The Senate Committee on Government Affairs was called to order by Chairman Ann O'Connell, at 2:52 p.m., on Wednesday, April 14, 1999, in Room 2149 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 Ann O'Connell, Chairman

Senator William J. Raggio, Vice Chairman

Senator William R. O’Donnell

Senator Joseph M. Neal, Jr.

Senator Dina Titus

Senator Terry Care

COMMITTEE MEMBERS ABSENT:

Senator Jon C. Porter

STAFF MEMBERS PRESENT:

Amelie Welden, Committee Secretary

OTHERS PRESENT:

Chairman O’Connell called the meeting to order as a subcommittee meeting and opened the hearing on Assembly Bill (A.B.) 226.

Mike L. Baughman, Lobbyist, Lander County, distributed a handout summarizing his testimony and providing information about the Town of Kingston (Exhibit C). Mr. Baughman explained A.B. 226 would allow Kingston and other small towns to "effectively access their limited supply of committed and experienced residents in both volunteer and paid public service." He referred to the map on the second page of his handout (Exhibit C), which shows the location of Kingston. He further noted Kingston has about 240 residents.

Leon Aberasturi, Deputy District Attorney, Lander County, clarified there are approximately 67 to 90 year-round residents of Kingston, but that number grows to about 240 during summer.

Chairman O’Connell asked if Kingston has repaired its sewer. Mr. Aberasturi answered the town is working on its water system.

Mr. Baughman stated A.B. 226 would help resolve a recurring problem in which members of the town board have been forced to resign in order for Kingston to employ qualified persons for community services. For example, he expressed Kingston hired a water master who was related to a town board member, so that board member had to resign. Mr. Baughman mentioned very few people are willing to serve on the town board, and he noted the clerk’s position has encountered similar problems. He asserted the community has only two paid positions: full-time water master and part-time deputy town clerk.

Mr. Baughman commented the third page of his handout includes demographics on Kingston, and the last page presents a table showing which communities would be affected by A.B. 226 (Exhibit C). He commented only a few communities would be impacted by the bill, and among these communities, only Kingston has an unincorporated town form of government. Mr. Baughman suggested other listed communities could have such a government in the future.

Mr. Baughman summarized A.B. 226 would enable the town board to hire relatives for key community positions. He recalled there was no opposition to the bill during previous hearings, but an amendment had been added to provide a sunset clause in section 2. He pointed out the provisions of the bill would expire on July 1, 2009, at which time the county would have to approach the Legislature for continuance of the bill’s provisions.

Chairman O’Connell commented Kingston residents pay $7 per month for their sewer service. Mr. Aberasturi clarified Kingston only has a water system and does not have a sewer. Chairman O’Connell asked if the town has increased the $7 payment to $14. Mr. Aberasturi replied he does not think so. He stated the town intends to adopt a master plan for its water system and to then begin charging a metered rate.

Mr. Aberasturi maintained A.B. 226 is "a straightforward bill" which would not affect any other ethics provisions. He emphasized board members would not be able to vote to hire their own relatives, but other board members would be able to consider those individuals for positions. He contended it is especially difficult to fill the water-master position because it requires state certifications and plumbing experience.

Chairman O’Connell closed the hearing on A.B. 226 and opened the hearing on A.B. 260.

Mr. Baughman distributed a summary of his testimony on A.B. 260 (Exhibit D). He explained the bill would exempt county health officers from the requirement in Nevada Revised Statutes (NRS) to declare their sources of income. Mr. Baughman indicated Lander County’s Board of Commissioners is required to appoint a county health officer who is paid not less than $25 per month. Mr. Baughman further pointed out the State of Nevada does not provide counties with funding for this purpose. He continued county commissioners are required to establish a county health board chaired by the county health officer. Mr. Baughman stated NRS 439.350 requires the county health board to adopt regulations concerning the prevention, suppression, and control of contagious and infectious diseases.

Due to the decision-making aspects of the county health-officer position, Mr. Baughman indicated the county health officer is included under the definition of "public officer" for ethics reporting rules. Mr. Baughman testified Lander County has only three licensed physicians, and the county health-officer job is basically a volunteer position due to budget constraints. He elaborated the county health officer receives no salary other than the minimum salary set forth in NRS. Mr. Baughman asserted none of the medical professionals in Lander County are willing to serve as county health officer because of time constraints, the unfunded nature of the position, and the financial disclosure requirements associated with the position. He expressed the county must therefore have the state health officer appoint a county health officer and fix his or her salary, as required under NRS 439.310. Mr. Baughman commented a county health officer could be appointed from anywhere in the state, perhaps for a salary of $25,000 to $30,000.

Mr. Baughman noted physicians are among the most highly-paid residents of Lander County. He summarized the county requests that the county health-officer position be exempted from reporting requirements "so that in our county and others, we will not be faced with the constraint from the county public-health officer volunteering their services."

Senator O’Donnell asked what industries exist in Lander County.

Mr. Aberasturi answered Battle Mountain has a few chemical companies that produce agricultural products, but most of the industry in the county involves mining. In response to another question from Senator O’Donnell, Mr. Aberasturi stated the county receives mining proceeds.

Senator Raggio asked if Lander County is the only county experiencing problems with finding a county health officer. Mr. Baughman replied no other counties came forward during previous hearings. He indicated A.B. 260 was presented to the Nevada Association of Counties (NACO), and other counties expressed neither similar concerns nor opposition. He stated he is unsure whether other counties are having problems finding county health officers, but he pointed out some other counties have small numbers of medical professionals.

Senator Raggio commented the county health-officer position is "hardly an unfunded mandate" because the law has required that position since before 1913. Mr. Baughman responded the county health-officer position could become a "rather significant" and unanticipated burden on the county if the state health officer is forced to appoint such a person at a specific salary.

Senator Raggio summarized no physicians in Lander County are willing to serve as county health officer because they would have to file financial disclosures in order to do so. He maintained many positions have such financial-disclosure requirements.

Mr. Baughman indicated concern has been expressed by other counties with regard to financial-disclosure requirements for other appointed positions. However, he reiterated no counties besides Lander have testified in support of or in opposition to A.B. 260.

Mr. Aberasturi commented he represents a spectrum of volunteer and appointed boards. He asserted rural counties are concerned about this issue, and he noted Nevada’s ethics laws are not "bright-line rules." He continued:

Mr. Aberasturi added Lander County asked other counties not to create a "laundry list" in A.B. 260.

Chairman O’Connell closed the hearing on A.B. 260 and opened the hearing on A.B. 261.

Mr. Aberasturi testified A.B. 261 is a "straightforward clarification bill" which would not add anything to current law. He noted most county commissions currently hold meetings outside of the county seat, and they take action at those meetings on issues that do not involve zoning. Mr. Aberasturi maintained persons who want to dispute county-commission actions either try to get the ethics commission involved or file a suit based on the open-meeting law. He asserted NRS chapter 244 contains additional provisions regarding meeting locations and schedules.

Senator O’Donnell asked if A.B. 261 would apply to all counties. Mr. Aberasturi answered affirmatively and noted the bill has no population cap. Senator O’Donnell pointed out A.B. 261 would allow Washoe County commissioners, for example, to meet and take action outside of the county seat. Mr. Aberasturi agreed and mentioned that practice already occurs. He explained county commissions can meet and take action outside of the county seat as long as they agendize and advertise pursuant to relevant law. Mr. Aberasturi indicated Lander County treats the issue very conservatively, and he advises Lander County commissioners to meet outside of the county seat, but to take action in the county seat only. He contended he would not give such conservative advice if the county had a civil department with more attorneys to handle paperwork.

Senator Raggio stated the Legislature has addressed this issue previously and has compromised to allow the county Board of Commissioners to meet but not to take action in locations outside of the county seat. He asked why the commission needs to take final votes outside the county seat.

Mr. Aberasturi answered he agrees. However, he noted Battle Mountain and Austin are the two main population centers in Lander County. He pointed out Austin residents are 90 miles away from the county seat, and when the commissioners travel to Austin, residents want to see them vote. Mr. Aberasturi testified the county also provides teleconferencing and other means of making meetings accessible to county residents.

Senator Raggio commented a similar argument has been considered with regard to the Legislature. He asserted, "Pretty soon it gets out of control if you allow and authorize a vote outside of the county seat or the state capital; then you start having a lot of problems." He suggested county commissioners could indicate how they plan to vote, but then take the actual vote in the county seat.

Mr. Aberasturi responded he has been advising his constituents to that effect. However, he pointed out 16 of the 17 counties in Nevada already take action at meetings outside of the county seat.

Madelyn Shipman, Lobbyist, Washoe County, testified current law authorizes final action outside of the county seat on all issues except for land-use matters. She elaborated final action on land-use matters can be taken only in the appropriate geographical area or in the county seat. She explained county commissions must comply with notice requirements for meetings outside of the county seat, and she commented the Washoe County Board of Commissioners has taken final action in such locations as Incline Village and Gerlach. Ms. Shipman suggested Mr. Aberasturi currently takes an extremely conservative approach to the law in order to alleviate any doubt.

Mr. Baughman maintained this issue presents a particular problem in counties with two or more population centers because large groups of constituents are geographically "dislocated" from the center of government in those counties.

Senator Neal asked if A.B. 261 would allow county commissions to meet outside of the state. Senator Raggio responded meetings can only be held within the boundaries of the county, as set forth on line 2, of page 2, of A.B. 261.

Senator Neal asked what "outside of the county seat" means. Mr. Baughman answered each county has a city which serves as the county seat, and other locations within the county would be considered outside of the county seat.

Senator Neal asked if A.B. 261 would allow county commissions to meet in other counties. Mr. Baughman referred to subsection 7, of section 1, of A.B. 261, noting county commissions can meet outside of the county.

Mr. Aberasturi added county commissions meet outside of the county in certain instances. For example, he commented Lander County is part of the Sixth Judicial District, which also includes Pershing and Humboldt counties. Mr. Aberasturi stated these counties often hold joint meetings in Winnemucca to discuss their budget or other matters.

Senator Neal again asked if county commissions can meet outside the state. Mr. Aberasturi replied the statute currently does not address that issue, and he contended A.B. 261 would not change the current statute in that regard. He suggested an amendment could be added to the bill to provide that county commissions cannot meet outside the state.

Mr. Baughman noted:

Chairman O’Connell mentioned some smaller counties have discussed holding regional meetings to consider interlocal agreements for providing services. She noted nothing currently in statute would prohibit such meetings, but she added final action could not be taken there. She asked if final action could be taken at such meetings, if A.B. 261 passed.

Mr. Aberasturi replied no and asserted the language proposed in A.B. 261 would not change current provisions regarding those kinds of meetings. He reiterated the bill would only clarify that if a county commission meets by itself outside the county seat, it can take action.

Chairman O’Connell asked if a county commission could take final action if it was meeting with a commission from another county. Mr. Aberasturi stated county commissioners cannot take final action outside of their county. However, he noted if Humboldt and Lander county commissioners met in Humboldt County, for example, the Humboldt County commission could take action. He indicated Lander County commissioners could not take action until they were back in Lander County.

Mr. Baughman commented, "That actually works pretty well." He expressed five counties in northern Nevada have come together as the Humboldt River Basin Water Authority under the Interlocal Government Cooperation Act. Mr. Baughman explained the authority meets as a board to discuss issues and make recommendations. He continued the representatives from each involved county then go back to their respective county commissions with the recommendations.

Chairman O’Connell closed the hearing on A.B. 261 and opened the hearing on A.B. 95.

Marvin A. Leavitt, Lobbyist, City of Las Vegas, testified A.B. 95 was requested by Las Vegas. He explained:

Senator Care asked:

Mr. Leavitt responded:

Senator Care asked:

Mr. Leavitt replied, "Yes, this is 50 percent of the basis of the assessment."

David Hill, Lobbyist, City of Sparks, proposed an amendment to A.B. 95. He requested that section 2 of the bill include "lighting" after "irrigation systems," on line 5.

Chairman O’Connell closed the hearing on A.B. 95 and opened the hearing on A.B. 129.

Brian Krolicki, State Treasurer, stated Darrel J. Rexwinkel, Deputy of Cash Management, Office of the State Treasurer, was joining him to present A.B. 129. Mr. Krolicki indicated the bill would make technical amendments to the investment portfolio handled by the state treasurer’s office. He asserted the bill would make three changes.

Mr. Krolicki said the first change, proposed in section 1 of A.B. 129, would add the Government National Mortgage Association as an eligible investment for the portfolio. He noted:

Mr. Krolicki continued paragraph (s), of subsection 1, of section 1, of A.B. 129 would allow the state treasurer to invest in "asset-backed securities that are rated by a nationally recognized rating service as ‘AAA.’" He pointed out this requirement would maintain the highest-quality rating on investments made by the state treasurer. He explained the treasurer’s office would like the flexibility to include in its portfolio asset-backed securities such as credit-card securities, car loans, and so forth.

Mr. Krolicki expressed subsection 4, of section 2, of A.B. 129 would allow the treasurer’s office to have outside managers help with investment matters. He stated this ability is already implied through securities-lending, when a third party manages the relevant monies. He indicated A.B. 129 would clarify that ability.

Mr. Krolicki moved on to summarize a proposed amendment to A.B. 129. He explained the amendment was not proposed when the bill was heard in the Assembly because, at that time, the treasurer’s office was unaware that changes were necessary. Mr. Krolicki distributed a memo describing the proposed amendment (Exhibit E) and a letter from the chairman of the Nevada Higher Education Tuition Fund Board of Trustees (Exhibit F). Mr. Krolicki asserted the proposed amendment would not be in NRS chapter 355, which monitors the treasurer’s direct investments of the general portfolio. He elaborated the proposed amendment pertains to a change in the investments of the Nevada Prepaid College Tuition Program. He commented the treasurer’s office currently has about $5 million under management through that program, and those monies have never been invested before. Mr. Krolicki stated the treasurer’s office recently went through a request-for-proposals (RFP) process, during which it noted some deficiencies in current language. He elaborated the treasurer’s office and the attorney general’s office realized some items needed to be clarified. He commented the RFP process is still ongoing, and the success of the proposed amendment to A.B. 129 will determine how the prepaid tuition program invests its money.

Mr. Krolicki referred to the memo regarding the proposed amendment (Exhibit E), noting the proposed section 3 would upgrade the required credit rating. He pointed out current statutes provide that the treasurer’s office can invest in corporate bonds that are "BBB" or better, but the office would like to upgrade that requirement to an "A" credit. He emphasized the treasurer’s office would also like to change the allowable amount of exposure to corporate bonds from 5 percent to 50 percent.

In response to a question from Chairman O’Connell, Mr. Krolicki said the enabling legislation for prepaid tuition was passed in 1997, so the treasurer’s office has never invested under the guidelines in question. He mentioned the money in the prepaid-tuition program is currently in a money-market fund.

Senator O’Donnell commented:

Mr. Krolicki responded he has enrolled his 6-month-old daughter in a 5-year prepaid-tuition program. He explained she will have her full college tuition covered at a 4-year Nevada university by the time she enters kindergarten.

Senator O’Donnell noted the cost of tuition in future years could "outstrip" the amount of money in the prepaid-college-tuition fund if monies in the fund are not invested properly.

Mr. Krolicki replied:

Mr. Krolicki explained the proposed amendment would also make a technical clarification to the effect that money in the Prepaid College Tuition Program can be invested in United States securities or agencies or instrumentalities thereof, including the Government National Mortgage Association. He pointed out collateralized mortgage obligations with a "AAA" rating would also be allowed. He emphasized all of these are important tools for investing prepaid college tuition monies.

Mr. Krolicki noted:

Senator Care asked if statutes address whether the treasurer’s office must sell an investment if its rating drops from "AAA." Mr. Krolicki answered affirmatively, noting that would no longer be a legal investment and would be liquidated as quickly as possible. He indicated such a situation has not occurred. He further commented investment policies exist "underneath" the treasurer’s general investment portfolio and the Prepaid College Tuition Program’s investment portfolio. Mr. Krolicki explained these policies are not codified in statute, but they are even more strict than the law. He stated the policies provide that an investment would be liquidated if its rating were reduced, as Senator Care suggested.

Chairman O’Connell closed the hearing on A.B. 129 and opened the hearing on A.B. 227.

Ms. Shipman commented A.B. 227 is a clarification bill requested by Washoe County. She stated current language suggests medical services must be purchased through a licensed broker who sells insurance. She expressed this situation was not the intent of the original statute. Ms. Shipman noted the northern Nevada consortium for the purchase of medical services includes 18 employers, 4 of which are public employers. She indicated the consortium covers 22,000 employees and approximately 40,000 individuals, including dependents. Ms. Shipman asserted the consortium has been able to save a significant amount of money by purchasing services competitively.

Ms. Shipman continued A.B. 227 clarifies that a cooperative association can purchase medical services, procure informational materials for members, and disseminate informational and educational materials with paychecks.

Chairman O’Connell commented the consortium can already do all of these things. She asked if Ms. Shipman believed the law was unclear.

Ms. Shipman referred to subsection 2, of section 1, of A.B. 227, noting the original language read:

Ms. Shipman explained the consortium obviously purchases insurance from a licensed person. However, she asserted, current language makes it appear that the consortium also has to purchase medical services from a licensed insurer or broker.

In response to a question from Chairman O’Connell, Ms. Shipman indicated no one opposed A.B. 227 when it was heard in the Assembly. She elaborated the Assembly Committee on Government Affairs did not believe the original bill made it clear that the consortium would not be "assuming the educational role of school teachers" when it procured and disseminated educational materials. Ms. Shipman pointed out A.B. 227, as amended, clarifies the educational materials in question are related to health issues.

Chairman O’Connell asked who currently provides services for the consortium. Ms. Shipman answered, "Actually, I believe that the best bids came in through St. Mary’s [Health Network], and so I believe it’s [it is] the St. Mary’s [Health Network] and the Sierra Medical Group and the preferred providers through them." Ms. Shipman continued the consortium acts as a group to seek the best bids for services for the 40,000 people who will be covered. She explained the employers in the group might have different arrangements with their employees, so the employers individually contract with the provider after the bids are received.

Chairman O’Connell asked if an "umbrella group" coordinates the consortium’s efforts. Ms. Shipman answered the consortium is a cooperative association that has been formed for that purpose. She noted members include Sierra Pacific Power Company, John Ascuaga’s Nugget, Circus Circus Hotel and Casino, and other public and private employers.

Senator O’Donnell stated A.B. 227 would change the language from "group health or life insurance or related medical services" and would allow the consortium to cooperate in a nonprofit fashion to sign contractual agreements with providers of health services. He asked if providers would include HMOs (health maintenance organizations) and PPOs (preferred provider organizations). Ms. Shipman answered affirmatively.

Senator O’Donnell asked if the nonprofit organization would be acting as an HMO or a service provider if it contracted directly with an HMO or a PPO. Ms. Shipman replied the cooperative association does not provide any services. She expressed the association only acts as a "funnel," and each member participates in developing RFPs and so forth. She emphasized no direct services are provided by the cooperative association.

Senator O’Donnell noted A.B. 227 would allow the association to "facilitate contractual arrangements for the provision of medical services for its members." He maintained the bill would allow the association to contract with a group of cardiologists, for example, outside an HMO.

Ms. Shipman stated each entity is required to offer an HMO-type program along with any self-insured or other program. She asserted the consortium requests HMO bids for the group as a whole, and the HMO which offers the most competitive bid receives contracts with all of the consortium members that contract for HMO services.

Senator O’Donnell suggested amending A.B. 227 to require the consortium to contract with an HMO or with an entity licensed to provide actuarial medical services. He indicated the consortium should not be allowed to contract with a group of cardiologists or pathologists, for example, without going through the actuarial process. He explained, "What you can end up doing is signing a contract that could conceivably put your patients at risk, because they may not get the services, or they’re [they are] not licensed."

Ms. Shipman stated she assumes everyone understands that members of the consortium would not contract with anyone who is not licensed. Senator O’Donnell commented A.B. 227 does not clarify that point and would allow members of the consortium to "contract with anybody."

Ms. Shipman stated the original language which was passed in 1995 authorized public entities to join with private entities to form such consortiums as previously mentioned. She noted employers always have "self-insured authority," but the formation of cooperative associations is a way to "maximize the numbers" so that employers are in a more competitive position. Ms. Shipman indicated the intent was to allow the consortium to find the best preferred-provider rates for medical services. She commented every type of medical services, such as gynecological, internal, and general, are included in the overall bid for a preferred-provider rate, which provides a substantial discount for members of the consortium.

Chairman O’Connell stated:

Senator O’Donnell asked if A.B. 227 addresses self-insured programs or contractual HMO-type programs.

Ms. Shipman responded:

Senator O’Donnell reiterated the language allows the consortium to arrange a contractual arrangement with a medical provider outside of an HMO or a PPO. He asked if that situation was intended.

Larry Harvey, Executive President, John Ascuaga’s Nugget, and Vice President, Nevada Health Care Coalition, testified the coalition works together to buy joint services. He stated the coalition buys joint hospital services directly, and he pointed out many coalition members bought such services individually in the past. Mr. Harvey commented the coalition is not allowed to do risk contracting; he mentioned an HMO license is required in order to do risk contracting.

Chairman O’Connell asked, "Are you in a retro [retrospective] group as far as your SIIS [State Industrial Insurance System] coverage?"

Mr. Harvey replied most members of the coalition are totally self-insured, and all of the members are self-insured for workers’ compensation. He stated:

Mr. Hill stated Sparks has realized savings of $200,000 per year in health care costs since the city has been involved with the Nevada Health Care Coalition. He indicated those savings were calculated by comparing current contracts to previous contracts the city signed before becoming a member of the coalition.

Mr. Harvey added such savings are "common" throughout the consortium. He asserted all member employers have saved money, and the quality of health care has been improved because the group works directly with providers on many issues. Mr. Harvey continued the coalition has performed a lot of health-awareness and health-education programs. He stated the consortium’s four public members (the City of Sparks, the City of Reno, Washoe County, and the Washoe County School District) have all reaped substantial savings. Mr. Harvey maintained these savings benefit all taxpayers, not just employees of those public entities.

Mr. Harvey submitted a packet with information about the Nevada Health Care Coalition (Exhibit G).

Chairman O’Connell closed the hearing on A.B. 227 and adjourned the meeting at 4:00 p.m.

RESPECTFULLY SUBMITTED:

Amelie Welden,

Committee Secretary

APPROVED BY:

Senator Ann O'Connell, Chairman

DATE: