The Senate Committee on Finance was called to order by Vice Chairman Raymond D. Rawson, at 9:08 a.m., on Friday, April 30, 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 Raymond D. Rawson, Vice Chairman

Senator Lawrence E. Jacobsen

Senator William R. O’Donnell

Senator Joseph M. Neal, Jr.

Senator Bernice Mathews

COMMITTEE MEMBERS ABSENT:

Senator William J. Raggio, Chairman (Excused)

Senator Bob Coffin

STAFF MEMBERS PRESENT:

Millard Clark, Committee Secretary

OTHERS PRESENT:

Lorne J. Malkiewich, Director, Legislative Counsel Bureau, said Assembly Bill (A.B.) 322 is a traditional one-shot appropriation to the Legislative Counsel Bureau (LCB) for reproduction of older Nevada Reports. The appropriation is contained in The Executive Budget. LCB has for several years sold Nevada Reports, basically because the sales list for the Nevada Revised Statutes (NRS) and the Nevada Reports is about the same and it is therefore efficient for LCB to handle the sales of both. Mr. Malkiewich said he must make sure LCB has old volumes of Nevada Reports in stock in order to sell them. This appropriation will allow LCB to reprint some of the older reports to have a complete set of them in stock.

Don Hataway, Deputy Director, Budget Division, Department of Administration, said A.B. 175 would restore the balance of the statutory contingency account to $1.5 million. The $752,114 represents the balance needed in the account at the time the budget was prepared to restore it to $1.5 million. Mr. Hataway said that since the budget was prepared some additional payments have been made and the current balance is $495,000. The additional $752,114 would bring the account balance to $1,247,114. Mr. Hataway said that in discussion of this account with John P. (Perry) Comeaux, Director, Budget Division, Department of Administration, the previous night, it was decided to recommend leaving the amount requested at $752,114 based upon the tight revenue situation, and the fact that after 2 years there is still $495,000 in the account. Mr. Hataway said the Budget Division believes the $1,247,114 account balance will be sufficient. He noted it has been quite a while since the Budget Division has requested assistance from the Interim Finance Committee (IFC) for the statutory contingency account. He said the Budget Division recommends the passage of A.B. 175 as originally proposed.

Senator Rawson closed the hearing on A.B. 175.

Ron W. Sparks II, Director, Western Interstate Commission for Higher Education, University and Community College System of Nevada, said this bill allows the Western Interstate Commission for Higher Education (WICHE) to be able to pay its bills even though not all of its total revenue has been received. He said the WICHE revenue is collected over a 12-month period and there are times when WICHE experiences a shortfall in revenues because payment is due in the regional office for the students to attend school before the funds needed to make these payments have been received. He said when this occurs, usually in November each year, it is necessary to obtain a temporary advance from the General Fund for the amount of money due but not yet received by WICHE.

Mr. Hataway referred the committee to Exhibit C, a one-page handout titled "WICHE Cash Flow Projection," which illustrates the situation that Mr. Sparks has to deal with. Mr. Hataway said the handout is based upon the revenue that is projected in The Executive Budget for Fiscal Year (FY) 2000 and FY 2001. He said historical data was used to prepare the projected estimated amount that will be collected as of December 1 in each year of the next biennium. Mr. Hataway said Exhibit C was prepared because the original bill included a request for a 25 percent advance and the Budget Division requested an amendment, which was approved by the Assembly, for a 50 percent advance. He said Exhibit C illustrates the fact that based upon the projected expenditure of the tuition payments to regional WICHE on or before December 1 each year in the amount of $1.1 million for FY 2000 and $1.3 million for FY 2001, WICHE would not sustain sufficient revenues prior to that time to make the projected payments in total. Mr. Hataway said the original request for a 25 percent advance was just not enough. He said the 50 percent advance is probably a little more than needed but Exhibit C illustrates why WICHE has a problem.

Senator Neal asked what courses are paid for by the WICHE program. Mr. Sparks replied that basically the courses are in the allied health field: physical therapy, occupational therapy, pharmacy, dentistry, graduate library studies, optometry, veterinary medicine, and physician assistant. Senator Neal asked why WICHE was paying for physician assistant classes when Nevada has a medical school. Mr. Sparks replied Nevada has a medical school but does not have a physician assistant program. He said the physician assistant is the allied health portion of the medical program.

Senator O'Donnell disclosed that his daughter is a recipient of WICHE. He said he will be voting on the WICHE budget since the WICHE program has already accepted her.

Senator Jacobsen asked the total amount of bad debt write-offs the WICHE program has made over the years. Mr. Sparks did not have the information with him but offered to provide it later. Senator Jacobsen asked how much was written off last year. Mr. Sparks replied there was no write-off last year. Senator Jacobsen recalled there was concern in the past with WICHE billing for the amounts owed, because amounts owed were never billed. Senator Rawson said a report showing the amounts owed was submitted to this committee in the past and there was always a long list of people that had not paid. Noting he has been watching the collections activity, the senator said Mr. Sparks has made a significant difference: the WICHE program does pursue collections more efficiently now than in the past.

BILL DRAFT REQUEST (BDR) S-1725: Supplemental appropriation to department of taxation for information services.

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Supreme Court – Budget Page COURTS-1 (Volume 1)

Budget Account 101-1494

Division of Planning and Analysis – Budget Page COURTS -19 (Volume 1)

Budget Account 101-1484

Law Library – Budget Page COURTS -43 (Volume 1)

Budget Account 101-2889

Jim Rodriguez, Program Analyst, Fiscal Analysis Division, LBC, provided a brief overview of the Supreme Court budgets on the budget closing report dated April 30, 1999. Mr. Rodriguez said that on March 4,^, 1999, and again on April 1, the court submitted its budget to the Joint Subcommittee on General Government of the Senate Committee on Finance and the Assembly Committee on Ways and Means. He said the Joint Subcommittee on General Government was concerned that the level of the request was beyond the state’s capability to support at this time because of the shortage of state revenue. Mr. Rodriguez said that at the end of the April 1, 1999, subcommittee meeting, the subcommittee requested that the court reconsider its budget request. He said the subcommittee requested that the court to resubmit its budget with no more than an 11 percent to 13 percent increase above the adjusted base for general funds.

Mr. Rodriguez said the court returned the adjusted budget request to the Legislative Counsel Bureau (LCB), Fiscal Analysis Division, for review. He became aware there was some confusion as to what the base would be for the 11 to 13 percent increase when the revised budget request was returned. He recalled that the court took the position it would use all the General Fund accounts in its budgets, which included the accounts for the district judges’ salaries and pensions. He said the LCB Fiscal Analysis Division at that time informed the court that only the General Fund accounts which were open for review by the Joint Subcommittee on General Government (this would exclude the district judges’ salary and pensions) could be included.

Mr. Rodriguez said the court reviewed its budget request and reached a consensus with the LCB Fiscal Analysis Division that the court would limit the revised budget to the Supreme Court budgets, the Supreme Court Library, and the Supreme Court Planning and Research Divisions, which are the primary General Fund accounts. He said the revised court budget figures were still considerably higher than the LCB Fiscal Analysis Division estimate of a 13 percent increase. Mr. Rodriguez said the final revised court budget request included an increase of about 20 percent above the General Fund adjusted base. He said that revision was the one before the committee at this time.

Mr. Rodriguez stated the LCB Fiscal Analysis Division calculated the 13 percent estimate based strictly on the priority list which the court supplied. He said the recommendations were not for specific compositions for the budgets. He explained the recommendations were generated by simply including items from the priority list that totaled the 13 percent increase. He said if the court has a different budget composition, it should address the differences. He noted the current recommendation was only a listing of what could be paid for with the 13 percent increase and was not a recommendation on specific elements of the court’s budget request.

Mr. Rodriguez said that given the 13 percent constraint, LCB staff calculated the court could include the first 8 items on its priority list, which were all position requests. He noted that since the court has reviewed the LCB staff suggestion to include the first 8 items on its priority list, it has eliminated 1 of the position requests. That reduced the 8 requested additional positions to 7. Mr. Rodriguez noted 6 of the positions are in the Supreme Court budget, account 101-1494. He said most of the 6 additional positions are associated with the addition of the new justices. He noted the additions are deferred pieces of Assembly Bill 343 of the Sixty-ninth Session.

Mr. Rodriguez said the budget request for budget account 101-1494 has an adjusted base budget of about $7 million for the next biennium. He noted the first priority item requests a Deputy Clerk position; the second, a Judicial Executive Secretary; the third, a Principal Attorney position; and the fourth, a Staff Attorney position, all related to A.B. 343 of the Sixty-ninth Session.

Mr. Rodriguez said that in addition to these positions, the fifth priority item includes the request for a Senior Information Services Manager, and the sixth includes the request for an Information Specialist III for the Supreme Court. Mr. Rodriguez noted the addition of these requested positions to budget account 101-1494 will add about $600,000 each year of the biennium to the court budget’s adjusted base budget, which is an increase of about 16 percent above the base budget.

Mr. Rodriguez said the budget request for budget account 101-1484 was reduced to 1 Management Analyst III position. This position will work with the Uniform System of Judicial Records (USJR).

Mr. Rodriguez said budget account 101-2889 does not contain any adjustments for staffing other than the M-300 recalculation for fringe benefits.

Mr. Rodriguez referred to Exhibit D, a three page spreadsheet which illustrates, in addition to the positions the court is requesting, the administrative and infrastructure requests. He said included in the request are funds for projected increases in the settlement conference caseload, for operating cost increases that are due to caseload growth, for microfilming increases, and for additional copiers and personal computers. The total of the requested increase is about $771,789 over the biennium.

Mr. Rodriguez said that in total the revised request for the Supreme Court contains an increase of about 20 percent and totals about $3 million over the biennium.

Senator O'Donnell remarked that the Supreme Court is the third branch of government and the Legislature should grant its request. However, he noted, because of the budget constraints, the court voluntarily cut about $3 million from its original budget request. Referencing Exhibit E, a 17-page Budget Closing Action Detail Report prepared by the LCB Fiscal Analysis Division, he said that page 13, titled "Supreme Court List of General Fund Budget Modules," shows the 7 additional positions suggested by LCB staff. The senator said the request for additional supplies, microfilming, copy machines, workstations, pamphlets, and out-of-state travel would be negated if the 13 percent were maintained. He said the

court has indicated these additional items are absolute necessities. Senator O'Donnell voiced his agreement with the court that if the 7 additional positions are included in the General Appropriations Act, the $348,194 for FY 2000 and the $423,596 for FY 2001 should be included in the add-back list. He explained this is the list of requests to be funded should there be additional funds available as a result of the Economic Forum’s forecast.

Senator Neal stated his position relative to the Supreme Court budget. Noting the court is a separate branch of government, he said that because it deals with substantive and procedural rights it would not be proper for this committee to deny the court the budget it needs. The senator noted it is the Supreme Court to which the citizens would have to appeal any actions taken by the governmental bodies within the state or any other actions of a civil nature which call for some type of resolution.

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Administrative Office of the Courts - Budget Page COURTS-15 (Volume 1)

Budget Account 101-1483

Mr. Rodriguez said the LCB Fiscal Analysis Division has made some technical adjustments to the overhead and operating cost allocations for this budget. He noted there was one significant change. He explained that the court originally requested to have the fines, fees, and forfeitures task force transferred from budget account 101-1483 to budget account 101-1484, which would have shifted it from a fee-based account to a General Fund account. However, the LCB Fiscal Analysis Division staff saw no reason to move the task force and shifted it back to the budget account it was originally in. Mr. Rodriguez noted this was shown in E-125 of the budget request.

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Uniform System of Judicial Records – Budget Page COURTS-25 (Volume 1)

Budget Account 101-1486

Mr. Rodriguez said this budget request includes adjustments to the allocated overhead cost and corrects an allocation in the overhead calculation. The net effect of the adjustment is an increase of $15,398.

Senator Jacobsen recalled there were 12 recommendations in the LCB audit for this budget account. He said a quarterly report showing the status of compliance with the LCB audit recommendations should be submitted to the Interim Finance Committee (IFC). Senator Jacobsen said the court has agreed to all 12 of the recommendations included in the LCB audit. He said it is taken for granted the court will comply with the audit recommendations, but because of the shortage in collections in the court system it would be a good idea to monitor the court’s progress to ensure compliance with the recommendations. Senator Rawson suggested sending a letter of intent instructing that a report be submitted to the IFC in 6 months indicating the status of compliance with the 12 audit recommendations.

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Judicial Education – Budget Page COURTS-28 (Volume 1)

Budget Account 101-1487

Mr. Rodriguez said there were no adjustments made to the court’s original request for this budget account.

Dan Miles, Senate Fiscal Analyst, distributed Exhibit F, an 11-page report titled "General Fund Revenues-Economic Forum-May 1999 Estimates." He said the first two pages provide a summary and the additional pages contain the detail. Mr. Miles said the three columns on the right side of the bottom of the second

page show the total General Fund revenue forecast for FY 1999, FY 2000, and FY 2001 that the Economic Forum made the previous day. He noted the differences in each year from the December 1 forecast and said a cumulative difference for all 3 years was also shown. Mr. Miles said it would take a few days to sort out all of the information presented by the Economic Forum. He said he was expecting the recommended revisions to the Medicaid budget to arrive soon, possibly later in the day. He added that all of the information would be analyzed during the next few days to determine the total General Fund amount.

Senator Rawson adjourned the meeting at 9:37 a.m.

RESPECTFULLY SUBMITTED:

Millard Clark

Committee Secretary

APPROVED BY:

Senator Raymond D. Rawson, Vice Chairman

DATE: