ASSEMBLY COMMITTEE ON GOVERNMENT AFFAIRS

MINUTES OF THE meeting

of the

ASSEMBLY Committee on Government Affairs

Seventy-First Session

April 9, 2001

The Committee on Government Affairswas called to order at 8:07 a.m., on Monday, April 9, 2001. Chairman Douglas Bache presided in Room 3143 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Mr. Douglas Bache, Chairman

Mr. John J. Lee, Vice Chairman

Ms. Merle Berman

Mr. David Brown

Mrs. Vivian Freeman

Mrs. Dawn Gibbons

Mr. David Humke

Mr. Harry Mortenson

Mr. Roy Neighbors

Ms. Bonnie Parnell

Mr. Bob Price

Mrs. Debbie Smith

Ms. Kathy Von Tobel

Mr. Wendell Williams

STAFF MEMBERS PRESENT:

Eileen O’Grady, Committee Counsel

Dave Ziegler, Committee Policy Analyst

Virginia Letts, Committee Secretary

OTHERS PRESENT:

Bob Gagnier, Executive Director, State of Nevada Employees Association

Robert Salley, Intern to Speaker Richard Perkins

Marian Kamalani, Intern to Speaker Richard Perkins

Robert Westwood, Intern to Speaker Richard Perkins

Bill Gregory, Howard Hughes Corporation, representing the Boy Scouts

Ron Garland, Boy Scouts of America, representing the Boulder Dam Area Council

Laurie England, Director of the Office of Consumer Health Assistance

Jeanne Greene, Director, Department of Personnel

Kim Foster, Chief, Administrative Services Division, Department of Personnel

Marty Bibb, Executive Director, Retired Public Employees of Nevada

Gary Wolff, Business Agent, Nevada Highway Patrol Association

Jim Richardson, Nevada Faculty Alliance

Perry Comeaux, Director, Department of Administration

Brett Kandt, Deputy Attorney General, Government Affairs Section, Office of Attorney General

Margi Grein, State Contractors Board

Danny Coyle, President, Retiree Chapter, State of Nevada Employees Association

Assembly Bill 451: Authorizes certain local governments to donate real property to certain nonprofit organizations in certain circumstances. (BDR 20-369)

Mr. Bache stated they would be operating as a sub-committee until one more member arrived.

Robert Salley introduced Robert Westwood and Marian Kamalani, then testified the three of them were interning for Speaker Richard Perkins for the Seventy-First Session. As Speaker Perkins was unavailable they would present an overview of the bill.

Robert Westwood stated A.B. 451 authorized local governments to donate real property to certain nonprofit organizations under some circumstances. If the nonprofit organization ceased using the property it would revert to the county or city where the property was located. Passage would assist organizations in acquiring land without depleting nonprofit organizations’ resources, which could be used to develop the land. It would be a partnership between nonprofit and local governments, providing benefits to the citizenry as a whole. It would reduce the burden of local governments in terms of creating and funding social service programs. There were arguments against the issue because it was considered to be a loss of land revenue, sales tax, and property tax.

Marian Kamalani indicated long-term benefits would be that local governments would continue to hold deed to the land. If the land was no longer used for civic or charitable purposes, local governments would have the right to recover the land. Local governments would then have the right to sell or redevelop the land for other purposes.

Bill Gregory, representing the Howard Hughes Corporation, the Boy Scouts and Clark County, passed out a picture of the proposed design for the Boy Scout facility and maps showing location of the land to be developed (Exhibit C). Currently there was a lease in place but Clark County indicated they wanted to donate it to the Boy Scouts and that was the nexus of the bill.

Ron Garland, Executive Director, Boulder Dam Area Council of Boy Scouts of America, testified they served all of Clark County and most of Nye County. A.B. 451 was enabling legislation giving local government the option of gifting land to nonprofit organizations. The proposed site was currently leased to the scouts. For development there was usually a stipulation that the land was owned by the organization.

Chairman Bache interjected the committee was now operating as a “full committee” and would proceed with questions.

Mr. Brown thought it a big step to give land away and was concerned about setting a precedent. He asked it there was a problem obtaining funding if there was a 50-year lease for $1 in place. Mr. Garland responded from a private investment standpoint it would be more difficult to get funding for improvements. The Don W. Reynolds foundation was donating the building as shown in Exhibit C, but all improvements were the Scouts’ responsibility. It was not an unusual situation as indicated by development of the Boys and Girls Club in Clark County.

Mr. Brown queried by what means that development had been gifted. Mr. Gregory stated his understanding was there was previous legislation allowing development of the Boys and Girls Club and if the club was ever dissolved the property would revert back to local government.

Mr. Lee asked how the meaning of “convey” was defined in legislation. Mr. Garland understood local government could convey title of the property to a non-profit organization as long as it was used for its designated usage. Mr. Lee continued, asking if the property was jointly titled between local government and nonprofit organization, and the organization left the premises would it then revert to the government. Mr. Garland said any property having value could take the opportunity for discussion should the organization decide to leave.

Mrs. Smith was curious about the number of nonprofit organizations vying for property. Mr. Gregory replied land was given to the Boys and Girls Club many years ago and there did not seem to be any ensuing issues with other nonprofit organizations.

Mrs. Gibbons questioned what happened if the scouts made a $500,000 property investment and area became industrial with land costs soaring, could the scouts sell the property at a large profit. If so, she wondered if the profits would go back to the county. Mr. Gregory stated the scouts would not have an opportunity to sell the property because if they vacated it, it reverted back to the county. His understanding was the particular piece of property was not in an advantageous location and felt that was one reason the county was willing to donate it.

Mr. Neighbors asked if one elected Board of County Commissioners could obligate any future boards for over 30 years on a lease. Ms. O’Grady replied they had the authority and it was frequently done.

Chairman Bache closed the hearing on A.B. 451 and opened the hearing on A.B. 556.

Assembly Bill 556: Revises certain provisions governing authority of state board of examiners and requirements for certain agreements for interlocal cooperation between public agencies. (BDR 31-565)

Perry Comeaux, Director, Department of Administration, testified A.B. 556 basically did three things. The first sections revised the State Board of Examiners’ authority in terms of their ability to delegate certain things to the clerk of the board. It changed certain interlocal agreement requirements and provided interim access to funding, stabilizing the operation of state government. Section 1 dealt with stale claims and allowed the Board of Examiners to delegate authority to approve stale claims to the clerk. Section 2 allowed the board to delegate to the clerk, under appropriate circumstances, approval of refunds of tax and fee overpayments to the clerk of the board. Section 3 allowed reissuance of stale dated warrants. Section 4 required a quarterly report to the Board of Examiners by the clerk on any refunds or other payments the board had previously authorized. Section 5 affected the emergency fund, changed allocation of those funds to the agencies. Currently there was a maximum allocation of $50,000 regardless of actual cost of the emergency and the bill removed that cap and allowed the board to authorize any expenditure. Section 6 allowed the board delegation of approval to the clerk for allocations made from the statutory contingency fund. Section 7 provided access to the Rainy Day Fund without a special session of the Legislature, allowing distribution upon receipt of an executive order by the Governor and a resolution adopted by the Interim Finance Committee. If they agreed a fiscal emergency existed the State Controller would transfer money to the Contingency Fund in order to stabilize operation of state government. Currently the Rainy Day Fund could only be accessed when both the Legislature and Governor agreed a fiscal emergency existed and a special session was held.

Mr. Comeaux added that Section 8 dealt with interlocal agreements. If it was reasonably foreseeable, a participating public agency would be required to expend $2,000 or more to participate, with the agreement in writing. That requirement mirrored the State Administrative Manual (SAM) where any agreement over $5,000 must be in writing and approved by the Board of Examiners. Section 11 addressed statutory requirements for written contracts. New language would increase to $2,000 the current limitation of $750 for contracts necessary to preserve life and property. The clerk may approve contracts for $10,000, with authorization for the Board of Examiners and emphasized the new language was discretionary.

Mr. Lee questioned if a stale claim was the same as a stale dated check. Mr. Comeaux replied that both of those items were dealt with in the bill. A lost check, or warrant, was a stale dated warrant that had been canceled and requested to be reissued. Stale claims were vendor claims submitted after books closed for a fiscal year. Although the state’s books closed on June 30, for reporting purposes, according to statute they closed the last Friday in August. It was not uncommon for an agency to be billed for goods after June 30 that were received before that date. Some provision had to be made to pay those claims so there was a separate stale claims account funded by the Legislature every two years. With the language in the bill it would allow the clerk expenditure approval protected by a report from the clerk every quarter.

Mr. Lee asked about language relating to state agencies that had been “aggrieved.” Mr. Comeaux stated in the seven years he had been in his position, there had never been a case of an agency disagreeing with the budget office’s determination and felt the language was there as one more step in protecting state agencies.

Mr. Neighbors said his problem was in case of fiscal emergencies, giving authority to the Governor rather than the full Legislature. He felt too much power was being given to the Governor and Interim Finance Committee. Mr. Comeaux indicated he had concerns since the Rainy Day Fund was established by the lack of interim access without a special session. What prompted proposed changes by the administration was the current utility rate volatility. If rates increased dramatically over the next biennium there needed to be adequate funding in the budget to pay all agency and departmental utility bills. He pointed out that in his experience the Interim Finance Committee was not a pushover when it came to allowing funding for any project.

Mr. Humke stated he had similar concerns and wondered if the bill pushed Interim Finance Committee constitutional authority. Mr. Comeaux replied he was not really qualified to offer an opinion. Mr. Humke inquired about language occurring several times throughout the bill, “the state board of examiners may authorize its clerk, under such circumstances as it deems appropriate, to approve stale claims on behalf of the board.” He wondered what type of approval would be given to the clerk to make changes. Mr. Comeaux responded the board would delegate approval of refunds, stale claims, stale dated warrants, and would review quarterly reports submitted by the clerk. He pointed out in the case of stale claims and warrants the board had no choice but to approve those claims, if they were deemed legitimate.

Mr. Humke asked for clarification of who served on the Board of Examiners. Mr. Comeaux stated it consisted of the Governor, Attorney General and Secretary of State. Mr. Humke questioned if the bill would diminish the authority of the Board of Examiners, or were the proposed changes merely ministerial. Mr. Comeaux felt the changes were routine transactions and in his opinion a waste of board members’ time.

Mr. Humke inquired about the language in Section 8, regarding inter-local agreements that “the agreement must be in writing.” Mr. Comeaux replied previously the board approved changes in the State Administrative Manual (SAM) requiring the board’s approval of inter-local agreements that exceeded $2,000. Concern was agencies were committing themselves to expenditures without any review.

Mr. Humke continued in Section 9 it indicated Attorney General approval, and wondered if that language was new or had always been in statute. Mr. Comeaux was not sure when it was included, but felt the entire contracting process required Attorney General approval before they went into effect.

Mr. Price interjected many years ago there was a decision that the power of the Interim Finance Committee was unconstitutional, but it had never been tested. He felt giving the clerk and Interim Finance even more authority was a bad precedent to establish. He saw nothing to delay any special session that needed to be held and he wanted to be on record he had real concerns with Section 7.

Mr. Neighbors stated he recalled two opinions rendered by the Attorney General’s Office over the past ten years that were thrown out by the Nevada Supreme Court. One dealt with establishment of Bull Frog County and another giving an unincorporated town all the powers of a city. He could understand giving the Interim Finance Committee and Governor additional powers if there was a catastrophic emergency, but he had problems if they were dealing with a fiscal emergency. He asked how much money was in the Rainy Day Fund and if there was a limit of how much money could be held in that fund.

Mr. Comeaux disclosed when the controller made the actual at the close of the previous fiscal year there was about $136 million. Limit on the fund was 10 percent of a particular year appropriation so at June 30, 2000, there was approximately $156 million and within $20 million of the maximum allowed. Mr. Neighbors pointed out that was almost $30 million less than the shortfall in 1991 and no one proposed statutory changes at that time.

Ms. Von Tobel felt the reason the Interim Finance Committee was careful with what they allowed out of the Contingency Fund was because there was a certain limit on how much must be retained in that fund. If they could declare an emergency she wondered if there would be the same conservative approach in spending those funds. She did not think the proposed language was good policy and any withdrawal from the Contingency Fund should have been considered during a regular session.

Mr. Comeaux pointed out in an emergency there was no way to plan ahead for the costs. Seldom were expenditures made from the fund with the most routine expenditure to Nevada National Guard when they were called out on a search and rescue mission. That expenditure was generally only $25,000 or $30,000. One situation where the fund could be accessed would be in a breakdown in a state building and if not dealt with could cause deterioration to the building. Something like that could cost $100,000 and a request would be made for $50,000 from the emergency fund and Interim Finance would issue another $50,000 from the contingency fund. The thought behind the language was for an agency to have access to the fund for emergency costs, but limited by the maximum amount in the fund.

Brett Kandt, Senior Deputy Attorney General and counsel to both the Board of Examiners and Budget Division, testified he was in favor of the bill. It addressed several issues in Sections 1 through 6 and it was a reasonable delegation of the board’s authority to the clerk. He indicated his office had no opinion on Section 7 as to whether it was a constitutional provision. Sections 8 through 11 addressed inter-local contracts, cooperative agreements and contracts with independent contractors, which were scrutinized by the Attorney General and required to be in writing.

Chairman Bache pointed out the bill was concurrently referred to the Committee on Ways and Means and would have to be processed through both committees by April 16, and asked what was the pleasure of the committee.

Mr. Humke thought the committee should seriously consider some policy questions before moving it on. It was an important policy question and because some members were missing he felt they should move cautiously.

Mr. Neighbors said he could not support the bill if Section 7 remained and agreed with Mr. Humke that perhaps no action should be taken until all members were present.

Chairman Bache stated they would wait until the end of the meeting and a full committee to take any action, but he felt they needed to move the bill. He closed the hearing on A.B. 556 and opened the hearing on A.B. 558.

Assembly Bill 558: Establishes for next biennium amount to be paid by this state for group insurance for certain public employees, public officers and retired public employees. (BDR S-1437)

Perry Comeaux, Director, Department of Administration, stated his testimony would be brief. Every biennium a bill was introduced setting in statute the amount of monthly contributions made by the state group health insurance plan on behalf of its employees. Section 1 specified monthly amounts of $357.50, which would be contributed for active employees for fiscal year (FY) 2002 and $384.50 for FY2003. Section 2 provided monthly contributions made on behalf of retired employees in the amount of $202.34 per month for FY2002 and $217.84 per month for FY2003. Those dollar amounts were reflected in the Public Employees’ Benefit Program (PEBP) budget, currently under consideration by the legislative money committees.

Ms. Parnell asked for a comparison with the FY2001 amounts. Mr. Comeaux replied active employee figures were $368.75, and $208.92 for retirees.

Mrs. Smith thought there had been previous discussions about a third tier for retired employees who had not worked for the state for a certain amount of time. Chairman Bache said there had been previous testimony about a scaled amount for retired employees based on years of service. There were problems brought out at that time because there were local government employees who transferred into the state and then retired with all their service counted.

Bob Gagnier, Executive Director, State of Nevada Employees Association, stated when it came to computation of retiree contributions it was a percentage amount based on years of service, and the amounts in the bill were referred to as “base amounts.” Everyone who retired prior to January 1, 1994, received a base amount, those retired since that date receive 25 percent for the first five years and then 7.5 percent for each year of service over five, up to a maximum of 137.5 percent of base.

Ms. Von Tobel questioned the $357.50 going toward an employee’s benefit, as the actual cost of the benefit was $179 less if the employee chose Health Plan of Nevada. Mr. Comeaux replied for the most part that difference subsidized costs of employee dependent coverage.

Ms. Von Tobel stated the cost of a single parent with a child was only $340 per month through Health Plan of Nevada but in the bill it stated the base was $357, so there was a disparity. She also wondered if employees were aware actual costs for their insurance were far less than the base of $357. Mr. Comeaux was not sure if all employees were aware of the differential. The actuary basically provided the board with information.

Ms. Von Tobel requested information on the difference be provided to the committee because in research she had done state employees certainly did not have access to that information.

Mr. Gagnier testified he was speaking in favor of the bill. It would be his organization’s proposal that the state rate be frozen for the first year of the biennium at the current amount, rather than being reduced. In a study conducted last summer by the State Department of Personnel it was shown that the state’s current contribution rate was $90 a month less than average. Local government averages had a wide spread from a low in Elko $220 per month to a high at Washoe County Airport Authority of $828. A lot of larger groups were in the $700 range. There had been a study by The Segal Company regarding retirees within the state health plan and because of that study SNEA suggested an interim study to evaluate retiree programs and funding. The actuary pointed out last year there were roughly 3.23 active employees for every retiree in the state health plan, but in 20 years that number would be reduced to 1.66 active employees for each retired employee.

Mrs. Freeman asked exactly what was meant by “direct contribution.” Mr. Gagnier replied “direct subsidy” was the state subsidized amount and went directly into the fund on behalf of the employee, based on a formula specified in law. The “indirect subsidy” was picked up by the overall plan and they paid the remainder of the subsidy. That was the difference between actuary cost and direct subsidy.

Mrs. Freeman wondered who requested The Segal study. Mr. Gagnier responded it was the Public Employees’ Benefits Board. Mrs. Freeman asked if that report would be submitted to the money committees. Mr. Gagnier stated he had suggested to the joint money committees that a regular interim study be conducted. Mrs. Freeman added there were retired employees on the Government Affairs Committee and felt there should be some input from them as well.

Mr. Gagnier indicated all committee members should look over the report because there was a larger and larger portion of funding going toward retirees. They did not want to jeopardize future retirees’ insurance coverage, but it was sounding more and more like social security programs where the number of actives was diminishing in relation to retirees.

Ms. Parnell wanted clarification in Section 1 where it defined who would participate in the Public Employees’ Benefit Program because it appeared there seemed to be a choice whether to participate in the program. Mr. Gagnier responded there was no requirement in the law that an employee must be in the state’s plan. Ms. Parnell also questioned an allowance of groups of 300 to depart, taking the subsidy with them. Mr. Gagnier said there was a large issue of retirees pulling out of the plan, because of indirect subsidy.

Marty Bibb, representing the Retired Employees of Nevada, agreed with the previous speaker and they would like to see rates remain the same for 2001 as they were for 2000. They felt with skyrocketing medical costs it was not the right time to reduce money available to the program. There had been a lot of adjustments in the past few years, some dealing with retirees, and in many ways had made program funding into “a bit of a crisis.” First there was a carve-out in 1999 and currently there was an integration of benefits, which meant that as a Medicare retiree there was $3,000 more out of pocket than in 2000 and $2,000 for 2001. There had been discussions about reducing the deductible from $350 to $250 annually; however, Medicare retirees still had a $350 deductible because the state no longer picked up the $100 difference. Of all the cuts made to reestablish the program in 1999, of the $9 million shortfall, $3.3 million came from retirees alone although they only comprised 6 to 8 percent of people in the plan. They were not opposed to an interim study but felt there needed to be an accurate handle on the numbers. He added in the Segal report it indicated retiree liability over the next 20 years would be $779 million, but there was no reference point for active employees over the same 20 years. At a board meeting it was brought up a realistic projection was 18 months so he was concerned when the report was trying to project out that far into the future.

Mrs. Freeman noted he had suggested an audit and wondered for which agency. Mr. Bibb replied he was not sure audit was the right term but there were many different dollar figures, subsidies, and questions of how much funding went from one person to support another person. There had to be a way to get a clear flow pattern of where the money came from and where it went if the issue was to be realistically addressed.

Mrs. Freeman supported the suggested interim committee study, with some timelines put in place, so the issue could be addressed at the next legislative session.

Ms. Von Tobel felt something should be done during the Seventy-First Session; if nothing was done but studying problems in the interim, the system was going to collapse. Her understanding was agency budget figures had been brought up twice before the Committee on Ways and Means, and there were no correct figures available. She did not feel Ways and Means or Government Affairs had been given an actual accounting of where the dollars were going. Until there was clarification between actual costs and the subsidy involved, reserves would never be replenished. Retirees would probably have been better off purchasing a supplemental plan through AARP and a supplemental pharmaceutical plan. If no correct figures were available, perhaps the state should not even be in the insurance business.

Mr. Comeaux indicated the money committees had been supplied with up-to-date information, the difficulty had been delays caused by shifts in the current enrollment period from the self-funded plan to HMOs and vice versa. He pointed out the budget under consideration by the money committees provided for a fully funded incurred but not reported reserve. Constructing the budget for the program was complex, because it was based on a series of assumptions and the closest thing to accurate numbers was history and reliance on consultants as to what projected costs might be.

Ms. Von Tobel asked if the reference to “plan” was the State Self Funded Plan, because there were known costs for every employee who was with Health Plan of Nevada as a premium was paid to that program each month. If every employee decided to switch to self-funded there would be a tremendous fiscal impact because those costs were known and far below the subsidy. Mr. Comeaux stated awards were made to HMOs on basis of a premium cost that they bid. Employees had a choice on which plan to participate in, and it was not a mystery where the money went, he just did not have it immediately available. There were other components such as life insurance, dental benefits, vision benefit, and prescription plans. Contributions were used to pay for the entire package.

Ms. Von Tobel said even with those additional items included there would be an increase of around $30, which was still far below what each employee paid in contributions. Last session there were 300 employees wanting to pull out of the plan and were unable to do so, and she felt that money should have been released in order to obtain another plan of their choice. Mr. Comeaux responded there was no problem with the 300 employees pulling out of the plan, as long as they took their retirees with them.

Gary Wolff, representing the Highway Patrol Association, Teamster’s Local 14 and 533, Communication Workers of America, and Nevada Cops, stated he did not have much to add. He wanted to go on record that they were not really opposed to the bill, only that portion dealing with subsidies the state provided state employees. The HMO in the north, through St. Mary’s, charged its participants an additional $75 on top of the state subsidy while no other participants throughout the state paid additional money to be in an HMO. He did not feel there was any equity as there were enough problems recruiting state employees and the highway patrol was losing employees at an alarming rate. Any additional burden would only add to those losses. One plan he felt should be looked at was the Teamster’s Local 14 plan, which was a true group insurance where everyone paid $425 a month no matter how many dependents were involved. He thought that was what group insurance was about rather than a multitude of plans involving different costs for different coverage.

Jim Richardson, representing the Nevada Faculty Alliance Chapters throughout the state, testified he was puzzled to see the bill in the Committee on Government Affairs, as it was only an appropriation bill. His group would like to see rates remain the same for retirees and actives. His calculations suggested that would add an additional $3.5 million in a session where there was limited funding available. The overall picture had to be looked at because in 2001 the state was paying $104 more per employee per month than they were paying two years ago, and part of the reason the plan got into trouble 1999 and had to be bailed out because of heavy losses. He felt retiree issues should be addressed by an interim study with additional review of The Segal Company Report. Many public employers throughout the country paid “full freight” for health care costs for retirees, but there was a significant price tag attached. He pointed out $75 a month for participants in the north had been a policy of the state for a number of years, so there was a problem with equal treatment between the north and south. Costs to the plan were varied and included operating costs, various coverage for vision and dental that may not be part of the plan, long-term disability, life insurance and a significant portion of the fund subsidized rates for dependent and retiree coverage.

Ms. Von Tobel said coverage in the south was cheaper because there was a larger market. No one ever specified what St. Mary’s actual costs were or what that additional $75 was used for, so she thought the state might be better off giving the employee $368.75 and let them purchase their own insurance.

Danny Coyle, President, retiree chapter of State of Nevada Employees Association, stated they took a neutral position on the bill. He did agree with Mr. Gagnier’s testimony to at least freeze rates for FY2001-2002 at their present level.

Chairman Bache interjected the bill was jointly referred to the Committee on Ways and Means and was strictly a budget act, so there were options. One option would be to amend the bill and freeze rates at their current level for the first year, or send the bill on to Ways and Means without recommendation.

Ms. Von Tobel felt rates for both actives and retirees should be frozen, as they really did not know what actual costs were for the plan.

ASSEMBLYWOMAN VON TOBEL MADE A MOTION TO AMEND AND DO PASS WITH THE RATES FROZEN.

THE MOTION WAS SECONDED BY ASSEMBLYMAN HUMKE.

THE MOTION CARRIED UNANIMOUSLY.

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Chairman Bache stated as all committee members were present he would take a motion on A.B. 556.

ASSEMBLYMAN HUMKE MADE A MOTION TO AMEND AND DO PASS DELETING SECTION 7.

THE MOTION WAS SECONDED BY MR. NEIGHBORS.

Mr. Price said several committee members felt Section 7 took power away from the legislative body and transferred it to the Governor’s Office.

Mr. Neighbors pointed out he could not believe any fiscal emergency could arise so fast that the Legislature could not be convened for a one day session and if section 7 was left in, the balance of power would be given to the executive branch.

THE MOTION PASSED UNANIMOUSLY.

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Assembly Bill 559: Transfers office for hospital patients from department of business and industry to office of the governor. (BDR 18-1440)

Laurie England, Director of the Office of Consumer Health Assistance, testified it was her understanding that at the conclusion of last session when the Office of Consumer Health Assistance was placed under the Governor there had been discussion of combining that office with that of hospital patients. Because of the lateness of the session it was decided that issue would be addressed in the Seventy-First Session. During the interim Fundamental Review the issue was addressed and it was felt combining both offices would increase efficiency. The Office for Hospital Patients was established in 1991 when hospital costs were a significant issue and at that time it was placed under the Office of the Commissioner of Insurance and subsequently transferred to Business and Industry (B&I) in 1995. It was logical to combine the two offices, as most requests for health assistance dealt with physicians, clinics, surgery centers and other types of ancillary providers while hospital patients dealt only with hospitals. There would also be a benefit to consumers with a “one-stop shop” approach.

Ms. Von Tobel stated the Office of Consumer Health was started in October of 1999, and questioned how many employees there were at that time. Ms. England indicated there were eight positions and no additional positions had been requested in their current budget.

Ms. Von Tobel questioned how many positions were in the Office of Hospital Assistance. Ms. England replied they were budgeted for 2.5, with two currently filled and she had requested one additional position. Ms. Von Tobel asked what the total positions would be after the two offices were combined. Ms. England said there would be a total of nine.

Ms. Von Tobel asked for a description of duties for the nine employees, as she was not clear on that point. Ms. England stated the Office of Consumer Health Assistance was established to assist people with health care concerns inclusive of health plan issues. Those issues went from denials, delays, wrong billings, payments not made by carriers, to confusion in terms of access to care, and quality of care issues. If there was another agency that should be handling an issue her office helped that person obtain correct information and receive the assistance they needed. The essence of combining the two offices was because often times health concerns crossed over.

Ms. Von Tobel wondered if performance indicators had been developed when the office was first established and been appropriately submitted. Ms. England pointed out the Office of Consumer Health Assistance did not have indicators until the Seventieth Session but they were now in place. There was a published report on the Internet delineating the types of calls, number of calls, geographic location of calls, breakdown by payer or plan, and a consumer satisfaction survey, which she initiated.

Mrs. Smith said it seemed some of the language was brought over from statutes regarding hospital patients, and wondered if the hospital assessment was retained. Ms. England replied that language was unchanged with a consumer price index added to the assessment each year.

Mrs. Smith questioned how the hospital assessment correlated to funding for the office. Ms. England replied under current practices it completely funded the office. Mrs. Smith thought if staff was downsized but had the same assessment, there could be some budgetary implications. Ms. England pointed out she had requested an increase of one position, a Quality Assurance Specialist, which would make it equitable with duties required for that position.

Mrs. Smith asked if deletion of one position would affect quality of service. Ms. England disclosed actual office caseload of hospital patients had been reduced to only eight to ten calls each month, with several of those bearing no merit. In assessing the number of calls received, she believed the efficiencies could be achieved by combining offices. There was one position already in place that was a clerical support and intake position for calls and services so she felt, because of a reduction on calls, current staff could absorb those services.

Ms. Parnell stated she was surprised there was no one testifying from Business and Industry because the office was being moved from under their supervision. She felt without their input it seemed 50 percent of the testimony was missing. Ms. England pointed out it was a recommendation by the Governor and as both agencies worked under Business and Industry, she saw no problems with the legislation.

Chairman Bache closed the hearing on A.B. 559 and opened the hearing A.B. 565.

Assembly Bill 565: Authorizes monthly payroll cycle for certain state employees. (BDR 23-1443)

Jeanne Greene, Director of Department of Personnel, introduced Kim Foster, the Financial Manager for the department. Currently state employees in the payroll system were paid on a biweekly basis. Governor Guinn in his search for efficiency suggested the proposed legislation, but it was only permissive and did not mandate changes. It would allow the department to determine cost savings resulting from preparing state payroll on a monthly cycle, determine costs of implementing a monthly payroll, revise the integrated financial system, and conduct a survey of employees to determine their willingness to convert to a monthly payroll. If there were savings there would be a determination on dispersing those savings and could include salary enhancements, additional or enhanced benefits, additional training, or a “cafeterial” type benefit account. Change was always a difficult process but their assessment of converting to a monthly payroll showed employees would not be negatively impacted by taxes and with implementation employees would still be paid on a two-week lag. She understood employees would have to change their budgetary habits; however, take-home pay would not be reduced or employee deductions adversely impacted. Other public and private employers had successfully processed payroll on a monthly basis. In closing, she stressed state employee salaries were not competitive. Passage of the bill would give the department the ability to investigate alternate pay cycles with any savings generated returned to the employee.

Mr. Brown questioned if there would be immediate financial savings to the state. Ms. Greene replied once assessment of changes was completed there should be some savings at that time through interest accrued for the two-week period that the money did not need to be withdrawn. There would be a survey among employees and if they approved the monthly cycle, those savings would be returned to the employee in some fashion.

Ms. Von Tobel questioned if there was a determination as to how those savings would be returned to the employees. Ms. Greene stated their plan was to let the employees decide, whether through a salary increase, a bonus program, or additional training.

Mr. Mortenson reported in some e-mails and faxes he had received, there were complaints about the fact salaries were received late and wondered if that was a fact. Ms. Greene responded, currently they were paid on a 12-day lag, the time period needed to collect data, input information into the computer, and to have checks issued. With implementation of monthly payments there would be about a 14-day lag because approximately 14,000 employees had to be processed through the system.

Ms. Smith observed there did not seem to be permissive language enabling employees to choose an option. It seemed to mandate a monthly schedule of payment. Ms. Greene said the original intent was to have permissive language, but it had been omitted when the bill was written. If the Governor approved a monthly cycle it would be implemented.

Mr. Neighbors questioned how much interest was expected from money invested for that two-week period. Ms. Greene responded that initial calculations indicated the state would earn approximately one million dollars a year.

Mr. Bache recalled when Governor Guinn was Superintendent of Schools employees were paid monthly and after he left the school district pay schedules returned to biweekly. He felt it was a hardship on employees in trying to budget over a 30-day period and especially if there was a situation of a low pay scale. He pointed out it would also affect legislators as they had been pulled into the monthly pay cycle.

Ms. Von Tobel noted that when employees retired their retirement checks were issued monthly at only 80 percent of their pay and they were forced to budget their funds on a monthly basis.

Mr. Brown asked if there would be savings by processing biweekly payments on a monthly basis. Ms. Greene replied, because Nevada Department of Transportation checks were also processed, but on a different cycle, if they were all processed at one time there would be considerable savings. There should also be cost savings from less paper usage to computer savings.

Bob Gagnier, Executive Director, Public Employees’ Retirement System, testified they were opposed to the bill. Discussions had taken place with the Governor’s Office before the bill was drafted and the Governor indicated legislation would never be implemented if employees opposed it. However, it now appeared employees would have little choice because a poll of state employees appeared to have been omitted from the bill. What seemed to be a savings really took employees’ money and allowed the state to invest it and earn interest. Right now the money was kept for twelve days with employees receiving nothing in return and there should be some recompense to employees. It there was a change to monthly paydays there would be a lag of six weeks for first-time employees. Once monthly paydays were implemented the statute was there regardless of who sat in the Governor’s Office.

ASSEMBLYWOMAN FREEMAN MADE A MOTION TO INDEFINITELY POSTPONE A.B. 565.

ASSEMBLYWOMAN SMITH SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

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Chairman Bache closed the hearing on A.B. 565 and opened the hearing on A.B. 569.

Assembly Bill 569: Exempts certain professional and occupational boards from provisions concerning state financial administration. (BDR 31-341)

Perry Comeaux, Director, Department of Administration, testified the bill basically proposed eliminating boards created pursuant to Chapter 623 to 625A and 628, 630 to 640A inclusive, 641 to 644 inclusive, 654 and 656 of Nevada Revised Statutes. Those were occupational boards and self-funded. License fees were either set by statute or set by the board through regulations and covered by Chapter 218, which required independent audits and were completed on an annual or biennial basis. It would streamline the process as no formal hearings were held by the Legislature on those particular budgets.

Margi Grein, State Contractors Board, stated they fully supported the bill. Currently fees paid to the Department of Administration for overseeing their budget was around $30,000. Since the law was changed in 1987 they had spent in excess of $310,000 having the budget division monitor their board.

Mr. Lee asked if that meant there would be no subsidy when purchasing vehicles through state purchasing. Mr. Comeaux indicated the only affect would be elimination of boards from provisions of Chapter 353. The purchasing program would remain the same.

ASSEMBLYMAN NEIGHBORS MADE A MOTION TO DO PASS A.B. 569.

ASSEMBLYMAN HUMKE SECONDED THE MOTION.

THE MOTION PASSED UNANIMOUSLY.

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Chairman Bache returned to A.B. 451 and stated he would accept a motion.

ASSEMBLYMAN LEE MADE A MOTION TO DO PASS A.B. 451.

CHAIRMAN BACHE SECONDED THE MOTION.

Ms. Von Tobel voiced concern on which charitable organizations would be allowed to participate and felt there could be a perception of discrimination.

Chairman Bache pointed out that from language in the bill, it would have to be any organization falling under classification in statute and up to the county to decide if the project was right. It was a law that addressed a particular situation.

Ms. Parnell saw nothing precluding a long-term lease agreement and felt that was a better solution so she would vote against the bill.

Ms. Smith stated existing language talked about “charitable and civic organizations” with no qualification and thought “civic organization” should be better defined.

MR. LEE WITHDREW HIS MOTION SO CONCERNS COULD BE ADDRESSED AT A FUTURE WORK SESSION.

BECAUSE OF TIME CONSTRAINTS CHAIRMAN BACHE WITHDREW HIS SECOND.

Chairman Bache adjourned the meeting at 11:05 a.m.

RESPECTFULLY SUBMITTED:

Virginia Letts

Committee Secretary

APPROVED BY:

Assemblyman Douglas Bache, Chairman

DATE: