The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:13 a.m., on Thursday, April 22, 1999, in Room 2134 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Senator William J. Raggio, Chairman

Senator Raymond D. Rawson, Vice Chairman

Senator Lawrence E. Jacobsen

Senator William R. O’Donnell

Senator Joseph M. Neal, Jr.

Senator Bob Coffin

Senator Bernice Mathews

STAFF MEMBERS PRESENT:

Millard Clark, Committee Secretary

OTHERS PRESENT:

Donna C. West, Project Manager, Project Genesis, Department of Motor Vehicles and Public Safety, explained that Senate Bill (S.B.) 279 is a request for appropriation from the State Highway Fund in the amount of $8,631,993 for the completion of Phase II, the implementation phase of Project Genesis and the beginning of Phase III for implementing alternative delivery methods using enabling technologies. Ms. West pointed out Exhibit C, a three-page handout titled "Information on One-Shot Request from Project Genesis." She said the first page of the handout displays the budget categories that are covered in this one-shot request. She said the second page of Exhibit C shows the activities that need to be completed for the implementation of the new system and to began Phase III.

Ms. West said the first category on Exhibit C is in-state travel. She said this funding allows for up to 10 employees a week to travel. She said the activities that require travel during the biennium are to train "wizards," who will be super-trained employees who will assist their coworkers during the period of going live with the new application. She commented the wizards would be trained in troubleshooting and problem-solving in the new application, in completing the subject matter training on more complex transactions and business services, in implementing performance measures, in goal setting, in results review and continuous improvement, and to train trainers and staff in customer service. She said this funding is for per diem and airline expenses.

Ms. West said this funding enables the Department of Motor Vehicles and Public Safety (DMV&PS) to have eight more employees funded to travel each week during July and August as the DMV&PS prepares to "go live" and begins to stabilize the new system.

Senator Raggio asked whether these employees would be permanent. Ms. West replied they are permanent employees. She said there are up to 10 employees each week who could travel for the purposes discussed earlier. She said in addition to the 10 employees there are also employees on the core team, information systems staff, and subject matter experts involved in the development of the system, who, for a 2-month period of time directly before and after the new system goes live, will travel as needed.

Ms. West pointed out that the second category on Exhibit C is overtime for application training. She said application training provides education to all DMV&PS employees on how to use the new system. She said that to be effective, she will deliver this training just before DMV&PS goes live with the new application. She commented that DMV&PS needs to ensure they can pay overtime for employees who are not involved in training to work additional hours to help maintain customer service during the 7-week training period from mid-June through August 1999. She said this funding also provides overtime pay for the "wizards" to work additional hours in the first few weeks after the department brings the new system live. She said the DMV&PS offices in southern Nevada are open 12 hours a day and provide Saturday service in the major metropolitan branches. "We need to ensure that wizards are available to help employees with questions or problems with the new system," Ms. West said.

Ms. West said the third category of Exhibit C is Equipment and Operating. The Department of Information Technology (DoIT) facility charges are included in this category. She said project development and testing charges from the state facility are logged and billed separately from normal department-operation charges. She said this funding request is to continue that process so that these costs associated with developing the new technologies for Phase III can be tracked and billed separately.

Ms. West said the equipment and operating category also includes hardware costs. She said this one-shot request is to complete the purchase of the hardware and software that DMV&PS has rolled out to implement the new system. She noted that in the original implementation plan, DMV&PS was going to roll out equipment one office at a time. She said when DMV&PS contracted with Deloitte & Touche it agreed to implement using the "big bang" approach where all offices will come on line at one time. She commented that because of this approach, the hardware and software needed to be rolled out this year, FY 1999. She said that because the DMV&PS had not budgeted for this expenditure this year, a lease purchase approach which was approved by the Interim Finance Committee (IFC) was used. This one-shot includes funding to complete those lease payments, she said.

Ms. West said the equipment upgrades were also included in the equipment and operating category of Exhibit C. She said the equipment upgrades represent a contingency fund for the hardware purchase. This funding would cover the difference between actual and projected hardware costs or modification required for the hardware, the software, the network after implementation of the new system to improve performance or add hardware where no need was projected.

Ms. West said the fourth category of Exhibit C is the contracts category. She said this funding is to continue to make use of contractor services during the next biennium. She said Deloitte & Touche consulting will be contracted to complete those aspects of Project Genesis which are currently performed manually but were out of the scope of the software development for this phase of the project. Senator Raggio asked whether this was a $2 million contract. Ms. West replied it is up to $1 million for each of the 2 years in the biennium. She said each project to be included would be reviewed to identify the estimated cost.

Ms. West commented that an example of this is the case management tools for the Compliance Enforcement Division. She said this new automated case tracking and reporting system was identified during the user requirements stage of the current phase of the project.

Senator Raggio asked what BEST Consulting does for DMV&PS. Ms. West replied that BEST Consulting has been providing the DMV&PS with project management. She said that during the next biennium the firm will help the DMV&PS with requests for proposals (RFPs) and contracts for the training vendors and with RFPs and contracts for people the DMV&PS will work with to develop Internet transactions and telephone transactions as well as management of these project issues.

Ms. West said the DMV&PS will hire vendors to assist with the change management process and customer service training. She said she refers to change management as continuous improvement. She commented that once the new system is stabilized, the department wants to be able to go back to continuous improvement beginning with performance measurement, goal setting, reviewing the results of the performance, identifying barriers, and removing the barriers. She said this training is a key component of the DMV&PS employee empowerment and continuous process improvement. Ms. West said this funding will cover hiring a vendor to develop lesson plans and training materials and for training the DMV&PS staff members as trainers. She noted this funding was originally requested and approved during the 1997 Legislative Session but the DMV&PS has been unable to complete the work due to the revised work plan to accommodate the "big bang" implementation.

Ms. West said customer service training was also included in the contracts category. She explained it is to provide the DMV&PS employees with the skills and knowledge to deliver exceptional customer service. She said this training will include such topics as consistency of service delivery, resolving customer issues, dealing with difficult people, conflict resolution, and stress management due to high-contact overload in customer service. She reiterated the funding requested covers the costs associated with hiring a vendor to develop the lesson plans and training materials and training the DMV&PS staff as trainers.

Ms. West said the fifth category in Exhibit C is the supplies and training materials. She said this request includes funding for such items as binders, transparencies and flip chart pads for use in the subject matter, change management and customer service training courses.

Ms. West said the sixth category is the dues and tuition category and includes the technical training and the attendant travel. She said this request is to complete the transition of the DMV&PS existing Information Management Bureau (IMB) staff into the new Genesis environment. She noted the total amount includes tuition for courses and associated travel. She said that during the current development effort, the DMV&PS IMB staff has been working to ensure that the legacy system is being maintained and that it is Y2K-compliant until use of the new system begins in August 1999.

Ms. West said the seventh category is communications and includes customer brochures. She said the funding will cover the costs of developing and printing brochures to inform the customers of the improvements in the system. This will include how to more efficiently do business with the DMV&PS and the introduction of new services such as Internet and telephone transactions and renewing registrations at emission stations.

Ms. West said the eighth category is the enabling technologies for Phase III. She said this category includes the digitized photo costs. She said the costs included in this one-shot request are necessary to support the enhancement requested for digitized photo images being requested by the department. The costs include modifying the Genesis application to access and display digitized images at the employee work stations and making the necessary equipment upgrades at the state computer facility. She said the equipment costs specifically relate to the cost of buying dedicated space to store the digitized images. She noted it is more cost-effective to purchase this storage space than pay the normal monthly rental charges from DoIT. Additionally, she said, DoIT does not currently have adequate storage space for this data.

Ms. West said that electronic commerce technologies is included in the enabling technologies category. She said there are three technologies included in this area. They are Internet transaction processing, Interactive Voice Response for telephone transactions, and Fax-on-Demand. Ms. West stated the primary payback for the state’s investment in Project Genesis comes from the DMV&PS’ ability to augment the base integrated system with alternative methods of doing business with the DMV&PS in Phase III. She said new service delivery methods eliminate the need for customers to visit a DMV&PS office.

Ms. West said DMV&PS already has a web site that helps provide information to its customers. She commented the Internet provides the DMV&PS with a low-cost, easy-to-use, rapidly expanding method for enabling customers to renew vehicle registrations and driver’s licenses, changing their addresses, and getting duplicate decals, registration certificates, and licenses. She said the customers will input their information, enter a credit card number, and receive confirmation of their transactions. Then DMV&PS will send out the customers’ completed documents in the mail the following workday.

Ms. West noted that Exhibit D, a two-page handout titled "Phase III: Alternate Service Methods," discusses various customer-enabled transactions. She said the DMV&PS uses an automated attendant to route calls and provide customers with information on office hours and locations and basic services. She commented the interactive voice response will enable the DMV&PS to expand its telephone service to include transactions similar to those planned on the Internet.

Ms. West said that fax-on-demand will also help DMV&PS expand its telephone information service. She said customers, using a menu can order information sheets and forms to be sent to their fax number so that their forms are complete when they visit the DMV&PS for service.

Ms. West said all of these technologies enable DMV&PS to partner with DoIT and the technology the department already has to provide these services. She commented that included in this funding request are contract services for development of these technologies along with related hardware and software and staff training to work with this application.

Ms. West said the last proposed enabling technology for Phase III is registration renewal at emission stations. She said providing registration renewals at emission stations will allow customers to complete their renewals at the same time and at the same location where their smog tests are done. She commented that this service is another type of one-stop service and will be a natural extension of the electronic transmission of emission test results from the stations to the DMV&PS that is currently being implemented.

Ms. West said the DMV&PS is requesting an amendment to this bill to carry forward $1,869,136 from FY 1999 to FY 2000. She said the breakdown of this funding to be carried forward is on the third page of Exhibit C. She commented these are funds that were approved for this biennium for activities that either have begun or will begin before the end of this fiscal year. She commented these activities continue through FY 2000.

Ms. West said the DMV&PS needs to carry forward funding to pay for contractors’ deliverables from Deloitte & Touche and the DMV&PS subject matter training vendor that will be received, as outlined in the DMV&PS contracts, after July 1, 1999. She said the DMV&PS needs to continue to have funding available for contract services for data entry to link driver’s license and registration records to create the integrated database.

Ms. West said the DMV&PS is also requesting to carry forward the funds related to the R25 computer conversion. She said this will provide funding if needed to engage either Deloitte & Touche or other Master Service Agreement resources when DoIT upgrades the operating system software. She explained that the remaining funds to carry forward are related to the space and equipment needed to provide training to the DMV&PS staff on how to use the new application. She said this training begins in June and continues through August 1999.

Senator Raggio asked how much has been invested in Project Genesis to date including the $1,869,136 that the DMV&PS is requesting to carry forward. Ms. West replied that Project Genesis was budgeted $14.1 million this biennium. Senator Raggio noted that the total cost of the project to date exceeds $23 million and asked whether this was envisioned when DMV&PS embarked on the project. Ms. West replied that DMV&PS originally envisioned that over a 7-year period the project would cost about $35 million. She said that "after S.B. 279" there will be one more stage which will include three additional technologies DMV&PS would like to implement. These will be requested at the next legislative session.

Senator Raggio asked what the DMV&PS will be able to do that cannot be done now once the project is completed. Ms. West replied that when Project Genesis is completed, the DMV&PS will be able to provide one-stop service for the customers for vehicle registration and driver’s licenses at one window. She said the customers will be able to transact business on the Internet or by telephone and renew their registration at an emission station. She said car dealers will be able to register new cars when they are purchased at the dealership, and document imaging will eliminate the microfilming process and provide documents at the individual work stations. Digitized photos will be available as will electronic lien and title, which means if there is a lienholder when a vehicle is purchased the title will not be produced and sent to the bank; the data will be sent electronically and a paper title will only be issued when the private party needs it.

Senator Raggio recalled that one of the selling points of Project Genesis was that it would eliminate the need for additional positions resulting from statewide growth. He asked whether this anticipated result was recognized at this point. Ms. West replied the realization of needing fewer positions as statewide growth occurs is not recognized at this point. She said there will be some efficiencies recognized by rolling out the new system and by implementing one-stop service. She said the real efficiencies and real payback to the state will occur with the alternate services delivery: the Internet, the telephone, the renewal at emission stations, and the ability to transact business at the new car dealership. She said when the department can prevent customers from having to come to the DMV&PS office in person to do business, the staff savings can occur.

Senator Raggio said many of the individual legislators have received anonymous information about Project Genesis. He said that ordinarily he does not look at anonymous letters but he has received a number of these letters over a period of time which are critical of Project Genesis. He asked Ms. West whether she has seen these letters. Ms. West replied she has seen them. Senator Raggio asked why the letters were written, noting they seem to be from people that are well-informed about Project Genesis. Ms. West replied there are some people who are concerned about Project Genesis but most of the staff are anxious to get the project implemented. They are tired of talking about the project and want to start using the system. She said there are people who are concerned because Project Genesis will change the organizational structure of the DMV&PS in addition to changing the way business is done. She stated this represents a very big change to the department, and change is very disconcerting and makes people very uncomfortable. Ms. West said there are people who are fearful of losing their jobs even though all jobs have been guaranteed and they have been told no jobs will be lost. She commented that this is the third time the DMV&PS has proposed it will make things better for the employees during her 18-year tenure. She said some employees are very skeptical that Project Genesis will ever be implemented.

Ms. West said the environment, the computer language used, and everything the information services staff deals with is changing. She said the old system that the staff is comfortable working with is going away and a new system is being implemented, and some of the staff is quite concerned even though training will be provided for the new system. She said employees are the most valuable resource the department has and who want to roll out the new system and organization to help the employees do their jobs better. She commented that some people are just afraid of change.

Senator Mathews said some people are afraid of change but some of the changes are very technical. She said, "It’s not just the change and being afraid of losing their jobs, it goes a lot deeper than that." She said the department heads should occasionally listen to the grapevine because there is often enough truth in the rumors to be useful to the manager and the manager should try to identify why the stories developed. Ms. West replied the DMV&PS was attempting to identify why various stories were being circulated. She said when a technical deliverable is received the people working on the project daily review it as well as the people working on the legacy system. She said some of the employees may not know the language being used or how the system is being developed, but they do know the business rules and what is being accomplished in the legacy system and they do not want to lose the accuracy in "the new system process."

Senator Jacobsen said he has received about two pages of concerns pertaining to Project Genesis generated by talking to various DMV&PS employees. He said these employees have told him the staff morale is about the lowest it could be. He said many of the concerns voiced by employees are genuine concerns for the particular employees expressing them. He said one of the major concerns expressed to him is that the pay grades for some employees are going up 6 to 10 pay grades at a time when no salary increases are being approved for state employees. There was also some concern about the large amount of overtime authorized for training. The senator commented that the time frame of the project is very important and the project should be kept on schedule. He remarked that some employees have commented some information provided by the contractors is from other states.

Senator Jacobsen said some of the employees he has talked to feel they have been left out of the loop on the status of the progress. He said he would like to hear about the things that did not succeed and why the DMV&PS failed to identify whether the problem is a department problem or a contractor problem.

Ms. West replied these are legitimate concerns. She said a reclassification for the technicians and supervisors was processed and most of them but not all of them benefited from a two-to four-grade increase. She asserted the employees are receiving recognition for the duties they are currently performing. She pointed out there were about 100 employees in Carson City who did not have enough change in their duties to warrant reclassification, which she said was more of a morale issue than the new system. She said the pay increases being considered in the proposed organization will be two to four pay grades in most cases but it depends on who gets the position and what grade the person is at currently. Ms. West noted the state personnel rules and procedures are being used to fill these positions. She stated that the idea that Project Genesis was created "to feather someone’s nest for management" is simply not true. She said the new system will create an appropriate career ladder and will facilitate cross training, movement between divisions in the department, and adequate management and supervision "to enable the employees to serve a customer and make a decision and deliver service."

Ms. West said all of the training is being conducted during the normal working hours. She said employees are not being paid overtime to attend training. She said the overtime funding requested is for providing service to customers who are in the office before it closes and will be served before the employees go home. She said it was desired to pay the staff overtime rather than have them accrue compensatory time.

Ms. West said Project Genesis is working very hard to stay on track and on time although recently there has been some slippage in the testing and pilot project areas. She said that during recent discussions with the project management team she was told they are back on track to go into production with the occupational and business license functions on June 1, 1999. She said the status of the project is discussed every day. There is also a weekly status and issues meeting and there is a weekly implementation meeting. She said these meetings involve not only the information systems staff but department management staff, and DoIT staff are also invited to participate in these meetings so all of the interested parties are present to discuss what is needed to keep the project on track.

Ms. West said programs from other states have not been used. She said the RFP was for a custom-built system but the contractors have looked at what has worked in other states and what has failed, and they have learned from the experience of the other states what will be best for Nevada.

Ms. West said the employees do want more information. A monthly newsletter is currently provided explaining the activities occurring, there is a hot line available to the employees, and there is a page on the department’s web site where the project information is updated. She commented that about every 2 to 3 months her staff provides employee update sessions at each office. She said that some employees have not elected to attend these meetings to keep up to date on the project. She said when an employee leaves a message or question on the hot line the person is contacted with the response promptly; whether the request is to contact the employee at home, on a weekend, or in the evenings, the project management staff will contact the individual. Ms. West said more than 350 of the 800 department employees have been actively involved in either the design, the developing, the testing, or the training for Project Genesis. She said the system is being built for the people who use it every day; they are the ones who will live with the system when it is implemented. She said the employees who are using the new system are very excited about the system.

Senator Jacobsen said all the employees he talked to about Project Genesis said they wanted the system to work. He said he talked to about nine people who had left the department to ask why they left. He said their answer was "Genesis." Ms. West said she does not want anyone to leave because of the project and she does not want anyone to feel this project will put anyone out of a job. She emphasized the project is to make life better on both sides of the counter.

Senator Neal commented that anytime a department is modernized on the scale Project Genesis is attempting, there will be people who are fearful of what will happen because they do not understand "the outcome."

Senator Raggio requested that LCB staff and Senator O'Donnell work with Project Genesis staff to get more information on the contract items included in the contract category of Exhibit C.

Dennis Colling, Chief, Administrative Services Division, Department of Motor Vehicles and Public Safety, said S.B. 280 is a request for the purchase of modular office equipment for the remodeled DMV&PS building.

Senator Raggio asked the status of the remodeling. Mr. Colling said the DMV&PS has opened the public part of the first floor of the east building. He said the east side of the first floor is remodeled and waiting for the modular furniture to be installed so the people can be moved into the space and remodeling of the remaining three floors of the east and west buildings can begin. Mr. Colling asked that S.B. 280 be expedited if possible. He said it will take up to 30 days for the delivery of the modular furniture once it is ordered and an additional 30 days to install the furniture once it is received. He stated the purchase and installation times will come very close to the Project Genesis implementation target for early August 1999. Mr. Colling said waiting until the end of May 1999 to order the furniture could impact on the Project Genesis implementation date.

Senator Raggio said LCB staff has a question about the appropriate funding for the purchase of the modular furniture. He said S.B. 280 indicates the funding will be from the State Highway Fund but there may be some of the expense that can be charged to other assessments. The senator said that before S.B. 280 is processed the committee wants LCB staff to approve the suggested funding source. He asked whether the total amount in S.B. 280 is still required. Mr. Colling replied that it is. He said, "One of the things this funding provides for is room for personnel expansion and installation costs."

John Drew, Acting Director, Department of Motor Vehicles and Public Safety, said S.B. 504 is a continuation of a one-shot funding.

Senator Raggio asked where the department is in the project, what the time frame is, and when the project will be completed. Mr. Drew replied the department is well under way with the project. He said the department has recently submitted the purchase request for about $2.9 million of equipment. He said the consultant, Frank Thatcher Associates, Inc., has been working with the DMV&PS staff and the department is proceeding with the design and implementation of the equipment. He commented the hardware for the project has been ordered.

Senator Raggio asked whether the project is on schedule. Mr. Drew replied that when the project was started there was no firm schedule because the consultant had not identified what it would entail to go from a low-band to a high-band system, but now that the process has begun it should be completed within the next 12 to 18 months.

Senator Raggio asked, "Where are we going with this project, what is the ultimate goal of the project?" Mr. Drew replied that the ultimate goal is to get rid of the existing low-band system, a "40-plus-year-old" technology which is no longer supported within the industry, and change, pursuant to a report prepared by Frank Thatcher Associates, Inc. for the 1995 Legislative Session, to a very high-frequency (VHF) (high-band) radio system to improve the officers ability to communicate amongst themselves and with their dispatchers.

Senator Raggio said there was some concern that the new system would soon be obsolete. Mr. Drew said that while he is aware of the concern and has voiced the concern to the consultant, the consultant believes the trunk-capable system will allow for future growth, enhancements, and new technology and he does not believe the system is obsolete.

Senator Rawson said this is a VHF system and all of the federal emergency management services and Clark County are using UHF. The senator said it seems the department should be purchasing an ultra-high-frequency (UHF) system. He asked why a consultant would be recommending a VHF system.

Mr. Drew presented a 10-minute recorded program discussing the VHF system.

Mr. Drew said one of the issues of the radio communications system is the interoperability of the system. He said that for the DMV&PS, "whether it is for the highway patrol, investigations, or the capitol police," it is important to be able to communicate with local law enforcement. He said the vast majority of law enforcement is using a VHF high-band radio system.

Senator Raggio said, "We will hear the objections to this system first so you can respond to those objections."

Ivan R. Ashleman II, Lobbyist, Ericsson, said he listened to the recording with great interest and the idea of having "compatibility and interconnectability" to the system is extremely important. Mr. Ashleman said the recording pointed out the idea of having a system that had the technology capable of transmitting fingerprints and deoxyribonucleic acid (DNA) information was very important and VHF will not do that. He said nothing on the tape suggested using a VHF system. He commented that in northern Nevada the local law enforcement agencies are all going to the 800 megahertz (MHz) system that the State of Nevada is already using throughout most of the urban areas and the northern Nevada agencies are tying into.

Mr. Ashleman said he distributed an editorial included in Exhibit E, original is on file in the Research Library, which includes three handouts: a one-page editorial titled "Petty Bickering Harms Projects," a 14-page handout titled "Summary Analysis of the Statewide Radio Communications Procurement for the Department of Motor Vehicles and Public Safety (DMV&PS)," and a 19-page handout titled "Issues with VHF-800 MHz Hybrid System." He said the editorial pointed out the existence of the regional system in the Washoe area that Sparks, Reno, and Washoe law enforcement agencies will be using. Senator Raggio asked what system that is. Mr. Ashleman replied it is an 800 MHz system. He noted it is a combination of these agencies and the existing Nevada Department of Transportation (NDOT) system that will be the system used in northern Nevada. He said that in southern Nevada there is currently an 800 MHz system which covers the entire Clark County area. He said the proposal for VHF envisions three towers instead of the multiple towers for the multiple communication points that would cover all of the Clark County area. He said the NDOT 800 MHz system is a state system that already exists.

Mr. Ashleman said the present proposal for the VHF system is priced at about $8 million and will be added to the existing $3 million for a total of about $11 million to be spent on the radio communications project. He said Ericsson Inc. believes that for $8.5 million it could provide communications for the entire state of Nevada, using existing towers, equipment, and interface ability and then adding to it to completely include the Nevada Highway Patrol Division (NHP) of DMV&PS and would include making equipment available to the local rural jurisdictions so they can also interface with the 800 MHz system. He commented, "Then you would have a statewide interoperable 800 MHz network." He said some of the law enforcement agencies in Clark County are using various 800 MHz systems and some are using VHF. Mr. Ashleman said all of these switches and all of the additional equipment are already included and they work more readily in an 800 MHz system. Hence, all of the things the VHF system claims to be able to do can be done with this proposed system at less expense using third-generation equipment rather than the second-generation equipment being proposed in the VHF system. Mr. Ashleman contended the 800 MHz system is more modern, has far more capabilities for channels and data, and will cost less.

Senator Raggio asked what system Mr. Ashleman is proposing. Mr. Ashleman replied:

Mr. Ashleman said, "My proposal includes enough money to assist the rural areas to utilize the 800 MHz system as well." He said this offers something to the other political jurisdictions that might not be able to afford to get on the system otherwise.

Senator Raggio asked to whom Mr. Ashleman proposed his system. Mr. Ashleman replied he sent his proposal to the State Purchasing Division and the DMV&PS, and he has discussed the proposal with the Governor’s Office.

Senator Rawson said he was under the impression that more channels are available using UHF than with VHF, that there is more accessibility, and asked whether that is accurate.

Lou Shehi, System Sales Manager, Ericsson Inc., said the 800 MHz system has ample frequencies available. Mr. Shehi said it is a standard frequency used and is standard for statewide systems. He said there are some systems that are not 800 MHz but 9 out of 10 of the largest regional systems are 800 MHz systems. Senator Rawson asked whether the conversations are clearer on the 800 MHz systems. Mr. Shehi replied yes. He elaborated, "it is a partitioning system. The trunking technology allows you to partition according to your talk groups, which are usually patterned after your working groups." Senator Rawson asked whether the towers need to be built closer together when the 800 MHz system is used. Mr. Shehi said that would be accurate in regard to over long distances and open spaces. He said the number of additional towers would have to be identified by an engineering study. He noted there are already 27 sites in the statewide system currently using the 800 MHz, 7 additional sites are being added by the Washoe County agencies, and there are 15 additional sites being planned. He commented there will be about 50 sites which will amply cover the majority of the state and the NHP as well.

Senator Rawson said that at one time he was a member of the Civil Air Patrol but eventually dropped out because he could not afford all of the radios he needed. He remarked there were too many systems in Nevada. He said that because of the national acceptance of the 800 MHz system it seems this system would eliminate the patchwork systems in the state.

Senator Coffin said there were some definitional problems he would like explained. He said the NHP is currently using a 40 MHz system that is plagued by "skips." Mr. Shehi replied, "Yes, that is a low-band frequency." Senator Coffin said there has been discussion of moving the NHP to a 150 MHz system. Mr. Shehi said the VHF low band is below the 43 MHz range and the VHF high band is in about the 150 MHz range. Senator Coffin said it was his understanding that there are not two UHF ranges, one is the 400 to 500 MHz range, and asked whether this was correct. Mr. Shehi said the UHF system does not usually go above the 512 MHz range. Senator Coffin said that within the 800 MHz range there is 800 MHz and also trunked 800 MHz. Mr. Shehi said the statewide shared 800 MHz system is a fully trunked system throughout the current 27 sites and the additional sites will also be trunked.

Senator Coffin asked how many of these sites Ericsson Inc. has already been involved in. Mr. Shehi said Ericsson Inc. has been involved in all of the 27 existing sites and all of the new sites being planned. Senator Coffin remarked that all of the current and planned sites will be trunked, reducing the number of frequencies required, or the width of the spectrum. Mr. Shehi replied that is correct. The 800 MHz frequencies may be reused in both the northern and southern parts of Nevada; there are ample frequencies available. He explained there is a space of about 70 miles where the frequencies should not be reused. He said with this–70 mile separation, the frequencies will not interfere with one another.

Senator Coffin said it was explained during a previous meeting that because many of the television stations were going to digital they were giving up a lot of the UHF frequencies. Mr. Shehi replied the television stations were giving up frequencies in the 700 MHz band to develop an entirely new band at the 740 MHz range. He said this is different from the 800 MHz.

Senator Coffin asked whether the 800 MHz frequency had to be trunked. Mr. Shehi replied the 800 MHz conventional mutual aid frequencies are provided for by the various emergency plans. He said in Washoe County there are two additional conventional 800 MHz repeater sites set for those agencies that are not trunked 800 MHz frequencies but can mutually program conventional 800 MHz and speak with one another. He said a second way to answer the question is that through conventional interfaces, outside groups can interface directly into the switch and bring those outside groups into the trunked system. Senator Coffin asked whether the digital monitors used to transmit information that is used by both fire and police agencies can be used on the 800 MHz trunked system. Mr. Shehi replied those are mobile data transmission units and can use any frequency. He said they can be part of the trunked suite, a system that can pass both trunked data and trunked voice on the same channels through the same switch. He said another way to accomplish this is to outboard the data into different 800 MHz dedicated channels to transmit the data. He said there are two approaches that can be used to accomplish the voice and data transmission. One is to use the trunked system and the other is to outboard to dedicated 800 MHz channels to transmit the data.

Senator Coffin asked whether the equipment offered by Ericsson Inc. is compatible with the existing equipment currently in use in the state. Mr.  Shehi replied that for a totally separate data system, if a statewide data system were operated outside the trunked suite the data terminals would have to be purchased. The transmission medium would have to be either purchased separately or could be included in the Ericsson Inc. trunked suite. He said the mobile data terminals would have to be purchased separately and if a different company manufactured the radios, they would have to be purchased separately also.

Senator Jacobsen asked whether Ericsson Inc. had analyzed the entire state to make sure one system would cover the state including the rural area emergency services. He said one ambulance in a rural area needs three radios and a telephone because of the different areas it services. Mr. Shehi replied that Ericsson Inc. has not completed a full engineering study. The company is in the process of performing that study to determine the degree of coverage necessary, the number of sites necessary. He said, "What we have in the current budgeting and planning is approximately 52 sites that would cover the highways and most of the area patrolled by the rural patrolmen." He said in view of the fact that this system would be asking that we include the NHP and the statewide system in the rural areas, Ericsson Inc. has added $2.2 million for 1,000 rural users." Mr. Shehi commented that in the latter part of his answer he said Ericsson Inc. has provided equipment for the rural areas and in the former part of his answer he said he believes that most of the area that the rural users need at this time would be covered by the 52 envisioned sites.

Senator Jacobsen asked whether there would be any problem with radio interference from surrounding states like California. Mr. Shehi replied no. Because the local frequency planners have foreseen the problem of interfering with the surrounding states, the planners have identified in the regional plan the ability to grandfather certain sites so they can be used along the corridors that would not, with the proper frequency planning, interfere with other states.

Senator Rawson said it sounds as if for less cost Ericsson Inc. can provide the rural areas with new equipment. He said this seems to be a tremendous advantage that should be addressed.

Senator Raggio asked whether this was a fight between two vendors with one vendor marketing a VHF system and the other a UHF system.

Raymond L. Sparks, Deputy Director, Public Safety, Department of Motor Vehicles and Public Safety, said he has been involved with this issue since the 1995 Legislative Session funded the state mobile communication of microwave study. Mr. Sparks said that study was specifically to address these types of issues and make a recommendation to the various state agencies as to the best way to proceed in developing radio systems. He said there is a shelf full of consultants’ reports and he can find one that will justify any particular technology that is wanted. He said the state contracted with Frank Thatcher Associates, Inc., who came to review the various systems that were in place within the state and made a recommendation. He said their recommendation was for the NHP and the DMV&PS to go to a VHF trunked high-band system. He said the department had no reason to dispute or question the recommendation.

Senator Raggio referenced the chart on page 18 titled "Radio Bands" of Exhibit F, original is on file in the Research Library, a 19-page handout titled "Seven Critical Issues for Decision." The senator asked where the proposal Mr. Sparks was suggesting would be on the "Radio Bands" chart in Exhibit F. Mr. Sparks replied the proposal he was suggesting was in the 150 to 154 MHz range. Senator Raggio asked what the difference was between what is being suggested and the Ericsson Inc. proposal.

Mr. Shehi replied the primary perception is that the state has an 800 MHz system paid for and running that operates on the public safety standard already in place. Senator Raggio asked who has the system in place. Mr. Shehi replied that NDOT has it in place and Washoe County will soon have it in place. He said Clark County also has an 800 MHz system currently operating.

Mr. Sparks said the question of what is the best spectrum or frequency range for the state’s radio system has been discussed for years.

Senator Raggio asked what the best frequency range is for the state to operate in and what the most effective system is for the dollars that will be spent.

Phillip J. Jenkins, Senior Analyst, Frank Thatcher Associates, Inc., said there are a number of issues that keep evading the committee and he would try to clear them up for the committee. Mr. Jenkins said 800 MHz is a shortwave-length frequency that penetrates buildings well and is therefore good for metropolitan areas. The VHF high-band system proposed by the state carries further. Mr. Jenkins said the state’s proposal is for about 50 sites for statewide coverage. He said he was not involved in the original study but he has it available. His recollection of the original study was that the cost to go to the 800 MHz was "about double" at the time of the study because there was no site buildout completed from Las Vegas north. Mr. Jenkins said an additional issue was that most of the sheriffs’ offices in the state were on VHF high-band.

Senator Raggio said Clark County is using 150 MHz and asked what Washoe County is using. Mr. Ashleman replied Washoe County is using 800 MHz. He said both of the proposed systems can interface if a trunking system is used. He said it is his understanding the state’s proposal only trunks in Las Vegas. He said the Ericsson Inc. proposal trunks statewide; that is the difference as far as compatibility is concerned.

Mr. Jenkins said his firm’s recommendation is for the NHP to look at the 800 MHz system but preferably to not go with it. He said one of his company’s client firms in the Las Vegas area that is going 800 MHz and that had looked at the county system is building its own system rather than joining the existing system. He said he could not elaborate at this time on the reasons but the company is a large entity and is not joining the county system.

Mr. Sparks said the second big issue is a vendor issue. He said there is a lot of money involved in the project and that generates a lot of interest. He said the DMV&PS did issue an RFP and Ericsson Inc. did bid on the system, but the contract was awarded to Motorola based on the normal competitive evaluations of the proposals. He said Ericsson Inc. was provided an opportunity to propose any type of alternative system it wanted but that did not occur. The company bid on the VHF high-band system and did not propose to take advantage of the existing infrastructure. Mr. Sparks said that type of creative proposal was solicited but was not received. He said that using the normal procurement procedures, the DMV&PS awarded the bid to a different company.

Mr. Ashleman said his company had extensive discussions with the State Purchasing Division and the DMV&PS and denied the firm did not offer to entertain using the existing equipment. He said Ericsson Inc. had repeatedly made that offer but did not see that using the existing equipment was desired by the state. He said when the option of using the existing equipment was offered he did not get the impression the state was interested in that option.

Mr. Ashleman said there have been four or five radio communication studies conducted in Nevada, all of which recommended the system Ericsson Inc. is currently offering. He said the state finally found a consultant to recommend a different system and is willing to purchase it. He commented that of the last four or five studies all but one of them recommended the approach that Ericsson Inc. is offering. Mr. Ashleman said Ericsson Inc. is offering to provide complete statewide coverage that is compatible at a price which is about $3 million less expensive than the system DMV&PS is recommending to purchase.

Senator Raggio asked that Senator O'Donnell, Senator Rawson, and Senator Coffin serve on a subcommittee to evaluate the radio communication questions and report back to this committee in 1 week.

Senator Jacobsen suggested that the subcommittee also consider the maintenance of the radio equipment.

Senator Raggio closed the hearing on S.B. 504.

John P. (Perry) Comeaux, Director, Department of Administration, said S.B. 283 is a bill to restore the balance in the contingency fund that is available to the IFC during the legislative interim periods. Mr. Comeaux said the amount requested is $4,562,736 and will restore the balance in the fund to approximately $8 million. He said Dan Miles, Senate Fiscal Analyst, informed him this morning that a few more expenditures have been processed from this fund since this request was prepared. He said if the amount requested in this bill is approved the total balance in the contingency fund will be about $8,000 less than the $8 million discussed to start the next biennium. Mr. Comeaux said he was not necessarily recommending that the amount of the request be increased but he did want to share the information with the committee.

Dan Miles, Senate Fiscal Analyst, said an accountant prepared a balance sheet the previous day which shows there is currently a balance of $3,428,630 in the contingency fund as of April 13, 1999. He said with this amount plus the requested appropriation of $4,562,736, the balance in the contingency fund will be $7,991,366. This would be about $8,700 less than the $8 million balance suggested for the contingency fund.

Senator Raggio closed the hearing on S.B. 283.

DEPARTMENT OF ADMINISTRATION

Budget and Planning – Budget Page ADMIN-1 (Volume 1)

Budget Account 101-1340

Birgit Baker, Program Analyst, Fiscal Analysis Division, LCB, said this budget is for the director’s office of the Department of Administration and had only one issue. Ms. Baker said the issue is that in 1987 the Legislature added a full-time Budget Analyst position to support the review of the budgets of the Professional and Occupational Licensing Boards. She said the Budget Division recommended a reduction in the assessment to these boards and the issue was how the reduction should be calculated. She said it is now agreed that the intent of the Legislature was to continue to support one full-time Budget Analyst for the assessments to the boards. She said this recommendation is to restore the funding to support a full-time position with a corresponding reduction in the General Fund.

Senator Raggio asked whether there is a need for a full-time Budget Analyst for boards. Mr. Comeaux replied that time records are now being kept for purposes of cost allocation and the time records indicate the analyst assigned to the boards spends about 12.5 percent of his time on the boards and the rest of the time is spent on other accounts. Senator Raggio noted that the Budget Division could use the position. Mr. Comeaux replied yes. He said that because the time records are available the Budget Division has proposed to fund the position with 12.5 percent funding from the boards and commissions and the rest of the funding from the General Fund. He said he was not aware the Budget Division had recommended the position 10 years ago and that the Legislature had recommended the position be funded 100 percent by the boards.

Senator Raggio said this occurred at a time when there was some concern about the board’s accountability and he was not sure it is still a valid concern. He said the Governor has expressed concern about the inability for internal auditing and asked what the concern of the Executive Branch was on the lack of internal auditing. Mr. Comeaux replied the Governor believes very strongly that he should have the ability, when he is concerned about the operations of a particular department or the progress on a particular project, to be able to send competent staff which is independent from the agency they are reviewing to evaluate the concern and give him an independent opinion. He said the Governor does not have that ability currently. Senator Raggio said, "We have no capability of that kind." Mr. Comeaux replied, "We do not. There are individual departments that have internal audit staffs that report to the upper management of that particular department." He said there is no central internal audit capability "on the executive side."

Senator Raggio asked how many staff would be required for the internal audit function and where the department would be located. Mr. Comeaux said to have an effective internal audit capability would require a minimum staff of about five people. He said that about 6 years ago the Executive Branch requested the creation of an internal audit unit that would be located in the Department of Administration. He said the Legislature approved the staff, which included a chief and a couple of auditors, but put a "sunset" on the function. He said the office got off to a slower start than anticipated. There was an incident that occurred during this period where the internal audit staff was sent to a department to evaluate it. When the Legislature met the next session some of the legislators were concerned that the internal audit group could be used inappropriately to punish a department. He said the internal audit function was eliminated and the office of Training and Controls set up. He said this function is basically internal control review and staff training.

Senator Raggio said, "If there is a proposal for a new department you should get it to us as quickly as possible."

Senator Coffin said he has often thought an inspector general is needed in the Executive Branch. He said the Executive Branch relies to a great extent on the chief of staff and remarked that "if you have an aggressive chief of staff with supervisory skills and knowledge of how to manage an agency, the agency problems will be identified." He stated, "Many times the chief of staff relies on the word of the agency chief without any verification." He asserted the state is large enough to warrant an internal audit function that reports to the Governor.

Mr. Comeaux said he was sure the Governor was interested in using the internal audit function to gather information for him when he receives conflicting information.

Senator Raggio said the Joint Subcommittee on General Government recommended restoring the charge to the boards for the Budget Analyst position.

Training and Controls – Budget Page ADMIN-6 (Volume 1)

Budget Account 101-1342

Ms. Baker said the Joint Subcommittee on General Government recommended closing pursuant to the Governor’s recommendation. She said this office will be responsible for implementing the corrective action plan prepared by the Department of Administration during the 1999-2001 biennium. She said Assembly Bill 255 is the legislation that the Legislative Auditor recommended to require the director of the Department of Administration to report noncompliance of the internal audit reporting to the Legislature.

Dept of Administration-Hearings Division – Budget Page ADMIN-109 (Volume 1)

Budget Account 101-1015

Ms. Baker said this is not a new budget, it is just revised performance indicators and a correction of the narrative. She said the only thing that has changed is the first page and the projected indicators have been corrected.

Senator Raggio asked how this budget will be impacted by the new workers’ compensation 3-way system. He said these are the people that adjudicate the contested claims. He asked whether they adjudicate for private insurance companies also. Mr. Comeaux replied they do. He said the Senior Appeals Officer is not certain at this point how the change to a 3-way system will affect the operation of this office. He said the appeals officer is sure that the most important thing for the Hearings Division will be to notify parties to these hearings in a timely manner. Mr. Comeaux said he believes the division is adequately staffed to handle the appeals.

Senator Raggio said there are 45 positions. He asked how many of the positions are Hearings Officers. Mr. Comeaux replied he is not sure. He said the positions include both Hearings Officers and Appeals Officers. Senator Raggio said he is concerned that there be sufficient employees to handle the workload. Mr. Comeaux said he believes the current number of employees is sufficient to handle the workload. He said there is funding in the Workers’ Compensation Hearings Reserve account for additional positions for both the Hearings Division and the Nevada Attorney for Injured Workers in the event their caseloads do increase during the interim. Senator Raggio asked whether there is any reason the Workers’ Compensation Hearings Reserve could not be closed. Ms. Baker replied that account is being held open because there are several bills pending on the 3-way issue.

Victims of Crime – Budget Page ADMIN-115 (Volume 1)

Budget Account 287-4895

Ms. Baker said some of the performance indicators and the narrative for this account were corrected. She said the Victims of Crime Program through the 1997 Legislature received authority to award compensation to nonresident victims of crime from available federal funding. She stated the federal government indicated that nonresidents could not be treated differently from residents. Ms. Baker said this legislative session passed Assembly Bill 353, which clarified the statute and authorized this account to receive the federal funding.

Senator Rawson asked how much federal funding will be received. Ms. Baker replied the federal funding for FY 1999 is about $650,000. Senator Raggio asked why the federal funding does not show as a resource for this account. Ms. Baker said decision unit M-200 brings in the federal funds. Senator Raggio asked whether the reserve for this account is sufficient and how many legitimate claims are received that cannot be paid in full. Mr. Comeaux replied the state has paid claims in full for as long as he has been the director of the Department of Administration. Senator Raggio noted Nevada was not paying out-of-state claims. Mr. Comeaux replied that is correct but at this point in time the state has resisted the federal program for years because the state was convinced that the federal government would not provide enough money to pay the out-of-state claims. He said the state now believes the money it has for the current biennium, based on past experience, will be adequate. He noted the state always has the option to step out of the program. Mr. Comeaux said if it starts becoming a burden that the federal government will not assist the state with, the state will revert to the way it was operating in the past.

Ms. Baker said the only change to this budget is to reduce the grant award from $890,000 for each year of the biennium to $705,000 for each year of the biennium, the FY 1999 grant award level, to prevent the payments to victims from being overstated.

DEPARTMENT OF EMPLOYMENT, TRAINING, AND REHABILITATION

DETR, Rehabilitation Administration – Budget Page DETR-64 (Volume 2)

Budget Account 101-3268

Ms. Baker said the major change is the transfer in of a Program Assistant IV position from the Rehabilitation Operations budget 101-3258, to provide technical assistance and reporting of the division’s staff training activities required by the Rehabilitation Act. She said this is included in the Governor’s recommendation.

Ms. Baker stated the only technical adjustment made by the Joint Subcommittee on General Government is to remove the contingency reserve for salary increases because that was not part of the Governor’s recommendation. She said if the Legislature approves the salary increase the funding will be provided.

DETR, Disability Adjudication – Budget Page DETR-68 (Volume 2)

Budget Account 101-3269

Ms. Baker said there was some concern about the timeliness of the processing of the applications for disability benefits. She said the agency has provided the information requested. The agency has indicated they have finally received a commitment from the federal government to fill two positions approved by the 1997 Legislature. She said the two positions would be filled July 1, 1999, and that will help them improve their mean processing time. She explained that the mean processing time is currently about 80 days and the goal is to reduce the time to 75 days. Senator Raggio commented that is still a long time. Ms. Baker replied that 75 days is an acceptable time to the federal government who pays for this program. Senator Raggio said it may be acceptable to the federal government but it is not acceptable to the people waiting for the determination. He asked whether this time lag was common in all states. Ms. Baker replied that she was not familiar with the other states but the program is based on federal standards.

Ms. Baker noted that one technical adjustment to this budget is an adjustment for postage expense based on a 20 percent surcharge assessed by the state mailroom for handling of the federal postage meter mail. She said the actual surcharge is 15 percent, which results in a reduction of $10,950 in FY 2000 and $10,456 in FY 2001 in operating expenses.

Ms. Baker said the other adjustment is the cost-of-living (COL) increases for medical consultants. She said the agency testified that they treat their medical consultants similarly to the way they treat state employees, so if there is no increase for state employees the COL increases for medical consultants should be removed. Senator Raggio asked whether the medical consultants were contract positions. Ms. Baker replied, "Yes, they are the doctors and psychologists."

Senator Rawson said he is not sure the contract positions can be treated the same as state employees. He said the state might lose some of these consultants and psychologists without the COL increases. Ms. Baker replied the agency indicated this is the procedure they have been operating under for the past few years and they were not concerned they would lose consultants by continuing the practice.

DETR, Vocational Rehabilitation – Budget Page DETR-73 (Volume 2)

Budget Account 101-3265

Ms. Baker said the Governor did recommend six new positions, three Rehabilitation Counselors and three Rehabilitation Technicians. She said that when the budget was reviewed some inconsistencies were found that would not have allowed these positions to be filled. She said this was because there was also built into the base budget $210,000 in vacancy savings. She said the subcommittee discussed this with the agency and the compromise was to reduce the vacancy savings, eliminate two of the new positions, and delay the start date of a third position. Senator Raggio asked whether this would change the budget. Ms. Baker replied it would not.

Ms. Baker said the Governor’s budget as proposed will not provide sufficient state matching funds for the federal funds that are available. She said the subcommittee placed $158,000 in general funds for FY 2000 and $220,000 in general funds for FY 2001 on the high-priority list to address the projected shortfall in General Fund match needed to support projected increases in federal funds. She said this amount including the federal funds will provide about $750,000 of funding for the purchase of client services in FY 2000 and $1,031,000 in FY 2001.

Senator Raggio asked whether there have been savings anywhere else in the DETR (Department of Employment, Training, and Rehabilitation) budgets as a result of the joint subcommittee actions. Ms. Baker replied there were savings but it was all federal dollars. Senator Raggio commented the LCB staff is maintaining a list of high-priority items, not a wish list but a semi-officially approved shortlist, and asked whether the subcommittee was recommending this additional General Fund request be added to that list. Ms. Baker replied yes.

DETR, Services to the Blind & Visually Impaired - Budget Page DETR-92 (Volume 2)

Budget Account 101-3254

Ms. Baker said the Joint Subcommittee on General Government recommends closing this budget as recommended by the Governor. She said the subcommittee included this account on the priority list to address a projected shortfall in General Fund match needed to support projected increases of 5 percent each year of the biennium in federal funding. She said additional general funds of $158,000 in FY 2000 and $220,000 in FY 2001, combined with the additional federal funds that could be matched, would provide approximately $742,000 in FY 2000 and $1,032,000 in FY 2001 for the purchase of additional client services.

DETR, Blind Business Enterprise Program – Budget Page DETR-100 (Volume 2)

Budget Account 101-3253

Ms. Baker said the subcommittee approved this budget as recommended by the Governor. She noted the adjusted base budget does include the health insurance benefit and the retirement program for the blind vendors that was approved by the IFC during the current biennium and is recommended to continue as part of the adjusted base budget.

Senator Raggio said these vendors invest their own money and have created an annuity-type program and asked whether this program was in operation. Ms. Baker replied, "Yes, that is included in the business enterprise category and the health insurance program has a separate category." Senator Raggio asked whether the vendors are satisfied with the program. Ms. Baker replied, "The procedure applied is prorated based on the number of days they have actually been operating up to a total of $5,000 each year."

Senator Raggio adjourned the meeting at 10:20 a.m.

RESPECTFULLY SUBMITTED:

Millard Clark,

Committee Secretary

APPROVED BY:

Senator William J. Raggio, Chairman

DATE: