The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:20 a.m., on Friday, May 21, 1999, in Room 2134 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Senator William J. Raggio, Chairman

Senator Raymond D. Rawson, Vice Chairman

Senator Lawrence E. Jacobsen

Senator William R. O’Donnell

Senator Joseph M. Neal, Jr.

Senator Bob Coffin

Senator Bernice Mathews

STAFF MEMBERS PRESENT:

Barbara Moss, Committee Secretary

OTHERS PRESENT:

Assemblywoman Christina R. Giunchigliani, Clark County Assembly District No. 9, indicated A.B. 47 was recommended by the interim Committee on Special Education and Student Discipline which was chaired by Ms. Giunchigliani. She said statewide teacher recruitment was one of the major issues that arose during the interim committee hearings. She pointed out A.B. 47 was amended to remove the fiscal note and make it a plan to prepare for any additional grants that could come from the federal government. Ms. Giunchigliani declared A.B. 47 requires the State Department of Education, in cooperation with the Board of Regents, to:

• Adopt a plan for establishing professional development.

• Seek ways to encourage licensed teachers to teach in other areas of the state where there is a shortage of teachers.

• Encourage licensed teachers to obtain an endorsement in a field of specialization where there may be a shortage of specialized teachers, and

• Offer equitable opportunities for teachers to provide "in the program."

Continuing, Ms. Giunchigliani pointed out page 2, section 2, of A.B. 47, which she said is a key piece of the legislation. Section 2 states that with the cooperation of the Board of Regents and the State Department of Education, a program would be established to recruit pupils enrolled in high schools, community colleges, or the University of Nevada (UNR) throughout the state to enter the field of teaching. She noted that students with disabilities or from diverse racial, ethnic, or cultural backgrounds would be specifically targeted. Ms. Giunchigliani asserted, "The time has come to recognize that classrooms are made up of diverse groups and there has not been a ‘teaching rank’ that reflects the fact."

In summary, Ms. Giunchigliani explained that A.B. 47 is a planning document. She deferred to Dr. Keith Rheault to speak about available potential grants.

Senator Raggio clarified that section 2 of A.B. 47 requires the Board of Regents to adopt the plan. He inquired whether the Board of Regents had any objections to the plan. Ms. Giunchigliani indicated she was unaware of any objections, but she deferred to Senator Rawson whose interim committee held hearings regarding the plan.

Senator Neal asked why A.B. 47 includes an appropriation. Ms. Giunchigliani pointed out there had been an appropriation to start a grant program; however, it was amended in the Assembly to make it a planning document without anticipating what money may come forth. Senator Raggio suggested it was unnecessary for the bill to be brought to the Senate Committee on Finance. Ms. Giunchigliani explained the intent in bringing A.B. 47 before the Senate Committee on Finance was that the interim Committee on Special Education and Student Discipline had been reviewing professional development. Senator Raggio commented the bill meshed with the action of the Senate Committee on Finance on professional development.

Senator Jacobsen inquired about the shortage of teachers this year. Ms. Giunchigliani indicated in response there were at least 500 teachers teaching outside their area of expertise this year. She expressed concern about both of these situations.

Keith Rheault, Ph.D., Deputy Superintendent for Instructional, Research and Evaluative Services, State Department of Education, submitted his oral testimony (Exhibit C). He indicated the Department of Education fully supports the intent and outcome of A.B. 47. He said the bill mirrors the first-year activities included in the recently completed application submitted by the state to the U.S. Department of Education for the Title II Teacher Recruitment Grant for federal funds, which amount to $9.5 million. Dr. Rheault noted the fund is competitive and only 20 grants will be distributed throughout the United States. He pointed out there is no other state that can better demonstrate the need and meet the requirements of the grant than Nevada.

Dr. Rheault stated the federal funding was intended to serve what is termed "high need local education agencies [LEAs]." He said in order to qualify there must be at least one school in the district that serves 40 percent of the students "on free lunch," and pointed out there are nine schools in Nevada which would qualify. He indicated the funding would provide about $600,000 over 2 years for incentive funds to hire teachers for shortage areas and teachers that serve at-risk student populations. It is a broader expanse, but covers everything in the bill, Dr. Rheault remarked.

Continuing, Dr. Rheault stated a fiscal note would be required to put the team together; however, the State Department of Education would receive Title VI teacher improvement funds to carry out the requirements should A.B. 47 not pass. He indicated that the intention to have the plan done by March 31, 1999, was built into the application in order that it be implemented the following year.

Senator Raggio asked whether the application is satisfactory in its present form. Dr. Rheault answered yes.

Rick C. Bennett, Director, Government Relations, University of Nevada at Las Vegas (UNLV), said that although he could not speak for the Board of Regents, he was aware of the regents’ teachers’ initiative and issues related to the encouragement and recruitment of students to become teachers. Based on that initiative, he noted "the regents would be supportive of A.B. 47." Senator Raggio commented the regents would be required to conduct a study. Mr. Bennett opined the study would complement the work done by the regents relating to the teachers’ initiative.

There being no further testimony, Senator Raggio closed the hearing on A.B. 47 and opened the hearing on A.B. 346.

Frank Revelle, Administrator, State Motor Pool, Department of Administration, indicated that A.B. 346 makes an appropriation to the State Motor Pool for purchase of additional vehicles to the fleet which would be issued to agencies upon request. He said $816,788 would be spent to purchase 46 vehicles requested by agencies. Senator Raggio asked whether or not the agencies need the vehicles. Mr. Revelle answered, "They seem to think they do." Senator Raggio pondered what could be purchased with that amount of money and asked whether a list had been provided and studied by the fiscal analysis staff. Mr.  Revelle answered yes. Senator Raggio requested comments from the staff. Mr. Miles stated the bill had been "cleaned up" in the Assembly Committee on Ways and Means. Senator Raggio inquired whether the vehicles were replacements or additions to the fleet. Mr. Revelle responded the vehicles are additions that are routinely purchased to enhance the fleet in response to increases in the infrastructure of state government. He indicated that each legislative session the agencies request vehicles, and the requests are trimmed and adjusted in the budget. Senator Raggio asked how many vehicles are owned by the state. Mr. Revelle said there are 743 vehicles in the motor pool division of the Department of Administration at present, and the number will increase to about 800 vehicles by the end of the biennium.

Senator Jacobsen asked whether there is adequate space to house the vehicles in the northern and southern parts of the state. Mr. Revelle indicated the vehicles addressed in A.B. 346 will be issued to agencies and therefore will not be "tangled up" in the motor pool. He noted the space for vehicles in the Las Vegas Motor Pool is limited, but the problem has been confronted. Senator Jacobsen asked the criteria used for replacing state vehicles. Mr. Revelle pointed out the criteria is 8 years of age and 80,000 miles on cars, and 10 years of age and 100,000 miles on trucks. He said that although an attempt is made to abide by the criteria, occasionally an accident occurs causing earlier replacement of a vehicle.

Senator Raggio closed the hearing on A.B. 346 and opened the hearing on S.B. 545.

David Pursell, Executive Director, Department of Taxation, indicated S.B. 545 is a request for a supplemental appropriation for Fiscal Year (FY) 1999 to cover a shortfall in payment for services provided by the Department of Information Technology (DoIT). Referring to a document entitled "Department of Taxation ¾ FY 99 Statement of Operations ¾ Projections Through June 30, 1999" (Exhibit D), Mr. Pursell explained it is a projection the department created for "the money committees" during budget closings. He indicated there is a shortfall in "operating" due to rent increases and postage. He said that because of monitoring travel expense and keeping 10 positions vacant before the hiring freeze was invoked, the Department of Taxation was able to cover the postage and rent increases and would have been $13,000 "to the good." However, with escalation of the operating costs for DoIT, the Department of Taxation is unable to absorb approximately $165,000 of the computer costs, Mr. Pursell remarked.

Continuing, Mr. Pursell stated the analysis to determine the projected year-end figure for category 26, "Information Services Cost," indicated the work program authority was $1.3 million, and the projection is $1.5 million. He explained the first 6 months’ actual cost was annualized for the entire year, which equated to about $126,000 a month. Mr. Pursell opined it is reasonable for the Department of Taxation to pay the $1.5 million for FY 1999; however, he made the committee aware that the last "couple of billings" received by the Department of Taxation were higher than the projections. He said he was unaware of the reason the costs were increasing, but should the next 2 actual months be added and annualized, the average monthly cost would increase from $126,000 a month to $132,000. Mr. Pursell said he would not venture a guess regarding the final 3 months.

John P. Comeaux, Director, Department of Administration, indicated he was informed the previous day about the most recent billings the Department of Taxation received from DoIT. He said DoIT was involved in estimating the amount of the additional billings to the Department of Taxation, which he pointed out was considerably less than $165,000. Senator Raggio reflected that this figure represents the current year and asked what would happen beyond this point. He commented that should the amount be much higher in the current year, it will be higher than the budget for the biennium. In response, Mr. Comeaux indicated the new billing structure is designed to recover the cost of operating DoIT. Mr. Pursell pointed out the Department of Taxation is budgeted approximately $2 million in each fiscal year of the next biennium. Senator Raggio noted the fiscal year is down to the last 2  months and queried whether $165,000 would be adequate to cover the shortfall for the current year. Mr. Pursell suggested that should the Legislature approve the $165,000, it would be reasonable for the Department of Taxation to pay $1,522,000 to DoIT for operating costs ¾ and no more. Mr. Miles pointed out there would be no need to augment the amount. Mr. Pursell indicated the issue had been discussed with DoIT from the perspective of the Department of Taxation. Senator Raggio clarified the recommendation of the Department of Taxation is to authorize "this amount" which will cover whatever services are provided between now and the end of the current year. Mr. Pursell answered, "Yes, that is what the Department of Taxation will pay for."

Senator Raggio closed the hearing on S.B. 545 and opened the hearing on Assembly Concurrent Resolution (A.C.R.) 12.

Janice Wright, Deputy Administrator, Division of Health Care Financing and Policy, Department of Human Resources, indicated she was not the proponent of A.C.R. 12 and suggested it would be preferable for another individual to testify. There being no other individual to testify, Ms. Wright offered to explain the resolution. She pointed out A.C.R. 12 urges the Department of Human Resources to provide reimbursement for the cost of assisted living facilities. She said this action would expand the Medicaid program, which is currently not in the budget. Ms. Wright noted that presently the Department of Human Resources spends approximately $115 million for institutionalization. She indicated that to provide for assisted living costs, the Department of Human Resources would be required to approach the federal Health Care Financing Administration (HCFA) and submit a demonstration waiver. She pointed out there would be insufficient staff or resources to accomplish the task at present. Ms. Wright expressed concern that A.C.R. 12 would provide a different mechanism for people in terms of their living environment. She pointed out that a federal regulation prohibits Medicaid from reimbursing for cost of living, which could not be waived. In that event, she said it would be difficult in this environment to provide for "those types of facilities." She explained that Supplemental Security Income (SSI) pays for the actual cost of living expenses, but "would not provide an opportunity for Medicaid to fund those expenses."

Senator Raggio asked who sponsored the measure. Ms. Wright confessed she did not know. She stated the language indicating the Department of Human Resources must provide by regulation and procedure to allow for an assisted living facility was amended out of a resolution in the Assembly.

Senator Rawson indicated the issue was discussed in the interim Legislative Committee on Health Care and was one of the general recommendations. He said when the bills were divided at the beginning of the legislative session, this one went to the Assembly. Senator Raggio pointed out the Governor’s proposal for the other half of the tobacco settlement money provides for some long-term care coverage, and he inquired whether Ms. Wright was in opposition to that as well. Ms. Wright answered no.

Senator Neal requested the definition of "assisted living facilities." Ms. Wright explained that in Nevada "assisted living facilities" provide food, shelter, and assistance in daily living. The assisted living facilities provide additional help for people who need such assistance, "which is different from an institutionalization process or facility." She noted that people receive medical care in institutional-type facilities, "which is the difference between what Medicaid currently reimburses and assisted living facilities." She said there are a variety of assisted living facilities, an example being the "Classic Residence by Hyatt." This is a retirement community with 207 rooms, 30 of which are licensed by the state. She noted an assisted living facility does not provide medical assistance.

Senator Neal asked whether the needs are being met at the present time. Ms. Wright indicated revenue from SSI is diverted to pay for assisted living room and board presently, which is not a Medicaid-reimbursable expense. She said Medicaid will provide services that are medically required, and assisted living is outside the scope of federal regulation. Senator Neal clarified that Medicaid money is not presently used for assisted living. Ms. Wright said that is correct. Senator Raggio commented that Medicare will not pay for assisted living unless a person is hospitalized. He said the Governor was attempting to address the situation for seniors.

Senator Raggio closed the hearing on A.C.R. 12 and opened the hearing on S.B. 174.

Senator O'Donnell stated:

Bruce D. Arkell, Special Projects Coordinator, Clark County Department of Public Works, indicated what was proposed and passed out of the Senate Committee on Transportation was the establishment of large freeway-type signs that would allow better access. He said a U-turn would interrupt traffic flow on the arterial and there is doubt whether or not it could be safely constructed. He pointed out a fiscal note was added because no local funds are available to construct the project without affecting other projects. Mr. Arkell said the bill, as passed out of the Senate Committee on Transportation, did not reflect what was approved. He pointed out that should the bill pass without another amendment, nothing would be done because signage for a U-turn that doesn’t exist is requested. He speculated there was an error in the bill draft. Senator Raggio commented the situation could cause traffic problems. Mr. Arkell agreed and said a U-turn itself would cause traffic problems. He noted the signage was proposed to avoid the problems, and yet S.B. 174 was "going to sign them."

Mr. Arkell indicated amendments defining the needs have been prepared. He distributed and addressed the amendments contained in Exhibit E. He indicated the amendment defines what would be done, which would be to erect signs, put in pavement markings, and eliminate references to the U-turn, which would not be constructed. Senator Raggio asked whether this would replace the U-turn. Mr. Arkell said yes, it replaces the U-turn in the original bill. He pointed out the U-turn does not exist.

Senator O'Donnell stated he had reviewed and concurred with the proposed amendments. Senator Raggio asked whether the amendments required funding. Mr. Arkell answered yes. Senator Raggio queried whether the money could be taken out of the Highway Fund. Mr. Miles indicated the staff consulted the Nevada Department of Transportation (NDOT) and were told that West Desert Inn Road is not under its jurisdiction; therefore, NDOT would not be able to participate. Mr. Arkell said it was his understanding NDOT could use its funds on nonstate roads. Mr. Miles indicated he would clarify the matter with NDOT. Senator Raggio noted the situation exists because of the design of West Desert Inn Road. Mr. Arkell said the design and construction of West Desert Inn Road was a joint project between the county and the state. He pointed out the state did part of West Desert Inn Road and the county did another part of the road, but nobody studied the signage issue. He asserted that is the basic problem.

Senator Neal questioned why this issue is being considered at the legislative level. Senator O'Donnell explained the problem with the Desert Inn arterial is that it is partially owned by the county and partially owned by the state. He said the county owns the beginning portions of the arterial, and the state owns the bridge, the tunnel, and the remainder to the end. There is a need for cooperative effort, Senator O'Donnell remarked.

Senator Neal asked the names of the cross streets. Senator O'Donnell answered Valley View and Paradise. He noted that business owners have been impacted and hurt by the arterial and emphasized action must be taken before they "go under." Mr. Arkell pointed out that page 5 of Exhibit E demonstrates the location of the signs. Senator Neal observed that traffic would have to be "cut down" coming out of the tunnel into the west side of town. Mr. Arkell noted the U-turn would have affected the flow of traffic on West Desert Inn Road. Referring to page 7 of Exhibit E, he explained, "The freeway-type signs are elevated on high rises that hang out over the facility." Senator Neal asked why the sign would cost only $50,000. Mr. Arkell stated the actual estimate for signs was about $134,000 and the number was "rounded up" to $150,000 for the appropriation.

Senator Coffin inquired about the underground Harmon Street crossing. Mr. Arkell indicated the actual facility design changed several times and he was unsure of its present status. He pointed out the issue had to do with property acquisitions and actual designs. Asked whether it was still underground and twisting around, Mr. Arkell answered, "No, it ended up as a service facility." He indicated he would provide Senator Coffin with updated information.

Senator O'Donnell submitted a petition signed by 400 business owners requesting a curb cut to enable them to make a turn to access their business area (Exhibit F. Original is on file in the Research Library.).

Senator Raggio closed the hearing on S.B. 174 and opened the hearing on S.B. 443.

Senator Raggio indicated that during the interim following the 1997 Legislative Session, concerns were expressed that the funding formula for higher education, which had been in place for a number of years, had not been addressed and should be revisited. He pointed out that other members of the Senate Committee on Finance had similar concerns. He indicated discussions had taken place with interested groups for the University and Community College System of Nevada (UCCSN) as a whole, as well as with particular institutions. He said the concern became apparent during the early days of this session and this is an issue that should be readdressed. The senator indicated that during the interim he met with a number of individuals representing the University of Nevada at Las Vegas (UNLV) who expressed their concerns and suggested a study was needed. He noted that before the current legislative session he became personally committed to supporting a study with adequate means to visit the issue again.

Senator Raggio emphasized he would support a study that was clearly objective and fully represented the UCCSN and other interested entities, including the state, the Legislature, and the taxpayers. He pointed out those were the reasons he requested this measure. He said the measure was patterned in part after a similar study endorsed by the late Senator Jim Gibson and other legislative leaders in the 1980s. Senator Raggio mentioned he served as one of the members of that study, together with other legislators and individuals representing the university system and its institutions. He noted the study was comprehensive and created the present formula for the funding process of higher education. He said the limited study was performed at the request of the Board of Regents for the purpose of addressing what the regents characterized as "equity funding." Senator Raggio indicated the study under discussion would be more comprehensive, although it would acknowledge the information gleaned from the limited study. He pointed out the study would review, as was done in the 1980s, the whole method of the formula of funding for the system.

Senator Neal asked the name of the chairman of the Board of Regents. Senator Raggio answered Regent Jill Derby from Douglas County is the chairman of the Board of Regents.

Dr. Richard S. Jarvis, Chancellor, University and Community College System of Nevada (UCCSN), expressed strong support for S.B. 443 and said he would be grateful for the study. He indicated the Board of Regents requested the study in its bill draft request (BDR) in August 1998. Dr. Jarvis stated developments this spring made the Board of Regents more anxious to move the study forward. He offered staff support to help develop recommendations as soon as possible to enable UCCSN to shape its budget request around the reports of the study.

James Richardson, Ph.D., Lobbyist, Nevada Faculty Alliance, indicated the Board of Regents submitted requests for this type of study during the previous two legislative sessions. He said there has been more interest expressed this session for the reasons outlined. He strongly urged support for S.B. 443 to conduct the study in order to move forward. Dr. Richardson noted a new study is needed because of growth and development.

Senator Coffin said he would like to see a change regarding the number of study committee members from various component organizations. He stressed the importance of a proper balance of regional and partisan membership, suggesting four members each from the Senate and Assembly and four members from the Board of Regents. The senator indicated the cost will be minimal. He recommended the leaders be allowed more flexibility in appointing members. Senator Coffin pointed out the limited study showed the University of Nevada at Reno (UNR) as having $497,000 "taken away," and said he was "a little unhappy" at this result. He commented the study had pointed out a "flaw" which he had hoped would not happen. The senator stated the results of the study were revamped by the Senate Committee on Finance. He emphasized his hope that the results of any study would not demonstrate any institution "losing ground." He asserted the goal should be to ensure the institutions grow and one does not pay for any other.

Dr. Jarvis pointed out the number Senator Coffin referred to came from a proposed enrollment revision that had nothing to do with the so-called equity study or that set of recommendations. He said that although they were delivered on the same day, the two items were completely separate. He noted "the reason a negative appeared was due to a comparison with the Governor’s recommendation."

In reference to the numbers of people on the study committee, Dr. Richardson pointed out that S.B. 443 would create a larger group than was the case in 1986. Senator Raggio commented the bill was patterned "somewhat" after the earlier composition of committee members, and asked the difference. Dr. Richardson answered the Governor would appoint three members of the Senate Committee on Finance, as opposed to one member in the 1985 study; thus, there are two more members in S.B. 443. He suggested that with 12 voting members and 4 nonvoting members, there would be considerable opportunity for regional and partisan balance.

In response, Senator Coffin said he thought his suggestion would help eliminate accusations of regionalism, even within the organization represented by Dr. Richardson.

Senator Raggio said he agreed to support the measure in accord with individuals with whom he discussed the issue. He indicated he would support the measure as a member of the Senate Committee on Finance if it did not become a sectional or partisan issue. He emphasized the measure would not receive his support should it become such. He said it would serve no purpose to have constraints regarding the exact location of the members placed in the measure. The senator said he hoped such issues would not be injected into the discussion" or [into] what is eventually agreed upon." He stated, "The study worked in 1980 without that extensive type of detail. Senator Raggio drew attention to the fact that he would withdraw his support should it become "that kind of issue."

Senator Neal specified his suggestion was an attempt to keep regionalism out of the issue. Senator Raggio recalled the earlier study did not have "those kinds of restrictions." He pointed out that everyone involved, including the Legislature, the Governor, and the Board of Regents, is interested in seeing that the composition of the committee will fully cover all concerns. He stated it is incumbent upon the appointing authorities to be cognizant of the need to have people who represent different areas; however, should a "laundry list" become attached, the issue will become "a political football" and will not serve the intended purpose.

Senator Neal asked the composition of the members of the earlier study. Dr. Richardson indicated the language of the bill authorizing the earlier study is the same as in S.B. 443, with one exception. The earlier study specified one member would be appointed by the Governor, and S.B. 443 states three members would be appointed by the Governor. Therefore, the makeup of the funding study committee would be two members larger than the previous committee in 1985. Senator Raggio requested Dr. Richardson read the exact wording of the original bill in regard to the composition of the committee.

Dr. Richardson read Senate Bill 256 of the Sixty-third Session:

Senator Raggio indicated he thought the three persons employed by the University of Nevada system turned out to be the presidents. Dr. Richardson pointed out that Presidents Joseph Crowley, Bob Maxom, and Paul Meachem served on the committee.

Senator Neal clarified the last funding study committee made the recommendation regarding the operation of the funding formula, and the Senate Committee on Finance is presently looking at the study because there is an inequity in the formatting process. Dr. Jarvis indicated the Board of Regents determined that in years past, educational institutions experienced growth at different rates. He pointed out a number of factors in higher education that were not prominent in 1986 have come into play, the most obvious of which is technology. He said those were the driving factors for the Board of Regents, not specifically the equity concerns which have become the more recent set of issues. Senator Neal paraphrased Dr. Jarvis’ statement by saying the growth of southern Nevada has added to the inequity of the funding formula. Dr. Jarvis pointed out the request for the funding study was not driven by an inequity consideration. He said an attempt had been made to distinguish between the two issues. He noted the problem with the present formula is that it reflects a view of the world and what it took to fund higher education 12 years ago, and that world has changed. Moreover, educational institutions are now very different and have spread apart in terms of size over the course of the decade. Dr. Jarvis added there are different funding implications for institutions of different sizes. He indicated the present study is driven by a desire to ensure an appropriate set of funding formulas for all institutions.

Senator Raggio noted the most recent so-called equity funding study indicated no equity issue between UNR and UNLV in regard to instructional funding. He said that in reference to the support portions of the formula, the funding study committee identified what was referred to as an overall differential of approximately $23 million. He pointed out the Legislature did not create the so-called differential over those years; the differential was created primarily within the institutions themselves. Senator Raggio stated the Legislature funded according to the formula. He said the institutions used the money in different ways at different times for different purposes and did not "do it in a uniform manner." He indicated that many times the Senate Committee on Finance pointed out to the presidents of the various institutions that they were creating their own inequities in comparison to other institutions. He confessed he was "irritated" that the Legislature was criticized when what were perceived as inequities were identified.

Senator Raggio asserted the Legislature has attempted not to "micromanage" the university system; but, "for good reasons," the different presidents of the different institutions allotted funding for different purposes over the years. He said some presidents put the money into salaries, others into health care, and as a result the Legislature created the cost-of-support formula. He emphasized the importance of recognizing those issues. Having said that, the senator continued, the issues must be addressed in order that those affected by past decisions will not be required to continue to live with them. He indicated the Legislature followed the formula, acted appropriately, and never deviated from that action. Senator Raggio stated the Legislature did more in every session to address the formulas than was recommended by the Governor and said the Legislature should not continue to get "beat up" over it. He expressed hope the Board of Regents will appoint funding study committee members objectively in order that the issues may be fully studied.

Senator Neal pointed out the funding study committee will be required to report back to the Legislature and the Legislative Commission. He noted that should anything need to be added in terms of "the charge of the request," the committee should make certain it can be accomplished. The senator expressed the belief that S.B. 443, in terms of its charge, is broad enough to adequately cover "anything."

Senator Coffin opined that the university system is not to blame for the lack of study on the issue. He pointed out the university system brought requests to study the formula to the 1995 and 1997 Legislative Sessions, and the requests were rejected once by the Senate and once by the Assembly. Senator Coffin stated that had the study been conducted in 1995, the results would have been available in 1997 and the five formulas would have been fixed. He indicated his ongoing concern that the adjustments made based on equity will be one of the major decision points on final budget votes. The senator said his suggestions were not made to provoke differences of opinion, but rather to use them as a vehicle to eliminate future discussion regarding the results of the study. He indicated the university system tried to promote a formula study, but the Legislature failed to heed its plea for help. The result was "a big fight" this year, particularly among the members of the Board of Regents. Senator Coffin urged support and expressed hope that the Legislature has "the right formula in its formula."

Dr. Richardson indicated President Joseph Crowley supports S.B. 443.

Senator Raggio closed the hearing on S.B. 443 and called for action on A.B. 47.

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Senator Raggio called for action on A.B. 346.

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Senator Raggio requested Mr. Miles check with NDOT to ascertain whether or not the funds required in S.B. 174 could come out of the Highway Fund.

Senator Raggio called for action on S.B. 545.

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Senator Raggio called for action on S.B. 443.

Senator Coffin suggested a "friendly amendment."

Senator Coffin indicated he would have no objection should the number be changed to four members from the Governor as well. The senator explained that enlarging the committee would remove any potential regionalism charges and ensure a sufficient number of members on the funding study committee.

Senator O'Donnell indicated a study committee can become too unruly and experience difficulty reaching consensus should it become too large. He asked Senator Coffin what an additional member would contribute to the committee. He pointed out that presently there are six legislators and Senator Coffin was suggesting there be eight. Senator O'Donnell inquired what the other two legislators could add to the discussion in terms of mitigating any kind of regionalism.

Senator Coffin answered the addition would mean there could be two legislators from the north and two legislators from the south from each body. He indicated it is critical to acceptance of the study.

Senator Raggio stated the funding study will not be helpful if it is structured to give any part of the state, or any particular sector, a voting advantage. He said the study will have no purpose if the committee is structured to allow "some sector" to control the outcome of university system funding. Senator Coffin indicated he did not understand how "that construction" could be made from his motion. Senator Raggio suggested the issue be left in the hands of the appointing authorities to define the balance of the composition of the committee. He declared the composition of the committee was determined in that manner in 1980 and asked why it was not acceptable now. Senator Coffin replied that today is not 1980. Senator Raggio said he had feared this issue would arise when an attempt was made to conduct an objective study that would be as balanced as possible without defining where everybody has to live.

Senator Mathews recommended remaining with 12 members of the funding study committee. As a participant on a number of studies in government and the private sector over the years, she pointed out that 12 members of a study committee is a large number. The senator indicated no work gets accomplished when a study committee becomes too large. She expressed appreciation and understanding of Senator Coffin‘s suggestions in terms of being mindful of the makeup of the committee; however, she said, adding additional members to the committee would not be advantageous to the study. Senator Mathews indicated she would reduce the numbers if she were able to do so.

Senator Raggio said the appointing authorities, including himself, would be mindful to create an appropriate balance and indicated he would confer with the other appointing authorities to assure it. He stated that attention will be paid to the concerns of Senator Coffin and others. The senator commented, "To some extent there must be an element of trust."

Senator O'Donnell stated he would not vote for the measure if the funding study committee submits a biased recommendation or condones any inequity. He pointed out the bigger picture should be kept in mind, which is, What should be done to provide quality education for the children of Nevada? Senator O'Donnell suggested regionalism be "dropped" and the focus placed on the real need, in which case everyone will do "the right thing." He expressed support for S.B. 443.

Senator Raggio indicated the funding study would have an appropriation of $150,000 in order to utilize the services of an appropriate contractor to provide detailed information. He was uncertain whether or not the last study had that capability.

Senator Coffin said:

Senator Mathews said:

Senator Raggio asked whether there was a second to Senator Coffin‘s amendment. There being none, the amendment died for lack of a second.

Senator Raggio requested a vote on the original motion.

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Senator Raggio opened the hearing on S.B. 184.

Senator Raggio indicated that "Senate Amendment to Senate Bill No. 184" (Exhibit G) was distributed to the committee. He pointed out that Scott Scherer had been requested to return to the committee with the language for the pilot program.

Scott Scherer, General Counsel, Governor’s Office, pointed out that S.B. 184 and S.B. 185 are appropriations bills for the drug court, one for Clark County and one for Washoe County. He said the amendment would combine both bills into one, including the pilot program. He indicated he would be remiss if he did not confess that when he was asked to return to the committee with the amendment language, he envisioned working far into the night to accomplish the task. Mr. Scherer bestowed kudos upon Leslie Hamner at the Legal Division of the Legislative Counsel Bureau (LCB) who he said turned "the task around quickly," allowing him to place his attention on other tasks.

Continuing, Mr. Scherer explained that the amendment creates the pilot program and renumbers the current appropriation in S.B. 184 to sections 12 through 14, and sections 1 through 11 are the pilot program. He said section 11 encompasses the language from S.B. 185. Mr. Scherer indicated the question had been asked whether or not the drug court judges would need extra money. He said he confirmed with both Judge Peter I. Breen, Department 7, Second Judicial District, Reno, and the court administrator’s office in Clark County that the drug court judges would not need additional money and the funds in the appropriations bills are sufficient.

Further, Mr. Scherer declared the pilot program in section 2 of S.B. 184 allows the director of the Department of Prisons to consult with the Division of Parole and Probation (P&P) and refer the offender to an advisory board created for the drug court. He said the offender is required to have established employment in the community and the ability to pay for part of his or her participation in the program and he or she must be within 2 years of probable release or be imprisoned as a result of a technical violation of parole and probation. He noted that the director would consult with P&P should he determine there is a good candidate for the program. The name and file of the candidate would be referred to the advisory board.

Mr. Scherer indicated the advisory board would consist of the drug court judge, a representative from the district attorney’s office, the local sheriff’s office, and the public defender’s office, as well as a treatment professional. He said the advisory committee would determine whether or not the individual is an appropriate candidate and at low risk for the pilot program, and either accept or reject him or her. Should the individual be accepted, he or she would be placed in the drug court program but still considered an inmate and the prison would retain control over the person. Mr. Scherer noted that should the person not comply with the conditions and orders of the drug court judge, he or she could be sent back to the Department of Prisons. He stated the pilot program is basically a residential confinement-type program, similar to residential confinement programs where the individual still has the status of inmate. Should the inmate escape or become a fugitive, he or she would be subject to all the interstate compacts with regard to escaped inmates. He indicated S.B. 184 is structured in that manner.

Further, Mr. Scherer said there are a number of different criteria that would automatically disqualify the candidate for the pilot program, such as:

• A serious infraction of the rules.
• A crime of violence.
• A gross misdemeanor or felony.
• An attempt to escape.

Mr. Scherer indicated the disqualifying factors are listed on page 3 of the amendment (Exhibit G). He explained page 4 of the amendment creates the requirement that the offender comply with the terms and conditions of the court and allows the court to return the offender to an institution.

Senator Raggio asked when the offender can enter the program after being assigned to the custody of the court and out of the prison system. Mr. Scherer answered the offender can enter the program within 2 years of his or her probable release. Senator Raggio inquired whether the offenders are kept in or out of custody. Mr. Scherer said the offender would be in a residential confinement-type setting. Senator Raggio queried whether the residential confinement would be with a family or a county institution. Mr. Scherer said the confinement in most cases would be with the offender’s family in his or her own home, if possible. He indicated some offenders may meet all the criteria for eligibility with the exception of residence. He noted the drug court judges discussed the possibility of helping those offenders find a place to live, including county facilities or low income housing.

Senator Raggio clarified that in the period of time before offenders are released they would be given the opportunity to participate in the drug court program. Mr. Scherer indicated the drug court program would have intensive supervision and inmates would be required to report regularly to the drug court judge and undergo frequent drug testing. He asserted the drug court program would have zero tolerance for violations and offenders would immediately be returned to the institution by the drug court judge should they disobey the rules. Senator Raggio pointed out the pilot program would be limited to no more than 150 offenders. Mr. Scherer said that is correct and noted there is a "sunset" on the pilot program to expire by limitation on June 30, 2001, as shown on page 13, section 14, of the amendment to S.B. 184 (Exhibit G). He indicated the 2001 Legislature would have the opportunity to revisit the pilot program, determine whether it had accomplished the goals of saving money and a lower recidivism rate, and decide whether to continue or expand the program or allow it to expire by limitation.

Referring to page 6, section 5 of Exhibit G, Senator Raggio asked the composition of the advisory committee. Mr. Scherer reiterated his earlier explanation of the individuals that would make up the advisory committee. He added that the judge would have automatic veto power. He said the majority of the advisory committee could approve a candidate; however, should the judge be uncomfortable accepting a candidate into the program, his or her veto would prevail. Mr. Scherer indicated it was determined judges should not be compelled to work with offenders they deemed were not a good risk.

Mr. Scherer indicated he faxed Amendment No. 1090 to S.B. 184 to P&P, the Department of Prisons, and the drug court judges in both Clark and Washoe Counties and was awaiting their response. He indicated that prior meetings and discussions with those entities were "along the lines of the amendment" and he expressed confidence the entities would be comfortable with it. Senator Raggio inquired when Mr. Scherer expected approval from the various entities. Mr. Scherer indicated he requested a final review by Monday, May 24, 1999. He suggested, with the approval of the committee, the bill could pass out of the committee with the amendment and any minor changes could be done on the floor of the Senate or Assembly.

Referring to page 13, section 11 of Exhibit G, Senator Raggio asked whether the language and the amounts were in the original proposal. Mr. Scherer indicated the language was the same, but the amount was the Washoe County funding for the Second Judicial District. He stated the Clark County amount, currently in the bill, is $700,000.

Senator Raggio suggested a motion to amend and do pass S.B. 184, in which case it would not be necessary to process S.B. 185. He requested Mr. Scherer to inform the committee should there be any objections before the bill leaves the Senate floor. Mr. Scherer indicated he would do so.

*****

Jeanne L. Botts, Senior Program Analyst, Fiscal Analysis Division, LCB, submitted her oral presentation regarding the "Joint Subcommittee on K-12 Education Recommendations Concerning the Closing of the Distributive School Account and Trust Fund for Class-size Reduction" (Exhibit H).

Revenue. Ms. Botts indicated revenues for schools were recalculated after the Department of Taxation issued its projections and the Economic Forum "projected the General Fund." She pointed out $16.4 million was available for schools the first year of the biennium and $17 million the second year. Ms. Botts stated the joint subcommittee recommended using the "new money" to fund items on its list of additional needs.

Referring to a document entitled "Summary of Changes to Revenues and Adjustments to Expenditures" (Exhibit I), Ms. Botts called attention to the top half of page 1 whereon the additional revenue of $16.4 million and $16.9 million in each year of the biennium is detailed. She indicated the largest segment comes from the local school support tax, which is approximately $12 million a year. She said there is another $9 million a year from the reprojected assessed value of the state, which is broken into the 50 cent portion of property tax considered outside of the Nevada Plan, and the 25 cent portion considered inside the Nevada Plan.

Ms. Botts indicated that some revenues are decreasing when compared to what is in the Governor’s budget. She said the first is the motor vehicle privilege tax. She noted the school districts complained that revenue was not coming in as expected and it appeared the Department of Motor Vehicles and Public Safety possessed a considerable backlog of unprocessed registrations. She declared, "The Budget Division came back with a revised estimate of 15 percent growth in the first year [instead] of 12 percent, which was an 11-year average, that resulted in a reduction of approximately $3 million each year in revenue for schools." Ms. Botts said there was also a $2-million-a-year reduction in the revenue from federal mineral land lease activity, which she noted is depressed. She said the Bureau of Land Management (BLM) expects the reduced level of activity to continue.

Technical Adjustments. Ms. Botts indicated the bottom half of page 1 of Exhibit I includes technical adjustments to the Distributive School Account (DSA) as recommended by the Governor in order to fund and "come up with" a whole number of special education units, a whole dollar amount per unit, and to ensure the 2 percent rollups and the growth rate in special education units equal the growth rate in regular enrollment. She said similar adjustments were made for the Adult High School Diploma Program. She pointed out Lyon County receives special transportation funds for pupils who live on Indian reservations outside the county but attend school within Lyon County. Ms. Botts indicated she had been advised by the State Department of Education that the current year’s expenditures are up to $60,000, which is an increase of $13,000. She said the base expenditures for Lyon County’s transportation had been "double counted" in the DSA and she made the adjustment. She noted it resulted in available net revenue of $16.379 million the first year and $16.843 million the second.

Senator Raggio clarified for members of the committee who had not served on the Joint Subcommittee on Human Resources/K-12.

Senator Neal asked, "When you say additional money, do you mean that you have to put the increases in based on the 50 percent property taxes?" Ms. Botts explained that these revenues are earmarked for schools and one of two things can be done: (1) increase the total spending for schools, or (2) cut the General Fund appropriations by the $16 million, or some portion thereof. She said the joint subcommittee recommended spending most of it for schools and therefore expenditures are increasing approximately $14 million over what the Governor recommended.

Senator Neal queried how much would be left, considering the 50 percent property tax. Ms. Botts indicated all of the money would go to schools. Senator Raggio said that ordinarily when the valuation increases and there is additional revenue, there is sometimes a reversion because the state’s portion is a guarantee. He explained the joint subcommittee did not revert the additional money that comes in from that source, but a determination was made to add it to money available for the DSA.

Senator Neal inquired whether the revenue inside the Nevada Plan (25 percent of local school support taxes) is also additional money. Ms. Botts stated there are two sources of locally generated revenue that are considered inside the Nevada Plan: (1) the local school support tax, which is 2.5 cents of the sales tax, and (2) 25 cents of the property tax. She indicated that all of those revenues go to the schools, but to the extent that sales tax comes in over estimates, state aid is reduced. Should the sales tax come in under what was estimated, state aid is increased. Ms. Botts indicated those revenues are rather flexible. Regarding the revenue outside of the Nevada Plan, she said there is no guarantee the money will be made up should there be a shortfall and, likewise, the schools are allowed to retain the excess.

Senator Neal expressed confusion regarding the terminology "inside the Nevada Plan." Ms. Botts responded that "inside the Nevada Plan" is a common reference "because the money is guaranteed." Senator Neal clarified that all the money taken in for the last quarter was used, which showed an increase in sales and property taxes. Ms. Botts answered, "Yes, except the numbers were for the coming 2 years." Senator Raggio said that otherwise the "new-found money" coming in from projected increased assessments and collections would reduce the General Fund portion. Ms. Botts added the General Fund appropriations would be reduced by all or part of the $16 million, and the joint subcommittee chose to spend it. Senator Raggio said the joint subcommittee decision determined that this amount of money is additional money to be allocated to the DSA for the purposes listed in the document entitled "Summary of Changes to Revenues and Adjustment to Expenditures" (Exhibit I).

School Improvement. Calling attention to page 2 of Exhibit I, Ms. Botts indicated the Governor recommended that each year $8 million of Estate Tax money be set aside for school improvement programs to be identified by the Legislature. She said the joint subcommittee is recommending the programs numbered 1 through 4 on page 2 of Exhibit I:

Ms. Botts indicated those four programs total $8 million and are funded from the Estate Tax. She stated $1.2 million has been allocated for assessments.

Continuing, Ms. Botts proceeded with the remainder of the items on page 2 of Exhibit I.

1. Funding of $500,000 over the biennium to pay for user licenses for computerized research data bases, on-line magazines appropriate for children, and updated on-line encyclopedias;
2. Funding of $500,000 a year to assist school districts in retaining their software maintenance contracts; and
3. Funding of $2.7 million over the biennium to bring the remaining schools up to level 1, which is a level established by the Commission on Educational Technology, that is one computer per classroom with Internet access and sufficiently up to date to handle the latest learning software, or the equivalent of one computer per classroom in a computer laboratory.

Senator Neal asked the manner in which the 2 percent and 3 percent were calculated. Senator Raggio answered the percentages were a request for additional appropriations over and above what was recommended in the budget. He said that during the hearings, the interested parties (school districts) requested reconsideration because some inflation factors were lower than what was thought reasonable. The senator indicated a number of different proposals were put forth to indicate the money in the budget might not be sufficient because of inflation. He said recommendations of 2 percent, 3 percent, and 4 percent, were suggested and it was determined that 3 percent a year would be added under item 12, 2 percent a year under item 13, and 2 percent a year under item 14. Senator Raggio pointed out there was nothing "magic" about it and it was "pretty much in the ballpark."

Ms. Botts indicated that at the bottom of page 2 of Exhibit I, the totals of the additional "adds" are $14.9 million in the first year and $14 million in the second.

Senator Raggio pointed out that page 3 of Exhibit I showed the amount budgeted and what the added percentages would come to in each year of the biennium. He commented a substantial amount was added.

Basic Support. Calling attention to pages 4 and 5 of Exhibit I, which is the worksheet on the Distributive School Account (DSA), Ms. Botts pointed out the third row of numbers (the average basic support of pupils) and indicated it is the statewide average. She explained that the bold outlined columns (tentative legislative approved) demonstrate that the basic-support-per-pupil statewide average remains fairly stable over the biennium. She stated, "In the current year it is $3,804 in each year of the coming biennium, and $3,806 and $3,804 in those 2 years, respectively." Ms. Botts indicated that total spending per pupil, however, increases from $5,067 in the base year of 1997-1998 to $5,498 in the first year of the new biennium and $5,523 in the second. She said revenue outside the Nevada Plan also increases from $959 per pupil in each year of the current biennium to $1,038 in the first year of the biennium and $1,074 the second.

Senator Raggio explained that the way the DSA is distributed, the guaranteed basic support per pupil does not consider the funding per pupil which comes from outside the state guarantee. Therefore, the state guarantee is not a true measurement of the state’s effort toward funding education. He said the total spent per pupil in Nevada is $5,498 for FY 2000 and $5,523 for the next year, because the formula plan allocated certain revenues to local school districts, which must be taken into consideration. Senator Raggio said, "When somebody asks you how come you only spend $3,806 per pupil, remind them it is not a true amount, it is only the state’s basic support guarantee."

Continuing, Ms. Botts indicated the weighted enrollment (the enrollment upon which schools are paid) is shown on the top line of page 4 of Exhibit I. She said that in the current year the state exceeded 300,000 pupils on a weighted basis, and the percentage that enrollment is expected to grow in the coming biennium is 4.72 percent the first year and 4.79 percent the second.

Consolidation. Ms. Botts stated in The Executive Budget the Governor recommended consolidating four state-funded categorical programs into the DSA, and distributing those funds through the per-pupil basic support to provide more flexibility to school districts. She said the four programs were: (1) class size reduction (CSR), (2) special education unit funding, (3) elementary school counselors, and (4) the Adult High School Diploma Program. She said one of the reasons the Department of Administration gave for consolidating these funds was to guarantee that Nevada reports all per-pupil expenditures and all available funding. Ms. Botts indicated that to ensure all funding for education in Nevada is accurately reported to national organizations collecting such data, the joint subcommittee recommends directing the State Department of Education, through a Letter of Intent, to report all spending for education, including items such as the employer’s pickup of the retirement contributions in the state when such data is submitted.

Class-size Reduction. Ms. Botts said the Class-size Reduction Program in the coming biennium is budgeted at approximately $83 million in the first year and $87 million in the second. She pointed out this money would be used to pay for 1,786 teachers hired to reduce pupil-teacher ratios in the first year and 1,826 in the second. She noted the joint subcommittee recommends consolidating the Class-size Reduction Program into the DSA but maintaining a separate line item to highlight the program. Ms. Botts stated that funds would still be allocated based upon the number of teachers needed in each district to reach the ratios of 16:1 in first and second grades and 19:1 in third grade, as in the current year. She said that to ensure the school districts with the greatest need for class-size reduction teachers receive adequate funding, money will be distributed by the same methods utilized in the past. She indicated the joint subcommittee also agreed to extend the flexibility allowed in the use of the third-grade funding to money budgeted for first and second grades. Ms. Botts declared that in the last 3 years school districts have been allowed to carry out alternative programs for reducing the ratio of pupils per teacher, or to implement remedial programs that have been found effective in improving pupil achievement.

Senator Neal drew attention to page 4 of Exhibit I, the "Tentative Legislative Approved 1999-2000" column. Noting the bottom-line figure of $1,377,353,148, he pointed out he "tracked it" over to page 5 to the "Total Spent Per Pupil" and asked whether the total spent per pupil is based on the class-size reduction money. He inquired whether there is a Class-size Reduction Program for every grade. Ms. Botts indicated the Class-size Reduction Program is only for the lower grades. In response, Senator Neal stated the money should not reflect an increase for every pupil, in that case. Ms. Botts pointed out that high school vocational programs are extremely expensive compared to primary grade programs, but it is all averaged statewide. She said the rural districts spend more money, the high school programs are more expensive, the special education programs are about twice as expensive; therefore, it is "just an average figure."

Further, in reference to the use of class-size reduction money for remedial programs or alternative class-size reduction plans, Ms. Botts said that in order to use funds in this manner the school districts have been required to receive approval of their written plan from the Superintendent of Public Instruction, evaluate the effectiveness of their program, and ensure that the combined ratio of pupils per teacher in the aggregate of grades K through 3 does not exceed the combined ratio in those grades in school year 1996-97. Therefore, Ms. Botts stated, the districts can receive approval to utilize the funds in alternative ways, but their ratios must not worsen.

Ms. Botts noted the Elko County School District requested flexibility to implement a demonstration project to reduce pupil-teacher ratios to 22:1 in grades K through 5 in order to eliminate team teaching. Ms. Botts indicated the joint subcommittee approved the district’s request but will require an evaluation and a report to the 2001 Legislature.

Continuing, Ms. Botts said because the Class-size Reduction Program will be rolled into the DSA, the trust fund for class-size reduction will no longer be needed. She said the joint subcommittee has "gone along" with the Governor’s recommendation to rename that account the Trust Fund for School Improvements. Any Estate Tax collected in excess of the amount budgeted in the DSA, which is $13.9 million a year, will be deposited into this account to be spent in the next session on school improvement programs.

Ms. Botts pointed out a separate class-size funding bill will be prepared and will include a second supplemental appropriation for the program in the current biennium. She pointed out that $856,000 is still owed the school districts from 1997-98, and another $4.2 million to supplement the $15.4 million already appropriated in this session in S.B. 278 will be needed. Ms. Botts said that part of the rationale for rolling the Class-size Reduction Program into the DSA is that it should ease some of the cash flow problems.

Special Education. Ms. Botts said the Governor recommended that funding for special education, which has been traditionally allocated in Nevada on a per-unit basis, be rolled into the DSA and distributed among the districts through the per- pupil basic support. However, because of the level of accountability that the unit distribution method offers, and the fact that children with disabilities are not uniformly distributed among the student population, the joint subcommittee agreed to continue using special education units as a means of accounting for these funds. She declared the subcommittee also agreed to expand the definition of a unit to include, along with teachers and speech therapists, other licensed professionals such as school psychologists and physical therapists, but not teachers’ aids.

Senator Neal inquired whether the school districts would be required to utilize the formula for special education children. Ms. Botts answered no and said the special education formula would still be used as it has been in the past. She pointed out that in order to receive unit funding, a licensed professional with an identified class list or caseload of children identified as meeting the requirements for disabilities is required to have an individual education program for each child. She noted there was concern about "putting it through the formula" because some districts have a higher percentage of handicapped children, or have developed intensive programs over the years.

Senator Neal asked about accountability. Ms. Botts explained that accountability means that the district, under the unit method, cannot receive the unit (which is approximately $29,000) unless the school district has offered a program that meets the department’s regulations governing such programs for at least 9 months of the school year.

Due to time constraints, Senator Raggio interrupted Ms. Botts’ testimony and asked whether there were any questions from members of the committee.

Senator Coffin called attention to the fact that he voted against this budget because he was opposed to rolling the Class-size Reduction Program into the DSA. He recalled that Ms. Botts had mentioned federal funds. He reflected:

Ms. Botts replied that on the issue of federal funding, Nevada "is supposed to get $5.6 million." She indicated Mary Peterson, Superintendent of Public Instruction, testified she expects there will be a requirement that the funds be used to supplement, not supplant, state money, similar to all federal grant programs in which the State Department of Education participates. Ms. Botts said that in terms of downgrading the program, "all that is really happening" is the Class-size Reduction Program is being taken from two accounts and placed in one account. She stated the laws requiring ratios are not changing, but the law that says there is a trust fund for class-size reduction would be changed. She noted the joint subcommittee decided to create a separate bill for the Class-size Reduction Program, but it will not be buried as a line item, such as pupil transportation or utilities. Referring to page 4 of Exhibit I, in "On-going Program Funding," Ms. Botts indicated the Class-size Reduction Program is set forth in the DSA as a particular category and will "go out" to districts as a categorical amount. The districts would not be allowed to spend the money for any other purpose.

Senator Coffin replied that although he understood Ms. Botts’ comments, the fact remains that when the Class-size Reduction Program is rolled into the DSA it begins to lose its identity. Ms. Botts pointed out it depends upon how the law is written. She said the joint subcommittee’s action specifies the money could only be used for salaries and fringe benefits of teachers hired specifically to reduce the ratio beyond their pre-class-size-reduction ratio.

Senator Coffin commented:

Senator Raggio expressed the opinion that Senator Coffin’s characterizations are inappropriate, unrealistic, and there is, in fact, no downgrading of class-size reduction in any way. He indicated that was the joint subcommittee’s feeling on the issue. He confirmed that Senator Coffin’s remarks would be noted in the record.

*****

Ginny Wiswell, Program Analyst, Fiscal Analysis Division, LCB, submitted a report on the actions of the Joint Subcommittee on Higher Education/Capital Improvements Program (CIP) for the University and Community College System of Nevada (UCCSN)(Exhibit J).

Ms. Wiswell pointed out the two key issues reviewed by the joint subcommittee were student enrollment and the support formula distribution. She recalled The Executive Budget contained funding provided for slightly less than 2 percent of the enrollment growth for students in the upcoming biennium. She indicated the joint subcommittee expressed concern about the level of enrollments being funded. Ms. Wiswell said the recommendations in Exhibit J will address those funding issues and incorporate the regents’ recommendations for enrollments, as well as support formulas.

Continuing, Ms. Wiswell stated the university systems are largely formula-driven and the joint subcommittee did not concur with one portion of the regents’ recommendations presented May 7, 1999, which had to do with the regents’ reprojection of student enrollment. She indicated the regents returned May 7, 1999, with a reduced enrollment projection. Referring to page 7 of Exhibit J, the column entitled "UCCSN Revised," Ms. Wiswell pointed out the anticipated growth rate for the first year of the biennium and indicated the second year of the biennium the enrollments were reprojected at 1.72 percent the first year and 5.35 percent the second year. She declared the joint subcommittee expressed concern and recommended funding the enrollment at "roughly" 6 percent in each year of the biennium, which is as the Governor recommended and as the regents originally projected the enrollments in August 1998.

Ms. Wiswell said subsequent to the budget closing, the joint subcommittee studied the enrollments again and reprojected them to address the regents’ concerns. She declared the enrollments were revised "somewhat downward" to approximately 5 percent the first year and slightly less than 6 percent the second year. Ms. Wiswell pointed out the left side of page 7 in Exhibit J shows the budgeted enrollment growth for each of the campus locations, and noted that UNR is budgeted at 1.5 percent growth over the first year of the biennium and grows to 2 percent. She also noted that the two southern campuses which have the largest enrollment growth historically receive a higher growth percentage with this reprojection.

Senator Neal inquired whether the reprojection takes into account out-of-state students. Ms. Wiswell answered yes. Senator Raggio indicated the joint subcommittee revisions, in all cases, exceed the Governor’s recommendation (which was "very limited") and the revisions requested by the Board of Regents. He explained that the joint subcommittee felt enrollment was the primary issue to be resolved and addressed and "they came as a result of 5.18 percent for the first year and almost 6 percent the second." Regarding the second year, Senator Raggio said UNLV is projected to go as high as 16,560 students, UNR to 9,600, and the Community College of Southern Nevada (CCSN) to 15,021. He pointed out the regents revised the projection for CCSN up to 12.8 percent and the joint subcommittee projected it up to 15,000, UNLV was revised to 15,400 and the joint subcommittee increased it to 16,500, and Truckee Meadows Community College was reprojected to 4,500 and the joint subcommittee put it at 5,000. The senator summarized that the joint subcommittee’s effort was primarily to address enrollment.

Senator Coffin indicated that according to Dr. Carol Harter, President, UNLV, the enrollment projections cannot be met "in order to gain the revenue that was built in after cutting the equity funding." Ms. Wiswell replied the revenue projections were reviewed prior to the budget closing. She said since that time, in response to the concerns of the individual campuses and the Chancellor’s Office, the revenue projections have been tied to the new revenue projections on page 7 of Exhibit J. She stated the revenues have been revised to agree with the growth projections and tie to the number of new students anticipated to be registered, as well as the nonresident students. Ms. Wiswell said the Board of Regents now agree with the anticipated enrollments recommended by the joint subcommittee.

Senator Coffin inquired what date the projections were made and whether the joint subcommittee had conferred with the college presidents. Senator Raggio commented the joint subcommittee had not discussed any of the issues with the college presidents. He indicated the action was taken by the joint subcommittee based upon comments and concerns regarding enrollment. Senator Coffin indicated that based on the comments of Dr. Harter ("who must fulfill the requirements mandated from above") the action cannot be accomplished. He indicated Dr. Harter had submitted her "strong opinion" to the Board of Regents and the Board of Regents met her requirements, but the joint subcommittee cut them. Senator Coffin asserted the joint subcommittee is not in the business of projecting enrollment, and he said projections are "supposed to be the job of the Board of Regents." He pointed out that if Ms. Wiswell’s comments do not take the president’s position into account, then the first analysis is still unanswered.

Referring to page 2 of Exhibit J, Ms. Wiswell pointed out the joint subcommittee created a variety of funding mechanisms to fund enrollment. She indicated the mechanisms provided "roughly" $22 million in additional enrollment expenditures by reallocating some internal funds, reprojecting the revenues, rededicating the vacancy savings, and using other methods as well. She said the joint subcommittee discussed increasing student fee revenues, but thus was not pursued because there were sufficient revenues to fund the projected enrollment.

With respect to the noninstructional support formula portion of the budget, Ms. Wiswell said it was being accommodated through a reallocation of Estate Tax revenues. She recalled the regents recommended increasing those Estate Tax revenue distributions to approximately $60 million over the biennium. She noted the joint subcommittee felt the action would jeopardize the long-term income that is mandated at $2.5 million a year by increasing those expenditures. Therefore, the joint subcommittee reallocated within the Governor’s recommended level of $55 million to provide an additional $11 million of support formula funding for the campuses. Ms. Wiswell indicated the joint subcommittee is recommending a Letter of Intent to have the campuses, through the Chancellor’s Office, return to the Interim Finance Committee (IFC) with their plans on the number of new positions that would be generated with this additional funding, and how they would propose to expend those dollars to support students throughout their campuses.

Senator Neal asked how the out-of-state fees are accounted for in this budget. Ms. Wiswell answered the out-of-state fees are included in the "other revenue" line item for the budget. She said there is a different rate for community college out-of-state students, as well as university out-of-state students. She declared the fees are based upon student head count, or growth, and offered to provide the numbers for the committee.

Continuing, Ms. Wiswell indicated the joint subcommittee approved several other modifications to the university system’s budgets. She said there was a small correction to the Estate Tax funding for the State Department of Education, and student incentive grants totaling about $6,300. She declared there was also an offset to the state General Fund for a federal grant in the state health laboratory, inflationary costs, new space costs, and fringe benefits. Ms. Wiswell pointed out that those recommendations came from the Chancellor’s Office for corrections that needed to be made to the Governor’s recommended budget.

Ms. Wisell said there is a provision in the budget, included in the E-125 decision unit, that incorporates non-General Fund revenues for the proposed dental school. She said those are included as authority in the budget at this time.

Further, Ms. Wiswell indicated the actions recommended by the joint subcommittee result in additional General Fund appropriation of $6.2 million in each year of the upcoming biennium over the amounts recommended in The Executive Budget; however, the Governor submitted budget amendments recommending that an additional $11 million be provided to higher education over the biennium. She said the recommended amounts are only slightly higher than the revised Governor’s recommendation.

Senator Raggio indicated the budget would only authorize up to $55 million to come from the Estate Tax Fund, which would preserve it to "result in more appropriate income from that particular source."

Answering a question from Senator Neal, Ms. Wiswell replied the percentage of fringe benefits to salaries in this budget is about 19 percent.

Senator Rawson disclosed he is an employee of the university system but said this issue would not affect him any differently than anyone else. Senator Coffin disclosed his wife is a professor at UNLV, but she would not receive a pay increase this year.

*****

Senator Raggio reopened the hearing on S.B. 174.

Tom Stephens, Director, Nevada Department of Transportation (NDOT), indicated that West Desert Inn Road is not on the NDOT system. He stated that in the past NDOT has not proceeded without "some other types of agreements" on improving roads which are not on the NDOT system.

Senator Raggio asked Senator O'Donnell to explain the tie-in to the state system in regard to this issue. Senator O'Donnell expressed the understanding that NDOT designed the majority of West Desert Inn Road and built the bridge over Interstate 15, as well as the tunnel underneath Las Vegas Boulevard South, but the road on either end of the arterial is owned by the county. He asserted the construction of West Desert Inn Road was a joint effort by the county and NDOT, but neither one took responsibility for the signage and directional arrows to guide drivers to the business district. The senator indicated that was the reason for S.B. 174.

Mr. Stephens replied he did not dispute the signage issue, but said this particular portion of the road was not under NDOT’s contract, it was under the county’s contract. He stated NDOT built the road over the top of the freeway and the railroad tracks. He indicated West Desert Inn Road is on the county portion of the road and suggested the county share the cost should highway funds be utilized. Senator Raggio asked whether NDOT could support "half the issue." Mr. Stephens added a caveat that NDOT examine the signage plan to ascertain whether or not $150,000 worth of signs are required. Senator Raggio indicated the "other half" would come from the General Fund. He asked Mr. Stephens to study the signage cost in order to determine whether the suggested signs could be done at a lesser cost. Mr. Stephens indicated he would confer with the NDOT board but agreed to study the issue and return to the committee.

Senator Raggio closed the hearing on S.B. 174 and opened the hearing on S.B. 504.

Senator Raggio indicated S.B. 504 was addressed May 20, 1999, and would appropriate for the high-band radio system. He declared the staff studied Amendment No. 1102, which appropriated $4.3 million from the Highway Fund to complete the 800 MHz system, and adjusted the other numbers for "the other purpose." He said Amendment No. 1102 to S.B. 504 would be utilized should there be no objections. There were no objections.

Senator Raggio recessed the meeting at 11 a.m. until the call of the Chair.

RESPECTFULLY SUBMITTED:

Barbara Moss,

Committee Secretary

APPROVED BY:

Senator William J. Raggio, Chairman

DATE: