech. The contestants would only be required to show up for the competition.

Ms. Hansen recalled that years ago when her brother, David Hansen, served as a school teacher and a principal, he was called a "hatchet man" because he was responsible for getting six teachers fired for incompetence. She said one of the teachers he was unable to fire transferred to a different school where he eventually shot the principal.

Ms. Hansen stressed it is very important that the public be allowed to discern between those teachers who are doing a very fine job, and those who are not. She suggested that Nevada needs specific, objective criteria to award merit pay for teachers. She stated that S.B. 40 would save Nevada money in the long run and give taxpayers greater "bang for their buck" as it encourages and rewards the very best of Nevada’s teachers.

Al Bellister, Lobbyist, Nevada State Education Association, stated he was opposed to S.B. 40. Mr. Bellister referenced an article in the June 1998 issue of the Harvard Business Review titled "Six Dangerous Myths About Pay." The Harvard Business Review concluded that individual incentive pay systems undermine performance because they undermine teamwork and lead people to believe that pay is not linked to performance but rather to "who you know." Mr. Bellister asserted this is what S.B. 40 is all about. He remarked that he has heard S.B. 40 described by its proponents as a popularity contest, and that is how the Nevada State Education Association perceives it as well.

Mr. Bellister commented the Harvard Business Review concluded merit pay plans share two attributes: they require a vast amount of managerial time to implement, and they make everybody unhappy. He stated that generally speaking, merit pay plans have failed around the country. They have been terminated in many places where they were instituted years ago. Mr. Bellister remarked the merit pay plans were terminated because they had a negative impact on morale, they were divisive to the faculties, and there was insufficient support from the state to adequately fund the program so it could continue. Mr. Bellister said he tried to find a merit pay program that had been implemented which is similar to S.B. 40 but could find no such plan. He said all of the merit pay plans he found seemed to rely on student achievement or some sort of evaluation process.

Mr. Bellister maintained that S.B. 40 intrudes on collective bargaining; salary is a mandatory subject of bargaining under The Nevada Revised Statutes (NRS) Chapter 288. He remarked that to the best of his knowledge none of the education associations has proposed this type of legislation, and this causes him to question the support that Senator Washington said teachers have for S.B. 40. He said his affiliates are not proposing to bargain merit pay, and to the best of his knowledge, school districts are not proposing to bargain merit pay. Senator Raggio said S.B. 40 does not contemplate collective bargaining in any way; the bill does not interfere with the collective bargaining process. The senator questioned why S.B. 40 would have any impact on collective bargaining, pointing out that merit pay funds would be a pool of money that is not subject to bargaining which would be available to school districts to award a onetime merit pay to teachers. He said the merit pay would be outside the collective bargaining contract, and nobody is suggesting that it be part of the collective bargaining process. Mr. Bellister replied that was his concern. Because salary is a mandatory subject of bargaining, he believed the merit pay could become part of the collective bargaining process. He said salary decisions should be left to the local level.

Senator Raggio questioned whether the Milken Family Foundation award was included in the collective bargaining process. Mr. Bellister declared his belief there is a big difference between S.B. 40 and the Milken Foundation award. He stated the Milken Foundation is a private foundation, a privately funded program. He said S.B. 40 would be a state-supported program. Mr. Bellister noted the state supports the collective bargaining program for employee-management relations and that is where the merit pay for teachers belongs.

Senator Neal voiced his belief that should the merit pay for teachers be included in the school district funds, salary would have a prior claim to the money. Senator Raggio replied that would be true, unless the merit pay for teachers was prohibited by statute from being subject to bargaining. The senator pointed out that the merit pay for teachers in Nevada would be prohibited by statute from being subject to bargaining as other plans are. He noted there is a lot of money which goes into the Distributive School Account that is not subject to bargaining.

Mr. Bellister noted that section 6 of S.B. 40 contains the following language:

Mr. Bellister remarked that the Esmeralda County School District could not reach the $1,000 maximum for the merit pay. He said he was concerned that S.B. 40 is not equitable for all school districts. He also mentioned that merit pay could be considered salary, and therefore, contributions to the Public Employees Retirement System (PERS) should be made on the merit pay received by the teachers. He further expressed concern that fewer than 10 percent of the teachers in the state would be eligible for the merit pay. Senator Raggio pointed out the merit pay was a one-time award and would not be included in the contributions to the PERS. Mr. Bellister replied that for teachers who receive the merit pay during the last year of their careers, "including the merit pay in the contributions to the PERS" would be an important benefit to them.

Mr. Bellister stated his belief that the best way to attract and retain teachers is to raise the pay for teachers. He noted this would be the second time during the decade of the nineties that teachers are looking at the prospect of receiving no cost-of-living increase during the biennium. He pointed out that teacher pay continues to lag behind private sector pay and stated his belief that before serious discussions about merit pay can be held, the teachers’ salaries must be made competitive. Mr. Bellister stated that is the best way to attract and retain teachers.

Senator Raggio identified that the statement "there is no likelihood of an increase for teachers " is not accurate. He said even though the final state budget will not include a specific amount for increases in teacher salaries, there is still the option in each school district for teachers to negotiate for increases in salaries dependent upon the availability of funding.

Senator Maurice E. Washington mentioned there are a number of supporters of Senate Bill 258 from the "I Can Do Anything" charter school which he visited. The senator mentioned that some of the students from the school would testify in support of S.B. 258.

Senator Washington said, "There is a report that several states have amended their charter school laws to reflect the limits on the number of charter schools which have been provided." The senator clarified that S.B. 258 intends to increase the flexibility in granting charter schools. He said that in the book School Reform Whose Time Has Come, it was stated that many Americans are desperate to find alternatives to a failing public school system. He said critics have claimed that: Charter schools are an attempt to privatize public education.

• Charter schools will take away funds that could be spent on noncharter schools.

• The curriculum offered in charter schools does not reflect the standards that have been set.

• Charter schools do not comply with current laws and regulations for special education.

• There are transportation issues.

• The cost for students to participate in extracurricular activities is too expensive and prohibitive.

Senator Washington stated that the Council for Basic Education believes there are three imperatives for charter schools to succeed: accountability, significant increase in student achievement, and high academic standards. The senator noted that the council also found there are two weaknesses in the charter school laws of the states which have been ineffective in creating charter schools. He said the first weakness is the limit placed on the number of charter schools allowed within these states. The second is that there is only one sponsoring agent in each of these states. Senator Washington stated that to have an effective strong charter school law there are several things which need to be in place. He explained:

Senator Washington pointed out that S.B. 258 seeks to revive the Charter School Act of 1997 by addressing some of these questions and concerns. The bill proposes to do this by removing the restrictions on the number of schools that can be set up in the state, by creating a new commission for charter schools, by exempting charter schools from statutory requirements found in the education code, by retaining provisions in state laws that protect the health and safety of the pupils, and by obtaining appropriations for the commission and its staff.

Senator Washington discussed the amendments contained in Exhibit E, a 9-page handout titled "Proposed Amendments for Senate Bill 258 Submitted by Senator Washington," and Exhibit F, a 4 page summary of S.B. 258. The senator said there are many major provisions throughout the 67 sections of S.B. 258. He outlined the major provisions and their key points as follows:

• Establishes a 5-member commission for the charter school to serve as an alternative sponsoring agent.

• Establishes the conditions for the creation of charter schools.

• Delineated the application process entailed in becoming a charter school.

• Provides for granting of a conditional charter school agreement.

• S.B.258 removes the cap, or limitation, on the number of charter schools within the state and the "at risk" status.

Senator Washington explained the reason it was important to remove the "at risk" status as it had been reported in the local paper is that the students attending the "I Can Do Anything" charter school were at-risk students. The senator stressed this was an unfair label of the students attending the school, indicating that it has a negative connotation. He stated the students are not at-risk students, they are students looking for alternative methods and means to be educated so they can get a quality education.

• Establishes the governance of charter schools and the role of the sponsor.

• Provides for staffing and personnel.

• Allows for changes in the collective bargaining options.

• Provides for participation in state school athletic and other interscholastic associations.

• Allows for startup costs.

• Allows funding for the commission for travel, staffing, and transitional expenses for charter schools that were granted under the current statute.

Senator Rawson asked whether Senator Washington was discussing the bill or both the bill and the proposed amendment. Senator Washington replied he was discussing both the bill and the proposed amendment. Senator Washington said Exhibit E is a section-by-section summary of S.B. 258 and the proposed amendments.

Senator Neal said he was concerned by the remarks that S.B. 258 was not to deal with at-risk students. Senator Washington explained that S.B. 258 does away with the language that any student on the school lunch program is considered at-risk. Senator Neal noted NRS 386.505 includes the verbiage, "The legislature hereby declares that by authorizing the formation of chartered schools in this state; the primary consideration of the legislature is to serve the best interests of pupils at risk." Senator Neal asked whether Senator Washington wished to change the declaration. Senator Washington replied it was not his intent to change the declaration. He stated his intent with S.B. 258 was to remove the at-risk status of charter schools. The senator pointed out he wanted to put charter schools on the same playing field as any other school. He stressed the charter school students are not "at-risk" but need an alternative method for education, and charter schools provide that alternative. Senator Washington commented that maybe the charter school students were not successful in "the normal public educational system," and charter schools may provide the opportunity for them to succeed. But he stressed it is unfair to label them as students attending an "at risk" school.

Senator Neal concluded that the charter school bill is no longer an experiment. Senator Washington agreed that the charter school is no longer an experiment. He noted the students attending charter schools are succeeding and doing well. He remarked that these charter school students would have dropped out of the public educational system but are now attending the charter school, will not drop out, and will succeed.

Senator Rawson noted that S.B. 258 may need to be amended even further as other bills are submitted for consideration. Senator Washington replied that he understood this could occur and was aware of some of the bills that have been proposed. He said S.B. 258 reflects his concern that charter schools at least be complying with the standards and accountability section of Senate Bill 482 of the Sixty-ninth Session.

Judy Kroshus, Manager, Job Opportunities in Nevada (JOIN), Fallon office, said she had 16 years of public school experience when she came to JOIN in 1995. Ms. Kroshus said one of the first things she noticed when she came to JOIN was that a lot of the students she knew from high school were now clients of JOIN. She saw that many of these clients left school without graduating and without the skills necessary to pass the General Educational Development tests. Ms. Kroshus recognized they were JOIN clients because they were working minimum wage jobs. She said that not having completed their high school education or received a general equivalence diploma (GED), they did not have anywhere to go. She commented that the manufacturing companies in Fallon and Fernley all required high school diplomas or GEDs. Ms. Kroshus said JOIN started negotiating with the Fallon school district to contract to provide an alternative program where students who were likely to drop out of high school could work with JOIN while they were still part of the high school population. She pointed out that by doing this, JOIN could help these students complete their education.

Ms. Kroshus noted this was the second year JOIN has been working with the Fallon High School using the contract. The high school has been referring students to JOIN as a result of the contract and has been providing JOIN with instructors. She testified that all of the students referred to JOIN by the high school have been completing their high school education. Ms. Kroshus stated that all of the students referred by the high school were successful because the environment is smaller or because something JOIN was offering allowed the students to complete their education.

Ms. Kroshus further stated she does not see JOIN as being in competition with the school district but as complementing the school district and bringing students who left, back into the high school population. She voiced that when she thinks of the "at risk" population, she thinks of them not as at risk of dropping out and becoming delinquents but as at risk of not continuing their lifetime learning and continuing to improve their status in life by getting better jobs, earning more money, and contributing more to society. She noted that if JOIN clients do not complete their schooling they will not continue to grow and contribute to society. Ms. Kroshus said she was glad to see S.B. 258 because it would help bring Nevada into line with what the rest of the nation is doing with charter schools. She encouraged the passage of S.B. 258 with the proposed amendments.

Margaret Williamson, Superintendent, I Can Do Anything Charter High School, said she has been part of the charter school movement since 1994. Ms. Williamson stated her support for S.B. 258. She said this charter school has a wonderful relationship with the school district and the district has facilitated the charter school students’ participation in extracurricular activities. Ms. Williamson agreed that the standards for the charter schools should be at least as high as those for the public schools. She endorsed the concept that core subject areas must have licensed teachers. Ms. Williamson said she believes that the students of charter schools should be required to participate in human immunodeficiency virus (HIV) instruction and other health-related instruction.

Senator Neal asked Ms. Williamson what core courses are taught at the I Can Do Anything high school. Ms. Williamson replied the core courses are English, math, science, social studies, and technology. Senator Neal asked whether Ms. Williamson has been able to compare the progress of her students with that of students in the public school system. Ms. Williamson replied this is the first year of operation for the I Can Do Anything high school and she was waiting for the proficiency examination results. She stated the TerraNova results showed the charter high school ranks fourth in the school district. The TerraNova testing took place in October and the charter school opened the month before the test was given. Senator Neal asked when the results of the proficiency examination would be available. Ms. Williamson replied she had expected to receive the results a few weeks ago. Senator Neal requested a copy of the results when they became available.

Arriva S. Gordon, Student, I Can Do Anything Charter High School, said she is not an "at risk" student but she is a student at the charter high school. Ms. Gordon spoke in support of S.B. 258.

Rebecca Ford, Student, JOIN, stated she has been a JOIN client for the past 1½ years. Ms. Ford said she has made tremendous progress academically while she has been a JOIN student. She commented that she did not do well in the public high school environment because of disciplinary problems and being distracted by her group of friends. Ms. Ford said she has done much better since becoming a JOIN student. She began earning credits as soon as she started the JOIN program and was no longer a disciplinary problem. She recognized that she would not have graduated from high school if she had stayed in the public high school. Ms. Ford believes that JOIN should become a charter school so other students can have the opportunity to use their services. Senator Rawson asked what grade Ms. Ford is currently in. Ms. Ford replied she was a junior. Senator Rawson asked what her plans were after she graduates. Ms. Ford replied she would like to be a journalist.

Chad Pascoe and Jesse Rogers, Students, I Can Do Anything Charter High School, testified in support of charter schools. Mr. Pascoe explained that the charter school acknowledges the differences in its students and is capable of delivering individual respect to each student. Mr. Rogers said he finds great satisfaction in knowing that all of the students’ disabilities can be catered to in the self-paced curriculum. He said the curriculum is structured in a way that challenges the students yet allows them to succeed. Mr. Pascoe asked that charter schools be allowed to continue to exist for students like him. He said there is a population of students that do not get their needs met by traditional schools. Mr. Rogers said he was part of that population. He said the only way for him to reach his full potential is through the charter schools. Mr. Rogers stated that both he and Mr. Pascoe feel passionately that if there were no charter schools to meet their needs, they would fail.

Jennifer Popejoy, JOIN student, said that along with her, there were seven other mothers who attend JOIN in Fallon. Ms. Popejoy said it was very hard for her and the other mothers in high school. She said they felt they were not being good enough mothers because they were not spending enough time with their sons and daughters and were not available for their children. Ms. Popejoy said that while attending JOIN, she attended school half-days. She pointed out that this half-day schedule allowed time for her to still be a good parent. Senator Rawson asked whether Ms. Popejoy made arrangements for half-day childcare. Ms. Popejoy replied yes, her child went to a babysitter. She noted JOIN is working with the program Even Start to open a day-care center.

Private Jordan Anderson, United States Army Reserve, said he was also a student at the I Can Do Anything high school. Private Anderson said he believes the charter school has helped him a lot. He said when he started school at I Can Do Anything Charter High School he had a grade point average of .87. He noted that his current grade point average is 3.27. Private Anderson said he thought his improvement was due to the lower student-to-teacher ratio at the charter school. He commented that the ratio of students to teachers at Sparks High School was very high, and it was very hard to get the individual, one-on-one teaching that he needed. Private Anderson commented that the Army recruiting office supported Army personnel attending the charter high school and has assigned a recruiter to the I Can Do Anything high school. He stated that charter schools should be continued and there should be more of them. Senator Rawson asked Private Anderson’s age. Private Anderson replied that he was 17 years old. Senator Rawson asked whether it was his intention to complete high school and then report to the Army for active duty. Private Anderson replied that he would be attending basic training during the summer between his junior and senior years. Senator Rawson asked whether there is a specific job skill for which he has signed up. Private Anderson replied that his military occupational specialty is 31L, a wire systems installer. He said he will be going to active duty 2 weeks after he graduates from high school. Senator Raggio commented that Private Anderson had achieved a remarkable improvement in his grade point average.

Private Chris Andivall, United States Army Reserve, said he also attended the I Can Do Anything Charter High School. Private Andivall said the charter high school was a great improvement for him. He said before he attended the charter high school his grade point was in the .0 range, he was not doing any of his homework, and he was always ditching school. Private Andivall said that when he first attended the charter high school his work began to get a little better; after a while it got a lot better. He said he now has a 3.7 grade point average and attends all of his classes. Private Andivall commented the small classes provided more individual attention to the students and were just more fun. He said it was a great atmosphere for students.

Tia Guenther, Student, I Can Do Anything Charter High School said she was not in school at all before attending the charter high school. She said her mother removed her from public school in the fifth grade so she could be home-schooled. Ms. Guenther said that because her mother did not graduate from high school, she could not teach her daughter what was in the school books that she needed to learn. Because of this, Ms. Guenther said she was a drop-out student from the eighth grade. She said that when she tried to enroll at Reno High School she was rejected because she did not fall within the age requirement for the grade in which she needed to be enrolled. She was 16 years old and she could not be admitted as a sophomore. Ms. Guenther explained that a few days after being rejected by Reno High School, her mother saw a story in the newspaper about the I Can Do Anything Charter High School. She said from the second she walked into the charter high school, it was like her second home; everybody was very friendly. Ms. Guenther said her grade point average is 3.7 now and she feels she has done extremely well in the charter high school. She noted that the teachers and counselors have always been there for her and have helped her a lot. Senator Rawson asked what Ms. Guenther plans to do after she graduates. Ms. Guenther replied that she would like to attend college to major in the entertainment field.

Senator Washington stated that the testimonies would speak for themselves. He commented that the I Can Do Anything Charter High School is a success and the JOIN program, which is applying for charter school acceptance, will also be a success. He introduced his daughter Angelise Washington, who is a student at the I Can Do Anything Charter High School. He said she was not an at-risk student and was doing very well in the charter high school. Senator Rawson asked how many students were enrolled at the I Can Do Anything Charter High School. Senator Washington replied there were about 172 students enrolled in the charter high school, which has a capacity of 225.

Robert S. McCord, Director of Government Relations and Legislation, Clark County School District, testified in opposition to S.B. 258 as it was introduced. Mr. McCord’s concerns and comments are presented in detail in Exhibit G, a 5-page handout titled "Testimony, Senate Bill 258" and discusses the pros and cons of the various sections of S.B. 258.

Mr. McCord said there were two charter schools presently under consideration in the Clark County School District. He noted the applications were active and moving forward. He said there would be an open meeting in Las Vegas, April 7, 1999, to discuss the charter school applications.

Senator Raggio invited Mr. McCord to make specific recommendations with respect to each of the sections in S.B. 258, to be submitted to the Legislature, and to participate in any future meetings to discuss this issue.

Senator Neal requested that Mr. McCord submit his comments and recommendations on the repealed sections identified on page 42 of S.B. 258. Mr. McCord replied he would do that.

Steve Williams, School Planner and Governmental Affairs Representative, Washoe County School District, stated that S.B. 258 makes sweeping changes to the existing charter school legislation. Mr. Williams noted some of the changes were needed but said S.B. 258 goes too far in many ways. He questioned why S.B. 258 strikes the language which refers to the basic courses required for graduation. He remarked that he thought these courses would logically be left as a requirement for graduation. Mr. Williams questioned the necessity for a charter commission. He commented that he did not believe there was a history of charter schools being denied by school boards. He noted the reference to "at risk" students was not to categorize or label students but to identify a group of people that need help. He said that at-risk students were the primary reason the charter school law passed previously. Mr. Williams pointed out that although there is no requirement for accreditation of the curriculum of the charter school, the school district must accept the credits from the charter school on an equal basis.

Mr. Williams remarked that the entire section which relates to the agreement between the chartering agency, the school district, and the charter school has been stricken even though this section seemed thoughtful and reasonable to him. He said the previous reasons for forming a charter school related to a focus on intellectual development, skills for academic purposes, and technical skills. Mr. Williams questioned why these reasons were removed from the bill. He noted that in the new bill, the reasons for forming a charter school could be as simplistic as "creating new professional opportunities for teachers." He remarked that this does not seem like a very valid reason for forming a school.

Mr. Williams pointed out that according to this bill, a charter school does not have to adopt a final budget, as does the school district. He asked, "Where is the financial accountability?" He questioned why the current bill reduces the percentage of licensed teachers from 75 percent to 50 percent. He said it was his understanding that some changes were proposed today in regard to the deletion of course requirements for charter schools and commented that he would like the opportunity to review the proposed amendments to determine whether they help the bill or not.

Mr. Williams concluded by saying, "If a laissez-faire attitude toward charter schools is the right way to go, if that is the way to increase the educational achievements of our students, why not apply that to all schools in the state, not just the charter schools?"

Mr. McCord responded to a question asked earlier by Senator Raggio by saying, "We have not come near the number of allocated charter schools under S.B. 220 of the Sixty-ninth Session at this point."

Senator Raggio commented this was because of the limitations in the existing law. Mr. McCord replied the existing law includes an unlimited number of at-risk charter schools. Senator Raggio responded: It was a struggle to get the authority through and a lot of concessions were made from the proponents of what has traditionally been perceived as a charter school otherwise in the country, so there were some rather strict limitations placed upon the establishment of charter schools. The senator said it was hard to argue with the success stories of the young people testifying today about the charter schools. He remarked there are not just one or two success stories, there are many and they seem to be uniform. The senator noted that "S.B. 258 does give a lot of liberal operation to the charter schools, but it’s hard to argue with the success stories heard today, that we should not at least take a look at extending that effort."

Henry Etchemendy, Lobbyist, Nevada Association of School Boards, discussed Exhibit H, a 3-page handout titled "Comments/NASB." Mr. Etchemendy said it is his position that the sponsor of the charter schools must be the local school board. He stressed that the local board of trustees should be the sole sponsor because there is utilization of public funds, it is a public education, and the school boards are, in the existing laws, the ones in charge of public education within the respective counties. He stated, "The addition to the bill of a separate commission which is an independent group approving an application for charter schools is improper and inappropriate and should not be done because of the public funds involved."

Mr. Etchemendy discussed page 9, lines 33 and 34 of S.B. 258. He explained that the way the proposal is written, once a school board of trustees receives an application it must take action on the application at its next regularly scheduled meeting or 14 days after the receipt of the application. He stated, "That simply will not work." Mr. Etchemendy pointed out there could be a regularly scheduled meeting 7 days after the receipt of the application but the board could not consider the application until 14 days have passed because of the wording "whichever occurs later" in the bill. He noted the language to "clean this up" is included in his 3-page handout, Exhibit H.

Mr. Etchemendy questioned why it was necessary to remove the current limits on the number of charter schools allowed. He noted only one charter school has been formed since the law was enacted in 1997, and there are only a few other applications for charter schools in the state currently. He said the charter schools could continue through the next biennium with the current limits, and the need to increase or remove the limit on the number of charter schools could be considered again during the 2001 Legislative Session.

Senator Raggio commended both the Washoe and Clark County School Districts for the improvement in the reduced number of schools needing improvement.

Lezlie Porter, Washoe County Resident, stated she was representing herself and Dorothy Dermody, who was also a Washoe County School Board Trustee. She noted that they represent the minority on the Washoe County School Board, which has taken a position in opposition to S.B. 258. Ms. Porter stated that the Washoe County School Board trustees have opposed every single school reform measure that has come before them thus far this year.

Ms. Porter voiced support for the charter school bill and noted some areas where the bill could be more "charter friendly." She discussed Exhibit I, a 2-page memo to the Senate Committee on Finance. She referred to page 8, line 16, of S.B. 258, and commented:

She said this would clear up any arbitrary issues that could potentially exist.

Ms. Porter referred to page 8, line 32, of S.B. 258 and suggested the following:

Ms. Porter noted that section 19 of S.B. 258 describes the responsibilities of the charter commission. She remarked, "They are asked to do a lot, but we see no provision for staff to gather and disseminate the required helpful information. The school districts have the resources; a volunteer commission does not."

Senator Raggio shared the information he received from the Legislative Counsel Bureau staff which he believes they obtained from the U.S. Department of Education. He said the federal act that was authorized by Congress has at least two requirements which must be met in order to access federal funds for charter schools. They are: (1) a state must show it has taken action to increase the number of charter schools (that is, to remove the cap that was in the first bill); and (2) a second sponsoring organization must be provided.

Ms. Porter noted her written comments were contained in Exhibit I and have been distributed to the Legislature.

Ricci Elkins, Sierra Nevada Academy, said she is in support of S.B. 258 and is excited by the opportunities the new bill presents. Ms. Elkins stated that as a charter school founder and as a distributor of information to people who are interested in charter schools, she can attest to the extreme difficulty parents and teachers face in the pursuit of their vision. She said this bill will substantially eliminate many of those obstacles. Ms. Elkins noted it has been mentioned that there are charter schools in the application process and only one in existence. She said the reason for this is the current limitations, which are very restrictive. Ms. Elkins commented she is very much in favor of the provisions for granting the provisional charter. She commented that the conditional charter may be the single most important feature of this bill because it allows the prospective charter school founders to be able to access and negotiate and to find areas of funding for facilities that otherwise they are not able to have currently. She noted there are a lot of different things to consider when founding or creating a school such as construction timelines, renovation timelines, funding issues, and the fact that "you cannot get a grant when you do not have a charter." Ms. Elkins pointed out that under the current law, by the time an applicant has been approved for the charter, all of the grant awards have already been made for the year.

Ms. Elkins stated that the other important issue is the early distribution of funds. She commented that for charter schools, as with all businesses, cash flow is essential. She remarked that charter schools are working with limited funding, so access to funding a month in advance would significantly increase the opportunities for the school’s success. She noted there were items that must be obtained or paid in advance of a school’s start-up, such as textbooks, furnishings, staff development for teachers, and salaries.

Ms. Elkins remarked she was also very impressed by the addition of the commission on charter schools. She said she is on a national committee, the Charter Friends Network, and believes the commission on charter schools is a very progressive step. she commented there is $100 million in funding available for charter schools nationally but without a separate commission, Nevada charter schools would not be able to access the funding.

Francis Gillings, Lobbyist, American Independent Party, Washoe County Chairman, stated he would like to require that all appointed members of the commission for charter schools (section 4 of S.B. 258) be individuals who have proven, by their actions, that they know how to raise good, knowledgeable citizens. Mr. Gillings commented that "if we are not careful we will have somebody’s friend be appointed to the commission for charter schools who could not raise dogs good." He remarked, "You can prove that just by what one’s children are like. I’m not bragging, but my wife and I raised three of our own and four adopted. None of them ever cost the state a dime and they are good citizens." Mr. Gillings said, "I think this is something that needs to be looked at even though it might be a little bit personal."

Senator Raggio invited any other written testimony with recommendations for amendments or changes in S.B. 258 to be submitted within the week so consideration could be given to the suggestions.

Senator Raggio closed the hearing on S.B. 258 and then called for committee action on S.B.358.

Judicial Selection – Budget Page COURTS-41 (Volume 1)

Budget Account 101-1498

Jim Rodriguez, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau (LCB), said this budget account was established to provide a selection committee to fill vacancies for either the Supreme Court or the district courts. Mr. Rodriguez commented that this budget is funded solely from a State General Fund appropriation. He noted there were three main components to this budget account. He identified the following components: (1) the base budget, which was requested to be funded at the fiscal year (FY) 1998 level; (2) the M-200 component, which requested additional funding that equates to the work program level of FY 1998-99 to cover the activity that was performed in the last biennium; and (3) the component for additional funding to cover a workshop that the Administrative Office of the Courts plans to conduct annually to review new procedures and rules for appointments.

Mr. Rodriguez indicated he had reviewed the past 10 years of actual expenditures and has determined that the base budget request is for more than what has been averaged over the past 10 years. He noted he has eliminated the request for additional funding because the request is, based on average annual expenditure, far in excess of what was actually expended during the past 10 years. Senator Raggio clarified that if a number of vacancies occurred, the Commission on Judicial Selection could go to the Interim Finance Committee to request additional funding.

Senator Raggio commented he would accept a motion to close budget account 101-1498 in accordance with the recommendation by staff to delete the M-200 decision unit request.

DEPARTMENT OF BUSINESS AND INDUSTRY

B&I Common Interest Communities – Budget Page B & I-51 (Volume 2)

Budget Account 101-3820

Rick Combs, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, said the Ombudsman for Owners in Common-Interest Communities was created by the 1997 Legislature in S.B. 314 of the Sixty-ninth Session.

Mr. Combs said the office currently consists of one person, the ombudsman, and that person is responsible for assisting in processing claims relating to residential property within common-interest communities that are submitted for mediation or arbitration. He noted that additionally, the ombudsman assists owners and executive board members for the associations in understanding their rights and responsibilities.

Senator Raggio asked where the funding came from for this budget. Mr. Combs replied the funding was from a fee that is imposed on a per-door basis which is collected by the Office of the Secretary of State and then transferred to this budget account. He pointed out the budget account was entirely fee-funded. He noted that the only major decision unit recommended by the Governor is M-200 which recommends funding for a new Management Assistant III. Reiterating that the only other employee in this office is the ombudsman and the office receives about 35 phone calls daily from owners in the communities, he said this additional position would help assist with those responsibilities. Mr. Combs pointed out that staff recommends closing the budget as the Governor recommended.

Senator Raggio asked whether the performance indicators for the budget account were correct and the office has actually received about 3,227 requests for information during fiscal year (FY) 1998. Mr. Combs replied the performance indicator information was correct. Senator Raggio said the office seems to be working well and people are aware of the office. Mr. Combs replied yes. He said the ombudsman currently walks around the office with a telephone headset on because the telephone is constantly busy with people asking questions.

B&I Real Estate Recovery Account – Budget Page B & I-57 (Volume 2)

Budget Account 216-3827

Mr. Combs said this account is used to pay for judgment against real estate licensees. He explained that when a judgment is received against a real estate licensee in the performance of his or her duties the division is authorized by statute to pay from this account up to $10,000 to help satisfy the judgment. He said the amount in the account at the end of any fiscal year in excess of $50,000 is transferred to the Real Estate Education and Research account, budget account 216-3826, to be used for the education of real estate agents.

Mr. Combs noted that the only recommendation in this account is to increase the projected recovery fees by $10,460 for FY 2001. This increase is based on the agency’s projections of the number of licensees submitting the $40 fee during the second year of the biennium. He explained that the same number of licensees used in the administrative account for the Real Estate Division was used to make this projection.

Senator Raggio asked whether each licensee pays $40 a year. Mr. Combs replied that was correct. Senator Raggio noted that in FY 1998 this budget account paid out a total of $66,000. Mr. Combs explained that operating expenses as well as the "settlement disbursements" were included in the total disbursements for FY 1998. He said the settlement disbursements during FY 1998 were paid primarily for a development called "The Lakes." He said this settlement had taken about 5 years to reach and was finally paid during FY 1998 and that is why the settlement disbursements during FY 1998 were so high. Senator Raggio noted the future yearly projection for settlement disbursements was about $30,000 each year. Mr. Combs replied that the projection was for about $10,000 each year. He explained that this projection was based on about one settlement each year during the biennium. He pointed out that the performance indicators included in The Executive Budget do not match the amounts recommended in the budget in this budget account. Mr. Combs explained that he has pointed this out to the division and they have indicated that $10,000 in projected settlements was acceptable to them. He said the division did not have a settlement in FY 1998 other than The Lakes case and had not had one yet in FY 1999, so they agreed that this is a reasonable projection.

Mr. Combs stated that the suggested change to this budget account is the increase in recovery fees received which, if not spent, would eventually be transferred to the Real Estate Education and Research Account.

*****

B&I Real Estate Investigative fund – Budget Page B & I-59 (Volume 2)

Budget Account 101-3831

Mr. Combs explained that this account funds investigations of land sales, timeshare sales, and campground sales which are advertised or offered for sale within this state. He commented the Real Estate Division requests that the designer of the project submit blueprints and all other forms for the division’s review. In special circumstances, where these documents reveal a need, the division will go to the development and conduct an investigation. When that occurs, this account will fund the cost for the investigation. Mr. Combs said the major decision unit is E-125, which provides the division with additional authority to conduct the in-state and out-of-state investigations during the 1999-2001 biennium. He noted the FY 1998 actual expense was extremely low and was discussed with the division. Mr. Combs mentioned that the division said the reason for the low level of expenditures during FY 1998 was that a new person who was in the position which conducts the investigations spent a good part of the year in training. The new person is also very skilled at looking at blueprints and is able to handle a lot of the problems that occur without actually having to go to the development to perform an investigation.

B&I AG Garlic & Onion Research – Budget Page B & I-172 (Volume 2)

Budget Account 101-4544

Mr. Combs explained that this account funds research projects relating to the production and promotion of garlic and onions. This account is funded through an annual acreage assessment on garlic and onion growers. He explained that for up to 1-year after the growers pay the assessment, they are authorized to request to be reimbursed the assessment they paid. Mr. Combs noted that because of this, the division bases its expenditures on the balance forward from the previous year. He stated that he recommends closing the budget as recommended by the Governor.

B&I, Alfalfa Promotion Account – Budget Page B & I-189 (Volume 2)

Budget Account 101-4543

Mr. Combs stated that this account is extremely similar to the previous account except that this account is for alfalfa seed promotion. He explained the budget was prepared by reviewing the agency request, but at this stage in the budget process it is easier to identify what the more accurate balance forward projection is. He noted that because of the more accurate balance forward projection it is possible to recommend an adjustment to give the division increased authority to issue grants for alfalfa seed promotion.

B&I High School Rodeo Association – Budget Page B & I-237 (Volume 2)

Budget Account 101-1341

Mr. Combs said there were no changes recommended to the budget. He explained this account is a continuation of a $20,000 appropriation in each year of the biennium for the Nevada High School Rodeo Association to defray the travel costs that are incurred by Nevada’s participants.

DEPARTMENT OF HUMAN RESOURCES

Indian Affairs Commission – Budget Page INDIAN-1 (Volume 2)

Budget Account 101-2600

Senator Raggio commented that staff is recommending an adjustment for stipend for Nevada Indian Commission members in the amount of $640. Jim Rodriguez, Program Analyst, replied yes, that is correct. Mr. Rodriguez explained that the commissioners will be reappointed in 2001; and that is why there is no adjustment to the FY 2001 budget request. Senator Raggio asked whether the commission has only met once because of the poor health of the commission director. Mr. Rodriguez replied that the director had a serious illness in FY 1998. Senator Raggio asked whether the commission is supposed to meet 4 times a year. Mr. Rodriguez said it is required to meet 4 times a year, that is correct. Senator Raggio asked whether there is sufficient funding in the budget should the Commission meet 4 times a year. Mr. Rodriguez replied there is.

ELECTED OFFICIALS

Municipal Bond Bank Revenue – Budget Page ELECTED-89 (Volume 1)

Budget Account 745-1086

Dan Miles, Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, explained this is one of two accounts for the Municipal Bond Bank that the Office of the State Treasurer operates for the benefit of local governments. Mr. Miles said this budget account receives the revenue from the local governments. He noted the revenue is later transferred to another budget account to pay bond interest and redemption cost. He pointed out the Governor’s recommended budget contained all the existing obligations of the revenue anticipated from existing obligations. He said he is recommending that the Governor’s recommended budget be approved. He noted that should new projects occur in the future, this account will need to be augmented, but that can be handled during the biennium.

Senator Raggio asked whether there are enough new projects being contemplated to justify the increase from $47 million to $79 million. Mr. Miles replied there are. He noted the state treasurer has prepared a complete bond redemption list identifying all the current projects.

Municipal Bond Bank Debt Service – Budget Page ELECTED-90 (Volume 1)

Budget Account 395-1082

Mr. Miles explained this budget was the accompanying budget to the previous budget account. He said this budget account is where the debt service principlal and interest payments are actually made from. He stated there were no adjustments recommended to the Governor’s proposed budget.

DEPARTMENT OF MUSEUMS, LIBRARY AND ARTS

State Museum, Carson City – Budget Page MLA-9 (Volume 1)

Budget Account 101-2940

Bob Guernsey, Principal Deputy Fiscal Analyst, pointed out that the budgets submitted by the Department of Museums, Library and Arts were technically and mechanically some of the best seen by staff. He said the budget office and the agency deserve credit for delivering a very clean base budget. He noted that is why there are not a number of technical corrections to these budgets by staff.

Mr. Guernsey stated that he recommends the State Museum, Carson City budget be closed as recommended by the Governor. Senator Raggio questioned whether the budget included the operating expenses for the new addition in Carson City. Mr. Guernsey replied that it did. He noted the new addition is scheduled to open sometime in February or March in the year 2000.

Senator Coffin asked what would be done if the person in charge of the department does not meet the requirements of the position. He noted there were some very good people currently running the department but said he is worried about what will happen when a final selection is made.

John P. (Perry) Comeaux, Director, Department of Administration, asked whether Senator Coffin was speaking of the statutory requirements for the State Librarian. Senator Coffin asked whether the Museum, Library and Arts director must have an advanced degree "in some of the fields of Museum, Library or Arts." Mr. Comeaux replied the only statutory requirement he is aware of is that the head of the library must have whatever the designation is for a librarian. He noted funding has been recommended to be provided for the positions of both the head of the department and the head of the state library. He explained that in previous bienniums this was not done because one person filled both positions and met the statutory requirement for the head of the state library. Mr. Comeaux pointed out it is recommended both positions be funded for the next biennium because it is known that the person currently in the position will be leaving.

Mr. Guernsey said it is his understanding that a bill draft request has been submitted to change the requirements for the department director from a masters degree to a bachelors degree. He confirmed that the person functioning as department head at this time is designated as acting director. Senator Coffin said he has no reservations with the budget and it is well constructed, and the leadership within the department is good. But he was worried about whether or not changing the statutes to meet the qualifications of the acting director is a good idea.

Nevada Historical Society – Budget Page MLA-15 (Volume 1)

Budget Account 101-2870

Mr. Guernsey said he recommends closing the budget as recommended by the Governor. He noted that the agency had a transfer from the Commission on Tourism of $25,742 in FY 1998 for equipment. He said the Tourism budget has not yet been closed but the commission are projecting a balance of $1,317,262 by the end of FY 2001. Senator Raggio asked whether there was any reason the equivalent amount of transfer from Tourism could not be placed into this budget. Mr. Comeaux replied that at the time the budgets were compiled there was some concern about the level of Tourism’s reserve. Mr. Guernsey noted the tourism commission budget will have a number of adjustments to it once all of the statewide cost allocations, the attorney general’s cost allocation, and the Department of Information Technology cost allocation are applied to it.

Senator Raggio remarked there is projected to be a considerable amount in the Tourism budget balance. Mr. Guernsey replied that is correct. He noted that the budget packet contained information the committee had requested in reference to the photo collection of the Nevada Historical Society. He commented that the historical society took the projections referenced by Senator Raggio as a opportunity to submit a request totaling over $1.5 million including staff and equipment. Mr. Guernsey said the first page of the budget request contains two items which may have some merit. He said the first item is a custom flat-storage case for large panoramic photos at a cost of $10,000. The second item is an explosion-proof freezer for $4,000. He said these two items, which total $14,000, appear to have some merit.

Senator Raggio asked whether it is prudent to approve money for this budget now and reduce the General Fund, or wait until the budget for the Commission on Tourism is closed. Mr. Guernsey replied that the committee normally waits until after the Tourism budget closes. Senator Raggio said, "Let’s make a note, because if there is some opportunity to replace some general funds in these budgets, after we deal with Tourism we should do that."

Nevada State Railroad Museum – Budget Page MLA-20 (Volume 1)

Budget Account 101-4216

Bob Guernsey, Principal Deputy Fiscal Analyst, said that there was only one adjustment recommended for this budget request. Mr. Guernsey noted that the Department of Personnel has approved the position upgrade of a Custodial Worker to Garage Service Worker, a grade 20 to a grade 23. He explained that the adjustments to reflect the increase in pay have been made.

Museum & Historical Society-LV – Budget Page MLA-25 (Volume 1)

Budget Account 101-2943

Mr. Guernsey said staff recommended no adjustments to this budget. He noted this budget was subject to quite a bit of scrutiny during the last biennium because of its location and the operation of the facility. He said the agency submitted a budget request which included 6 new positions. Mr. Guernsey said the agency was asked to trim back the request and possibly phase in the new positions requested. He commented the request came back from the agency with the indication it was an "all or nothing" request. He said the positions were not recommended in The Executive Budget. Mr. Guernsey commented that only the normal inflation increases were included in The Executive Budget. He suggested the budget be closed as recommended by the Governor and commented the budget may be reviewed at some point in the future, if there are additional revenues and there is a desire by the committee to do so.

Senator Raggio called attention to the agency performance indicator which projected visitors of 35,000 and 40,000 respectively during each year of the biennium. Senator Rawson recommended that the budget be closed as recommended by the Governor but that the committee revisit the request for additional positions and building modifications if additional money is identified before the end of the legislative session.

Lost City Museum – Budget Page MLA-29 (Volume 1)

Budget Account 101-1350

Mr. Guernsey noted there was no significant growth in this budget request.

Comstock Historic District – Budget Page MLA-33 (Volume 1)

Budget Account 101-5030

Mr. Guernsey said staff recommends consideration of two adjustments to this budget. He noted the budget has been extremely tight in the past and he has now been notified of an increase in the utility costs for water. Senator Raggio noted the request was to increase the utility costs by $280 for each year of the biennium. Mr. Guernsey replied that is correct. He mentioned that the Budget Division normally applies a "frozen merit" for certain classes in state government. He noted that because this budget only contains 1.5 full-time positions, freezing the merit pay increase for the clerical position will place the budget in a deficit position. He indicated that he and the Budget Division both agree the clerical position should be unfrozen and the additional funding for the pay increase for the clerical position allowed to be added to the budget request. Senator Raggio noted this would add to the budget request $909 in the first year of the biennium and $1,475 in the second year.

State Historic Preservation – Budget Page MLA-36 (Volume 1)

Budget Account 101-4205

Mr. Guernsey said staff recommends a transfer of Commission on Tourism funds for the Historical Marker Program. He noted the tourism commission has historically supported the Historical Marker Program with funding. He pointed out that historical markers are recommended for funding at $29,950, $19,950 from the Nevada Department of Transportation and $10,000 from the Commission on Tourism. He noted that the Commission on Tourism funds would replace general funds.

Senator Raggio commented that this has been a good program and noted that in FY 1998, 47 historical markers were rehabilitated.

Senator Raggio adjourned the meeting at 11:07 a.m.

RESPECTFULLY SUBMITTED:

Millard Clark

Committee Secretary

APPROVED BY:

Senator William J. Raggio, Chairman

DATE: