The Joint Subcommittee on Human Resources/K12 of the Senate Committee on Finance and the Assembly Committee on Ways and Means was called to order by Chairman Raymond D. Rawson, at 8:15 a.m., on Thursday, March 25, 1999, in Room 3137 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 Raymond D. Rawson, Chairman

Senator Bob Coffin

Senator Bernice Mathews

SENATE COMMITTEE MEMBERS ABSENT:

Senator William J. Raggio (Excused)

ASSEMBLY COMMITTEE MEMBERS PRESENT:

Ms. Jan Evans, Chairman

Mr. Joseph E. Dini, Jr.

Mr. David E. Goldwater

Mr. Lynn Hettrick

Mr. David Parks

STAFF MEMBERS PRESENT:

Barbara Moss, Committee Secretary

Senator Bill R. O'Donnell, Clark County Senatorial District No. 5

OTHERS PRESENT:

Senator Rawson opened the hearing on the first State Department of Education budget.

STATE DEPARTMENT OF EDUCATION

Mary L. Peterson, Superintendent of Public Instruction, State Department of Education, indicated she would present budget accounts 2673, 2697, 2720, 2605, 2678, and 2705. She distributed a set of handouts designed to provide background information on the Commission on Educational Technology and the Council to Establish Academic Standards for Public Schools (Exhibit C).

Asked whether it would be possible to consolidate the cultural diversity and American Indian education positions, Ms. Peterson answered the two positions are making a difference and have ambitious work programs for things yet to be accomplished. She explained the two positions tie in well with education reform efforts to raise standards for all students due to the fact that minority students are experiencing difficulty with the high school proficiency examination. Ms. Peterson said the function of the two consultants is to assist the minority population in meeting the higher standards. She noted that although the two positions are important, an attempt will be made to combine them should funding not be available.

Senator Rawson commented that although the evaluation enumerated and described the programs, none were started, defined, or recommended. Ms. Peterson pointed out effective programs have been identified, placed in the directory, and distributed to school districts to help them identify and implement programs for American Indian students. She mentioned pilot programs for dropout prevention have begun, particularly for Native American students. Ms. Peterson indicated the two programs have been initiated in an effort to stem the tide of low performance and high dropout rates among minority students.

Douglas C. Thunder, Deputy Superintendent for Administrative and Fiscal Services, State Department of Education, referring to 2.75 full-time equivalent positions (FTEs) involved in the two programs, clarified .25 of that number was dedicated to supporting the science consultant; therefore, the number of FTEs related to the two programs was actually 2.5.

Senator Rawson requested an explanation of the Early Childhood Consultant position’s responsibilities and opined there will be changing support from the state in regard to the position. He asked for a definition of the federally funded Even Start Program position. In response, Ms. Peterson explained the primary purpose of the federally funded Even Start Program is to provide high-quality early childhood education to low income children. She mentioned two other elements of the Even Start Program: (1) a parent education component whereby the parent(s) is enrolled in a general equivalency diploma (GED) or adult high school diploma program, and (2) education to teach parents effective parenting skills. Ms. Peterson noted the three-part program received federal funds. She said that in the last biennium, $828,000 a year was available from state funds and was used to expand the program to nine additional projects in the state. Without state funding the projects will not continue because federal dollars are not anticipated to increase, Ms. Peterson remarked.

Senator Rawson reflected approximately $10,000 a year has been spent on the Even Start Program. He pointed out that although early childhood programs are important, they are "very pricey." He emphasized budgets must be carefully reviewed to determine the best way to use available federal funds.

Ms. Peterson indicated the expense is exorbitant at the beginning of the Even Start Program because it includes start-up costs of the initial investment for various projects. She emphasized the cost is less per pupil the longer projects endure.

Ms. Evans indicated the Even Start Program was one of several impacting the proposed budget. She asked whether the State Department of Education has perused the numbers to perhaps rework the budget with an understanding that continuation of the level of funding would not be possible. Asked the requirements to continue the Even Start Program using state dollars to match federal funding, Ms. Peterson answered federal funding is $565,400 a year and a state match of about that amount would help retain the program. She indicated some of the projects would be cut back because of a net loss of approximately $300,000. Queried whether a state match was required to receive federal funding, Ms. Peterson answered no. She explained the state has made a considerable initial investment in the Even Start Program of $1.6 million over the last biennium.

Jeanne L. Botts, Senior Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau (LCB), called attention to a report the U.S. Department of Education sent to the State Department of Education explaining the Nevada state-funded Even Start Program, as well as information on federal funding (Exhibit D). She indicated page 3 of Exhibit D listed the programs for the Nevada Even Start Family Literacy Program for state-funded projects.

Referring to the Library Consultant position, Senator Rawson indicated no training was provided to local schools for a year and speculated an overlap position had been created. Ms. Peterson explained the person in the Library Consultant position left the department February 1998 for a 1-year leave of absence. She said the position was filled on a temporary basis in August 1998 and it took time for the person to get "up to speed." Ms. Peterson indicated the person who originally held that position will not return and the department is in the process of making the temporary employee permanent. She noted the first order of business for the position was to ensure the textbook list was accurate and operational, and efforts have been focused upon that task. Ms. Peterson said the training will take place now that the person in the Library Consultant position has permanent status.

Senator Rawson reflected that although a person cannot be dismissed because he or she takes a leave of absence, a critical position should not be allowed to be vacant for that length of time. Ms. Peterson noted it was difficult to find a person to fill the qualifications of the Library Consultant, but the department is pleased with the new person in the position. She indicated it is difficult to fill a wide variety of positions because school districts pay more for similar positions. Senator Rawson lamented the problem exists throughout the state.

Pointing out The Executive Budget does not include funding for the Commission on Educational Technology, Senator Rawson said a great deal of effort had gone into the commission and he did not want it discontinued. He requested a breakdown of the commission’s estimated travel and per diem expenses for the next biennium. Referring to page 1 of Exhibit C, entitled "E-231 Commission on Educational Technology," Ms. Peterson said it was submitted as part of budget account 2673 in the department’s original budget submission in August 1998. She explained ongoing clerical support is provided for the commission, including travel to the meetings and so forth. She said the total included in the original budget request was $46,898 in the first year of the biennium and $42,313 in the second. She indicated the worksheets itemize each of the projected expenditures for ongoing support of the commission.

Senator Rawson declared the requested funding will not be provided, but a minimal level might be achieved. He suggested examining part-time positions used in the past to determine what that level would need to be to provide support for the commission.

Ms. Peterson expressed her understanding of Senator Rawson’s request to reduce the cost and asked for guidance from the staff on the level of reduction. Senator Rawson indicated most agencies’ out-of-state travel has been restricted and suggested the department scrutinize that particular area. He noted a letter of intent had been sent requesting the department to report all out-of-state travel quarterly. Ms. Peterson indicated the department took the letter of intent seriously and arrived at a systematic approach which is used internally and will be continued consistently.

Teacher Education and Licensing – Budget Page K12 ED-8 (Volume 1)

Budget Account 101-2705

Keith Rheault, Deputy Superintendent for Instructional, Research and Evaluative Services, State Department of Education, indicated the Commission on Professional Standards held a mandatory workshop to consider raising licensure fees. He reported reactions ranged from consternation regarding the raising of fees at the same time salaries are not increasing and health benefit costs are rising, to the suggestion to make it simple and charge $100 for initial licenses and renewals. Dr. Rheault expressed a desire to hold a onetime public hearing; however, he said, the commission wants to hold two public hearings to address the proposed fee increase. He noted the next commission meeting will be May 6, 1999, and the meetings are usually held every 6 weeks.

Dr. Rheault pointed out a problem develops when people are notified of a fee increase subsequent to submitting their payments. He explained applications are sent out all year to be returned in 3 or 4 months with the payment. He indicated the staff will now return the applications with a request for the additional $15 fee increase and hope the teachers will comply.

Dr. Rheault indicated he informed the commission there was no other budget being considered, nor any other proposals to "kick in" any more state appropriations, and therefore, the fees are necessary. He said his assumptions when calculating how much revenue would be generated for FY 2000 were based on the fee increase becoming effective July 1, 1999. He predicted the first year will be fine; however, the critical question will be how much reserve can be carried over into 2001. He noted expenses are approximately $55,000 to $60,000 a month, including salaries, printing, postage, and telephone. Dr. Rheault declared there should be a month and a half of funds in reserve while revenues come in. He stated if the budget is accurate as projected and the fees come in, there should be $103,000 in reserve in FY 2000, which would be appropriate. He pointed out he has no control over whether or not the revenue increase will become effective July 1, 1999. Should it not occur, some unspent funds might be carried forward into FY 2000. Dr. Rheault speculated he would not, in that event, approach the IFC in 2001 to request further funding.

Senator Rawson reflected the fee increase is an unfortunate complication of "a tough budget year." He said there should be no vacillation on the issue and the date the fee increase will become effective should be decided. Dr. Rheault reported a compilation of license fees for 50 states shows Nevada in the top quarter; however, Nevada’s fee is not the highest. He pointed out Connecticut charges a fee of $200 a year for license and renewal. He said the amount of the fees depends upon the philosophy of the state in regard to whether or not the licensure process is subsidized. Dr. Rheault said some states do not charge anything for license renewals and others charge from $25 to $40 per license. Dr. Rheault indicated states that have "gone to commission," such as Nevada, Wyoming, and Alaska, are either semiautonomous, control the licensure, or are self-supporting, and their fees range from $125 to $150.

In response, Senator Rawson stated the general policy in Nevada has been that licensure boards should be self-supporting. He pointed out they are subsidized from time to time and mentioned a small amount for state General Fund money was budgeted should it be necessary in the second year to approach the Interim Finance Committee for an allocation from the IFC Contingency Fund. The idea of building a reserve to depend upon is a good one, Senator Rawson remarked.

Responding to Senator Rawson’s request, Dr. Rheault indicated he would provide the committee a copy of the information regarding licensure in other states.

Proficiency Testing – Budget Page K12 ED-21 (Volume 1)

Budget Account 101-2679

Mr. Thunder indicated that when the State Department of Education’s expenses were projected for the current year, this budget account produced many challenges. He noted approximately $37,000 was received in a contingency fund early in the year. He pointed out the bill from CTB/McGraw-Hill for the TerraNova test for grades 4, 8, and 10 was approximately $51,000 higher than the department’s budgetary authority, but he said the department was expecting this. Although it appears the amount is higher than contracted, Mr. Thunder explained, CTB/McGraw-Hill charged approximately $48,000 less than the department would have expected at this point in the contract’s history. He indicated a work program is being prepared to meet the shortfall by transferring money from other categories in the budget account.

Mr. Thunder noted another difficult area is the statewide writing test. He said the department knew funding would be lacking for that area and perused other budget accounts in regard to the problem. At the present time, it appears the budget has a deficit of about $15,000; however, one of the federal programs will assume the shortfall, Mr. Thunder reported. He indicated that with those two actions in mind, the State Department of Education’s budget situation should be satisfactory for FY 1999.

Asked whether the high school proficiency test was included in his report, Mr. Thunder indicated there will be a surplus in the high school proficiency test budget that will be funneled into the TerraNova test to help offset the $51,000 deficit.

Ms. Evans asked whether quotes were received from vendors to perform the high school proficiency test. In response, Ms. Peterson distributed a handout entitled "Statewide Testing in Nevada" (Exhibit E) which outlines the basic elements of the testing program in the state of Nevada, including National Assessment of Educational Progress (NAEP), norm-referenced tests, and criterion-referenced tests. Calling attention to the last table on page 1 of Exhibit E entitled Criterion Referenced Tests, Ms. Peterson indicated the table demonstrates the amount of the original request and what the Governor budgeted for the high school proficiency exam.

Continuing, Ms. Peterson said $1 million was the original estimate to contract the exam. She noted that although a request for proposal (RFP) had not been distributed, CTB/McGraw-Hill was asked for an estimate. She indicated that since the budget was submitted, another estimate has been received of about $600,000 a year to take over the high school proficiency exam. She mentioned a third option provided in earlier budget hearings was to perform high school proficiency testing in-house with additional staff.

Questioned whether the figures shown on the criterion-referenced tests had been reprojected, Ms. Peterson answered the projected cost to begin development of criterion-referenced tests at two grade levels is about $285,000 the first year of the biennium and $300,000 the second. She said this amount is expected to be sufficient to begin the program. Other states have spent considerably more over the entire course of development of criterion-referenced tests, Ms. Peterson remarked.

Ms. Evans asked the effective date that students who fail the high school proficiency test will no longer be allowed to graduate. Ms. Peterson replied the high school proficiency test has been in place since 1977 and students must earn the amount of credits required for high school graduation, in addition to passing the test. She suggested Ms. Evans’ reference was to the new test with a higher passing score. Ms. Peterson said that beginning this year, seniors must pass the new test with the slightly higher passing score to receive a diploma. She pointed out the 1997 Legislative Session gave the direction to implement and set the passing level for the more difficult high school proficiency test which first impacts high school seniors this year.

Ms. Evans clarified that students have several opportunities to pass the high school proficiency test and may begin taking the test in their junior year. Ms. Peterson said, "That is correct." Continuing, Ms. Evans asked what happens to students who do not pass the exam. Ms. Peterson indicated local school districts have a variety of approaches to the problem. She pointed out the students in the Clark County School District are provided summer school. She noted that by law, local school districts are required to provide remediation to those students, which takes a variety of forms. She said some school districts offer before- and after-school programs.

Ms. Evans requested information regarding a middle school test that must be passed before students can graduate. Ms. Peterson explained there is norm-referenced testing at the end of eighth grade using the TerraNova test. She suggested Ms. Evans’ reference was to a requirement placed into law in 1997 that students must pass a minimum number of credits at a certain grade level in math and English language arts before going on to ninth grade. Ms. Peterson said that pursuant to this law, the State Board of Education established regulations whereby students must earn the equivalent of 1 credit in math at a grade of "C" or better and 1 credit in English language arts at a grade of "C" or better during the seventh and eighth grades before going on to high school.

In conclusion, Ms. Evans asked when students will not be allowed to graduate if they do not pass the high school proficiency exam. Ms. Peterson indicated that next year the first group of students must earn 1 credit in math and English language arts and, thereafter, 1½ credits. Asked whether students who do not earn the proper amount of credits will be retained in eighth grade, Ms. Peterson answered yes.

On the high school proficiency test, Senator Coffin proclaimed the math questions are too difficult for most students, with the exception of math majors. Ms. Peterson indicated the current test is based on the course of study in place since the early 1990s. She noted the 1997 Legislative Session passed a law whereby newly developed criterion-referenced tests must be based upon the new standards and go into effect next year. She repeated that the current high school exam is based on the course of study to which students should have been exposed since the early 1990s. Ms. Peterson asserted the test does not include advanced trigonometry or calculus; however, it includes "strands" of basic geometry, algebra, and computation. She remarked that should a test be developed based on the new standards, it could be significantly more difficult than the current test, with which students are presently experiencing problems.

Asked whether the situation is fair to students who began in 1996 and will graduate in 2000, Ms. Peterson answered it would not be fair. She indicated a delay until 2003 was requested for implementation of the standards-based test for high school seniors. She declared the delay would give students advance notice and the opportunity to learn the higher standards.

Senator Rawson commented students cannot be held to a standard until they have been taught to that standard. Asked the top priority of the State Department of Education, Ms. Peterson answered it is to ensure the high school proficiency exam is on sound footing, which is the reason the ability to contract with an outside vendor is imperative. She said assurance is needed that students receive the results of their tests promptly and that there are a variety of forms for the test.

Further, Ms. Peterson said the second priority is the criterion-referenced tests recommended by the Council to Establish Academic Standards for Public Schools for grades 3 and 5. Asked whether old exams would be released to the public, Ms. Peterson responded this would be appropriate. However, resources would be required to assure there would be a new form of the test every time it is administered. Therefore, as soon as the form is administered it would be released and there would be totally new questions on the next form, Ms. Peterson remarked.

Senator Coffin suggested that although students are taught for 4 years prior to taking the test they will ultimately be required to pass, it is questionable whether all students have the intelligence needed to pass the courses that will theoretically allow them to pass the test. Ms. Peterson indicated the standards are for all students under the direction of the Nevada Education Reform Act. She said the importance of remediation cannot be overstated. She emphasized there must be assurance that all students have the opportunity to learn the standards, and some will require more time than others; consequently, some students may require an extended year. Senator Coffin reflected it is also a question of intelligence.

William Hanlon, State Board of Education and State Board for Occupational Education, Las Vegas, District 2, State Department of Education, indicated Senator Coffin’s point was well-taken. It was Mr. Hanlon’s professional opinion that although standards are written for all students, not all students will be able to pass the high school proficiency test. He called attention to a misunderstanding in the community that students learn when they are taught. Using the analogy of a baseball coach working with his team, Mr. Hanlon said players are taught to bat by being shown the fundamentals of batting and the coach’s desire to send them to the plate to get a hit. He asserted that no matter how much time is spent teaching some players to bat, when these players go to the plate they strike out. Mr. Hanlon declared this also applies in education. Classroom teachers teach to all students with the expectation they will learn; however, when they come to the plate, or take the test, there will be some who will not be able to hit the ball, or pass the test, Mr. Hanlon asserted.

Further, Mr. Hanlon indicated, there will be high failure rates with special education students, "low stanine" students, and English language learners. He said the very poorest in the communities are failing the current test at a rate of 75 percent, which is clearly unacceptable. Mr. Hanlon commented the existence of an algebra standard in some states leads people in those states to believe a higher achievement level will be attained. He referred to Alabama, where for a number of years algebra and geometry were required in order to graduate. Mr. Hanlon pointed out he has never seen Alabama at the top in terms of high school graduation.

Mr. Hanlon inquired, "What is the accepted casualty rate?" He projected that in 1999, 10 percent of current seniors in high school will not earn a diploma based on the current test. He indicated the state of Nevada, according to the National Center for Education Statistics, graduates only about 81 percent of its students. He said if another 10 percent of students fail who would normally graduate, the statistic will drop below 80 percent. Mr. Hanlon emphasized 1999 is not the "crisis year" and stated that next year, when polynomial factoring, trigonometry, quadratic equations, and systems of equations are presented, the problem will be better known. He commented the reason the problem is not widely acknowledged is that the failure rate of the test affects the poorest students whose parents will not realize they will not graduate until the day before graduation, which will result in about 2,000 telephone calls to the school.

Ms. Botts pointed out the more difficult subject matter will not necessarily come into next year’s test. She said there will be a problem next year because the passing score was raised on the current test built on the framework adopted by the State Board of Education in 1994. It was Ms. Botts’ understanding the State Department of Education and the State Board of Education are gradually phasing the new standards into the high school exam; however, the more difficult subject matter will not necessarily be on next year’s test, which is the intention of the Nevada Education Reform Act.

In response, Mr. Hanlon indicated the law reads the standards will be implemented and tested in the next school year. Ms. Botts pointed out the issue came up in a Legislative Committee on Education meeting where the staff was requested to obtain a legal opinion. She explained the intent was to have two separate testing programs: one was the proficiency testing program with the TerraNova test for grades 4, 8, and 10, and the other was the current, improved and more difficult high school proficiency test that had a moderate, and next year an increased, passing score. Ms. Botts stated the second test was the criterion-referenced test built on the standards, which was a separate testing program that will commence next biennium because the funds were frozen in the current biennium. She indicated the Council to Establish Academic Standards for Public Schools recommended the test begin in grades 3 and 5. Ms. Botts said there will be a problem if the higher standards are not put into the high school exam at some point; however, they will be phased in gradually and will not "hit" next year.

Ms. Peterson agreed with Ms. Botts’ interpretation and requested it in writing. She expressed the belief the actual language of the law, as Mr. Hanlon indicated, states the new standards will be implemented and tested in schools next year. Ms. Botts stated she would provide the interpretation in writing.

Asked whether the Legislative Committee on Education considered the fact the stanines of intelligence cannot be altered, Ms. Botts indicated both the Legislative Committee on Education and the Council to Establish Academic Standards for Public Schools considered the issue. She said that when the question was asked of a spokesperson for the State of Virginia Department of Education, the reply was: "Children have fallen through the cracks before and they are falling through the cracks now, but they are better because they attempted to reach higher standards and benefited by more challenging instruction and programs." Ms. Botts declared states that preceded Nevada in this action noticed high failure rates in the first year or two; however, after remediation and the realization the quest for higher standards was serious, children performed better.

Questioned whether another tack could be taken for students who, even after remediation, do not have the intelligence to go further with the more difficult courses, Ms. Botts indicated the entities did not discuss that particular issue.

Asked what was done to remediate students other than test them one more time, Ms. Peterson indicated students have five opportunities to pass the high school proficiency exam.

In response, Senator Mathews stated she is not a baseball player, but she is a good tennis player. She suggested the analogy of the batter missing the ball every time does not necessarily mean the batter failed¾ it just means the baseball player may need to try tennis instead. She reflected upon the fact that everyone has the right to fail; however, everyone also has the right to succeed. She emphasized the Legislature must do everything possible to help students succeed. Senator Mathews asserted the Legislature has an obligation to make sure students have every opportunity to pass and voiced the opinion that just retesting them is not the answer.

Mr. Hanlon indicated that although remediation funds were made available by the state for the schools that scored low on fourth, eighth, and tenth grade tests, no such funds are available for the high school proficiency test. Therefore, individual districts were required to fund their own remediation. Mr. Hanlon said an added difficulty in Clark County is busing. He indicated some students arrive on the bus two minutes before school starts and depart on the bus two minutes after school ends, which makes it difficult for remediation to be done during the school day. He said that typically the children who cannot afford summer school, or transportation to summer school, are the ones who need it most. It was his understanding the Clark County School District and others are attempting to provide additional classes ("early bird and late bird"), but he noted that many children in Clark County are unable to attend additional classes due to the demographic makeup. Mr. Hanlon pointed out credits may be in jeopardy when a student is removed from regular classes to attend remedial programs. He expressed discomfort with the fact the state does not provide mandatory summer school.

Senator Rawson pointed out a major portion of $8 million in Estate Tax revenue is allocated for remediation in the proposed budget. In addition, all areas where remediation money is available are "divided out" and enumerated. The senator said it appears millions of dollars will go towards remediation in the coming budget. Senator Raggio indicated all the points regarding remediation are well-taken.

Education Support Services – Budget Page K12 ED-35 (Volume 1)

Budget Account 101-2720

Asked whether reserves had been estimated, Mr. Thunder answered reserves would not be based upon initial projections for this year. He indicated the reserve could be less than $20,000; however, depending on how all other budget accounts perform, it could be as much as $100,000. He pointed out the reserve fluctuates from year to year, depending on how many programs are added with administrative costs against which indirect costs are assessed. He voiced the belief the reserve in FY 1999 should be satisfactory. Mr. Thunder said the budget was built without indirect cost reserves going into the next year, and therefore, anything carried into FY 2000 will be a "plus."

Continuing, Mr. Thunder indicated that about a year ago, the reserve was substantial and was used for increased rental charges when the Las Vegas office was augmented, as well as for 2.5 added positions that were previously funded from other budget accounts. The combination of those factors resulted in a reduction in the reserve, Mr. Thunder remarked.

Senator Rawson mentioned the addition of a Management Analyst III to take over some audit functions. Ms. Peterson indicated decision unit E-129 on page 8 of Exhibit C describes the position as management analyst and support staff, and page 9 of Exhibit C shows a breakdown of the cost. She called attention to page 10 of Exhibit C which contains a document entitled "Status of Internal Control Recommendations," an analysis of the State Department of Education’s internal controls.

Asked whether the requested position is of a high enough level to institute internal controls, Mr. Thunder declared the position will fit with the various other positions within the budget account and the structure of the department. Asked to whom the position would report, Mr. Thunder answered it would report to him.

Drug Abuse Education – Budget Page K12 ED-48

Budget Account 101-2605

Dr. Rheault said the last estimates provided by the U.S. Department of Education demonstrated federal revenues for the account would be down. He noted that instead of $2,073,000 in the Governor’s recommended budget, Nevada will qualify for $1,721,000, which is a reduction of about $300,000. He indicated the reduction occurred because the federal government chose to retain 30 percent of the total funds in drug education to obtain competitive bids. Dr. Rheault pointed out Nevada can still apply for competitive money, but there is no guarantee of success. He said that with the reduction of federal funding, the budget account is authorized to expend 4 percent of the grant for administrative services and 5 percent for technical assistance, which amounts to 9 percent of the total grant.

Dr. Rheault said an increase of a .5 FTE position was requested, but because of the reduction in federal funding, it will not be funded at that level. He indicated authority for a .75 FTE position is requested to be subsidized out of available funding. He noted the human immunodeficiency virus (HIV) and acquired immunodeficiency syndrome (AIDS) funding has been flat and the amount available for salaries has been decreasing. Dr. Rheault said two current HIV consultants would provide assistance in meeting requests for drug programs. He indicated the current FTE position is filled by Mike Fitzgerald, who has earned a great deal of compensatory pay and overtime in his attempt to remain abreast of the requests and needs of the state. He stated the position would alleviate some of that pressure. He said it is anticipated the requested .75 FTE position would perform the grants management component of the drug education program, as well as assist with teacher training and other programs. He noted dropout-related activity has increased and Mike Fitzgerald’s position has been "picking up the slack." That would balance out the positions, Dr. Rheault stated.

Senator Rawson requested a schedule for conducting surveys on students’ use of alcohol and drugs. Ms. Peterson indicated the survey is conducted in the spring in one fiscal year and the data is analyzed, developed into a report, and printed in the fall of the next fiscal year.

Senator Rawson called attention to "significant" discussions that took place in various committees regarding the scarcity of effective preventative alcohol and drug abuse resistance programs, and asked whether a mechanism exists to evaluate their efficiency. Ms. Peterson said that pursuant to a bill passed by the 1997 Legislative Session, an evaluation was conducted of all programs for drug abuse prevention used in the school districts. She reported an independent consultant was hired who used state information, as well as national evaluations of various programs, to produce an evaluation report that was submitted to the Legislature. Thereafter, a 1-day Safe Harbor Symposium was held in Las Vegas and Reno for all curriculum coordinators and drug abuse prevention program coordinators from the school districts. Ms. Peterson said the information regarding effective and not-so-effective programs was shared. She indicated the evaluation proved useful and was widely distributed, and symposia were provided north and south to share the information directly with people involved in the programs. Senator Rawson said the State Department of Education would be expected to take a major leadership role in that regard and expressed his appreciation for the department’s efforts.

Ms. Evans indicated she had read the evaluation and noted the widespread use of the Drug Abuse Resistance Education (DARE) program. She said she had gleaned through perusing literature from many sources, particularly in the juvenile justice community, that DARE is not considered a highly effective program. Ms. Evans declared information should be communicated throughout school districts when a program has not proven effective and emphasis should be placed on those with a better track record. Ms. Peterson said the point was raised in the symposia, both north and south. She indicated findings were consistent throughout the country that while DARE is well-intentioned and the people involved are committed, a positive impact has not been demonstrated.

Occupational Education – Budget Page K12 ED-68 (Volume 1)

Budget Account 101-2672

Senator Rawson indicated The Executive Budget recommends eliminating the Occupational Education Consultant for business education and marketing. Ms. Peterson responded Dr. Rheault provided a method to fund the position using federal dollars. Senator Rawson asked the importance of the position and emphasized federal dollars must be used in the best possible way.

Dr. Rheault indicated that within the scheme of workforce education, the position is as important as any other. He said about 200 teachers in the state teach business education, and the position would be responsible for ensuring their curricula are up to date and training is adequate. Dr. Rheault pointed out the position would also work with two youth groups affiliated with distributive education clubs and future business leaders. He noted the position would also assist in monitoring the federal Carl D. Perkins basic grants and technical preparation grants. Dr. Rheault said there are only five consultants and a team leader in the group, and the position would be utilized for monitoring, oversight, and management of grants awarded through the Carl D. Perkins act. In conclusion, he emphasized the importance of the position and asserted that funding the position is the best use of the money.

NDE School to Careers – Budget Page K12 ED-93 (Volume 1)

Budget Account 2678

Senator Rawson said The Executive Budget plans to eliminate two .50 FTEs and the full-time Assistant Director position is scheduled to end in the first year of the biennium. He requested a plan for the "phase down."

Dr. Rheault indicated Mr. Thunder provided Ms. Botts a letter dated February 3, 1999, concerning when the phase-out would take place. He said the full-time coordinator and two .50 FTE positions scheduled to be eliminated in 2000 can be funded for 1 year with federal money, reserve, and carryover of federal funds. He noted that in the second year of the biennium (FY 2001) only $42,000 will be available for administrative purposes. He said the phase-out plan would at that point include a half-time coordinator. A half-time coordinator is needed to complete federal reports, close out grants, and put everything in order before the state phases out the program, Dr. Rheault stated. He voiced the belief the half-time coordinator could accomplish the task better than the half-time Grants Analyst or the Management Assistant I. There is only enough funding for a half-time position the second year of the biennium, and the position would "sunset" at the end of 2001, Dr. Rheault remarked.

Noting out-of-state travel is maintained at approximately $10,000 but positions are decreasing, Senator Rawson asked Dr. Rheault to ascertain whether the numbers were adjusted correctly.

Ms. Evans indicated the department was previously asked to reexamine the program to find a way to maintain state support to prevent a worthy program from "turning to dust," with the understanding a $2 million appropriation would not be possible. She suggested in regard to time limitations that a method be found to distribute the remaining $8 million among the School to Careers, Even Start, and Classroom on Wheels programs and other programs that were discussed. Ms. Peterson stated the department provided information on state funding for School to Careers, and the "bare bones" cost was estimated at $1.25 million a year.

Dr. Rheault pointed out the request was brought to the State Council on School to Careers. He said the business people at the council considered the request, determined priorities for the year, and estimated $1.25 million would be required to achieve an adequate program at a reduced level. Dr. Rheault distributed a document entitled "STC Response to Legislative Question" (Exhibit F) which explained the council’s findings.

Ms. Evans indicated that sometime in the past two biennia, Ms. Peterson had provided the committee a chart demonstrating turnover in school districts, and in some cases, actual schools. She stated the results were dramatic and showed some schools experiencing 100 percent turnover, and even more than 100 percent turnover in a given year. Ms. Evans said that although the numbers were disturbing, they provided a better understanding of the difficulties faced by schools, the reason some students are struggling, and why some schools are having trouble reaching adequate standards. Asked whether the chart is updated regularly, Ms. Peterson answered turnover is part of the school district’s accountability reports and would be provided to the committee on a district-by-district basis. She agreed the results of the report were alarming and stated the most recent transiency or mobility rate is about 39 percent.

DEPARTMENT OF HUMAN RESOURCES

HR, Welfare Administration – Budget Page WELFARE-1 (Volume 2)

Budget Account 101-3228

Senator Rawson addressed the issue of the Nevada Operations Multi Automated Data Systems (NOMADS) in regard to the status of the program and what is to be done with it. He noted local areas implementing the program had not been consulted. He indicated there are problems and suggested this meeting was the appropriate vehicle to clear the air.

Richard Gammick, District Attorney (DA), Washoe County, stated his intention to discuss NOMADS. He emphasized his purpose was not to find fault or point fingers, but to discuss the issue from the county perspective and call attention to serious concerns with the program as it stands today. Mr. Gammick indicated the concept of NOMADS is tremendous and places all the counties and the state in a position to have a computer system which provides information that assists with their obligations and expands their horizons. He said that unfortunately, the system to put NOMADS into place is not working and there are concerns about its future.

Mr. Gammick mentioned the concept was proposed about 12 years ago. He said the system was put into place June 16, 1998, which was the first time staff members from DA offices in Clark County, Douglas County, and other counties discussed policies and implementation with the people who run NOMADS. Mr. Gammick said "a lot of wheels" were already in place by that time and the program was written. He voiced concern that the program is written in "CSP," which is an offshoot of the COBOL (common business-oriented language) computer programming language, a 30-year-old technology "related to the brontosaurus." Mr.  Gammick explained the program contains 12 million lines of code and is very inflexible.

Continuing, Mr. Gammick indicated each county uses approximately 500 to 700 forms, which are defined as letters, stipulations, court orders, and letters sent to custodial parents. He pointed out the forms are used daily and, for the most part, are unique to a case, particularly in regard to stipulations and orders. Mr. Gammick pointed out NOMADS will only allow 177 of the 700 forms to be put into the system and will not allow them to be changed or customized; consequently, the forms must be standardized, which does not work in the legal system. He indicated Washoe County performed a pilot project wherein the forms were run through NOMADS. The results showed that only one standardized form out of the 177 forms could be used. Mr. Gammick declared another meeting was held with the NOMADS people and work was begun on an alternative solution which resulted in a link between NOMADS and the modern computer system. He said that currently all 700 forms can be accessed and customized to a particular case and the system can communicate with NOMADS.

Mr. Gammick reiterated the biggest problem is the antiquity of the system. He asserted the system is very inflexible. He said the counties and state work off the legacy system, which does not meet the requirements of NOMADS and requires additional information. He indicated every case must be audited before it can be input into NOMADS. After approaching the problem from every direction, Mr. Gammick continued, it was determined in January 1999 the conversion process to NOMADS would require 4 hours per case. He reported Washoe County has 17,000 cases that require auditing, Clark County has 80,000, and the rural counties have a proportionate number. He estimated it will take 3 years to audit all the cases and input them into NOMADS. Mr. Gammick said the estimate was based upon the premise that services provided custodial parents will not be sacrificed. He noted Clark and Washoe Counties set records on the amount collected for child support in 1998. He stated Washoe County collected $20 million and Clark County collected $36 million. This means $56 million was collected between the two counties for child support, something that had never before been done in Nevada, Mr. Gammick pointed out.

Mr. Gammick expounded that in the Washoe County DA’s office caseworkers and clerks have been mandated to work 10-hour days, which is 10 hours a week overtime per person. He indicated that 2 months ago $300,000 was allocated from the Washoe County Board of Commissioners from contingency funds to cover overtime and equipment for NOMADS. Mr. Gammick said he requested $540,000 for overtime wages in the present budget. He mentioned that after conferring with Mike Davidson, Assistant DA, Clark County, who oversees NOMADS in Clark County, he learned Clark County is in the same position as Washoe County.

Mr. Gammick remarked that one-third of the caseworkers in the Washoe County DA’s office have 1 year or less of experience. He said the DA’s office considered bringing in outside help and/or other support staff to assist; however, because of their complexity the cases must be audited by a caseworker. Mr. Gammick noted the Washoe County DA’s office has 18 people who must keep up with their current caseload as well as audit cases for NOMADS. He indicated five people work full-time on NOMADS and struggle to keep up with the remainder of their caseloads.

Mr. Gammick said 12 computer screens are used to input information into NOMADS. He explained information is input on screen 1, then on screen 2, then on screen 3, 4, 5, and so forth. Should an error occur in screen 1, NOMADS will not allow the system to back up to correct the error. Further, Mr. Gammick said, if there is an error or inconsistency in screen 7, for example, that does not jibe with what is on screen 1, the information is "dumped" and the process must begin again. He emphasized there is no way to back up and correct errors in the NOMADS system.

Mr. Gammick stated that during the pilot project over 400 cases were entered into NOMADS. He said the pilot project failed due to problems with forms and printing, and in addition, NOMADS dumped the 400 cases that had been entered. Mr. Gammick asserted the entire pilot project was a waste of time.

Mr. Gammick indicated the Washoe County DA’s office submitted, in January 1996, an estimate of 2-3 years to become operational on NOMADS to a steering committee set up by Myla Florence. He pointed out the Washoe County DA’s office is losing employees because of the overwhelming workload. He said a report was sent January 29, 1999, to the federal government setting a completion date for the entire state to be operative on NOMADS in less than 1 year. He voiced concern about the state’s credibility with the federal government, noting that the Washoe County DA’s office, because of the work still to be accomplished on the current program, never indicated it could be operational in 1 year.

Mr. Gammick declared the federal government has begun to impose penalties and the state agreed to absorb the first one this year. He indicated the second penalty is due soon and will reduce the reimbursement to the Washoe County DA’s office. He said the Washoe County DA’s office currently receives a 66 percent "pass through" from the federal government through the state for reimbursement on family support. He noted the next set of penalties will reduce the reimbursement to 54 percent, which is a $367,000 loss to Washoe County, considerably more to Clark County, and a proportionate amount to the counties. Mr. Gammick said he is unsure how much longer the Washoe County Board of Commissioners will support NOMADS. He lamented if the commission does not come forward with $367,000 plus the $300,000 taken out of the contingency fund, and the $540,000 requested in the budget for overtime next year is not funded, custodial parents will be impacted. Based upon what happens in the Legislature and the federal reimbursement program, custodial parents and their children will ultimately pay the price, Mr. Gammick remarked.

Expounding on the message he wished to convey, Mr. Gammick emphasized the counties are working diligently to accomplish the goal of becoming operational on NOMADS. He expressed apprehension that should more requirements be introduced the Washoe County DA’s office will lose more caseworkers. Mr. Gammick pointed out it takes approximately 1 year of actual experience for a caseworker to become proficient.

Mr. Gammick indicated the contract for the program with International Business Machines (IBM) will expire June 30, 1999, and he understood the state would inherit operation of the system July 1, 1999. He called attention to the fact that programmers are not available to maintain CSP and noted IBM had been unsuccessful in its attempt to recruit 75 CSP programmers in a nationwide search. Consequently, even if funds are set aside for maintenance of the program and DoIT is ready to transition, there is doubt whether programmers with the correct expertise will be found, Mr. Gammick exclaimed. He mentioned there are currently 591 items with the program that require fixing and he was unaware when they would be dealt with or what kinds of problems would be caused if they are not fixed.

Scott Doyle, District Attorney, Douglas County, indicated that from the perspective of the rural counties, NOMADS is designed to work on "a functionality-type concept." He explained that rather than a caseworker handling a case from cradle to grave and being involved in all aspects of it, which is the traditional mode most jurisdictions work under in the existing Advance Data System (ADS) or legacy system, NOMADS works best when the caseworker is only responsible for one of the areas of activity in child support enforcement. Mr. Doyle pointed out NOMADS is an incredibly complex system and instructions, commands, and procedures for each area of enforcement are difficult for the user to learn and apply timely and effectively in the workplace. He said this is best evidenced by the fact the instructions contained in the task guide for NOMADS are a three-volume set comprising 900 pages of detailed commands for the user to navigate through the system. Mr. Doyle indicated a caseworker must be "specialized" to be effective in NOMADS.

Mr. Doyle said that after working with NOMADS for a period of 6 months, he concluded that the staff of four caseworkers handling the Douglas County portfolio of child support enforcement files would have to increase to a staff of eight in order to handle NOMADS. He declared Douglas County and the state cannot afford this level of expenditures. Mr. Doyle indicated the only way to permit rural counties to work in a functionality-type mode, in which the caseworker specializes in one facet of the file, would be to regionalize and consolidate rural county child support offices rather than operate them on a county-by-county basis.

Referring to page 6 of a memorandum sent to Senator Rawson regarding the NOMADS program (Exhibit G), Mr. Doyle indicated a recommendation was made to set up one region composed of 15 counties outside of Clark and Washoe Counties, to be administered by the state. He said there would be difficulty in structuring interlocal agreements between the 15 counties and the state. Logistical problems would require determination of the manner in which people would work at the regional office and whether they would physically come to the office or work at home electronically. Mr. Doyle speculated the rural counties will fail if problems are not solved and they are unable to work on their existing portfolios in a functionality mode on NOMADS.

Mr. Doyle indicated the second recommendation on page 6 of Exhibit G must be decided by the state. He wondered whether the state will "stay the course" with the development and implementation of NOMADS, or substantially change the course of action and consider developing another system that perhaps may have a higher rate of success and is less complex to operate. Mr. Doyle asserted it was a difficult decision and, unfortunately, he could offer no suggestions.

Continuing, Mr. Doyle stated the third recommendation on page 6 of Exhibit G deals with short-term financial recommendations and budgeting for the next biennium. He indicated the subcommittee was asked to find funds within the state budget and appropriate them to pay the penalties that will be incurred as a result of not meeting federal mandates in a timely fashion, and appropriate payment for penalties for the next biennium. Mr. Doyle maintained the issue is more than just fairness, it is one of effective child support enforcement at the local level.

Mr. Doyle noted Douglas County completed its tentative budget hearings a week before being informed by the state it must shoulder $44,000 in penalties and share the information supplied to it by the state for FY 1999-2000. He said the final budget hearing of the Douglas County Board of Commissioners will consider what must be done to balance the General Fund budget this year. He speculated that in order to meet the $44,000 "hit" in intergovernmental revenue the county might consider reducing the child support enforcement complement in the Douglas County DA’s office by one caseworker and a part-time clerk. Mr. Doyle pointed out it will be the only way to meet the budget except to spend some limited reserves earmarked to complete Year 2000 compliance (Y2K) for the existing child support enforcement computer system and ADS, as well as the countywide data processing system. He said the DAs office must choose which obligation to respect in view of the "tight condition" of Douglas County’s general fund. Mr. Doyle stated if the casework staff is reduced, the whole process will be "turned on its head" from a policy standpoint.

Mr. Doyle said the reason for the federal mandate to have standardized computer systems was to make local jurisdictions more effective and efficient in collecting child support obligations. He emphasized that should the state lose sight of this fact and focus solely on implementation of NOMADS at the expense of existing enforcement, custodial parents and children who are the beneficiaries of the program will be adversely affected. The issue of penalties and the funding of them transcends fairness and goes straight to the heart and reason for the program, Mr. Doyle remarked.

In conclusion, Mr. Doyle indicated the subcommittee must seriously consider appropriating sufficient funds to make sure the existing "punch list" of system deficiencies is corrected as expeditiously as possible. Saying he would not pretend to be an expert on budgets, Mr. Doyle said it was his understanding a recommended appropriation to the contractor of several million dollars in the first year of the next biennium would convert to approximately 70,000 hours of vendor time to correct deficiencies in the system. He expressed concern that many of the deficiencies on the punch list were discovered in the fall of 1998 as the state and counties commenced loading files on the system.

Mr. Doyle stated that having been in state service previously himself he understands the timeline in which state agencies are required to submit their budgets to the Governor and, in turn, have them tendered by the Governor to the Legislature for its consideration. He wondered whether the 70,000-hour figure had been reconsidered in light of the actual experience last fall. He asked, moreover, whether the 591 items on the punch list had been considered, evaluated, time-framed, and prioritized, and speculated that based on the discussion by the steering committee, the answer would be "only partially" on all counts. Mr. Doyle said the state may not be aware of what is needed in the actual system in light of the experience that has transpired over the past two calendar quarters. He indicated technology difficulties are a subject for another forum, but asserted the technological and managerial problems drive the financial decisions in this particular case.

Mr. Gammick acknowledged that should the counties be forced to bear the penalties, and the county boards of commissioners are not in a position to provide assistance, the counties will be in deep trouble. He mentioned the Washoe County Board of Commissioners had been supportive of everything relating to NOMADS; however, there is fiscal concern about how far they can go. Mr. Gammick indicated penalty payments will be reimbursed 90 percent if certification is successful. He noted Washoe and Clark Counties are continually working together to decrease the amount of time needed to become operational on NOMADS. Mr. Gammick stated the counties are committed to converting their case files to the federal requirements.

Further, Mr. Gammick indicated, 4 years ago the Washoe County DA’s office was on a very bad computer system in the area of family support. He pointed out that in 4 years’ time the system was upgraded to a Pentium-based system, with file servers in the family support division on new technology (NT) and recently installed Pentium II 400s in the division. Mr. Gammick said Washoe County offered to Clark County some computers that were being replaced; however, the Clark County Board of Commissioners gave the family support division in the Clark County DA’s office $1 million to purchase new computers and file servers in order to get on a modern system. He indicated Douglas County realized its computer system was not compatible and obtained a modern PC-based computer system.

Mr. Gammick pondered whether a modern computer system that would serve the purpose for the time the technology remains valid could be installed in a shorter period of time. He said conversion of the child enforcement files should continue because the task must be accomplished in any event. In addition, Mr. Gammick suggested a firm proven to be successful in PC-based modern technology be hired to study the program and inform the state what would be required to install a modern system into which the files would be "dumped." He said it would be money well-spent. He reiterated that even if NOMADS certification is successful, major problems will still be faced "going down the road."

Mr. Gammick called attention to another problem¾ the old ES-9000 state mainframe computer¾ which, he pointed out, "crashes" twice a day. He indicated DoIT and its director, Marlene Lockard, worked on file transfer but experienced financial difficulties, as well as NOMADS/ES-9000 compatibility problems. Mr. Gammick declared the Washoe County DA’s computer system shuts down when the ES-9000 malfunctions because the required material cannot be retrieved. The problem contributes to the delay in converting the files within 2 years or less, Mr. Gammick remarked.

Concluding his remarks, Mr. Gammick declared he could not in all good conscience recommend NOMADS funding be continued. He emphasized the penalties must be removed from the counties to prevent an adverse effect on services to custodial parents. Mr. Gammick indicated 38 states are certified to 1988 standards; however, he was unaware of a single state certified under the Welfare Reform Act and other federal programs. He asserted the state should consider other options in order to remove the financial burden of NOMADS.

Asked to elaborate upon his comment that the ES-9000 "crashes" frequently, Mr. Gammick responded the ES-9000 crashes because of the amount of work related to not only NOMADS but several other state agency projects as well.

Marlene Lockard, Director, Department of Information Technology, indicated there was good news with respect to performance issues. She said additional funding was requested December 1998 for contract help to migrate from the ES-9000 to the new R-25 machine. Ms. Lockard was pleased to report the migration for the Project Genesis system had been completed 3 weeks previously, and the Department of Employment, Training and Rehabilitation (DETR) guide system was successfully and flawlessly migrated last weekend. She declared the performance issues and response in all reports were "awesome."

Indicating the district attorneys reported the problem "unsolvable" and Ms. Lockard reported an "awesome" response, Senator Rawson expressed confusion and requested further explanation. To clarify, Ms. Lockard said the district attorneys’ reports of the problems were absolutely correct and DoIT has been working diligently to reduce the problems.

Ms. Lockard stated additional capacity was requested on the system due to the lack of capacity on the ES-9000. She explained that in order to achieve satisfied end users it was imperative the migration from the ES-9000 to the new machine be accomplished as quickly as possible. She said it was a move from old to new technology with a very complex migration platform; however, it is now implemented and ongoing. She noted the migration is not yet complete and other applications are still being moved to the new machine. In addition, Ms. Lockard pointed out, growth in the state impacts the technology foundation and infrastructure. She indicated capacity on the mainframe has increased 25 percent a year, which is 2.5 percent a month. She said the current proposal requests the additional piece to the parallel Sysplex model to which the system is migrating in order to support already-approved technology projects, as well as to allow room for additional projects the Legislature may approve in the future.

Senator Rawson asked when the "punch list" of 591 problems pointed out by Mr. Gammick will be addressed. Ms. Lockard deferred to Frank Pekovich, Project Executive, State of Nevada, IBM, to address remediation of the issues. She explained that the performance issues with the mainframe stem from the hardware infrastructure. Responding to a query, Ms. Lockard indicated the state worked with the vendor for the past 2 years in an attempt to develop an efficient partnership to address the issues. She said it had been determined by the Legislature that the state did not have sufficient project management expertise to run the project, which was the reason the contract with the current vendor was continued. She stated the vendor determines the workload and the "fixes" and runs the project. Ms. Lockard indicated DoIT is in "an assist mode" with the IBM vendor and others, and the technical staff have attempted to "integrate into more responsible roles on the project." Ms. Lockard stated, "Transition has been difficult while attempting to meet federal requirement target dates and avoid penalties."

Questioned how problems will be resolved after the vendor’s contract expires, Ms. Lockard explained the Governor’s recommended budget includes contract staff and retention of the core technical staff to assist with punch list items and others that will surface over the next months. She indicated code delivery of phase 2 of the NOMADS project was made March 12, 1999, and DoIT is in the second week of testing. She pointed out that more information will be provided on code fixes and other items as testing evolves. An ongoing list of work will be needed in addition to maintenance and support of the system, Ms. Lockard maintained.

Senator Bill R. O’Donnell, Clark County Senatorial District No. 5, testified he understood that when the DA’s offices submit a request for information, a data stream is sent to the ES-9000 which may come back in a time frame of anywhere between 5 minutes and 5 days, depending upon the batch mode. Mr. Doyle responded that Senator O'Donnell’s understanding was accurate. He indicated the issue had been reported to the steering committee based upon the DA’s offices’ use of the data link from December 1998 to January 1999. Mr. Doyle stated performance has improved since that time. He said the director of DoIT informed the participants at the February/March steering committee meeting that certain programs were being moved from the ES-9000 to the R-25, one of which was the Genesis system. He indicated it was done to create space for the "batch" tasks. It was Mr. Doyle’s understanding that should bulky programs be removed from the central processing unit (CPU) and placed elsewhere, performance times would improve. He indicated it was a problem in the past and he was unsure whether there will be any improvement in his jurisdiction in the future.

Acknowledging his understanding of the state’s data processing operations was limited, Mr. Doyle reported there have been interface difficulties between the ES-9000 and the R-25. He noted the Department of Motor Vehicles and Public Safety (DMV&PS) database is one of the components of the Genesis program. Mr. Doyle pointed out a function of NOMADS is to locate people for enforcement proceedings; this is accomplished through the DMV&PS database. He speculated if the DMV&PS database resides on the R-25 and NOMADS resides on the ES-9000, and the ES-9000 does not communicate effectively with the R-25, the data links and elements coming through the ES-9000 to local systems may delay delivery of "locate" information as part of the enforcement action. That particular aspect of the migration process has not yet been explored by local jurisdictions to ascertain performance in that area, Mr. Doyle remarked.

Mr. Gammick interjected that the estimate of 2 years or less for the system to become operational was predicated on information being accessible. He requested support for DoIT to enable the department to fix the problems.

Answering a query, Mr. Gammick indicated the penalties to Clark County will be approximately $2 million the first year and will compound considerably into the second and third year. He deferred to Mr. Willden of the Welfare Division to provide further information.

Michael J. Willden, Deputy Administrator, Program and Field Operations, Welfare Division, Department of Human Resources, reported the penalty will be 4 percent the first year, 8 percent the second year, and 16 percent the third year, growing to a stop-loss of 25 percent. He indicated 4 percent for the first year in the amount of $411,000 is due in FY 1999. Mr. Willden said second- and third-year penalties are estimated to be $3.9 million and will be due in FY 2000. He reported that because the counties receive approximately 69 percent of the federal money for the child support program and the state receives 31 percent, the $3.9 million penalty will be split 69/31, with 69 percent paid by the counties and 31 percent paid by the state. This amounts to $2.7 million spread across 15 participating counties. Mr. Willden noted the penalty cost for Douglas County will be approximately $44,0000, and for Washoe County, $367,000. Clark County’s share, based on its receiving almost 76 percent of the counties’ share of federal money, will be almost $2.1 million.

Senator O'Donnell expounded:

Mr. Goldwater indicated options had been mentioned during testimony and requested further information on them.

Mr. Gammick indicated that at the time NOMADS was ready for mainframes and dumb terminals within the family support divisions, the DA’s office had already begun using personal computers (PCs) and file servers and was working with the state to set up programs to enable the PCs to emulate a dumb terminal in order to communicate with NOMADS. He said the DA’s office has continued to remain abreast of modern systems. The office currently has new Pentium II 400s and a file server based on Windows NT, which will replace all Windows programs. Mr. Gammick noted Douglas County also acquired modern equipment, and Clark County received approval for $1 million to purchase new computers. He said he was unsure of the status of those two counties in regard to being able to come up with a modern computer program based on modern technology. He pointed out the hardware is present, the Internet is present to tie the lines together, and a "hard line" has been established between Washoe and Clark Counties. Mr. Gammick emphasized a modern technology option must be determined. He suggested "a vendor or consulting firm be hired to ascertain the capability of the system, given the use of modern equipment to determine the cost and time it would take experienced programmers to build a program in modern language."

Asked whether his suggestions had received answers and/or met with financial resistance, Mr. Gammick said it was his understanding the state is not looking at other options at present. He commented, "We are going to ride the Titanic to the bottom of the ocean floor."

Senator Rawson suggested other options would be to couple available technology to the developed system or to outsource the system to a responsible vendor.

Myla C. Florence, Administrator, Welfare Division, Department of Human Resources, distributed a memorandum regarding NOMADS from herself to Steve Abba, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, dated March 22, 1999 (Exhibit H). Ms. Florence indicated that at the time the budget was constructed the division contemplated achievement of certification by September 30, 1999. She said that in discussions with the district attorneys over the last couple of months, as well as at the monthly steering committee meetings, it became apparent it was unlikely the date would be met. Ms. Florence indicated it was determined during discussions that the state would probably be able to absorb the first 2 years’ penalties during FY 1999. However, it became clear that as penalties mounted to $3.2 million and then $6.4 million, the budget would not have the ability to absorb that level of penalties. She said the determination of where the money will come from still rests with the Legislature. Ms. Florence indicated that unless another remedy is afforded by the Legislature, the penalties will be absorbed in the state’s federal participation levels based on the funding from the federal government. She explained that penalties are not paid by submission of a check, rather the federal government reduces the letter of credit under which the state will be forced to operate.

Ms. Florence pointed out the penalties will not affect child support collections per se, only the impact upon staff to make them. She clarified the penalties will only affect the administration of programs. Regarding other options, she said every biennium there are discussions on whether or not to separate child support from the eligibility components of the system. Ms. Florence indicated the system will distribute almost a half billion dollars of benefits in child support, Temporary Assistance for Needy Families (TANF), and Medicaid eligibility payments. The system is quite complicated in terms of its functionality, she remarked.

Ms. Florence said that as part of the Maximus quality assurance review of the system, the Welfare Division requested a high-level indication of the options. Based upon the system thus far and the anticipation that phase 2 code would be of sufficient quality to operate cases within the system, she asserted, it would be nonsensical to segregate portions of the system with regard to eligibility versus child support, or stop and begin again. She noted the problem in regard to stopping and starting again is the continuation of federal penalties. Pointing out "our friends across the Sierra" opted to stop and begin again, she said it is expected to take 5-8 years to develop and implement the child support portion of the system at a cost of about $1.3 billion, while penalties to the state continue to accrue.

Ms. Florence expressed sympathy for the district attorneys in their frustration with the system. She indicated Welfare Division staff have "thrown blood, sweat, tears, and resources at the problem in order to accelerate the schedule to meet certification and deal with the fixes in the queue."

In regard to the comments concerning flexibility, Ms. Florence noted the state did not design the system, the vendor developed the system¾ with 200 cumbersome screens. She stated the functions the system is intended to perform are extremely complicated and contain over 10 million lines of code. Senator Raggio commented the vendor did not create the system in a vacuum but took input from the state. Ms. Florence declared the vendor had input in terms of the kinds of outcomes the end user desired; however, software design experts performed the formatting, coding, and commands from one part of the system to another.

Asked whether communication between "the black boxes" will be an ongoing problem, Ms. Lockard answered the plan calls for retiring the ES-9000. She indicated there is currently no communication problem between the two boxes and deferred to Mr. Duensing to explain the total picture.

Guy Duensing, Deputy Director, Communication and Computing Division, Department of Information Technology, stated the plan is to retire the ES-9000 and replace it with the R-36. He said there are no current communication-type problems that he is aware of. He indicated the DA’s offices use AS-400-type technology and a Mutual Broadcasting System (MBS) bridge that has been solidified insofar as bringing the computers up and/or down.

Asked whether there will be a problem identifying people through DMV&PS records, Mr. Duensing said there should not be a problem. Senator Rawson suggested performing a trial run to discover whether or not the system will function in that capacity. Mr. Duensing indicated the R-36 is scheduled to be implemented in an October-November time frame.

Asked the reason for response times of 5 minutes to 5 days when the DA’s offices request records, Mr. Duensing said response time should not take that long. Mr. Doyle indicated the response time has improved. He noted the DA’s offices saw the low point when they began using the data link bridge during December 1998 and January 1999. He pointed out there are times when the ES-9000 goes down, and the malfunctioning is discovered when data is not received in a timely fashion. Mr. Doyle said that when the ES-9000 becomes operational again, a second communication is required between state operators and operators of the county AS-400 because both must be brought back up. He explained that when the problem occurs there must be a direct person-to-person communication to coordinate restart, which delays production of documents. He pointed out the problem will continue to some degree until October or November 1999 when full migration to the R-36 is complete.

Questioned whether the ES-9000 is down 50 percent of the time, Mr. Duensing answered no. He said the ES-9000 has 99.9 percent uptime during business hours. He indicated a problem was experienced in December-January when the system went down for scheduled maintenance during the night after which the connection had to be reestablished. He explained that when the DA’s office informed the facility of the problem, an attempt was made to bring up the system in a shorter period of time. Mr. Duensing said the problem was that the DA’s office started its side before the facility had a chance to start its side. He said an automatic process is now in place whereby when the DA’s office starts its side the connection is automatically started on the mainframe.

Queried whether the DA’s offices are notified when the ES-9000 is going down, Mr. Duensing indicated a procedure was established in late January or early February to notify the DA’s offices when the system will be down for maintenance or any other circumstance.

Senator O'Donnell reported he had been informed the project manager of NOMADS refused to go off the ES-9000 and onto the R-25. Mr. Duensing indicated there was a misunderstanding and explained DoIT would have liked to move NOMADS over; however, penalties could have been enforced had there been a problem. He said it was determined the monetary problems would have outweighed what would have been gained. He reported that at the end of February the Genesis project was moved over, last weekend DETR was moved over, and within the next 2 weeks the DMV&PS legacy system will be moved over.

Asked whether response time on the ES-9000 is good at present, Mr. Duensing said yes. Senator O'Donnell asked why, if the response line is good, $6 million must be spent to purchase an R-36 to transfer NOMADS. Mr. Duensing explained the R-36 will be used not only for NOMADS, but also for the Department of Taxation’s Automated Collection Enforcement System (ACES) and the Division of Child and Family Services’ Unified Nevada Information Technology for Youth (UNITY), and all other customers which still "live" on that system. He indicated Genesis and DETR are on the R-25 and are scheduled to reside there once everything is accomplished. Mr. Duensing stated the ES-9000 and its replacement still support a bulk of the stage processing. He said when NOMADS goes live it is estimated to need approximately 67 multiple virtual systems (mvs) "right off the bat," UNITY will take 30 mvs, and the remainder of the applications will grow approximately 25 percent a year.

Referencing the discussions mentioned above regarding options that take place each biennium, Mr. Goldwater asked:

1. Has the vendor shown interest in doing "cleaner"-type consulting or entering into a more creative contract with the state?
2. What is being done to ensure there will be human resources to work the process and what are the problems in that regard?
3. Who is in charge of NOMADS within the state?

Ms. Florence stated that as the customer, "the buck stops" with her insofar as guiding the requirements of the system. She indicated that with respect to ongoing management, it was determined 2 years ago that a project executive from IBM would manage all of the state and DoIT, as well as Welfare Division resources including programmers, analysts, and testers. Ms. Florence said she would be less than frank if she did not mention the relationship has been difficult. She explained the reason for the difficulty is primarily that the Welfare Division is in the unenviable position of being penalized while communicating with federal agencies regarding the progress in order to be relieved of the penalties. She stated her imperative differs from that of a vendor who performs as slowly and methodically as possible. She compared the state’s relationship with the vendor to that of an entity that will suffer substantial penalties which must be shared with the counties versus one that works on a time-and-materials basis.

Ms. Florence recalled that over a year ago she had appeared at an IFC meeting to request funding for a full, comprehensive quality assurance program to help define problems, determine potential options, and so forth. She said the request was "turned into a need for the state to have more training resources." Ms. Florence stated that request has not been the issue insofar as getting code completed, tested, and "rolled down" to the field. She indicated an independent vendor is now required by the federal government because the state has not met the certification timeline. She pointed out the state is now required to secure an independent verification and validation contractor to provide concurrent reports to the federal government, as well as to the state, in regard to the viability and the potential for completing the project.

Asked the definition of the term "cleaner," Ms. Florence indicated the term is technological and deferred to Ms. Lockard for an explanation. Ms. Lockard said that at the first steering committee meeting in January 1999, she indicated an analysis should be performed on the DA’s offices’ current systems, primarily in Clark and Washoe Counties, to determine what part of their existing systems did not meet federal certification. She said this could be an option to spending more time certifying the system and continuing further with a troublesome project.

Asked whether any vendor would be interested in "doing something of that nature," Mr. Gammick indicated he was unaware of any vendor being approached with that particular option. He pointed out that every time the option was raised, the answer was, "It is not an option¾ we have what we have and that is where we are going." Mr. Gammick declared the option was raised about 10 months ago when the DA’s offices became actively involved.

Questioned whether the Welfare Division had a plan to solve the DA’s offices’ complaints, Ms. Florence answered, "A plan for every problem? I don’t think so." She indicated a process exists to ascertain how the division might meet certification by seeking economies in terms of case conversion. She said the division formed work groups to prioritize approximately 600 items to determine which should be addressed first. She indicated some items are in the queue this period while code is being tested. Ms. Florence said problems will be dealt with and other code "fixes" performed during this period.

In regard to transitioning, Ms. Florence said that 2 years ago the plan was to co-locate the Welfare Division, DoIT, and vendor staff in one place and have skills transition during this period. She declared the goal was to make DoIT capable of assuming the project during this biennium. Ms. Florence indicated the transition could not fully occur given the fact there were so many changes as a result of welfare reform. However, the project was always approached with the notion the state would assume full responsibility for maintaining and modifying the system, which is the way the budget is proposed today, Ms. Florence remarked.

Asked how the DA’s offices’ problems will be resolved, Ms. Florence said an attempt has been made in the steering committee meetings to identify and deal with the problems and to involve the DA’s offices’ staff in testing to ascertain how conversion can be improved. She was unsure whether flexibility issues can be easily accommodated. Ms. Florence indicated she was sensitive to the issues raised by the DA’s offices and expressed a desire to work with the offices to resolve the problems. Based upon conversations with counterparts around the country, Ms. Florence said the problems are not unusual. She declared that even though 38 states have made certification to move from free-standing, locally driven, and in many cases technologically superior systems, to statewide-standard systems, the task is very difficult.

Mr. Gammick stated:

Senator Rawson pointed out the counties need to appreciate that the $95 million spent has been state, federal, and county money. As various entities struggle to reach a conclusion with some degree of satisfaction all around, the money already spent cannot be dismissed, he remarked. The senator asserted the decision may be to "take our lumps" on the $95 million, but everyone must share in that determination. He indicated his perception of what everyone who has testified has said is, "We can’t deal with the issue of what has been put into it." He emphasized, "We must deal with it."

Mr. Gammick elucidated that although the investment has been tremendous, it has not all been for naught. He pointed out California has "thrown out" three programs in their entirety and asserted he was not suggesting Nevada follow suit. He indicated some of the programs are aimed at achieving the ultimate federal requirements, which include auditing cases and putting information into them. He said other things have been learned through the computer system, such as a workable solution to the forms requirements and the hardware system. Calling attention to Ms. Florence’s statement of a statewide system that works together rather than 17 small, individual systems, Mr. Gammick said that is what networking and the Internet is all about. He emphasized the DA’s offices desire this; however, the problem is the instrument that is used to get there.

Senator Rawson stated the decision has been made to go to an overall system and there was "buy in" from all the players in that decision. He noted a "major hole" with which he was trying to contend is that most of the players have not bought into the statewide system.

Senator O'Donnell said Ms. Florence "hit the nail on the head" when 2 years ago she lobbied the IFC for a quality assurance contractor. He recalled having expressed the opinion at the IFC meetings that should the IFC not vote for a quality assurance person, "the plug better be pulled" because the money was just being wasted. The senator said, "I think I was right." He indicated he did not support the IFC decision to proceed with more training and voiced the opinion a quality assurance contractor should have been hired. He stated:

Senator Rawson indicated budgets will not be closed until decisions are made on NOMADS. He expressed appreciation to the district attorneys for articulating their concerns and indicated they will be considered in the decision.

Ms. Florence declared she did not perceive the Welfare Division’s relationship with the district attorneys to be a total disconnect. She said the division shares their frustration in many ways.

Referring to decision unit M-581, Ms. Florence indicated it is currently budgeted at $16.6 million in FY 2000 and $11.6 million in FY 2001. Asked whether funds are adequate to accomplish the goals, Ms. Florence said the budget is based upon having flexible resources for programming. She declared that in order to expedite many of the changes, a level of DoIT staff, as well as vendors, will be required to continue modifications, even after certification. She remarked her experience with computer systems is that there are never enough resources because there are so many unanticipated occurrences.

Questioned whether the budget takes into account the aforementioned 591 items and the necessary program hours needed to solve them, Ms. Florence stated approximately 121,000 program hours were estimated for the upcoming biennium. Senator Rawson indicated the kinds of phase 2 code problems or new federal changes that may occur are unknown. Ms. Florence predicted changes will be needed.

Asked what entity would inherit administration of the program after transition, Ms. Florence indicated DoIT would be responsible for the programming and Welfare Division staff would be responsible for analyzing and prioritizing changes. She pointed out that although the current legacy system is over 20 years old, changes have been accommodated quicker than they have been in NOMADS. Senator Rawson said he took no great comfort in knowing the legacy system was that old but the point was well-taken.

Queried whether transition would take place in-house, Ms. Florence said that to continue the transition which began over the current biennium, DoIT staff will be paired with appropriate vendor or Master Services Agreement (MSA) staff to learn specific areas of functionality in terms of making any code modifications or corrections.

Senator Rawson noted that in order to prepare budget-closing documents there must be an understanding of what type of contractor support will be needed in the next 2 years, as well as the 2 years thereafter. He asked whether the contractor will be phased out or will continue to be relied upon in the future. Ms. Florence indicated detailed information had been provided LCB staff.

Asked what will occur after the IBM contract expires July 1, 1999, Ms. Florence stated the budget will provide "some level" to continue the relationship with IBM, as well as other subcontractors or MSA staff. She indicated both she and Ms. Lockard desire flexibility to seek the most experienced and knowledgeable programmers through whatever arrangement can be constructed, as provided this biennium.

Ms. Florence declared another complicating factor occurs when the federal government gives a mandate and then throws obstacles in the way of achieving it by way of contracting rules and preapproval requirements. She said conflicting messages are received. Citing an example, she said she was told the federal government would not approve any kind of time-and-materials contract again. Then she was told that utilizing the state MSA agreements would not require prior approval. And then she was advised that if 50 percent of MSA resources are devoted to a child support component, prior approval would be required. Ms. Florence indicated the 60-day prior-approval requirements for contracts could greatly affect whatever determinations are made before the end of the legislative session.

Asked whether IBM will retain their best people during the transition, knowing their contract will be over July 1, 1999, Ms. Florence indicated the answer rests with IBM. She declared there are credibility issues associated with the project and suggested it was in IBM’s best interest and good faith to the state to provide that level of service. She reminded the committee the reason for the discussion at this point in time is that there have been delays on the part of the contractor. She pointed out the system was scheduled to have been completed in October 1995.

Mr. Dini noted there will be a problem if IBM does not retain good programmers and the state takes over the project. He mentioned DoIT lost 16 out of 18 programmers in the past year and queried how the state will provide the expertise to obtain certification. Ms. Florence expressed confidence the code for certification will be completed by June 1999. In that event, the issue will be to give DoIT and "whatever expertise can be acquired through an MSA agreement" the responsibility to fix and modify the 591 items in the queue. Ms. Florence indicated DoIT has the expertise but does not have the functionality knowledge because the department has not been in a position to acquire it.

Senator Rawson said it should be determined, as budgets are closed, who will be responsible to ensure the project works and the problems are fixed. He was uncomfortable with allowing IBM to walk away from the site at this point in time.

Ms. Lockard indicated a transition plan is being put together that will be "win-win-win" for everyone. It was her opinion IBM has no desire to walk away and will continue to provide critical core technical individuals essential to the project. She pointed out the overall structure that has been in place the past 2 years is top-heavy with project management. She noted the organizational structure designed by IBM is termed "the football," and in "the game" there are different development teams. The person in charge of the football is the application development manager with DoIT. Presently 90 percent of the development staff reports to a DoIT employee, Ms. Lockard remarked. She indicated there had been turnover within DoIT staff for a number of reasons. She said a new, extremely skilled and competent manager was hired on "the Welfare side," and a new project application development manager with 16 years’ experience with IBM was hired on "the DoIT side." She declared the project application development manager has already made substantial improvements in the organization, as well as in the ability to retain the staff and attract new staff to the project.

Ms. Lockard indicated a bonus program is advocated as part of the DoIT budget. She pointed out, for the record, "The old technology exists on this project and is not reflective of the technology that exists in state government or what is implemented in other projects." She acknowledged the 10-year-old system is the platform that was adopted based on the vendor’s recommendation. She declared a bonus program will provide incentive to attract and retain skilled technical people to work on an old technology system with high turnover.

Senator Rawson expressed concern in regard to a bonus program because it was not mentioned in the budget. He observed that although DoIT is in charge, any problems with the system are the fault of IBM. The senator voiced doubt a few IBM staff would remain while the system is transitioned. He indicated the problem is insoluble. Questioned whether IBM was willing to contract a major portion of the transition, Ms. Lockard indicated IBM had been clear from the beginning of the project that the company would not entertain anything but a time-and-materials contract arrangement. She explained the reason the state was "pushed" was that IBM expertise was required 2 years ago. Ms. Lockard asserted the state was forced into a very disadvantaged contract relationship with IBM.

Questioned whether IBM would consider an outsourcing contract whereby the firm would maintain and process the system, Ms. Lockard answered there had been no extensive discussion with regard to outsourcing. Asked whether the option might be viable, Ms. Lockard indicated all options are viable.

Ms. Florence indicated she did not believe there would be an appetite, under any circumstance, to automatically outsource to a specific vendor. She maintained the state would be required to go through the process of releasing a request for proposal (RFP) to determine outsourcing. Senator Rawson declared there were a number of companies that could accomplish the task.

Senator Rawson indicated he desired assurance, before the budgets were closed, that a special legislative session would not be required to deal with an issue that "falls apart." He expressed a desire to depart the legislative session secure in the knowledge a solution to the problem, albeit expensive, had been found. The senator asked whether it was feasible to request IBM or another vendor to consider a contract to take the state through certification and run the program on a performance basis.

Matthew Q. Callister, Lobbyist, International Business Machines (IBM) indicated he was present on behalf of IBM and introduced Mr. Pekovich.

Frank Pekovich, Project Executive, State of Nevada, IBM, pointed out there had been many difficult and complex topics brought up by both the district attorneys and others. He stated IBM is willing to remain committed to the State of Nevada for this and any other projects. Mr. Pekovich said commitment can take different forms, whether it be renewal of the current contract, support of a state-managed project, or an IBM-owned project. He commented the federal government has its view on the definition of a time-and-materials contract. Mr. Pekovich indicated that typically a time-and-materials contract is more risk for the client and less for the vendor, whereas a firm, fixed price is more risk for the vendor. In such event the vendor would need control and authority. Mr. Pekovich declared that should the vendor bear more risk, be it in the form of penalties or of performance guarantees, the vendor would want to control the outcome. He noted IBM would not shy away from that type of contract; however, it would need the right people, management, processes, and procedures.

Continuing, Mr. Pekovich explained that a model in which the state were to manage the work product with IBM in a supporting role, a firm, fixed price would not make sense. He indicated IBM discussed different options with the state and is open to all options. Mr. Pekovich expressed discomfort with the option in which IBM would retain responsibility with "few people to effect the outcome."

Senator Rawson suggested staff be involved in discussions, not to micromanage the project but pursuant to funding responsibilities. He suggested it would take months to issue RFPs, and Mr. Pekovich agreed. Senator Rawson requested recommendations of independent contractors to provide estimates on contracts. Mr. Pekovich indicated he would provide three recommendations for the state’s review.

Ms. Evans noted the state was informed the federal government would not approve a time-and-materials contract and would only approve a performance-based contract of some type. She asked (for the record), "Is IBM interested in discussing a performance-based contract?" Mr. Pekovich answered (for the record), "IBM is interested in discussing a performance-based contract." He pointed out there are states in which IBM is currently under contract, New Mexico being one, where the state and the vendor agree on performance levels. Recalling Mr. Gammick’s problem with mainframe outages and Mr. Duensing’s concern about 99 percent availability, Mr. Pekovich indicated a target of 99 percent availability could be established and financial penalties would ensue should the vendor not deliver. He noted other examples might be response or problem-turnaround time. Mr. Pekovich stated IBM will agree to a performance-based contract if it has control of the project.

Ms. Evans declared:

• What is the additional cost?

• What is the time frame? (The time frame is required to calculate the penalties and determine the state and county shares.)

• What will be the estimated cost of ongoing maintenance?

• Will the state be able to support the system? and

• Should support and maintenance of the system be outsourced?

In response, Mr. Pekovich expressed appreciation for Ms. Evans’ concerns and indicated there were no simple answers. He explained the product should be completely built by the middle of June 1999. He noted the federal government has reviewed the project and he voiced confidence that federal certification requirements would be met. He pointed out the "trick" is how quickly the counties can convert cases from the old system to the new. Mr. Pekovich said only two things must be accomplished for the system to be certified: (1) It must be ensured the application meets federal requirements, and (2) It must be ensured the users move their cases to the new system. He indicated the second requirement is by far the greatest challenge. He said the challenge is not technical, it is more a matter of "arms and legs." Mr. Pekovich commented a great deal of effort is required to cull data and transfer it to NOMADS. Acknowledging there are many issues, he reiterated the greatest challenge to certification is the data transference. He said the question of when the project will be completed must be answered in conjunction with the counties. Based upon the number of people working on the system and the number of cases to be converted, the counties have indicated the project will not be completed until 2000, Mr. Pekovich remarked.

Asked whether IBM, if given the resources, could accomplish case-conversion transition in a shorter time, Mr. Pekovich indicated there are better and lower-cost resources than IBM. He mentioned IBM has used college students in other projects. Senator Rawson said the state was essentially informed it has an insoluble problem and asked whether it could be resolved should resources be put into it. Mr. Pekovich recommended the resources be expended and opined that if county leadership is comfortable with the plan the system will be salvageable.

Ms. Evans asked how the concerns expressed by the district attorneys regarding the 4-hour time frame to convert cases and the problem of moving through the screens could be addressed. Mr. Pekovich indicated additional resources could be brought to bear on the conversion time frame. He pointed out there was a recent brainstorming session to consider which activities could be accomplished more expeditiously. Mr. Pekovich said resources have been geared toward a completion date of October 1999. He explained the issues coming forward from the counties to the state have been viewed through the prism of "certification 1999," which has given a negative spin to any suggestions or alterations. He stated that while probably 16,000 pieces of work have been closed out, 591 were set aside because they did not impact certification. Mr. Pekovich said that should the focus of the counties be changed from 1999 certification, items of more importance to the counties could be accomplished. The items may not be important to the federal government, but they could help the counties decrease the time to convert cases, he remarked.

Ms. Evans recalled Mr. Pekovich saying there were two parts to solving the problem: (1) The application must meet federal requirements, and (2) the users must utilize the system. She pointed out an hour was spent listening to the obstacles faced by the district attorneys and asked what could be done to help the counties solve some of the problems with the program, such as moving through the screens. Mr. Pekovich said the answer is to reprioritize the work. He indicated the focus has been on federal requirements and suggested shifting it to help the counties get their jobs done. He recommended bringing the 591 items to the forefront, assigning each one a target date, and providing the resources to accomplish the task.

Ms. Evans agreed with prioritizing the tasks, but suggested confronting them one at a time. She inquired the amount of time and effort that would be required for IBM to make the modifications. Senator Rawson speculated it could take another million lines of code. Mr. Pekovich indicated every enhancement requires an average time frame of approximately 100 hours. He mentioned that navigation (stepping through a series of screens to reach a final destination) would require about 100 hours to enhance the system to make it easier for the counties.

Senator Rawson clarified IBM’s priority has been certification and Mr. Pekovich agreed. Recalling Mr. Gammick’s concern about forms, Mr. Pekovich indicated NOMADS was not built to be a word processor. He explained the manner in which the counties perform their day-to-day work requires the ability to change a form "on the fly." He pointed out the creation of forms was not a certification requirement and had to be discussed with the federal government to make sure the program was not going backwards. He said changes were implemented, results were good, and IBM could continue to do anything required. However, most noncertification changes have been put in a queue status ("off to the side"), Mr. Pekovich remarked.

Ms. Evans suggested the state proceed "full speed ahead on getting the priorities, talking to the counties, and getting the list of things that need attention quickly." Asked the retention rate for IBM employees, Mr. Pekovich explained IBM has a group of approximately 22 people and a team of partner subcontractors who work with them. He indicated IBM has not lost any of its employees since the contract began in 1997; however, one subcontractor was lost through marriage. Mr. Pekovich said retaining employees is a challenge and explained that IBM retains a queue of professionals to replace those who leave.

Senator Rawson indicated he would like to see discussions between the counties and staff regarding a change in focus, retaining certification as the top priority but putting resources into solving the counties’ problems, and development of a long-term relationship with IBM. He said a determination must be made as to the amount of money that should be appropriated to accomplish those goals. The senator emphasized the concerns of the counties must be reconciled and requested further suggestions from the subcommittee.

Mr. Goldwater asked Mr. Pekovich, "Who do you consider your customer?" Mr. Pekovich answered, "Myla Florence." Mr. Goldwater suggested the directive of the chairman is to find out who, exactly, is in charge. Senator Rawson said the discussions will address that issue.

Mr. Dini questioned whether the counties really want to go forward with the project. Senator Rawson pointed out that $95 million has already been spent on the project. He commented, "If we’re going to kiss that off, it should not be without consideration. The counties need to understand there is a significant investment and asked whether they can make it work."

Mr. Pekovich indicated the state has taken great pains to work with the counties. He said that during the monthly meetings he perceived the counties were willing to move ahead, but at their own pace. The question has been what that pace should be. Mr. Pekovich stated the focus has been on certification this year, which means 2,000 cases a week must be converted; however, the counties’ pace is closer to one-tenth of that.

Ms. Evans said the discussion suggested by Senator Rawson is an excellent idea. In addition to what had been outlined, she requested best estimates of ongoing cost and maintenance, as well as alternative options in terms of efficiency and cost for the state to continue operating the system. She emphasized the state should be open to future options. Although the focus is to obtain system operation and certification, opportunities should not be missed to entertain other considerations, Ms. Evans stated.

Senator Rawson indicated the state would be requested to cooperate with IBM and asked Mr. Pekovich to move ahead as quickly as possible. He called attention to the legislative timeline and indicated a solution must be reached before sine die.

In conclusion, Senator Rawson suggested an independent contractor be hired to evaluate the situation and perform a cost analysis on the issues raised. He reflected upon the consequences should the child support portion of the system be "unplugged." After weighing all the factors a decision can be made to remain with the existing program or cut some losses, Senator Rawson stated.

There being no further business, the hearing was adjourned at 12 noon.

RESPECTFULLY SUBMITTED:

Barbara Moss,

Committee Secretary

APPROVED BY:

Senator Raymond (Ray) D. Rawson, Chairman

DATE:

Ms. Jan Evans, Co-Chairman

DATE: