MINUTES OF THE meeting
of the
ASSEMBLY Committee on Ways and Means
Seventy-First Session
April 12, 2001
The Committee on Ways and Meanswas called to order at 10:45 a.m. on Thursday, April 12, 2001. Chris Giunchigliani, Vice Chairwoman, presided in Room 3137 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:
Ms. Chris Giunchigliani, Vice Chairwoman
Mr. Bob Beers
Mrs. Barbara Cegavske
Mrs. Vonne Chowning
Mr. Joseph Dini, Jr.
Mr. David Goldwater
Mr. Lynn Hettrick
Ms. Sheila Leslie
Mr. John Marvel
Mr. David Parks
Mr. Richard D. Perkins
Ms. Sandra Tiffany
COMMITTEE MEMBERS ABSENT:
Mr. Morse Arberry Jr., Chairman
Mrs. Marcia de Braga
STAFF MEMBERS PRESENT:
Mark Stevens, Fiscal Analyst
Steve Abba, Principal Deputy Fiscal Analyst
Carol Thomsen, Committee Secretary
Andrea Carothers, Committee Secretary
Vice Chairwoman Giunchigliani announced that the first order of business to come before the committee would be review of A.B. 4.
Assembly Bill 4: Allows money in fund for new construction of facilities for prison industries to be used to expand existing industries. (BDR 16-680)
John Marvel, Assemblyman, Assembly District 34, appeared before the committee as Chairman of the Advisory Board on Industrial Programs, and spoke on behalf of A.B. 4. According to Mr. Marvel, the advisory board requested modification of language specific to the fund created by the Nevada Revised Statutes (NRS) 209.192, to accommodate construction of new facilities for the prison industries program and construction of capital projects. Mr. Marvel stated that prison industries at Southern Desert Correctional Center (SDCC) was presently experiencing problems with the stained glass program. The program was currently housed in a small “hovel” and generated a great deal of interest within the inmate population. Mr. Marvel introduced Howard L. Skolnik, Assistant Director, Prison Industries, and nonvoting member of the Advisory Board on Industrial Programs, Nevada Department of Prisons (NDOP), who would identify other problem areas.
Mr. Skolnik stated that in FY1994, a fund was established for the construction of facilities for new prison industries, to be funded via a 5 percent deduction from inmate earnings. As of April 2001 the fund contained an estimated balance of $608,000, which grew by approximately $7,000 per month. Mr. Skolnik advised that prison industries was in the process of purchasing a surplus building for new industries at SDCC. The current estimate from the Public Works Board to purchase and reconstruct the building was $840,000, which would require the use of some operating capital in order to complete the project. Prison industries would request the ability to not only construct buildings for new industries, but also to utilize the funds for expansion of existing industries. Mr. Skolnik indicated it had taken seven years to amass almost enough money to purchase one building, and noted that prison industries could have undertaken some expansion projects with the money in the past, had it been authorized to do so.
Vice Chairwoman Giunchigliani asked about the prison industries program in southern Nevada where antique automobiles were refurbished. Mr. Skolnik indicated that particular program was still operational, and explained the prison industries programs at SDCC consisted of:
Ms. Tiffany asked why the prison industries program was not associated with an apprenticeship program, in order to build necessary buildings under a licensed contractor. That would utilize prison industries participants, both male and female, and enable inmates who were released from the NDOP to secure employment in one of the building trades, i.e., carpenter, electrician, laborer, et cetera. Ms. Tiffany also asked why prison industries did not partner with the community college, which offered a wide variety of trade programs. Since the NDOP was forced to provide the space because of security, it would prove beneficial to have the college provide the programs.
Mr. Skolnik reported the NDOP had, in fact, partnered with the community college, however, pointed out that prison industries operated via a separate enterprise fund than the NDOP, which operated the manufacturing service; prison industries did not manage the programs within the NDOP. Mr. Skolnik advised that the NDOP had contacted building trade councils and unions in the past regarding apprenticeship programs, however, to date, nothing had materialized. Ms. Tiffany asked whether it would take a Letter of Intent from the legislature to initiate such programs. Mr. Skolnik noted that many programs required funding, which was not included in the prison industries operating budget. Prison industries was not structured to fund training programs, but rather was structured to become self-supporting via the operation of actual businesses. Mr. Skolnik indicated the NDOP was pursuing other avenues at the current time, and was in the process of funding a program in conjunction with the community college for a community work or transition program. Ms. Tiffany assumed the two could be related, as an inmate could enter into a transitional training program while working in prison industries. Mr. Skolnik felt that could be possible, however, it had not been undertaken to date and, frankly, had not been the focus of the NDOP. It had only been within the past several months that prison industries had truly taken on a program focus under the leadership of Jackie Crawford, Director, NDOP.
Vice Chairwoman Giunchigliani noted an apprenticeship program would entail a complete policy change, and at times funding was simply not available to initiate such a change. Some maneuverability that would allow for transition would be more appropriate, as the goal was to return inmates to society with a useful skill. Vice Chairwoman Giunchigliani stated she appreciated the fact that prison industries had, over the years, adopted programs that were more useable and provided additional work skills for inmates. Mr. Marvel commented that through the efforts of Mr. Skolnik and Ms. Crawford, the prison industries program would become very ambitious, aiming for participation of at least 20 percent of the population. Vice Chairwoman Giunchigliani inquired whether participants in the prison industries program were required to obtain a high school diploma or a General Education Diploma (GED) prior to entry into a program. Mr. Skolnik explained that was not a requirement or qualification at the present time, however, it could become one in the future. Vice Chairwoman Giunchigliani felt it would be a good incentive. Mr. Marvel pointed out that the legislature had “capped” the GED program.
Mr. Skolnik stated that prison industries was reviewing community work programs for inmates, similar to the Nevada Division of Forestry (NDF) program currently in operation. The community work program would be established within actual work locations, allowing the inmate to attain a smooth transition into the community upon release. Vice Chairwoman Giunchigliani inquired whether inmates earned credits toward their sentence for participating in the prison industries program. Mr. Skolnik explained that a participant would earn credit toward his sentence, and would also earn prevailing wage.
Mr. Hettrick indicated he had utilized the auto program at SDCC, and many of the inmates who worked in that program were actually hired upon release by the Imperial Palace, which had an existing antique car collection. Mr. Hettrick told the story of an inmate from the program who had worked on his car, and upon release, requested a letter of reference. Mr. Hettrick told the inmate that he would write a reference if the inmate could assure him he would not return to prison. The inmate promised that he would straighten out his life, so Mr. Hettrick wrote the letter. The inmate secured a job out-of-state, and was currently fully employed and doing well in the community. According to Mr. Hettrick, Computer Corps USA in Carson City operated a program where computers were donated and refurbished, then given to persons who could not afford to purchase one. Computer Corps was presently working with prison industries to initiate a program that would utilize inmates to repair computers, which would place inmates in an industry that was “hot” at the present time. Mr. Hettrick noted there were other programs available and prison industries was in the process of initiating new programs which would provide training for inmates. He noted that inmates did move from prison industries into good jobs in the community, and Mr. Hettrick felt that A.B. 4 was an excellent bill that would allow expansion of existing jobs and facilities within the program.
Vice Chairwoman Giunchigliani asked what had been the genesis of the legislation that created the funding program, and also asked why the legislature had not anticipated the need to allow the money to be used for expansion of existing facilities and/or programs. Mr. Marvel explained that concerns had initially been voiced regarding whether the program would stand the court test and, therefore, the original legislation contained extremely restrictive language. That language was tested by the Attorney General’s (AG’s) Office, who ruled on the legality of withholding money earned by inmates for capital improvements. The legislature did not want to be too expansive at the onset, however, since the evolution of the program, the need to expand present programs was discovered. Mr. Marvel noted there were many inmates who were qualified to enter the program, however, there simply was not sufficient space available.
Vice Chairwoman Giunchigliani noted that the bill would not increase the amount being withheld from inmate wages, but would expand the flexibility surrounding the use of those funds. Mrs. Chowning stated that she had visited various prison industries programs around the state, and felt it was an absolutely marvelous and very worthwhile program. Mrs. Chowning did, however, voice disappointment in the prison industries program for women, and noted that the program mainly consisted of re-bagging purchases for a store, which was not conducive to learning new skills. Mrs. Chowning encouraged prison industries to review other programs for female inmates.
As there was no further testimony forthcoming on A.B. 4, Vice Chairwoman Giunchigliani closed the hearing. The next item for committee review was A.B. 135.
Assembly Bill 135: Makes various changes to provisions governing investigation and prosecution of insurance fraud. (BDR 57-332)
Joseph E. Dini, Jr., Assemblyman, Assembly District 38, stated he had sponsored the bill on behalf of the Attorney General, and noted that insurance fraud was a serious problem, especially in the urban areas of Nevada. Clark County had a tremendous problem in that area, and millions of dollars were being lost every year. Mr. Dini felt the only way to control insurance costs was to create an effective fraud unit, as had been done in the AG’s Office. The bill would simply redefine what constituted insurance fraud, and would bring the Attorney General and the Commissioner of Insurance together on the issue. Mr. Dini indicated that when the final version of the bill was crafted, the Nevada Trial Lawyer’s Association assisted with some of the more difficult language contained therein; Mr. Dini felt A.B. 135 was a good product that should move forward.
Frankie Sue Del Papa, Attorney General for the State of Nevada, voiced appreciation for the support of Mr. Dini and Mr. Perkins in sponsoring A.B. 135, and its companion bill, A.B. 134, which was the mechanism to provide funding for the Insurance Fraud Control Unit. According to Ms. Del Papa, A.B. 134 would alter the $500 fee currently charged to each insurance company via creation of a sliding scale on a graduated basis, i.e., $500 for smaller companies, and up to $2,000 for larger companies. A.B. 135 would enhance the ability of the AG’s Office to investigate and prosecute insurance fraud in Nevada, which was a crime that made victims of every law-abiding family. Ms. Del Papa advised the committee that Kevin Higgins, Chief Deputy Attorney General in charge of the Fraud Control Unit for Industrial Insurance, would walk the committee through the bill upon completion of testimony presented by the Commissioner of Insurance.
Alice Molasky-Arman, Commissioner, Division of Insurance, thanked the sponsors of the bill, and explained that the control of insurance fraud had been a joint project of the AG’s Office and the Division of Insurance for the past several years. The division was wholeheartedly in favor of A.B. 135, which would make a strong policy statement in Nevada and discourage those who would commit fraud.
Vice Chairwoman Giunchigliani referenced Section 14 of the bill, and requested clarification of the terminology contained therein which stipulated “knowingly” and “willfully.” Electing to respond was Mr. Higgins, who explained such language was the median standard, and did not require specific intent on the part of the perpetrator. However, a person would be required to know he was committing unlawful acts, but did not necessarily need to know such acts would fall within the insurance fraud category. Mr. Higgins indicated that if a person submitted a claim to his insurance company for stolen goods that were actually still in his possession, such action would be construed as “knowingly.” Vice Chairwoman Giunchigliani stated it was her understanding that insurers could also be charged with insurance fraud, and A.B. 135 was not limited to individuals. Mr. Higgins concurred, and explained that since insurance companies were regulated via the Division of Insurance, that agency retained the authority to refer fraud cases to the AG’s Office, which then had the authority to prosecute. Vice Chairwoman Giunchigliani inquired whether the bill contained stipulations regarding fraud by insurers. Mr. Higgins noted that some sections of the bill would touch on that authority; however, the major provisions were specific to insurance fraud by the purchaser of insurance.
To further clarify Section 14, Mr. Higgins explained it was a change that came about when the bill was drafted to replace Section 23 of the original legislation, and did not constitute a substantive change. In response to Vice Chairwoman Giunchigliani’s question, Section 8 of the bill specified that persons reporting insurance fraud would report the case to both the Commissioner of Insurance and the AG’s Office. In Section 19, which stipulated reporting requirements, the term “governmental entity” was added, which meant governmental entities as well as individuals, would be required to report insurance fraud to both the AG’s Office and the Commissioner of Insurance. That was of importance, because there was a fine line between action that was deemed an “administrative civil violation,” and the point where it became a criminal violation, which would need to be reported to both agencies in order to determine the proper jurisdiction.
Vice Chairwoman Giunchigliani inquired whether the amendment of the bill corrected the language regarding the ability of insurers to pursue suit, as well as the language which dealt with confidentiality. Mr. Higgins noted that Section 6.5 addressed the AG’s confidentiality requirements, and the Commissioner of Insurance had a separate bill before the legislature to address specific confidentiality provisions for the Division of Insurance.
Mr. Goldwater commented that he did not feel dealing with the policy aspect of the bill was appropriate for consideration by the Ways and Means Committee, and asked for information regarding the fiscal impact of the bill. Ms. Del Papa explained there was no fiscal impact with reference to A.B. 135, and the companion bill, A.B. 134, which would also come before the committee, provided the financial mechanism for funding; there was no General Fund money allocated to the Insurance Fraud Control Unit within the AG’s Office. Under A.B. 134, explained Ms. Del Papa, insurance companies that conducted less than $100,000 worth of business in the state would be assessed the current $500 per year fee, companies conducting $100,000 to $1 million worth of business would be assessed approximately $750 per year, with a graduated scale up to companies that conducted over $50 million worth of business, and would be assessed a fee of $2,000 per year. Ms. Del Papa stated the AG’s Office would be grateful for such a funding mechanism, because General Fund dollars were often hard won.
Mr. Goldwater asked whether the funding mechanism would provide sufficient dollars to meet the program needs. Ms. Del Papa felt that the funding levels contained in A.B. 134 would be sufficient, and explained those were the fee levels that all parties had agreed upon, therefore, the AG’s Office would “live” with that amount, which would enhance its ability to complete the job. According to Ms. Del Papa, the AG’s Office was grateful for the cooperation it had received from all parties involved in constructing the legislation. Mr. Goldwater inquired whether the fees would affect the premium rates for insurance. Ms. Molasky-Arman responded, and stated she did not feel the fees would create a significant impact on premium rates.
Vice Chairwoman Giunchigliani explained that the bill had previously been heard in the Assembly Committee on Commerce and, while some members sat on both committees, the background information was being provided for those who did not and, therefore, were not familiar with the bill.
Robert “Bob” Crowell, representing the Nevada Trial Lawyer’s Association, indicated the association had, indeed, worked with the AG’s Office, the sponsors, and the Commissioner of Insurance in constructing the legislation. The association originally had some concerns regarding the reporting applications of A.B. 135, however, the language had been amended at the request of the association, and it would stand in support of the bill. Mr. Crowell stated the issue of whether an insurer could be investigated for insurance fraud would not be altered by the bill; it would not change existing language or law with respect to those causes of action, nor would it change the existing law with respect to the insurance fraud delineated by Section 14.
Ms. Tiffany asked what had prompted the drafting of the bill, and wondered whether a crisis situation existed in the area of insurance fraud. Mr. Dini noted that he had introduced the first insurance fraud legislation approximately ten years ago, and during the 1999 session a slightly different version of A.B. 135 was passed by the Senate, however, was not passed by the Assembly. Mr. Dini felt it was an important issue, particularly because of the problems experienced in the southern Nevada area, where insurance fraud was running rampant. He felt it was extremely important to pass the appropriate legislation to strengthen the Insurance Fraud Control Unit. The companion bill, A.B. 134, would provide additional strength for the AG’s unit and the Commissioner of Insurance in the investigation of insurance fraud. Mr. Dini stated passage of the legislation would “declare war” on insurance fraud in the urban areas of Nevada.
Mrs. Chowning remarked that, as she understood the issue, the purpose of the Insurance Fraud Control Unit of the AG’s Office was to address all instances of insurance fraud committed by persons attempting to bilk the insurance industry by filing a fraudulent claim; however, it also appeared to address those insurance companies who were committing fraud, and she requested clarification regarding the insurers. Mr. Higgins explained that the current Insurance Fraud Control Unit within the AG’s Office did prosecute persons who were insured and committed insurance fraud via the claims or application processes. The Commissioner of Insurance had first jurisdiction over insurance companies, and if a company was committing fraud, the Commissioner could withdraw its certificate to operate, which would make the company ineligible to conduct business in Nevada. According to Mr. Higgins, if the offense rose to the criminal level, the case could either be referred to the AG’s Office or the local district attorney’s office for prosecution. That type of case had been referred to the AG’s Office in the past, and Mr. Higgins explained that both individuals and insurance companies within the workers’ compensation area had been prosecuted for committing fraud. Since insurance was a regulated industry, the AG’s Office saw far fewer cases of fraud in the area of insurance companies.
Mr. Higgins remarked that A.B. 135 would primarily strengthen the abilities of the existing Insurance Fraud Control Unit. The bill would allow the unit to subpoena business records, which it could not do at the present time, would allow the AG’s Office to retain the fines and fees collected to fund the unit, and would bring the unit up to a level playing field with other fraud units within the AG’s Office. Mr. Higgins noted that certainly both types of fraud cases would be reviewed and prosecuted, however, via different processes.
Mrs. Chowning noted that at prior budget hearings, Ms. Molasky-Arman had testified that she did not have sufficient staff to complete the job assigned to the fraud unit within the Insurance Division, and the bill would provide additional strength, because of the ability to subpoena business records, et cetera. Mrs. Chowning felt passage of the bill would strengthen both fraud units.
Vice Chairwoman Giunchigliani inquired whether there was other testimony forthcoming regarding A.B. 135, and hearing none, closed the hearing. The next order of business before the committee was A.B. 601.
Assembly Bill 601: Restricts ability of state agencies to enter into certain agreements to purchase real property. (BDR 31-1106)
Brenda J. Erdoes, Legislative Counsel, LCB, pointed out that A.B. 601 was drafted at the request of the Committee on Ways and Means, and as a member of the LCB’s non-partisan staff, Ms. Erdoes would neither urge passage, nor voice opposition of the legislation, but rather would present a brief explanation. The bill was requested in relation to the EICON v. State Board of Examiners case that was filed in the Nevada Supreme Court to test the Nevada Building Authority v. Hancock case, in order to ascertain whether the Supreme Court wanted to change the way it viewed lease/purchase agreements. Vice Chairwoman Giunchigliani asked Ms. Erdoes to speak to the Nevada Supreme Court ruling of April 12, 2001, regarding the Employees’ Insurance Company of Nevada (EICON) case.
Ms. Erdoes advised that the Supreme Court had not overruled the Hancock case, however, did advise that an arrangement which involved the lease/purchase of property and included an “out” clause, which meant that if the lease stipulated it was not binding past the biennium and the legislature failed to appropriate the money to pay the lease, the payments would not count against the debt limit. According to Ms. Erdoes, prior to the decision in the EICON case, state agencies were not allowed to enter into a lease/purchase agreement for the purchase of property beyond the biennium, because it would have counted against the debt limit under the Hancock case. Ms. Erdoes stated that A.B. 601 was one version of two bills that would deal with the issue of state agencies being allowed to enter into lease/purchase agreements, as long as the agreements contained the non-appropriation clause. Ms. Erdoes noted it was limited, however, to those lease/purchase agreements that related to real property, and would not affect agreements to purchase personal property, i.e., office copy machine lease/purchase agreements.
Ms. Erdoes reiterated that a second bill had been drafted, which conflicted with A.B. 601, and that was A.B. 567 currently under consideration by the Assembly Committee on Government Affairs. It was her understanding that after two hearings on the bill, no action had been taken to date. Ms. Erdoes explained that A.B. 567 would provide the procedure under which state agencies could enter into lease/purchase agreements, and the key difference was that A.B. 567 contained a provision that stipulated state agencies might enter into the lease/purchase agreements without approval of the legislature, up to payments which totaled no more than $100,000 per year.
Brian K. Krolicki, State Treasurer, commented that the petition granted by the Supreme Court regarding the EICON v. State Board of Examiners case was good news for the Treasurer’s Office. Mr. Krolicki indicated his office had been working on the issue for several years in an attempt to test the original Hancock decision, in an effort to determine how the state could better conduct its business. According to Mr. Krolicki, in anticipation of relief from the Supreme Court, A.B. 567 was drafted at the request of the Treasurer’s Office, and it was simply a matter of establishing the proper procedure within the process. Some details in A.B. 567 were important from the standpoint of the Treasurer’s Office. Mr. Krolicki indicated A.B. 601 would be a good starting point, however, one key aspect was that when the state entered into a lease/purchase agreement for real property, it would more than likely be required to issue certificates of participation, because the lease/purchase agreement would most likely not be held with a party who was prepared to hold the note. The state would be required to secure the release of the note and send it to market, which was the issue addressed in the EICON test case.
Continuing, Mr. Krolicki indicated that if the state were to enter into a lease/purchase agreement on state-owned lands, which did not contain the non-appropriation clause, a constitutional problem would arise because an other-than-state-owned building would be constructed on state land. The need existed in the area of accepting revenue from an entity for return to the state, which would be addressed via passage of A.B. 567. According to Mr. Krolicki, A.B. 567 contained the thresholds of involvement for different parties, and stipulated a $50,000 threshold would require the Budget Director, the State Treasurer, and the Governor to sign-off. At the $100,000 threshold, the legislature would be required to sign-off, and Mr. Krolicki reiterated that it was extremely important to establish a $50,000 or $100,000 threshold.
Vice Chairwoman Giunchigliani said it was her understanding that A.B. 601 included more controls, which probably caused some of the debate between the two pieces of legislation. Mr. Krolicki offered to amend the language in A.B. 567, if that would meet with legislative approval, and the threshold amounts could be altered at the discretion of the legislature. Don Hataway, Deputy Director, Budget Division, Department of Administration, suggested that language in Section 1(1), line 6, of A.B. 601 be amended to indicate that the legislature or the Interim Finance Committee could approve long-term agreements, in order to provide added flexibility.
With no further testimony to be presented, the hearing on A.B. 601 was closed, and Vice Chairwoman Giunchigliani opened the hearing on A.B. 605.
Assembly Bill 605: Makes various changes relating to state purchasing fund. (BDR 27-1315)
William C. (Bill) Moell, Chief, Division of Purchasing, stated that persons in government were constantly looking for ways to be more effective, and during his considerable time in government, and particularly since the early 1980s, there had been numerous times of “famine” and also of adequate funding for various state programs. Mr. Moell related that the Division of Purchasing had recognized the need to acquire goods and services for its customers more quickly, and at the best value. The division pioneered multiple award contracts, which gave customers more choice, and had multi-state contracts, which leveraged the division’s buying power beyond Nevada’s borders. Continuing, Mr. Moell noted that the division also had more open term contracts than ever before, which facilitated those purchase orders which had previously been opened for bid.
The Division of Purchasing now had the opportunity to take a quantum leap into the world of even better service, and was poised to move forward with the Nevada Mall project. Mr. Moell explained the project was a password-protected, Web-based shopping mall, which would allow the division’s customers, both state and local, to “shop” for the goods needed to meet operational goals. Agency-approved vendor contact would be direct rather than via the division, and staff would become contract managers rather than requisition processors.
Continuing, Mr. Moell commented that there would be substantial “soft” dollar savings in the time it took to process orders, and also in the speed of receiving goods. Approvals and oversight would be electronic. Mr. Moell declared that efficiency was partially offset by the cost to operate a software system where one custom password would access ten or more catalogs for the division’s open term contract vendors.
A.B. 605 anticipated utilization of no more than $155,000 per year of Purchasing Fund dollars to implement the Nevada Mall project, and other potential E-commerce opportunities to improve customer service. Mr. Moell explained that the Purchasing Fund had been established at $1,250,000 when all transactions were processed through the fund. That amount provided a cushion for receipts and disbursements incumbent with that business model. Mr. Moell further explained that the Integrated Financial System would not utilize the Purchasing Fund in a similar way, and would make available the unique opportunity to transition to an on-line procurement system for low dollar, high volume purchases.
Mr. Moell indicated the division’s proposal suggested a reduction of the Purchasing Fund by a maximum of $150,000 per year to a minimum level of $500,000. The division felt the soft landing into electronic commerce over a period of five to ten years would allow it to continue to absorb the state’s growth of business while minimizing the budgetary impact on customers. Mr. Moell urged committee support of A.B. 605.
There being no further testimony, the hearing on A.B. 605 was closed, and Vice Chairwoman Giunchigliani announced the next order of business would be A.B. 613.
Assembly Bill 613: Requires transfers of money from fund for school improvement to provide scholarships for students pursuing degrees in teaching. (BDR S-434)
Daniel G. Miles, Interim Vice Chancellor, Finance and Administration, University and Community College System of Nevada (UCCSN), indicated that A.B. 613 was requested by the UCCSN, and intended to secure scholarship dollars already allocated for teacher education via a program that had been in place since approximately 1991. Section 1 of the bill clarified the current biennium allocation, as legislation passed during the 1999 session appeared to only allocate money for the first year of the biennium. Mr. Miles explained that Section 2 of the bill added Great Basin College and Nevada State College, institutions that offered baccalaureate degrees in education. Mr. Miles reported that the UCCSN was requesting an increase in the allocation to accommodate those additional scholarships.
Vice Chairwoman Giunchigliani asked how many teachers had taken advantage of the program over the past ten years. Mr. Miles stated he was not able to provide information regarding the past ten-year period, however, available information indicated the program was currently operating at the maximum, and all funds were being utilized for scholarships. Vice Chairwoman Giunchigliani remarked that she had been advised that legislation had been proposed to utilize tobacco settlement monies for teacher education. Mr. Miles stated he was unaware of such legislation. Vice Chairwoman Giunchigliani inquired why funding was being transferred from the Distributive School Account (DSA), given the fact that the state was below average in the per-pupil funding. Mr. Miles explained the bill was simply to perpetuate the program, which had been in place for the past ten years. Vice Chairwoman Giunchigliani asked whether the UCCSN felt it had an obligation to encourage scholarships through its own funding and programs. Mr. Miles stated the UCCSN did transfer money to the Nevada Department of Education (NDE), which was used to match other student aid programs. It was his understanding that when the estate tax was first instituted and the original legislation was put into place, the concept was that the scholarships would benefit the K-12 classes specifically, so the funds were derived from that area and transferred to the higher education area.
Martha Tittle, Legislative Representative, Clark County School District, indicated the district was extremely supportive of scholarships for teachers pursuing degrees in education, because such programs complemented the district’s goals to attract qualified individuals to the teaching profession. Ms. Tittle felt scholarships were especially important during the current period of national teacher shortages, which had directly impacted the district. There was some concern regarding the increased allocation of $200,000 over the biennium, as those funds would be allocated from the DSA at a time when there were not sufficient funds to adequately fund K-12 education. Ms. Tittle stated the question was whether other sources of funding existed that could provide the additional scholarship monies for the program, because the district felt it was a very important program.
James Richardson, representing the Nevada Faculty Alliance, commented the program had been underway for approximately ten years, funded with the same mechanism as that outlined in A.B. 613, and the alliance would go on record in support of the bill. Mr. Richardson noted there were other scholarship funds available within the UCCSN, however, there was always a need for additional funding, and the program had been a valuable resource in addressing the need that existed in Nevada. Mr. Richardson urged the committee to support the bill.
Douglas C. Thunder, Deputy Superintendent, Administrative and Fiscal Services, NDE, clarified that the money was not allocated from the DSA, but rather from the Fund for School Improvement, formally known as the Class-Size Reduction Program. Some funding was realized from the estate tax, and the UCCSN was required to utilize its portion of the estate tax as an endowment for the K‑12 level, however, the funding received via the Fund for School Improvement was utilized as available, and did not require placement in an endowment account. Mr. Thunder stated the NDE would fully support the first section of the bill, because that amount had been approved for the current biennium.
Vice Chairwoman Giunchigliani asked what the average cost was for the 45 teachers who supposedly utilized the program, and did the allocation fully fund those scholarships. Mr. Thunder stated that it equated to approximately $1,452 per scholarship. Vice Chairwoman Giunchigliani noted that amount would not cover full expenses, and felt that perhaps the estate tax issue should be reviewed. Mr. Hataway advised the committee that the Fund for School Improvement contained adequate reserves to address the issue, and pointed out that Nevada State College would not be operational until the second year of the upcoming biennium, thus the figure of $230,680 for FY2002 could be reduced by $50,000, which would remain in the Fund for School Improvement.
Vice Chairwoman Giunchigliani inquired whether there was further testimony to come before the committee regarding A.B. 613, and hearing none, closed the hearing. The next order of business would be review of the following bills, with a view toward possible action and/or necessary review: A.B. 549, A.B. 609, A.B. 135, A.B. 236, and A.B. 285.
Assembly Bill 549: Increases amount of general obligation bonds that state board of finance may issue to provide grants to certain water systems. (BDR 30-1328)
MR. DINI MOVED DO PASS A.B. 549.
MR. HETTRICK SECONDED THE MOTION.
Vice Chairwoman Giunchigliani advised the committee that the bill addressed a necessary change in general obligation bonds, and called for a vote on the motion.
THE MOTION CARRIED. (Mr. Arberry, Mrs. Chowning, Mrs. de Braga, and Mr. Perkins were not present for the vote.)
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Assembly Bill 609: Extends authorized period of expenditure of certain money appropriated to department of motor vehicles and public safety. (BDR S‑1319)
Mark Stevens, Assembly Fiscal Analyst, LCB, explained the bill addressed a one‑shot appropriation originally passed during the 1999 session for modular furniture for the Department of Motor Vehicles and Public Safety (DMV&PS). The agency could not expend the total amount of the allocation prior to the end of the current fiscal year, and had requested an extension.
MR. MARVEL MOVED DO PASS A.B. 609.
MRS. CEGAVSKE SECONDED THE MOTION.
Mr. Beers inquired whether the allocation would become a part of The Executive Budget for FY2002-03. Mr. Stevens explained that it would be shown only as a one-shot appropriation, and would not be part of the FY2002 operating budget. Mr. Stevens assumed that the one-shot appropriation was hooked to one of the DMV&PS’s accounts in its FY2000-01 budget, and would also show as an expenditure within the agency’s FY2002 budget. Mr. Beers stated that, theoretically, the appropriation would increase the reserve in the DMV&PS at the end of the current biennium. Mr. Stevens explained that passage of the bill would allow the DMV&PS to balance-forward a portion of Highway Fund dollars into its FY2002 budget. Vice Chairwoman Giunchigliani noted that the allocation would not be reflected in the base budget for the DMV&PS, and called for a vote on the motion.
THE MOTION CARRIED. (Mr. Arberry, Mrs. Chowning, Mrs. de Braga, Mr. Perkins, and Ms. Tiffany were not present for the vote.)
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Assembly Bill 135: Makes various changes to provisions governing investigation and prosecution of insurance fraud. (BDR 57-332)
Vice Chairwoman Giunchigliani reminded the committee that it had heard testimony earlier in the hearing regarding the bill.
MR. DINI MOVED DO PASS AS AMENDED.
MR. HETTRICK SECONDED THE MOTION.
THE MOTION CARRIED. (Mr. Arberry, Mrs. Chowning, Mrs. de Braga, Mr. Perkins, and Ms. Tiffany were not present for the vote.)
Assembly Bill 236: Makes appropriation to Department of Motor Vehicles and Public Safety for funding of shortfalls resulting from 1998 reclassification of personnel. (BDR S-1306)
Mr. Stevens noted that the committee had voted do pass A.B. 236 at a previous hearing, and Mr. Dini pointed out that an amendment to change the amount from $30,884 to $31,015.09 would be required. Mr. Stevens advised the committee he would request that Chairman Arberry place the bill on the Chief Clerk’s desk for amendment.
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Assembly Bill 285: Provides for appeal of decision of appointing authority regarding use of catastrophic leave by state employee. (BDR 23-438)
Vice Chairwoman Giunchigliani asked for the committee’s thoughts regarding A.B. 285, which was the catastrophic leave issue presented to the committee by Assemblywoman Bonnie Parnell, Assembly District 40, and Robert Gagnier, Executive Director, State of Nevada Employees’ Association. Mr. Hettrick recalled that the statistics presented indicated there were only a small number of appeals regarding the catastrophic leave issue, and he did not feel the committee should deal with the issue. Mr. Dini felt it was a good bill, even if it did not have a large impact; it created another step which he felt would be helpful in settling disputes. Vice Chairwoman Giunchigliani indicated the fiscal note was $20,000. Because there appeared to be a difference of opinion as to whether the proposed legislation was necessary as it would not have significant impact, versus creation of another step in the catastrophic leave issue, Vice Chairwoman Giunchigliani announced that action on the bill would be held in abeyance.
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With no further business to come before the committee, the hearing was adjourned at 11:51 a.m.
RESPECTFULLY SUBMITTED:
Carol Thomsen
Committee Secretary
APPROVED BY:
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Assemblywoman Giunchigliani, Vice Chairwoman
DATE: