The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 7:35 a.m., on Wednesday, May 12, 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

Assemblywoman Christina R. Giunchigliani, Clark County Assembly District No. 9

Assemblywoman Barbara K. Cegavske, Clark County Assembly District No. 5

Assemblyman Kelly Thomas, Clark County Assembly District No. 16

STAFF MEMBERS PRESENT:

Millard Clark, Committee Secretary

OTHERS PRESENT:

Dan Miles, Senate Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, explained that at the request of the Senate Committee on Finance the budget was reviewed to determine whether there should be any other costs added for the new remodel and expansion of the Governor’s Mansion. He said there was a budget revision requesting additional insurance costs be added and a second budget revision requesting an increase in the salary of the Administrative Assistant at the Governor’s Mansion. He pointed out the total cost of the revisions is $7,704 in each year of the biennium. He stated the technical adjustments and budget issues are shown on page 1 of Exhibit C.

Senator Raggio asked how the salary increase was justified. Mr. Miles stated there is a memorandum from Tracy W. Raxter, Administrative Services Division, shown on page 2 of Exhibit C.

Senator Raggio noted that staff was requested to review the budgets and recommend adjustments.

Rick Combs, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, reviewed the technical adjustments in the account shown on page 4 of Exhibit C. He said some of these adjustments are repeated in the various other accounts and he will not repeat those adjustments in each budget.

Mr. Combs explained that decision unit M-200 was inaccurately funded through reimbursement revenues and has been changed to cost allocation revenue. He said Don Hataway, Deputy Director, Budget Division, Department of Administration, agrees with the changes in the way the first three decision units are funded as shown in numbers 1, 2, and 3 on page 4 of Exhibit C.

Mr. Combs stated that all of the hardware and software expenditures in decision units M-200, E-125, E-710, and E-720 have been adjusted based upon updated pricing information provided by the Purchasing Division.

Mr. Combs said expenditures for new telephones in decision units E-710 and E-720 were eliminated based upon the fact the Office of the Attorney General received new telephones for its entire Carson City office during Fiscal Year (FY) 1999.

Mr. Combs noted the vacancy savings reduction in decision units E-900 and E-901 for transferred positions were adjusted to ensure the revenues and expenditures transferred from this account match the revenues and expenditures transferred to the accounts that will receive the new positions.

Mr. Combs called attention to the elimination of the half-time deputy attorney General position based on the decision of the Senate Committee on Finance and the Assembly Committee on Ways and Means to close the budget for the Commission on Ethics with a new independent counsel position. He pointed out the Office of the Attorney General will no longer be required to provide legal support for the commission and the office currently has a half-time deputy assigned to the commission.

Mr. Combs pointed out that when the hearing was conducted for this budget the cost allocation plan had not been adjusted "for the Governor’s recommendations, as well as an analysis for actual FY 1997-98 expenditures." He stated that based on the new cost allocations, the revenue needed adjusting. He pointed out that unless expenditures are reduced beyond the technical adjustments made in the closing report, the General Fund support for this account during FY 2000 will need to be increased by $102,830 over the amount recommended in The Executive Budget. The cost allocation adjustments are shown on pages 5 of Exhibit C.

Senator Raggio asked the per-hour rate used for this computation. Mr. Combs answered the rate is $78 an hour. He said that for FY 2000 the cost allocation plan was sufficient in board and commission charges, as well as the agencies that participate in the cost allocation plan, to actually reduce the General Fund support required in FY 2001 by $263,201.

Mr. Combs explained the major budget closing issues shown on pages 5 and 6 of Exhibit C. He stated most of the new positions are in decision unit M-200. He said that as indicated in the first hearing on this budget, it is difficult to make a recommendation on the actual need for a particular position because performance measurement data projected for the future has not been received. He stated it does not appear that the number of new attorney positions requested is unreasonable, based on population growth. He said it is difficult to determine whether or not a particular position is needed, for the reason stated.

Mr. Combs explained that of the 9.53 full-time equivalent (FTE) non-computer-related positions in decision unit M-200, 5 are for the Department of Human Resources. He said the Computer Network Specialists would be assigned to the Carson City office to manage the remote local area networks (LANS).

Senator Raggio asked how many attorney positions there are in the Office of the Attorney General. Gene P. Etcheverry, Chief Financial Officer, Office of the Attorney General, answered there are 188 attorney positions. Senator Raggio asked what is in place to utilize attorneys full-time, so if they do not have work in their particular assignment, they do something else "to prevent having to add new positions."

Anne Cathcart, Senior Attorney General, Office of the Attorney General, stated attorney time records are kept and they are meant to indicate not only how many hours a day an attorney is working, but also for what client agency services are being provided. She explained that the chief of every division reviews the time records to see whether an attorney appears to be over- or under-utilized and adjustments can be made accordingly. She said that in her personal experience the attorneys work more than the traditional 40-hour work week.

Mr. Etcheverry explained that in the time allocation, which is tabulated monthly, it shows that attorneys, while they have their principal and secondary assignments, are available on an as-needed basis to fill in on other assignments if they have time. He stated this is a common practice in the office.

Senator Raggio stated that having a variety of assignments is important, not only for cost effectiveness, but for the attorneys’ development so they are exposed to a variety of opportunities. Ms. Cathcart pointed out a great deal of cross training is done throughout the office.

In continuing, Mr. Combs explained the computer positions requested as shown on pages 6 through 8 of Exhibit C. He pointed out the ratio of computer support positions to computer devices is still significantly higher in the Office of the Attorney General than it is at other state agencies.

Senator Raggio asked whether the position request in decision unit M-200 was for Computer Forensic Technicians. Mr. Combs replied it was not. He said one position is a Network Technician and one is an Information Specialist. Senator Raggio said it would seem the two computer support positions are not necessary.

Mr. Combs stated most of the equipment requested is replacement equipment with the exception of the five laptop computers, and the recommendation appears reasonable.

Mr. Combs noted the approval of the funding in decision unit E-805 would only result in the reclassification of the positions if the Department of Personnel deems the reclassifications appropriate based upon the duties performed by the positions.

Mr. Combs reviewed the supplemental requests from the Office of the Attorney General as shown on page 8 of Exhibit C. He said this request was taken care of in an amendment to a bill to include the equipment and fund it through "recovery revenue" from the tobacco settlement.

Senator Coffin asked whether that means the Network Specialist would be removed. Senator Raggio said those are the positions the staff has deemed unnecessary. Mr. Etcheverry pointed out there currently is a network specialist in both the northern and southern parts of the state. He explained this request was to provide service to the Reno office so there would not be a person based in Carson City who would be unable to provide immediate service to the Reno office.

Special Fund – Budget Page ELECTED-31 (Volume 1)

Budget Account 101-1031

Mr. Combs explained this is a special account used by the attorney general to pay for expenses associated with lawsuits "that are not anticipated at the time the budgets are closed." He said the Governor has recommended a status quo budget.

Attorney General Insurance Fraud – Budget Page ELECTED-32 (Volume 1)

Budget Account 101-3806

Mr. Combs pointed out a minor technical adjustment for equipment repair costs. He said the agency indicated the expenditure in FY 1998 was a onetime expense and should be removed from the base budget. He explained the budget closing issues shown on page 10 of Exhibit C. He said the Governor has only recommended minor increases for inflation and fringe benefit adjustments. He pointed out that the reserve at the end of FY 2001 is projected to be only $6,317. He said the minimum reserve is normally an amount equal to 2 months of expenditures. He noted the attorney general’s office has taken steps to try to correct the condition. He said that S.B. 224, if enacted, would increase the assessment imposed by the commissioner of insurance to fund this account and the insurance fraud activities of the Division of Insurance.

Ms. Cathcart stated the bill is currently in the Assembly Committee on Commerce and Labor and no hearing has been set.

Senator Raggio asked whether this is an exempt bill. Ms. Cathcart answered it is not. Senator Raggio said if the bill is important for this budget if needs to be out of the committee by the end of the week. Ms. Cathcart said she is aware of the status and pointed out the Governor had indicated to the office he would not veto the bill because of the increase in fees, since the insurance industry wants the increase.

Mr. Combs said this is not a negative position, so the budget is not contingent upon the bill passing; but "it is difficult if there is not an assessment increase." Senator  Raggio stated that if S.B. 224 is not passed, the committee might need to revisit this budget because the reserve is left almost depleted. He asked whether this is the budget where fraud cases for the state are prosecuted. Ms. Cathcart answered yes.

Senator Raggio asked why there are no projections on the number of cases that might be opened on insurance fraud. Ms. Cathcart replied she does not know what the difficulty was in projecting possible cases. She said the Insurance Fraud Unit has not been in operation long and perhaps it was felt there was not enough experience to make projections.

AG, Medicaid Fraud – Budget Page ELECTED-35 (Volume 1)

Budget Account 101-1037

Mr. Combs reviewed the technical adjustments and budget closing issues shown on pages 11 and 12 of Exhibit C.

Senator Raggio stated he thinks the committee should not recommend the two new positions for the Medicaid Fraud Control Unit. He said if federal legislation is enacted to expand the jurisdiction of the Medicaid Fraud Unit to investigate and prosecute cases of senior abuse and neglect in board and care facilities, a work program can be presented to the Interim Finance Committee (IFC) to request funds. He said this could be indicated through a Letter of Intent.

Mr. Combs said the committee needs to be aware the General Fund appropriation in this account has been reduced in the base budget, based on the fact this account has historically received recovery revenue in excess of the amount of its General Fund appropriation so that the General Fund appropriation is reverted at the end of each fiscal year. He pointed out the account is funded 75 percent through the Title XIX Medicaid funds and 25 percent through state matching funds. He said 15 percent of the state match historically has come from the General Fund and 10 percent from recoveries. He pointed out The Executive Budget recommends reducing the amount from recoveries to 3 percent. But based on the recommendation to reduce, it has also been recommended to allow the agency to use the General Fund appropriation in both years of the biennium and to allow the agency to request an advance from the General Fund if needed.

Mr. Combs stated the state is still required to do a 25 percent match but the matching funds can come from recoveries. Senator Raggio stated it seems reasonable that whatever General Fund amount is authorized should be allowed for both years of the biennium.

Attorney General-Worker’s Comp Fraud – Budget Page ELECTED-39 (Volume 1)

Budget Account 101-1033

Mr. Combs explained the budget closing issues shown on pages 13 and 14 of Exhibit C. Senator Raggio asked whether the requested funding appears to be reasonable. Mr. Combs answered yes.

* * * * *

AG Office of Consumer Protection – Budget Page ELECTED-43 (Volume 1)

Budget Account 330-1038

Mr. Combs explained the technical adjustments and budget closing issues shown on pages 15 and 16 of Exhibit C. He said the decision unit funding requests appear reasonable.

AG Crime Prevention – Budget Page ELECTED-49 (Volume 1)

Budget Account 101-1036

Mr. Combs said there are only minor increases for inflation and fringe benefit adjustments for the 1999-2001 biennium.

* * * * *

Senator Raggio asked whether periodic reports are received from the attorney general on all of these accounts. Mr. Combs answered there are reports on the four fraud units. Senator Raggio indicated continued reports are expected. He stated it is helpful to staff and to members of the committee to see the reports.

Attorney General Tort Claim Fund – Budget Page ELECTED-52 (Volume 1)

Budget Account 715-1348

Mr. Combs explained that decision unit E-125 would approve funding to allow the tort claims manager to attend the annual Public Risk and Insurance Management Seminar. He said this provides an opportunity to determine the actions that other states are taking to improve their loss experience. He stated decision units E-710 and E-720 recommend funding for replacement of a personal computer and two new filing cabinets, respectively.

Senator Raggio asked how many claims are pending. Mr. Combs answered there were roughly 540 cases in FY 1998, but he was not aware of how many claims are pending. Senator Raggio noted approximately $3.4 million was paid in claims and the average payment per claim was approximately $12,000.

Senator Raggio asked whether any serious claims are pending. Ms. Cathcart replied there are usually a few. Senator Raggio stated the committee would like to know about any claims having a potentially high risk and asked that the committee be so informed. Ms. Cathcart stated this information would be provided later in the day and current statistics on the number of claims pending will be provided as well.

AG Extradition Coordinator – Budget Page ELECTED-56 (Volume 1)

Budget Account 101-1002

Mr. Combs reported the only major technical adjustment was the removal of a telephone for the new half-time position based upon the fact there was already a phone for that position. He reviewed the budget closing issues shown on pages 19 and 20 of Exhibit C.

AG Private Investigators Licensing Board – Budget Page ELECTED-60 (Volume 1)

Budget Account 101-1032

Senator Raggio asked whether there is a bill to move this account from the Office of the Attorney General. Mr. Combs answered yes. He explained that basically the bill would remove the attorney general from the chairman of the board position and put the board on the same level as any other licensing board.

Senator Raggio asked the status of the bill. Ms. Cathcart explained the bill is in the Assembly Committee on Commerce and Labor and no hearing has been set.

Mr. Combs said the technical adjustment was to adjust the new half-time positions cost based on the October 1, 1999, start date. He reviewed the budget closing issues shown on pages 21 and 22 of Exhibit C.

Senator Raggio asked what difference it makes whether an investigator is transferred from the administration account to this account, as recommended in decision unit E-900. Mr. Combs replied the source of funding would change based on the transfer. He pointed out that at present the licensing board pays for the investigator position through the cost allocation plan. He said that because all of the investigator’s time was being spent on Private Investigator Licensing Board matters, it was felt to be appropriate to transfer the position to this budget account and eliminate the cost allocation plan payment.

AG, Council for Prosecuting Attorneys – Budget Page ELECTED-65 (Volume 1)

Budget Account 101-1041

Mr. Combs stated there are a number of adjustments to this account as shown on pages 23 and 24 of Exhibit C. He said most of the adjustments are related to the fact the executive director and the council were not appointed until late in FY 1998 and there were only $6,956 in expenditures on which to base a budget. He explained that he met with the executive director of the council and reviewed the actual expenditures for FY 1999 and developed a budget based on those figures.

Mr. Combs said the bill creating the Council for Prosecuting Attorneys authorized the council to balance forward any remaining funds appropriated to the council to the next fiscal year. He estimated there should be at least $80,000 of the original $200,000 appropriation left at the end of FY 1999. He indicated he would recommend $80,000 be budgeted as a balance forward in FY 2000.

Mr. Combs explained that all FY 1998 expenditures were removed from the base budget and placed in decision unit M-200, which would continue funding to support the personnel, travel and operating expenses of the executive director. He stated there was testimony many of the counties did not have the funding to support this decision unit as recommended in The Executive Budget. He said the council was not aware of a funding source from which the funding could be obtained other than the counties.

Mr. Combs pointed out the Governor has included the advisory council on his list of "potential uses for unappropriated revenue." He said the Governor recommended providing General Fund support in the amount of $134,217 in FY 2000 and $134,815 in FY 2001. He noted the Governor’s proposal does not take into consideration the $80,000 to be balanced forward from FY 1999 to FY 2000 or the technical adjustments in terms of establishing an adequate budget for the next biennium. He stated that if the committee wishes to replace the "gifts, grants, and donation" revenue that is proposed in The Executive Budget with General Fund support, approximately $16,946 would be required in the first year of the biennium and approximately $96,940 in FY 2001.

R. Michael McCormick, Executive Director, Advisory Council for Prosecuting Attorneys, said he concurs with the recommendations of the staff. Senator Raggio asked whether the amount budgeted for the next biennium is sufficient. Mr. McCormick replied the council "will make it work." Senator Raggio remarked this is an important program and a good job has been done "up until this point."

AG, Victims of Domestic Violence – Budget Page ELECTED-68 (Volume 1)

Budget Account 101-1042

Mr. Combs explained that at the December 14, 1998, IFC meeting a work program was approved to increase the Ombudsman position from a .51 FTE position to a .75 FTE position. He said The Executive Budget did not include the increase, so based upon the IFC’s approval of the increase, the position has been adjusted in the budget to .75 FTE. He noted the increase would be funded through assessments against persons who are convicted of a battery that constitutes domestic violence.

Mr. Combs said the Governor has recommended only minor increases for inflation and fringe benefit adjustments for the 1999-2001 biennium. He explained there is also another domestic violence account that is currently being administered by the attorney general’s office. He pointed out the account is never included in The Executive Budget. He stated the account is basically used to accept grants from the federal government that are "violence against women grants and the grants" are issued out as subgrants to various law enforcement agencies for training. He said it appears to be reasonable that the Legislature have approval authority over the grant funds and how they are used by the attorney general’s office in the same manner that they have authority over most other grant funds brought into the state.

Mr. Combs said that if the committee agrees, the Letter of Intent would be to have the Budget Division start including this account in The Executive Budget when the budget is prepared.

Ms. Cathcart pointed out that the private investigators board is the type of board needing to be connected with a law enforcement agency in order to access criminal justice records.

Senator Rawson assumed the chairing of the meeting.

John P. Comeaux, Director, Department of Administration, said the bill, if approved, would "repeal" the Permanent Net Proceeds Fund, which is a fund created by the 1993 Legislature. He explained the legislation provided the first 5 percent of the state’s portion of the net proceeds of minerals tax would be "swept" into this account and the account would serve as a "rainy day"-type fund and expenditures from the account could be made only as a result of direct legislative appropriation. He said that shortly after the legislation was enacted the Fund to Stabilize the Operation of State Government was created to serve as the "rainy day" fund and there is currently a balance of approximately $129 million. He stated it is the position of the administration that the Permanent Net Proceeds Fund is no longer necessary.

Mr. Comeaux said Assembly Bill (A.B.) 234 would provide for the elimination of the Permanent Net Proceeds Fund and for the transfer of any balance in the fund into the state General Fund upon passage and approval of the bill. The balance in the fund at this time is approximately $2.6 million.

Senator Neal asked whether the fund is actually no longer needed or whether the money is wanted for another purpose. Mr. Comeaux replied the position is that having two separate "rainy day"-type funds is not necessary. He said the $2.6 million in the fund was included in the calculations of the General Fund balance anticipating the bills approval.

Senator Neal asked why the fund was named the Permanent Net Proceeds Fund. Mr. Comeaux answered the net proceeds were simply the source of the revenues that would flow into the fund. Senator Neal asked where the 5 percent of the net proceeds of minerals tax would go if the bill is approved. Mr. Comeaux responded those funds could only be expended through direct legislative appropriation. He reiterated the $2.6 million currently in the fund would go directly into the General Fund upon passage and approval of the bill, which is where the state’s portion of the net proceeds tax goes.

Senator Neal asked whether this action would provide additional money to expend. Mr. Comeaux explained the money has already been accounted for in the budget.

Senator Coffin asked whether the administration has a position on the large "rainy day" fund that could "help cover a lot of the shortfalls." Mr. Comeaux answered that he believed the Governor, if he felt it was necessary, would not hesitate to talk to the Legislature about using a portion of the fund to handle something critical that could not otherwise be taken care of. He said that the Governor does not believe that is necessary at this point. Senator Coffin asked whether the Governor would object if the Legislature chose to use some of that money. Mr. Comeaux answered that would depend entirely on what the funds would be used for.

Assemblywoman Barbara K. Cegavske, Clark County District No. 5, explained the purpose of the bill is to ensure that school children have an adequate supply of up-to-date books , instructional material, and equipment and that the school districts adequately maintain their equipment, vehicles, and buildings. She said the bill would accomplish this by requiring districts to set aside a certain amount of money each year for expenditures that have often been considered expendable.

Ms. Cegavske said an article in the Las Vegas Sun in April quoted from a 1963 science book still being used in 5^th grade in Clark County elementary schools which read "during your lifetime, man will probably land on the moon." She stated she hears more complaints about the shortage of textbooks than about any other expenditure in the school budget. She maintained there should be enough textbooks that each child has one to bring home to study. She said instructional supplies, materials, library books, and software are also necessary for top-quality education.

Ms. Cegavske asked how children could be expected to meet the new standards in English, math, and science without new, more rigorous books and materials. She noted the Legislature has tried to fund the needs, but amounts actually spent for textbooks and library books were less in 7 of the last 9 years than the amounts contained in the legislatively approved budget for those years. Sometime as much as 30 percent less was spent than what was budgeted for textbooks and 56 percent less than that budgeted for library books.

Ms. Cegavske stressed that too often as school budgets are "squeezed" the areas which suffer are classroom materials, equipment, and maintenance. She noted many of these decisions are site-based. She stated a sound maintenance program prolongs the life of equipment, vehicles and buildings, yet too often this is an area in the budget that suffers. She said ongoing maintenance costs should be covered in the annual operating budget of school districts, but there are always bond issues that include routine maintenance for existing buildings along with construction of new buildings.

Ms. Cegavske explained that section 2 of the bill requires school districts to spend at least as much as the average spent per pupil over the prior 3 years in three categories. One consists of textbooks, library books, instructional materials and supplies. Ms. Cegavske said the second category deals with equipment and vehicles and the upkeep of the equipment. The third category is the maintenance and repair of equipment, vehicles and facilities. She pointed out a school district is allowed the flexibility to spend less in one of the 3 categories and more in another as long as expenditures for the total meets or exceeds the prior-year spending for those 3 categories.

Ms. Cegavske noted exceptions are allowed. She called attention to subsection 5 of section 2, which states a district is not required to satisfy the expenditures if revenues or enrollment are declining. If a district’s ending fund balance in its general fund has declined for 3 consecutive years, a written explanation of the cause of the decline must be submitted to the Committee on Local Government Finance.

Ms. Cegavske explained that school districts would be required to file amended final budgets each fall after the official count of pupils and the districts’ state financial aid is calculated. She said the amended budgets would be due on or before January 1 of each year.

Ms. Cegavske stated this bill would most likely be criticized as unnecessary meddling by the state in matters that should be left to local control. She maintained the bill attempts to assist school districts by ensuring that ongoing needs are met before new expenses are considered.

Ms. Cegavske pointed out the bill has bipartisan support and was passed by the Assembly unanimously. She urged support of the bill.

Senator Neal commented:

Senator Coffin asked whether there is something in the bill that would "free us up" from the accusation of having put an unfunded mandate on the district. He asked whether the "balance of money" that the school districts can apply in other areas is being narrowed.

Jeanne L. Botts, Senior Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, said she does not see this bill as an unfunded mandate because it is just requiring the districts to spend the average of what was spent over the last 3 years, in the aggregate, for the three categories identified previously. She pointed out that as long as enrollment and revenues are increasing that should not be a problem. She said there is an exception allowed that if there is a decline in enrollment or revenues the districts are not required to meet the requirement of the new law.

Senator Coffin asked, "What if other expenses are required to be maintained or increased, such as school security? How will that be worked into the budget if the districts are required to make the expenditures indicated in the bill?"

Ms. Cegavske stated the problem over the years is that the Legislature provides funding for the items identified in the bill and, "unfortunately," schools are making the decisions on whether maintenance is performed and whether or not equipment and books are purchased. She said this bill asks the school districts to make sure those items the Legislators have thought the money was going for be provided for the children in all schools.

Senator Coffin said the question about school police was not answered. Ms. Cegavske explained section 3 on page 2 allows for a written explanation of why the money was used in another area, such as increasing school security. Senator Coffin pointed out the ending fund balance could be increasing instead of declining, or "going up and down," and that inflation is not accounted for.

Ms. Botts explained the original bill would have prevented school districts from spending down their opening fund balances and that was amended out of the bill. However, what remained was the requirement that if the ending fund balance had been diminishing for 3 years, it had to be reported. She said there could be good reasons why the ending fund balance might be spent and there is not a prohibition against spending the ending fund balance, there just has to be a reporting of why it has occurred. Ms. Botts agreed this bill is an attempt to require school districts to spend at a certain level in the three areas of expenditures and not diminish the spending.

Senator Coffin suggested that "on the appropriation side," more funds be appropriated to those areas.

Senator Jacobsen commented that legislators who represent more than one county see a variety of systems. He said each school district runs its own operation and has a tendency to blame the Legislature for not giving the district enough money. He put the blame on the districts because he noted, they are in charge of handling the funds. He stated that perhaps "the pattern has been left too broad" in allowing districts to exercise their own judgement. It was his opinion "that is the way it should be," but he said if there is to be a guarantee of "an equal education for every child," there should be a stipulation as to what is to be done regarding the three areas.

Henry Etchemendy, Lobbyist, Nevada Association of School Boards, stressed that the association strongly opposes the bill and hopes it is not processed in any form. He stated the proposed requirement to expend for any purpose the average of the preceding 3 years, or any other period, is not well-reasoned and is made without consideration of the needs and replacements that vary from year to year. He said there is no documented justifiable purpose and the proposal is neither fiscally prudent nor possible.

Mr. Etchemendy provided information from nine school districts indicating their appropriations and actual expenditures for the previous 3 years as shown on pages 1 through 9 of Exhibit D. He said the textbook adoption cycle by itself could skew the amount spent for textbooks in any year, let alone over a 3-year period. He pointed out buses are replaced as needed, which can mean heavy replacements in one year and much fewer replacements in the next. He stated that facility maintenance is much the same depending on conditions which may occur or just the wearing out of a building, and "a lot of that is" not in the districts’ control. He asserted that is something that cannot be averaged over a 3-year period. He acknowledged it is true there is a lot of deferred maintenance but said some needs have priority over others and cannot be "cured" by a bill of this type.

Mr. Etchemendy explained that many times there will be a onetime appropriation of funds from an outside grant that will allow a district to acquire instructional equipment and that cannot be averaged. He maintained a district should have the opportunity to spend the money when necessary and not build in a false average that it will be required to meet each and every year.

Mr. Etchemendy stated the districts establish their budgets and give out the budgets dependent on the resources available and the needs. He pointed out the needs change from year to year and when the budgets are developed and adopted there are meetings the public can be involved in if they wish to be. He stressed that if there are concerns, they are best expressed on a local basis.

Mr. Etchemendy said that people could appear and express their concerns at meetings of the local school board, which are held regularly. He emphasized A.B. 219 is unnecessary. He said it would compound the budget problems and produce an end-of-the-year rush to perhaps make unneeded purchases, the only purpose being to meet the 3 percent mandate.

Senator Rawson noted there are several members of the Senate Committee on Finance who also serve on the Joint Committee on Human Resource/K-12 who have a good sense of the bill and the concerns.

Senator Neal asked how the problem of old science textbooks could be solved. Mr. Etchemendy answered there is a textbook adoption cycle and textbooks are replaced based upon that cycle. He said the cycle is every 6 to 8 years, depending on the type of textbook. Senator Neal asked what the cycle would be for a science textbook. Mr. Etchemendy did not know. He maintained the bill may be well-intended but it is impractical and requested it not be recommended for consideration by the Senate.

Senator O’Donnell said he does not know who the school boards are listening to, but the parents are "screaming that textbooks in our public schools need to be updated and purchased in a timely manner." He stated he understands that every school board in the entire state is pressured by the unions to place more money into salaries rather than schoolbooks. He asked who is being listened to, the unions or parents who want schoolbooks. He said it has been stated that this bill is not needed, is cumbersome, and would not work. He asked what the solution is.

Mr. Etchemendy responded that some of the school districts have told him that many of the schoolbooks are acquired in what is called "classroom sets" and are available for students to take home. He said not every student in the classroom will have a textbook but there are enough books for students to take home. He said the problem is in the management of the classroom, where procedures have not been setup, so that everyone has access to take the books home.

Mr. Etchemendy pointed out that a solution would be eliminating binding arbitration, which he understands is not in the purview of this committee, but it is a purview of the Legislature. Senator O’Donnell asked whether it is being said that the school boards cannot stand up to decisions between giving out money for schoolbooks and giving out money for salaries. Mr. Etchemendy stated he has seen a number of arbitrator’s decision wherein an arbitrator will say "we’ve looked at everything and you have spent your money for this, however, you should have spent it for this." Senator O’Donnell said that maybe the law would help direct the money where it needs to go.

Senator Jacobsen asked whether Mr. Etchemendy could indicated what the priorities are. He said it appears from information in Exhibit D that textbooks receive the most amount of money. Mr. Etchemendy answered that he does not know that there are any real priorities because things are changing. At one time textbooks were the number one priority because the book was what was used to teach with, however, with the technology age, a lot of the technology equipment for education is taking over.

Charles (Steve) Williams, Lobbyist, Washoe County School District, said Mr. Etchemendy has done a good job in summarizing the district’s position on the bill. He provided a handout, Exhibit E, showing the expenditures over the past 3 years for the items in question. He pointed out that expenditures per pupil have increased by approximately 23 percent over the past 3 years. He said if the bill was implemented and the average was used, less would be spent per pupil in the upcoming year.

Mr. Williams pointed out the bill would not directly apply to the Washoe County School District and this decision-making should be left in the purview of the school districts where parents can make their case to the school board as to how the money should be spent. He stated the problem is "even though the pie would be divided differently under this bill, it does not make the pie any bigger." He maintained this bill should not be passed and decisions on these matters should be left up to the local school boards.

Senator O’Donnell said the bill says the spending must be "at least equal to the average." It does not say the district has to spend that much money. Mr. Williams said he understands that and said.he apologizes if he misspoke. He said what he intended to say was if the average was used the district would be spending less and he had not intended to imply the district would do that.

Martha Tittle, Lobbyist, Clark County School District (CCSD), testified the district "supports and believes" textbooks are important but has concerns about the proposal in A.B. 219. She said section 2 removes flexibility from this budget category. She stated that CCSD already allocates funds to each school for textbooks and instructional supplies. She pointed out that 75 percent of the allocation must be spent on textbooks with any adjustment having to be expended in either library books, field trips, library supplies, instructional supplies, special education, or instructional equipment. Ms. Tittle stated the district feels that as long as its allocation for textbooks must be managed without the benefit of inflationary factors and growth continues at record numbers, each board needs the flexibility to manage this budget account as it manages its other accounts.

Ms. Tittle stated that also in section 2, subsections 2 and 3, might become artificially inflated because of the infused dollars rapidly being expended on maintenance and repairs. She said once that occurs, it would not in all likelihood occur again for some time but it would raise the amount per pupil above the need. She said this is most likely well-intended legislation but not a measure that should be included in law.

Kristine K. Jensen, Lobbyist, Nevada Concerned Citizens, said she is speaking from the perspective of a parent. She recalled she had read a letter from a student last legislative session asking for students to sign a petition requesting middle school textbooks. She said that in the past few weeks she has received another complaint from a local elementary school that has no textbooks. Mimeographed copies are run off and the parents’ group chose to raise funds to provide the teachers with more paper. When that paper was provided the allocation from the principal was taken away.

Ms. Jensen stated there are real problems and she is not sure how they need to be addressed. She said there appears to be a great deal of latitude as to how the principal determines how the money is spent.

Senator Coffin asked Ms. Jensen to provide him with the names of the schools she has spoken about today. Ms. Jensen said that at Lemis Elementary in Clark County there are no textbooks. She said she would provide the name of the school using the mimeographed copies. Senator Coffin stated a mimeographed copy "is not altogether bad, especially when you are on a textbook purchase cycle of 6 to 8 years, and with the evolvement of science, providing copies of the most recent material could be an advantage."

Assemblywoman Christina R. Giunchigliani, Clark County Assembly District No. 9, pointed out the State Department of Education establishes the cycle of textbook purchases and asserted if the textbooks are not being used in a timely manner, that should be brought to the school district’s attention. If the school district does not take action, the State Department of Education should be informed. Ms. Giunchigliani stated that not every child needs a textbook anymore because "whether we like it or not" with the new technologies more options are available for teaching.

Ms. Giunchigliani said there should be an additional set of textbooks available for a parent to check out. She stated she continues to have to make a case for textbooks for special education children because the school tends to spend all of the money without giving thought to the "special" population. She pointed out this bill will not fix "those types of problems." She said the problem comes down to adequate funding and how the district funds the individual schools. Ms. Giunchigliani explained the funding is determined by a formula and said no one has reviewed the formula to see "if that is what is causing the lack of textbooks and materials."

Ms. Giunchigliani said she appreciates the intent of the bill. She stated she uses older textbooks for a variety of reasons and said she would not want to see all of the older books discarded. Additionally, there are problems in the way books are chosen. Ms. Giunchigliani explained there is a long list of textbooks that school districts can choose from, but internally, management might decide that only three could be chosen from. She said the problem is those books might not be tied to the curriculum being taught or at the reading level of the students, so "the books sit in a box because no one can use them."

Senator Rawson closed the hearing on A.B. 219 and opened the hearing on A.B. 74.

Senator Raggio resumed chairing the meeting.

Assemblyman Kelly Thomas, Clark County Assembly District No. 16, testified A.B. 74 would allow retired persons who are members of the Public Employees’ Retirement System (PERS) to accept employment as a member of the professional teaching staff in the College of Education at the University of Nevada, Reno (UNR) or the University of Nevada, Las Vegas (UNLV) without affecting their retirement benefits for the duration of that employment. Additionally, the bill requires PERS to conduct a study on the effect of the retirement system of the reemployment of the retirees.

Mr. Thomas pointed out this would be a temporary measure containing a "sunset" clause and would expire July 1, 2000.

Senator Raggio asked what the necessity is for the bill. Teresa Jordan, Ph. D., Interim Dean, College of Education, University of Nevada, Las Vegas, University and Community College System of Nevada, testified in support of the bill. She said the legislation would enable UNLV to utilize the expertise of seasoned public school educators in the teacher preparation programs. She called attention to the current statute allowing a retired public employee to earn only $16,000 annually from public employment and still be able to continue to receive full retirement benefits. She said the bill would remove the constraint that discriminates against the retirees who have accepted public employment in Nevada.

Dr. Jordan stated that as a result of the current law UNLV is unable to recruit from an outstanding pool of potential faculty members for the teacher education program. She said the bill is especially critical because the legislation will enhance UNLV’s capacity to meet the growing demand for teachers in public schools. She noted the problem is especially critical for enrollment in Clark County.

Dr. Jordan called attention to a recent board of regents of the University and Community College System of Nevada (UCCSN) report on teacher education in Nevada which projects that Nevada’s public schools will need approximately 27,000 new teachers in the next decade. She said Clark County alone will need approximately 800 school administrators during the same period.

Dr. Jordan pointed out that the historical strategy of going out of state to recruit teachers is being jeopardized by two conditions: first, the national shortage of teachers and second, the recruitment incentive programs being offered in other states and school districts to keep their own graduates in their states. Dr. Jordan stated these conditions require Nevada to take a proactive approach if the state is going to meet the demands of teachers. She said one of those approaches is to increase the productivity of how many qualified teachers are "turned out."

Senator Raggio asked what the estimate is of how many retirees would take advantage of this situation in Clark County. Dr. Jordan replied the number of positions over the next biennium would be only about 4 to 6, but they are critical positions. She said that a few years ago the UNLV College of Education typically had 50 to 60 applicants in a teaching pool and UNLV is now running into the same national shortage for colleges of education, in terms of finding professors, as the school districts are encountering in terms of acquiring qualified teachers. She stated that this year the number of applicants for the teaching pool was between 20 and 25 and half of the applicants were not qualified.

Dr. Jordan said she has conducted 24 faculty searches this year and she will most likely only be able to successfully fill 11 positions. She stated this bill would allow UNLV to draw from a qualified applicant pool.

Senator Mathews pointed out that new UCCSN professional staff are covered under a different retirement system and asked why the PERS retirees cannot be hired. Rick C. Bennett, Lobbyist, University of Nevada Las Vegas, said it is his understanding the current statute applies to all public employers even though the faculty does not participate in PERS and is tied to the same limits as all other public employers who do participate in PERS.

George Pyne, Executive Officer, Public Employees’ Retirement System, explained that professional staff at the UCCSN are treated somewhat differently than other public employees with respect to membership in the system and retired reemployment laws. He said that for the most part professional staff of the UCCSN participate in the UCCSN program, with one exception. He said that if a person is a member of PERS at the time the individual accepts UCCSN employment, then he or she remains a PERS member. He explained that "were a member retired out of PERS and returned to work as a professional with the UCCSN, the position would not be considered eligible for PERS and would be subject to an earnings limitation of $16,000 a year."

Senator Raggio asked whether there is an age at which individuals can earn as much as they want to even if they are retired under PERS. Mr. Pyne answered there is not. He noted the Public Employees’ Retirement Board was originally opposed to the bill but subsequent to the board taking a position on A.B. 74, the bill was amended to include a provision that the issue of retired employee reemployment be studied. The board is therefore no longer opposed to the bill.

Senator Raggio said it does not appear many people would be affected. Mr. Pyne agreed. He said PERS recognizes that professional staff at the university is somewhat unique when it comes to treatment in the PERS system.

Senator Coffin asked why in the bill the institutions are mentioned by name" instead of saying UCCSN." Mr. Pyne pointed out the desire was to have a narrow scope in the bill so that the PERS system would not be affected.

Senator Raggio pointed out Great Basin College (GBC) is planning a teachers training program and the college might want the opportunity to hire professional staff who are retired and should perhaps be included in the bill.

James Richardson Ph. D., Lobbyist, Nevada Faculty Alliance, testified the alliance strongly supports the bill.

Senator Raggio closed the hearing on A.B. 74 and opened the hearing on A.B. 268.

Ms. Giunchigliani explained that when the limited session bill passed, as elections chairman she had looked at the Economic Forum issue. She said the timelines were slightly late as far as receiving the report "for the monies for the purposes of the budget committees to close budgets." She explained this bill would take away the May 1 date and change the report date to the week of April 20 but not before April 25. She said fiscal staff had indicated this would provide more time to deal with the various budgets.

Senator Raggio asked why it would be desirable to move the date up and said he would think one would want to have "the fullest amount" of revenue that was available. Ms. Giunchigliani answered it was felt "what needed to be considered would be available by April 25" and the earlier due date would give the Senate Committee on Finance, the Assembly Committee on Ways and Means, and the fiscal staff more time to report back to the Economic Forum.

Mr. Miles suggested looking at the calendar 2 years hence to see when the sales tax number might come in, because the Economic Forum would want the last sales tax figure.

Senator Raggio called attention to A.B. 241.

Assemblywoman Kathyrn (Kathy) A. McClain, Clark County Assembly District No. 15, stated this is another textbook bill. She testified she has heard numerous stories from parents and teachers regarding the lack of textbooks for students. She commented on the amount of money that parents were spending, especially in elementary schools, on instructional materials and supplies for the classrooms. She said this was not only pencils and paper but a variety of other items, and parents said they were spending between $20 and $50 per child for supplies.

Ms. McClain stated she brought this bill forward because there was "so much inconsistency" in the expenditure. She explained the bill would require 2 percent of the districts’ budgets to be spent on textbooks, 2 percent on classroom materials and supplies (this could include software), and 1 percent on library resources. She pointed out that when the figures were gathered they indicated there would be a $33 million fiscal impact.

Ms. McClain said she and Ms. Cegavske tried at one point to combine their bills, but that did not work out well with the Legal Division. She said A.B. 241 asks for an audit of the money that has been spent on textbooks in the schools in Nevada. She said she understands the rationale that a textbook is not always needed. She said the audit would also look at the classes that are offered where textbooks are appropriate, the number of students enrolled in those classes, and the number of textbooks available for those classes.

Ms. McClain stated she wants to know what is being required for parents to purchase at the beginning of and throughout the school year in the elementary schools.

Senator Raggio noted the bill has changed considerably from what it was originally. He pointed out the audit would have to be done by the Audit Division of the Legislative Counsel Bureau. He commented legislators constantly hear laments about textbooks and instructional materials. He stated that on at least 5 occasions during his tenure on this committee, when superintendents from the various school districts have been called to appear before the committee they have been asked why the situation exists. Senator Raggio said the superintendents deny the fact that such needs exist. He explained "that when the formulas are funded under the Nevada Plan, those monies are built into the formula." He stated it is not the Legislature in its funding that fails to provide for textbooks, instructional supplies, equipment, and maintenance. He said the problem is how the money is allocated at the district level and it varies from district to district. Senator Raggio pointed out that as the Distributive School Account (DSA) closes this legislative session, in addition to what has been recommended by the Governor the Legislature will factor in a percentage for inflation for textbooks and everything that is mentioned in the bill.

Senator Raggio stated he does not want Ms. McClain to be disillusioned when she comes back to the Legislature thinking she has dealt with the problem, when most likely she will continue to hear the same complaints. He said that until the Legislature becomes more precise in its allocation of the funds that are in the formula, the problem will continue.

Ms. McClain said she understands school finance and site-based management program budgeting. She stated she wants to go further than what is allocated to the schools, she wants to know why the money is not spent on textbooks if it is allocated for textbooks.

Senator Raggio emphasized that there is enough money in the Nevada Plan to buy whatever instructional supplies necessary for any particular district, it is a question of how the money is used.

Wm. Gary Crews, CPA, Legislative Auditor, Audit Division, Legislative Counsel Bureau, said an audit would provide the information requested in the bill. Senator Raggio asked what the cost of the audit would be. Mr. Crews answered that in functions such as this, what is usually involved is reallocating staff resources. He said there would be some costs that were not anticipated in the amount of $25,000 for travel, per diem, and so forth. He explained that is necessary because each school district would have to be visited and approximately 2 weeks would be spent at each district.

Mr. Crews said that he indicated to the Assembly Committee on Ways and Means that the cost could most likely be absorbed if the opportunity existed to reallocate the funds within the division’s budget.

Mr. Etchemendy testified the Nevada Association of School Boards is in full support of the bill.

Ms. Jensen said that in the provision on page 2, line 9 reads "the amount of money requested of parents and pupils who are enrolled in elementary schools," she would ask that "elementary" be deleted and the same information gathered on middle and high schools as well.

Ms. McClain stated the provision was limited to elementary schools in an effort to keep the cost of the audit down, and because t appeared the biggest problem was in the elementary grades.

Senator Raggio stated, "If it is not as necessary to have textbooks, why is the Legislature required to provide a 4 percent increase for textbooks into the Nevada Plan each year?"

Al Bellister, Lobbyist, Nevada State Education Association, stated that arbitration is not the problem with textbook and supply purchases. He said that with the passage of the binding arbitration law in Nevada only five arbitrations have been held regarding the school districts. He observed that to the best of his knowledge, Clark County School District has never been in arbitration. Bargaining and arbitration cannot be blamed for the shortage of textbooks, he maintained. Mr. Bellister emphasized it has never been argued to an arbitrator to take textbooks out of the classrooms and said that frankly, he resents the accusation. He said it could be demonstrated that over time, prior to and after the passage of the binding arbitration provisions, the percentage of the budget that goes to salaries has been relatively flat. He stressed that bargaining is not "eating up" a greater percentage of the budget for salaries.

Senator Raggio said the measure seems to be quantitative in what the auditors would be asked to do. He asked what could be done to put some qualitative value into the audit. He said he is very interested in how the current textbooks align with the present standards and whether or not the books are being used, and so forth. He stated that is the kind of information that would be helpful. He said unless the audit can take into account information of this nature, he does not think it will be of any great value.

Mr. Crews stated that is information which can be provided through the audit. He pointed out the audits are approached with a specific objective and are "always open to other things that come to the attention of the auditors."

Senator Raggio remarked that perhaps some language should be added to the bill directing that both quantitative and qualitative information be included in the audit.

Senator Jacobsen said he feels that if any direction is to be given regarding the audit, it should be given to the State Board of Education and "be directed to" the local school districts. He stated the Legislature might find itself in a position it does not want to be in. He said he is reluctant to process a measure of this nature because he does not feel it is realistic.

Senator Raggio pointed out some of the problems have been solved by the creation of the Legislative Committee on Education that functions during the interim. He said he respectfully disagrees with Senator Jacobsen because he feels that for too long the Legislature has abdicated the responsibility which belongs to the Legislature by virtue of the Nevada Constitution. He agreed the Legislature should not micromanage the local school board business but said some working together is necessary to achieve better-established goals.

Senator Neal pointed out the audit is only to provide information and the Legislature needs information if the legislators are to make proper decisions.

Ms. McClain stated she thinks the audit is necessary. She said it would provide specifics that can be dealt with in the next legislative session. She remarked that she is sure a problem will not be found in every school, but where there are problems, the information will be available to use for making intelligent decisions during the next legislative session.

Assemblyman Lynn C. Hettrick, Assembly District No. 39, testified in support of A.B. 289.

Mr. Hettrick reviewed section 1, subsections 1-4 of the bill. He explained the bill merely provides that any profits from any vending machines at the Nevada Department of Prisons (DOP) must go into the Offenders’ Store Fund. He said this was done because current legislation has the funds going into the inmate’s store and welfare funds, with the funds to be spent on items benefiting inmates. He quoted a statement of Senator Raggio’s that "ordinarily, profits from the vending machines do not have an impact on General Fund appropriation." However, Mr. Hettrick said, it was also noted that in this situation, "The prison proceeds have historically been used for the purchase of law books and other requirements pursuant to federal court decrees. If the fund was not used in the manner described, a General Fund appropriation would be necessary."

Mr. Hettrick stated that the floor statement for S.B. 582 of the Sixty-fourth Session in recommending that legislation before the entire Senate read as follows:

Mr. Hettrick said that in 1992 the DOP adopted administrative regulation 213. The regulation set forth the department’s policy concerning employee funds, which included the uses of vending machine proceeds, commissions, and so forth, for the use of Christmas parties, picnic raffle sales, and employee picnic awards, among other things. The regulation included the following statement: "It is the policy of the DOP that these funds belong to the employees of the particular institutions for which the particular fund is formed and will not be governed by state statutes."

Mr. Hettrick pointed out that administrative regulation 213 as well as copies of the minutes of the Senate Committee on Finance were sent to the Legal Division of the Legislative Counsel Bureau for a requested opinion as to whether or not the regulation complied with the intent of S.B. 582 of the Sixty-fourth Session. He said that at the same time DOP sent a request for an opinion to the attorney general’s office. He stated the two opinions did not agree. The Legal Division opined the money had to go into the budget and be used to offset the General Fund and the attorney general said that S.B. 582 of the Sixty-fourth Session did not prohibit the use of the money.

Mr. Hettrick noted the Assembly Committee on Ways and Means has passed A.B. 289, directing that "the money go to replace the General Fund." He further noted the Assembly committee has closed the NDOP store fund budget with revenues of $64,648 budgeted for FY 2000 and $66,734 for FY 2001. He asked support of the bill to place the money in the DOP store fund.

Ed Flagg, Lobbyist, Nevada Corrections Association, said that in looking at the bill he could see Mr. Hettrick’s side and also that of the employees. He stated the bill does not address the fact there are two sets of vending machines. One is located in the employees’ briefing room and the other is in the visiting room. He stated the feeling is that the money from the machine in the briefing room should stay with the employees because it is money the employees are spending in the machine, and the other money is from machines used by the inmate families.

Donna O’Brien, Northern Nevada Correctional Center, Department of Prisons, stated she has spoken with approximately 200 correctional officers and they are in agreement with Mr. Flagg. She maintained the money spent in the machines by the employees should benefit the employees and what the inmate families spend in the visiting room should benefit the inmate fund.

Senator Raggio asked whether all vending machines are placed in the same location in every correctional institution. Ms. O’Brien answered that to the best of her knowledge "that is the only location for the machines, other than those in the central office." She said the money builds the morale of the staff. She stated there had been some criticism of the use of funds to buy a microwave, but she pointed out it is to everybody’s’ benefit for the staff to have hot meals available. She said individuals are more alert and more sensitive to what is going on around them on long shifts if they "are not eating a cold baloney sandwich." She emphasized that having a hot meal makes the employees better at their jobs.

Kathy Naumann, Lobbyist, Nevada Conference of Police & Sheriffs, spoke in support of the position taken by the Nevada Corrections Association on the bill. She said that in southern Nevada she has been astounded by the "effrontery that this bill has taken to the rank and file officer." She said she has seen many pages of petitions signed by workers, who did not petition the Legislature for pay raises, but petitioned about this issue. She stressed this issue is very important to the officers.

Robert Bayer, Director, Department of Prisons, testified that when he became director he was not aware there was going to be a problem over the vending machines. He suggested there be a compromise that would not require legislation. He said the Governor feels it is not good public policy to have peace officers using the proceeds from their money to pay for inmate services. He stated it would seem more appropriate to use the money from the vending machines in the inmate areas for inmate services.

Mr. Bayer suggested a regulation be drafted that would separate the two issues. He stated "Current regulations and the exemption of the law has money going into the different employee funds." Senator Raggio asked what the net revenue would be from all the vending machines if the recommendation presented was followed. He also asked what the breakdown is in terms of the vending machine revenue generated by the employees versus what is generated by the inmates. Mr. Bayer answered he does not have a figure of what each machine is generating.

Senator Raggio said someone should have information on how much money is generated from the machines. Mr. Bayer said that for FY 1998, the net proceeds statewide were $69,000. He conjectured the largest portion of that figure comes from machines that the inmates do not have access to.

Mr. Hettrick stated he would not argue there is a difference in where the money comes from, but all of the money is being used "in reverse" of what S.B. 582 of the Sixty-fourth Session says. He pointed out the intent of the legislation is to clarify the two different opinions on the bill. He said dividing the use of the proceeds would set up a need to "regulate the amounts and keep books on the money as to where it came from and where it goes." Senator Raggio asked whether keeping records of this nature would be feasible. Mr. Bayer replied he believed it would be and the simplest approach would be to have two separate operators running the vending machines.

Mr. Hettrick maintained there is still a need to clear up the problem through a law rather than through regulation, because under regulation there have already been two different opinions given. He stressed that whatever is decided needs to be specified in the law.

Senator Raggio closed the hearing on A.B. 289 and opened the hearing on A.B. 660.

Pete Ernaut, Chief of Staff, Governor’s Office, said A.B. 660 asks to have the 23 direct employee positions of the Governor’s Office deemed nonclassified positions. He pointed out the Judicial and Legislative Branches of state government have non-classified employees. He said it would make no sense to have the entire Executive Branch nonclassified, but the bill would provide an appropriate management tool for the Governor’s Office. He said it would work very simply. He explained that the Senate Committee on Finance and the Assembly Committee on Ways and Means would close budgets based on an amount of money for salaries and the Governor would make the decision on what the employees’ salaries would be.

Mr. Ernaut said the Governor would have the flexibility to manage the office the way he deemed fit. He stated that of the 23 positions, 13 are clerical. He said the Legislature not only sets the salaries but also the job titles. He stated this makes it unwieldy "when a governor prefers to have less clerical staff and more management or constituent services staff. He pointed out the salaries that are included with the job descriptions make the flexibility impossible and make the proper management of the office very difficult.

Mr. Ernaut remarked that as the state has grown the Governor’s Office has changed quite drastically. He said the current Governor has tried to dedicate more staff to constituent services than did many previous administrations. However, the current structure does not allow recruitment or retention of proper management personnel due to the constraints of the numerous clerical positions.

Mr. Ernaut pointed out the Assembly did amend and pass the bill but said the Governor prefers the original language of the bill. Senator O’Donnell stated he is concerned about subsection 4 of the bill. He asked whether the intent in closing the budget was to give the Governor flexibility. He asked why there is a cap on a salary increase of "7½ percent budgeted." Mr. Ernaut explained that is a provision in the bill with which the Governor does not agree. He stressed that this bill is not about raises, it is about management. He pointed out that of the 23 staff positions available, the plan is to fill only 18. He said salary savings would allow for more management staff. He emphasized the budget would not be exceeded, so there would not be any additional money needed. Mr. Ernaut contended that with the current governor, money would be saved.

Senator O’Donnell stated it appears subsections 1 through 3 of the bill provide the flexibility and subsection 4 takes it away. He said he is not sure he can support the action of the Assembly.

Senator Coffin said he is not sure what the Governor wants. He said he objects to the fact there are no salary limits. He asked whether an employee in unclassified service is allowed to have a business. Mr. Ernaut stated it is not the policy of the Governor to have any staff members receive outside income. Senator Coffin noted that provision is being eliminated from the bill and there is a good reason for having the law state the unclassified employees not pursue any other businesses or occupation. Mr. Ernaut said there would be no objection to having that put back into the bill.

Senator Raggio asked whether a proposed amendment to the first reprint of the bill could be provided quickly. Mr. Ernaut suggested the original language of the bill be used.

In an answer to Senator Coffin, Mr. Ernaut explained the language regarding outside employment was taken out of the bill because it is covered elsewhere in state statute. Senator Raggio asked Mr. Ernaut to confirm to the committee that the language being shown as deleted in the bill is covered elsewhere before the committee acts on the bill.

Senator Raggio opened the hearing on A.B. 303.

Gary H. Wolff, Lobbyist, Nevada Highway Patrol Association, testified the bill provides a mechanism for police officers or firefighter to continue working in a civilian capacity and not have any deductions from their retirement system should they be disabled. He said there have only been a few cases over the past 10 years and under the old law a police officer or fire fighter who became disabled and elected to work in a civilian capacity would be penalized. He stated that every law enforcement agency and firefighter across the state supports the bill.

George Pyne stated the retirement board is in support of the bill. He said the bill would allow a disabled employee, to accept a job in a civilian capacity and continue to contribute to the Police and Fireman’s Retirement Fund, rather than receive a disability pension.

Senator Raggio asked whether the bill requires that the officer or fireman have at least 5 years service in order to qualify. Mr. Pyne answered that is correct.

Senator Raggio closed the hearing on A.B. 303. He called attention to two bills to be introduced. He said Bill Draft Request (BDR) S-1737 is a supplemental appropriation to the Commission of Ethics for the anticipated shortfall in operational expenses in the amount of $15,600. He noted this has been discussed previously. The second bill draft request was BDR S-1738. Senator Raggio explained this was the bill requested to make an appropriation to the Welfare Division in the sum of $9,13,000,548 for expenses related to the Nevada Operations Multi Automated Data Systems (NOMADS) project.

BILL DRAFT REQUEST S-1737: Appropriation to the Commission on Ethics.

Senator Raggio commented he needs information from staff regarding A.B. 268. He asked what the bill does and whether it affects the opportunity to "marshal as much of the new funds as possible into the Economic Forum report." He said the change in reporting date might not accommodate receiving the final numbers from the sales tax.

Mr. Miles explained that currently when the Department of Taxation "rolls the sales tax" it is run on a weekend because so much of the computer mainframe capacity is used. He said that in looking at a 2001 calendar, the probable weekend would be the night of April 20, 2001, and the data would most likely be available on Monday, April 23, 2001. He noted the Economic Forum would have to meet on the 24th or 25th of April. Senator Raggio stated the bill would be held at this time.

Senator Raggio asked whether there is consensus on A.B. 289 to divide the money from the vending machines so that the funds in the employees’ sector are used for the employees’ purposes.

Senator Raggio announced that A.B. 660, A.B. 219 and A.B. 241 would be held.

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

Budget Account 101-3228

Steve Abba, Senior Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, reviewed the technical corrections and closing issues shown on pages 1 through 6 of Exhibit F. He pointed out there would be some adjustments in decision unit M-581 for the Department of Information Technology (DoIT) cost allocations, so there will be approximately a $1.6 million reduction each fiscal year that is not reflected in the closing packets.

Mr. Abba said the other adjustments in decision unit M-581 deal with two funding issues. He explained that in the first year of the biennium there would be "some enhanced match" that was not accounted for from the federal child support reimbursement. He said this deals with welfare changes related to child support, so that allowed a reduction in General Fund support of $167,869. He stated that in FY 2001 there is a further reduction in General Fund support of approximately $2.3 million and it is anticipated the NOMADS child support system will be certified by September 30, 2000. This would allow the division to recover approximately $2.3 million in penalties that are currently being paid. There was a reduction made to the budget in FY 2001, which was approved by the Joint Subcommittee on Human Resources/K-12 and recommended by the Governor.

Mr. Abba reported the subcommittee approved funding to begin implementing the electronic benefit transfer (EBT) system with a Letter of Intent instructing the Welfare Division to report to the IFC once the cost/benefit analysis report has been delivered and the alternative included in the study are fully evaluated prior to moving forward with the implementation process. He said this is a requirement mandated by the federal welfare reform legislation and the state must have its EBT system running by October 1, 2002.

Mr. Abba remarked there was a lot of concern over the projected cost for the EBT system compared to the way food stamps are currently issued. He pointed out that once the information from the cost analysis is received, the IFC could determine whether the division should pursue continuing with the EBT system or whether it is possible to request a waiver exempting the state from the requirement of the EBT.

Mr. Abba stated there are technical and equipment adjustments based on projected costs of computer hardware that were made by the Purchasing Division.

Senator indicated the joint subcommittee spent many hours on these issues. He said it is important that everyone understand what has been called the "NOMADS fix." He asked Mr. Abba to give an overview on NOMADS. He acknowledged the work of the Governor in trying to help resolve the issues. He pointed out a bill was passed to expend over $9 million on the NOMADS problem.

Mr. Abba pointed out that the items approved in the budget dealt strictly with finishing the programming portion of NOMADS as well as DoIT costs. He said the $9 million appropriation adds $4.3 million in state funds to pay the projected costs of the federal penalties. He reiterated it has been budgeted to recover approximately $3.2 million of that penalty. He explained that the remaining part of the appropriation, approximately $4.6 million, is for enhancements to the NOMADS project. He said the largest share of the enhancement is the approximately $1.9 million to be used for conversion efforts.

Mr. Abba said as he understands it takes a long time to convert child support cases into NOMADS, not only at the state level but by the district attorneys’ offices, and the plan is to hire contract support to help the district attorneys’ offices with getting the cases entered into NOMADS. He said there would be ongoing activities for several phases of the conversion effort.

Mr. Abba explained another $240,000 of the appropriation is to be used for additional training. He said there is currently a problem with having the Welfare Division staff available to work with the district attorneys’ in training their staffs on NOMADS. He stated this would also allow the division to maintain support at the help desk when there is a need dealing with the computer aspect of NOMADS.

Mr. Abba noted $420,000 of the appropriation is earmarked for what is called "quality assurance." He said this would continue the MAXIMUS contract. He explained that MAXIMUS is used to help the division and DoIT oversee the various development aspects of NOMADS.

Mr. Abba stated $312,000 will be used to hire a contract firm that is required by the federal government to constantly monitor how NOMADS is progressing with their timelines and whether or not the goals the state has given the federal government are actually being met. He said the independent contractor will not report to the government or the state but will be independent and will file separate reports at various junctures of the project to "both bodies." Decisions from the independent reports will be evaluated at that time.

Mr. Abba reported approximately $1.4 million will be used as a contingency if the federal child support people do not allow the state to recover that amount of money in what is called "disallowed costs." He stated there is currently some disagreement on previous expenditures on NOMADS that the federal government is saying it needs more information on.

Senator Raggio asked whether "there has been a rejection." Mr. Abba said the federal government has not rejected the recovery at this time. He pointed out that if the money is not spent the $1.4 million will not be used but noted this is still in question.

Senator O’Donnell asked what the total cost is. Mr. Abba answered the total is a onetime appropriation of $9 million. Senator O’Donnell asked how much is included for the contingency. Mr. Abba replied the amount is $1,379,262, which is the disallowed cost.

Senator O’Donnell asked why the money would be placed into a reserve account for the IFC instead of placing it in the budget. Senator Raggio pointed out that if the federal government allows the cost, the money would not be spent. Mr. Abba added that most likely there would be some portion which will not be recovered. He said the bill would be effective upon passage and approval, and any money remaining would revert at the end of FY 2001.

In continuing, Mr. Abba said approximately $156,000 in state funds is to be used for software enhancements to allow for better navigation through NOMADS. He pointed out "this was a specific complaint from the district attorney’s office that NOMADS is somewhat cumbersome to use." He noted technology is being reviewed that would make the NOMADS system more user-friendly.

Mr. Abba noted again the sum total of the enhancement, not including penalties, is approximately $4.6 million and the penalty portion of the onetime appropriation is approximately $4.3 million. He said it is anticipated a combination of what has been approved in decision unit M-581, plus the onetime appropriation in the bill, will allow the NOMADS project to be completed by September 30, 2000.

Senator Raggio pointed out that if the system can be certified by September 30, 2000, there is the likelihood that approximately $2.4 million can be recovered. He said the good news is that the federal representatives have taken an interest in the situation and have indicted their approval of what is being proposed.

Mr. Abba stated that after the Governor’s trip to San Francisco to meet with federal representatives, the food stamp representatives immediately released money. Following the visit of the "child support representatives" to Nevada, the representatives released the federal government’s portion of the funding, with the exception of the disallowed costs. These are still being negotiated.

Senator Raggio pointed out the EBT in decision unit M-548 is a federal mandate. He said one of the reasons for the Letter of Intent was the issue that it is projected to be more costly to issue the food stamps via the EBT than through the current system. He said the cost/benefit analysis report might indicate it would be worthwhile to seek a federal waiver.

Mr. Abba pointed out the federal government has sent a letter to the Welfare Division indicating a waiver would be considered, but it was stated that no state aid waivers are anticipated.

Senator Raggio stated that he does not think there is any choice but to approve the budget with the recommendations.

HR, Welfare Field Services – Budget Page WELFARE-11 (Volume 2)

Budget Account 101-3233

Mr. Abba reported that the main issues for the Joint Subcommittee on Human Resources/K-12 was the approval of decision unit E-125, which provided for 2 new Social Work Supervisor positions, and decision unit E-350, which added a Social Welfare Manager to oversee field operations in the Las Vegas area. These issues are outlined on page 13 of Exhibit F.

Mr. Abba said the other main issue approved by the subcommittee was not recommended in The Executive Budget. This would be for a professional development center for northern Nevada to be located in Reno and would be similar to the center in Las Vegas, only smaller. Mr. Abba explained the centers are used for training of Welfare Division staff as well as training for clients. He said the additional funding is approximately $130,000 in state funds in FY 2000 and $56,000 in FY 2001.

Senator Raggio remarked that he and Senators Rawson, Coffin, and Mathews served on the subcommittee. He said that in this particular case the centers were felt to be essential to the training of staff because of all the welfare reform issues.

HR, Welfare/TANF – Budget Page WELFARE-18 (Volume 2)

Budget Account 101-3230

Mr. Abba called the committee’s attention to one of the major actions of the subcommittee, which was a reduction in the Temporary Assistance for Needy Families (TANF) caseload. He said that based on the recent caseload projections the TANF caseload will be reduced by approximately 5,000 recipients a month. He explained the reduced costs would be reserved in what is being called the "TANF rainy-day reserve account." He said the reduced costs associated with the new caseload projections are approximately $7.3 million in each fiscal year.

Mr. Abba pointed out that state funds in this particular account could not be reduced when there are savings because there is a maintenance-of-effort requirement that must be met. He said the state is at the minimum of what the requirement is, so the reserve increase would strictly be TANF Block Grant money.

Senator Raggio asked whether establishing the reserve complies with the maintenance-of-effort requirement. Mr. Abba answered yes. Senator Raggio asked whether the maintenance of effort "has to always be kept up." Mr. Abba responded the federal welfare reform legislation required the states to maintain what is called an 80 percent maintenance of effort. He said if all of the work participation requirements were met, the percentage could be reduced to 75 percent. He pointed out "the good thing with the reserve is [that] if there are ever caseload increases the money would be available to pay for the increases."

Mr. Abba noted the subcommittee approved $1.7 million each fiscal year to purchase job retention services. He said these services are provided by contract. He stated the subcommittee approved a $187 monthly cash assistance increase that will be phased in over 2 years and is for nonneedy caretakers. He said approximately 1,700 individuals would be affected.

Mr. Abba said the subcommittee also approved a $350 onetime job incentive bonus for TANF recipients who maintain their employment record for a period of 6 continuous months. He explained that the idea is this would entice clients to maintain employment as well as keep in touch with the Welfare Division for tracking purposes.

Mr. Abba noted the subcommittee approved reinstating the self-sufficiency grant program that was approved by the 1997 Legislature. He said this program provides for an upfront payment of what amounts to 3 months of TANF cash assistance in lieu of longer-term cash assistance. He stated this was a cost savings measure.

Senator Raggio pointed out that these decisions took a great deal of time and effort. He stated the decisions also indicated a sincere desire on the part of the Legislature to deal with the issues, to provide some meaningful increases, and to make sure the programs were funded as fully as possible.

HR, Welfare to Work – Budget Page WELFARE-24 (Volume 2)

Budget Account 101-3226

Mr. Abba said the Joint Subcommittee on Human Resources/K-12 received a formal request from the administration to reappropriate $601,595 that is currently held in a reserve for the development of the "Super System." He explained this would be an ancillary system to NOMADS to be used for tracking Welfare to Work clients and Employment and Training clients. He said the request for proposals (RFPs) did not generate enough bid support and the division has put out a revised RFP but will be unable to spend the money before the end of the fiscal year. Mr. Abba pointed out the committee did approve the reappropriation but only at $501,000 because there is a certified match that is available from the Claimant Employment Program (CEP) which can be utilized for the "Super System."

Mr. Abba stated the committee recommended issuing a Letter of Intent to the division that the division go to IFC once the RFP responses are in to provide information to the committee regarding the development of the "Super System."

Mr. Abba pointed out there is no funding recommended in the second year of the biennium. He explained there appears to be a significant amount of balance forward from FY 2000 to FY 2001. He said the contract monies that go out to the private industry councils are not being spent at rates that will expend all of the funding in FY 2000. Additional, the Welfare Division representatives believe the division will be able to obtain a onetime performance bonus of $793,000 that will be available in FY 2001.

HR, Child Support Enforcement Program – Budget Page WELFARE-28 (Volume 2)

Budget Account 101-3238

Mr. Abba reviewed the technical adjustments and budget closing issues shown on pages 26 and 27 of Exhibit F. He said the main issue for the Joint Subcommittee on Human Resources/K-12 was to continue the funding of the central disbursement unit for child support collections. He explained the federal welfare reform legislation requires states to have a central disbursement unit (CDU) established and operating by October 1, 1999. He said the CDU is used to bring all child support collections into one central site and disburse the collections from the site.

Senator Raggio noted the CDU will be operated by Clark County but under contract with the state. Mr. Abba pointed out Clark County is being reimbursed for the additional staff needed to operate the facility. He said the state has one staff member in an oversight capacity at the facility.

Mr. Abba said a waiver has been received, because NOMADS is not functional, to have the funds go through the CDU, but the payments will be disbursed through the district attorney’s office. He said the reason for the CDU is that currently there are 15 days to process payments, but under federal welfare reform there are only 2 days.

HR, Collection and Distribution Account – Budget Page WELFARE-37 (Volume 1)

Budget Account 101-3239

Mr. Abba noted the technical changes. He explained that the only reason the account has been established is to handle the incoming child support collections and the outgoing child support payments. He said the adjustment takes out expenditures that were not appropriate in the account and places them in the child support budget.

HR, Assistance to Aged and Blind – Budget Page WELFARE-39 (Volume 2)

Budget Account 101-3232

Mr. Abba said the subcommittee closed the budget as the Governor recommended and asked the Welfare Division to return to the IFC prior to the date the federal government issues the projection on how much the additional supplemental security income (SSI) payments will be for SSI recipients. He said the reason the subcommittee made this request was to provide a better understanding of how the Welfare Division will determine the appropriation of the funds.

HR, Employment and Training – Budget Page WELFARE-41 (Volume 2)

Budget Account 101-3267

Mr. Abba pointed out this account has approximately $45 million for childcare funding. He explained that of that total, $16.8 million is state funds. He said it came to the subcommittee’s attention there was another $4.6 million in federal childcare money available and the closing adjustments reflect the addition of the $4.6 million. He explained that $2.2 million of the additional money required a match, either through a state match or what is called a certified match.

Mr. Abba said the division was able to identify a number of local entities that will provide the certified match to be able to bring in the additional funding. He said there have been letters of confirmation from the organizations shown on page 42 (Exhibit F). He said with the adjustments there would be more than $50 million in childcare funding, which will reduce the current waiting list for childcare from 3,900 to 1,500. He pointed out this will eliminate the current waiting list for the highest-priority children. These are children of families having incomes at or below 185 percent of need.

Mr. Abba said the other action the subcommittee took on this budget is that in the first year of the biennium the committee recommended an additional $22,000 for the New Employees of Nevada (NEON) program. He explained the additional funding consists of TANF grant monies and would ensure that all NEON-eligible TANF recipients will be able to access NEON for employment and training activities. He said the budget in FY 2001 will be overbudgeted for the number of projected clients but will allow the division to target the more difficult clients.

Mr. Abba said the subcommittee also eliminated an Employment and Training supervisor position that had been recommended in The Executive Budget based upon a review of the staffing standard. He stated in was determined there was already a 1:8 ratio and the position was not needed.

Senator Raggio called attention to page 1 of Exhibit F. He noted this was an outline of the result of the action on the General Fund adjustments. Mr. Abba stated what is shown are the cumulative actions on state funds. Senator Raggio said the total is an addition of $384,994 in FY 2000 and an overall reduction of $2,360,001 in FY 2001.

Senator Raggio complimented Mr. Abba for the "excellent job" he did for the Joint Subcommittee on Human Resources/K-12. He said this was a lot of work and was "very helpful to the understanding of the Senate Committee on Finance."

RESPECTFULLY SUBMITTED:

Patricia Hampton

Committee Secretary

APPROVED BY:

Senator William J. Raggio, Chairman

DATE: