The Joint Subcommittee on Human Resources/K-12 of the Senate Committee on Finance and the Assembly Committee on Ways and Means was called to order by Chairman Jan Evans at 8:15 a.m., on Wednesday, April 21, 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 William J. Raggio

Senator Bob Coffin

Senator Bernice Mathews

ASSEMBLY COMMITTEE MEMBERS PRESENT:

Ms. Jan Evans, Chairman

Mr. Joseph (Joe) E. Dini, Jr.

Mr. David E. Goldwater

Mr. Lynn C. Hettrick

Mr. David R. Parks

GUEST LEGISLATOR PRESENT:

Mr. John C. Carpenter, Assembly District No. 33

STAFF MEMBERS PRESENT:

Jeanne L. Botts, Senior Program Analyst

Jean Laird, Committee Secretary

OTHERS PRESENT:

Ms. Evans opened the meeting by stating it is appropriate this committee is discussing the education of young people in light of the tragedy in Littleton, Colorado. She said she knows personally that Littleton is a lovely community because she was a student teacher in Jefferson County, Colorado. She remarked that such a tragedy reminds people of the importance of things they do with and for young people. She expressed that the responsibility of lawmakers weighs very heavily in this era. She added that thoughts and prayers of the committee are with the victims and families and young people everywhere.

STATE DEPARTMENT OF EDUCATION

Ms. Evans said there are a number of key issues remaining regarding the Distributive School Account. She said at the last meeting there were 11 issues presented and the committee had addressed the first 4. She noted staff will briefly review those four issues before the committee considers the remaining issues.

Ms. Evans asked those testifying to be mindful of the time as the committee is nearing the end of available time for public input. She explained the Legislature would receive projections in the following week from the Economic Forum giving the committee a clear picture of the amount of money that may be available. She added the committee will begin final deliberations at that time and will proceed with closing budgets.

Jeanne L. Botts, Senior Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, reviewed the first four issues discussed by the committee at the previous meeting.

Ms. Botts said the first issue was whether the committee wished to adopt the Governor’s recommendation that the following state-funded categorical programs be consolidated into the Distributive School Account (DSA):

• Special education unit funding
• Class-size reduction program funding
• Funding for elementary school counselors
• Funding for adult high school diploma programs

Ms. Botts explained the school districts did not appear to favor changing the unit method of funding special education at this time. On class-size reduction, she said there was support for the idea of bringing that program into the DSA but continuing to allocate funds utilizing the same methods as in the past to assure school districts have a sufficient number of teachers to reach the required ratios. Regarding the elementary school counselors, she said the larger school districts favored consolidating that funding into the DSA, but some of the smaller school districts preferred to have a base level of funding to assure retention of the counselor position. Ms. Botts noted there are 50 counselors and each district currently has at least one. Regarding the funding for adult high school diploma programs, she said larger school districts favored consolidating the funding into the DSA, but smaller school districts were concerned about losing the base level of funding for those programs. She added there was also support for the idea of transferring the funding for the adult high school diploma programs, both regular and prison programs, to the Continuing Education budget account and then having staff support provided by the Workforce Education Team.

Ms. Botts said the second issue was whether the definition of a unit should be expanded to include school psychologists, physical therapists, and teachers’ aides if special education unit funding is retained. She noted there had been a suggestion from the Elko County School District that two teachers’ aides could be covered by a unit to address the difference in cost between professional-level positions and teachers’ aides.

Ms. Botts said the third issue is class-size reduction. She pointed out the committee needs to decide what degree of flexibility, if any, school districts should be given in meeting the required pupil-teacher ratios. To decide that, she said, the committee would need to address the following:

• Whether the current flexibility in the use of third-grade funding for approved remedial programs should be expanded to include all class-size reduction funding.
• Whether school districts should be allowed flexibility in the ratios and grades covered by the funding.
• Any changes that might be needed in law.

Ms. Botts said that in general, school districts seemed to prefer increased flexibility in the use of class-size funds. Elko County School District had requested flexibility to reduce ratios to 22:1 in grades kindergarten (K) through 5 so the district could eliminate team teaching. Lyon, Washoe, and Humboldt County School Districts currently utilize all or a portion of third-grade class-size reduction money for Reading Recovery Programs and would like that flexibility to continue.

Ms. Botts said several options had been discussed on the fourth issue, which was the Adult High School Diploma Program. One option was to leave it as it is and allocate the money according to the formula developed by the State Department of Education. The Governor’s recommendation was to consolidate the adult diploma program into the DSA and include it in the per-pupil basic support. Another suggestion was to transfer all funding for the adult diploma programs, both the prison and the regular programs, out of the DSA and into the Continuing Education budget account. Ms. Botts explained that the Continuing Education budget account contains federally funded adult education programs, the Job Training Partnership Act (JTPA), and state-funded adult literacy programs. She pointed out that if this suggestion were adopted the Workforce Education Branch of the State Department of Education would be in charge of allocating the money and working with that program. Ms. Botts explained that another option for issue No. 4 was to issue a Letter of Intent to school districts directing districts to maintain current levels of spending for adult diploma programs. A stronger version of that option would be to require by law that school districts maintain existing levels. Finally, it was also discussed to provide a base level of funding for adult diploma programs and distribute the remaining funds through the per-pupil basic support.

She concluded her brief overview of the discussions of the previous meeting on the first four issues.

Ms. Botts proceeded with discussions of issue No. 5. She said the Governor recommended $8 million a year be budgeted for school improvement programs to be defined by the Legislature. The source of funding for that $8 million was recommended to be estate tax money. An additional $5.8 million in estate tax revenue was budgeted by the Governor to be added directly to the DSA. She said there was, therefore, a total of $13.8 million in estate tax funding budgeted in The Executive Budget. The Budget Division also recommended estate tax receipts above $13.8 million be deposited to the renamed Trust Fund for School Improvement (formerly the Trust Fund for Class-size Reduction) and held in reserve until the Legislature defined the use of that money.

Ms. Botts pointed out estate tax revenues have not reached projected levels. She said this shortfall has caused the need for a supplemental appropriation to the Trust Fund for Class-size Reduction of at least $15 million. She explained if that were done, there would be no estate tax money to fund school improvements until well into the first year of the biennium. The Budget Division suggested that, instead, the Legislature fund school improvements directly out of the DSA and replenish the DSA with estate tax as it is received next year, up to the $13.8 million level. In that case, the excess would be held in the Trust Fund for School Improvement.

Ms. Evans reminded the committee there was previous discussion regarding two positions newly authorized in 1997 for the Department of Education. She said those positions are up for reconsideration. She noted the Assembly Committee on Ways and Means has heard A.B. 357.

Gloria Dopf, Team Leader, Educational Equity, State Department of Education, explained the Educational Equity Team contains the programs for diverse learners as well as special education. She said all the programs for youngsters who need additional supports to access the general curriculum and to perform well in the general curriculum are clustered in the programs under her jurisdiction. She noted that when the two new positions for cultural diversity and Indian education were authorized at the last legislative session, both positions became a part of her team. She indicated she was concerned as to whether she would be able to hire individuals of high caliber, get them operating quickly, and produce results before this legislative session. Ms. Dopf declared she was able to hire high-caliber individuals who have been employed for just over a year. She said the positions were authorized beginning October 1997, but the process of application, analysis, and selection delayed the hiring until February 1998.

Ms. Dopf called the committee’s attention to the handout "Evaluation of Nevada Department of Education Cultural Diversity Consultant and Indian Education Consultant Accomplishments Related to Assembly Bill 266." (Exhibit C.)

Ms. Dopf stated this is an era of educational reform. She said as the educational standards are raised, as the bar for assessment is raised, and as remediation programs are implemented, it is critical that support be continued. Those supports need to be provided to school districts, parents, and programs for working through the impact of those initiatives for students from culturally diverse and linguistically diverse backgrounds.

Ms. Dopf said it is important to provide support to the districts for specialized programming to give teachers the skills and students the tools to meet the high standards and perform well in the assessment process.

Ms. Dopf testified the incumbents in these two positions have created a network to link with district administrators, with school district personnel, with University of Nevada representatives, and with community groups. She said the incumbents have initiated activities and raised awareness of the needs of this student population and put together programs to help the districts support these students.

Chopin S. Kiang, Cultural Diversity Consultant, State Department of Education, said he was present to advocate for all children in Nevada. He referenced the department’s handout, "Nevada Department of Education Cultural Diversity Consultant" (Exhibit D). He said the educational reforms referred to by Ms. Dopf are designed to help Nevada’s schools increase standards in the educational system to meet growing demands from the business and public sectors. He said that through the Nevada Education Reform Act of 1997 (NERA) and other education initiatives, Nevada has instituted many educational reforms. These reforms have been designed to increase state standards and provide remediation to students and technical assistance to educators to help them teach to these increased standards.

Mr. Kiang pointed out that for many linguistically and culturally diverse students, raising the level of expectations has placed them even further behind. He provided relevant statistics for the committee. The dropout rate for Hispanic students is nearly 16 percent compared to the overall rate of 9.9 percent. Only one out of five African-American students who took the Nevada high school proficiency exam last fall passed the mathematics portion of the test. That means 80 percent of this population of 11th grade students face the prospect of not obtaining a standard high school diploma or the alternative, dropping out of school. About 28,000 limited-English-proficient students representing all cultures, from Latin American to Asian American are unable to match the scores of their peers in reading, mathematics, language, and science by a wide gap in norm-referenced TerraNova exams. Mr. Kiang speculated that with the ever-increasing number of migrations into this state, by the year 2000 there may be a redefinition of who is the majority and who is the minority in Nevada.

Continuing, Mr. Kiang said he has attempted to address the needs of all students, including students with disabilities or different religious backgrounds, not just students of color. He testified the team conducted a survey among teachers, educational communities, and parents which indicated key points of need. He pointed out the needs identified were professional development, parental involvement, preservice education, and direct services to children regarding curriculum development.

Mr. Kiang said that based on those identified needs, the team has developed two pilot projects, one in Winnemucca at Albert Lowry High School to address the needs of "limited-English-proficient or English-language-learner" students in Humboldt County. Another is in North Las Vegas at Mojave High School to address the needs of English-language learners and the poverty issues many students face.

Mr. Kiang said he had recently completed a professional development seminar attended by 75 teachers from Mojave High School, which was an English as a Second Language (ESL) symposium to upgrade teacher skills and strategies. He said all professional development conferences have received great reviews, including the National Association for Multi-Cultural Education Conference held in Las Vegas and various other inservice seminars he has promoted, coordinated, or directly taught. He said it is through teachers who are sensitized, aware, and more professionally trained that Nevada can meet the needs of the identified children.

Mr. Kiang noted that in the following month, a parent-involvement-training program will be implemented in Washoe County. There will be an inservice seminar for teaching "involved parenting," in this case emphasizing the Spanish version for the Hispanic community in Washoe County. It will be conducted at the Nevada State Education Association (NSEA) office in Reno. He noted that 2 weeks later the same seminar will be conducted in Clark County.

Fawn Lewis, Educational Consultant, State Department of Education, referenced her handout "Indian Education Statistics, Nevada Department of Education" (Exhibit E). She testified that raising the level of expectation with the increase in state standards has placed many American Indian students even more academically behind their white peers. She shared results from the October Nevada High School Proficiency Examination. American Indian students passed the mathematics section at a rate of 32.7 percent and their white peers passed at a rate of 58.8 percent. On the reading section, American Indian students passed at a rate of 66.5 percent and their white peers passed at a rate of 82.3 percent. On the writing section, American Indian students passed at a rate of 86.6 percent and their white peers passed at a rate of 92.1 percent. In addition, Ms. Lewis said, American Indian students have a dropout rate of 12.6 percent compared to 8.3 percent for their non-Indian peers.

Ms. Lewis said there have been a number of activities designed to help raise students’ achievement levels and to provide technical assistance to teachers and others who work with students. Some of the activities include the Test Bias Review Group, which reviews the Nevada proficiency examinations for all areas of bias. She said she had been working with the department to ensure there is American Indian representation on the Nevada Social Studies Standards Writing Team. She noted that, as a result, the team has made changes to ensure American Indians are not just one chapter in Nevada history, but part of the entire state history. Ms. Lewis said she had provided technical assistance to the Council to Establish Academic Standards for Public Schools to ensure that culturally appropriate changes have been made.

Ms. Lewis testified she had created two pilot programs, one in Lyon County School District and the other in Douglas County School District. These programs address American Indian students’ needs to lower the dropout rate, encourage parental involvement, improve attendance rates, raise graduation rates, increase participation in federal programs, identify and utilize culturally appropriate material in schools, create student assistance programs, address the new state standards, and track students. These two pilot programs were put into place without any additional funds from state or local sources.

Ms. Lewis expressed she had also provided training and technical assistance to a large number of programs and agencies, including the following:

• Nevada Indian Commission
• Inter-tribal Council of Nevada
• Nevada Urban Indians
• Las Vegas Indian Center
• Bureau of Indian Affairs schools (Pyramid Lake High School and Duckwater Day School)
• All school districts with a Title IX Indian Education Grant or those wanting to apply for a Title IX Indian Education Grant
• All school districts in the state
• All tribal education programs in the state

Ms. Lewis noted she had created a newsletter that is disseminated bimonthly to over 1,700 people. It addresses the importance of educational reform in Nevada and its impact on American Indian students, as well as national education resources.

Ms. Lewis said if authorization for her position is continued, she would work to bring in additional federal funds to increase the achievement levels of American Indian students, increase access of American Indian students to technology, and expand successful programs to reduce the dropout rate and increase student performance. She said she would also continue to serve as the bridge between the Nevada Education Reform Act and American Indian students.

Senator Mathews expressed that she did not want to fight this battle another session. She said that once she has "plowed the ground," she does not want to plow it again. She said the committee "keeps passing the buck." She pointed out this has been dropped from the recommended budget because nobody is fighting for it, because the people hired have not been on board long enough to be evaluated, and because it is $200,000 a year for 2.5 positions. She said she felt concern that this committee has been reluctant to spend $200,000 for 2 employees who represent a population that this committee is very aware needs help.

Senator Mathews said she did not want to fight this battle and then go through it again in 2001. She said she wanted this program to be in the base budget. She opined this population is neglected because they do not turn out at the voting polls. She pleaded with her fellow legislators to see the need for these two positions and not force her to make this kind of speech again. She pointed out the cost of these two positions is a "drop in the bucket" in the budget. She acknowledged there was not a great deal of extra money this session, but emphasized that these positions should be in the base so funding is allocated from the beginning as with other existing programs.

Senator Raggio said he appreciated Senator Mathew’s ardor and testimony, but reminded her it was her suggestion these positions be added at the 1997 Legislative Session with the provision they "sunset" unless the effectiveness was proven. He pointed out this hearing is the department’s opportunity to demonstrate the program’s effectiveness to the committee. He said the information provided has been helpful and the committee will review the evaluation report, the statistics, and the testimony. He noted the testimony has been compelling and the program appears to warrant continuation.

Senator Mathews responded that she realized the positions were intended to sunset, but there has not been adequate time to evaluate effectiveness. She said she does not know why this program cannot be placed and left in a budget without her having to come before this body every time for a program this committee knows is needed. She asked the committee to "consider Littleton," where she has family, and be aware of the needs of every population in Nevada’s schools.

Senator Mathews said she is impassioned because she has asked herself whether Colorado has this kind of problem and whether Colorado has a program with staff of this quality to oversee programs for students who need help. She asked whether Nevada would be able to identify diversity groups anywhere in its schools without this staff. She said she was also impassioned because it is so important these students receive a fair chance and it is important not to do it haphazardly.

Senator Rawson noted the incumbents in these positions have spent a fair amount of time identifying, understanding, and cataloging what Nevada has. He agreed there has not been time for the programs to fully develop and said that even if the committee is committed to a "sunset," a full biennium is needed to allow the programs to develop and demonstrate effectiveness.

Ms. Evans congratulated Mr. Kiang and Ms. Lewis on the work they had accomplished in just 1 year. She said there was previously no data and no history and this team is off to a good start because their approach has been effective so far.

Returning to the list of issues, Ms. Botts stated issue No. 6 was whether General Fund appropriations recommended for the DSA in the Governor’s budget should be reduced, in light of the revised estimates of property tax revenue available for schools in the next biennium. She said the Department of Taxation’s final assessed valuation showed an increase of 12.2 percent in the first year of the biennium and 9 percent in the second year. This resulted in $9.2 million additional revenue the first year of the biennium and $8.5 million the second year. Ms. Botts said in the revised information from the Budget Division, General Fund appropriations were reduced by those same amounts, $9.2 million in the first year of the biennium and $8.5 million in the second year.

Ms. Botts informed the committee issue No. 6 ties to issue No. 7. The question is whether General Fund appropriations should be reduced or, as issue No. 7 addresses, whether the appropriations should be retained at the level originally recommended by the Governor, or some amount in between, and the new money be used to fund identified needs. She said the committee had identified needs in the education system and some needs have been brought to the committee by various individuals in testimony. She identified the following examples:

• Inflation.
• Removing the vacancy savings factor recommended by the Governor (approximately $2.3 million a year).
• Increasing money for textbooks and instructional supplies.
• Covering increases in group insurance.
• More money to support educational technology.
• Covering potential revenue shortfalls, such as the revenue from mineral leases on federal land or motor vehicle privilege tax.

Ms. Botts reminded the committee she had provided them with a memorandum about the shortfall in the revenue from mineral leases on federal land, which will be about $2 million a year.

Ms. Evans said the decision point here is how the committee wants to handle the new revenue and "plug the holes" mentioned by Ms. Botts. She said one of the items that gives her concern is the vacancy savings factor, because that is also part of the "2 percent roll-up costs" and the committee may want to consider that. Also, she said, the subject of inflation is always controversial. Ms. Evans said Ms. Botts has provided a number of items, of which the committee can choose none, some, or all. Availability of funds will be a prime consideration, she stated.

Ms. Botts pointed out the committee had been provided information on inflationary adjustments recommended in The Executive Budget. She said The Executive Budget basically only provides inflation increases for utilities, liability and property insurance, postage, and "other fuel."

Mr. Dini stated the vacancy savings factor is critical. He said the committee needs to know the rationale for not allowing an inflation factor for such things as textbooks, because Nevada is in a new era, which brings new courses to teach. He said he could not see how the school districts could handle the changing needs with the money that would be available. He added there would almost certainly be an increase in group insurance throughout the state as the cost of medical care continues to rise. He stated the committee should review all this carefully, or some of the school districts that are not growing could be crippled and become unable to meet the education mandates.

Ms. Evans asked local school district representatives, when providing testimony, to include in their remarks comments about the potential problems for the committee’s consideration.

Senator Coffin also asked for comments from witnesses about property tax levels. He noted he had previously raised the issue of property tax caps and Paul Johnson, Finance Officer, White Pine County School District, responded with information on the impact of changing the property tax caps to allow counties to go to the constitutional maximum. He asked that Mr. Johnson report to the committee for the record and said it is important the committee hear testimony from the small counties.

Ms. Evans agreed that is a very important issue for the Legislature. She said White Pine County, Lincoln County, and several other counties are struggling with decaying and condemned buildings and she said the safety and well-being of students and faculty is at issue.

Ms. Botts directed attention to issue No. 8, which is whether pupils attending school part-time should be counted as less than one full pupil. She said S.B. 213, as amended, provides a method of counting pupils, for appropriation purposes, who attend school for a portion of the day from private or charter schools or who are home-schooled pupils.

Ms. Botts said the question is whether all regular public school pupils should be counted based on the portion of time the pupils attend school.

Ms. Botts stated issue No. 9 is how the $8 million budgeted for school improvement programs might be spent. She said the following statewide programs, which focus on improving academic achievement of pupils, have been suggested and the Budget Division has concurred with this list:

• Approved remedial education programs for low-achieving pupils ($3 million to $6 million a year).
• Professional development to help teachers teach to higher academic standards ($1 million to $3.5 million a year).
• Developing and implementing new standards-based exams for grades 3 and 5 in reading and math ($300,000 each year).
• Contracting with a testing company to improve the high school proficiency test ($600,000 to $900,000 each year).

Senator Raggio pointed out this is not a simple issue and emphasized this is the area of highest priority for the committee to deal with if Nevada is going to continue the efforts for school reform and improvement. Otherwise, he said, everything done to date will fall by the wayside and all the problems that have been suggested as rooted in an inferior education system will be aggravated beyond belief. He said he was not sure the $8 million assigned temporarily to this area is adequate. He said that as chairman of the Legislative Committee on Education, he had asked the State Department of Education, the legislative fiscal staff, and the budget office to work as diligently as possible to "marshal all the assets that can be put into this corral." He said this is important because if Nevada does not first address all remedial education programs, this state will have many more problems resulting from children who are disillusioned, inept, or inadequate to go from one grade to another. He reiterated the remedial program effort must be fully funded so nobody "slips through the cracks."

Senator Raggio stated the professional development of teachers is equally important because it does no good to raise the standards for learning without raising the standards for teaching. He said he is asking everybody, on behalf of the Legislature and the education community, to work together unselfishly and collectively to ensure teachers are in a performance mode to teach to the new standards. He said that hopefully this Legislature is not going to argue about who gets the money to do this. The argument will be about what is the most effective way to ensure teachers are trained as fully and quickly as possible to teach to the new standards. He opined it does no good to do this if there is no way to measure results in realistic fashion. He said this is not just "item No. 9 on a laundry list."

Senator Raggio said when the committee returns to issue No. 7 to deal with inflation, vacancy savings, and so forth, it will find all these issues important. But, he said, unless the committee deals with these school improvement measures, it might as well forget the rest because Nevada will be "going down the same old trail." He said Nevada has been trying to "get off the dirt road and onto a paved highway" to some higher education standard with students who can compete with one another in their schools and across the world. He referred to Mr. Kiang’s testimony regarding the fact that minorities are having a tough struggle with this, as everyone else is. He said that thankfully no one has suggested Nevada "dumb down" the tests or give someone a false grade to "get them by." He said Nevada must make a strong effort to ensure that, in the five times they have the opportunity, students are able to pass so when they do graduate their diplomas mean something.

Ms. Evans said the committee shared Senator Raggio’s concern about the importance of those items. She said there is also a great deal of interest on the part of parents, teachers, and schools regarding remediation for schools that have just recently come out of the category of "low achieving." She agreed that if the state takes away the resources provided to gear up, those districts will just simply fall back. She said this is part of a matrix of support for higher standards and concurred that issue No. 9 is at the top of the list.

Ms. Botts addressed issue No. 10, which she explained is a reminder that the estate tax money must be used to enhance, improve, or increase school district expenditures and should not be used to supplant existing revenue.

Ms. Botts said issue No. 11 identifies additional programs the committee might consider, if additional money becomes available. She said one is SMART, the Statewide Management of Automated Record Transfers, which was begun in 1995. This is expected to be completed in all school districts, except Clark County because of the size of the task, by the end of June. Ms. Botts noted A.B. 655 contains an appropriation to complete the SMART system.

Ms. Botts said another item for consideration is continued funding for educational technology efforts. She referenced comments made by Fred Dugger, Special Consultant to the Nevada Legislature, who was the manager of information systems for the Legislature for 10 years prior to his retirement and was the director of the Department of Information Services for the State of Nevada executive branch for approximately 8 years. She said at an earlier committee meeting Mr. Dugger indicated the Commission on Education Technology had pared its request to three high priority items:

• Access to school libraries for a computerized database.
• Funding for schools that might have been missed in the appropriation last session, to get all the schools to level 1 technology, which is one computer per classroom or the equivalent in a laboratory.
• Funding for repair, replacement, maintenance, and upgrades.

Ms. Botts said another item for consideration is continuation of the satellite downlink project begun in 1997. She said Clark County School District received an appropriation last session of $527,000 to provide satellite access to all schools and to convert from an analog system to a digital system. She indicated the district did not complete the conversion for all schools because there were more schools to convert than had been planned.

Ms. Botts said another item for consideration would be the state-funded School-to-Careers program. She said that for 4 years, $2 million in state funding has been added to the School-to-Careers program and that has not been recommended for continuation.

Ms. Botts said remaining items for consideration include expanding English as a Second Language programs, early childhood education, educational programs related to the Holocaust, assisting rural school districts with replacing unsafe school buildings, and several miscellaneous programs.

Ms. Botts reminded the committee Humboldt County School District had previously testified about the school district’s suggested solution to the problem caused by the shortfall in the net proceeds of mines revenues.

Ms. Evans directed attention to the document "Distributive School Account (DSA) 1999-2001 Biennium" (Exhibit F). She said it includes estimates of changes in revenue for each year of the biennium, although projections have not yet been received from the Economic Forum. She said also included are estimated costs for each year of the biennium for each possible addition previously identified. Ms. Evans said the committee will need to make decisions very soon and these estimates will give the committee some idea of what each would cost. She said estimates would be updated as new information becomes available.

Senator Coffin pointed out the list of possible additions identified by staff do not include all the things that have been discussed. He recommended the next generation of this list include all proposed additions, so the committee can rank them by vote. He said there are also related bills with fiscal notes in both houses that should be included on the list. He indicated that when the revised list is prepared it should be a total list, not a filtered list.

Ms. Evans agreed and explained this list is a "first cut" to get the committee started. She cautioned it is a "work in progress" and the estimates are "ball park." She added that, as Senator Coffin pointed out, this is not to be viewed as a final, comprehensive list.

Senator Coffin also requested an additional category be added to the revenue page, "allowing counties to increase property tax rates." He said he would be interested in seeing an estimate of how much additional revenue that would yield.

Ms. Botts asked for clarification whether Senator Coffin was talking about tax revenue for financing capital projects or for school operations. Senator Coffin asked whether there is any prohibition against spending property taxes on school operations. Ms. Botts said there would be a problem if it were optional for school districts to use that for school operations. She said the DSA is based on the fact that all districts dedicate a mandatory 75-cent property tax levy for school operations. She explained that in other states where local school districts are allowed to move that amount up or down, disparity occurs. She reiterated all Nevada school districts currently have a mandatory 75-cent property tax contribution for operations, but districts have the option to use property tax on their "debt side."

Senator Coffin said legislation has passed allowing pass-through on property tax because of what the state has "loaded on the counties to pay for debt." He said he needs to know what the options are for those counties and how much revenue that would yield. He said if every county needs to raise taxes so a small county can raise taxes, the committee needs to know that.

Ms. Evans asked Ms. Botts to address two other revenue items which will impact the committee’s decision-making. Those revenues are the motor vehicle privilege tax and the revenue from mineral leases on federal land.

Ms. Botts referred the committee to the document "Privilege Tax on Vehicles, Collections History Commencing with Fiscal Year 1987" (Exhibit G) She said The Executive Budget recommended increases in the motor vehicle privilege tax of approximately 15 percent the first year. She noted the Budget Division’s worksheet shows a 30 percent increase over the base year to the first year of the biennium, which is a 2-year span. Ms. Botts said that in the second year of the biennium 11.7 percent is recommended based on the history of collections and growth in retail sales of autos. In contrast, she said, in the information sent to school districts to assist them in preparing their budgets, the Department of Taxation estimated 5.88 percent per year. The Department of Taxation admitted their estimates were conservative, however. Ms. Botts pointed out there is a $12 million difference between the estimate in The Executive Budget and the estimate of the Department of Taxation.

Ms. Botts informed the committee the year-to-date collections as of the end of February 1998 amounted to a 6 percent increase over the same period in the prior year. She added year-to-date sales of autos were up 12.7 percent through February 1999.

Ms. Botts said she had met with tax administration staff from the Department of Motor Vehicles and Public Safety (DMV&PS) and neither she nor they were able to determine why the revenue had dropped, considering the strong growth in population and auto sales. She said she had asked DMV&PS to report on revenues through the second week of April, but she had not yet received that report.

Ms. Botts offered the following information, should the committee need tax revenue projections now to proceed with its decision process: The 6 percent from the Department of Taxation may be low, although that is what was reported through February 1999; preliminary information from DMV&PS through March 1999 indicates 9 percent; the 15 percent assumption in The Executive Budget may be optimistic.

Ms. Botts pointed out the projected increases used for estimates in the handout "Distributive School Account (DSA), 1999-2001 Biennium" (Exhibit F) were 10 percent the first year of the biennium and 9 percent the second year. She noted if this occurs, there would be a shortfall of approximately $5 million the first year and $7 million the second year.

Senator Raggio asked whether that is the same as the estimate from the Department of Taxation. Ms. Botts said it is in between the estimate from the Department of Taxation and The Executive Budget.

Ms. Evans agreed the amount of the shortfall is baffling considering growth in population and auto sales, but she said the assumptions made by the budget office are equally baffling, since nothing in recent years has been even close to 15 percent. She noted the committee will now have to deal with "that hole."

Regarding revenue from mineral leases on federal land, Ms. Botts said the Distributive School Account receives money from the federal government from revenue from leases of federal land for minerals. She said it is budgeted in the current year at approximately $5.8 million. She pointed out that through April 2, 1999, $2.2 million had been received. She said she had contacted the Bureau of Land Management (BLM) and learned the state will probably receive no more than $3 million. She said that for the coming biennium the Budget Division estimated $5.1 million. The handout prepared for the committee "Distributive School Account (DSA), 1999-2001 Biennium" (Exhibit F) estimates $3 million each year. This results in a projected shortfall of approximately $2 million each year. Ms. Botts reported that the individual she worked with from BLM did not expect revenue from mineral leases on federal land to increase in the near future.

Senator Rawson asked what leeway the districts have now to transfer funds between budget years; that is, whether districts must revert or, instead money can be moved between years. He recalled a suggestion in one of the handouts to provide statutory authority to transfer money between years.

Ms. Botts clarified the suggestion in the handout. She said the Legislature provided a supplemental appropriation to the DSA in the amount of $17.9 million. She explained that now, since it is known there will be a shortfall in revenue from mineral leases, that $17.9 million supplemental appropriation may not be sufficient for the DSA. She said that rather than doing a second supplemental appropriation in the current fiscal year, the Legislature could allow the State Department of Education to borrow from the appropriation for the next biennium to finish out this year. She noted a similar action occurred in 1991.

Dr. Brian Cram, Superintendent, Clark County School District, testified the proposed budget would reduce the statewide DSA per-pupil allocations by about $33 in FY 2000 and about $41 in FY 2001. He added that in FY 2000 a statewide reduction of approximately $10 million would occur. He said he pointed this out because of the statements made that somehow the districts have been made whole or that districts will be held to the prior-year levels. He emphasized that is absolutely incorrect. In real dollars, he stated, that has not occurred at all. Dr. Cram pointed out that in Clark County the per-pupil reduction will be $36 in FY 2000 and $42 in FY 2001. He said this results in a reduction of about $7.5 million in FY 2000 to the children in his district.

Dr. Cram expressed that philosophically the budget cuts are bad because they come at a time when there is great enthusiasm about what is happening for the education system in Nevada. He recalled testifying earlier in favor of improving academic standards and accountability and said Nevada must provide the resources to make sure that happens now. He said the great news is everyone is in the same boat now. The Legislature has a greater realization of the issues and of what it takes to "ramp up" achievement and the school districts have a greater understanding of the Legislature’s desire to do that. He said both are "talking the same talk" for the first time and that is good news.

Dr. Cram noted there are minor things that need to be adjusted and minor disagreements, but basically Nevada is on the right track, finally. Now Nevada must provide the resources and use those resources in the most efficient manner to make sure those things happen. He reiterated that he regrets these reductions occurred at a time when Nevada is moving ahead, because, although money is not the only issue, it certainly is an important one. Dr. Cram stated he finds the reduction in real dollars compatible with the increase in real interest in raising standards and raising achievement. He said Nevada should not "waffle one inch" on raising standards and achievement.

Dr. Cram said these cuts are real cuts to the school districts, "whether you call them the vacancy factors or something else." He maintained, "If it looks like a duck, quacks like a duck, walks like a duck, it is a duck, or in this case a true budget cut."

Dr. Cram stated that although there may be arguments about the amounts, there is general agreement Nevada has per-pupil funding below the national average. When that condition exists, budget cuts are especially significant, because of the smaller base. He said when he hears comments that the school districts have been made whole his answer is, "Let me tell you how deep that hole is in Clark County." He said Clark County School District has not been made whole with a loss of $7.2 million.

Dr. Cram said the other factor that is less observed by the public, but is almost insidious in its nature, is the fact that the base is not properly inflated. He said that retracts significant dollars in a hidden manner and is compounded over multiple years.

Dr. Cram agreed with Senator Raggio that Nevada is into this venture now and it is important to finish. He said that to do what some other states have done and retreat from the issue because it became difficult would be a waste of money and is not typical of Nevada. He stated the bottom line is that Nevada should not quit because of funding or disagreements on issues. Dr. Cram said it is absolutely correct to say Nevada must put additional resources into remedial programs and must face that issue now that it has been "mutually identified."

Dr. Cram voiced his opinion that money should be invested in teacher training. He said he had been an open critic in Clark County that teacher training has been atrocious. He indicated he had been engaged in a battle to ensure school districts are equal players in determining the curriculum and in defining exit exams at the University of Nevada, Las Vegas (UNLV). He requested the Legislature ensures that UNLV continues the initiative to increase the number of teachers produced by the university system or there will be serious recruitment problems as early as the next school year. He asked that the Legislature also ensure the university does not withdraw money from that area because the university says it needs the money elsewhere.

Dr. Cram reiterated the vacancy factor irritated him. He added that when the base is not properly adjusted to fund inflation on textbooks, instructional equipment, group insurance, and other items, "it is just a real loss, no matter how well-disguised it is."

Dr. Cram informed the committee that school districts are shifting significant amounts of money from regular education to subsidize special education. He said he agrees special education programs are important, but the committee needs to know what school districts must do to fund special education programs.

Dr. Cram said that for years Nevada has had a visionary funding plan – a plan that other states are just embracing because of class-action lawsuits.

Dr. Cram said he did not believe the state revenue estimates. He noted the projections follow a typical pattern he has seen before. First Nevada declares an absolute state of emergency, then money starts to flow in and it is discovered the state can do more than was specified in the original catastrophic predictions. He said his concern has been: When the money starts to flow in, who is going to be first in line—special interest groups or Nevada’s children? He said Nevada should definitely cover the shortfalls. School districts should be made truly whole, with at least the same as last session in real dollars. He said Clark County has been able to make significant progress but still has a long way to go. The remaining schools require an infusion of training, money, and, on the part of the district, additional effort. "The district is down to the tough issues now and has already dealt with the easy issues," Dr. Cram stated.

Dr. Cram asked the committee to keep Nevada’s children in mind when more powerful lobbyists present other issues. He asked the committee to remember what will happen with small children who have great difficulty surviving in at-risk schools. He said Nevada cannot afford to let one child "go down." He concluded by saying that is what this is about today and that is why this is the most important hearing in the session.

Mr. Goldwater noted he had been saying there were cuts in this budget and his comments have not been well-received. He said he is glad to hear someone else recognizes it. He indicated there are things that can be done to ensure everyone remains whole. He asked for Dr. Cram’s thoughts on whether to roll the class-size reduction, school counselors, and special education funding into the DSA. He asked what the implications of that plan are for school districts.

Dr. Cram responded he would keep class-size reduction and special education funding outside the DSA. He said there is some advantage to pulling together some programs for flexibility, but not class-size reduction and special education. If those two programs were rolled into the DSA without applying the old formulas, Clark County would lose $4.2 million. Another reason to keep those programs separate is they are unique programs with unique beginnings and both programs should be separately tracked. He emphasized that if they are rolled in, the funding should not be reduced. Special education and class-size reduction are both mandated and have specific program requirements, Dr. Cram noted. He pointed out that flexibility for these two programs could be accomplished without rolling the funding into the DSA.

Mr. Goldwater assured there is not one political "mover and shaker" in the building who would be able to "out influence" one child in Assembly District No. 10.

Senator Raggio pointed out the Governor was a great superintendent of schools for Nevada and maintains his desire for a quality education system. He indicated the testimony being provided today about cuts in basic support contradicts information the committee has reviewed. He said he was interested in seeing precisely what the cuts are that Dr. Cram talked about and pointed out that when considering funding for education, he considers the total funding per pupil. He said total funding is not necessarily just the guaranteed state support because there are other resources that should be factored in.

Senator Raggio pointed out the total per-pupil funding for education in this budget increases from $4,837 in FY 1998 to $5,480 in FY 2000 and $5,504 in FY 2001. He said that is "hardly a cut" when the total funding has been increased, and that is what this body and the school districts must consider. He said the big picture must be kept in focus when considering issues such as the DSA, class-size reduction, unit funding for special education, and counselor programs. He said that although he is mindful of Dr. Cram’s remarks, he believes Nevada should receive credit for the many things that have been done for education.

Senator Raggio referenced Dr. Cram’s comments on vacancy savings. He explained that is a process used in budget preparation because it recognizes that not all positions are filled all the time in a school or a state agency. It is a process necessary for financial responsibility and accountability and to identify all available resources. He pointed out that Clark County had funded at least an additional 1 percent increase in school district salaries in the last round of contract negotiations. He said much of that undoubtedly came from vacancy savings. He reiterated it is something the state must consider when budgets are constructed.

Dr. Cram commented that school districts had never participated in vacancy savings adjustments before. Senator Raggio replied it is, nevertheless, available money. He said he wanted to present another fact to the committee. He said at "count day" school districts are guaranteed a certain amount of money for each of the students counted. Any growth in the number of students beyond "count day" is the school district’s financial responsibility. He said factors such as vacancy savings have in the past been applied to meet that expense. He informed the committee that so far this year Clark County’s net gain since "count day" is about 800 students. Senator Raggio said he would appreciate detailed documentation on Dr. Cram’s statements for the committee to include in its considerations.

Mr. Goldwater indicated Senator Raggio had brought up a valid point about the basic support level, which he said is why he (Mr. Goldwater) has been addressing the consolidation of counselors and special education funding into the DSA. He pointed out that consolidation of programs into the DSA, the "roll-in process" is artificially inflating the basic support. He said the committee has information from legislative staff documenting that when those items are removed, the statewide average basic support declines from $3,804 in FY 1999 to $3,798 in FY 2000. He emphasized that when the inflation factor is added in, the reduction is even worse. He said he does not think anyone in this building is doing that on purpose, but the Legislature must be mindful of what it is really doing. He explained he has tried to bring those issues out to help this committee ensure it does not inadvertently cover up a decline in basic support.

Paul Johnson, Finance Officer, White Pine County School District, said he wanted to share with the committee the significance of the DSA revenue for the White Pine County School District general fund and the impact this DSA proposal will have on the White Pine County School District. He referenced the document "White Pine County Proposed DSA" (Exhibit H) and said it shows 61 percent of the total General Fund revenue comes from the DSA. It is a significant portion of White Pine’s general fund revenue. He said if this portion of revenue does not increase to compensate for basic increases in costs to the district’s general fund, his district will have a problem making ends meet.

Paul Johnson said White Pine County School District will need to rely on local funding sources to compensate for the marginal increase in DSA revenue. He said that is a serious problem because White Pine County has a declining tax base, declining local school support tax, and declining motor vehicle privilege tax. He said local sources will not be able to pick up the slack. He added that, as the DSA is currently proposed, there are certain fixed costs which will not be met, including necessary expenses to maintain facilities.

Paul Johnson said a special appropriation from the last session was tremendously helpful, but without the continuation of that support, the district’s general fund cost will increase by about $43 per student. Additionally, he said, there are cost increases for utilities and fuel, maintenance for vehicles and facilities, continuing education, health insurance, and special education increases. He pointed out that for White Pine County School District these cost increases total $161 per student. He compared that to the revised increase from the DSA of $27 per student and said it is far short of filling the basic needs.

Paul Johnson said White Pine County School District has done what it can internally to reduce expenses. He explained his district has refinanced its debt, reduced staff, reduced professional development, reduced staff travel, and reduced contract expenditures. He noted the district established spending freezes in the middle of the year to create an ending fund balance to carry forward to help fund the next year. He pointed out that capital repair and maintenance have been reduced to only those projects necessary for life or safety. He added that White Pine County would also be increasing student teacher ratios in grades 4 through 8 to balance the budget next year.

Paul Johnson identified items that cannot be funded under the current DSA budget plan. He said the first is implementation of Core Knowledge, which was the key to White Pine County’s success in improving test scores last year. Another is replacing aging school buses and district vehicles. He noted his district has vehicles so old they are actually a health risk. He mentioned his district only has school lunch programs in two schools and will not be able to expand that program. He said his district will not be able to afford step increases in salary for staff and will not be able to adequately fund repairs and improvements of facilities and transportation. Finally, he said, the district will not be able to have an ending fund balance to stabilize swings in revenues.

Paul Johnson said considering the proposed DSA and the anticipated local revenues, the district will actually have less revenue in FY 2000 than in FY 1999 to accomplish the same things. He pointed out the existing DSA proposal does not meet basic increases in costs. He reiterated 62 percent of the district’s total general fund revenue is from the DSA, so it is a significant portion of the general fund. He testified that if the DSA does not cover basic needs, the district will have a problem and may have to sacrifice the many positive efforts of the past few years.

Paul Johnson reiterated declining local revenue compounds the problem, causing the district to have fewer dollars for regular education. He said what school districts need is a real increase in funding to cover the demands. The basic support must cover basic increases in textbooks and other tools students and teachers need to provide a quality education to achieve the higher standards.

Paul Johnson stated that as finance officer for the school district and as the parent of a first grader, he has a responsibility to do everything he can to get the necessary funding.

Senator Mathews asked whether Mr. Johnson would choose to have special education and class-size reduction rolled into the DSA. Mr. Johnson replied that when budget categories are rolled together, there is a risk each item will lose its character and identity. Additionally, he noted, special education costs have increased three times faster than funding.

Ms. Evans mentioned her concern regarding counselors. She noted that under the present system each district is guaranteed at least one counselor. She said if the funding for counselors is rolled into the DSA there would not be enough money in some districts to fund even one counselor. She directed the committee to work towards a solution so smaller districts are not penalized by getting just a few thousand dollars, simply because of size.

Clark (Danny) Lee, Lobbyist, Nevada Adult Education Association, informed the committee 2 percent of the total budget is for adult education and that includes the regular program and the prison programs. He pointed out this program could disappear if the currently proposed budget is approved. He informed the committee there are currently 15,000 students in the adult program plus many high school students who attend to make up deficient credits to get a diploma. He noted the latter aspect decreases the dropout ratio.

Mr. Lee explained adult education fulfills a guarantee that everyone in the state can get a high school diploma. He warned that dissipation of the adult program could be viewed as a denial of rights to achieve a high school diploma.

Mr. Lee requested the committee use Ms. Botts suggestions and noted the Nevada Adult Education Association especially supports the option to transfer all funding for adult education programs from the DSA to the budget account for Continuing Education.

Mike Schroeder, Business and Financial Services Administrator, Washoe County School District, testified that when the budget was presented to the school districts as a group, the districts were told it was a "status quo, hold-harmless" budget and the only cut was the vacancy savings. He said the districts are discovering that is not the case as they put together proposed budgets for the coming year. He informed the committee the actual per-pupil funding in the DSA decreases and the decrease is supposed to be made up by revenues outside the DSA. He explained that is partially true but those revenues will not make up the total decrease.

Mr. Schroeder stated that comparing all current revenues to projected revenues for the coming fiscal year, the per-pupil revenue increases by $5. He said that increase essentially contributes only to the roll-up costs, which are additional costs of employees’ movements on salary schedules. He said those roll-up costs are actually $64 per pupil greater than the prior year, so the $5 only covers a fraction of these costs.

Mr. Schroeder said the district must file a balanced budget and has tried to do that in a manner which will have the least impact on children and education in the classroom. He said the district did that by using $3 million of the fund balance and by reducing operational budgets by 5 percent, including materials, supplies, textbooks, services and equipment. He informed the committee that using the fund balance is not advisable fiscal policy. First, he said, it leaves no margin for error in projections and second, it leaves no reserves for unforeseen circumstances. He compared it to an individual using his only savings for daily expenses.

Mr. Schroeder said the expenses projected in the recommended budget do not consider increases in the cost of health insurance, which may be 10 to 12 percent. He testified that without additional resources the district will have to decrease benefits, which "takes money out of your employees’ pockets."

Mr. Schroeder emphasized that, although school districts were told this was a "hold-harmless" budget, it really is not. He noted there have been many favorable comments by legislators about education and he urged the committee to do what is necessary to continue to appropriately fund education.

Senator Raggio asked Mr. Schroeder to submit to the committee his analysis of Washoe County School District’s total projected funding.

Barbara Clark, Lobbyist, Nevada Parent/Teachers Association (PTA), said she would not be able to talk about reserves, vacancy savings, or projections, but she is convinced the DSA needs more money. She said she represents parents who put millions of dollars into the education system every year and hundreds of hours of volunteer time in the classroom. She informed the committee that the PTA provides updated encyclopedia, updated software, added turf, playground equipment, band uniforms, and athletic equipment. She said parents are in the classrooms doing one-on-one tutoring, copying, and so forth and the value of all that equates to hundreds of thousands of dollars.

Ms. Clark said the PTA has been a strong advocate of the class-size reduction effort from the beginning. She said parents are concerned when flexibility is discussed and pointed out that even now, when a 16:1 classroom is described it is not really 16:1 because some classes have 19 or even 21 pupils before another classroom is justified. She said if the increased flexibility allows for raising the ratio to 22:1, it would really be 26:1 and soon Nevada will be back to the original classroom size. She pointed out parents are not invited to participate in the process to determine whether there should be waivers for such things as the Reading Recovery Program. She said if the Legislature provides flexibility for school districts, it would be important to mandate parent involvement.

Ms. Clark concluded by stating there is no value in standards if there are no assessments and if schools cannot remediate those who need the extra help.

Assemblyman John C. Carpenter, Assembly District No. 33, addressed flexibility in the class-size reduction mandates. He said he had not been a fan of class-size reduction and the test scores show it has not really worked. He said he met with 10 teachers from Elko representing the Nevada State Education Association (NSEA). He said the teachers were concerned about how Nevada is implementing class-size reduction, which is by having 30 to 34 children in one classroom with 2 teachers. He said the teachers feel flexibility is needed to achieve the goal of 20 children in one classroom with one teacher in grades kindergarten through 6.

Mr. Carpenter encouraged the committee to provide this flexibility. He said the teachers have learned that what Nevada is doing right now does not work. He explained that if there are 32 children in a classroom with 2 teachers the children use each teacher against the other because no two teachers teach exactly alike. He noted the teachers in Elko would like to have the flexibility for the school administration to work toward a worthwhile goal.

Senator Mathews asked whether Mr. Carpenter is saying class-size reduction does not work or he is saying that for it to work the infrastructure must be in place.

Mr. Carpenter said he believes Nevada needs one teacher in one classroom with 22 students per classroom and maybe someday 16 students per classroom. But it is not working the way it is now being done, with one classroom, 32 children, and 2 teachers. He said the districts need flexibility to work in the right direction and it might take 10 or 15 years to reach that goal. He maintained that if Nevada had the money that has already been spent for class-size reduction, around $300 million, and spent it on classroom construction, Nevada would "be there" today and would have a real program it could be proud of. He emphasized Nevada needs to start towards that goal today.

Senator Raggio said Mr. Carpenter’s comments prompt him to review how the state arrived at where it is today. He said that in 1989 the Legislature authorized class-size reduction to be implemented in the following biennium. He mentioned the Legislature examined the issue over several legislative sessions before authorizing class-size reduction. He said there was much reluctance on the part of legislators to enter into the venture because many legislators envisioned exactly the kind of problems Mr. Carpenter and others allude to.

Senator Raggio said the Senate Committee on Finance brought in practically every school district, expressed misgivings about class-size reductions, and asked whether the school districts would be able to provide the classroom facilities to ensure a 16:1 class-size ratio, because the committee did not want to implement the program without that assurance. He emphasized that the responsibility for building classrooms was and is with the school districts. He said the school districts and NSEA said, "Yes, we can guarantee that." He pointed out the Legislature did not authorize it without that guarantee. Now, he said, Nevada has expanded class-size reduction down to the lower grades. The Legislature has continually asked the school districts whether they were in a position to meet their obligation on facilities. He said some school districts have come forward in intervening years and said, "Well, we can’t actually build the classrooms, but we believe firmly in this team-teaching concept." He recalled the teachers union was also very adamant this was a great concept.

Senator Raggio said the Legislature did not create this problem, which came about because others decided to do it a different way. That is not what this Legislature intended when it embarked on class-size reduction, he declared.

Senator Raggio also pointed out he does not want to see the funding change. He said he wants the law to stay the same to guarantee the adequate number of teachers, which is what the state is funding on class-size reduction. He said the committee will consider added flexibility because of the situation the program is in today, rather than what the Legislature intended.

Senator Raggio cautioned those present to not blame the Legislature for creating this situation. He said it was the school districts who proposed and advocated for the concept of team teaching and said team teaching was a "doable alternative." He pointed out some teachers and students still say it works. He said it is important to recognize those districts that have come to the realization there are problems with the team-teaching concept and not being able to provide an actual classroom for each of the reduced-size class. As long as Nevada maintains the ratios that are in the law, there are programs available through flexibility to better utilize this concept. Senator Raggio said parents and others have been given the impression the schools have "nice little classrooms" with 16 students and one teacher. He said that is not the fact in many cases.

Senator Coffin said he remembered vividly the discussions in 1991 about class-size reduction. He said the Senate recognized the problems and passed a school construction measure, but it failed to pass the Assembly. He pointed out the primary beneficiaries of that measure would have been the small counties and there would have been less team teaching and more classrooms.

Senator Coffin noted the 10 teachers Mr. Carpenter talked to in Elko are important but suggested he also talk to other teachers in his district, since there are vastly different viewpoints in every district. Mr. Carpenter responded that the teachers he talked to represented a great majority of the teachers.

Mr. Carpenter agreed with Senator Raggio that when the class-size reduction effort began, people thought Nevada would actually reach the class-size goals and that has not happened. He noted the Elko County School District has done its part regarding school construction. He said that last year, except for Lyon County, Elko had the highest rate for school construction. He said with that funding in place and with increased flexibility his district can work towards true class-size reduction. He said a class-size ratio of 22:1 through the sixth grade is a good goal.

Marcia R. Bandera, Superintendent, Elko County School District, stated her district is requesting a mid-course correction in this program for Elko County School District and perhaps for others. She added that sometimes a plan must change as it is being implemented. She pointed out that "we grew like crazy" and Elko learned how to use modular buildings. She said the growth is finally flattening out. Ms. Bandera said Elko County School District is looking for an opportunity to make creative and effective changes and other districts may also want that opportunity. She emphasized Elko has been and will be accountable for every dime spent. She reminded the committee that Elko County School District decided 20 years ago to hold kindergarten at 20 students to 1 teacher per session and they have held to that mark. She said her district is hoping to negotiate with the Legislature for an opportunity to show the Legislature another method that will work for children in Elko and other school districts.

Ms. Bandera voiced concern about group health insurance and requested an increase in the funding for each year of the biennium. She informed the committee that teachers have done their part during negotiations and have agreed to increases in deductibles and increases in employee payments on prescriptions and other coverage categories. She said even though the teachers have cooperated with the district, costs have increased heavily and quickly.

Ms. Bandera also requested inflationary increases on pupil transportation. She said her school district covers 17,146 square miles and students need to ride the bus.

Lastly, Ms. Bandera requested the committee seriously consider the definition of the special education unit one more time. She stated, "Not just for adding related services but also the use of instructional aides when the Individualized Education Program (IEP) says that is the most appropriate service." She said this should only be used where called for and documented and the districts should be held accountable.

Regarding class-size reduction, Senator Rawson said that when the program was originated there was funding to take the first six grades to a student-teacher ratio of 19:1. He said even though the Legislature wrote a special clause into the law to prevent it, the other grades have "crept up" in Elko and other districts. He said that is a big disappointment. He said there might not be anything that can be done about it now, because it has happened in spite of the protections the Legislature tried to build in.

Ms. Bandera responded that Elko has not allowed larger class sizes in fourth, fifth, and sixth grades, other than those caused by enrollment increases. She said her district adds modular buildings as quickly as possible. She admitted some sixth grade classes have reached a ratio of 33:1, but on the whole, her district is around 28:1, which is about where it was prior to the big growth spurt for those upper grades. She offered Elko as a "pilot test district" to try out a ratio of 22:1 and said her district would conduct any evaluations the committee would like and report back.

Bill Merrill, Budget Director, Nye County School District, expressed his district’s concerns regarding the budget and its effects. He said his district has had a 35 percent increase in health insurance. He noted Nye County has had a 93 percent decrease in mineral land lease revenues over the last 5 years. He pointed out that at the same time the county had a 100 percent increase in students. He said local tax revenue leveled out because growth in ad valorem tax increased the same amount as the net proceeds of mines decreased. He stated that although revenue has been flat, there has been a tremendous growth in the number of students.

Mr. Merrill voiced concern about the state mandates, such as the ongoing costs of the SMART program. Hopefully, he said, funding will be provided to give the district relief for the General Fund. He said the SMART program required his small county to establish and maintain network systems for connectivity. He said the district had to contract with outside telecommunications services and all available options were expensive.

Mr. Merrill testified that something has happened to the DSA formula or with the amounts recommended by the Governor. He said even though the DSA amount increases, Nye County will be behind about 5 percent of its total budget. He added that the vacancy savings factor is not going to help. He said the budget under consideration has a 6.99 percent increase or $201 per employee for insurance. However, insurance increased by $1,200 per employee. He stated that will be a significant "hit" on the district’s general fund. Theoretically, he said, "roll-up" costs for the teachers and employees will be 2 percent, which equates to a $120 per-pupil cost to the district. He said that including everything in the Governor’s budget; there is only a $40 increase per pupil in the DSA.

Mr. Merrill said Nye County School District normally maintains a 3.8 percent ending fund balance. He explained that has proven to be a prudent amount based on a number of years of history, considering unexpected loss in revenue or unexpected increase in expenses. He said the district will be at less than a .5 percent ending fund balance, depending on the outcome of the legislative session. To balance the tentative budget this year his district has cut a number of positions, including certified teachers, administrators, and classified employees. He noted that to reach a balanced tentative budget, every site and every department must take a 33 percent cut in textbooks, supplies, and equipment funds. This is the cut that affects programs the most, he said.

Mr. Merrill said most districts in Nevada are having the same or similar problems. He requested the committee review the funding in the DSA very carefully. He testified that the modifications districts have had to make will definitely have an adverse impact on Nevada’s students.

Senator Mathews asked for clarification on the amount of increase per employee for health insurance. Mr. Merrill replied it was a $1,200 increase per employee. Senator Mathews asked whether Nye County had looked for another insurance provider. He said Nye County is self-insured, but the district has requested proposals and all the other proposals were even higher.

Al Bellister, Lobbyist, Nevada State Education Association, testified his association shares the concern school districts have expressed regarding vacancy savings. He said it is particularly inappropriate, given the fact that school districts must report the actual salaries spent pursuant to the Nevada Revised Statutes (NRS) Chapter 387. He said any vacancy savings realized are already incorporated in the report and this seems to be a double hit on the school districts.

Mr. Bellister said NSEA supports adjustments for inflation for operating items. He said the Consumer Price Index (CPI) is projected to grow slightly more than 2 percent each year and that would be an appropriate adjustment rate. He echoed concern about group insurance rates. The CPI for health insurance is at 2½ times the general CPI, so 5 or 6 percent is the minimum adjustment necessary for health insurance.

Mr. Bellister urged the committee to add salary increases for public school employees to the list of potential "add-ons." Regarding the circulated document comparing teacher salaries to state employees over the last 15 years, he said a shorter-term comparison is more appropriate because of the high turnover rate in retirements, rapid growth, and the thousands of teachers hired every year. He asserted if the most recent 6 years were analyzed, there would be an entirely different picture of salary compensation. Mr. Bellister said the Legislature, over that period of time, has appropriated 13 percent for salary increases, while at the same time the CPI has increased 15 percent. He stated the appropriations simply have not kept pace with the CPI. Regarding the effects of bargaining, he said there are school districts in the state who have yet to reach the legislatively approved amount, much less the CPI. He said the schools with the highest increases because of local circumstances had increases of about 17 percent. He noted, "When you take into consideration the CPI, even the highest increases only exceeded the CPI by about a point and a half." He emphasized the need for teachers’ salary increases is great. There is a need to remain competitive with the private sector and other states as Nevada experiences teacher shortages. He reiterated the need to consider school district salaries if money becomes available.

Ms. Botts pointed out that, at the request of the school districts, she had prepared another chart which reflects the most recent 10 years, "Cumulative General Pay Increase Comparison, State Workers & Entry Level Teachers by District, FY 1988-89 to FY 1998-99" (Exhibit I).

Mr. Dini noted his disappointment in what is happening in Lyon County. He said the school district has indicated the president of NSEA in Lyon County has refused to sign the agreement for using alternative programs for class-size reduction. He said he remembered that all parties were in agreement when Lyon County led the way to implement remedial reading as an alternative to the normal class-size reduction using money allocated for third grade class-size reduction. He said that now, at a time when everyone is struggling with the funding mechanisms, NSEA in Lyon County has refused to sign the continuation of Lyon County’s remedial reading program. Mr. Dini emphasized this program has led the way in the state and Lyon County has helped other districts set up similar programs. He said the remedial reading program has been money well-spent and is helping students come up to standard and remarked he could not believe NSEA would allow this to happen in Lyon County.

Mr. Bellister said this is the first he had heard of the situation and said he would contact the local association to determine what is preventing them from reaching agreement with the school district.

Nat Lommori, Superintendent, Lyon County School District, noted the initial Reading Recovery program using class-size reduction began in the 1996-97 school year. At that time Lyon County began training using the class-size reduction funding from the 1995 Legislative Session. He said there was some flexibility to use class-size reduction funds for programs that were proven effective. He said Lyon County now has 2½ years of data proving the success of the Reading Recovery Program and plans to continue with it for many years in the future. He said the Reading Recovery Program makes the best use of class-size reduction funding by focusing on instruction for students who most need assistance. He noted that when Lyon County first implemented the program NSEA did sign off on the use of this funding for an alternative program. He explained that when the union president changed, the new president was hesitant to sign. He said that becomes a problem for an ongoing program because it is not wise to start and stop programs.

Mr. Lommori said just after a couple of years Nevada learned that a class-size ratio of 16:1 without additional training or effort did not show much difference in student achievement. He said that by looking "outside the box" and analyzing how student needs can better be met, Lyon County came up with the Reading Recovery Program and it has proven successful. He said his district urges continued flexibility. He noted there is only one team-teaching situation in Lyon County at this time, and the rest are all in single classes.

Ms. Evans requested the school districts provide the definition they have all agreed on for the "flexibility" everyone is requesting.

Wade Johnson, Comptroller, Lyon County School District, referenced his handout "Lyon County School District, April 21, 1999" (Exhibit J.). He explained it quantifies concerns such as the vacancy factor, the technology issue as it affects Lyon County, and samples of inflation.

Regarding the technology issue, Mr. Johnson said ongoing technology costs should be built into the base budget. He said Lyon County School District has approximately 1,050 functioning computers right now at an estimated value of $1,000,365. He added that the peripheral equipment, such as printers and networking hubs, is another $200,000. Assuming a 5-year life expectancy, Mr. Johnson estimated annual replacement costs at $300,000. He said at a recent meeting with school principals that he learned the number one concern for the success of this technology implementation was the need for more support and said anything the Legislature can do to help would be greatly appreciated.

On the issue of whether to combine programs into the DSA, Wade Johnson said Lyon County School District would be in favor of combining the adult diploma program into the DSA for increased flexibility. He said that currently adult diploma program funds are to be used only for students who have left high school. He said his district does not have adequate resources to start an alternative education program. However, he said, with flexibility the district could better utilize those funds by serving not only adults, but also students who are currently dropping out of school and are reported as such.

Sandra Burton, Reading Recovery Teacher-Leader, Lyon County School District, indicated her support for flexibility with the class-size reduction money. She referenced the handout "Lyon County School District, April 21, 1999" (Exhibit J), which she said describes the Reading Recovery Program. She said Lyon County has a long-range plan to train all primary teachers for a strong background of reading literacy. She explained this program not only trains the teachers in reading recovery, but trains the entire district. To provide an example of how this program is organized, she said if there is a school with 100 first-grade students, those students will be divided into 5 classrooms of 20 students. However, she explained, there will be six first-grade teachers, because two will be trained in reading recovery and each of those two will provide one-to-one instruction for a half day and will share a classroom. The two teachers will be able to serve 16 first-grade students in a year. That is almost a full classroom of one-on-one instruction, getting those students up to speed in reading, which Ms. Burton said is so vital.

Ms. Burton said her district is able to provide this focused instruction to the children most in need using funding for class-size reduction. She referenced page 5 of the Lyon County School District handout (Exhibit J) and testified that in 1996-97 there was a 75 percent success rate; in 1997-98 there was a 79 percent success rate; in the first semester of 1998-99 there has been an 82 percent success rate.

Regarding early literacy for second- and third-grade students, Ms. Burton testified 70 to 80 percent are reading at appropriate grade levels. She noted third-grade students often arrive in the school system reading at first-grade level. She admitted this program is not a sure-fire answer for every student and said 3 to 5 percent will still need to be referred to the special education. But, she said, this program works. She said her teachers go on to train other teachers.

Mr. Hettrick said it is well-known he has not been a fan of class-size reduction, but he said he is an absolute fan of the Reading Recovery Program. He said this program is providing the increased achievement scores the Legislature expected from class-size reduction. He said the benefit of the Reading Recovery Program is that it takes care of students who actually need help; otherwise the class size is artificially lowered for everybody else by getting two teachers in a classroom. He said it sounds good, but it lowers the class size for students who do not need smaller classes. Mr. Hettrick said Nevada needs to get the class size down where it has an effect on students and that is at the reading recovery level. He said the Legislature should provide the requested flexibility, which could bring 75 to 78 percent of the students "up to level" and that is what Nevada has been trying to accomplish with education reform in this state for some years. He said the committee should recognize this need and move toward the change.

Additionally, Mr. Hettrick referenced discussions about building classrooms. He said that during the last year he had determined Nevada would have to build thousands of classrooms to reach a true class-size ratio of 16:1, with 16 students and 1 teacher in each classroom. He said Nevada is never going to fund this and should get back to programs that work, and the Reading Recovery Program works. He said it is not a matter of taking the money away, but putting the money into a program that works so the students benefit. He said the Legislature should provide flexibility and allow districts to implement programs that truly reform education in a positive way.

Ms. Evans asked Ms. Burton whether she had noticed a decline in the number of referrals to special education. Ms. Burton said there has been a decline in first grade because Lyon County School District does not encourage referrals until the student has gone through the Reading Recovery Program. She said often the "Reading Recovery child" and the "Special Ed child" look identical, and the students appropriate for special education cannot be identified until they have gone through the Reading Recovery Program.

Ms. Evans said the subject of group insurance has surfaced throughout this meeting and it is something the committee will review. She asked each of the districts to provide the amount per person per year for group insurance and the number of people covered. She said that to address this issue, the committee needs complete information.

Dan Piel, Superintendent, Storey County School District, noted his district is the third-smallest school district in the state. He said the school population represents less than .5 percent of all the children in Nevada, so Storey County is "small potatoes" in terms of the total DSA. However, he said, the children in Storey County are just as important as the children in every other school district.

Mr. Piel said many changes had to be made to tentatively balance the FY 2000 budget. He said his district opened the school year with a beginning fund balance of almost $600,000, which he remarked is sound budgeting for a small school district, but now has an ending balance of $7,572. He said his district also has a contingency budget of zero dollars. He said 4 positions have been eliminated; 1 administrator, 2 teachers, and the proposed network administrator. He said this is a large number of positions for such a small district and indicated the network administrator was desperately needed.

Mr. Piel said the interfund transfers have increased dramatically, especially in the area of special education. He called attention to the $289,000 interfund transfer to support special education. He said this is primarily a result of the need for one-to-one teacher aides. And, he said, the interfund transfer into food service, which has not yet been addressed at this meeting, amounts to $127,000. He said that last year there was a health insurance increase of 14 percent. This year it is 20 percent and that is not built into the budget.

Mr. Piel said his district’s roll-ups for FY 2000 are well beyond the 2 percent in the Governor’s budget. He said the amount of the roll-ups is between 2.8 and 3 percent.

Regarding the issue of combining funds into the DSA, Mr. Piel testified that if the elementary school counselor program is rolled in, his district will not be able to have the counselor position. He said Storey County would only receive $11,000 to fund that position in Storey County. He expects a net loss of $46 per pupil with the proposed budget.

Mr. Piel pointed out Storey County has the lowest property tax base in Nevada. He said he wished there were something he could do about that because his district has deteriorating classrooms.

Mr. Piel asked the committee to look closely not only at what the large school districts do, but also at what the small districts must do to submit a balanced budget as required.

Mr. Hettrick asked Mr. Piel whether his school district would have a problem with combining programs into the DSA if small school districts were held harmless on the counselors and other programs. Mr. Piel responded that, even then, it seems small districts never recover from consolidation of funding into a formula. He said if a method were developed in which they were truly held harmless, small districts could support it.

Henry Etchemendy, Lobbyist, Nevada Association of School Boards, said counties and school districts must depend on and use the estimated revenues from the net proceeds of minerals when they are developing budgets. He noted the estimates are not always realized and that has caused many problems. He informed the committee that school superintendents recently got together with legislative staff and developed an idea that school district budgets would be based on actual collections of the prior year, rather than estimates of future collections.

Mr. Etchemendy referenced the handout "Possible Solutions for Net Proceeds Problem" (Exhibit K) and asked the committee to consider the suggestions in the handout. He said this would be an opportune year to change the budgeting process to use actual revenues received. He informed the committee it would require a onetime appropriation of approximately $3,072,750 to be distributed through the DSA to districts that receive net proceeds of minerals revenue. He said that recommendation is described on page 2 of the handout (Exhibit K); page 4 shows total net proceeds of minerals projected by the Department of Taxation by county and what the amounts would be for each district based on the 75-cent allocation. Mr. Etchemendy asked the committee to keep this proposal in mind if money becomes available.

James Parry, Superintendent, Carson City School District, referenced his handout "Carson City School District, Financial Comparison of Responses" (Exhibit L). He said it is just one example of the committee’s issue No. 7, which is whether to use additional money for inflation. He said his district’s lowest bid for group insurance would be a 37 percent increase, which is a $700,000 hit to the budget. He said his district’s roll-ups are another $700,000, and the only way to fund them is to reduce the district’s ending fund balance.

Kristine K. Jensen, Lobbyist, Nevada Concerned Citizens, testified her organization supports the fund for school improvement referred to in issue No. 9. She said Nevada Concerned Citizens support and have followed the academic standards movement and the efforts to raise the standards. She said her organization understands the committee’s need to measure the success and to raise the standards for teaching.

Ms. Jensen said there are better uses for the state’s money than the School-to-Careers Programs. She said vocational programs are best handled at the local level with local programs. She pointed out the School-to-Careers Program was mandated by the state to acquire federal money and that federal money sunsets in the year 2001. She asked the committee to consider making better use of that money to focus on raising academic standards.

Ms. Jensen said her organization supports providing flexibility to address the needs of individual children on an individual level. She said that would be more effective than a blanket mandate for all districts. From the perspective of a parent, she said the stringent class-size reduction mandate placed on Clark County is causing the need to convert almost 80 percent of elementary schools to a year-round schedule. The elementary school year-round schedule does not coincide with the middle school year-round schedule, which does not coincide with the 9-month high school schedule. She said the impact on families is troublesome and she asked the committee to consider the flexibility option.

Mr. Dini indicated concern that Nevada Concerned Citizens opposed the School-to-Careers Program. He said there are many students who will not go on to college and need an opportunity to make a living so they will not be on welfare programs.

Ms. Jensen responded that Nevada Concerned Citizens support vocational education, but not the federal School-to-Careers Program. She said she has followed the School-to-Careers Program for 4 years and indicated she had information regarding the federal mandates the committee should consider and offered to share it. Mr. Dini said he would like that information to be provided to the committee.

Jane N. Moyle, Lobbyist, Nevada Rural School District Alliance, said she had budget impact numbers to present to the committee which are as dismal as the other districts’ numbers. She offered to commit her testimony to writing and submit it for the committee’s consideration in the interest of time.

Douglas C. Thunder, Deputy Superintendent for Administrative and Fiscal Services, State Department of Education, pointed out the department had provided a packet of materials for the committee, which includes various historical information and statistics (Exhibit M. Original is on file in the Research Library.).

Ms. Evans adjourned the meeting at 11:20 a.m.

RESPECTFULLY SUBMITTED:

Jean Laird,

Committee Secretary

APPROVED BY:

Senator Raymond D. Rawson, Chairman

DATE:

Assemblywoman Jan Evans, Chairman

Date