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 8:30 a.m., on Thursday, April 29, 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 E. Dini, Jr.

Mr. David E. Goldwater

Mr. Lynn C. Hettrick

Mr. David R. Parks

STAFF MEMBERS PRESENT:

Jeanne L. Botts, Senior Program Analyst

Barbara Moss, Committee Secretary

OTHERS PRESENT:

Chairman Evans opened the meeting on budget closings using the "Closing List for Thursday, April 29, 1999" (Exhibit C).

Education State Programs – Budget Page K12ED-1 (Volume 1)

Budget Account 101-2673

Jeanne L. Botts, Senior Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau (LCB), indicated this is the state-funded budget account of the department that carries out the responsibilities for education conferred at the state level by the Nevada Constitution and the Nevada Revised Statutes (NRS). She said the budget account includes activities of the State Board of Education, the administrative duties of the Superintendent of Public Instruction, management of the department, and statewide school issues.

Ms. Botts stated that for the coming biennium the Governor recommended deleting 10.75 positions and creating 3 new positions across the department’s budgets, which results in a net loss of 7.75 full-time equivalent employees (FTEs). She said that should the Governor’s proposal be approved the department’s total number of employees would be 111. She noted the Fiscal Analysis Division staff recommends a total of 110.26 and 109.52 FTEs in the first and second years of the biennium. Ms. Botts called attention to a chart on page 3 of Exhibit C that breaks down the positions by budget account and by team within the department. She said 2 positions and a half-time clerical support position, a total of 2.5 FTEs, added by Assembly Bill (A.B.) 266 of the Sixty-ninth Session for cultural diversity and American Indian education programs were deleted in the Governor’s budget.

Continuing, Ms. Botts noted a 0.25 FTE clerical position was added in 1995 to assist the Science Consultant. The position was vacant for most of the 4 years it was in existence and has been deleted. In addition, a .5 Management Assistant II position that had been vacant since July 1995 was deleted. Ms. Botts said that in order to shift some of the burden from the financially strapped budget account 101-2720, Education Support Services, half of the Management Assistant II position that provides clerical support for the Deputy of Fiscal Services was transferred into this account.

Ms. Botts suggested the committee may wish to add the positions for cultural diversity and American Indian education into this budget and suggested it could be done at this time, or funded through Assembly Bill 357.

Ms. Botts noted one of the clerical positions was underbudgeted and there were no telephone expenses; therefore, the amounts are a little higher than those seen on page 2 of Exhibit C.

After distributing "Budget Closing Action Detail Report¾ K-12/Human Services" (Exhibit D), Ms. Botts indicated 2 positions and a .5 FTE clerical support for the cultural diversity program have been added in. She noted some minor problems shown in the fourth paragraph of page 2 in Exhibit D, such as added telephone costs and other adjustments, which brought the total cost of the addition to $202,116 the first year and $207,437 the second year. She said if the subcommittee wished to continue the evaluation of the program for cultural diversity and American Indian students, the department might be directed through a Letter of Intent to continue evaluating the effectiveness of the programs.

Mr. Dini requested a history of the Even Start Program. In response, Ms. Botts indicated the fifth paragraph on page 2 of Exhibit D addresses early childhood programs. She indicated that during the 1997 Legislative
Session a onetime appropriation provided $828,000 a year for the Nevada state-funded Even Start Program. She said there is about $1.5 million in federal funding for the Even Start Program. Ms. Botts indicated the department provided information demonstrating it could function with a reduced amount of approximately $500,000 a year. She stated that in the current biennium the dollars were directed to seven programs around the state. She pointed out she has a final evaluation report on the programs and a letter from the department with additional information on how the money would be used should $1.5 million in Estate Tax funds be received. Ms. Botts said, "The programs help preschool-age children and their parents in a program aimed at improving the literacy of the parents, as well as to begin working early with the children."

Mr. Dini clarified the program continues with federal funds in seven areas of the state. Ms. Botts voiced the belief the federal money goes to different programs. She said one of the seven programs funded in the current biennium is not continuing, which is part of the reason the programs can operate with a reduced amount of funding.

Ms. Botts distributed a memorandum entitled "Nevada Even Start¾ Final Evaluation Report" (Exhibit E), and a memorandum entitled "Federal and State Nevada Even Start (NEST) Funding" (Exhibit F). She called attention to the seven Even Start programs funded in the current biennium shown on page 2 of Exhibit E and reported the total allocation for the programs was $1,622,421.

Mr. Goldwater indicated he was "fairly comfortable" with what was being done with the Even Start Program. He remarked that of all the programs to which the Legislature has allocated money, none have been more thoroughly explained, examined, and possessed more appropriate documentation than the Even Start and cultural diversity programs.

Senator Raggio indicated he supported the concept of the motion; however, he suggested putting the Even Start Program on the high-priority list because it already receives federal funds. He voiced the opinion that putting $500,000 into the budget before knowing what funding will be available is ill-advised at this time.

Mr. Goldwater stated, "The Even Start Program deserves a higher priority than ‘high priority on the high-priority list.’" He said that although the program will continue with federal dollars, it will not be the same without state support. He pointed out that although he appreciated Senator Raggio’s concerns, he chose to remain with his original motion.

Senator Mathews expressed opposition to removing the Even Start Program from the motion and indicated she would withdraw her second should the program be put on a high-priority list. She pointed out that the Even Start Program fought for the two positions for years and emphasized they were crucial to the program.

Mr. Hettrick indicated he opposed the motion with the inclusion of the Even Start Program based on cost. He stated the program is too expensive for what is accomplished. He said Even Start is a good program overall; however, the cost of $13,000 a family for an average of 6.2 months is not cost-effective. Mr. Hettrick noted federal money is available and on that basis he would agree to place the program on the priority list.

Senator Coffin asked whether the high-priority list would be discussed "as a full committee or as a subcommittee." Senator Raggio mentioned the Economic Forum projections would be available this week and there must be time to analyze them. He suggested closing the budget without adding the money to the Even Start Program, placing it on the priority list, and studying the issue when additional revenues are acknowledged. The senator said that should the joint subcommittee still be in operation the matter could be handled in that body. He noted the joint meeting of the Senate Committee on Finance and the Assembly Committee on Ways and Means was scheduled for the following week and would provide ample opportunity to address the issues.

Mr. Goldwater indicated that should the committee desire to consider each of the items individually he would not interfere with that course of action and offered to change his motion to address each item one at a time.

Senator Raggio emphasized the need to close as much of The Executive Budget as possible. He reflected that the majority of the Senate members have no objection to the items in the motion with the exception of an additional amount for the Even Start Program. The senator said he would be willing to second Mr. Goldwater’s motion should it adhere to his suggestion. He noted the remainder of the budget could in that event be closed and the Even Start Program expenditure could be put on the priority list.

Mr. Goldwater agreed that Senator Raggio’s suggestion was the most pragmatic solution to the problem.

Ms. Evans indicated there was a motion and a second; however, before taking a vote she clarified the vote would be on items that were part of the motion, excluding the Even Start Program expenditure. She added that Ms. Botts has two other items in the budget that will be discussed and considered after the vote.

Senator Raggio expressed the understanding that the motion included funding for the Commission on Educational Technology and a Letter of Intent to continue quarterly reporting.

Ms. Evans called for the vote.

*****

Continuing with the final two items in the budget, Ms. Botts distributed a memorandum entitled "Panel Costs for Second Year Inadequate Schools" (Exhibit  G). She indicated that Bill Arensdorf, Director, Audit and Accountability, Nevada Department of Education, requested the committee consider adding state funds to help support the cost of the panels to supervise academic probation. She said the Nevada Education Reform Act from Senate Bill 482 of the Sixty-ninth Session required that the second year a school is designated as having inadequate performance, it will be supervised by a panel appointed to help the school with its school improvement process.

Ms. Botts indicated Mr. Arensdorf reported resistance from school districts regarding paying the costs of panel members who live outside the district. She noted the bill requires that two of the teacher members on the panels come from another school district. She said that in order to prevent any problems, delay, or reduction in the amount of review the panel could conduct, Mr.  Arensdorf requested a small amount of funding. Referring to page 2 of Exhibit  G, Ms. Botts indicated Mr. Arensdorf estimated the panel would need to be present at the school at least 3 or 4 days during the school year. He said that should the panel be present three times the cost would be $5,730 the first year and $8,022 the second, and should the panel be present four times a year the cost would be $7,640 the first year and $10,696 the second. Ms. Botts voiced the opinion this was an appropriate budget account in which to put the funding should the committee choose to do so.

Referring to a memorandum entitled "Elimination of Support Staff Positions, BA #2673" (Exhibit H), Ms. Botts explained that in an attempt to solve problems in budget account 2720 she moved half of the position of secretary to the Deputy Superintendent for Administrative and Fiscal Services into this account. She explained that the Deputy position is split equally between the Education State Programs account (101-2673) and the Education Support Services account (101-2720) and it was appropriate the secretary position be split accordingly. In so doing, a half-time clerical position was eliminated in budget account 101-2673 to add room for another half-time secretary. Ms. Botts indicated the memorandum from Mary Peterson, Superintendent of Public Instruction (Exhibit H), requested the half-time secretary position not be eliminated even though it has been vacant since July 1998. Ms. Peterson explained in the memorandum that there had been recruiting problems and subsequently the position became subject to the hiring freeze. Ms. Peterson asked that the position remain available to help with the Library/Textbook Consultant and the English/Language Arts/Fine Arts Consultant.

*****

Proficiency Testing – Budget Page K12ED-21 (Volume 1)

Budget Account 101-2697

Referring to page 4 of Exhibit C, Ms. Botts pointed out this budget account provides for the statewide assessment of students in reading, writing, mathematics, and science at grades 4, 8, and 10, as well as students in grades 11 and 12 who must pass the high school proficiency exam in order to earn a regular diploma. She said the budget account continues the 6 existing positions but eliminates 3 positions that were authorized last session but were never filled. She indicated 1 position was for remedial education and 2 positions were responsible for developing and implementing the criterion-referenced exams tied to the standards.

Ms. Botts recommended increasing the General Fund appropriation by $19,357 the first year of the biennium and $17,055 the second year to cover 2 positions currently paid a higher salary than what is displayed in The Executive Budget. She noted the amount of money is considerable for a 6-person account and definitely needed to be added. She also recommended adding $33,000 over the biennium to support the continued work of the Council to Establish Academic Standards for Public Schools, broken down to $20,400 the first year and $12,600 the second year. She said the second-phase standards under current law must be adopted by September 1999; however, a bill was passed which extended the date to January 2000. She anticipated the workload would be heavier the first year of the biennium.

Further, Ms. Botts declared the contract amounts needed by the Council to Establish Academic Standards to continue its work are budgeted in the budget for the Legislative Committee on Education. She indicated that under existing law this particular council sunsets at the end of the 2001 biennium; however, S.B. 466 would make the council permanent.

Ms. Botts called attention to page 5 of Exhibit C where some unresolved testing issues were listed that would not affect the closing of the budget.

High School Proficiency Exam. Ms. Botts suggested the committee consider providing $900,000 to the Distributive School Account (DSA) in each year of the biennium to enable the department to hire a contractor to improve test development and administration of the high school proficiency exam. She said the funds could be transferred out of the DSA and reimbursed by Estate Tax revenue. She pointed out this expenditure could become one of the school improvement programs funded by the $8 million recommended in The Executive Budget.

Standards-based Exams. Ms. Botts suggested the committee consider providing $300,000 each year to enable the department to either purchase or develop standards-based tests for grades 3 and 5 as recommended by the council. She indicated the Budget Division suggested it be funded in a like manner by transferring funds from the DSA and reimbursing the account with Estate Tax revenue.

Writing Tests. Ms. Botts suggested a Letter of Intent for the department to work with the school districts to resolve problems associated with the administration of the tests and to explore alternatives for managing the writing tests’ ever-growing workload, including either the use of private contractors or having one or more large school districts assist in administering and scoring the exam.

National Assessment of Educational Progress Testing (NAEP). Ms. Botts reminded the committee the NAEP testing is funded through this budget account.

Ms. Evans commented that Ms. Botts addressed issues which did not affect the closing of the budget. She said the numbers provided were under the umbrella of $8 million that has been set aside.

Mr. Dini requested a report from the Superintendent of Public Instruction on the 1998 reading scores.

Mary L. Peterson, Superintendent of Public Instruction, State Department of Education, indicated Nevada was rated fourth in the Western Region in 1998 when 8th graders were tested using the National Assessment of Education Progress (NAEP). She said the 1997 Legislature mandated the results be reported. She noted that on the reading assessment 4th and 8th grade students in Nevada performed about the same as other students in the western region of the county; however, the Western Region of the country was below the national average. Ms. Peterson stated Nevada students did not perform "all that well." She said Nevada ranked 31 percent out of the 43 jurisdictions. She declared the statistics provided baseline data and demonstrated that Nevada has a long way to go to improve its reading instruction. Ms. Peterson indicated she would share the actual numbers with the committee.

*****

Mr. Goldwater asked whether the budget would fund the necessary criterion-referenced test (CRT). Ms. Botts answered no. She clarified the CRT was put in the budget account for discussion purposes because it pertained to testing, but it was one of the items suggested to be funded out of the $8 million for school improvements that will be discussed in the DSA account.

Education Support Services – Budget Page K12ED-35 (Volume 1)

Budget Account 101-2720

Calling attention to page 7 of Exhibit C, Ms. Botts said this budget account contains the accounting, auditing, personnel, and word processing functions which are performed for all units of the State Department of Education. She said the costs associated with these functions are distributed across all other budget accounts in the department.

Ms. Botts addressed the major issues of the budget account on page 8 of Exhibit C. She indicated there are no reserves budgeted in this account in either year of the biennium. She recalled that last session the account appeared to be accumulating an ever-increasing reserve, but the estimated reserves did not materialize. Ms. Botts said the department was asked to explain. A written response was received April 18, 1999, and deficits are projected in the indirect cost collections of approximately $300,000 each year. She noted that to resolve the problem the department suggested transferring 6 positions from this budget account to the state-funded Education State Programs account. She said rather than do that, the Fiscal Analysis Division staff recommended several adjustments to the budget summarized in the chart on page 9 of Exhibit C.

Ms. Botts pointed out that only $85,175 was saved the first year and $95,703 the second year. She said the department estimated the shortfall in the budget account was approximately $300,000 a year. She voiced the opinion the shortfall will not be "that onerous." Ms. Botts indicated any new programs added by the 1999 Legislature for which indirect costs are assessed will help increase revenue to this budget; likewise, new federally funded programs or increases in the spending level of federal programs will also raise indirect cost revenue. She noted if indirect cost revenue is insufficient the department will have to cut costs and may be faced with laying off employees or transferring positions to other budget accounts. Ms. Botts suggested the subcommittee may wish to direct the department, through a Letter of Intent, to report quarterly to the Interim Finance Committee (IFC) on the status of this account (including its revenues, expenditures, and any changes needed in positions) and refrain from filling vacancies or reclassifying positions in the account until revenue projections indicate sufficient funds are available. She said the agency might also approach the IFC to restore some of the cuts should sufficient revenue become available.

Referring to page 10 of Exhibit C, Ms. Botts suggested adding the following recommendations to the Letter of Intent:

• The department will report to the IFC on implementation of the recommendations in the report on internal controls conducted by the Department of Administration.

• The department will receive reporting on assistance offered to local school districts in financial matters and training provided school business officials.
• The department will be directed to follow the Budget Division’s directive that all federal grant authority in the state be booked in the state’s accounting system.
• A performance indicator will be added to this budget account in future biennia related to auditing school districts, such as the cost per audit, per district, and dollars recovered.

Ms. Evans commented the recommended adjustments seem reasonable. She said there will more than likely be sufficient revenue from indirect costs, from both state and federal programs. She stated the opportunity to return to the IFC with the information should eliminate all or most of the cost cuts.

Mr. Dini requested more information regarding elimination of the internal control position. He indicated that when departments are audited it is usually recommended internal controls be tightened. He expressed concern that deleting the position would weaken the efforts in accomplishment of internal control.

Ms. Peterson indicated the internal controls audit produced multiple recommendations with which the department complied over the past 12 to 18 months. She said that because of the nature of the recommendations it would be beneficial to the department to have a full-time position in the fiscal and administrative services branch to ensure all internal controls continue to be in place and updated. She stated the rules of practice have been consistently updated and every employee possesses a complete desk manual outlining his or her tasks. Ms. Peterson stated the recommendations have proven beneficial in making the department run more smoothly. She said the internal control position could ensure continued progress, which was the reason for the original request.

*****

Other State Education Programs – Budget Page K12ED-5 (Volume 1)

Budget Account 101-2699

Ms. Botts pointed out a memorandum on page 11 of Exhibit C regarding consolidating small state-funded programs into budget account 101-2699, Other State Education Programs, as well as consolidating small federally funded programs subject to indirect cost rates in two separate budget accounts, depending upon the type of indirect cost rate. Therefore, budget account 101-2709, Discretionary Grants, would contain only those with a restricted cost rate, and budget account 101-2706 would be renamed and would contain only programs that have an unrestricted cost rate. Ms. Botts said that when calculating cost allocation rates, the State Department of Education negotiates each year with the U.S. Department of Education. The difference in the two rates is a restricted rate for programs that are not permitted to pay certain costs, notably rent, through an indirect cost system. Ms. Botts indicated the other rate, which is called unrestricted, is "looser" and a lot more can be charged through the indirect cost rate. She suggested the rates be separated out to simplify accounting for the department. She explained the next three budget accounts move programs back and forth to make the segregation possible.

Ms. Botts pointed out that budget account 101-2699 is a consent budget which has been closed by both full committees. It was reopened at this time to add to it the state-funded Apprenticeship Program, which is being transferred out of budget account 101-2706. She said the Apprenticeship Program was the only state-funded program in budget account 2706 for the coming biennium. Ms. Botts noted this budget account is currently called the School Improvement account. She said all that would be left in it would be the Goals 2000 program and it is suggested that other programs with unrestricted indirect cost rates be transferred in.

Continuing, Ms. Botts said budget account 101-2709, Discretionary Grants, had been closed by the joint subcommittee but not by the two full committees when this decision to consolidate was recommended by the subcommittee. She indicated the account would now include all the programs subject to a restricted indirect cost rate.

Calling attention to the chart on page 12 of Exhibit C, Ms. Botts pointed out it was totally revenue-neutral and programs were being transferred from one account to another. On page 13 of Exhibit C, she indicated the Other State Education Programs budget account was closed with $12,000 of additional workshop fees, but the state-funded apprenticeship program, which was approximately $500,000 a year, was transferred in. That was the only change to this budget account, Ms. Botts remarked. She said the chart on page 14 of Exhibit C demonstrates the changes to the budget account.

*****

Don Hataway, Deputy Director, Budget Division, Department of Administration, commented that in regard to budget account 101-2699, both the executive and the legislative staffs have been checking revenues and making "guesstimates" about the imminent action of the Economic Forum. He surmised there would be additional revenues available for the Legislature to make decisions. He said that should the ultimate decision on the Local School Support Tax (LSST) and gaming be higher than estimated there will be revenues in excess of what is projected. Mr. Hataway indicated that as part of the more conservative estimate done by the Department of Administration (which he said would be evidenced in his comments related to the distributive school fund) the Governor would like the committee to consider two additional programs for this particular budget account. He said the programs were unable to be considered for funding because of the restricted revenue situation existing in December 1998. He stated the Governor would like to add $75,000 for the biennium for the Holocaust Education Program and $177,250 for the Classroom on Wheels Program.

Ms. Evans indicated both programs had been discussed at length in previous hearings and are legislative priorities. She expressed gratitude that the Governor also places them high on the list of priorities.

THE MOTION CARRIED. (MR. GOLDWATER WAS ABSENT FOR THE VOTE.)

*****

Senator Coffin expressed thanks to the Governor for bringing the two items back into the budget.

Discretionary Grants - "Restricted" – Budget Page K12ED-13 (Volume 2)

Budget Page 101-2709

Ms. Botts indicated updated information was received from the department. She said the budget account contains several small federally funded programs and the department submitted revised estimates of revenue and adjustments to expenditures which were incorporated. She declared that when the budget account was closed in the joint subcommittee the Letter of Intent was discussed. Ms. Botts stated the Letter of Intent directed the department to use any excess administrative cost allowance in the Technology Literacy Challenge Grant Program that may be available for a thorough evaluation of the Education Technology Program. She noted the Education Technology Program would provide training to teachers on how to integrate education technology into the classroom to improve learning or increase aid to schools, rather than retaining the excess administrative cost allowance in reserve.

Ms. Botts indicated the other changes in the budget account are part of the shift of all programs subject to restricted indirect cost rate into budget account 2706, including the National Cooperative Statistics Program, the National Community Service Program, the Christa McAuliffe Fellowship, and the Technology Literacy Challenge Grant, as well as a half-time Management Assistant I position which is supported by the Technology Literacy Challenge Grant.

*****

(School Improvement) Discretionary Grants ¾ "Unrestricted"

Budget Page K12ED-76 (Volume 2)

Budget Account 101-2706

Ms. Botts indicated all that is left in this budget account is the federally funded Goals 2000 program. She said the state-funded Apprenticeship Program was moved to budget account 2609, and several federal programs subject to an unrestricted cost rate were moved into this budget account. She declared there would be a change in the name of the proposed budget account and suggested it be called Discretionary Grants-Unrestricted, and the half-time secretary for the Technology Literacy Challenge Grant would be moved into the budget. Ms. Botts pointed out this is the budget account from which the 50 state-funded elementary school counselors were recommended by the Governor to be deleted and transferred into the DSA. She called attention to the chart on page 22 of Exhibit C which demonstrates the changes matrix of what programs are added to the budget account.

*****

Mr. Hataway distributed a document entitled "Summary of Changes Recommended by Governor’s Revised Budget, Received April 28, 1999" (Exhibit I. Original is on file in the Research Library). He indicated the administration believes the minimum amount of additional revenue that will be recommended by the Economic Forum is what is reflected in Exhibit I. Mr. Hataway indicated the chart on page 3 in Exhibit C represents the Governor’s final recommendation "compared with the original showing the net change." He said the original Governor’s budget recommended a total increase of $219,903,764 for the biennium. He declared it is anticipated the Governor’s recommendations for the Economic Forum may be adjusted somewhat higher; however, the Governor does not want the bottom line of $219 million to change. In other words, in addition to the recommendations that would be presented to the Legislature for its consideration, any other savings which may occur with additional revenues, particularly from the Local School Support Tax, would be applied to further expenditure improvements in this budget.

Calling attention to the matrix on page 4 of Exhibit C, Mr. Hataway outlined the changes recommended in the budget. He indicated that columns "W" and "Y" were the summary columns, reflecting the totals after the base and decision units in the budget were added in.

Line 15 on page 4 of Exhibit I. The first change is elimination of the vacancy savings factor.

Lines 23 and 36 on page 4 of Exhibit I. Mr. Hataway said the Governor "zeroed in on" these two items in terms of additional dollars. The dollars represent the savings after all other adjustments have been made in revenues and expenditures to this budget. The Governor recommends additional dollars, namely $5.8 million for additional textbook expenditures and another $5.8 million for additional staff training. Professional staff training is in addition to the recommendation made on the Estate Tax revenues. Mr. Hataway said the Governor made clear he recommends specific language be added to the "DSA appropriation and authorizations bill" to protect the total amount for books and staff training from collective bargaining.

Lines 58 and 83 on page 5 of Exhibit I. The amounts represent the adjustment for the new assessed evaluation estimates issued by the Department of Taxation for FY 2000, and for FY 2001 the estimates have been increased by the last 10-year average of 9 percent.

Line 59 on page 5 of Exhibit I. This is the adjustment to the Motor Vehicle Privilege Tax. This recommendation, which Mr. Hataway said is a reasonable compromise on what was in the original budget, is the 11-year average of a 12.06 percent increase per year. Mr. Hataway surmised that although the original budget took into consideration the fact that the two most recent actual years grew at 15.3 and 13.7 percent, the increase could not continue. However, he was "comfortable" with the 11-year average from 1988 through 1998 of 12.06 percent per year.

Ms. Evans asked whether the committee could appeal to the budget office for continued help and scrutiny of the Department of Motor Vehicles and Public Safety. She indicated there had been difficulty "making things add up over there and the answers received do not make sense." She requested help to "sort things out." Mr. Hataway gave assurance the budget office would be of service.

Line 76 on page 5 of Exhibit I. This represents a final consolidated recommendation which is $8 million per year for school improvements using Estate Tax revenue. The four primary areas of usage would be remediation, professional development, criterion-referenced test (CRT) development, and contracting for the high school proficiency examination. The amounts for the proficiency exam, budgeted at $900,000, and for the CRT, 300,000, would be subject to modification based upon the request for proposals (RFPs) received as a result of solicitation of proposals. With what is already built in the budget, the $900,000 may be a little high, Mr. Hataway acknowledged, but it is recommended that any savings will go to remediation. He said the Governor is flexible regarding the mix of dollars used between remediation and professional development, but because professional development is part of remediation there will be no problem with what is ultimately decided by the Legislature.

Line 90 on page 5 of Exhibit I. The slot tax has been adjusted based on the estimates from the Gaming Control Board.

Line 92 on page 5 of Exhibit I. This is an adjustment to the mineral land lease revenue on the basis of comparing actual revenues from FY 1992 through FY 1998 versus year-to-date actual collections. Mr. Hataway said his adjustment is higher than that presented by Jeanne Botts, but it has some basis of actual experience over those years.

Line 94 on page 5 of Exhibit I. This is the transfer of the remaining Estate Tax and the interest earned on the Estate Tax from the class-size reduction, i.e. school improvement fund, to support those school improvement programs.

Line 89 on page 5 of Exhibit I. This reflects the same dollar amount for the biennium but in terms of equalizing the expenditures for textbooks and professional training for both years of the biennium. There was movement between the 2 years but the total dollar amount remains the same, Mr. Hataway stated.

Mr. Hataway reiterated the bottom line position of the Governor is that the Legislature hold at the increase of $219 million for the biennium; therefore, any additional revenues which might be generated through the Economic Forum would also be applied to the textbook professional development area.

Senator Raggio said he assumed the changes do not replace funds already recommended for these areas but are augmentations which would be kept in that categorical area in order that they not be invaded for other purposes. Mr. Hataway indicated the Governor recommends appropriate language be added to the DSA bill to protect the total textbook and professional development training from collective bargaining. He said the Governor believes those items should be "off the table" in order for adequate resources to be applied to them.

Mr. Hataway indicated there is one additional minor change since Exhibit I was prepared which has been incorporated into Ms. Botts’ recommendations. He declared the statutes require reimbursing school districts for transportation of students. Referring to a line item entitled "Transportation" on page 3 of Exhibit I, Mr. Hataway said the original and current recommendation is $46,756, which was based upon the actual expenditures for FY 1998. He indicated a revision from the department based upon current billings and projections through the end of the year estimates the amount would more appropriately be $60,385.

Ms. Evans indicated there is a great deal of congruence with the legislative interests on most of the items; however, there is some disparity. She stated the Governor’s suggestion would be considered as the committee makes decisions.

Referring to a packet that addresses the DSA, class-size reduction, and school improvement (Exhibit J), Ms. Evans indicated the committee would recognize familiar verbiage and items that had been discussed several times. She said that as closing sheets are prepared for final consideration this will be the final opportunity for discussion, questions, and direction on unresolved items. She noted Ms. Botts had prepared an additional list for closing the budget consisting of budget adds and priorities to be considered by the committee. Ms. Evans stated that after the final reprojected figures are received from the Economic Forum the committee will know how much "wiggle room" there will be in order to close the budgets.

Distributive School Account (DSA) – Budget Page K12ED-81 (Volume 1)

Budget Account 2610

Ms. Botts addressed the unresolved issues listed on pages 2 and 3 of Exhibit J.

• Should this flexibility be allowed to extend to all class-size reduction funding, or limited to the 3rd grade share as in the past?
• Should school districts be allowed flexibility in the ratios and grades covered by the funding? For example, the Elko County School District has appeared before the Legislature requesting flexibility to reduce ratios in grades kindergarten through 5, to a 22-to-1 ratio, to eliminate team teaching in that district.

• This point is a procedural change in NRS 388.7301 to change the name of the Fund for Class Size reduction to the Fund for School Improvement for the reasons outlined.
• This point amends NRS 388.730(2) to change the purpose from solely class-size reduction to all activities and programs for school improvement.
• This point amends NRS 388.700 to allow local school districts the flexibility for allocation of resources to the 1st, 2nd, and 3rd grades through the variance process. Each school district would be allowed to submit a business plan of improvement for the use of all, or part of, the funds for implementation of approved education programs for which there is empirical evidence of producing success. Each business plan would provide certain detailed information in terms of how, why, where, levels of measurement, target levels of achievement, and so forth.
• This point amends the school accountability statutes to incorporate requirements for the districts receiving federal Title I funds and other, similar federal funds to submit a business plan for approval by the State Board of Education. Mr. Hataway indicated these are entitlement funds, but the Governor believes all remediation funds going to districts should be spotlighted to ensure the state is getting "the most bang for the buck" on both state and federal programs. He said the federal government has expressed reservations about the usefulness of this particular program.
• This point amends NRS 375A.700(1)(c) for deposit to the Fund for School Improvement. This is the chapter for the Estate Tax and it would be changed to the Fund for School Improvement and not the Fund for Class Size Reduction.
• This point authorizes the use of $8 million in Estate Tax funds per year for each year of the 1999-01 biennium, primarily for education improvement programs.
• This point consolidates Estate Tax revenue in the DSA for the reasons outlined earlier.

SENATE BILL 466: Revises provisions governing education. (BDR 34-1247)

Ms. Evans requested public testimony on this budget. There being none she requested Ms. Botts to continue with her presentation.

• The Statewide Management of Automated Records Transfers (SMART) received a scaled-down request that would extend the implementation of SMART in Clark County over 4 years at $2 million a year for a total of $8 million.
• Continued funding for educational technology. Last week the committee heard from Commissioner Fred Dugger, Commission on Information Technology, on the three high priorities for that program.
• Continuation of the satellite downlink project begun in 1997. The project was not completed because there were more schools than what had been reported by the department.
• In reference to the state-funded School-to-Careers program, Ms. Botts explained that when the scaled-back request of $1 million a year was added to the list by the subcommittee when the budget was closed, the question had been asked how the money might be spent. She distributed a handout, Exhibit M, which explained how the money might be spent.
• Expanding English-as-a-Second-Language (ESL) programs.
• Early childhood education program.
• Holocaust education program.
• Assisting rural school districts with replacing unsafe school buildings.

There being no further business, the meeting was adjourned at 10:30 a.m.

RESPECTFULLY SUBMITTED:

Barbara Moss,

Committee Secretary

APPROVED BY:

Senator Raymond D. Rawson, Chairman

DATE:

_____________________________________________

Assemblyman Jan Evans, Chairman

DATE:_______________________________________