MINUTES OF THE meeting
of the
ASSEMBLY committee on Ways and Means and
senate committee on finance
joint subcommittee on human resources/k-12
Seventy-First Session
May 31, 2001
The Assembly Ways and Means and Senate Finance Joint Subcommittee was called to order at 4:00 p.m., on Thursday, May 31, 2001. Chairman David Goldwater. 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 MEMBERS PRESENT:
Mr. David Goldwater, Chairman
Mr. Morse Arberry Jr.
Mrs. Barbara Cegavske
Mr. Joseph Dini, Jr.
Ms. Sheila Leslie
SENATE MEMBERS PRESENT
Senator Bob Coffin
Senator Bernice Mathews
Senator William J. Raggio
Senator Raymond D. Rawson
COMMITTEE MEMBERS ABSENT:
Ms. Sandra Tiffany (Excused)
STAFF MEMBERS PRESENT:
Mark Stevens, Fiscal Analyst
Gary Ghiggeri, Fiscal Analyst
Georgia Rohrs, Program Analyst
Linda Smith, Committee Secretary
Chairman Goldwater emphasized that the Governor and legislative leadership had worked very hard to fully fund the state Distributive School Account for the 2001-2003 biennium.
Senator Raggio said the amounts included in the DSA budget were contingent upon passage of S.B. 577, which increased corporate business fees, and A.B. 460, which would return rental car collection fees to the state. S.B. 577 would result in an additional $29 million across the biennium and A.B. 460 would result in an additional $23.5 million across the biennium.
Senator Raggio referred to two areas of funding that would be provided outside the DSA:
· A 3 percent teacher retention bonus would be payable from the one-shot money previously proposed by the Governor for a 5 percent bonus.
· The $20,000,000 originally included in the one-shot money for teacher training, textbook resources, and information technology, would be allocated for teacher recruitment bonuses and educational technology -- $10,000,000 over the biennium for each area.
Senator Raggio then referred to the DSA budget and explained the recommended adjustments:
· A 2 percent cost-of-living increase would be included in the second year of the biennium. In FY2004 the base budget amount would reflect a 4 percent cost-of-living increase, even though the increase in FY2003 was 2 percent.
· Because cost projections for utilities were understated in The Executive Budget, it was recommended that utility costs in the DSA budget be increased by a total of $2,123,049 -- $518,820 in FY2002 and $1,604,229 in FY2003.
Senator Raggio stressed the importance of understanding all of the education funding that would be available during the upcoming biennium, not just the DSA. Because of the need for a pool of money for utility increases that might not otherwise be addressed in the various budgets, approximately $23 million would be available from a “utility access fund.” It was estimated that $17 million needed to be set aside for state agencies, including prisons and universities, and $6.5 million would be available for K-12. The funding would be for additional utility requirements that might occur and was in addition to the inflation factors for utilities already proposed in the DSA and other budgets. There would be access requirements to ensure that the agencies involved, as well as the school districts, had appropriately utilized the funding that was otherwise provided for utility increases. Senator Raggio stressed the importance of having the access fund. In addition, public and private sectors were experiencing substantial increases in health insurance premiums as well as utilities. The proposal would include, although it would not be part of the DSA budget, approximately $13 million that could be accessed for additional costs in health care premiums. Out of concern that school districts might cut essential or desirable programs, $5 million would be set aside to subsidize other vital education programs.
Senator Raggio said the legislature was bound by the Economic Forum projections in determining available revenues. The budget would be balanced if S.B. 577 and A.B. 460 passed in their present form. The budget was built based upon reversions in excess of $80 million. The reversions were realistic and would provide a balanced budget even with the proposals currently being discussed. In an attempt to provide something further, if revenues came in much stronger than now anticipated, a “trigger” was recommended. Staff had been asked by leadership in both houses to define the point in the ending fund balance, or revenues against ending fund balance, where a trigger would occur. The trigger amount would be based upon staff’s determination and staff was to be exempt and immune from lobbying on that point. The revenue stream would be tested on May 1, 2002, and if revenues were strong enough, a trigger in the amount of 1 or 2 percent for additional cost-of-living increases would become effective on July 1, 2002. Whether or not the 2 percent trigger was fulfilled, there would still be the guarantee of inclusion of 4 percent for cost-of-living increases in the base in FY2004. If revenues were not strong enough on May 1, 2002, the Board of Examiners would test again on October 1, 2002, and, if revenues were strong enough at that time, the trigger would “kick in.”
Chairman Goldwater thanked Senator Raggio for his hard work and his explanation of the proposed DSA funding and funding outside the DSA dedicated to education. Chairman Goldwater then referred to the proposed performance audits for Washoe and Clark County School Districts. Senator Raggio said Gary Crews, CPA, Legislative Auditor, Audit Division, Legislative Counsel Bureau, had explained that performance audits of that magnitude would be very costly -- approximately $1 million. The suggestion was made, and Senator Raggio hoped it would be accepted by the joint subcommittee, that one position be added to the LCB audit staff. Mr. Crews would assign a veteran auditor to conduct a preliminary survey over the interim of both the Clark County School District and the Washoe County School District to determine what areas might be appropriate for audit. Local school districts conducted financial audits each year and the financial audits were not the concern of the legislature. Most individuals were concerned with other issues such as budget procedures. The proposed preliminary survey would be less costly. Washoe and Clark County School Districts were selected for the audits due to their being the two largest school districts in the state.
Chairman Goldwater and Senator Raggio concurred that language should be included in the funding bill that the base amount for salaries in FY2004 would reflect a 4 percent salary increase.
Senator Mathews wondered if there was still a “hole in the budget.” Chairman Goldwater said it was his understanding that passage of S.B. 577 and A.B. 460 would provide a balanced budget.
SENATOR RAWSON MOVED TO CLOSE THE BUDGET WITH STAFF RECOMMENDATIONS INCLUDING A 2 PERCENT COST‑OF‑LIVING INCREASE FOR FY2003 AND AN INCREASE IN FUNDING FOR UTILITY COSTS IN THE AMOUNT OF $2,123,049 OVER THE BIENNIUM.
MS. LESLIE SECONDED THE MOTION
Senator Raggio said his explanation of the educational funding included the proposal for the DSA and funding outside of the DSA and assumed the motion was for the appropriate parts of the agreement. The parts that would go into the DSA would be the 2 percent cost-of-living increase for FY2003 and the adjustment required for inflation for utility rates. Funding for the utility access fund, additional costs of health care premiums, and subsidies for other vital education programs would be appropriated in separate bills. An explanation needed to be included in the bill that stated the funding provided for the health insurance premium increases was a one-time appropriation and did not set a precedent. In response to a question posed by Chairman Goldwater, Mrs. Rohrs stated there was an increase in the amount available for health insurance premiums built into the DSA. The base was what the school districts reported they would be paying in the next biennium for health insurance premiums and there was an increase built into the DSA beyond that amount. Chairman Goldwater asked if the base for the next budget cycle would include the additional funding for health insurance premiums and Senator Raggio indicated the funding would not be rolled into the base. Senator Rawson said the funding was a one-shot appropriation to cover potential insolvency in the health premium area. Senator Mathews noted that the subcommittee appeared to be confused and said language needed to be included in the bill explaining exactly what would happen to the precedent‑setting insurance premium amount. Chairman Goldwater said the indication was that the amount did not roll-up, but if the amount was expended it would seem the districts would report what was spent on health insurance and the amount would automatically become part of the base.
Mrs. Cegavske asked how much was included in the DSA for textbooks. Mrs. Rohrs said textbook funding was part of the operating expenses. There was a separate line item for textbooks in the amount of $13.8 million in the first year of the biennium and $14.5 million in the second year of the biennium. For library books, $2.2 million in the first year of the biennium, $2.3 million in the second year of the biennium; for instructional supplies, $21.2 million in the first year and $22.2 million in the second year; and for instructional software, $1.4 million in the first year and $1.4 million in the second year.
Mr. Stevens said he thought Mrs. Cegavske was referring to the $20 million included in the Governor’s bill for training, textbooks, and technology. There was also a bill in the Assembly for the same amount of money. The Senate bill had been reviewed in committee and, in its current form, would be a combination of money for technology and for new teacher recruitment bonuses.
Senator Coffin said Senator Raggio had indicated he was comfortable with the $80 million in reversions and knew Senator Raggio had concerns with the reversions earlier in the session because the amounts were much higher than usual. Senator Coffin asked Senator Raggio what had increased his comfort level with the reversion amounts. Senator Raggio said budget cuts still had to be made that were initially proposed. The Governor had recommended some cuts and committees were in the process of doing those cuts to balance the budget. Senator Raggio again stressed that the budget would be balanced based upon $80 million in reversions. After discussions with staff, Senator Raggio felt the projected reversion amounts appeared to be appropriate. However, no one could foretell what the actual amounts would be. The Governor had signed off on the plan and indicated that hiring freezes would continue and that the budgets would be monitored. The reversion amounts were the best estimates of staff who prepared the budgets and individuals who would have to approve the budgets.
Senator Raggio indicated his presentation of the funding was an attempt to finalize the situation and indicated the Governor and Speaker Perkins concurred. Senator Raggio said it took a lot of hard effort to try to address and allay all of the concerns and utilize as efficiently as possible the funding that had been proposed. Anything the subcommittee approved was conditioned upon all parties signing on. It was also conditioned upon the bills being processed and passed in a form acceptable to both houses. Senator Raggio said there would be a return to the Governor’s proposal included in The Executive Budget if the current plan was not adopted.
Mr. Arberry said the plan took a great deal of planning and did not want to send a message to the educators that the legislature did not support them. The legislature did support education and was working very hard to provide funding for education and to provide adequate salaries for educators. Mr. Arberry indicated he was not totally happy with the proposal, but wanted to commend all the individuals who had worked on the plan.
Senator Rawson was concerned that there might be the perception that the legislators could not support anything that was not included in the budget. There was no question this was a difficult budget year and important issues had been set aside due to lack of funding. Legislators had a separate constitutional responsibility and authority to determine good issues and generate those issues and try to fund them through the legislature. Senator Rawson said he would never “buy off” on the idea that if something was not in the Governor’s budget, then it was not worthy of consideration and resented the label of “pork” being tied on anything that was not included in the Governor’s budget. There were “pork” bills and there were legitimate funding issues. Senator Rawson stated the plan was a good compromise and a good plan.
Senator Coffin stated he too, was happy with what had been proposed and indicated there had been significant changes made to the Governor’s recommended budget.
Chairman Goldwater thanked the subcommittee for 4 months of hard work, thanked Senator Rawson for his able stewardship and leadership, and thanked Senator Raggio and Speaker Perkins for the last 40 hours of hard work on the proposal.
Chairman Goldwater said the motion before the subcommittee was the compromise outlined by Senator Raggio and asked all those in favor of the motion to indicate by saying aye.
THE MOTION PASSED UNANIMOUSLY. (Ms. Tiffany was not present to vote.)
********
Chairman Goldwater adjourned the meeting at 4:50 p.m.
RESPECTFULLY SUBMITTED:
Linda J. Smith
Committee Secretary
APPROVED BY:
Assemblyman David Goldwater, Chairman
DATE: