MINUTES OF THE meeting

of the

ASSEMBLY committee on Ways and Means and

SENATE COMMITTEE ON FINANCE

JOINT SUBCOMMITTEE ON HIGHER EDUCATION/CAPITAL IMPROVEMENTS

 

Seventy-First Session

April 30, 2001

 

 

The Joint Subcommittee on Higher Education/Capital Improvements was called to order at 8:00 a.m. on Monday, April 30, 2001.  Chairman Morse Arberry Jr. presided in Room 3137 of the Legislative Building, Carson City, Nevada.  Exhibit A is the Agenda.  Exhibit B is the Guest List.  All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

 

 

ASSEMBLY COMMITTEE MEMBERS PRESENT:

 

Mr.                     Morse Arberry Jr., Chairman

Mr.                     Joseph Dini, Jr.

Mr.                     Lynn Hettrick

Mr.                     John Marvel

Mr.                     Richard D. Perkins

 

SENATE SUBCOMMITTEE MEMBERS PRESENT:

 

            Senator William J. Raggio

            Senator Bob Coffin

            Senator Bernice Mathews

            Senator Raymond D. Rawson

 

SUBCOMMITTEE MEMBERS ABSENT:

 

Ms.                     Chris Giunchigliani

 

STAFF MEMBERS PRESENT:

 

Gary Ghiggeri, Senate Fiscal Analyst

Steve Abba, Principal Deputy Fiscal Analyst

Rick Combs, Program Analyst

Connie Davis, Committee Secretary

Andrea Carothers, Committee Secretary

 

BUDGET CLOSINGS

DEPARTMENT OF ADMINISTRATION

 

BUILDINGS AND GROUNDS DIVISION (710-1349) - BUDGET PAGE ADMIN-66

 

Rick Combs, Program Analyst, Legislative Counsel Bureau (LCB), Fiscal Analysis Division, discussed the following technical adjustments to the Buildings and Grounds Division Budget Account 710-1349:

 

• Balance forward from FY2001 to FY2002 was reduced based on revised projections provided by the Buildings and Grounds Division.  Work programs approved during FY2001 resulted in the balance forward being reduced by $200,000;

 

• Transfer to the Capitol Police budget adjusted in the base budget and in decision unit E-710 to correspond with adjustments made in that budget.

 

Mr. Combs discussed the following budget closing issues for consideration by the subcommittee:

 

• Decision unit M-100 - In addition to normal inflationary adjustments to each budget account in The Executive Budget, increased revenue from rent charged to state agencies and state-owned buildings was included in the Buildings and Grounds Division budget.  Based on the projects recommended in the FY2001 CIP and revised completion dates for other previous CIP projects, the revenue was increased by $2.7 million in the first year and $3.2 million in the second year;

 

• Decision units E-276, E-277, E-800, E-801, E-926, and E-994 recommended increased transfers to the Capitol Police Division.  The amount transferred for the equipment in E-710 was adjusted based on an adjustment recommended in the Capitol Police account;

 

• Decision unit M-302 recommended a two-grade increase for the Chief Engineer, Plant Operations, position based on the Governor's recommendation to provide engineer positions a two-grade increase;

 

• Decision unit M-303 recommended a two-grade classification increase for a Management Assistant II position based on the Department of Personnel's occupational study;

 

• Decision unit E-710 recommended $39,051 in FY2002 and $39,166 in FY2003 for replacement equipment, which included hand tools, meters, small computer items, as well as a radio base station, radios, and a forklift ($23,500);

 

• Decision unit E-720 recommended $2,156 in FY2002 and $4,090 in FY2003 for the purchase of new equipment, which included "Wet Vacs," a cast-iron pump, and a victaulic press.  The victaulic press would allow the division to perform their own repair to equipment in three buildings in southern Nevada rather than using an outside vendor;

 

• Decision unit E-730 recommended increased expenditures for operating and utility costs of new buildings being brought on-line during the 2001‑03 biennium.  The original Governor's recommendation included the Carson City Courthouse, the Highway Patrol building in Las Vegas, and the National Guard Armory building in Carson City.  Based on the fact that the Highway Patrol building would not be finished during the coming biennium and that some of the buildings recommended in the 2001 CIP, if approved, would come on-line during the biennium, staff elected to treat the CIP as though all the projects would be approved and increased the expenditure authority by the amount necessary for operating and utility costs.  Since the CIP would not close until the end of session, staff recommended that if the subcommittee wished to close the budget, staff be provided the authorization to reduce expenditures for capital improvement projects that were not approved.  Additionally, if the CIP closed too late to adjust the budget, staff recommended a Letter of Intent to the administrator indicating those amounts had to be taken out of the budget.

 

Mr. Combs discussed plans by the Department of the Military to vacate the Carson City Armory building by February 2002.  Although the state had taken over the expenditure of maintaining the building, rent revenue had not been included in the budget, and there were no plans other than for the Division of Emergency Management, who rented approximately 6,800 square feet, to stay in the building.  Mr. Combs indicated that staff could make the necessary adjustments to Emergency Management's budget as well as the Buildings and Grounds Division's revenue.  Emergency Management paid about $65,000 a year in rent to the Department of the Military.

 

Mr. Marvel requested information on whether there were any plans to sell the Carson City Armory.  Daniel O'Brien, Manager, State Public Works Board, identified himself for the record and indicated there were no immediate plans to sell the building and no provisions had been made for moving the Division of Emergency Management (DEM).  In response to a question from Mr. Marvel, Mr. O'Brien said the Armory had been under consideration for use as a transition location for other facilities; however, it did not appear it was still being considered for that use.

 

Mike Meizel, Chief, Buildings and Grounds Division, identified himself for the record and indicated the Armory was a valuable property and would be sold when the DEM no longer rented space. 

 

Mr. Marvel asked for information concerning the Office of the Military's plans to vacate the building.  Ward Patrick, Deputy Manager, Professional Services, State Public Works Board, identified himself for the record and advised that the DEM, the U.S. Property and Fiscal Office (USPFO), and the Office of the Adjutant General currently occupied the building.  Mr. Patrick reported that construction was underway to move part of the Guard functions out, and that the PWB was in the design process on the USPFO portion.  It was planned to move the DEM out after construction, which had been anticipated, and could be funded during the following session. 

 

Mr. Combs resumed his presentation and reported that staff recommended issuing a Letter of Intent that directed the division to develop a plan for the usage or sale of the building and to present that plan to the Interim Finance Committee at its first meeting in calendar year 2002.

 

• Decision unit E-850 recommended $1,069,869 in FY2002 and $700,927 in FY2003 for building maintenance and renovation projects.  Mr. Combs referred to a list of the Buildings and Grounds Division (B&G) renovation projects (Exhibit C) and indicated that the majority of the projects were for the Sawyer Building.  Mr. Combs reported two adjustments that included deletion of the funding for the installation of the basement floor ($17,289) at Special Children's Clinic and reduction in the cost of the carpet replacement at the Special Children's Clinic by $8,037 as a result of the capital improvement project at the facility.  Mr. Combs advised that the remaining projects did not appear to be duplicative of projects recommended in the 2001 CIP.

 

Mr. Combs recommended closing the budget with the suggested technical adjustments and authority for staff to make additional adjustments based on approval of the 2001 CIP.  It was suggested that a Letter of Intent be issued concerning the usage of the Carson City Armory building.  Additionally, Mr. Combs projected the reserve at the end of the current biennium with adjustments would be approximately $803,000.  Mr. Combs said that typically, the account had a $700,000 to $800,000 reserve for unexpected problems, and it was anticipated that the reserve would be especially important for the increase in utility costs.  Mr. Combs noted there was a possibility the reserve could be "somewhat understated" since there were no actual figures on which to base the costs for many of the new buildings "coming on-line."  It was Mr. Combs' opinion a reserve of $803,000 would provide funding if the utility costs increased significantly during the biennium.

 

In response to a question from Senator Raggio, Mr. Combs advised that the reserve was not reflected in the closing packet.  After the adjustments recommended by staff were made, the reserve differed significantly from what was reflected in The Executive Budget. 

 

After hearing staff recommendations, Senator Raggio expressed his understanding that the subcommittee would close the budget with two Letters of Intent, one authorizing staff to change the revenues and expenditures and the other on developing a plan for the usage of the old Armory building.  Senator Raggio indicated the Armory was prime commercial property and that he could not see the state holding it for a longer period of time than necessary to house the DEM.  Senator Raggio suggested that a plan should be developed as quickly as possible.

 

                        SENATOR RAGGIO MOVED TO CLOSE THE BUDGET WITH TECHNICAL ADJUSTMENTS AND TWO LETTERS OF INTENT AS RECOMMENDED BY STAFF. 

 

                        MR. MARVEL SECONDED THE MOTION.

 

Senator Coffin recalled the purchase of the Capitol apartment building and asked if the building had been turned over to the Buildings and Grounds Division or to the PWB.  Mr. Ghiggeri, Senate Fiscal Analyst, Fiscal Analysis Division, advised that the Legislative Counsel Bureau (LCB) had purchased the Capitol apartment building and the LCB was not required to utilize the PWB.  Upon approval of the legislature to purchase the building, a Letter of Intent was sent to the director of the LCB requesting his appearance either before the legislature or the Interim Finance Committee prior to expending any monies for renovation of the building. 

 

Senator Coffin asked which agency would determine if the building was worth saving.  Mr. Ghiggeri advised the determination on whether the building should be saved or demolished was completely outside the purview of the Buildings and Grounds Division or the PWB.  Mr. Ghiggeri speculated the Legislative Counsel Bureau, in conjunction with an outside engineering or architectural firm, would make that determination.

 

                        FINAL ACTION ON THE MOTION WAS HELD PENDING A QUORUM OF THE SUBCOMMITTEE.

                       

********

 

CLEAR CREEK YOUTH CENTER (101-1353) - BUDGET PAGE ADMIN-81

 

Mr. Combs reported that at the January 29, 2001, Legislative Commission's Budget Subcommittee hearing, representatives of the Buildings and Grounds Division indicated the Division of State Parks would most likely take over responsibility for the Clear Creek Youth Center.  Mr. Combs referred to an excerpt (Exhibit D) from a Commission on Tourism report and business plan on alternative uses of the Clear Creek facility.  The report called for the Division of State Parks to take over the administration of the Clear Creek Youth Center on July 1, 2001.

 

Mr. Combs advised that the Governor recommended General Fund appropriations that totaled $96,209 in the first year of the biennium and $106,427 in the second year of the biennium while the Commission on Tourism's report recommended funding in the amount of $320,000 for the first year and $260,000 in the second year in order for the business plan to be implemented.  Additionally, the business plan would reduce General Fund support for the first five years, and, in the sixth year, General Fund support would be eliminated, and the Clear Creek Youth Center would become a self‑supporting account. 

 

Mr. Combs pointed out that although capital improvement projects totaling $1.1 million had been recommended for the Clear Creek facility in the 2001 CIP, the report called for $2.6 million in major capital upgrades to ensure that the facility could become self-supporting.  Additionally, Mr. Combs pointed out that the Clear Creek budget, as recommended by the Governor, did not recommend the transfer of the Clear Creek facility to the Division of State Parks, and a request to transfer the Center to the Division of State Parks had not been received.  Mr. Combs reported that based on the lateness of the report from the Commission on Tourism, the Administrator of the Division of Buildings and Grounds had indicated they would plan to continue operating the facility through the Buildings and Grounds Division during the current biennium and proceed with the transfer to Division of State Parks in the next biennium. 

 

Mr. Marvel reported that the Division of State Parks did not want the transfer, which was confirmed by Mr. Meizel.  Mike Meizel, Chief, Buildings and Grounds Division, identified himself for the record and explained that Wayne Perock, Administrator, Division of State Parks, was of the opinion that a period of several years was needed to prepare for a take over.  Additionally, Mr. Meizel explained that the business plan had just recently been received and while they would like to transition it as a youth education center to Division of State Parks, several more years were needed to prepare.  In the meantime, Mr. Meizel recommended the capital improvement project should proceed because infrastructure improvements were needed whether the facility was held, sold, or leased.

 

Mr. Combs discussed the following decision units:

 

• Decision unit E-275 recommended $6,381 to fund an increase in seasonal help needed for increased activities during the spring and fall.  The adjusted base included $3,633 in each year of the biennium for seasonal support and the amount recommended would increase the amount to about $10,014 per year, which was the amount approved by the 1999 legislature for each year of the 1999-2001 biennium.  Mr. Combs indicated the recommendation appeared reasonable based on the prior recommendation;

 

• Decision unit E-710 recommended replacement of small equipment items;

 

• Decision unit E-720 recommended funding for a new chipper/shredder and a portable electric generator.

 

Mr. Combs noted that both recommendations appeared reasonable.

 

MR. MARVEL MOVED TO CLOSE THE BUDGET AS RECOMMENDED BY STAFF.

 

MR. DINI SECONDED THE MOTION.

 

THE MOTION CARRIED.  (Ms. Giunchigliani was not present for the vote.)

 

BUDGET CLOSED.

 

********

 

MARLETTE LAKE (712-1366) - BUDGET PAGE ADMIN-86

 

Mr. Combs reported that decision unit E-710 recommended the purchase of a new outboard motor ($2,510) in FY2002 for the boat used to check the dam and other areas around the lake that were inaccessible by vehicle or by foot, and the recommendation appeared reasonable.

 

MR. HETTRICK MOVED TO CLOSE THE BUDGET AS RECOMMENDED BY THE GOVERNOR.

 

MR. DINI SECONDED THE MOTION.

 

THE MOTION CARRIED.  (Ms. Giunchigliani was not present for the vote.)

 

BUDGET CLOSED.

 

In response to a question from Senator Raggio, Mr. Meizel advised that the Buildings and Grounds Division wanted to purchase a 4-cycle motor between 12 and 15 horsepower.

 

********

 

BUILDINGS AND GROUNDS DIVISION (710-1349) - BUDGET PAGE ADMIN-66

 

                        SENATOR RAGGIO MOVED TO CLOSE THE BUDGET WITH TECHNICAL ADJUSTMENTS AND TWO LETTERS OF INTENT AS RECOMMENDED BY STAFF. 

 

                        MR. MARVEL SECONDED THE MOTION.

 

THE MOTION CARRIED.  (Ms. Giunchigliani was not present for the vote.)

 

BUDGET CLOSED.

 

********

 

Chairman Arberry asked the Legislative Auditor, Gary Crews, CPA, to report on the results of the legislative audit on the Public Works Board Lied Library projects. 

 

Gary Crews, Legislative Auditor, identified himself for the record and referred to the legislative audit report (Exhibit E), which had been distributed to the members of the subcommittee.  Mr. Crews reported that the audit had been requested by the Interim Finance Committee, authorized by the Legislative Commission on December 11, 2000, and released to the members of the legislature and the public during the week of April 16, 2001.

 

Mr. Crews introduced Michael Spell, CPA, Audit Supervisor, and George Allbritten, Deputy Legislative Auditor, who spoke on the key issues of the audit of the Lied Library projects.  Mr. Crews indicated that the principles discussed in the audit report would apply to any future project undertaken by the Public Works Board (PWB).  Mr. Crews turned the microphone over to Mr. Spell.

 

Mr. Spell identified himself for the record and reported that the Lied Library was funded over three legislative sessions as shown on Exhibit 1, page 6, of the audit report.  The design portion was funded during the 1995 session, construction was funded in the 1997 session, and furnishings and equipment during the 1999 session, for a total of $58,224,759.  Mr. Spell reported that as of February 28, 2001, project expenditures totaled $55 million.  Exhibit 2, page 6, illustrated the annual expenditures for each capital improvement project. 

 

In addition to recorded expenditures, Mr. Spell reported that the PWB had received claims totaling approximately $5.9 million filed by the general contractor and subcontractors.  Additionally, the architect had submitted an invoice totaling more than $600,000 for additional services.

 

Mr. Spell discussed the PWB's responsibility for planning, developing, and managing the capital improvement program.  The PWB ensured that all state buildings and projects included quality architecture and construction, required life‑safety systems, and were completed within budget and on time.  The PWB had the dual responsibility to manage construction and ensure compliance with applicable building codes.  Mr. Spell pointed out that dual responsibility created a potential building conflict, and, as an example, said that enforcing quality and safety issues could affect the "timely completion and cost of a project," which could be considered an issue for further review. 

 

Mr. Spell reported that the audit determined the PWB did not use a competitive evaluation process to select an architect to design the Lied Library.  Instead, the PWB appointed the architect previously selected to conduct a study of the University and Community College System of Nevada's (UCCSN) library needs.  Mr. Spell said that in FY1994, the PWB used a competitive evaluation process to select an architect to conduct the UCCSN library study.  The purpose of the study was to provide an assessment of the UCCSN's current and future library needs.  In addition, the study was to include a recommendation for renovating or replacing the library at the University of Nevada Las Vegas.  The study was completed in April 1995 and recommended building a new library.  Shortly before the study was completed, UNLV requested the PWB appoint the same architect to design the new library.  The PWB concurred with the request and appointed the architect to design the new facility and provide construction management for the project. 

 

Mr. Spell referenced page 10 (Exhibit E) and noted the architect had received three contracts from the PWB totaling $3,651,000 all related to the Lied Library project.  Mr. Spell pointed out that the PWB regulations and policies did not address the selection of architects and engineers when a project was approved after the completion of a study.  The lack of policy resulted in several methods for selecting architects on projects which resulted from a study.  The legislative audit compared three other projects that resulted from studies approved during the 1993 session.  The PWB used a competitive evaluation process to select an architect for the study and design of one project and a non‑competitive process to select the architects for the other two studies and a competitive process was used for design and construction management. 

 

In reference to contract qualification regulations, Mr. Spell indicated the PWB advertised the Lied Library construction bids in December 1997.  Bidders were informed the estimated construction cost of the base bid would be between $39 and $41 million and in addition, bids were to be submitted for three alternate components of the project.  Exhibit E, page 11, showed the contractors' base, alternate, and total bids for each of the nine bids received.  Four of the nine bids submitted were less than the construction budget; therefore, the bid included all three alternates and the contract was awarded to the lowest bidder.  Construction was to begin on March 23, 1998, and all work was to be substantially completed by October 22, 1999.  Although required by law, the PWB did not establish a process to evaluate the contractor's qualifications.  A 1997 amendment to Chapter 341 required the PWB to adopt regulations, procedures, and criteria necessary for determining the qualifications of the contractors.  Six criteria were specified for evaluating a contractor's qualifications:

 

• The financial ability of the applicant to provide the necessary bond;

 

• The principal personnel of the applicant;

 

• The performance history of the applicant;

 

• Any breach of contract of the applicant on a prior contract;

 

• Whether the applicant had ever been disqualified from being awarded a contract;

 

• The safety program and safety record of the applicant.

 

Legislation was approved in July 1997 and regulations were to be in place by October 1, 1997.  However, regulations had not been adopted by December 1997, the date the PWB advertised for bids to construct the library.  Consequently, the PWB did not evaluate the qualifications of the contractors that bid on the Lied Library. 

 

Mr. Spell advised that Chapter 471, 1999 Nevada Revised Statutes amended the contractor qualification laws, which expanded the scope of the 1997 act by including local governments.  However, two of the six criteria originally required in the evaluation process were eliminated.  The new qualification laws did not include a contractor's performance history as criteria for evaluating a contractor's qualifications.  However, Mr. Spell indicated that performance history was an important element in the evaluation process.  Legislative auditors made three recommendations:

 

• Develop policies and procedures to ensure the architect selection process was competitive when projects were funded on the basis of a study;

 

• Legislation be considered addressing contractor qualification criteria.  Mr. Spell advised that A.B. 461 had been introduced and originally addressed performance history; however, the bill was amended and the performance criteria was no longer a part of the bill;

 

• Adopt criteria and procedures for evaluating qualifications of construction firms bidding on projects as required by law.

 

Senator Raggio asked why A.B. 461 was amended to remove the section on performance history.  Daniel O'Brien, Manager, State Public Works Board, identified himself for the record and indicated that PWB representatives had been working to place new criteria into A.B. 461; however, could not reach agreement concerning performance history with others involved in the process.  Agreement was reached on a provision to allow the PWB to set in their regulations additional criteria that would provide taking into consideration the past performance of the bidder.  Mr. Crews expressed concern regarding enactment of a regulation on performance history and questioned whether the adoption of such a regulation would exceed their statutory authority.

 

George Allbritten, Deputy Legislative Auditor, identified himself for the record and began his presentation with a discussion on change orders and delays.  Mr. Allbritten advised that the construction contract required any change in the approved work, contract time, or contract price be authorized by the PWB.  For the Lied Library, authorized change orders added $3.6 million to the project's costs and six months to the completion date of the project.  Noteworthy among the change orders was work necessary to ensure certain of the building walls complied with appropriate fire safety codes.  The initial construction of the walls deviated from the construction plans that created several fire safety issues.  The resolution of the issues significantly affected the "timely completion of the library."

 

Mr. Allbritten indicated that PWB records showed that construction of walls began in January 1999 using a method that deviated from the approved plans.  The construction continued for several months, which "set forth a sequence of events" that affected the completion of the library.  Chief among those events was the eventual determination that the construction method did not conform to appropriate fire safety requirements.  Considerable effort was needed to resolve the fire safety issues brought about by the alternate method of construction.  The fire safety issues were not resolved until February 2000 and added about $780,000 to the project costs, created delays of over three months, postponing the original January 2000 opening date of the library.

 

In reference to the payment of progress billings paid without the architect's approval, Mr. Allbritten advised that on public works projects, the architect served a key role in evaluating and approving the contractor's progress billings.  The process included verifying the status of the project and that it was progressing on schedule.  Mr. Allbritten reported that without the architect's approval, there was diminished assurance the amounts requested were appropriate.  Seven progress billings that totaled $4.7 million were paid without the architect's signature or other evidence of approval, and correspondence indicated the architect had concerns regarding the extent of the project's completion, the sufficiency of money to complete the project, and the release of retention.

 

In reference to reporting of information, Mr. Allbritten advised that the PWB did not always report critical information to oversight bodies.  NRS 341.100 required the manager of the PWB to advise the Board and the legislature of the progress of all public works projects. 

 

In reference to the previous discussion on correspondence related to unsigned billings and concerns regarding the project's completion, Senator Mathews asked whether the PWB had an inspector on the job.  Mr. Allbritten responded that there was an inspector on the project, and additionally, that all parties, PWB, inspectors, and architects, were supposed to sign off on the billing before payment.  In reference to a question from Senator Mathews, Mr. Allbritten indicated that the architect played a key role in the project and that his approval should have been required before payment was made.

 

Mr. Allbritten continued his presentation concerning the issue that the Public Works Board and the legislature be kept apprised of the progress of all public works projects.  A review of PWB and Interim Finance Committee (IFC) minutes indicated that information submitted to those bodies was inconsistent with the project records.  Consequently, Mr. Allbritten indicated an accurate status of the construction problems related to the Lied Library was not fully communicated.  As an example, agency correspondence dated June 1999 indicated concerns the project would not be completed in time for the original January 2000 opening date; however, those concerns were not expressed to the IFC until November 1999.  Additionally, Mr. Allbritten indicated that the legislative audit did not find any evidence that the fire safety issues related to the wall construction were adequately communicated. 

 

Recommendations included:

 

• Develop formal guidelines for approval of deviations from construction plans;

 

• Develop policies and procedures for approving and monitoring construction change directives;

 

• Obtain the architect's approval on each progress billing as required by PWB policy;

 

• Obtain the architect's approval and resolve disputes on billings;

 

• Ensure that reliable information regarding the status of public works projects was provided to oversight bodies.

 

In reference to construction completion requirements, Mr. Allbritten reported that while the PWB issued certain documents that established key construction completion dates, an effective process should include formal guidelines for establishing requirements and conditions of those documents.  Mr. Allbritten indicated the PWB had not issued formal guidelines addressing the process and as a result, the completion documents for the Lied Library were subject to varying interpretations and modifications. 

 

In reference to the certificate of substantial completion, Mr. Allbritten advised that the completion process included contractor notification to the architect that the work was sufficiently complete to comply with the terms of the contract.  The notification list included a list of items to be completed by the contractor.  When the PWB and the architect agreed on the completion of work, a certificate of substantial completion, signed by the PWB and the Attorney General, should be issued which established the project's contractual completion date and the contractor's continued responsibility related to the project.  While the certificate for the Lied Library was effective May 2, 2000, the following work had not been completed: 

 

• Final cleanup had not occurred;
• Punch lists had not been prepared; and,
• Fire safety and mechanical systems had not been completely tested.

 

Mr. Allbritten reported that because there were items that had not been completed for several months, the actual date of substantial completion was unknown.  By July 2000, sufficient work had progressed for the building to be occupied.  However, the building needed to be completed by May 15, 2000, to "facilitate the fall semester opening."  Since the building was unavailable on the May 15, 2000, date, UNLV delayed the opening until January 2001.  Although the library was not completed timely, liquidated damages were not assessed.  Instead, the PWB adjusted the authorized completion date through change orders. 

 

Mr. Allbritten reported a second key event in the completion process was when the "using agency" occupied a building which was documented by the issuance of the certificate of occupancy.  Despite its importance, the PWB had not established guidelines for issuing the certificate of occupancy.  Mr. Allbritten reported that the PWB and the State Fire Marshal issued a conditional certificate of occupancy effective July 6, 2000.  Although the building was considered in compliance with state and local ordinances and the Uniform Building Code, the certificate was issued with four outstanding issues and according to the State Fire Marshal, only one of those issues had been resolved as of February 28, 2001.  Therefore, a final certificate was not issued.

 

Mr. Allbritten advised that the legislative audit recommended that the PWB develop formal guidelines for the issuance of a certificate of substantial completion and a certificate of occupancy.

 

Mr. Allbritten referred to the legislative audit appendices (Exhibit E) that included additional information:

 

• Page 26 – Schedule of change orders;

 

• Pages 27, 28  - Change orders summarized by requesting party and construction category;

 

• Page 29 – Schedule of progress payments;

 

• Pages 30, 31, 32 – Comparison of original cost estimates to actual expenditures;

 

• Page 33 - PWB response to the audit.  Mr. Allbritten pointed out that the agency accepted all of the legislative audit recommendations.

 

Chairman Arberry referred to the summary of contractors' bids on page 11 of the legislative audit report (Exhibit E) and asked which contractor received the contract.  Mike Spell identified himself for the record and advised that Tibesar Construction was the lowest bidder and was awarded the contract.  Chairman Arberry indicated it was his understanding that Tibesar Construction had no previous experience in building a project of great magnitude and asked if that could be verified.  Mr. Spell indicated the PWB's database on the history of projects was insufficient to provide information on the workload.  Additionally, Mr. Spell indicated that without the qualification requirements in place, there were no records to review.  It was Chairman Arberry's understanding that the architect also lacked experience in designing a project on the level of the Lied Library. 

 

Chairman Arberry commended the legislative auditors on their work.

 

Mr. Marvel referred to page 14 of the audit report (Exhibit E) and noted information that indicated initial construction of the walls deviated from the building plans, but that approval from appropriate regulatory officials was not obtained.  Mr. Marvel asked if there had been any determination on why approval was not obtained.  Mr. Allbritten responded that there was no formal procedure within the PWB to facilitate approval of changes to construction plans.  In response to a question from the Chairman, Mr. Allbritten clarified that change orders were approved, but there was no formal procedure for the PWB and the Fire Marshal to approve deviations from approved construction plans.  Mr. Crews advised that while approval of deviations from approved construction plans were submitted to the architect, there was no record of communication between the architect and the PWB.  Mr. Crews reinforced that procedures needed to be developed so that the appropriate regulatory officials could be included in any changes to approved construction plans.

 

In response to a question from Senator Mathews concerning the on-site inspector's job, Mr. Allbritten advised that informal approvals by the architect, which were communicated to the inspectors, resulted in construction being allowed to continue "unbeknownst" that life-safety issues were being impacted by the changes.

 

Mr. O'Brien, Manager, Public Works Board, identified himself for the record and indicated that in the private sector, any deviation requested by a contractor or architect must be approved, in advance, by the building department.  However, the state PWB inspectors approved work in conformance with plans, and changes approved by an architect in the field did not go through any other approval process. 

 

Mr. O'Brien envisioned the PWB as the building department for the state and that any changes approved by an architect would go through a plan check by the PWB to verify that changes conformed to code.  While such a process did not currently exist within the state, Mr. O'Brien proposed that the PWB establish a building department environment within the PWB agency to ensure the availability of a check and balance system. 

 

Mr. O'Brien explained that during the Lied Library project, the subcontractor represented that "a top of wall detail" was approved by the architect, which turned out not to be true. 

 

While Senator Mathews indicated she was aware that Mr. O'Brien was new to the position as the Manager of the PWB, she also expressed concern that some of the same problems seen with the Lied Library project were being repeated with the Veterans' Home project.  Mr. O'Brien responded that while the problems at the Veterans' Home differed from the ones experienced on the Lied Library project, the bidders' past performance would have been evaluated had the process to qualify bidders been in place at the time. 

                       

Insofar as the Lied Library, Mr. O'Brien indicated any deviation from the plans that was not approved by the architect was not the fault of the inspector but the fault of management, and a change had to occur in management's attitude.  Mr. O'Brien advised that the certificate of substantial completion was very specific concerning what had to be complied with before a certificate of completion could be issued.  Compliance with those specifics was not adhered to in the Lied Library project; however, a certificate of substantial completion was issued. 

 

Mr. O'Brien discussed the necessity of establishing a process for issuing a certificate of substantial completion (when liquidated damages begin and end) and a certificate of occupancy (building code provision that indicates safe occupancy).  Mr. O'Brien explained that a certificate of occupancy could be issued and a building could be occupied, even though there were outstanding contract provisions, which would allow the agency to get into the facility while the contract provisions were resolved.  Mr. O'Brien indicated that many of the issues discussed were in the audit report and that the PWB agreed with the audit recommendations and the need for procedures to be established.

 

Senator Coffin referenced the schedule of contract change orders on page 29 of the audit report (Exhibit E) and requested information on change order 26 which reflected a $738,059 reduction in the cost of the contract.  Mr. Spell explained that change order 26 was a negative $738,059; however, $1.1 million of change order 26 was for correction of a contract that had been initiated as change order 16 which was incorrectly charged as a change order and should actually have been a contract out of the 99 C‑11 project.  The contract was reversed; however, $400,000 was for various additional change order items to complete the project. 

 

In response to concerns raised by Senator Coffin in reference to life safety issues, Mr. Spell indicated there were life safety issues going on throughout the entire project.  Page 28 (Exhibit E) reflected 56 change orders out of 459 were fire safety related items and totaled $1.2 million.  Additionally, page 27 (Exhibit E) indicated the State Fire Marshal requested three change orders for $158,648. 

 

In response to a question from Senator Coffin concerning payment of progress billings without the architect's approval, Mr. Spell indicated the architect was interviewed and reported concerns about retention and the percentage of project progress, and that he had not received some progress billings because the contractor and the PWB "kept him out of the loop."

 

Mr. Spell stated that according to the terms of the contract, the architect was to be involved in signing the progress billings, which was also required pursuant to the Public Works Board policy.  Additionally, Mr. Spell advised the PWB was in agreement that a policy should be in place to resolve any disputes between the architect and the PWB that might occur throughout any project.

 

Prior to approving the budget for the capital improvements projects, Senator Coffin asked the representatives of the Audit Division if the policies and procedures were sufficiently in place to ensure the PWB was prepared to supervise the new $200 million worth of construction projects outlined in The Executive Budget for the 2001‑2003 biennium as well as the holdover of projects not yet completed for 1997 and 1999.  Mr. Crews responded that at the conclusion of the audit, the policies and procedures were not in place.  Senator Coffin expressed concern in reference to the huge capital improvement projects outlined for the biennium and the fact that the policies recommended by the audit were not in place.

 

In response to a question from Chairman Arberry, Mr. O'Brien stated that all the PWB project managers were licensed either as architects or engineers.  Additionally, Mr. O'Brien advised that the PWB architects or engineers would be responsible for signing the progress billings unless a staff management person removed that responsibility. 

 

After having reviewed a summary of the contractors' bids, Chairman Arberry indicated that past performance of the contractors should have been considered in light of the magnitude of the Lied Library project.  Mr. O'Brien agreed and expressed his intention that procedures would be developed and in place to enable the PWB to work more as a building department before the 2001 CIP was approved and before beginning any new projects.  Additionally, Mr. O'Brien indicated the PWB had already established a plan check procedure which provided that all projects required State Fire Marshal approval even before being bid.  Mr. O'Brien provided assurance that the procedures were being internally established and would be in place before any large projects were undertaken.

 

Chairman Arberry indicated that Senator Coffin's points were excellent and that before the capital improvement projects were approved, a preliminary outline of the PWB's newly-developed procedures would be required.  Mr. O'Brien agreed.

 

In response to a question from Mr. Marvel concerning litigation, Mr. O'Brien indicated that Tibesar Construction had sued the state and a response to the suit was being prepared.  In response to an additional question from Mr. Marvel concerning the amount of money for which the state was being sued, Mr. O'Brien indicated that claims in the amount of over $600,000 had been made; however, actual paperwork had not yet established a specific dollar amount.

 

The Chairman extended his appreciation to the Audit Division and commended their work on the audit recommendations for the Public Works Board. 

 

 

PUBLIC WORKS ADMINISTRATION (101-1560) - BUDGET PAGE ADMIN-90

 

Mr. Combs discussed the following technical adjustments by staff:

 

• Registration costs for the American Public Works Association meeting were eliminated in the base budget.  Meeting was attended in-state in FY2000 and there were no plans to attend in the future;

 

• Allocation of costs for property and contents insurance and state-owned building rent between PWB Administration, Budget Account 1560, and PWB Inspection, Budget Account 1562, were adjusted based on the recommendation to transfer accounting positions to the Administrative Services Division.  Positions eliminated in both accounts changed the percentages that needed to be applied to each budget;

 

• Computer costs were adjusted for updated pricing information.  Computer training costs in decision unit E-710 were transferred from the information services expenditure category to the training expenditure category and expenditures for operating supplies for replacement equipment were eliminated because the expenditures were included in the base budget;

 

• The allocation of expenditures recommended in decision unit E-720 in PWB Administration, Budget Account 1560, and in the Inspection account, Budget Account 1562, was also adjusted based on the revised percentages of employees in each account.

 

Mr. Combs discussed the following budget closing issues:

 

• Facility Audit Program approved by the 1997 Legislature  - The program and the three supporting positions were funded through a General Fund appropriation.  When the program was approved, the agency indicated 300 buildings would be audited each year and that they expected to review all 1,800 state buildings on a six-year cycle.  Instead of auditing 600 buildings each biennium, only about 98 audits a year had been averaged since implementation of the program. 

 

The PWB manager indicated the facility audit reports helped to identify deficiencies in the audited buildings and helped to establish a scope of work to correct the problems and to provide a rough cost estimate.  The manager also indicated that conducting an audit of buildings did not result in decreased costs of projects that were determined to be necessary through the performance of the audits.

 

Mr. Combs advised that the cost of the three positions totaled $187,103 in FY2002 and $191,546 in FY2003.  Mr. Combs indicated that should the subcommittee elect to eliminate the program, the Fiscal Analysis Division requested the authority to work with the PWB and the Budget Division to ensure that all operating, travel, and training expenditures were identified.  Currently, as reported by the PWB, those expenditures totaled approximately $11,338 in each year of the biennium;

 

• Decision unit M-200 recommended additional funding in each year of the biennium in printing expenditures for additional facility audit reports; $2,020 was recommended in The Executive Budget in each year of the 2001‑03 biennium.  Upon review of the base budget for printing costs, the agency concurred sufficient funding existed in the base budget due to an adjustment made in the base.  However, Mr. Combs reported that costs for the 2001 CIP document totaled $6,326, and in previous biennia, the legislature approved $2,500 in each odd numbered year to print the CIP document.  Based on additional information from the agency, Mr. Combs indicated the PWB could produce the document for about $4,000 in future biennia if it reduced the number of copies printed and the amount of color used.  Currently 260 comb-bound books and 35 3-ring binders were reproduced.  Staff recommended increasing the base amount of $2,500 by $1,500 to a total of $4,000, which would enable the PWB to print the CIP document in FY2003.

 

• Decision units E-250 and E-900 – Decision units E-250 and E-900 recommended the transfer of an Accounting Technician position and an Accounting Specialist position to the Administrative Services Division of the Department of Administration.  Additionally, decision units in Budget Account 1562 recommended transferring five remaining accounting positions to the Administrative Services Division.  The costs for the specific positions transferred would be paid from the PWB accounts through a transfer to the Administrative Services Division in FY2002 and FY2003, which would equal the cost of those positions.  In future biennia, those costs would be allocated among the various agencies of the department based on the number of documents processed.  The manager indicated that transferring the positions would result in efficiencies for both agencies and the administrator of the Administrative Services Division agreed, indicating that having a larger staff assisted in minimizing the impacts of vacancies as well as positions that go on annual and sick leave.  Based on information from the manager, Mr. Combs advised that the transfer of the positions appeared reasonable.

 

• Decision unit E-710 – Decision unit E-710 recommended funding for replacement of computer hardware, computer training, and maintenance fees for computer software.  Funding was included for replacement of three personal computers in each year of the biennium and a laptop computer in FY2002, five printers in FY2002 and three printers in F2003.  Staff indicated the recommendation appeared reasonable based on the age of the equipment.

 

• Decision unit E-720 – Decision unit E-720 recommended funding to provide T-1 connectivity between the PWB's Carson City and Las Vegas offices.  The cost of the computer hardware and the Department of Information Technology (DoIT) charges were allocated between the two accounts based on the number of positions in each account.  The DoIT reviewed and approved the requested expenditures. 

 

Mr. Combs pointed out the largest issue for the subcommittee's consideration was the decision on whether or not to eliminate the Facility Audit Program.

 

Senator Coffin recalled issues in the PWB budget discussed in earlier hearings concerning Inspectors and asked the manager how many new Inspectors were requested in the budget.  Mr. O'Brien stated that the Public Works Inspection account was the budget that would include any requests for new Inspectors.  Senator Coffin indicated he would hold his question until the Public Works Inspection account was heard.

 

Senator Raggio asked the manager to discuss his opinions and recommendations concerning the Facility Audit Program.  Mr. O'Brien indicated the Facility Audit Program had two employees, however, the program had never been fully staffed.  Additionally, Mr. O'Brien reported that one staff person worked out of a separate account; however, the employee's time was charged back to the proper account.  Mr. O'Brien indicated a lot of manipulation of moving people around had occurred over the last few years, and that the results of the program would have been better had the program been fully staffed with three positions.  Mr. O'Brien reported that state agencies had indicated the program was of benefit to them, and it was his feeling that had more effort been put into plan checking and full staffing, the program would have been more useful.  However, it was Mr. O'Brien's opinion that the Facility Audit Program was not a program that the "state could not live without." 

 

In response to a question from Senator Raggio concerning the Facility Audit list for the 2001-03 biennium (Exhibit F), Mr. O'Brien indicated there was over 2 million square feet of buildings proposed to be inspected.  In reference to the inspection of 300 buildings per year, Senator Raggio asked the manager what he envisioned concerning the number of inspections during the next two years if the Facility Audit Program was continued.  Mr. O'Brien responded that while the number of buildings inspected depended on the size of each of the buildings, the 300 proposed originally was too high, especially considering that in addition to the inspection, a report had to be written for each building inspected.  Senator Raggio pointed out that information from staff indicated that at an average of 98 audits per year, it would take the agency more than 18 years to audit all 1,800 of the state's current buildings. 

 

Senator Raggio asked the manager what he thought was best for the state concerning the Facility Audit Program.  It was Mr. O'Brien's recommendation that the PWB be provided the opportunity to continue the program.  In response to a question from Senator Raggio concerning staffing, Mr. O'Brien indicated that the three employees would be funded for inspecting state buildings and that they could be kept busy with the inspections.  In response to an additional question from Senator Raggio, Mr. O'Brien indicated the value to the state from the Facility Audit Program would be that reports by the inspectors would disclose the condition and number of square feet of state buildings which would determine maintenance items for the capital improvement projects. 

 

Senator Raggio questioned who would determine the priority of which of the 1,800 buildings had the most serious need to be audited in the next two years.  Mr. O'Brien indicated that determination would be under his direction based upon input provided to him.  Mr. O'Brien explained that in the past priority was based upon auditing older buildings. 

 

Senator Raggio indicated his support if assurance could be provided that the program could be conducted in the proper manner, was meaningful and of some value to the state.  Mr. O'Brien indicated that as the manager, it was his objective to continue the program in the proper manner, have it completely staffed, and to be able to completely justify the program in two years.

 

SENATOR RAGGIO MOVED TO CLOSE THE BUDGET WITH STAFF RECOMMENDATIONS AND RETENTION OF THE FACILITY AUDIT PROGRAM OVER THE NEXT BIENNIUM WITH PERIODIC REVIEW DURING THE INTERIM. 

 

MR. MARVEL SECONDED THE MOTION.

 

Chairman Arberry requested clarification on the motion concerning periodic review of the program and whether the reports should be provided on a quarterly basis.  Senator Raggio expressed a great deal of confidence in Mr. O'Brien and indicated that while a periodic review was necessary, he would leave the number of reviews for staff to determine.

 

Senator Coffin expressed concern in approving the Public Works Administration and Public Works Inspection budgets after being told by the legislative auditors that the policies and procedures recommended in the Lied Library project audit had not yet been implemented by the PWB, nor had any draft policies been seen.  While expressions of confidence had been made concerning one person, Senator Coffin said that nothing was known about the remainder of the agency.

 

Chairman Arberry was of the opinion that the Public Works Administration and Public Works Inspection budgets should be approved and not held in light of the fact that the audit had just been published.  Additionally, Chairman Arberry indicated it would be more important to focus the legislative auditors' recommendations on the capital improvements projects' budget, which had not yet closed. 

 

It was Senator Coffin's opinion that if the subcommittee approved the Administration and Inspection budgets, the means by which those projects would be managed would be set in motion and the process would be seen as having the subcommittee's stamp of approval.  Senator Coffin indicated he saw no reason not to hold the budgets until the PWB had shown in writing they agreed to implement the audit recommendations.

 

Senator Raggio expressed his understanding from Mr. O'Brien that the PWB had accepted all the recommendations of the legislative audit, and the recommendations would be incorporated into the policies of the PWB.  Additionally, Senator Raggio indicated the Facility Audit Program did not have an impact on the Public Works Administration budget.

 

Chairman Arberry indicated Senator Coffin's concerns were well-taken.

 

THE MOTION ON THE FLOOR CARRIED.  (Senator Coffin voted no.  Ms. Giunchigliani and Mr. Hettrick were not present for the vote.)

 

BUDGET CLOSED.

 

********

 

PUBLIC WORKS INSPECTION (101-1562) - BUDGET PAGE ADMIN-96

 

Mr. Combs discussed the following technical adjustments:

 

• Costs for out-of-state travel related to specific capital improvement projects were eliminated in the base budget.  The agency indicated the costs were one-time "in nature";

 

• The base budget included a portion of costs for temporary positions, approved by the Budget Division, to assist the PWB to provide management and inspection services for the school construction projects in White Pine and Lincoln Counties.  Due to a late start on the projects and the uncertainty concerning the length of time the positions would be filled during FY2002, the agency agreed to submit work programs for the continuation of the positions in FY2002 and funding was deleted;

 

• Allocation of costs for property and contents insurance and state-owned building rent were allocated similar to the Public Works Administration budget account;

 

• Salary and fringe benefit costs for the positions transferred to the Administrative Services Division in decision unit E-901 were increased to reflect the reclassification of two positions recommended in decision unit M-303.  The funding transferred to the Administrative Services Division to support the costs of the five accounting positions was increased accordingly;

 

• The costs for computers, printers, and servers in decision units E-710 and E-720 were adjusted based on updated pricing information received from the Purchasing Division.  Expenditures for operating supplies were eliminated in the decision units because the expenditures were included in the base budget;

 

• Computer training costs in decision unit E-720 were transferred from the information services expenditure category to the training expenditure category;

 

• Allocation of expenditures recommended in decision unit E-720 in the Public Works Inspection account for the T-1 connectivity between Carson City and Las Vegas was adjusted based on the number of positions in each account.

 

Mr. Combs discussed the following decision units:

 

• Decision unit E-225 recommended vehicle operation costs for three excessed Highway Patrol vehicles that the agency wished to obtain.  Expenditures in the base budget for the use of personal vehicles were reduced by $1,621 in each year of the biennium to offset a portion of the costs for the decision unit.  The agency indicated Inspectors were using their own vehicles and the three vehicles being requested would reduce the use of personal vehicles;

 

            Decision unit E-225 also included $5,760 in each year of the biennium for the purchase of additional publications and periodicals.  Most of the publications were approved for purchase in previous biennia, but were not purchased in FY2000 due to delays in the printing of the publications and because the Board was required to use some of the funding for increased telephone costs.  Mr. Combs advised that, based on the information provided by the agency, the recommendations in decision unit E-225 appeared reasonable;

 

• Decision units E-251 and E-901 recommended transferring the five remaining accounting positions in the Public Works Inspection budget account to the Administrative Services Division.  Given that the subcommittee had approved the transfer of the five positions in the Public Works Administration budget account, Mr. Combs moved on to the next decision unit;

 

• Decision unit E-275 recommended funding the costs of increasing two half-time Management Assistant positions to full time to provide adequate administrative support for the Board's professional staff.  Of the two half‑time positions currently located in Carson City, one would be transferred to the Las Vegas office.  Based on the need for administrative support in the Las Vegas office, Mr. Combs indicated the recommendation appeared reasonable.

 

            Mr. Combs advised that decision unit E-275 also included $19,002 in FY2002 and $18,946 in FY2003 for additional training for employees.  Mr. Combs noted that approval of decision unit E-275 would double the authorized training expenditures for the Public Works Inspection account and there were also recommendations for training expenditures recommended in decision unit E-276.  Mr. Combs advised that the PWB had provided a list of training expenditures incurred in FY2000 that totaled $19,070.  It appeared that many of the courses included in the base budget were similar to the courses recommended in this decision unit and that many of the expenditures were related to the statewide projects in the CIP.  Although the base budget in the Public Works Inspection account included $15,300 transferred from the statewide programs for training related to those programs, the only project in the 2001 CIP that included any training expenditures was the asbestos abatement CIP 01-S-6 which included $13,230.  Based on the lack of funding for training costs in the 2001 statewide projects and that additional training costs were recommended by staff in E-276, Mr. Combs recommended reduced funding in decision unit E-275 for training to $4,500 in each year of the biennium which would allow Inspectors to attend courses needed to maintain their certifications.

 

• Decision unit E-276 recommended $736,580 in FY2002 and $677,508 in FY2003 for five new positions and various other expenditures to improve project management and coordination.  The Governor's recommended expenditures for the Inspection account exceeded the revenue included in the 2001 CIP to be transferred into the account.  Mr. Combs explained that while the difference was not great earlier in the session, the Board had revised certain project management inspection fees, and it appeared an $800,000 difference existed between the amount recommended to be transferred from the 2001 CIP and the amount that would be expended in the Inspection account over the biennium. 

 

            Additionally, Mr. Combs advised that the Director of the Department of Administration, during his presentation of the Debt Affordability Study, indicated the total amount of the 2003 CIP, in terms of the amount of general obligation bonds that could be issued, would probably be about $44 million which would be "a significant reduction and a smaller CIP to support the cost of the Inspection account.  Mr. Combs advised that while it appeared there would be sufficient funding remaining from the 1999 CIP that could be combined with the funding in the 2001 CIP to support the recommended expenditures in E‑276, it also appeared that future revenues in the Inspection account might not be able to support a large increase in expenditures.  Based on the possible reduction of future revenues as well as justification provided by the PWB for the expenditures recommended in decision unit E-276, Mr. Combs referred to a document listing staff suggestions for reductions to E-276 (Exhibit G).  Mr. Combs reviewed the list and pointed out the differences between staff suggestions compared with the Governor's recommendations:

 

• Five positions recommended by the Governor:  Project Manager IV, who would serve as a fire protection engineer and also head the building department referred to earlier by Mr. O'Brien.

 

In response to a question from Chairman Arberry on the duties of the fire protection engineer, Mr. Combs advised that while the title of the position was for a Project Manager IV, the employee's duties would include those of a fire protection engineer.  Mr. O'Brien addressed the Chairman's concerns and advised that the Project Manager IV was a position title and the employee would serve as the supervisor over the building code function of the agency.  It was Mr. O'Brien's recommendation that the position's responsibilities would be either a fire protection or civil engineer or architect who had the required building experience.  Chairman Arberry indicated that definition needed to be provided as to the specific type of engineer the PWB required.  Mr. O'Brien indicated a fire protection engineer would have the background, knowledge of building codes, and fire protection issues the PWB required for the position.

 

Senator Coffin noted that the schedule provided by Mr. Combs (Exhibit G) did not include the number of positions requested by the agency.  In response to a question from Senator Coffin, Mr. O'Brien indicated the agency had not requested additional positions.  In response to additional questions from Senator Coffin, Mr. O'Brien advised that the PWB had a problem keeping inspectors and filling the positions.  Mr. O'Brien discussed a requested increase to the Inspector's salaries that had not been included in the document because it was submitted to Mr. Combs too late to be included.  It was Mr. O'Brien's understanding Mr. Combs agreed with the proposal to increase the Inspectors' salaries.  Mr. O'Brien reiterated his earlier testimony that Inspectors could do their jobs if they were not circumvented by management.

 

Senator Coffin questioned whether Project Managers could perform the duties of Inspectors and at the same time address concerns regarding the recommendations to reduce the number of positions as outlined by staff.  Senator Coffin expressed concern that the staffing reductions would facilitate the state to "create the self-fulfilling prophecy of having bad buildings built over the next biennium."  Mr. O'Brien addressed Senator Coffin's concerns and indicated that problems could be avoided if management supported the Project Managers, allowed them to do their jobs, refrained from "backdoor deals with the contractor," and complied with the code and to the contract documents. 

 

Mr. O'Brien indicated he had requested a position that could manage the building department function to ensure the proper approval of changes and compliance to code.  Additionally, he believed the process would work with additional Project Managers to ensure that that one Project Manager was not placed on more projects than he could handle. 

 

Senator Coffin advised the Chairman he would have to leave the hearing for another meeting; however, indicated for the record that he did not concur with staff recommendations to reduce the number of Project Managers and indicated his preference would be to add the Project Manager positions back into the budget. 

 

Mr. Combs continued his presentation on the differences between staff suggestions compared with the Governor's recommendations on new positions, (Exhibit G): 

 

• Mr. Combs discussed the new Project Manager IV position recommended to provide supervision for the Las Vegas office; a Project Manager III position recommended for Carson City to serve as the second Mechanical Engineer and assist with in-house mechanical designs as well as the energy retrofit program; a Management Analyst III position recommended for Carson City to provide data processing tasks.

 

Mr. Combs discussed the review of the PWB Inspection account by the Legislative Committee for the Fundamental Review of Base Budgets which resulted in a finding that the board could increase its efficiency and decrease its travel costs by transferring positions from Carson City to the Las Vegas office.  The committee also recommended that the PWB conduct an organizational analysis of its personnel and present its findings to the Subcommittee on Higher Education/Capital Improvements.  That analysis was to include whether positions from the Inspection account currently in Carson City should be relocated to southern Nevada and whether the Deputy Manager for Professional Services position, or some other supervisory position, should be transferred to the Las Vegas office to ensure proper supervision and to reduce travel costs.  Because the PWB had not conducted an organizational analysis, as recommended by the Fundamental Review Committee, staff did not recommend approval of a new position to provide oversight to the Las Vegas office.  The office currently had a Manager, two Deputy Managers, and a Chief of Design assigned to the Carson City office.  Mr. Combs indicated it appeared reasonable to transfer one of those positions to Las Vegas rather than necessitating approval of another new position. 

 

Additionally, staff recommended the approval of the Project Manager IV position who would serve as the Fire Protection Engineer.  Mr. Combs noted that the PWB had indicated they would assist the state in ensuring that delays were not caused by fire protection issues similar to the delays experienced in the Lied Library project.

 

Staff recommended approval of a Project Manager III position to assist with the management of projects in Las Vegas.  Staff indicated that position could be used as a second Mechanical Engineer for the PWB if desired by the Manager.

 

Mr. Combs advised that the PWB concurred on the remaining adjustments recommended to decision unit E-276; however, while the PWB had not concurred or provided staff with a priority list on the five positions, they had indicated that the top priority was the Fire Protection Engineer.

 

• Increased Travel and Training Costs – Decision unit E-276 recommended funding for four employees to attend one national conference and for three persons to attend another national conference.  Mr. Combs advised that because it was unclear how having numerous people attend the conferences would assist in improving management and coordination, staff did not recommend approving the expenditures.  Mr. Combs noted the PWB had the authority to send an employee in Budget Account 1560 to one conference and an employee in Budget Account 1562 to the other conference.

 

            Mr. Combs reported that decision unit E-276 also included $28,750 in each year of the biennium for five employees each to attend project management training, contractor bidding training, delay claims training, construction scheduling training, and for two employees to attend facility audit training.  Mr. Combs noted that the facility audit training, if approved, should be in Budget Account 1560, not the Inspection account, and would need to be funded out of the General Fund.  Staff did not recommend approval.  Additionally, staff requested specific details concerning the courses that would be attended and the PWB indicated a detailed list was not available.  The PWB provided information regarding training courses that had been offered to the PWB by professional organizations that would provide training in-house to staff that wished to attend.  Mr. Combs recommended approval for two training courses in each year of the biennium in the amount of $7,900. 

 

• Computer and Telephone Expenditures - Decision unit E-276 recommended purchase of cellular phones for 29 existing positions and 4 of the 5 new positions recommended.  Based on the fact that Project Managers, Coordinators, and Inspectors were normally in the field and that the Managers indicated that often contractors or the University System loaned them telephones to use, staff recommended approving the 29 cellular phones.  Staff also recommended eliminating pager expenses as the PWB indicated the cellular phones eliminated the need for pagers.

 

• Computer Software – $24,750 in each year of the biennium was recommended for Primavera Expedition software (project scheduling); $100,000 in FY2002 and $25,000 in FY2003 for a Capital Project Planning and Budget System prepared by Legacy Solutions as well as $50,000 for Oracle database software; Lynx Photo Management software which would allow the PWB to maintain a log of photographs for all the projects in their various stages; $30,000 in each year of the biennium to purchase laptop computers, $2,000 in each year of the biennium to purchase four digital cameras and $5,500 in FY2002 for a projector for PowerPoint and similar presentations. 

 

            The PWB indicated that DoIT had not been involved in the determination that the Legacy Solutions Capital Planning and Budget System was warranted.  This was an item that was added to the budget late in the process and did not receive DoIT approval.  Based on the expenditures associated with the system, staff did not recommend approval of the Legacy system or the Oracle database at the current time.  Staff recommended that the agency work with DoIT during the interim to more specifically determine their needs.  Staff recommended a reduction in the number of laptops that would be purchased from ten each year to five in FY2002 only.  The Manager had indicated he wished to assign laptops to Inspectors in the field to determine whether efficiencies resulted from their use.  Staff recommended starting the use of laptops in the field as a pilot project and having the Board provide a report to the 2003 legislature regarding the manner in which the laptops assisted the agency and whether there were any problems in maintaining computers on construction sites.  Staff reduced the number of digital cameras in each year to two cameras in the first year of the biennium based on information that the agency currently had three such cameras.

 

            Mr. Combs noted that the document comparing the positions (Exhibit G) outlined a number of adjustments also related to the recommendations to only approve two of the positions.  Mr. Combs indicated that if the subcommittee decided to approve more than two positions, adjustments would be required to travel, operating, and equipment expenditures for those additional positions.

 

Senator Raggio requested clarification on which positions in the budget staff recommended the subcommittee should not approve and whether approval was based on relocation in some cases.  Mr. Combs explained that his recommendation included a Fire Protection Engineer, which would be located in Carson City and a Project Manager in the Las Vegas office.  Mr. Combs noted that the agency had also requested a position that would act as a backup Mechanical Engineer in the Carson City office and staff believed the two positions could be combined to allow the Project Manager to work in Las Vegas but serve as the backup Mechanical Engineer, as well which would reduce the need for one position.

 

Senator Raggio asked Mr. O'Brien to comment on staff recommendations.  Mr. O'Brien indicated that while he had no problem with staff recommendations on the two positions, he had requested a Project Manager IV, which was a supervisory position over the Las Vegas office.  In response to questions from Senator Raggio, Mr. O'Brien indicated the Las Vegas office currently had three Project Managers, and because the number of projects was increasing, he was not in favor of relocating one of the positions.  Mr. O'Brien went on to explain that he needed the Deputy Manager to be in close proximity to his duties and not 450 miles away.  Additionally, Mr. O'Brien explained that the Chief of Design supervised the design professionals who were in the Carson City office. 

 

Senator Raggio asked if there was sufficient revenue from the projects proposed to cover the additional position requested.  Mr. O'Brien indicated his understanding was that they were covered with the changes proposed; however, he would have to defer to Mr. Combs for any additional positions. 

 

Mr. Combs explained the difficulty in projecting revenues in the Public Works Inspection budget account based on the PWB's method for determining their project management and inspection fees in the capital improvement projects.  Mr. Combs indicated that the Inspection account was budgeted with a transfer of revenue from the projects and not from the reserve.  However, Mr. Combs addressed the concern that the revenue generated by two years of capital improvement projects did not equal the total two-year biennial budget.  Mr. Combs explained there was no concern for this biennium since a significant amount of revenue from the 1999 program had not been transferred into the Inspection account budget.  Mr. Combs further explained that if the budget was approved, as recommended by the Governor, and if the amount of the Capital Improvement Program was reduced in future biennia, the possibility of layoffs existed.  In response to a question from Senator Raggio, Mr. O'Brien expressed his understanding concerning the possibility of future layoffs and discussed his familiarity with the private sector's practice of "staffing up" during periods when there was work and "laying off" when there was no work.

 

Senator Raggio expressed concern in reference to the Lied Library project and claims from the contractor for $6 million and from the architect for $600,000.  Senator Raggio asked for information on how much money was available from the project.  Mr. O'Brien indicated there was no pool of money available for the pending claims and the money that remained was targeted either for furniture, fixtures and equipment (FF&E), or other issues.  Mr. O'Brien stated that the PWB had requested $2 million from the contingency fund in the next year's CIP in order to take care of any outstanding issues on the Lied Library and other projects.  At this point Mr. O'Brien advised it was the PWB's position to fight the lawsuit.

 

Senator Raggio commended Mr. Comb's analysis indicating he had done an outstanding job of reviewing the budgets.

           

                        SENATOR RAGGIO MOVED TO APPROVE THE BUDGET WITH ADJUSTMENTS RECOMMENDED BY STAFF AND THE ADDITIONAL POSITION IN LAS VEGAS.  THE ADDITIONAL POSITION WAS GRANTED WITH THE FIRM UNDERSTANDING THAT WITHOUT SUFFICIENT FUNDS, THE POSITION WOULD NOT BE FILLED IN THE FOLLOWING BIENNIUM, WHICH MUST BE MADE CLEAR TO THE PERSON FILLING THE POSITION.

 

                        MR. MARVEL SECONDED THE MOTION.

 

THE MOTION CARRIED.  (Senator Coffin, Ms. Giunchigliani, and Mr. Hettrick were not present for the vote.)

 

BUDGET CLOSED.

 

********

 

Mr. O'Brien requested clarification on whether the motion included approval for the Inspectors' increases. 

 

Mr. Combs provided clarification that several weeks ago, the PWB had indicated there was a proposal to increase the Inspectors' pay by 10 percent in addition to the cost-of-living adjustment, similar to the Governor's recommendation for Engineers.  The Governor's Steering Committee to Conduct a Fundamental Review of State Government determined that a number of Inspector positions were vacant and a high turnover rate existed.  Mr. Combs reported that he had advised the PWB he would review any proposals from the Budget Division concerning an increase in the Inspector positions.  There were no proposals received and, therefore, the Inspector's increase was not included in the closing document. 

 

Mr. Combs advised that while an analysis of the situation indicated a strong case that the PWB Inspector positions were being drawn away by local governments' higher salary rate, he did not have anything concrete showing how much it would cost to increase Inspector positions.  However, based on a "quick review," Mr. Combs calculated the cost would be approximately $105,000 in the first year and around $120,000 in the second year to increase all 19 Building Inspectors.  Additionally, Mr. Combs addressed the need to consider whether a reclassification was required if the increase affected employees in other state agencies.

 

Chairman Arberry recommended that Mr. O'Brien meet with staff to more clearly define the Inspectors' increase before consideration by the subcommittee.  Mr. O'Brien agreed. 

 

As there was no further business to come before the subcommittee, the meeting was adjourned at 10:36 a.m.

 

RESPECTFULLY SUBMITTED:

 

 

 

Connie Davis

Committee Secretary

 

 

APPROVED BY:

 

 

 

                       

Assemblyman Morse Arberry Jr., Chairman

 

 

DATE: