MINUTES OF THE meeting
of the
LEGISLATIVE COMMISSION’s budget subcommittee
Seventy-First Session
January 30, 2001
The meeting of the Legislative Commission’s Budget Subcommitteewas called to order at 8:46 a.m., on Tuesday, January 30, 2001. Chairman William J. Raggio presided in Room 1214 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. Morse Arberry Jr., Chairman
Ms. Chris Giunchigliani, Vice Chairman
Mr. Bob Beers
Mrs. Barbara Cegavske
Mrs. Vonne Chowning
Mrs. Marcia de Braga
Mr. Joseph Dini, Jr.
Mr. Lynn Hettrick
Ms. Sheila Leslie
Mr. John Marvel
Mr. David Parks
Mr. Richard Perkins
Ms. Sandra Tiffany
SENATE MEMBERS PRESENT:
Senator William J. Raggio, Chairman
Senator Raymond Rawson
Senator Lawrence E. Jacobsen
Senator Joseph Neal
Senator Bob Coffin
Senator Bill O’Donnell
Senator Bernice Mathews
COMMITTEE MEMBERS ABSENT:
Mr. David Goldwater, Excused
STAFF MEMBERS PRESENT:
Mark Stevens, Fiscal Analyst
Steve Abba, Principal Deputy Fiscal Analyst
Gary Ghiggeri, Fiscal Analyst
Robert A. Guernsey, Principal Deputy Fiscal Analyst
Russell Guindon, Deputy Fiscal Analyst
Georgia Rohrs, Program Analyst
Rick Combs, Program Analyst
Lila Clark, Committee Secretary
Chairman Raggio asked Charles Duarte to present the budget overview for the Division of Health Care Financing and Policy (HCFP).
DIVISION OF HEALTH CARE FINANCING AND POLICY
BUDGET PAGE HR, HCFP – 1-34 – VOLUME II
Mr. Duarte, Administrator, Division of Health Care Financing and Policy, Department of Human Resources, introduced staff members, Miss Mary Wherry, Deputy Administrator, Steve Kepp, Administrative Services Officer, and Rebecca Ward, Deputy Administrator.
Mr. Duarte said he was representing Nevada’s Medicaid and Nevada’s Check Up Programs. Mr. Duarte referred the Committee to the information packet the committee had been given entitled “Division of Health Care Financing and Policy – Department of Human Resources – Revenue by Division – 2002-2003 Biennium” (Exhibit C). The Division’s request for $1,824,459,682 represented the largest portion of the Department of Human Resources’ budget request for the 2001-2003 biennium. The 2001-2003 biennium budget request for the Department of Human Resources totaled $3,183,274,230.
Mr. Duarte stated that the mission of the Division of Health Care Financing and Policy was to purchase quality health care services and insure access to those services for their recipients in the most efficient manner possible trying to restrain the growth of health care costs and to review other programs in the state to determine if they had potential for federal revenue maximization.
Overall, the division was responsible for:
Since its formation in 1997, DHCFP has pursued its mission through two major programs: Medicaid and the state children’s health insurance program, operated under the name Nevada Check Up. The Nevada Medicaid Program covered approximately 110,000 eligible recipients who were provided services through a combination of fee-for-service provider networks and contracted managed care networks. The Medicaid eligibility categories served were:
Nevada received the base Federal Medical Assistance Percentage (FMAP) for Medicaid of 50 percent. Nevada also received higher rates of federal reimbursement for specific types of services. For example, utilization review received 75 percent; medical administrative personnel received 75 percent; family planning services received 90 percent; the design, development and implementation of a Medicaid Management Information System (MMIS) received 90 percent and the operation of a federally certified MMIS received 75 percent. Medicaid funding was also provided to several other entities including the Health Division, the Aging Services Division, the Division of Child and Family Services, the Welfare Division and the counties of Nevada. Additional opportunities for federal revenue maximization existed and would be pursued by the Division.
The other major program administered by the division was the Nevada Check Up Program operated under state authority with federal government participation through Title XXI of the Social Security Act. Health insurance coverage was provided to low-income children, not eligible for Medicaid, at or below 200 percent of the federal poverty level. For a family of four that was an annual income of approximately $34,100. Under Title XXI, all approved funding was federally “matchable” at a 65 percent reimbursement rate with an administrative cap of 10 percent of total health care expenditures. Enrollment in the program was currently at 15,400, however, the division targeted an average enrollment of 24,625 in FY2003 through continued outreach activities.
Mr. Duarte went on to explain the division’s accomplishments for FY2000-01. In the administrative area, the division executed a contract to initiate the functional requirements phase of the Medicaid Management Information System (MMIS) and initiated a functional reorganization of the division to support transition to a value purchasing/benefits administration model. This helped the division to purchase services more cost effectively.
In the Nevada Check Up Program, the division had increased enrollment. As of July 1, 1999, there were 6,341 children receiving health care services under Nevada Check Up. As of June 30, 2000, there were 11,112 children receiving service and as of January 2001, 15,410 children were receiving services.
The Medicaid Program received a grant from the federal government to develop a Medicaid infrastructure plan that would allow people with disabilities to seek employment and maintain Medicaid coverage; eliminated duplicate functions between DHCFP and other divisions based on the Fundamental Review; created new policies for the personal care aide program; and developed a contract amendment to outsource the processing of payment authorization requests for outpatient services, durable medical equipment, pharmacy and home health services.
Mr. Duarte explained the division’s initiatives for FY2002-03. He believed the division must change from a passive payer of health claims to an active practitioner of value purchasing in every aspect of health care services delivery. The division should move from a social service model approach to that of a prudent buyer of services, such as any large corporation would do. Purchasing health care in the current market meant utilizing a variety of managed care organizations. This would lead to more predictable rates and reduced rates of expenditure growth. The use of managed care contracts would also develop risk partners that could help stabilize expenditures. However, value purchasing required rigorous oversight of contractors to assure fiscal viability and the quality of health services provided to recipients. The key to achieving this level of oversight was attracting and retaining staff with good credentials and having technology appropriate for the task. The division would assess other states for examples of best purchasing practices and consider specialized managed care contracting for smaller special needs populations. The division intended to exert strong leadership to move the health care system forward and obtain quality health care for the tax dollars spent.
The division’s administrative initiatives for FY2002-03, in order to become a value purchasing agency, included proceeding with MMIS development and implementation; proceeding with organizational and operational conversion to a value purchasing/benefits administration model and developing improved rate-setting methodologies specific to hospitals, skilled nursing facilities, intermediate care facilities (medical and mentally retarded), and durable medical equipment, in order to properly motivate program participation.
Senator Raggio asked whether the MMIS program was going to be accomplished within the original cost estimate of $25.6 million. Mr. Duarte stated that he believed the program could still be completed for the estimated $25.6 million. Senator Raggio asked if it would be reimbursed at 75 percent. Mr. Duarte said the design, development and implementation represented by the $25.6 million would be federally reimbursed at 90 percent.
Mr. Duarte stated that the program initiatives for Nevada Check Up included coordinating between Medicaid and Nevada Check Up programs so that families had seamless coverage for their health needs; implemented a pilot project with Clark County Social Services and University Medical Center to enable those entities to complete applications for Nevada Check Up in Clark County; and continued to reduce the number of uninsured children by continuing to expand marketing and outreach contracts with community-based organizations and Native American tribes.
Mrs. Chowning asked what the income level would be for expanding coverage to the families. Mr. Duarte said the entire family income would be considered and the current income standards would apply.
Mr. Duarte reported that Medicaid initiatives included: reorganizing the division and transitioning the staff to a value purchasing/benefits administration model; proceeding with the implementation of enhancement modules passed by the legislature; establishing health care purchasing standards; implementing mandatory Medicaid managed care in northern Nevada; establishing an appropriate managed care model to improve access and health care outcomes in rural Nevada; and implementing competitive bidding and other procurement practices to leverage the state’s buying position with managed care plans and providers.
Mr. Duarte went on to discuss the division’s budget requests for the 2001-03 biennium. DHCFP was requesting a total FY2001-03 biennium budget of $1,626,651,801. The budget reflected the requirements of caseload-related drivers, serious deficiencies in the division’s infrastructure, and the need to meet the service needs of the Medicaid recipient population. Mr. Duarte drew the committee’s attention to a chart on page 6 of Exhibit C that showed the distribution of decision units among the division’s budget accounts.
With respect to the division’s budget drivers, Mr. Duarte stated that the dominant share of the DHCFP budget was in Medicaid, Budget Account 3243. Medicaid represented 70 percent of the total budget. The dominance of the Medicaid budget was due to two primary budget drivers: increased medical caseloads and an increase in Medicaid provider reimbursement rates. Medicaid caseloads were projected to increase by 13.8 percent from FY2001 to FY2003. The historic and projected caseload trend was displayed in Table 1 on page 19 of Exhibit C. Table 2 on page 20 of Exhibit C illustrated the caseload growth that was occurring in higher cost aid categories, as well as TANF medical only. Table 3 on page 21 of Exhibit C contained “pie” charts giving a graphical representation of the division’s overall budget. Table 4, page 22 of Exhibit C, showed the division’s expenditures by budget account and Table 5, page 23 of Exhibit C, showed the distribution of staff to administration, Nevada Check Up Program or the Medicaid Program. Funding for rate increases was requested in order to maintain appropriate provider participation in the program and so provide continuing access to health services for recipients. A total of $76,576,179 was requested in Medicaid decision unit E-350 for discretionary rate increases.
Mr. Duarte stated another major budget driver for the program was increased enrollment in the Nevada Check Up Program. Enrollment in FY2001 was 18,845 and was projected to increase to an average enrollment of 24,625 in FY2003. A total of $42,099,488 was requested in decision unit E-425 to accommodate the enrollment increase.
Ms. Leslie asked for a clarification on the anticipated enrollment as of February 1, 2001. Mr. Duarte said he expected 16,000 to be enrolled by February 1, 2001 and 18,845 as an average enrollment by June 2001. Ms. Leslie stated that she believed the Interim Health Committee and the Access Committee both recommended that the waiting period be reduced from six months to three months so more children could be enrolled. She questioned whether the reduction in the waiting period was anticipated in this budget. Mr. Duarte replied that the reduction in the waiting period was not included in the budget request.
Mr. Duarte stated that another major area of the division’s budget was a request to address some of the division’s deficient infrastructure. A key to this was to replace outmoded technology. Nevada was the only state in the nation without a Medicaid Management Information System (MMIS). Deploying this technology required additional systems and program staffing, as well as financial commitment. The biennial budget requested four positions within Medicaid to manage and maintain MMIS. With the exception of the implementation costs for the point of sale pharmacy application, funds for the development and implementation of MMIS systems applications were requested as one-time appropriations external to the DHCFP budget. Federal financial participation for this project was 90 percent.
Mr. Duarte continued, stating the division did need to increase administrative and operational staffing. The biennial budget addressed the need for key administrative staff by the addition of nine positions. The expense of six of the administrative positions was offset by savings and staffing reductions within other parts of the Medicaid Program. The division requested seven operational positions to support additional physically disabled waiver cases, seven eligibility certification specialists with their associated costs for Welfare Field Services and funding to be transferred to provide an additional position for the Aging Services Division to be dedicated to the Home and Community Based Waiver Program.
The third major component of the division’s budget included a number of initiatives or program enhancements to improve the scope and coverage of services available to Medicaid and Nevada Check Up populations. The program initiatives included:
Medicaid
Nevada Check Up Program
Mr. Duarte referred the committee to pages 8 through 14 of Exhibit C that detailed a complete listing of program initiatives, enhancement units, and the budget request amounts for DHCFP. He summarized the initiatives and drew the committee’s attention to the major initiatives. In the administrative area, Budget Account 3158, decision unit E-275 funded three positions to support infrastructure needs and E-278 added six positions to support provider reimbursement activities. Savings for these positions was achieved by eliminating positions in other decision units. In the Nevada Check Up Program, Budget Account 3178, decision unit E-425 provided for an average monthly enrollment of 21,062 in FY2002 and 24,625 children in FY2003, and added a full-time management analyst to provide consistency to Nevada Check Up Program policies and operations. Continuing with the Nevada Check Up Program, decision unit E-432 was an estimate of caseload migration from the Nevada Check Up Program to Medicaid as a result of removing the asset test. Mr. Duarte believed there would be approximately 2,200 children migrating from Nevada Check Up over to Medicaid as a result of elimination of the asset test. There were a number of children in Nevada Check Up now who, Mr. Duarte believed, were there for the sole reason that they did not pass Medicaid eligibility because of assets. Eliminating the asset test would mean these children would migrate over on their anniversary date and be picked up by the Medicaid Program at an enhanced match rate of 65 percent federal funding.
Ms. Giunchigliani asked Mr. Duarte how many children would be transferred over from Nevada Check Up to Medicaid. Mr. Duarte stated that the number was approximately 2,200 children.
Mr. Duarte moved on to discuss the proposed budget for the Medicaid Program (Budget Account 3243), starting with decision unit E-276 that funded a new position for the Aging Services Division to help support the additional caseload in the Home and Community Based Waiver Program. Decision unit E-278 described the division’s efforts to contract out certain activities the staff was currently performing including payment authorizations, pre-admission screening and annual resident reviews and personal care aide functional assessments and level of care determinations. Eight positions could be eliminated as a result of the proposed contract and the savings achieved would be used to fund administrative positions recommended in Budget Account 3158. Decision unit E-279 would eliminate five positions and E-300 would fund four new positions and the ongoing costs to manage and maintain an MMIS system. Decision unit E-350 would fund discretionary rate increases for Medicaid providers based on the division’s current determination of rate adjustment needs pending the outcome of a comprehensive rate study. Decision unit E-351 would fund implementation of a point of sale pharmacy system that Mr. Duarte hoped would be operational in October 2001. Decision unit E-429 would fund an additional 40 slots in FY2002 and 120 additional slots in FY2003 for the CHIP waiver. Decision unit E-430 would fund an additional 100 waiver slots for the entire biennium for the Group Care Waiver Program for the elderly. Decision unit E-431 would fund additional slots for the Mental Retardation and Related Conditions waiver. Decision unit E-432 addressed the impact of removing the asset test for children and pregnant women. Decision unit E-433 related back to E-432 and would fund eligibility certification specialists in the Welfare Division.
Mr. Raggio asked Mr. Duarte to explain the large difference in the amount of dollars requested in the first year of the biennium compared to the amount requested in the second year in Decision unit E-432. Mr. Duarte explained that the division hoped to receive Health Care Financing Administration (HCFA) approval to eliminate the asset test in October 2001 and that would shift forward the expenditures.
Mr. Duarte continued, decision unit E-433 would fund seven eligibility certification specialists to assist with the implementation of expedited eligibility for pregnant women. Five of the positions would be located in Clark County, one in Washoe County, and one for the rural areas. Decision unit E-434 would fund the addition of 180 slots over the biennium to the physically disabled waiver and also included seven positions and their associated costs to provide case management services to those recipients.
Ms. Leslie requested a clarification of Mr. Duarte on the number of people currently on the waiver. She believed it was being expanded from 205 to 385. Mr. Duarte explained that prior to August 25, 2000, approximately 145 slots were funded. As people left the state, the waiver expired, or for any other reason left the waiver, that slot must remain empty by federal rule until the start of the new calendar year. Of the 145 slots, approximately 15 people left the waiver, leaving approximately 130 slots. Ms. Leslie asked Mr. Duarte to explain the rationale for waiting until the start of the new calendar year to fill the slots. Mr. Duarte said he did not know the federal rationale. Ms. Leslie stated that she believed this was an unusual rule requiring an automatic waiting period and Mary Wherry, Deputy Administrator of the Medicaid Program, explained that her understanding of the rule was that it was what was referred to as an unduplicated count and it was applied to all waivers across the United States. She further explained that she believed it might also be a fiscal control measure for the federal government because they had to anticipate their budgetary expenses. Ms. Leslie commented that she believed unduplicated count could be determined without having to hold open the slot and not filling it. Ms. Wherry explained that the division was looking at an opportunity to figure out the average amount of unduplicated slots. For example, if Nevada had 20 unduplicated slots over a year, but the average number of months was five, then how could this be spread to, perhaps, fill several additional slots so that state funding would be available and Nevada would remain within budget. Ms. Leslie asked Mr. Duarte to clarify that the 205 slots available was an unduplicated number. Mr. Duarte responded that it was.
Ms. Leslie asked for the number on the waiting list. Mr. Duarte answered that there were approximately 200 people on the waiting list. He said that before August 25, 2000, there were approximately 130 available slots with 129 people on the waiver program. On August 25, the division received federal authority for 30 additional slots for FY2000. The division had been working to do functional assessments on everyone on the waiting list, approximately 300 people in August 2000, and they were currently going through Medicaid eligibility review and disability review. The number on the waiting list had been reduced to approximately 200. Ms. Leslie asked how long it took for someone on the waiting list to get services. Mr. Duarte replied that it took too long and the division was trying to reduce the time. He said some people had been waiting since August 25, 2000, to get on the waiver program and some recipients had waited as long as 18 months. Ms. Leslie asked Mr. Duarte to explain how long people would have to wait on the waiting list with the proposed budget. Mr. Duarte said that he hoped to reduce the time down to something more reasonable such as a couple of months to determine eligibility and disability certification. Mr. Duarte went on to say that they would receive additional slots in January 2002 and also be able to fill some of the slots that were “unfillable” from the previous fiscal year and that would take Nevada up to 205 recipients by the end of calendar year 2001.
Continuing with decision unit E-435, Mr. Duarte explained this unit funded the Medicaid coverage for eligible women in the Breast and Cervical Cancer Prevention and Treatment Act of 2000. Decision unit E-450 funded additional adjustments for salaries and operating costs for the CHIP waiver.
Mr. Duarte indicated that the initiatives he had reviewed represented a total funding request of $67,006,526 in FY2001-02 and $76,928,607 in FY2002‑03.
Mr. Duarte went on to discuss the division’s six performance indicators, stating that the focus had been placed on quality initiatives for the division as well as setting major goals that included covering children and delivering cost effective care. The first division goal was to purchase high quality health care for Medicaid-eligible Nevadans. Performance indicators for this goal included reducing the number of low birth weight babies, increasing the numbers of immunized children, increasing the numbers of children receiving early periodic screening, diagnosis and treatment services. The second goal was to purchase high quality health care for Nevada Check Up enrollees with the focus on expanding coverage for children. The third goal was to purchase accessible health care for Medicaid-eligible Nevadans focusing on increasing the number of women receiving prenatal care in the first trimester and maximizing the average number of participants in the waiver programs. The fourth goal was to increase the number of programs that received federal funding support. The fifth goal was to increase the number of children eligible for Medicaid. The sixth goal was to reduce the number of uninsured Nevada children through the Nevada Check Up program by expanding work with the community to achieve enrollment objectives and to streamline the eligibility and application process.
Mr. Hettrick stated that he appreciated the goals and indicators but believed the division needed to do a better job on the indicators. He expressed concern regarding the figures supplied concerning low birth weight babies. For example, if there were 1,000 babies and the program helped 6 percent, that equaled 60 children. To lower the percent to 5.9 percent lowered the calculation by one child. He said that the committee needed statistics that showed how much it cost per unit to provide the services because percentages were not meaningful; they were a measure of a number against a number. If it cost $200,000 to raise the birth weight of one baby it was not cost effective and the legislature should choose to do something else that would affect more people and do a better job. Mr. Hettrick said that if the legislature was to be able to judge budgets, make decisions on cost effectiveness of programs and assure the efforts were meaningful and had an impact on people’s lives that needed help, they needed something other than percentage numbers. He said he would like to see cost for service or some other measures in order to be able to make value judgments. He suggested that the division bring other indicators to future committee hearings for the committee’s review. Mr. Hettrick further commented on the closure of skilled nursing homes and the comparison of the reimbursement rate for skilled nursing homes of $106 per day in Nevada and $212 per day in California. The maximum Nevada might achieve was, perhaps, $130 when California was at $212 and still closed skilled nursing homes.
Mr. Duarte indicated that he had prepared the indicators and had tried to reflect some of the quality indicators needed to demonstrate that the division was purchasing value for the state. For example, the cost of a low birth weight baby was about $35,000 to $42,000 per year. If this could be reduced it would significantly reduce the program’s expenditures. The goals of 5.9 percent and 6 percent compared to the statewide average of about 7.6 percent for low birth weight. Mr. Duarte believed they were achieving some of the goals they wanted to achieve through their programs. He indicated he understood the committee’s concerns and would try to develop indicators looking at costs in order to put it into perspective for the committee as well as for the community. Mr. Duarte discussed the closures of some of the skilled nursing care facilities and said he believed it was difficult to make comparisons between Nevada and the state of California because it may be like comparing “apples to oranges” and not talking about the same type of recipient with the same level of need in the same type of bed. He was aware of a recent closure in Douglas County and had been told by the CEO that Medicaid was one of the problems. Mr. Duarte said that the CEO indicated that Medicaid had not allowed high enough skill levels and did not pay enough. In Mr. Duarte’s analysis of the situation, however, even if the patients were bumped up two skill levels, assuming there was medical justification to do so, it would only result in approximately $9,000 per month and they were losing $100,000 per month. A majority of the loss, according to the CEO, had to do with Medicare.
Miss Giunchigliani asked Mr. Duarte if someone who would leave a nursing home and become eligible for a waiver program would go to the top of the waiting list. Ms. Mary Wherry answered by saying that each waiver may have its own policies as to how someone is positioned on the waiting list. At this point, the physically disabled waiver had been first come, first served. The division was in the process of reviewing with the attorney general’s staff a way to prioritize the waiting list. This would require HCFA approval. Ms. Giunchigliani stated that she was curious to see the results of the rate study. If Nevada’s reimbursement rates were not competitive, the beds would go to private patients.
Regarding the division’s request for a $5 million one-time appropriation for uninsured families, Ms. Giunchigliani asked if the division had a plan for expending the funds. Mr. Duarte explained that the director’s office was coordinating the planning of those funds. He said he had been requested to do some policy analysis on using the $5 million to expand coverage through the children’s health insurance program. He said the $5 million could translate into $14 million in total funding. Two major initiatives being looked into were expanding coverage to parents in low-income households and employer premium subsidization as an alternative to direct insurance coverage.
Ms. Leslie stated she knew the income level used to determine state or county responsibility for long term care had previously been raised one percent for the SSI state portion, and she wondered if there was any provision in the budget to raise it more because the burden was falling on the counties. Mr. Duarte replied, “No, there is not.” She continued by asking Mr. Duarte if there was still $300,000 set aside for the rural counties for their long term care costs. Mr. Duarte said he believed the $300,000 was a correct figure but it would probably be best to address the question to a representative of the Nevada Association of Counties.
Regarding planning, Ms. Leslie asked Mr. Duarte to explain the proposed contract for rate increases, what it was to be used for and how it related to the plan in place. Mr. Duarte explained that the division had executed a contract with the firm of Myers and Stauffer, LC, to work with the industry in developing reimbursement methodologies for specific provider types including acute hospitals, ambulatory service centers, nursing facility rates and durable medical equipment. Ms. Leslie asked Mr. Duarte the amount of the Myers and Stauffer, LC contract. Mr. Duarte said the contract was for approximately $267,000. Ms. Leslie asked Mr. Duarte to explain how this contract related to a request made by Director Charlotte Crawford at an earlier hearing for a contract as part of her $1.8 million strategic plan request. Mr. Duarte answered stating that Ms. Crawford’s plan covered a broader array of provider types that were reimbursed directly through Medicaid and were also funded through other divisions such as Aging Services, the Division of Child & Family Services (DCFS) and Mental Health Developmental Services (MHDS). It included many smaller specialty provider groups such as homemaker services, chore services and personal care aide services. There were approximately 70-80 different provider types that may be considered in this review. Ms. Leslie asked Mr. Duarte the amount budgeted for this review. He said he believed it was approximately $550,000 but he suggested this figure be confirmed with the director’s office. He assured Ms. Leslie that this contract was not a duplication of the Myers and Stauffer, LC contract.
Senator Rawson asked Mr. Duarte for a copy of the report produced by the work group that studied the disproportionate share. He said he believed there might be more federal matching funds available that should be aggressively pursued. Mr. Duarte stated that there was a published report dated June 30, 2000, which he would provide to the committee. Mr. Duarte went on to say that the division was looking at other funding possibilities not necessarily a part of disproportionate share but with respect to new regulations in Medicaid that allowed payment to be made up to what was called “the upper payment limit.” He said they would be working with some policy initiatives with the hospital association and others to look at the feasibility related to those issues. He believed it had potential to particularly address the needs in some of the rural counties.
Chairman Arberry asked Mr. Duarte to provide the committee with a list of providers and the recommended rate increases, the percentage of the rate increase and the estimated costs.
Mr. Jon Sasser with Washoe Legal Services appeared as the Co-Chair of the statewide Nevada Covering Kids Coalition. Covering Kids Coalition was the recipient of the $850,000 three-year grant from the Robert Wood Johnson Foundation that came to Nevada approximately 18 months ago. The Coalition’s goal was to ensure that every eligible Nevada child was signed up for the appropriate health insurance program. Mr. Sasser referred to Exhibit D and encouraged the committee to access the Coalition’s Web site. The $850,000 paid for staff for four different coalitions: the statewide coalition, a rural coalition, a southern Nevada coalition and a northern Nevada coalition. The Coalition worked as partners with the state in outreach and enrollment efforts and also advocated for policies that simplified the enrollment process. Mr. Sasser referred the committee to page 3 of Exhibit D to review the organizations that comprised the Nevada Covering Kids Coalition. The Coalition’s legislative agenda appeared on page 2 of Exhibit D. Mr. Sasser said he had attended a series of meetings with representatives of the Governor’s staff, with Mr. Duarte, and Dr. John Yacenda of the Department of Human Resources and staff to discuss the mutual problems that needed solutions. Mr. Sasser said that the Governor’s recommended budget addressed to some degree every one of the Coalition’s legislative concerns with one minor exception. He went on to say that three areas had been addressed: the simplification of enrollment in the Nevada Check Up Program with a “one-shot appropriation” to develop an interactive Web-based application; a new policy to determine eligibility within seven days for pregnant women for access to prenatal care in the first trimester; and for Medicaid children the elimination of the assets test.
Mr. Robert Hadfield, Nevada Association of Counties, addressed the committee regarding the Medicaid match program for long term care. Nevada’s counties were partners with the state of Nevada in taking care of Nevada’s aged population that could not take care of themselves. The proposed budget did not include an increase in the state’s share of the county match program for long-term care. He urged the committee to look at this issue to continue the commitment made to counties several sessions ago. Mr. Hadfield went on to say that he did support increases to nursing homes, however, the retroactive increase done several months ago wreaked havoc on county budgets throughout the state and his organization was still trying to figure out how to account for the costs between fiscal years. The $300,000 appropriation made available by the legislature to fund the Fund for Institutional Care of the Medically Indigent would not, in his opinion, be adequate. He believed more funding would be needed to take care of Nevada’s counties that could not make the match payment. The Medicaid match agreement was very tenuous; it was based on 17 counties being in a contractual arrangement with the state and if one county dropped out, then there was no state plan and there would be no match money for long term care.
Mr. Marvel asked Mr. Hadfield if there were any counties in danger of dropping out. Mr. Hadfield said that Pershing County was unable to make the match payment last time and he did not believe Mineral County would be able to make the match payment. Lyon County was unable to make the match payment last year. Several counties were unable to make the match payment last year, through June 30, 2000, and clearly, they would be unable to make it this year with the same caseloads because there would be even higher costs. Mr. Hadfield believed there would be four or five counties that would need help from the fund this year. Mr. Marvel wondered if there was enough money in the fund. Mr. Hadfield stated that he guessed there were not enough funds and that the fund would have to be increased sometime before June 30, 2001. He was not able to calculate the amount needed until he knew the amount of the retroactive costs.
Ms. Giunchigliani asked the division to explain the un-funded request item of approximately $68 million in one year and $78 million for the following year that was not funded by the Governor’s recommended budget. She wanted to know what programs were to be funded with this request. Mr. Steve Kepp, Administrative Services Officer, advised that the referenced amount represented the expenditures that were included in agency requests for decision unit M-150 which were work program year changes from the base year. This request did not address a particular program and changes in caseload growth were included in decision unit M-200. Ms. Giunchigliani asked Mr. Kepp to provide a breakout for the committee and he indicated he would provide greater detail.
Ms. Rebecca Ward, Deputy Administrator, addressed the committee and said that this was a “budget phenomenon.” When the budget was constructed, decision unit M-150 represented adjustments made to the base. Those adjustments needed to be rolled into the base so in The Executive Budget those amounts were in the base budget but the system did not roll those into the agency request so you actually had to look at the unfunded decision unit and add that to the agency request in the base to make a comparison between the two. Mr. Duarte indicated that The Executive Budget did reflect what was purchased for the Medicaid Program. Ms. Giunchigliani asked why, if this was the case, did the division not request a change that was recommended by the Health Care Committee to reduce the wait time for certain individuals to become eligible for the Check-Up Program from the six months to the three months and wondered if this was not a priority. Mr. Duarte said the division felt that eliminating the asset test was a significant improvement for the program and the additional move would not affect a large enough number of children. Ms. Giunchigliani asked Mr. Duarte to provide the committee with what the costs would have been necessary to reduce the wait time from six months to three months.
DEPARTMENT OF TAXATION
TAX 1 – 8 – VOLUME I
Chairman Morse Arberry advised committee members the next budget to be reviewed was the Department of Taxation, and recognized David P. Pursell, Executive Director, as the spokesperson for that budget. Mr. Pursell introduced Lynne Knack, Administrative Services Officer, and Woody Thorne, Deputy Director. Mr. Pursell referred the committee to Exhibit E as an outline of the comments he planned on presenting to the committee.
Mr. Pursell started his presentation by stating that the mission of the Department of Taxation was to provide equitable and effective administration of the tax programs for the state of Nevada. The department’s goals were to provide quality service to the taxpayers of Nevada, improve voluntary compliance by taxpayers, enforce tax compliance, develop a capable workforce and improve tax administration methods through the use of new technologies.
Mr. Pursell directed the committee to the “pie charts” in his presentation summarizing the FY2000 tax revenues collected by the department and showing where the taxes collected were distributed. He called the committee’s attention to the distribution to the state Highway Fund representing 6.4 percent of the revenue and indicated that this was part of the program that would be transferred to the Department of Motor Vehicles (DMV) as of January 2002 pursuant to action taken by the 1999 legislature. Mr. Pursell said the department was working with DMV to ensure that the transition of collecting and distributing the tax was transparent. Mr. Pursell went on to say the department was responsible for administering a number of various taxes contained in Title 22 of the Nevada Revised Statutes (NRS). Title 22 contained 28 chapters that ranged from the Local Government Budget Act, Senior Citizens Property Tax Assistance Act, Net Proceeds, Business Tax and Sales Tax. According to Mr. Pursell, a complete list could be found in the department’s Annual Report, a copy of which was mailed to every legislator. The Annual Report could also be reviewed on the department’s Web site.
Continuing with the presentation, Mr. Pursell said the department was staff to the Nevada Tax Commission, an eight-member commission appointed by the Governor, responsible for setting policy for the department. The Tax Commission reviewed all audit appeals of hearing officer decisions, certified tax rates and other duties that are delineated in the Annual Report. The department also staffed the State Board of Equalization, a five-member board appointed by the Governor, which reviewed property tax appeals after appeal to county boards of equalization. The State Board of Equalization also heard direct appeals on centrally assessed properties. Centrally assessed properties included airlines, railroads, electric companies and others. The department also staffed the Committee on Local Government Finance, comprised of 11 members appointed by the Nevada League of Cities, the Nevada Association of Counties, the Nevada School Trustees Association and the State Board of Accountancy. The purpose of this committee was to advise the department regarding regulations, procedures and forms for compliance with the Local Government Budget Act. Department staff reviewed budgets as submitted by local governments such as cities, counties, hospital districts, and was the staff that became involved when local governments found themselves in the position of severe financial hardship. Mr. Pursell said the committee was probably familiar with the White Pine County School District, the Nye County Hospital District and that currently, the department was managing the City of Gabbs. The department also staffed the Appraiser Certification Board, comprised of six members, three of which were qualified appraisers chosen by the County Assessor’s Association and three were appointed by the Nevada Tax Commission. This board advised the department on matters pertaining to the certification and continuing education of Nevada appraisers.
Next, Mr. Pursell referred the committee to the organizational chart included in Exhibit E. Since his appointment as Executive Director of the department in 1999, Mr. Pursell said he had made changes to the organization. The Executive Budget did not recommend any new programs for the department but through the base and maintenance decision units it accommodated an ongoing funding of the department’s existing purpose and programs. The department’s internal fundamental review resulted in an overall organizational restructure approved by the Governor and supported by the Nevada Tax Commission. All of the fundamental review changes were accomplished with current operating resources and staff, although several positions were recommended for reclassification to accomplish the organizational restructure. Some reclassifications were included in decision unit E-850, funded by the elimination of an Auditor II position. Mr. Pursell said that when he was appointed Executive Director of the department, the director was responsible for the supervision of the Chief of the Audit Division, the Chief of the Revenue Division, the Chief of the Division of Assessment Standards and the Internal Auditor. Mr. Pursell believed that the scope of responsibility was too much for one individual. This was further complicated by the fact that the deputy directors of the department were acting as hearing officers and because the department was a party to the hearings, there were occasions when he was unable to discuss issues regarding the department with the deputies because they were hearing cases and he was considered a third party. Mr. Pursell said he needed to utilize the two deputies more in the administration of the department rather than as hearing officers.
In addition, there were complaints from the business community that there was inconsistent information from the department depending upon who was contacted. If someone in the Revenue Division was contacted, one set of instructions would be received and then when the business was audited, the auditors gave out different information. In order to achieve consistency, the two divisions were combined by geographic district. There were now three district managers responsible for both the revenue and the audit staffs. A manager was located in Carson City, Reno and Las Vegas, all reporting to a deputy director. This change helped the department ensure that taxpayers were receiving consistent information whether it was received from revenue staff or auditing staff. In order to accommodate this change and still have the function of the hearing officers, the position that was originally the Chief Auditor was changed into the Hearing Officer. This resulted in one individual acting as a full-time hearing officer with one deputy director responsible for the Information Services, Budget and Financial Section, acting as a fallback position.
One of the most significant changes in the department moved the Accounting, Processing and Cancellations sections, formerly in the Revenue Division, under the Administrative Services Officer. The duties performed were determined to be more of a financial function and more appropriately belonged in the Administrative Services Section rather than in the Revenue Section. The change was made to ensure that all the fiscal and financial functions within the department were managed in one division by someone possessing a fiscal background. This move identified problems in the Automated Collection Enforcement System (ACES) mainframe program that had been corrected resulting in more efficiency in the ACES program. There were continuing changes occurring in this section such as including audit program functions needed for tracking the billing of audits to be moved from the Compliance Section to the Administrative Services Section.
Mr. Pursell went on to say that an Information Services Section had also been created that was supervised by Woody Thorne. Four reclassifications had been requested in this section to accommodate the transfer of Department of Information Technology (DoIT) programmers from DoIT to the Department of Taxation.
Mr. Pursell said there were still some changes he would like to see made in the organization and he was hopeful the legislature would approve the major reclassifications included in The Executive Budget. Mr. Pursell pointed out in Exhibit E a chart that depicted the department positions by district. In Carson City, the home of the department’s executive offices, there were 125 full-time employees and 1 half-time employee, 67 positions in Las Vegas, 26 positions in Reno and 6 full-time positions and 1 half-time position in Elko. The reason for the higher number of employees in the Revenue Section in Carson City was that all excise taxes were administered from Carson City; those activities were not administered at the district level now. This was currently under review and the department’s goal was to decentralize functions to the district level as much as possible.
The major reclassifications in the budget included a request that one auditor position be reclassified to a Revenue Officer. The Program Specialist position reclassified to the IS Manager would be the supervisor for the transfer of the programmers that came to the department from DoIT. The reclassification of the management analyst and program officer positions to information services specialists were requested to place the positions into the information services series of computer positions. The department had an Accountant Technician III position that had been reviewed by Nevada State Personnel and determined to be more appropriately classified as a Budget Analyst II position. The Administrative Services Officer III reclassification and Property Appraiser III reclassification requests were denied so there would be additional General Fund dollars that would not be needed for supporting the reclassifications in enhancement unit E-805.
Mr. Pursell went on to share with the committee some of the statistics that the department was now attempting to capture. Mr. Pursell indicated that when he appeared before the money committees in the 1999 Legislative Session, concerns were expressed that the department was keeping track of collections by individual taxpayer and that was not allowed by statute. With a $60,000 appropriation from the 1999 legislature, an audit program was developed that kept track of the billings that transpired in a fiscal year. For fiscal year 2000, a total of 1,756 billings, for a total billing amount of $33.2 million, was reported. Mr. Pursell said he wanted the committee to understand how the process worked once an audit was completed and the business was billed for that liability. The taxpayer had 45 days to request a re-determination of the original billing and during that time period, before they decided to petition, before it got to a hearing officer or ultimately to the Nevada Tax Commission or to court, there were a number of things that could happen to the initial billing. If there was no payment on the billing it was not posted to the system. Many times the department received additional information that caused an adjustment to the original billing, for instance, errors were corrected or there were credits that could be associated to a different time period than the audit. The department attempted not to bill and then deal with a credit independently; it tried to offset credits. There could be a hearing officer decision that made a difference in the original billing and there could be a Nevada Tax Commission decision that could affect the billing. The billing might occur in one fiscal year but because of the time it took to get to the final conclusion of the audit, there might be a time lag between the billing and when the department collected from the taxpayer. This was apparent comparing FY2000 collections on billings of approximately $20.6 million to FY2000 billings of $33.2 million.
Mr. Pursell said it was difficult to follow this through the entire process because there were three different systems the department kept track of and they were not integrated. The stand-alone system for the auditors that kept track of billings went into the ACES system once a payment had been received. The department had another system that attempted to track the revenue collection side of the process. Mr. Pursell said that Exhibit E also contained a table showing the projected revenue collections for FY2001, separated into 30-day, 60-day and 90-day accounts. The department’s revenue officers were working to collect these accounts both by phone and going into the field. The department projected the revenue officers would collect $23.8 million. They would set up approximately $5 million in payment plans and $1.3 million from bankruptcies for a total projected FY2001 collection of $30,075,014.
The total FY2000 revenues collected were approximately $2.9 billion. Considering this on a monthly average, it was approximately $245.9 million. The average monthly active accounts receivable, 30-, 60- and 90-day plus, had consistently for FY2000 run at approximately $15 million per year. The department’s average monthly collection was $2.5 million so 17 percent of the active accounts receivable was collected on a monthly basis and the $15 million was approximately 6 percent of the total amount of revenues collected or about 6 percent was delinquent at any given month.
Mr. Pursell went on to say that Exhibit E also included a breakdown of the inactive accounts and the liability contained in the inactive accounts. In calendar years 1999 and 2000 there were newspaper articles regarding the amount of uncollected dollars that existed with the majority of it being in the Department of Taxation. The information for those newspaper reports came from the inactive account report shown on page 10 of Exhibit E but it was not broken down into the four categories: payment plans, bankruptcies, Tax Commission write-offs and collectible inactives. Rather, only a total was shown because the computer was not programmed to separate the categories. This was also the information that was used in the 1997 audit of receivables statewide.
After the Y2K programming that took place in 1999, in calendar year 2000 the department was able to do some programming to break out what was in the inactive account accumulation. By statute, the Nevada Tax Commission was required to write off accounts once they became five years old. Mr. Pursell said he believed one of the inherent weaknesses in the ACES computer system was that when accounts went inactive they continued to accumulate interest and the department could not eliminate the inactive accounts from the database so this number would continue to grow each month, simply because the interest was calculated against the inactive accounts. The department did little, if any, revenue collection work against those because the department’s accounts did not go into this inactive status until the department had lost contact with the taxpayer. They might have moved, the business might have closed or the department did not know if the taxpayer was in the state. However, there were liens attached to these accounts and, occasionally, a lien would be pursued. In summer 2000, the department entered into an agreement with the Employment Security Department (ESD) that allowed certain individuals at the department to look at employment records and through that tracking every once in a while someone was found with a liability who was now working someplace else. When this occurred, the taxpayer was contacted and the department attempted to renegotiate a payment plan on those collectibles that were due the state of Nevada on prior businesses.
Next, Mr. Pursell pointed out to the committee in Exhibit E a list of FY2000-01 vacancies that existed in the department. Many of the vacancies were auditor positions, revenue officers and support staff for audit and revenue positions. The vacancy rate had averaged at least 10 percent over the two fiscal years with a total of 224 employees. Mr. Pursell explained that he promoted from within whenever possible which resulted in not only one vacancy but people moved from position to position in the department. This made it difficult to retain a trained workforce. He said the department did not seem to be able to keep auditor positions filled, however, even with the turnover, the department had been able to keep the active accounts receivable amount steady over the last fiscal year.
Mr. Pursell shared with the committee some of the accomplishments the department had made in the information technology area. He asked the committee to review the department’s new Web site that was activated on January 23, 2001. Mr. Pursell said the feedback he had received so far from businesses indicated the site contained more information and was easier to use than the department’s previous site. All of the department’s forms were consolidated in one part of the Web site and many of the department’s reports were included on the site with a goal of getting all the published reports onto the site. The most important change to the Web site was that the department acquired software and a hardware server that accommodated a technology licensed from RightNow Technologies. This program was a “frequently asked questions” database that prioritized the questions that were asked of the department and could be searched. It would not only help the business community in having one place to go to see the frequently asked questions, but it would help department staff to insure that consistent information was being given out to the public.
Mr. Pursell pointed out on page 13 of Exhibit E a list of ACES fixes and enhancements the department had been able to implement since the completion of the Y2K transition. Mr. Pursell said he believed the big accomplishment was the development of the ability to query the mainframe computer from personal computers. This ability helped the department in building statistics that it used and to focus employees on the appropriate areas. The department was still working to determine what were the best reports to be pulled from the mainframe to help in collection efforts.
Mr. Pursell said decision unit E-902 transferred four information systems specialists from DoIT to the department. Mr. Pursell believed this was a big step towards enabling the department to continue the effort to develop a system that met the needs of the business community in the state.
According to Mr. Pursell, several months ago the Governor issued an Executive Order that made Nevada a participating state in the Streamlined Sales Tax Project. This project would provide model legislation to be considered by participating states’ legislatures in the 2001 session. There was a bill draft regarding this and the department was setting its priorities so it could compare the model legislation with the tax structure in place.
Mr. Pursell requested that the committee review and consider a program the department was referring to as the Taxation Electronic Document Management System (EDMS) Initiative. He said that in the fall of 2000, the department was prepared to present this program to the Interim Finance Committee in terms of using $800,000 that was in the department’s budget and had been earmarked for Phase II, Systems Requirements of the Business Process Reengineering Study. Mr. Pursell said he wanted to share a proposal with the committee that would move the department closer to becoming more efficient, both on the collections side and eliciting information from the business community. Scanning and imaging, according to Mr. Pursell, was the direction the department should go. The department was presently labor intensive because of the ACES system and this would not change as it was inherent in the system. Even larger accounts that used a lock box and sent the deposits to the bank required the department’s tax examiners to key in the information from the return. If the information could be scanned and imaged, there was a possibility that not as many tax examiners would be needed and some of the tax examiner positions could possibly be turned into revenue officers. He also believed that scanning and imaging would bring the department closer to electronic transfer of funds and, ultimately, electronic transfer of the return itself. This would alleviate printing and postage costs and would get the dollars into the state treasury faster. Mr. Pursell indicated that he had information from California that indicated if credit cards were used it would have tremendously reduced their accounts receivable; up to 30 to 40 percent. On page 16 of Exhibit E was a preliminary breakdown of the cost of the project. Mr. Pursell said that he had been told by an employee of the State Library and Archives Division that there was a strong possibility that the department could receive federal funding because the federal government was interested in the archiving of information and that this could be a pilot project. Mr. Pursell said he would bring more information to the committee during the session as it became available.
Mr. Pursell went on to discuss the streamlined sales tax project. This was an effort nationwide to address sales on the Internet. The idea was to simplify both the definitions and tax statutes across the nation, making it simpler for businesses to understand their responsibilities. It was an effort for Congress to take another look at the Bella Hess and Quill decisions that basically said that if a business was not physically located in the state, the business could not be forced to collect use tax.
Chairman Arberry asked Mr. Pursell a question regarding the use of credit cards. He said that the Department of Motor Vehicles (DMV) was having a problem collecting the fee charged by the credit card company when a credit card was used. He asked Mr. Pursell how the department would collect a fee and who would pay the charge for utilizing the credit card. Mr. Pursell said the department was in the process of gathering information from California and he would share the information with the committee at a later date.
Mr. Hettrick commented that if 30-40 percent on uncollectibles could be saved with the use of credit cards, the fee for the use of the card would be cheap in comparison to trying to collect the uncollectibles. In this case, it might not be as critical to get the fee as it would be to allow the use of the credit card because then the credit card company was responsible for the collection.
Senator Mathews said she agreed with Mr. Hettrick and was about to make the same comment.
Mr. Pursell continued his presentation with a discussion of the department’s request for a recommended $1.3 million one-shot appropriation for funding the system requirement study on the department’s computer system. He proposed to the committee that as the session progressed and more discussion was held on the model legislation on e-commerce, during the discussion the technology needs would be identified for Nevada to be able to implement that type of model legislation. The department had also been working with some vendors on performance-based contracting. This meant that a vendor would put its money up front and would not get paid until the system was completed and functioning and then the state negotiated with them, through increased collections, a payment schedule for their development of the project. Mr. Pursell proposed that the $1.3 million be used for this type of system because ACES was limited and its main processor could not be changed. Mr. Pursell said he could itemize situation after situation where the system corrupted the data if too many changes were made. In late calendar year 1999, after the legislative session, White Pine County invoked a one-quarter percent optional tax. It took a great deal of time to code the change to distribute the revenues correctly and then it happened to the department again with Storey County. Mr. Pursell believed those problems were inherent in the system and resulted because of the way the computer was programmed and could not be changed. Mr. Pursell was hopeful that through discussions on the streamlined tax proposal and performance-based contracting with vendors, the department could put a plan together for the expenditure of the $1.3 appropriation to aid the department with the collection and distribution of taxes.
Mr. Marvel asked Mr. Pursell if the committee had at some time in the past appropriated $860,000 for the enhancement of the computer program and the department used only $60,000. He wondered why the cost had increased to $1.3 million compared to the $860,000 originally appropriated. Mr. Pursell said the 1999 legislature appropriated $860,000, $60,000 of which was used to develop the portable audit system that tracked audit billings. He said the system was just about completed but had been delayed due to some staff changes with DoIT personnel. Mr. Pursell said he stopped Phase II of the systems requirements of the Business Process Reengineering Study (BPR) because he did not think it addressed the organizational changes which had taken place in the department and the department at that time began discussions on the responsibilities that would come to the department as a result of e-commerce. Mr. Pursell proposed that the $800,000 previously appropriated be used toward an imaging and scanning program that would take the department closer to electronic transfer of funds and electronic filing. The $1.3 million would be used on e-commerce and model legislation for collection of taxes. Mr. Marvel asked Mr. Pursell if the department was requesting a total of over $2 million. Mr. Pursell said, “Yes.”
Mr. Beers suggested to Mr. Pursell that he should provide more details on the imaging system as he was unclear on how an imaging system would take the department closer to electronic payment. Mr. Pursell said he would provide the information to the committee.
Mr. Pursell then addressed Budget Account 2363, the Senior Citizens Property Tax Assistance Program. It was recommended in The Executive Budget to transfer this program to Aging Services. This program provided relief to eligible senior citizens who carried an excessive residential property tax burden in relation to their income either as a homeowner or as a tenant. The current structure of the program allowed for a rebate of a percentage of the claimant’s accrued property tax within household income ranges established by statute. Mr. Pursell said the department was nearly finished with the distribution of rebates for the current year and later in the legislative session he would be able to report to the committee the amount refunded. He said it was approximately $3.7 or $3.8 million.
Mr. Marvel asked Mr. Pursell why the state ever got involved in the Senior Citizens Property Tax Assistance Program when no ad valorem taxes were collected by the state except for an amount designated for debt service. Mr. Pursell told the committee that he did not know the answer to the question. He said it was a very old program and he did not know what the initial intent was for the state to be involved. Mr. Marvel stated that the counties did not contribute to the funding for this program. Mr. Pursell stated that the refunds came from the General Fund.
Chairman Arberry asked Mr. Pursell to explain how the department intended to spend the money appropriated and the criteria for its expenditure. Mr. Pursell said the Governor had recommended that eligible individuals in the program received more of a rebate. That recommendation was included in enhancement unit E-125. Mr. Pursell believed that the additional amounts included in The Executive Budget were supported by a survey conducted by the American Association of Retired Persons (AARP) and it was on the awareness of the popularity of property tax relief programs. The AARP study indicated that of the seniors that were otherwise eligible for the program, 41 percent said they did not need the assistance, 25 percent said they were not aware of the programs available and 14 percent said they did not think they would qualify. The object of the Governor’s recommendation was to relieve a greater portion of the burden low-income seniors were paying for property taxes. Based on the AARP survey, the Governor recommended that the proposed changes to the program would include leaving the statutory income ranges the same as they were, increasing each fiscal year by the CPI that was already included in the statute and increasing the allowable percentage for each income range from what was in the statute to 100 percent, 95 percent, 90 percent, 85 percent, and 80 percent. The governor also proposed increasing the accrued property tax portion of rent from 8.5 percent to 10 percent and increasing the amount to be refunded from the $500 cap to $1,500. The department believed those changes would support the additional seniors that could be eligible for the program and increase the rebate to the ones that were already eligible for the program.
Chairman Arberry requested that Mr. Pursell send the committee a copy of the information he had presented to the committee and the projections.
Mr. Marvel asked Mr. Pursell to explain how the sale of power generating plants would affect the centrally assessed properties and the distribution of taxes to the counties. Mr. Pursell said the department was presently conducting a study to determine the effects. The department currently valued an entire system so if a generating facility was in one county and there were distribution lines going through, for instance, three other counties, and the whole value was $50 million, the $50 million was allocated out over all the wire miles to the three counties. Through deregulation, as the power companies sold off the generating facilities they could then become a sitused amount of assessed value that would not go out over the wire miles. It could take revenue from counties where wire miles were and situs all the value into one county. There could be a shift of the allocation of the revenues. Mr. Marvel said that was problematic since in his district he had a lot of line miles of transmission lines. Valmy in Humboldt County was also in Mr. Marvel’s district. He asked Mr. Pursell how deregulation would affect Pershing, Lander and Eureka Counties. Mr. Pursell said it would reduce their assessed values. Mr. Pursell pointed out that there was a statute that required, as the state went through deregulation and there were different ownerships for the power plant, the transmission lines and the distribution lines, that the state was required to treat those as if they were one owner. He said this statute would need to be reviewed because he was unsure that the state could value an owner’s interest when the owner was not part of the system. Mr. Marvel said his concern was that the affected counties be held harmless. Mr. Pursell said the department was reviewing some of the sales of the generating facilities in Nevada and would determine the impact to the counties.
Mr. Dini said his problem was different from Mr. Marvel’s problem. Storey County had three power plants located in it and Lyon County had two power plants and they might fare well in deregulation. He asked Mr. Pursell to explain why Storey County had not received any sales tax on its new power plant and whether there was a way in which Storey County might receive more sales tax. Mr. Pursell answered Mr. Dini by explaining that in the consolidated tax distribution formula, Storey County was a guaranteed county so they received a set amount of sales tax. Mr. Pursell said Storey County could be removed from the guarantee program, however, Storey would be competing against Washoe, Clark, and Douglas Counties for sales tax. Mr. Pursell indicated that Storey County could make a decision at the local level on whether to remain a guaranteed county. Mr. Dini pointed out that Storey County had a financial problem due to the tax exemptions they gave industry and this appeared to be a chance for them to increase their revenues.
Ms. Giunchigliani referred to the proposed Senior Citizens Rebate Program increase in benefits up to $1,500, and asked Mr. Pursell if he believed this really targeted a low-income senior. She said she thought this might be more indicative of a medium-income senior. Mr. Pursell said the department would query the program to clarify who was receiving the rebates. She said she wanted to be sure the program was focusing on low-income seniors.
Chairman Arberry said The Executive Budget recommended the transfer of four information systems specialists from DoIT to the department. He asked Mr. Pursell to comment on the motivation for this transfer and the criteria to be used to measure the success of this so-called “pilot program.” Mr. Pursell said that from the department’s perspective, the department would obtain better control over what it wanted to focus on with the mainframe computer and what programming could be done to ACES to generate better reports. He went on to say that the department had a stand-alone program for audit and one for revenue officer collection. He would like to integrate those programs as much as possible. Moving the positions to the department would also help the department as it decided what should be done in terms of a new computer program for the state of Nevada on collecting revenues. It would focus on electronic transfer of funds, scanning and imaging.
Senator Neal said he did not quite understand Mr. Pursell’s statements on the line charge tax and the single individual. Mr. Pursell asked if Senator Neal was referring to the electric generating facilities. Mr. Pursell used Valmy, in Humboldt County, as an example. Valmy was owned by Nevada Power Company and was an operating, generating facility with transmission lines going out to 13-15 counties. If the value of that property was $100,000,000, the statute stated the value should be allocated proportionately to the counties based on how many transmission line miles existed in each county. If Humboldt County had 40 percent of the line miles and Washoe had 20 percent of the line miles, Washoe would get 20 percent of the value. If Elko has 10 percent of the line miles, Elko would get 10 percent of the value of $100,000,000. If the facility was sold off to another owner who had nothing to do with the transmission lines, they would only own what was sitused in Humboldt County; that whole $100,000,000 assessed value would stay in Humboldt County. It would not be allocated out over the transmission lines because the lines were not part of the operation.
Senator Neal asked if the new owner who actually owned or utilized the lines would pay any taxes. Mr. Pursell responded that the owner would pay taxes on the physical property but not on a generating facility. Senator Neal asked, ”Assuming Nevada Power did sell off the generating facility but another entity used the transmission lines, would any taxes accrue to that entity for the use of those lines?” Mr. Pursell said that if he understood the question, he was not sure this could be done if there were separate ownerships of the transmission lines and the generating facility. He said he read the statute to say that even if there were separate ownerships, it would be treated as the same operation. If that was done, the allocation to the various counties would still exist but the question remained of whether an ownership could be taxed when they did not own the transmission lines. Mr. Pursell said he believed this was a question that would need to be discussed by the legislature.
DEPARTMENT OF EDUCATION
BUDGET PAGES K12ED 01-10 - VOLUME I, K12ED 18-110 – VOLUME I
Dr. Keith W. Rheault, Ph.D., Interim Superintendent of the State Department of Education (also called Nevada Department of Education or NDE) began the presentation for the Department of Education. He indicated he was the Interim Superintendent until Thursday, February 1, 2001, when the new superintendent would begin employment. He directed the committee’s attention to Exhibit F entitled “Budget Hearing – January 30, 2001 - Nevada Department of Education.” He said he would first address the major issues listed on page 2 of Exhibit F. The major issues were: changes to budget accounting, proficiency testing program, teacher licensing, charter schools, new staff positions, Fundamental Review/educational audits and federal funding.
Dr. Rheault introduced Mr. Douglas C. Thunder, Deputy Superintendent for Administrative and Fiscal Services, Nevada Department of Education. Mr. Thunder pointed out the chart on pages 3 and 4 of Exhibit F that delineated the department’s budgets and how they interrelated to one another. Budget Accounts 2673, 2720 and 2719 were budget accounts that provided service throughout the department.
The next group of accounts, colored orange on the chart, were non-federally funded programs that had specific purposes. The largest of these accounts was the Distributive School Account (DSA). Mr. Thunder said that for each year of The Executive Budget, the number of full-time equivalent positions and the dollar amounts for each year of the biennium were shown. Budget Account 2697, Student Testing Programs, was all state funded, Budget Account 2705, Teacher Licensing, was moving closer and closer to be being completely self-supporting and away from using General Fund money. Budget Accounts 2701, 2702 and 2667 were not included in the budgets, they were pass-through programs such as the Education Gift Fund. If there was money to spend in those accounts, the program directors must have come to the legislature and asked for permission to spend funds so it would be difficult to determine how much money would be in the accounts. Because of that, after discussion with the state Budget Office, it was decided to leave those three accounts out of the budget process. Budget Account 2699 contained most of the state-funded programs and for the most part, any “one-shot appropriations” that had been requested. The Postsecondary Commission, located in Las Vegas, licensed agencies that provided postsecondary education.
According to Mr. Thunder, the next group of budgets were federally-funded programs with no state funding involved. The administrative and the pass-through amounts were completely funded by the federal government and there was no monetary contribution on the part of the state.
He pointed out that the next group of budgets provided federal funding for specific purposes and required state or other match or maintenance of effort.
Budget Account 2710 was the estate tax-funded Fund for School Improvement. This account was not included in the budget and the $39.3 million shown was the current balance.
The final portion of the chart indicated the department totals of 126.5 full-time equivalents (FTEs) for the first year of the biennium and 126.25 in the second year. The total dollar amounts were $887.6 million in the first year and $912.4 million in the second year. Mr. Thunder pointed out that part of that money, the money transferred from the various budget accounts into the indirect cost-funded account, was intra-departmental transfers and included in the total, which resulted in some double reporting.
Mr. Thunder stated that the department made three significant changes in the development of the budgets. The first change dealt with the manner in which the funding was put into the indirect cost account, Budget Account 2720. It was funded based upon charges assessed against the administrative expenditures of all the other accounts. Those assessments were based upon rates that were approved by the Federal Department of Education. When each year started, for a period of time the account was unfunded because it depended upon the revenue either being carried forward from the prior year or assessments being made against administrative expenditures that had not yet happened. Because of the federal Cash Management Improvement Act, the department was not at liberty to charge federal programs in advance for the expenditures that would be made. That must be done after the fact. In recent years the budget accounts that had General Fund dollars in them had been billed early so they would have cash. The department proposed that instead of moving the General Fund dollars from each of the six or seven different accounts there would be a direct appropriation of General Fund dollars made into Budget Account 2720. The amount of the appropriation would be based upon the estimated direct costs accrued against those General Fund programs throughout the year. At the end of the year, a reconciliation would take place to ensure that the General Fund was charged the correct amount and adjustments would be made at that time. This proposal resulted also as a recommendation of “The Fundamental Review of Base Budgets” which took some issue with the method the department had used to collect the indirect costs in the past. The department believed that this would answer that issue and also provide an answer to the cash flow problems the department had had in the past. Mr. Thunder said it was a new idea and the department looked forward to discussing it in greater detail in future subcommittee meetings.
Mr. Thunder said the second significant change was in Budget Account 2673, the primary account for all the state-funded programs and activities. The department was organized into teams that looked at functions rather than the source of revenue for each of the programs. In Budget Account 2673 there were five teams that had parts of the budget. In some cases, all of the funding for the team came from that budget account. The offices of the superintendent and the deputy superintendents also received funding from this account. The tracking of the operating costs and the travel expenditures by each of these teams had been a difficult task in the past. There were some reports that could be used to get the information needed but they were very cumbersome and very difficult to follow. The department suggested that it move away from the traditional categories of 02 for out-of-state travel, 03 for in-state travel and 04 for operating expenses and prorate those monies into special categories so each of the teams would have its own special category and would be able to track their expenditures more precisely. This was done in decision unit E-278. Mr. Thunder said E-278 showed how the money was prorated from those traditional categories into special categories for each of the teams.
The third significant change had to do with how employees who were funded out of more than one budget account were paid. Currently, if positions were funded from two budget accounts two time sheets were completed each week, the time sheets were processed and then a check was received. The employee received one check that had been divided between the two accounts. Mr. Thunder said there were quite a number of these people on the payroll. He referred the committee to Budget Account 2719, the proposed new budget account that would move the division together into one budget account. The employees would be paid out of the one budget account. He explained that this would be quite an involved process to put this plan together but he believed that doing it would facilitate things for the employees and also create a good accounting record of all of the funding. If the department had an employee who was paid 25 percent out of one account and 75 percent out of another account, in most cases, the department simply transferred the 25 percent into the account that had the 75 percent. That proposal, according to Mr. Thunder, was somewhat new to the department but he said he would be happy to discuss it at greater length at future subcommittee meetings.
Senator Raggio said that he had noted that the budget recommended that the Education Commission of the States (ECS) be transferred into a legislative account. He asked Mr. Thunder to explain the reasoning for the move. Mr. Thunder said that in the past it had been primarily a legislative function and the department had not been that involved in the workings of the Education Commission of the States. The department thought it would be appropriate to transfer the payment and the revenue into the legislative account.
Mrs. Cegavske asked if the transfer was a recommendation from the Department of Education. Mr. Thunder replied, “Yes.” She said she was curious because the most recent superintendent attended several of the meetings and was very involved in ECS. Mrs. Cegavske asked Mr. Thunder if it had been a money issue; because this was not only something certain legislators had been involved in but she believed it was a very good organization. She stated further that the staff used the organization and the Department of Education also used it because the organization’s facts and figures were very accurate and they had a fantastic clearinghouse. Mr. Thunder explained that the department did not want to diminish the work done by the organization, but the department felt the legislative staff had closer connections with ECS than the department did. He said the department was almost solely involved in other organizations that they had fees for such as the Council of Chief State School Officers and the National Board of State Boards of Education. He went on to say that there was no reason why it could not stay where it had been. He said in some past years when the budget had been very tight, the department had trouble making the payment.
Dr. Rheault informed the committee that he would next discuss proficiency testing program issues. He said he would talk about current required state assessments, upcoming pilot assessments with new tests, the proposed new eighth grade criterion-referenced test, proposed maintenance and enhancement requests, new contracts required during the next biennium and a few programmatic issues. Dr. Rheault referred the committee to page 6 of Exhibit F for clarification. He said that the types of tests offered were in the left hand column; highlighted in red were tests currently administered; new tests appeared in blue and in yellow were proposed new tests. Beginning with the current testing situation, the chart went back to 1996-97. He pointed out on the high school proficiency exams, the 1996-97 year was still being tested under the 1990 course of study which was very minimal, basic testing. Starting in 1997-98 the testing became more difficult and was based on the 1994 course of study. That went through 2001. Dr. Rheault said the department would be using the 1998 course of study to test the proficiency of high school students. He said the department used norm-referenced testing in 1996 and carried it through 2001. That was done in reading, language and math. Norm-referenced science was added in the beginning of 1998. The department also had a direct writing assessment where the students actually wrote out an assignment and teachers scored the test. That had been one test in Nevada that was ongoing.
The criterion-referenced test was funded by the 1999 Legislature. For grades 3 and 5, the legislature provided $300,000 to begin the process to develop and start the testing. The department pilot tested the exam last school year and would test students in grades 3 and 5 in May 2001. It was spelled out in the legislature that the first testing in grades 3 and 5 only be used for informational purposes for school districts so they could tell how the students were doing. Dr. Rheault said the tests marked in red on page 6 of Exhibit F were currently being administered. Pilot tests of the grade 3 and 5 criterion-referenced tests were done last year and would be done again this year.
Regarding the high school proficiency test, in spring 2001 the grade 10 test would be field tested. It was based on new academic standards that were adopted in 1998 and first implemented in school districts during the 1999-2000 school year. The pilot test would be given to 10th grade students and that had been questioned by the Academic Standards Council and others as to why it would be given to 10th grade students when it was an 11th grade exam. He explained that those were the group of students that would be given the test for the first time in October 2001 when the test would count; it was a good informational piece for the students to give them an idea what to expect on the test and would also give the department data as to where the students were in late spring 2001.
Senator Raggio asked Dr. Rheault when the test would be administered to the pilot group. Dr. Rheault responded that the test would be administered in the first week of April 2001. Senator Raggio asked if the test would be given to all 10th grade students. Dr. Rheault said the test would be given to all 10th grade students in the state.
Chairman Arberry asked how long it would take for the results to come back. Dr. Rheault said the test included reading, math and writing. The reading and math parts were multiple choice questions and would be returned within 30 days. The one piece that had not been tried yet was the open response questions in science. There would be two open response questions in science requiring rubrics and teachers to come in to administer the test and that would slow down the scoring on that portion of the test. For the most part, the main pieces would be returned in 30 days.
Dr. Rheault went on to discuss items in blue on page 6 of Exhibit F. He described these as tests where the department would have to renegotiate contracts in the next biennium. The high school proficiency contract and the 3rd and 5th grade criterion-referenced testing contract would end June 2001. He believed that the sooner the department could determine how much would be made available for the criterion-referenced test and the high school proficiency tests the better it would be so a request for proposal could be issued.
Regarding the norm-referenced tests, the current contract was a five-year contract with CTB McGraw-Hill. Dr. Rheault explained that there was one more testing cycle in the biennium that would be administered in October 2001 for the TerraNova test. The department would have to go to request for bid again to come up with the norm-referenced testing requirements for the state. The enhancement and maintenance requests in the proposed budget were impacted by the requirement to go out to contract again.
Dr. Rheault referred to the criterion-referenced tests for 8th grade. He said the department felt these tests were critical for a number of reasons. First, there was a gap in how the department measured how students were doing on new academic standards without that test. The state had funded grades 3 and 5 for criterion-referenced testing and the high school proficiency test was funded. There was currently nothing in the middle grades and this would help answer that problem. Also, under Title I requirements, where the state received $23‑$24 million, testing had been tied to the receipt of the money and multiple measures of testing had been used within a state. Currently, at the 8th grade level the only thing the department had was the norm-referenced testing. That would also help satisfy the Title I requirements requiring multiple measurements in the middle school block.
Senator Raggio asked if that test would replace any other test and Dr. Rheault replied that it would not. He said that for Title I requirements, the department needed a minimum of two measures and it would help meet that requirement and he believed it would also be helpful to school districts to see how the standards were being achieved.
Ms. Giunchigliani asked when the tests would be given. Dr. Rheault said it had not yet been decided but he believed it was the Board of Education’s policy for criterion-referenced tests to be administered at the end of the school year. The norm-referenced tests would be in the fall and the criterion-referenced tests in the spring. Ms. Giunchigliani asked if the scores went to the parents. Dr. Rheault replied, “Yes.” He said he would get more detail but that every student should get a report on how they did. Ms. Giunchigliani then asked if the faculty would get copies of the testing results. Dr. Rheault said the scores were provided to each individual school and the purpose of the criterion-referenced tests was to make sure that teachers were aware of how their students were doing.
Mrs. Cegavske asked Dr. Rheault to explain how soon after the tests were administered did the parents and faculty receive the scores. She also said that as she reviewed the tests, she was concerned about the number of tests given and whether or not the students were over tested. Dr. Rheault responded that all of the state-required tests were shown in Exhibit F and if there was any other testing done it was on the local level. Mrs. Cegavske asked if the Board of Education looked at the amount of testing being done. Dr. Rheault answered that the board was looking at the issue although he did not believe there was much leeway in that the norm-referenced tests were required to be given at grades 4, 8 and 10, the high school proficiency exam was required and the criterion-referenced tests were required by statute. The only test that had not been decided yet was the 8th grade criterion-referenced test. All the rest were state required. Dr. Rheault said the department knew that there was a 30-day turnaround on the norm-referenced tests in the contract. The criterion-referenced tests would be administered for the first time in May 2001 and he believed there were some open-ended questions on the test that would slow up the delivery of the scores. The board, according to Dr. Rheault, was still concerned with that piece of the testing; there was a trade-off by having open-ended questions where higher level thinking skills of the students would be tested or choosing multiple choice questions that would be returned within 30 days. The May 2001 grades 3 and 5 criterion testing would still be undergoing scoring in June due to the open-ended response questions. He said the State Board of Education and the legislature would be looking at the time it took to receive scores but that 30 days was the minimum to get the department’s responses back to the school districts that could then be shared with parents and school staff.
Dr. Rheault continued his presentation with a summary of the costs of the testing program to the state shown in Exhibit F, page 7. The costs were broken down by amounts included in The Executive Budget. The high school proficiency exam, category 16, was funded for operational expenses provided to the department; it was not a contracted amount. He said the legislature had provided similar amounts in the last session and the department was still providing some assistance to work with the high school proficiency exam. The writing assessment in the base budget was $261,662 and the contract for the norm-referenced testing, $382,194. The high school proficiency exam was funded as a one-shot appropriation for $900,000 by the 1999 Legislature for development and field testing. He pointed out the $184,345 which appeared in the base budget was the amount actually paid McGraw-Hill last fiscal year. Dr. Rheault said he would be working with the state Budget Office to clarify the figure as the department assumed that because they had a contract with McGraw-Hill for $900,000 that that would be funded in the base budget. However, $184,345 appeared instead, as that was the amount that had been paid to McGraw-Hill. This would come into play with the request for information received from all the major test vendors for the upcoming contracts as to what the department had calculated as the needed amount for the full testing program.
Dr. Rheault said category 22, criterion-referenced testing, was similar to category 20 in that the department had been given $300,000 for contracting to develop both the 3rd and 5th grade tests. In the base amount, however, only $72,303 was reflected because that was what the department had paid McGraw-Hill by the end of the base year. He said the department also would receive $14,034 to help administer the National Assessment of Educational Process (NAEP).
Mrs. Cegavske asked whether McGraw-Hill had worked out the problems they had with returning the testing results to the department and was that part of the reason why it had not been paid all at once. Dr. Rheault said McGraw-Hill had worked out the problems although it had been ongoing for the last month or so back and forth with them. He said the return time on the tests did not play into the reason they had not been paid in full. The department had just received the bill recently since all the details had been worked out regarding the work that McGraw Hill had completed. Mrs. Cegavske asked whether the contract with McGraw-Hill would be renewed. Dr. Rheault responded by saying the department had to go out to bid because of the amount of money involved, however, he was sure McGraw-Hill would be one of the applicants for the funding. Mrs. Cegavske asked Dr. Rheault to look very carefully at the contract this time because she believed it jeopardized many schools, especially high school students who were waiting for results after the first semester. Mrs. Cegavske said she believed the department should be very cautious as to the vendor selected and be certain the problems had been taken care of. Dr. Rheault said that the department was much wiser because of what they had experienced over the last five years and were aware of problems from other states and could enter into a clear contract this time with whoever was awarded the contract.
Mrs. Cegavske said that in either 1997 or 1999, the committee had asked the superintendent to be certain that if the department did not receive what had been requested that there be penalties applied. She said that to date, that had not happened. Dr. Rheault said that the contract included provision for penalties but the department had not sought penalties.
Dr. Rheault continued by moving to the maintenance budget. For the department’s operating category, category 16, the department had not requested additional funding. He believed that the $129,097 was adequate. On the writing exam, category 19, the department was requesting maintenance funds primarily due to growth in student numbers. The request included $67,897 the first year and $104,169 the second year. Most of the $67,897 the first year of the biennium was for paying for program services support and contracted support and included pay for teachers that came in on the weekends to grade the tests and a portion of it went for postage and printing costs.
Regarding category 15, the norm-referenced tests, the department went to the Interim Finance Committee for General Fund money to make up differences in the number of tests that were provided by the contractor. For next year approximately $100,000 was needed to make up the difference. Part of the reason that more tests were provided than were in the contract had to do with legislation that was passed in 1999 that required the department to report on all students that should have taken the test. This was necessary so the department would have a better understanding of who did not take the test and if districts did not have 90 percent or more of their students take the test there would be some consequences. Dr. Rheault said the department was able to work with that and it did increase the percentage of students who took the test. The department provided a score sheet for every student that was on the roster and whether they took the test or not, it was sent to McGraw-Hill and the department was advised what students did not take the test. Now the department was scoring 100 percent of 4th, 8th and 10th grade students that should be taking the test and whether they did or not could be determined.
Senator Raggio asked Dr. Rheault to explain why maintenance funds increased so much in the second year of the biennium. Dr. Rheault said the increase primarily resulted from information received from the three major testing companies which indicated that the costs the department paid on its five-year contract would not be the costs on a new contract. Senator Raggio asked Dr. Rheault to explain again the reason the costs in the second year were much higher. Dr. Rheault said that based on the number of students that would be tested in grades 4, 8 and 10, the costs per student would increase with a new contract. The needed amount might come in lower than expected but the amount requested was based on information given to the department when it researched the costs.
Categories 20 and 22 were based on information sent to all the major testing companies prior to the session. The department gave the companies specifics of current testing programs for high school proficiency and the criterion-referenced tests and asked them to provide estimates of the costs under contract. Dr. Rheault said both of these had to go forward for contract in the next fiscal year. The increased costs over what had been funded in the past year for high school proficiency costs came in at $1,100,000 and the CRTs for grades 3 and 5 came in at $700,000 above what the department was currently funded. Harcourt Brace, if they were to get all the contracts for high school, norm-referenced and criterion-referenced, came in with an estimate of $5.8 million. CTB McGraw-Hill was approximately $5.7 million and Riverside was approximately $6 million. The department reviewed what the contract included and cut back from the estimates thinking the estimates were high. Dr. Rheault said the amounts requested by the department in maintenance funds would be adequate for the testing program.
Ms. Giunchigliani told Dr. Rheault that she tried to match Exhibit F with what was included in the budget. She asked where in the budget she could find the $4 million under total annual request and the $5.1 million. Dr. Rheault told her that she would not find that total in any budget. For example, the CRT grade 8 was a one-shot appropriation in The Executive Budget but it was not included in Budget Account 2697. Ms. Giunchigliani requested clarification that it was in category 22. Dr. Rheault said it was a separate funding piece and he was unsure if it was attached to a budget.
Mr. Thunder clarified for the committee that it was not currently attached to a budget but he believed it would be placed there. He thought that the amount in the one-shot appropriation was $1.7 or $1.8 million and part of that was for the accountability report.
Ms. Giunchigliani asked Mr. Thunder what had actually been funded totally in addition to the “one-shot.” She continued by asking if the total was approximately $3 million. Dr. Rheault said it would be approximately $3 million but it would not match because in categories 20 and 22, the department assumed, possibly incorrectly, that the $900,000 and $300,000 was in the base but what was in The Executive Budget currently was the $184,000 and the $72,000. He said the department’s figures were approximately $1 million off. Ms. Giunchigliani asked if the line item in the budget called “proficiency exam” was where everything was lumped together exclusive of the “one-shot appropriation.” Dr. Rheault said Budget Account 2697 was where all of this was included.
Dr. Rheault referred the committee to the total annual requests section of Exhibit F, page 7. He remarked that the department had requested positions in The Executive Budget but there was an assessment consultant that had been included in the budget request and that consultant would specifically be working with the new criterion-referenced test for grades 3 and 5 providing technical assistance and management of that program and, if 8th grade was funded, the consultant would work with that test as well. When added together, the grand total was $4,743,010 for the complete testing program for the state in FY2002. He said that for his own interest he ran that figure against the distributive school account budget of $734 million and determined that the percentage to have students accountable for their achievement came to .65 percent of what was spent in the distributive school account.
Mrs. Cegavske asked Dr. Rheault to comment on the grants and grant writing. She said she had not seen anything other than basic grants included but she was aware of six or seven other grants that were available. She asked if the department had hired any new grant writers. Dr. Rheault answered that the department did not have anyone specifically hired for grant writing. He said that he had planned later in his presentation to discuss several grants that the department was currently working on. He said the department planned to submit a grant related to charter schools later in the week and he believed that would be approximately $2 million. The department was now working on the Reading Excellence Act funding that he believed could provide the department approximately $15 million over a five-year period. Dr. Rheault stated that the new state superintendent had grants as one of his priorities and had asked Dr. Rheault to compile a list of potential grants. Several of the new state board members, in particular Dr. John Gwaltney from Washoe County, had already met with Representative Jim Gibbons and his staff and were working on getting Nevada’s fair share of federal money. Mrs. Cegavske said there were several grants Dr. Rheault should be aware of. She went on to say that her concern was that the department did not have the professional status of someone that actually had the expertise to go after the available grants. She said there were millions of dollars available in every category such as professional standards, construction, technology, special education and so many others. She said she had heard that Nevada was one of the states that probably could receive more but had not applied. Dr. Rheault stated that he agreed with Mrs. Cegavske. He said staff was not available. On the Reading Excellence Act, the department had collaborated with the University of Nevada, Reno and University of Nevada, Las Vegas to work with their grant writers to put a good grant request together with better expertise.
Mrs. Cegavske asked if there was a reason why the department had not asked for a grant writer. Dr. Rheault indicated that he did not believe the department had ever asked for a grant writer. He said there had been discussion in 1999 but he thought that the state, either through the Governor’s Office or some other group, was going to have a team of grant writers that could work with agencies. The last grant received, according to Dr. Rheault, had to do with the advanced placement (AP) courses and the department received approximately $250,000 per year for at-risk students to pay the cost of the AP courses. The only way the department was able to have that grant written timely was that the Clark County School District had professional writers and they did most of the work.
Mrs. Chowning commented that she had seen a grants position as one of the enhancements in one of the budgets. She said she noticed that Nevada had no federal grants in dual-language programs but that a lot of states had received funds for such programs. She wondered why Nevada had not received any federal money for these programs and also where in the budget the cultural diversity consultant position appeared. Dr. Rheault said the cultural diversity position was in the base of Budget Account 2673, the administrative budget. Mrs. Chowning said that evidently Nevada had lost dollars it could have had if the grants had been applied for. She asked Dr. Rheault to look into the situation.
Dr. Rheault continued with a discussion of teacher licensing issues. He drew the committee’s attention to page 9 of Exhibit F. Starting in 1999-2000, it was agreed in the 1999 Legislative Session that this budget would attempt to be self-funded through teacher licensing fees. The first year of the biennium the legislature provided $186,000 in state appropriations in conjunction with the licensing fees to fund the budget. It was estimated at that time that the fees would generate about $100,000 - $120,000 in reserve funds that could be carried forward to start the next fiscal year. A balance forward of $104,000 from last year was carried forward and that was the amount for the start of the second year of the biennium. The projected licensing fees were $777,588 and he believed that would be a little high. The numbers the department projected at approximately 6 percent growth did not materialize. He estimated that revenues would grow this year to a maximum of approximately $660,000. Last year, the department took in $619,500 which, when broken down, was 77 or 78 percent of the total cost to operate the licensing program. Dr. Rheault said there was $100 in state appropriations included in The Executive Budget and that would allow the department to go to the Interim Finance Committee if the revenues projected to fund the budget did not come in as estimated. Dr. Rheault said this year had started with $104,000 and he believed it would be tight but adequate, however, the $100,000 reserve would not be available to start the next year.
Senator Raggio asked for information outlining the amount of the licensing fee. Dr. Rheault said an initial license was $100 and that included $37 for the cost of fingerprinting. The cost to renew a license was $65 with no fingerprinting required. The department also collected fees from teachers adding endorsements to licenses at a cost of $45 to add an endorsement to an existing license. Senator Raggio asked if there was potential for increasing the fee. Dr. Rheault said that had not been discussed because the amounts charged by Nevada for licenses ranked in the top five states. Senator Raggio observed that based on the amount that was proposed to support the budget, it could not be done with fees unless the amounts were increased. Senator Raggio asked Dr. Rheault to calculate, based on the projections, what it would take in the way of a fee increase to support the budget.
Dr. Rheault stated the next part of The Executive Budget he wanted to explain to the committee was a technology request, E-850 for special projects. This request added $134,879 to the department’s request and Dr. Rheault suggested that although the department was hopeful, this might be the first thing not funded. He said the commission could look at possibly raising fees but they were not looking at it at this time. The department would like to get full imaging equipment and capability within both the northern and southern offices to streamline the process of licensing to make it more efficient. Utah had been doing imaging with its licenses for at least ten years with the same number of staff that Nevada had. Utah was able to handle 10,000 more licensees than Nevada. According to Dr. Rheault, Nevada had a paper-intensive process with approximately 64 filing cabinets in Las Vegas alone that cost almost $4,000 - $5,000 per year in space rental. An imaging system could do away with all the paper filing. He said this was a “chicken and egg” thing. The department could not speed up or streamline the process until imaging was started but with no money available for imaging, the department could not go ahead. The Clark County School District had gone to an imaging system and the department would want to move to a compatible system.
Ms. Giunchigliani disclosed that she was a special education public school teacher. She said she remembered in the past a problem with paying teachers who had been hired based on a contractual rate because they were not fully licensed. Dr. Rheault said he believed that problem had been worked out although it had been a problem two years ago. Part of it had to do with how many licenses came in at one time and in Clark County, for example, new teachers were hired later than in most districts. The department received 500 to 1,000 applications in the month of August. In the past year Clark County had expanded their hiring practices by hiring and awarding contracts earlier and the problem was avoided.
Ms. Giunchigliani asked Dr. Rheault if what he would have liked was the $134,879 plus the $8,500 in order to set up an electronic program. Dr. Rheault said that would allow the department to do both new licenses and renewals and eventually all hard copies would be sent back to the teacher. The department would have backup with everything scanned. Ms. Giunchigliani declared that she hoped the legislature would look at some sort of one-shot for the program because she remembered years ago the department could not find her records and she and several other teachers had to look through file boxes to locate the records for renewal. She expressed that such problems were ridiculous in this day and age.
Dr. Rheault said the department had had an internal audit review. The two budgets that were really hit hard were the distributive school account and licensing. One area that was particularly questioned was the process the department followed from the time a license application was received until it was completed. In the southern Nevada office the department handled each packet four times. That had since been streamlined to only being handled twice but it remained a slow process. The proposed new process would put the information at each analyst’s computer so the employee would not have to leave his desk in order to have all the information necessary to issue a license.
Ms. Tiffany questioned Dr. Rheault as to why the department had not looked at doing on-line teacher licensing. She said on-line licensing would eliminate paper, it was Web-enabled, and done on-line. The department might consider accepting credit cards and the imaging system could be avoided. Dr. Rheault said part of the problem with the type of system Ms. Tiffany suggested was that fingerprint cards could not be taken on-line and actual transcripts were required to assure authenticity. Ms. Tiffany suggested that the process might still work but would require additional steps. For instance, with a Department of Motor Vehicles registration, a person must still have his car smog checked and a report submitted. Ms. Tiffany said she believed the department should work toward a paperless system. Dr. Rheault said that although he was not an expert in this area, he knew an on-line system would work for all the renewals and all teachers renew every five years. Ms. Tiffany encouraged Dr. Rheault to provide alternatives to the imaging system and to look at everything available regarding on-line credit card applications. A digital system would cut down staff time and the need for filing cabinets.
Dr. Rheault continued his discussion on teacher licensing with the item in The Executive Budget that requested an enhancement for the National Teacher Certification Program. He said that $20,000 had been provided to support the costs for teachers who had successfully completed the course. Because of the incentives the legislature provided, such as a 5 percent addition to salary plus some of the funding support, the department estimated that 20 teachers would become certified in the first year. Instead, 50 teachers attempted the certification. Of the 50, 24 were successful and Nevada now had 24 nationally certified teachers. In addition to the state funding of $20,000, the department was also able to get approximately $100,000 in federal support through the National Teachers Certification Board. There was $24,000 budgeted for the current fiscal year and The Executive Budget recommended $150,000 for each year of the biennium. This would have been a maximum of $2,000 for each teacher. He went on to say that in order to qualify for the funding the teacher must have been successful in getting the license and must have stayed in the state for two years after the funding was received.
Dr. Rheault said he had included information from the National Board for Professional Teaching Standards in Exhibit F to answer questions on whether a nationally board-certified teacher was any better than someone without the certification. A comprehensive study had been completed of nationally board-certified teachers that determined the incentive was worth the cost and certified teachers significantly outperformed uncertified teachers.
Senator Mathews said that she believed the teachers who had gotten certified probably performed highly and did well before certification. She continued that she did not believe that just because a teacher had become certified they suddenly became great teachers. Dr. Rheault said they were good teachers before they applied for certification and this gave recognition that they were good teachers.
Dr. Rheault moved on to discuss charter school issues. He said he would discuss the number of currently operating charter schools, pending applications for the 2001-2002 school year, technical assistance and monitoring impact on the department, regulatory issues and department staffing needs. An additional half-time charter schools consultant was requested in The Executive Budget and that currently a half-time position had been handling charter schools. The Executive Budget also requested two auditor positions to audit charter schools.
Chairman Arberry asked how the department handled charter schools coming into existence and then suddenly going out of existence when the department had already given them money. How were the students absorbed back into the system? Mr. Thunder explained how the department had handled Techworld Public Charter School when it closed. Techworld operated for 54 days, or 30 percent of the 180-day school year. There were approximately 144 students enrolled; 134 of them returned to Clark County’s traditional schools. When the department made the third quarter payment Clark County’s share was recalculated to take into account the additional 134 students so that Clark County was not required to educate the students without payment. He said the department would continue to look at the situation in order to be certain that the rationale was correct. The rationale the department used to calculate the payment was that when payments were made to charter schools it was in essence doing that on behalf of the school districts. The department took a portion of the money that they received locally and gave it to the charter schools and then that amount was subtracted from the payments to the school districts. He went on to say that if there was a case in which the amount that a charter school was to have received exceeded the amount that the district was to receive that the district would have to make that payment. The department felt that it was paying the charter school on behalf of the district. Given that fact, since the students went back to the district’s traditional schools, it was very much like students transferring from Valley High School to Rancho High School. The money would still be there to cover those transfers. Mr. Thunder said this was a point that needed clarification so that the department would not have to deal with this issue every time it came up. Mr. Thunder said he had also calculated the amount paid Techworld. They received two payments for approximately 144 students that resulted in approximately $378,000. The department calculated what they would have been entitled to on a daily basis and, in essence, they were overpaid approximately $120,000 for their services. It was the department’s intent to subtract from that amount whatever inventory was available that could be used by the Clark County School District and then bill Techworld for the difference.
Dr. Rheault added that he had asked the department’s deputy attorney general to work on the issue and attempt to get back all monies owed the department. One of the problems encountered in this process was that the department had not required that the funds stay in Nevada and Techworld’s headquarters were in Florida where the money was and where their people were located. Dr. Rheault believed that it would be much more difficult to get the money back from out of state. According to Dr. Rheault, the deputy attorney general suggested that if changes were made to charter schools there should be some requirement that the funding would stay in Nevada.
Mr. Dini asked about the possibility of adding to statute that charter schools put up a bond. Dr. Rheault said that he had received a recommendation from David Pearlman of the Commission on Postsecondary Education. Dr. Rheault said that the Commission required all schools to put up a bond and have some indemnification fund. Dr. Rheault was not sure that would be possible since it was a public school. The deputy attorney general also suggested that the governing boards of charter schools be residents of Nevada. Currently, the governing boards might reside anywhere and they had been very difficult to contact. The department also had not required any background checks for board members of charter schools.
Mrs. Chowning said the lack of background checks on charter school personnel was very concerning to her because of child molestation charges. She believed that children were being put at risk and this problem should be addressed in the current session of the legislature. Dr. Rheault clarified that it was just the executive board that had not had background checks, teachers were required to have background checks if they were in the classroom. Mrs. Chowning asserted that perhaps the extra consultant could help follow up on this and Dr. Rheault agreed.
Senator Mathews advised the committee that she thought all teachers in classrooms, charter schools or not, had to have background checks. Dr. Rheault said the licensed teachers’ background checks were handled through the department’s licensing offices and if they were not licensed they were still required to have a work permit or occupational card that did the background check. Senator Mathews continued by asking if employees who worked for boards of trustees in regular public schools were required to have background checks Dr. Rheault answered that he was unsure but maybe when a person filed for election he was asked if he had had a felony conviction.
Mrs. Cegavske learned that the Clark County School District had submitted a bill that requested that a percentage administrative fee be charged to funds distributed to charter schools. She wondered if any other school district had done the same thing and did the Department of Education charge an administrative fee. Mr. Thunder answered that there was a provision in the contract between a charter school and the district that there could be negotiations for types of services provided and costs for the services. Mr. Thunder continued by saying he believed that the bill draft asked for something similar to an indirect cost fee. Mrs. Cegavske said that the Clark County School District had administrative hours committed to helping charter schools and they needed a mechanism to finance those costs. Mr. Thunder attested that it did take more time to work with a charter school than it did with a regular school and that the districts had devoted extra time in that effort. Dr. Rheault said the department’s costs showed up with the additional staff for auditors and the requested new consultant.
Chairman Arberry stated that even though the department had tried to cover all aspects covering charter schools, there would always be scam artists out to get something. The biggest concern was to make sure the students did not lose out and the parents were not misled into believing their child would receive a better education. Mr. Thunder pointed out several things that had been done by regulation. One of the problems was the late dates for filing to open a charter school. Charter schools were scurrying around days before count day trying to get the school up and running and the intent of the regulation was to move those deadlines back so that there was a period of time after the charter was approved to get things going. Also, if a charter school had a conditional charter, which meant the facilities were not completely ready, that conditional charter had to be cleared and converted to a full charter no less than 30 days before either the start of that charter school or the first day of the school district’s calendar. Mr. Thunder was hopeful that those two regulation changes would help prevent some of the problems the department had gone through up to that time.
Dr. Rheault communicated that several charter schools applied last year. One of them was based out of California but was strictly a distance education on-line-type of charter school. The charter school wanted to operate in four or five school districts. The department had not allowed the charter school because the statutes and regulations were based in Carnegie units, number of hours and time before teachers. He continued that this was a popular charter school way to provide learning and there was one school district that would like to see this happen in the state for distance education. This was an issue tied somewhat to charter schools but was a bigger issue that, according to Dr. Rheault, would need to be discussed further.
Chairman Arberry asked Dr. Rheault to comment on the classroom on wheels program. He noted that there was an enhancement in the funding and he wanted to know how it would be used. Mr. Thunder said there was $301,000 in both years requested by the classroom on wheels. A total of $301,000 was approved for a two-year period in the last biennium. The funding would be used to expand their service. Part of the money was used for renovation of buses used by the program and this time funds would be used to add more buses to their fleet and use more of the funding for operating. Mr. Thunder told Chairman Arberry that he would provide the details to staff.
Ms. Leslie asked about peer mediation. She said $50,000 was included in the last budget and the department had requested funding but that no funding was included in The Executive Budget. She asked for a report on how the funding had been used. She also wanted to know the department’s position on whether the funding had been effective.
Ms. Giunchigliani noted that the holocaust education funding was no longer in the budget but it was recommended as a one-shot appropriation. She believed the agreement reached in the 1999 Legislative Session was to have it permanently in the budget so legislation each session would not be required. She asked the department to comment on the reasons for the change. Mr. Thunder said it had been included in the department’s budget request and the Governor felt that it would be more appropriate to fund through a one-shot appropriation. Mr. Thunder said that several years ago the funding had been provided to the Department of Administration for distribution to the Holocaust Council. In the last few budgets it had been provided to the Department of Education. If the department had distributed the funds an indirect charge would be required so instead they had transferred it to the Department of Administration for disbursement to the Holocaust Commission. Mr. Thunder said that someone from the Department of Administration would have to be asked the rationale of placing this item in the budget as one-shot rather than a regular budget item.
Dr Rheault provided a list (Exhibit F) of the seven charter schools that were currently operating. There were 1,212 students enrolled as of September 1999 in the charter schools in Nevada. The department had received nine new applications for charter schools interested in starting up next school year and had reviewed the applications and responded as to whether the requirements were met or additional information was needed. Further, Dr. Rheault said that the student population had dropped to 1,072 when Techworld closed.
Chairman Arberry refreshed Dr. Rheault’s memory on an issue that occurred in 1999 regarding A.B. 521 of the Seventieth Session that appropriated funding for disruptive students. Chairman Arberry asked for the status of that program. Dr. Rheault disclosed that there was a full report that would be submitted to the legislature by February 14, 2001. The program funded eight pilot programs and had designated that there had to be a certain number of high schools, middle schools and elementary schools included. For the most part, the report itself was not supportive because of the short time frame in which many of the pilot programs operated. Most of the programs started in January 2000 and the evaluator went into the schools in the spring so it was a short time frame. Chairman Arberry asked whether the program would be discontinued for the next biennium. Dr. Rheault said the eight pilots would be discontinued because the department had provided about $60,000 per site to fund additional temporary staff to work with the disruptive students that were sent to the pilot programs. Unless the pilot programs were continued through their own school district funds, those eight pilots probably would drop some of the services they had provided.
Ms. Giunchigliani asked if the committee would receive the report on what types of pilot programs were offered. Dr. Rheault said the February 2001 report covered the eight pilot programs that were funded but there was also a separate report the department staff put together that talked about all the other alternative programs that currently exist. In the department’s opinion, some of the existing programs might have been able to be built upon rather than giving them to a new program and starting from scratch. Ms. Giunchigliani said that the program should be reviewed to ascertain what programs worked better in rural counties versus larger areas. She said that she believed if the issue of disruptive students taking away educational time was to be dismissed, a disservice would be done to the other students. If the pilot money went away, she believed it would be irresponsible not to fund the programs that were working or at least determine which ones were working and fund those. Dr. Rheault said there needed to be some support for those programs but that the funding would not necessarily have to go into a pilot program, there were other good programs that should be reviewed and that was why the department prepared the supplemental report that would be submitted to the legislature. Ms. Giunchigliani said that every parent wanted to be certain their student was receiving instructional time rather than having a few disruptive students taking the time away from learning.
Ms. Giunchigliani asked Dr. Rheault if the $14 million for special education was new dollars or in addition to $4 million previously received, and was the intent of the funding to implement caseload reductions. Dr. Rheault replied that was the plan the way the current budget was built. Ms. Giunchigliani asked where the funds appeared in the budget. Dr. Rheault said it would be in Budget Account 2715. Of $7 million additional dollars per year, $4 million additional would be paid for the caseload change. Ms. Giunchigliani said she believed there was $14 million additional federal money and Dr. Rheault said he believed that was for two years but he was uncertain. Ms. Giunchigliani said she understood that it was $7 million each year dedicated to caseload reductions in special education.
Ms. Giunchigliani said that in The Executive Budget there was an increase in the number of special education units. She queried Dr. Rheault as to whether there was an increase in the actual dollar amount per unit. Mr. Thunder responded that in the DSA budget the number of special education units grew by the student enrollment growth. The amount per unit grew by the roll-up cost of 2 percent. Ms. Giunchigliani asked if the department looked at the units currently funded what would the cost have been to fund those adequately as opposed to adding new units. Mr. Thunder said that one of the reports received and reviewed from school districts each year was a separate report on a state special education special revenue fund, and the total costs and the number of teachers involved in that program. From that, the department determined the total number of teachers that were claimed as special education teachers and compared it with the total number of units. Primarily, what the department had done in the past was looked at the funding amount per unit and realized that there was also a disparity between the number of units that would be awarded and the number of units that the districts would claim. Ms. Giunchigliani said she had proposed legislation so she would like to work with the department on that issue.
Mrs. Chowning asked the department to explain where in the budget she could find performance indicators and dollars that were aimed at the dropout prevention problem and programs to assist in that area. Dr. Rheault said there was only one performance indicator listed in the budgets that gave the dropout percentage rate. It reported a 7.8 percent dropout rate according to Dr. Rheault. Mrs. Chowning continued by asking if there were any dollars in any of the budgets to address the dropout problem. Dr. Rheault stated that the department utilized one staff research position to coordinate the dropout report. The department did not have anyone specifically that worked with districts on new programs or technical assistance. He went on to say that it was a quarter-time position that was financed from federal funding.
Dr. Rheault identified new positions included in The Executive Budget and referred the committee to pages 14 and 15 of Exhibit F for detail on new staff, staff to be transferred, reduction in staff and some changes to staff.
Chairman Arberry asked if Mr. Thunder planned to discuss the Statewide Management of Automated Record Transfer (SMART) program and Mr. Thunder said he would briefly touch upon it but he would discuss it in detail in future subcommittee meetings.
Mr. Thunder said he would like to focus on the positions included in The Executive Budget. The department asked for an administrator for the distributive school account. That account had been administered in the past primarily by people who were paid out of the indirect cost fund account and virtually all of those people had many other jobs they were responsible for. With the increasing number of charter schools and the increased complexity of the distributive school account, the department felt it was appropriate that one staff person be solely responsible for the oversight for the administration of the distributive school account.
Mr. Thunder mentioned the one-half time charter school consultant position that the department believed should be made a full-time position. In the SMART support, M-205 of Budget Account 2673, the department wanted to move away from reliance upon contract services and toward in-house services. In M‑205, the first year of the biennium, the department would add one data processing type employee for SMART and in the second year, another employee would be added. By hiring those two positions the department would not have to rely so much on outside contracting, according to Mr. Thunder.
Mr. Thunder said that the support service area of the department had been overwhelmed in recent years due to the creation of additional panels, committees and boards. Those employees provided travel checks and took care of all details and the department had the same number of accounting personnel currently as the department had 15 years ago, with much more work to do. In answer to the situation, the department requested an Account Clerk III position that was included in the budget.
Continuing, Mr. Thunder said the department requested two additional auditors in the budget and clerical support was needed for the auditors so a Management Assistant I position was requested.
The other new position requested, according to Mr. Thunder, was an information systems specialist. He said that currently one person took care of the many networks in the department. Examples of the networks included were the teacher licensing network, the SMART Program, the nutrition network, and the general department network used for communication among staff and between the northern and southern offices.
Mr. Thunder said that the department had requested a total of eight new positions in the first year of the biennium and nine in the second year. In addition to those positions, the department asked that part of two positions be transferred from their current locations into a new budget account. One of those to be transferred was Mr. Thunder’s position. He said he was half paid out of indirect cost and half out of Budget Account 2673. In negotiations with the federal agencies related to indirect costs, Mr. Thunder said he learned that top administrative people should not be paid out of indirect cost so to correct that concern, the department suggested that the deputy be fully funded from Budget Account 2673. The department also had a consultant position, the planning, research and evaluation consultant, paid from Budget Account 2720, that the department requested be transferred to Budget Account 2673. Approximately 95 percent of the consultant’s work involved state programs.
Mr. Thunder went on to say that during the current biennium, the department had approximately three cases where people had been transferred on a temporary basis and were waiting for the legislature to convene to review and confirm the transfers. They involved cases where a program went away and there were other needs for similar types of positions that could be paid out of other budget accounts. One grants and projects analyst position in the Job Training Partnership Act (JTPA) Program went away and two other federal programs needed the position and had the funding so the department transferred one-half of the position into the Carl Perkins Occupational Education Program and the other one-half into the Technology Literacy Challenge Grant. The other transferred position was in Budget Account 2611, the comprehensive health budget account. Their funding had diminished and there was insufficient funding to pay for one staff member, however, there was sufficient funding in the Drug Free Schools account, Budget Account 2605. Temporarily, the department had moved a one-quarter management assistant position into Budget Account 2605 from Budget Account 2611. In another case the federal Schools to Careers Program went away so positions were reduced. If everything were to be approved in The Executive Budget the department would have 126.5 full-time equivalent employees in 2002 and 126.25 in 2003.
Chairman Arberry asked the department to provide details and breakdown of the equipment needed by the department and Mr. Thunder replied that he would provide the information.
Mr. Dini asked to be told the status of the Lyon County SMART Program. Mr. Thunder said that the problem in Lyon County was that the program was started on a MacIntosh-based system and the software manufacturer that had supported the system was no longer supporting the system. Lyon County was further ahead in linking schools and the district office than most of the other districts. It was Mr. Thunder’s understanding that Lyon County actually received less funding because they were further along. The Executive Budget recognized that, according to Mr. Thunder, and his understanding was that there was funding to help Lyon County replace the computers so that it would be up-to-speed with the SMART Program.
Dr. Rheault discussed the audits and internal reviews completed of the department during the biennium. Many of the recommendations tied back to requesting a distributive school account administrator, auditors, and certain licensing requests. Dr. Rheault said he also included in Exhibit F the six recommendations that came out of the textbook audit recently released. Dr. Rheault said the department had had quite a bit of activity with outside entities that looked at different programs within the department and their recommendations were included in Exhibit F, pages 16 through 26.
In conclusion, Dr. Rheault said he provided a one-page summary (Exhibit F, page 28) that was put out by the U.S. Department of Education that showed the 2000 and 2001 federal appropriations for Nevada. The federal 2000 appropriation was Nevada’s fiscal year 2001. The 2001 appropriation was for state fiscal year, 2002. Dr. Rheault wanted to show the committee that for the most part, at least the federal program funds currently being received, were getting a fairly good increase. The only one that showed up with a large negative was Goals 2000 because that had not yet been re-funded.
Dr. Rheault pointed out that the department had applied for federal charter schools funding and intended to apply for Reading Excellence Act money. There was one new program, the School Renovation Grants Program, that the department had not yet applied to for next fiscal year that showed $5,483,750 for Nevada next fiscal year. Dr. Rheault said he just received the first information from the U.S. Department of Education that said they would be working on information and regulations governing the program. It was Dr. Rheault’s understanding that 25 percent might be used for Individuals with Disabilities Act (IDEA) and/or technology activities carried out in connection with school repair and renovation. It appeared to Dr. Rheault that it would be an entitlement to Nevada similar to the class size funding but that Nevada would still have to make an application and he was unsure of the strings attached. He believed that the funding was earmarked for at-risk students or districts that had a high economically disadvantaged population.
Dr. Rheault assured the committee that the department would answer all requests for information that had been received in the meeting and thanked the committee for its time.
DEPARTMENT OF AGRICULTURE
BUDGET PAGES AGRI 1 – VOLUME I
Chairman Arberry called upon Mr. Paul Iverson, Director of the Nevada Department of Agriculture, to present the overview of the department’s budget. Mr. Iverson referred the committee to the table of contents page of Exhibit G. He said he intended to go through the binder item by item and would attempt to conclude his presentation in approximately 25 minutes with most of the committee’s questions answered.
Mr. Iverson stated that he would address five major components in the budget request. Exhibit G contained the information concerning each of those components. The department’s proposed budget contained major reorganization and consolidation plans that would provide the agency the opportunity to be more efficient while providing quality service to the public.
Mr. Iverson said first he would present an overview of the agency, its organization and a review of the various programs administered by the department. Secondly, he said he would discuss the results of the resources that the department received during the last session of the legislature. He said the Ways and Means Committee had been very generous to the department last session and he wanted to explain what the department had done with the funds provided. Thirdly, he said he would present the proposed budget reorganization and consolidation plan. He said he was hopeful that this would clear up many of the questions the committee might have concerning the budget. Fourth, he planned to discuss the enhancement highlights presented in the budget explaining in detail why the department had requested specific items. Fifth, he planned to provide information concerning specific programs that he knew the committee was interested in. If time permitted, he said he would go through some of the department’s publications and some additional programs.
Mr. Iverson said that the division administrators for the department were with him and would be able to answer specific questions. Many of the department’s programs were very scientific and technical and the individuals with Mr. Iverson would be able to answer technical questions. He introduced Mr. Rick Gimlin, Administrative Services Officer. In the audience was Bob Gronowski, Administrator of the Division of Plant Industries, Dr. David Thain, Administrator of the Division of Animal Health, state veterinarian and Acting Administrator of the Division of Livestock Identification and Brands. He continued by introducing Ed Hoganson, the Administrator of Measurement Standards and Bob Beach, Administrator of the Division of Resource Protection and also the state director of the USDA’s Wildlife Services.
Mr. Iverson said that some of the photographs in Exhibit G were very graphic. They highlighted the important role the agency had in public safety and the welfare of the people of Nevada. Mr. Iverson referred the committee to Section 1 of Exhibit G that listed the goals and objectives that the department had implemented. He said there were three key words in the department’s mission statement: enhancement, protection and encouragement. Those three words radiated throughout the goals, according to Mr. Iverson, and he believed that the department’s legislative responsibility was to encourage, enhance and protect the agricultural and related industries in Nevada. The department accomplished its duties in a fair and equitable manner. One of the areas the department had become very involved in was natural resource issues because the department wanted to be sure it maintained sustainable resources. Their industries were very progressive and innovative and in order to do that, the department had worked closely with industry. The department supported and encouraged cooperation between various agencies and local government. Mr. Iverson said the department had implemented some things in its office procedures that Mr. Iverson believed the legislature had directed the agency to do. Those administrative changes had improved the department’s fiscal policies and management, administrative procedures, and provided the department an ongoing evaluation of its services to determine which ones were cost effective.
Mr. Iverson remarked that the organizational charts contained in Exhibit G depicted the new Department of Agriculture that was created by the 1999 Legislative Session. Prior to the 1999 session, the department was part of the Department of Business and Industry. The department had created new divisions: Division of Administration to care for the administrative issues in the office and the Division of Measurement Standards. He said that the petroleum labs and weights and measures had been rolled into the new Division of Measurement Standards. The other new division created was the Division of Resource Protection that was a very unusual division in that it was one-half federally funded with the administrator’s salary 100 percent federally funded. That division was supported as if it were an agency of the department. Mr. Iverson went on to say that there were five organizations associated with boards and commissions: The Sheep Commission, high school rodeo, Junior Livestock Board, the Rangeland and Resource Commission and the Beef Council. The department consisted of 95 full-time employees in Reno, Sparks, Las Vegas, Winnemucca, Elko and Carson City and 120 seasonal, intermittent and part-time employees. There were 40 programs with an $8 million budget. According to Mr. Iverson, 63 percent of the department’s budget was derived from fees, grants and other sources and 37 percent of the budget was financed from the General Fund.
Mr. Iverson stated that the Division of Administration was responsible for accounting, personnel, budgeting, internal controls, and administrative procedures that implemented funding and operational policies. Also included in that division was mediation and land use natural resource issues. They were involved in national agricultural policy issues and government liaison. They had worked closely with the Legislative Counsel Bureau and the state Budget Office to develop a cost allocation plan that would be put into place on July 1, 2002. The allocation program would save the state $317,000 because those dollars would be picked up by all the agencies in the Department of Agriculture. Mr. Iverson said the department had developed a strategic plan that had given guidelines on what the department needed to do and where it needed to go.
Mr. Iverson continued by reviewing the Division of Administration’s accomplishments and stated they had stepped forward in a proactive way. The department had worked closely with the Division of Emergency Management to provide resources to ranchers that had been affected by wildfires a couple of years ago. They had helped with feed, infrastructure improvement and repairs. The division was still doing mediation and was considered a model for most of the country in mediation efforts with the U. S. Forest Service and ranchers who used the land. Mr. Iverson was impressed with the fact that the division had stepped up and become one of the pilot agencies for the advanced accounting receivable module for the Integrated Financial System (IFS system) and that experience had provided the department an opportunity to become more effective and efficient in its operations. The department was also the pilot program for payroll input for the human resources system. These projects had given the department the opportunity to learn and work with other agencies.
Mr. Iverson said that the strategic plan had been very important in establishing funding policies and the department had its funding policies approved by the board. Mr. Iverson said the cost allocation program had been a long time coming but he thought it was a fair and equitable program based on the number of employees in each division and the amount of funding for each program. It would provide equality among the divisions within the agency.
Mr. Iverson moved on to discuss the Division of Plant Industries. He said the 1999 legislature had funded four new positions: a new weed analyst who had become the noxious weed specialist for the state, the Africanized honeybee specialist in Las Vegas, a new pest control operator coordinator, and a nursery inspector. Mr. Iverson commended the legislative body for support of the Africanized honeybee program and the imported fire ant program. Because of the legislature’s proactive position and because of the funding allowed, Mr. Iverson believed that the department had been able to slow down something that could have become “a real mess.” Without the support of the legislature, the department would not have had staffing to address those problems. As a result of the new pest control operator program, every pest control operator in Nevada must take six continuing education units per year relating to the appropriate use of chemicals. Those pest control operators were the people who sprayed chemicals in homes, hospitals, schools and hotels. In the nursery inspection program, one employee had been sent to Peace Officer’s Standards and Training (POST) and would graduate as an enforcement officer and the department would have achieved what the industry wanted when their fees were increased by almost 500 percent. The industry wanted more enforcement to stop illegal stock from being brought into the state, especially to Las Vegas. Mr. Iverson said that would be best accomplished out on the highways looking at trucks since Nevada did not have border stations.
Mr. Iverson pointed out that the fee increases received last year for pest control and nurseries were all supported by industry. The department conducted numerous meetings around the state and the increases were supported. The legislature funded the positions for the first year and from that point on they were to be funded by industry.
Mr. Iverson continued his presentation by reviewing photographs included in Exhibit G. The first photo was a person out on the highway inspecting nursery stock coming in to the state to assure that the load was free of insects. The second photo showed the nursery inspection program where the department looked for weeds, insects and plant diseases. There were currently 782 licensed nurseries in Nevada and it was the department’s goal that each nursery would be visited at least once a year and more often for the larger nurseries in Las Vegas.
The next photo showed the department’s organic certification program. There were over 21 individuals involved in that program and Mr. Iverson described it as a “niche market” that provided something for people who did not have large ranching operations who could grow organic food in their backyards and maybe sell it.
The next photo dealt with noxious weeds. Mr. Iverson was very pleased with what had happened over the past two years. The department had moved forward with this and had set up programs with the counties. The picture showed an African rue infestation eradication program that took place in Churchill County.
A photo concerning the biological control of weeds was shown next. The program was going so well that the department had collected beetles and released them in new sites. The photo showed employees building a cage to study the effects of control agents on noxious weeds. The department had biological controls for salt cedar, nap weed and leafy spurge.
Next, Mr. Iverson discussed pest control applicator licensing. With the new program the department had become very involved in education. There were 1,100 operators in Nevada and 320 companies involved in the education program. The department also provided training for individuals involved in restricted use pesticide applications including ranchers and farmers. The department was also involved in pesticide misuse investigations such as pesticide over-spray or drift, and animal poisonings. The department had done fertilizer analysis in its labs and was registering every pesticide, fertilizer and antifreeze in the state. There were 8,200 pesticides, 800 manufacturers, 1,900 fertilizers and 141 antifreezes. According to Mr. Iverson, the department had been very fortunate to have some of the best employees in its labs. Those people had found some new procedures to determine pesticides in water and those procedures had been published and used nationwide. Pesticides in water were very important and the staff had been able to detect 1 part per billion of pesticides in soil and .01 parts per billion in water. He described that as quite a feat for a small office.
The department was also responsible for the workers’ protection program and had entered into a new $3,000 contract with the Alliance for Workers’ Rights to provide translators for the department.
In the groundwater protection program, the department tested wells throughout the state for pesticides. Thirty wells would be tested annually.
Mr. Iverson described the crop certification program that looked for disease. One of the major diseases was white rot, a disease that could cause catastrophe to the onion and garlic industry. The department’s sampling programs were unique and the photo included in Exhibit G showed the state epidemiologist setting an imported fire ant trap. The education program has also been very positive.
The next photo showed setting up a bee trap. The department had expanded its bee trap line because they wanted to find out where the bees were moving. There had been some movement and he said the program had been extremely effective regarding education and as far as working with pest control companies, casinos, schools, and law enforcement officers in getting the problem under control.
Mr. Iverson said the plant pathology group was responsible for determining plant diseases. The department had a testing lab responsible for the purity of seed and the department was still doing airport inspections in Las Vegas to assure that the luggage, the waste and the cargo that came into the state would meet the department’s requirements.
Senator Mathews asked Mr. Iverson why the airport inspection program inspected planes only in Las Vegas. Mr. Iverson said that only planes that had landed for the first time from a foreign country were inspected. When a plane landed in Reno from a foreign country it would also be inspected. Senator Mathews then asked whether the department tested for mad cow disease and Mr. Iverson answered in the affirmative. He said the department had been operating a very aggressive mad cow program.
Ms. Giunchigliani asked whether the department replanted grasses, etc. after noxious weeds had been destroyed in order to help keep the noxious weeds out. Mr. Iverson answered that it was very important that new grasses be planted. He said that was the one thing that could help control noxious weeds. Ms. Giunchigliani continued by asking if replanting had been done in the valley areas that had been burned by fires. Mr. Iverson replied, “Yes.” Ms. Giunchigliani asked if the bee problem had been reduced. She said one of her constituents had been stung 500 times and almost died. The lady who was stung was a very petite Asian woman and it was unknown how she survived. That attack occurred in downtown Las Vegas. Mr. Iverson said the problem was “coming alive again.” The bees had hunkered down in order to stay warm when it was cold but they were now starting to move again and the department had received several calls. He went on to say that the beehive the department had found in Senator O’Donnell’s front yard had probably in excess of 20,000 bees. Mr. Iverson said that he had included pictures in Exhibit G that had hives with hundreds of thousands of bees that were located next to schools in Las Vegas that he hoped had been destroyed.
Senator O’Donnell said that by sitting in committee hearings and listening to Mr. Iverson explain dangers and circumstances surrounding the Africanized bees, he had been able to determine that a beehive in his yard was Africanized even though that had not been substantiated. He said that his wife had informed him while they were in Home Depot that she was on her way to the garden section to purchase a bug bomb. When he asked her why she said that she intended to throw a bug bomb into a beehive in their yard to kill the bees. He informed her that if the hive was low and on the ground it usually meant the hive was an Africanized bee colony. It turned out that the hive was Africanized and they had 20,000 bees in their front yard.
Mr. Iverson resumed his testimony by discussing the Division of Plant Industry and the department’s work in organizing certain programs and activities into five elements that were used nationwide to address many issues. The five areas were exclusion, detection, control, enforcement and marketing. He went on with the Division of Plant Industry’s accomplishments. The division had located nine imported fire ant locations in Las Vegas and eradicated them. The survey would continue. Last year the division looked at schools, new landscaping and new construction. There had been an increase in the Highway Patrol trying to determine what was happening on the highways as far as nursery stock entering the state illegally. Illegal nursery stock allowed insects and diseases into the state and also was costly to the taxpayers because many of those operations were not taxed as the merchandise was not purchased from legitimate dealers. Mr. Iverson said he was very excited about the new Invasive Species Council that involved federal agencies looking at the impact on the economic, environmental and public health of Nevada’s communities. The new noxious weed plan had been completed and sent to all Ways and Means committee members. He said there had been a lot of excitement and enthusiasm with the “ag in the classroom” and teacher’s workshops in Las Vegas. The division included an invasive species element in the new Emergency Management Plan so if invasive species happened to impact a community there would be a plan to be followed. Invasive species, whether they were weeds, bugs or insects, were no different than most emergencies. They impacted the economy, the environment or public health; they just did it in slow motion.
The Division of Animal Industry had been extremely busy with an anthrax outbreak according to Mr. Iverson. It had been ten years since Nevada had anthrax and then it was contracted twice. Mr. Iverson stated that anthrax was a very serious disease that could not be ignored. The department had responded immediately with all of its resources. Other projects included surveying deer and elk for the mad cow type disease and the scrapies eradication program with the sheep industry. Mr. Iverson said there had been nine cases of positive rabies in the last year and almost every one of the cases involved a human. In the food safety quality assurance program, the division had a program to survey for West Nile-like virus. He said the division also had a major plague program surveying wildlife to determine what had happened with plague and to find hot spots in the state. The division had done hundreds of autopsies on animals that had been brought in. An example given was a case in Boulder City with a horse and all the horses in the stable had to be quarantined for 45 days.
Mr. Iverson said that there were two microbiologists in the lab who constantly did diagnoses of animal and zoonotic diseases. The department had renamed the lab the Animal Disease and Food Safety Lab. Mr. Iverson referred the committee to a picture of an e-coli virus in Exhibit G.
Mr. Iverson continued by referring to photos in Exhibit G of cattle that had died of anthrax. Once the animals had died, after a day or so they bled out. The blood stopped coagulating and poured out. The first anthrax outbreak occurred a distance from Reno but the second outbreak occurred in downtown Reno. Some of the cattle were within one-quarter of a mile of a major residential area and an elementary school, which meant the department had to address the problem as quickly as it could.
Once the anthrax outbreak had been discovered, the anthrax bacteria was grown in the lab. Mr. Iverson said he had included photos of Hazmat personnel burning anthrax cattle near Reno. A napalm solution was sprayed on the carcass and burned. Other anthrax cattle had been buried with a lime solution on top. Over 75 cattle died in the anthrax outbreak and the department felt very fortunate that it had been able to react quickly to inoculate and save cattle.
Mr. Iverson said that 227 animals had been brought into the lab for rabies testing. For every one of those animals, whether they had rabies or not, the department had to remove a portion of the brain for testing. The laboratory staff used a fluorescing photomicrograph to test for rabies.
Mr. Iverson detailed for the committee a voluntary program for sheep in which after an animal died, its brain would be removed to determine whether there was a problem with mad cow scrapies and mad cow disease.
According to Mr. Iverson, the department had a progressive program in the state in cooperation with the Division of Wildlife, USDA Division of Veterinary Sciences where the department asked hunters to bring in blood samples and brain tissue from their deer and elk. Those samples would then be tested for disease.
Another issue that had been addressed by the department was the treatment of the trichomoniasis organism responsible for cattle reproductive disease.
Mr. Iverson said that another issue that the department had to address was animals that came into the state. The enforcement officers were out on the highways to verify proper health and brand documents.
According to Mr. Iverson, the department’s inspectors watched for chickens being improperly shipped through the state and had stopped the practice of transporting dead chickens through the state. Senator Neal asked if the department examined the dead chickens to determine the cause of death when it discovered them. Mr. Iverson said the department had done an investigation and found that most of the chickens that had died were old egg layers on their way to slaughter.
The department had added an element in the Emergency Plan to address animal care in case of an emergency and also addressed some of the diseases associated with animals.
Mr. Iverson continued his presentation by addressing the photos in Exhibit G associated with Nevada’s estray horses. The horses were wild horses and could be extremely mean. Mr. Iverson said there were still major problems with the horses along Highway 50, Silver Springs, Fernley, Carson City and Reno. The department currently had approximately 40 horses and 7 more had been transported to the training facility. The training facility had been purchased and paid for by Washoe County. The county gave the department $43,000 to build the initial facility and another $12,000 was received from Carson City to add onto the facility so it could now hold 80 horses. The city of Reno recently provided another $15,000 to add onto the training facility. The department had built a training facility at Warm Springs where inmates actually trained the horses so that they would be more adoptable. The department had told interest groups that it would hold horses from 60 days until they were processed and at that time they would send them to sale. Sending a horse to sale meant sending a horse to slaughter and that was a difficult policy for the department to deal with. The department had taken in 200 horses and they had placed 200 horses. This program, according to Mr. Iverson, was very costly but it had kept the department out of the newspaper. The program was staffed by 12 inmates who trained the horses but since Washoe County gave the department funding to double the facility there would be 24 inmates working with the horses. The facility was built primarily with money provided by the Virginia Range Protection Association and the Let‘em Run Association who supplied $6,500 to start the process.
Mr. Iverson said that he wanted to highlight the program’s accomplishments. He said the department was very proud of its food safety and assurance program and that the department had a very good, cooperative relationship with the Health Division and the colleges. Many of the department’s programs were cooperative. The department had been able to do a comprehensive habitat capacity study on the Virginia Range and the department was going to target 550 horses on the range as a maximum. He felt that number would provide a sustainable herd.
The next program discussed by Mr. Iverson was the Division of Measurement Standards. Mr. Iverson announced that the division had been able to accomplish 100 percent of the tests it had scheduled. Every gas station, every commercial scale in the state, had been tested. Mr. Iverson described the new fuels committee that brought in all of the industry members who were involved in producing and distributing fuels. They had discussed and resolved issues.
Mr. Dini asked if there were many violators. Mr. Iverson said that most violations were at the pumps and that the department addressed and took care of problems immediately. The department’s labs were now geared up so that they could get out immediately and get another gas sample. There had been a few small problems but they had been fixed so that people had not gotten bad gas and gas that had not been taxed was not sold.
The 1999 legislature had funded two chemist positions and the department set up a full chemistry lab in Reno and a full chemistry lab in Las Vegas. They had been working closely with Clark and Washoe Counties on air pollution issues. An additional weights and measures inspector had also been funded by the 1999 legislature to help with package checking in the scanner program. Mr. Iverson referred the committee to the pictures of employees checking measures to be certain consumers received the appropriate gallons of fuel they had paid for. The department’s truck was a 74,000 lb vehicle that was used to haul large blocks of steel to test the scales. The department was still involved with their scanner program, still working in supermarkets and department stores. Mr. Iverson said the new chemists were working in the petroleum lab on vapor pressure and the quality of fuel. The department had worked closely with Clark and Washoe Counties on their programs.
Next, Mr. Iverson discussed the brand inspection program. He said that four years ago he was very concerned about the finances of the program but that now the program had become solvent. The program had approximately $400,000 in the bank, costs had been reduced and they had increased efficiency. The program was going well and Mr. Iverson believed that the department would be coming back to the legislature to ask for permission to hire someone to administer the program because the program had been administered with borrowed administrative help. According to Mr. Iverson, the program was very important and they had enjoyed a cooperative relationship with the highway patrol. There were over 4,500 registered brands.
Mrs. de Braga asked Mr. Iverson whether the department was planning on taking on the duties of collecting the head tax and if so, how would the department do it cost effectively. She said that county officials who had been collecting the tax did not want to collect it because they thought the cost to do so was more than they believed the income would be. Mr. Iverson said the department had a very good relationship with county recorders and assessors and they had helped the department get through the program. The county officials would like to get rid of the program and Mr. Iverson said he did not blame them because they did the work, spent the money on the program and none of the funds were returned to the counties. A declaration must be sent that cost $1.50 - $2.00 to send, the declaration must be returned by the taxpayer and then a bill would be sent. By the time the process had been completed, it might cost approximately $10 to collect $5 for the program. The department had agreed with the counties that the department would eventually take the head tax and an enhancement had been requested in the budget that requested a program officer to set up a computer program to collect head tax. Mr. Iverson believed that it could become cost effective because they would increase revenues and reduce costs by doing a declaration and bill at the same time. Mr. Iverson said that the counties had agreed to give the department all of their files and since the department was closest to the industry they would know the names of those people to be billed.
According to Mr. Iverson, the Division of Resource Protection was a very unique agency in the state because it was half-funded by the federal government and half-funded by the state. Half the employees were federal and half were state employees. The division administrator was a federal employee who was supported just as if he was a state employee. The administrator was doing the coyote-sampling program and other wildlife protection programs with sage grouse and antelope. Mr. Iverson stated that for many years the focus in the state had been on the protection of sheep and that still remained a major issue because that was where much of the federal funds came from. He referred the committee to the photos in Exhibit G and said the division helped protect the livestock owners. The department had three planes that conducted aerial hunting operations to protect agricultural resources across Nevada in an effort to keep the livestock well and to keep economic viability in the industry. Samples were taken from coyotes, sent into the lab and tested for plague. Mr. Iverson said another area the division had worked on was keeping geese away from the ponds near the airport in Reno so there would not be a bird issue with an airplane. The division was also involved in wildlife protection and had a grant from the Division of Wildlife to protect antelope, sage grouse and some other sensitive species. The division was working with Clark County on tortoises, the Willow flycatcher and Palmer chipmunk that were also species that needed protection. One problem in the state was ravens. Ravens created problems for many animals such as tortoises and sage grouse. Mr. Iverson pointed out in Exhibit G the division’s accomplishments.
Mr. Iverson continued by discussing the other boards and commissions within the department. He said there were many volunteers and that the funding supplied by the legislature for those organizations went to Nevada’s youth.
Ms. Giunchigliani said that six full-time equivalent positions were to be moved and the budget would stay the same but there would no longer be fee-generating individuals when they were moved from one budget area into another. Those would be livestock inspectors and she wondered if they would not generate fee revenues how would the revenues remain at the same level. Mr. Iverson said the department proposed that the four livestock inspectors be moved into the Division of Administration. Seventy-five percent of the salary would be paid from General Funds and 25 percent would be provided by the Livestock Inspection budget. The positions would primarily work 75 percent of their time in plant industries, nursery inspection, highway jobs, anything dealing with pesticides and animal count, and 25 percent of their time would be spent on animal health issues.
Mr. Rick Gimlin added that the four inspectors that would be moved were primarily supervisory staff that did not generate a large amount of revenue. He said that moving those employees would not jeopardize major revenue in the account. The majority of the revenue in the livestock inspection account was generated by over 100 deputy brand inspectors statewide. The supervisory staff did not generate a large amount of revenues. Ms. Giunchigliani asked Mr. Gimlin to provide the figures to the committee so they could determine the impact of shifting the positions. Ms. Giunchigliani asked when the department planned to re-record the brands. Mr. Gimlin said that had been an error on his part. When he submitted the budget account he neglected to adjust the re-recording revenue out of the base and, unfortunately, it had drastically overstated revenue and reserve. He said they also had an overstatement of the seasonal staff and even with both errors, it turned out that the department still had a positive reserve in both years. In FY2002 the reserve would be approximately $370,000 and in FY2003 the reserve was approximately $268,000. Ms. Giunchigliani asked Mr. Gimlin to provide the numbers on the errors so they could be reviewed by a subcommittee and Mr. Gimlin agreed.
Chairman Arberry asked Mr. Iverson to discuss the rat problem in Spanish Trails in Las Vegas. Chairman Arberry understood that the rats had sneaked into Las Vegas on trees and wondered how they got to Las Vegas with the department’s programs to inspect nurseries and trucks on the highway. Mr. Iverson said that the department had not had the manpower to stop vehicles to inspect nursery products. The only time that had been done was when the brand inspectors were placed on the highways temporarily to determine what impact they could have. There were a tremendous amount of trucks entering Nevada and Mr. Iverson thought the rats came in on nursery stock probably brought in illegally and not through a registered nursery. According to Mr. Iverson there had been times when the Highway Patrol had escorted trucks out of the state and they sneaked back in on a different highway.
Mrs. Cegavske thanked Mr. Iverson for all his help on her newsletters that advised constituents about the bee and ant problems. She said she understood that once the rats had come in they were there permanently because there was no way to eliminate them. She asked if that was true. Mr. Iverson said that the rats were very much like the bees in that once they were there we had to learn to live with them. He believed that could be done through education and the problem could be slowed down. Closing the openings around homes and removing piles of junk could help although the Spanish Trails community provided a wonderful area because of the attics, swimming pools and other areas. Mr. Iverson said he was working to eradicate as many rats as possible and to educate the homeowners.
Mrs. Cegavske asked if any of the rats had been diseased. Mr. Iverson responded that the department had asked the pest control operators to bring in the dead rats for examination. They had been examined and no diseases were found.
Senator Rawson inquired whether a bounty program would help to eliminate the rats. Mr. Iverson said that it might and it was a good idea. Senator Rawson said that someone who had the rats in their district might want to propose a bill that produced a bounty program.
Ms. Giunchigliani wondered if a developer might have brought in the rats and was there a way to check back to see who planted the trees and were they received from an illegal nursery. Mr. Iverson said there was a problem in tracking back to see what trees the rats came in on. An individual might have brought in trees from another state or someone might have purchased some cheaper trees from someone on a street corner without a license. The department was unsure of the way the rats arrived in Spanish Trails but he believed they came in on trees.
Ms. Giunchigliani asked whether fines could be imposed when the department located trucks bringing illegal loads into the state. Mr. Iverson said that the department did fine the trucks and also had the authority to lock the trucks and take the merchandise away and burn it. He said that they had done that but most of the time the trucks were turned back. Ms. Giunchigliani asked why they were turned back. Mr. Iverson said that had been done so the department would not have to burn the merchandise but the operators were still fined. Ms. Giunchigliani asked if the fines were high enough to serve as a deterrent and Mr. Iverson said he believed they were. However, the state was an open state and anyone could come and go and that was why the nursery industry was willing to raise fees and help because they were concerned. This had cut into all the good operators’ businesses because they must buy from registered nurseries, have their stock inspected, and comply with all quarantines.
Ms. Giunchigliani asked who someone would contact if they suspected an animal of having rabies. Mr. Iverson said all rabies testing in the state was done at the department’s lab. When an animal was picked up that was suspected of rabies it was delivered to the lab as soon as possible so the department could return the findings quickly.
Mrs. Chowning complimented Mr. Iverson on the Dog Bite Prevention Program that Dr. Anderson from Reno had done in all Clark County first grade classrooms. That program was a partnership with State Farm Insurance. Dog bites were one of the largest reasons for injury to young children, especially ages five through nine, and Mrs. Chowning encouraged legislators to contact schools in their areas to be certain the program had been presented in the first grade classrooms. Mr. Iverson said that program had had a real impact on the number of dog bites and also on the number of rabies tests required.
Mr. Iverson said that he wanted to review the funding the legislature had provided in the 1999 session, however, Chairman Arberry said that was not necessary.
Mr. Iverson went on to discuss the consolidation of budgets. He said that the department tried to reduce the number of budgets that had to be addressed in the budget. He wanted to eliminate eight budgets so they could be moved into plant industries, Budget Account 4540. Mr. Iverson referred the committee to Section 10 of Exhibit G for a schematic depicting how it would work. They wanted to blend two other budgets into the administration budget. That would take 19 budgets and reduce them to 11 budgets. A key element in the proposal was that the department would still track each of the dollars by category and job code. Instead of tracking by budget it would be done by job code and category. The department would have the ability to do this under the new IFS system. Mr. Iverson said the proposal would save $317,000 by taking a portion of each division’s budget and placing it in the Department of Administration. The numbers shown under Budget Accounts 4537, 4540 and 4546 were the percentages of the 52 percent cost allocation to the Department of Administration. The Division of Administration services the entire department so the requested change would assure that all divisions paid their fair share towards administration.
Mr. Iverson then discussed the department’s enhancement highlights shown in Section 11 of Exhibit G. He highlighted Budget Account 4554, E-900 as an important change. He said the department was trying to develop an agricultural enforcement team and the best way to do that was to pull people who already had been trained and had law enforcement authority that could be sent out on the roads to stop some of the problems. Mr. Iverson said the department also requested funding for a public grazing data base in decision unit E-300 of Budget Account 4554. Last session the program was funded with $80,000 and the department would like $5,000 for each year of the next biennium. The grazing study would be completed by March 1, 2001, and Mr. Iverson said the committee would be sent a report.
In Budget Account 4540, the department asked for a re-approval of the positions that were brought before the committee on December 4. At that time Chairman Arberry asked the department to make the request a decision unit in the budget. The funding would be used to hire an agricultural inspector to help with nursery inspections in Las Vegas and a secretarial position to help with the pest control operator program in Las Vegas.
In the Division of Animal Health, Budget Account 4550, Mr. Iverson described E-150 as the horse-training program. He requested $71,088 in FY2002 and $73,843 in FY2003 to fund 75 percent of the salary for the educational coordinator and horse trainer. He said the program was not training a large number of horses but it was a positive program and the horses had been adopted out. The program recently had its second adoption of 16 horses. A major advantage to this program, according to Mr. Iverson, was to see the effect on the inmates. Some of the inmates had never touched a horse in their life and they could now take nine credits of college courses from the community college. The coordinator had been hired in October 2000. He had been a gym coach at the prison and his position was transferred into the Division of Agriculture and the position was called a recreation specialist. The current year’s salary was primarily paid from excess funds in the Plant Industries Division that occurred when the department had not been able to hire a plant pathologist. An additional $10,000 from Animal Health and $5,000 from Brands was also used.
Ms. Giunchigliani asked if the department had gone to the Interim Finance Committee for approval of the changes. Mr. Iverson said, “No, they had not gone to IFC but instead went to the Budget Office and obtained approval for a temporary one-year position so it could be brought before the legislature.” Ms. Giunchigliani said she believed that the position should be reviewed closely. She also asked why prison industries had not paid for the training. Mr. Iverson said prison industries had given the department $25,000 which was sitting in a reserve account. If the program was funded for the next biennium the $25,000 would be returned to the General Fund. Ms. Giunchigliani said she thought that $200,000 could be taken out of the reserve for prison industries since they had $1.4 million there and that might be more appropriate than using General Funds. Mr. Iverson said the prison had committed to $25,000 and if approval was not received the department would use the money to at least continue the program and Mr. Iverson would try to get counties or others to donate to continue the program.
In Budget Account 4537 the department asked for equipment money to improve the chemistry labs and in Budget Account 4551 travel money was requested. He said that the department needed to purchase one equipment package for one inspector that included a truck, a utility box and all the scales that went with it.
With no further business Chairman Arberry adjourned the meeting at 4:42 p.m.
RESPECTFULLY SUBMITTED:
Lila Clark
Committee Secretary
APPROVED BY:
Assemblyman Morse Arberry Jr., Chairman
DATE: