ASSEMBLY COMMITTEE ON WAYS AND MEANS

MINUTES OF THE meeting

of the

ASSEMBLY COMMITTEE ON WAYS AND MEANS/SENATE FINANCE

jOINT sUBCOMMITTEE ON HUMAN RESOURCES/K-12

Seventy-First Session

March 6, 2001

The Joint Subcommittee on Human Resources/K-12 was called to order at 8:00 a.m., on Tuesday, March 6, 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 COMMITTEE MEMBERS PRESENT:

Mr. David Goldwater

Mr. Morse Arberry Jr.

Mrs. Barbara Cegavske

Mr. Joseph Dini, Jr.

Ms. Sheila Leslie

Ms. Sandra Tiffany

SENATE COMMITTEE MEMBERS PRESENT:

Senator Bob Coffin

Senator Bernice Mathews

Senator William J. Raggio

Senator Raymond D. Rawson

COMMITTEE MEMBERS ABSENT:

None

STAFF MEMBERS PRESENT:

Mark Stevens, Fiscal Analyst

Georgia Rohrs, Program Analyst

Gary Ghiggeri, Fiscal Analyst

Linda Smith, Committee Secretary

BUDGET ACCOUNT 2610, DISTRIBUTIVE SCHOOL ACCOUNT,

PAGE K12ED‑ 11

Chairman Goldwater recognized Ms. Marybel Batjer, Chief of Staff to Governor Kenny Guinn. Ms. Batjer referred to the $10 million included in The Executive Budget that would establish the Nevada Early Literacy Intervention Program. Ms. Batjer stated the Governor felt very strongly that being able to read successfully by the end of third grade was paramount to lifelong success and he had been attracted to a program operated in the Clark County School District. Statistics indicated a child who was not a successful reader by the age of nine, or the end of their third grade, experienced difficulties in the higher grades. In the fourth grade, students were taught social studies, history, and mathematics – each subject required students to be successful readers. Ms. Batjer stated the Governor did not intend to prescribe the exact program, and was aware Clark County, as well as Washoe County, currently operated successful reading programs. Ms. Batjer explained there were other successful reading programs, but those programs were reading intervention programs. The $10 million was recommended to provide training in fundamental reading skills for all K-3 teachers. Ms. Batjer stated the program that operated in Clark County incorporated the elements outlined in the Governor’s proposal -- skills and knowledge to understand how speech sounds are connected to print, the ability to code unfamiliar words, the ability to read fluently, sufficient background and vocabulary to foster reading comprehension, the development of appropriate active strategies to construct meaning from print, and the development and maintenance of motivation to read. Chairman Goldwater asked Ms. Batjer if the committee had copies of the referenced proposal. Don Hataway, Deputy Director, Budget Division, indicated a memorandum had been forwarded to members that outlined the premise of the proposal, as well as a spreadsheet that recommended the method of allocation. Mr. Hataway stated he would be happy to provide the memorandum to members.

Dr. Agustin A. Orci, Assistant Superintendent, Elementary Education and Curriculum Division, Clark County School District, responded to a request from Ms. Batjer to detail the Clark County program. Dr. Orci indicated after 25 years in education, he had spent the past four or five years in the private sector working in the training area for four major Las Vegas resort properties. Dr. Orci found there was a significant emphasis on on-the-job training in relation to significant resources expended by those private organizations. Dr. Orci had returned recently to the Clark County School District and found the need for on‑the-job training, particularly in the area of reading, was the highest priority. Dr. Orci indicated new teachers from the University System might have had one course in reading, and not a very significant course. The district provided on‑the-job training at a very significant cost. At least 3,000 to 3,500 Clark County teachers needed training to become literacy specialists. The proposed funding would provide: 1) improved test scores; 2) teacher expertise in areas beyond reading; and 3) intervention, as opposed to remediation. Dr. Orci stressed that remediation was much more expensive than intervention, and students needed to be taught reading before failure, not after. Dr. Orci stated the significant cost factors associated with dropouts would also be reduced. The training provided in Clark County was research-based and significant research indicated the program had been successful. The proposed funds would be used to make certain every K-3 teacher in the district would be a reading expert.

Senator Raggio asked how long the program had existed in the Clark County School District. Dr. Orci stated the pilot program had existed for the past three years and approximately 800 teachers had been trained in a minimum of 100 schools across the district. Senator Raggio asked Dr. Orci to explain how the K‑3 teachers were trained and the training time frame. Dr. Orci indicated the training totaled seven days and involved classroom instruction. A significant part of the training was on-the-job -- teachers attended classes to learn the needed skills, applied the skills in another classroom, and then returned and were debriefed, which added to expertise. The actual training took place over a three- or four-month period. Senator Raggio asked how much instructional time was lost due to the training. Dr. Orci stated the district preferred to provide the training during off hours, during the summer, or during inter-sessions of year-round schools. In response to a question from Senator Raggio, Dr. Orci confirmed teachers were compensated for the training time and indicated that was a significant part of the cost. The expertise for training the teachers came from a research base Clark County School District had examined and experimented with several times over the past three or four years, and the expertise was within Clark County staff currently engaged in training and who were already experts – a “trainer of trainer” type of approach was proposed.

Senator Raggio asked if, in the three-year pilot program, a measurement had been developed that indicated the change or improvement. Dr. Orci indicated data was collected that measured the reading level of children taught by teachers who had completed the training, and stated the significant increase in reading levels had been very gratifying. Senator Raggio asked the cost of the pilot program and Dr. Orci said approximately $200 per teacher, a total of $160,000. Senator Raggio indicated the proposed allocation was approximately $3.4 million each year of the biennium and asked if that amount would be adequate to fund the program across the school district, and Dr. Orci indicated the recommended funding would establish the base to train the teachers to be reading experts. Senator Raggio stated direct allocations would be provided to the school districts, and wondered what Dr. Orci would suggest to ensure accountability through the Nevada Department of Education (NDE). Dr. Orci indicated a definite evaluation design needed to be established that provided results at the end of the two‑year period, and would invite the NDE to be involved in the training to enable the department, if desired, to provide training to the other districts. Senator Raggio observed the funding provided by the appropriation could not be used for any other purpose and each local school district would be able to develop a program. He hoped programs initiated by the districts would be similar to Clark County’s existing program, and suggested guidelines might need to be provided by the legislature. Dr. Orci stated the six components Ms. Batjer referred to earlier in testimony were universal and based on reliable research.

Senator Rawson stated the budget also recommended $11.5 million for professional development centers and approximately 65 percent of funds had been directed toward reading and remediation and wondered if the focus of the development centers would be changed. Dr. Orci indicated they were working closely with the professional development centers – the emphasis of the professional development centers was assessment and ongoing assessment. Dr. Orci thought the two efforts would work hand-in-hand.

Ms. Tiffany agreed with Senator Raggio that more detail was needed. Ms. Tiffany had contacted the NDE and found that all five of the professional development centers were autonomous – there was no uniformity. Ms. Tiffany asked about the plan, the policy, and the accountability for the early literacy program, the professional development centers, and the $20 million for textbooks and training. Ms. Tiffany also asked how many master teachers would be taken out of the classrooms for the new program, and Dr. Orci responded the training would be conducted outside of regular classroom time. Ms. Tiffany asked how the pilot project in Clark County had been funded in the past. Dr. Orci indicated the project had been funded with existing district resources, including some grant monies, however, the funding was on a very small scale compared to district needs. Ms. Tiffany wondered why, if the district could fund the project, special allocations were required. Dr. Orci indicated Clark County had trained 800 teachers, and the new funding would provide training for 3,500 existing teachers and any new teachers employed by the district.

Ms. Leslie indicated she was somewhat confused since she had not seen the memorandum Mr. Hataway had referred to which addressed the program. Washoe County School District would receive $1.6 million over a two-year period based on the Governor’s allocation. Ms. Leslie indicated Washoe County had already used remediation funds to train teachers in some schools and had good success. Ms. Leslie was concerned the new program would not provide enough flexibility and wondered if the funds could be used to provide more intensive literacy efforts in those schools with trained teachers. Ms. Batjer again indicated the Governor did not want to prescribe or be restrictive with the funding since successful programs existed, such as the Clark County program. Ms. Batjer emphasized the recommended funding allowed flexibility. Ms. Leslie asked if each school district would prepare a plan, which provided detail on the type of program each school would utilize, and would then submit the plan to the NDE for approval. Ms. Batjer stated she would be happy to work with Ms. Leslie on the issue and indicated the Governor wanted any program, new or existing, to include the required six elements.

Ms. Tiffany questioned how the success of the program was measured. Dr. Orci explained students were given a form of a test that measured reading levels upon completion of each grade. Ms. Tiffany asked what form of report would be provided to the next legislative session. Dr. Orci indicated Clark County School District hoped to show increased standardized test scores as well as the criterion-reference measures used. By the next session fourth grade results would include students who had participated in the program in second and third grades and the testing would be conducted early in the fourth grade.

Mrs. Cegavske wanted clarification on how many teachers had been trained and grade levels taught. Dr. Orci indicated approximately 800 K‑3 teachers had been trained and approximately 3,000 still required training. The district’s goal was to have 100 percent of K‑3 teachers trained. Dr. Orci stated there were approximately 8,000 K-6 teachers in the Clark County School District. In response to a question posed by Mrs. Cegavske, Dr. Orci indicated all fourth grade students would be tested, not just those who had been taught by the reading experts. Dr. Orci stated the district had already met with University of Nevada, Las Vegas (UNLV) staff to discuss the development of a very specific evaluation design to glean where the district had succeeded.

Chairman Goldwater referred to a NDE press release that designated Nevada schools needing improvement and asked if any of those schools had participated in the pilot project. Dr. Orci indicated some had, but on a very limited basis, i.e., Fitzgerald Elementary, one of Clark County’s greatest concerns, had only two teachers trained in the process. Dr. Orci indicated the program could not be deemed a failure since so few teachers received the training. Chairman Goldwater reiterated the subcommittee would want to know much more about the program. Mr. Hataway indicated other guests might want to testify on the issue before the end of the meeting.

The Chair recognized Dr. James Hager, Superintendent of Schools, Washoe County School District (WCSD). Dr. Hager testified, WCSD staff visited Clark County School District and reviewed their program, and determined the program was very good. Dr. Hager addressed Ms. Leslie and stated WCSD had many reading programs operating that were remedial in nature – Success for All, Reading Recovery, etc. The pilot program operated in Clark County was a preventative program that taught children to read before the need for remediation. Dr. Hager indicated the WCSD Board of Trustees had set a goal that no child would be in the lower quartile of reading by the end of third grade. He also indicated the proposed funding would compliment the regional professional development centers. Ms. Batjer stated the Governor had been attracted to the Clark County program because it was an intervention program as opposed to a remedial program, and Dr. Orci had mentioned intervention was generally much more cost effective than remediation.

Ms. Leslie felt students in at-risk schools needed the most help and wanted to make certain the proposed funding would be directed to those schools. Ms. Leslie acknowledged teacher training was important but did not feel teacher training alone would solve the problem. Senator Raggio said it was his understanding the pilot program recognized the importance of phonics. Senator Raggio stressed all K‑3 students needed to participate in the program, not just children in at‑risk schools. Chairman Goldwater told Ms. Batjer the subcommittee needed to be made more comfortable with the coordination of effort and needed to determine if the funding was excessive or insufficient. Chairman Goldwater also wanted to know what type of accountability would be required from school districts. Because the proposal was a one‑shot appropriation, and because teachers often moved from one school to another, Senator Raggio recommended, to the extent possible, all teachers be trained. Ms. Batjer stated research indicated teachers trained in reading instruction were better equipped to teach math and other programs and deferred to Don Hataway to address the funding portion.

Mr. Hataway indicated the funding was recommended to be built into the Distributive School Account (DSA) as a categorical allocation and would be funded with estate taxes. Senator Raggio was concerned estate taxes might not materialize to the extent included in the DSA. The large amount received in the current year for estate taxes was unusual. Senator Raggio noted the $10 million would not be required each biennium if all current teachers were fully trained with the $10 million included in the DSA for the next biennium. Some funding might be required to train new teachers. Mr. Hataway agreed with Senator Raggio and stated the funding would have to be reevaluated every two years. Based on Dr. Orci’s statement that it required more than two years to get all of the students through K‑3, Mr. Hataway envisioned a minimum four‑year program.

Dr. Jack McLaughlin, Superintendent of Public Instruction, Nevada Department of Education, testified the NDE would be very happy to work with all parties on the issue and be part of the process. Dr. McLaughlin indicated the program was a vital key to education.

Douglas Thunder, Deputy Superintendent for Administrative and Fiscal Services, Nevada Department of Education, referred to a handout (see Exhibit C) that detailed information on school expenditures published in The Digest of Education Statistics. The most current information published was for the 1997-1998 school year. Mr. Thunder indicated he had added percents of the total current expenditures for each category and rankings among the states to the spreadsheet. Current expenditures defined by the National Center for Education Statistics included all expenditures with the exception of capital projects and debt service. Mr. Thunder remarked the graphs detailed how Nevada schools and United States schools expended available resources; a summary of the information provided on the graphs was also included (Exhibit C). Mr. Thunder also provided a chart that compared average group insurance rates for school districts to the rates paid by the state (Exhibit C).

Mr. Thunder stated payments to the school districts from the DSA were the primary part of the DSA and referred to a chart (Exhibit C) which provided basic support amounts for the districts and detailed the three sources of the total guarantee: 1) local school support tax (LSST), 2) the 25 cent property tax and 3) the state share. The state share was paid to the school districts out of category 15 in the DSA budget. In FY2002 and FY2003 the recommended basic support amount would be $3,896 for each year. Enrollment growth was anticipated at 4.86 percent in FY2002 and 4.68 percent in FY2003. The total basic support amount recommended for FY2002 was $602,881,129 and $620,826,300 for FY2003. Mr. Thunder explained the amounts included the basic support per pupil amounts and the special education unit funding. The budget provided 2,401 units at $29,977 for the first year of the biennium and 2,514 units at $30,576 in the second year. The last session of the legislature allowed home‑schooled students, private school students, and charter school students to be enrolled in classes in the traditional schools and the districts received payment based on a prorated amount. The payments were made in the August final adjustment of the DSA -- the total paid for that purpose was $8,261. Mr. Thunder addressed the hold‑harmless provision and stated a bill had been submitted that would increase the provision from one to two years -- the current provision was one year. If a school district’s current enrollment declined from the prior year, the prior year enrollment would be used to determine the basic guarantee. Mr. Thunder commented the statewide fiscal impact in FY2000 was $6.3 million – the number of students was 1,331.8. In the current year, it appeared the fiscal impact would be $4.3 million for 915.8 students. In FY2000 and FY2001, 13 of the 17 school districts had declining enrollments.

The next area in the DSA was the Class-size Reduction Program (CSR), and Mr. Thunder indicated the Governor had recommended $91.8 million to fund 1,866 teachers in FY2002 and $97.8 million to fund 1,949 teachers in FY2003. Mr. Thunder stated $1 million had been provided each year of the last biennium for remediation for at‑risk students and the Governor proposed the continuation of that funding through the next biennium. Funding was also recommended for schools needing improvement -- $7.8 million in the first year and $7.4 million in the second year of the biennium.

The Adult High School Diploma Program (AHSD) was also included in the DSA. The Governor recommended $14.7 million for the first year of the biennium and $15.6 million in the second year. Dr. Keith Rheault, Deputy Superintendent of Instructional, Research and Evaluative Services, Nevada Department of Education, referred to the spreadsheet entitled “Proposed Formula for Future AHSD Funding,” (Exhibit C) and explained the program included the regular AHSD program and the prison AHSD program. S.B. 555 of the Seventieth Session directed the department to develop a plan or formula that would distribute the funding more equitably. The proposed formula was the result of that directive. Dr. Rheault pointed out, based on the recommended formula, prison funding would be cut back. To allow phase‑in time for the school districts, the department requested approval to use the formula, or some variation, beginning in FY2003. Dr. Rheault addressed the formula components that included:

· A 3 percent base.

· 1990 census data.

· 27 percent for service population.

· 10 percent of students enrolled in the program.

· 10 percent for General Education Diploma (GED) certificates awarded.

· 20 percent for high school diplomas awarded – the end product.

· 18 percent for facility costs at the prisons in recognition of higher costs.

· 7 percent additional funding for program operation costs at the prisons.

· 5 percent held in reserve for competitive bids for English as a Second Language (ESL) instruction, child care, and transportation.

Dr. Rheault indicated that in 1995 he had worked on a revision to the method of distributing AHSD funding, and he was aware department staff and task forces had worked on the issue prior to 1995. The most recent task force did not support the recommended formula. Dr. Rheault opined any proposal that shifted funding and provided more funding for one program and less for another would not be acceptable to all parties. The formula did reduce funding for the prison programs. The NDE believed the recommended formula was fair -- some expenses charged through the corrections programs in the past had been high and the programs could still be operated with reduced funding. Dr. Rheault stated the recommended budget increased the AHSD programs by $930,000 and that would make up some of the difference to the correctional programs. Dr. Rheault told the subcommittee the reduction shown on the formula spreadsheet for the Clark County prison program appeared to be high, however, one-shot funds for a new facility had been included in the FY2001 allocation. Mrs. Rohrs asked if The Executive Budget had been based on a change in the funding formula or was it based on overall enrollment growth. Dr. Rheault responded it had been based on enrollment growth.

Senator Coffin noted the 1990 census numbers had been used in the formula and referred to a footnote on the spreadsheet that indicated 2000 census numbers would not be available until August of 2002. Senator Coffin wondered if perhaps the department was waiting on data from the long census forms. Dr. Rheault indicated he would have to check with staff, but believed it was because specific students needed to be identified – those without diplomas. Senator Coffin thought the NDE could use the FY2000 census numbers currently available with the same percentages. Dr. Rheault stated the department would use the latest available numbers.

Mr. Thunder indicated the five additional gifted and talented units Senator Rawson had recommended during the last session had been included for the next biennium. Mr. Thunder stated he did not have information on the initial units, but indicated the department would forward information to the subcommittee. The number of units had been allowed to grow based on projected population growth -- 5.24 units were recommended in FY2002 and 5.47 in FY2003. Funding was also recommended for $850,000 each year of the biennium for elementary school counselors. Professional Development Centers were recommended for funding of $5.2 million in the first year and $6.1 million in the second year of the biennium. School to Careers would terminate as of December 2001, therefore, $1 million was recommended for the first year of the biennium only. The Early Childhood Program was recommended at $4.5 million each year of the biennium.

Mr. Thunder explained several programs that had previously been included in the DSA had been moved to other budget accounts – the funding for the SMART program earmarked for local school districts was moved from this budget account to Budget Account 2699, and the administrative portion of the program was moved into Budget Account 2673. In the past, funding for the testing programs had been placed in the DSA and then transferred to Budget Account 2697; The Executive Budget recommended the funds be included in Budget Account 2697. Educational technology funding was not recommended in the DSA, but technology funding was included in a $20 million one‑shot appropriation.

Mr. Thunder stated a new bill, A.B. 120, would remove the federal land lease money from the DSA and passage of the bill would create an approximate $2.4 million shortfall in the DSA budget each year. Another issue that could have an effect on the local school districts was the review of the depreciation factors in the motor vehicle privilege tax.

Mr. Thunder said development of the DSA required a very significant database of information -- up to 100 line items, which included expenditures for salaries, operation, equipment, etc. Local school districts included the information in the statutorily required NRS 387.303 reports and submitted the reports annually to the department. Mr. Thunder provided a brief discussion on construction of the DSA budget each biennium.

Mr. Thunder stated the legislature approved the total basic support amount for each year of the biennium and then each local board of trustees determined how those funds would be expended to meet local needs. Mr. Thunder used textbooks as an example. Senator Rawson indicated if local districts did not earmark funds for textbooks or other areas, the legislature might have to and local control would be lost. Senator Rawson also voiced concern with the spreadsheet distributed earlier in the meeting that indicated the state only funded $1,200 per student to Clark County and $1,172 to Washoe County (Exhibit C). Senator Rawson emphasized that the state guaranteed a certain amount per pupil and if the LSST and/or property tax came in under projections, the state still provided the guarantee. Mr. Thunder asked Senator Rawson to compare the first chart to the second chart, which had a more realistic figure of actual expenditures -- $5,295 per pupil. Mr. Thunder indicated the $5,295 was based on 1997-1998 school year data, but included all sources – the 50-cent property tax, the motor vehicle privilege tax, plus federal programs.

Senator Raggio recognized that the state support figure was normally quoted. However, based on the information provided by Mr. Thunder, the average expenditure per pupil in Nevada was $5,614 and Senator Raggio was concerned that information had never been conveyed to the public.

Senator Raggio indicated he had often heard administrative costs in education were too high and, based on the chart included in Mr. Thunder’s handouts (Exhibit C), Nevada had the dubious honor of ranking second in the nation. The chart reported Nevada schools expended 7.28 percent of funding on school administration. Nebraska, a comparable state, only spent a little over 5 percent. Senator Raggio asked if anyone had looked at the numbers to determine if Nevada actually was spending too much on school administration. Mr. Thunder did not know what factors were behind the high amount for administration and indicated, perhaps because some of the districts were so large, many areas that might have been covered by central administration were covered at the school level. Senator Raggio stressed research was needed in the area.

The Chair welcomed Dr. Carlos Garcia, Superintendent of Schools, Clark County School District, to his first DSA budget subcommittee meeting. Dr. Garcia asked Walt Rulffes, Financial Operational Officer, Clark County School District (CCSD), to review the economic side of the district. Mr. Rulffes referred to the CLARK COUNTY SCHOOL DISTRICT LEGISLATIVE PRESENTATION, March 6, 2001, BUDGET ISSUES 2000-2001 (see Exhibit D). Mr. Rulffes stated the district had some fairly serious fiscal issues, however, Clark County’s board of trustees had not wavered from its commitment to protect the classrooms, improve academic standards, improve student achievement, and to continue to work toward a reduced dropout rate. Dr. Orci had stated earlier in his testimony the cost was $200 per teacher for training, and Mr. Rulffes wanted to correct the record that actual costs were $200 per day for a total of seven days.

Mr. Rulffes referred members to page 4 of the handout (Exhibit D) and reviewed the reduced per pupil funding. At the time the budget was constructed the district had estimated a funding reduction of $78 per pupil from the prior year – an approximate $18 million reduction. The district currently expected the amount to be slightly less -- between $65 and $75 per pupil. Senator Rawson asked what precipitated the shortage and Mr. Rulffes stated the projected revenues from local sources were not as high as anticipated and the state per pupil amount had been reduced for Clark County. Mr. Rulffes stated Doug Thunder spoke to the overall state DSA guarantee per pupil and then the individual school district per pupil amounts were determined and each district received a different per pupil amount. For FY2001 Clark County’s state guarantee per pupil was $3,630 and Washoe County’s was very close to that amount. Due to the small school factors included in the formula, the numbers for the other districts became progressively higher. A graph included in Exhibit D showed a ten-year history of the per pupil funding. The 1991-1992 school year was designated as the base year. The top line in the graph reflected the projected increases that would have occurred based on the Consumer Price Index (CPI); the bottom line reflected the decline in per pupil funding and local school districts made a number of cuts. Mr. Rulffes stated recovery began in the 1994‑1995 school year and the CCSD held their own until the 1999-2000 school year when another decline occurred. The hole the district had to dig out of in FY2001 was approximately $55 million. Chairman Goldwater questioned the reason for the shortfall and Mr. Rulffes responded the state per pupil guarantee, in the case of Clark County, had been reduced for the 2000‑2001 school year. Unfunded mandates had also contributed to the shortfall.

Mr. Rulffes stated the district had experienced arbitration costs for two years – the first year the arbitrator awarded 2.5 percent to the unions and the cost to the district was $18.6 million and that grew to $20.9 million in FY2001 (see Exhibit D). Mr. Rulffes stated the FY2001 agreement was a mediated arbitration that provided 1.25 percent, an additional $10.6 million. Senator Raggio stressed the award by the arbitrator, under law, had to have been based upon the district’s ability to pay. Senator Raggio stated Clark County evidently had the ability to pay the arbitration award, and because the second year was mediated, the funds had to be paid out of available resources. Senator Raggio was at a loss to understand the point. Dr. Garcia indicated Senator Raggio was correct – the district was supposed to have the ability to pay and the arbitrator’s interpretation was, if programs were cut, the district would have the ability to pay. As a result, the CCSD had been placed in the position of cutting numerous programs. Dr. Garcia indicated he would provide the subcommittee a list of all the programs that had been cut. Senator Raggio asked if Dr. Garcia wanted the legislature to pass a law taking away collective bargaining. Senator Raggio felt the district placed blame on the legislature for the reduced per pupil amount and Dr. Garcia assured him that was not intended. Mr. Rulffes explained, because the first year arbitration award had occurred in the tenth month of the twelve-month year, the district had difficulty funding the increase and had even used reserves. The total impact to the Clark County School District was just under $55 million. Mr. Rulffes indicated the arbitrator’s award stated the district had to reprioritize programs to fund the award. Chairman Goldwater asked Mr. Rulffes to provide the subcommittee with some type of backup that verified the arbitrator’s position and Mr. Rulffes stated he would send a copy of the arbitration award.

Chairman Goldwater stated school administrative costs in Nevada were apparently very high and perhaps the level of administration should be cut rather than programs. Mr. Rulffes indicated the CCSD would address the administrative costs and explained the district had made two rounds of cuts – one at the beginning of FY2001 and another when Dr. Garcia became superintendent. In response to a question posed by Senator Coffin, Mr. Rulffes said the CCSD had received increased sales tax and property tax revenues, but not at the level projected at the time the biennial budget was developed. Senator Coffin indicated sales tax revenues were unpredictable and created significant problems in constructing adequate budgets.

Mr. Rulffes referred to page 9 of Exhibit D that provided assignment details for CCSD employees funded with general funds. Mr. Rulffes indicated the chart might answer questions Senator Raggio asked earlier in the hearing and stated almost 91 percent of the district’s employees were assigned to direct school activities. The bus drivers and transportation maintenance personnel added another 5 percent. Slightly more than 4 percent of the employees were assigned to the central administrative functions. The central office functions included payroll, human resources, and infrastructure support for technology. Mr. Rulffes could not find evidence that the CCSD had too many administrators. Senator Raggio commented he had only raised the issue because the NDE had presented a document that showed the state of Nevada spent 7.28 percent of the total expenditures on school administration. Mr. Rulffes assured the subcommittee the review of all administrative expenditures would be continued and everything possible would be done to reduce administrative costs in order to preserve as many dollars as possible for the classrooms.

Chairman Goldwater asked the Clark County School District to provide outlines of the collective bargaining sessions. Dr. Garcia asked if the district could also provide a list of programs that had been cut and Chairman Goldwater agreed. Chairman Goldwater asked the NDE to provide definitional items on how administrative costs were determined. Dr. Garcia stated the district wanted to be as lean as possible, but $50 million was a large amount to cut.

The Chair recognized Mary Beth Scow, President, Clark County School District Board of Trustees. Ms. Scow stated student achievement was the ultimate goal of the board. Ms. Scow stated Dr. Garcia had been with the district for eight months and the board had set parameters and outcomes that were expected from the new superintendent. As Dr. Garcia attained the established parameters and outcomes he was rewarded through performance pay – accountability was very important to the board. Ms. Scow stated she was impressed with the subcommittee’s questions and, like the members, wanted taxpayer money used wisely. Ms. Scow stated education was a very people‑intensive undertaking and efficiencies were difficult. Dr. Garcia recommended members review the Legislative Platform for 2001 (see Exhibit E). Nevada ranked 35^th nationwide in per pupil expenditures; Clark County School District ranked 37^th. Dr. Garcia stated the problem of funding education was a national crisis. Supply and demand and economics were the key elements. Dr. Garcia said almost every education journal addressed teacher salaries. The 400 teachers who had turned down positions with the CCSD had all stated the pay was not high enough even with the benefits provided. The district planned to open fifteen new schools in the 2001-2002 school year. In April of 2000, Clark County was the eighth largest school district in the nation and in July of 2000 the district was the sixth largest. Based on the district’s projections, there could be a shortage of 500 teachers by the fall of 2001. Districts all over the country were experiencing the same problem. Chairman Goldwater asked if the budget as recommended would help, hinder, or maintain status quo in the CCSD. Dr. Garcia stated if things remained the same the district would be able to recruit the normal 1,600 to 2,000 teachers per year. He indicated long-range solutions needed to be developed. Dr. Garcia declared Nevada needed to get closer to the national average per pupil expenditure.

Mr. Arberry indicated new teachers hired to work in intercity schools moved to suburban schools at the first opportunity and wondered if the CCSD had addressed the problem. Dr. Garcia responded that the district had initiated discussions in current year negotiations with the collective bargaining units that would provide additional stipends for people who worked in certain situations. The highest mobility for teachers was in areas where kids needed the most stability. Senator Coffin indicated the Chairman had asked Dr. Garcia some pretty blunt questions. He stated the legislature was a very ephemeral body that adjourned quickly. Dr. Garcia had indicated long-term solutions, however, there was a short-term problem and a long-term problem. Short-term solutions were also needed. Senator Coffin wanted to know if the budget was sufficient and Dr. Garcia responded in the negative. Dr. Garcia stated the district was currently reviewing every single program to determine what programs might be eliminated and it was the district’s fiscal responsibility to make necessary cuts. One of the biggest concerns was if the reserve dropped too much to accommodate costs, the district’s bond ratings would be jeopardized. Mr. Rulffes stated the CCSD viewed the Governor’s proposed DSA budget as status quo and indicated teacher recruitment was a very important area and requested legislative support in that area. The district also was concerned no funding had been included in the recommended budget for the growing non‑English speaking populations. Chairman Goldwater had a major concern with the district’s bond ratings possibly being affected by a lack of program and materials money. Chairman Goldwater then asked for the district’s opinion of the 5 percent bonus as it related to teacher recruitment. Dr. Garcia indicated many other states had set a minimum salary for teachers of $30,000. Some other states provided a signing bonus -- a teacher who stayed five years received a bonus at the beginning of the fifth year. Dr. Garcia indicated the majority of new teachers only stay up to four years.

Mrs. Cegavske addressed an issue from last session about busing high school students and indicated no feedback had been received from the Clark County School District. She also indicated student transportation was a big issue in the district. Mrs. Cegavske felt none of the states would have enough teachers today, tomorrow, or next year because teachers were not coming out of the colleges. Students were not being encouraged to go into the teaching profession. Mrs. Cegavske stated the budget included a salary amount of $29,833 and wanted to know how much closer the state could get to the $30,000. Mr. Rulffes indicated the entry level salary for CCSD was $26,847. Senator Raggio stated the average starting salary in Nevada was $29,833 and if the 8.85 percent paid for the teacher share of retirement was factored in, the average starting salary in Nevada would be $32,493. The actual average teacher salary in Nevada with the 8.85 percent added in was $44,978. Under the Governor’s proposal the amount increased to $46,644. Dr. Garcia indicated the real issue was recruitment and that issue was not going to go away. The problem could be resolved by bringing the per pupil amount closer to the national average. Chairman Goldwater indicated the discussion had taken place every legislative session for as long as he had been there and he always respectfully disagreed with the majority leader. No matter what the salary, the fact remained that job offers had been turned down by 500 people in the CCSD. Perhaps we were not communicating to applicants how well we were doing, but good teachers were not being placed in classrooms at the rate needed. Chairman Goldwater said the salary issue had been a long-standing debate in the subcommittee.

Senator Rawson indicated Human Resources had heard the same issue. There were pockets of differences within the state. Clark County was a district that was very hard to serve currently due to the rapid growth. Senator Rawson understood the CCSD had to hire just over 2,100 teachers last year, and 70 percent of the teachers were from out of state. Washoe County School District had to hire 500 teachers and 60 percent were from the University of Nevada, Reno. The situation was totally different. Southern Nevada had to compete in the national marketplace. A bill had been introduced that created a stratification of teacher licensure and would try to create a career pathway. Innovation would create interest in coming to Nevada. Senator Rawson indicated the nation would be short 945,000 teachers in the current year.

Ms. Tiffany wanted to focus on recruitment and how Clark County’s growth had exploded. The task the district had was daunting and asked if it would be better to state there was a recruitment problem, a certain number of teachers needed to be hired, and to do that “x” amount of dollars would be required to give bonuses, benefits, etc. Would it be better for the CCSD to come to the legislature and say we would like to see a one-shot appropriation of “x” amount for recruitment? Ms. Tiffany agreed with Senator Raggio that total salaries were never reported – 90 percent of the budget went to teachers and 10 percent went to programs. No matter what the legislature funds, 90 percent would still go to salaries. Ms. Tiffany did not feel that increasing the DSA would solve the program problems. Dr. Garcia indicated the real issue was the district was below the national average in per pupil funding and dealing with that issue would solve the other issues. All the programs, like the reading program the CCSD had addressed, could be covered with sufficient funding. Dr. Garcia stated that with collective bargaining the district could not tell the teachers’ unions what starting salaries would be. Negotiations had to be completed. On the other hand, the legislature had the power to do other things the district could not. Ms. Tiffany stated the teachers, after successful arbitration, received a raise, then the support staff received a raise, and then administrators received a raise. Why wasn’t there a difference between a teacher getting a raise or support staff getting a raise? Ms. Tiffany thought the district needed to address the issue and had very ineffective collective bargaining. In Ms. Tiffany’s opinion, administration should not even be in a union.

Senator Mathews asked if other states reported average teacher salary information in the same manner as Nevada – did other states include fringe benefits or just the raw salary? Mr. Rulffes indicated usually raw salary was reported, however, fringe benefit information was clearly outlined in recruitment materials. Senator Mathews stated if each state reported raw salary the amounts would be comparable. Dr. Garcia explained the district made a point to sell applicants on the additional benefits; however, many young people were not focused on retirement and wanted to see larger salaries.

Senator Coffin asked Mr. Rulffes to provide samples of recruiting materials used by other states.

The Chair asked the legislative auditor to provide a ten-minute overview of the audit required by A.B. 241 of the Seventieth Session. Gary Crews, CPA, Legislative Auditor, Audit Division, Legislative Counsel Bureau, stated in accordance with the framework of the bill at least one school in each district had been audited. A total of 45 schools were reviewed statewide.

Mr. Paul Townsend, CPA, CIA, Audit Supervisor, Audit Division, Legislative Counsel Bureau, referred to the findings and recommendations on page 12 of the “Audit Report, State of Nevada, Analysis of Instructional Costs and Materials Available to Students, 2000” (see Exhibit F). He noted although the state’s budgetary process was used to determine the minimum funding districts received, local school districts controlled the actual expenditures. Each school district had responsibility under the Local Government Budget Act to develop budgets that would be adopted by the local board of trustees. Therefore, budgets addressed local priorities that might not correspond with the specific funding amounts related to instructional costs in the state’s basic support guarantee. Budget and accounting records were reviewed for each district. In FY1999, the year of the audit, 14 of the 17 school districts expended more than the amount funded through the Nevada Plan for textbooks – the basic support guarantee included $36.64 per pupil for textbooks; the average amount spent statewide was $53.25 per pupil. Mr. Townsend stated expenditures for instructional supplies included a variety of purchases. As defined in the NDE accounting handbook, the category included classroom materials, payments for football helmets, athletic uniforms, band uniforms, and decorations for graduation ceremonies. In FY1999, 16 of the 17 schools districts spent more than the state funded for instructional supplies. The state’s basic support guarantee provided $54.27 per pupil for instructional supplies and the average amount spent statewide was $61.77. In FY1999, 10 of the 17 districts spent more than the state funded for library books. The state provided $6.43 per pupil, and the average amount spent statewide was $8.00.

Mr. Townsend said the instructional software category generally included computer software used in the instruction function. However, school districts had not accounted for those expenditures consistently, which resulted in some districts not reporting in the instructional software category. In FY1999, the state’s basic support guarantee provided funding related to instructional software of $3.19 per pupil – the average amount spent statewide was $7.63. Mr. Townsend indicated the report contained a recommendation that would make district reporting more consistent. Mr. Townsend referred to a chart on page 17 of Exhibit F that provided detail on Nevada Plan funding versus district expenditures for fiscal years 1995 through 1999. In FY1995, statewide, districts had spent $2.3 million less than what had been funded through the Nevada Plan for textbooks. In FY1996, $900,000 less was spent. The following three years, districts expended more than what had been provided through the Nevada Plan for textbooks. Mr. Townsend stated the NDE had provided information for FY2000 that indicated statewide the districts spent approximately $2.5 million less than what had been funded which indicated a reverse in the pattern. Mr. Townsend explained the remaining three charts contained information on the other three categories: instructional supplies, library books, and instructional software.

Mr. Townsend stated the audit revealed that state funding decisions were based upon estimated costs reported in detailed financial information reported by school districts to the NDE through the NRS 387.303 reports. There were weaknesses in the process of compiling and reporting the information that allowed errors to occur. Each school district submitted the NRS 387.303 report to the NDE. The department compiled the data into an annual report that provided the preliminary information used to prepare the DSA biennial budget. School district accounting records were compared to the amounts reported in the NRS 387.303 report and, in most cases, the amounts were accurate, however, several errors were noted. The largest error occurred when the department compiled the data and underreported instructional costs in one of the districts by $475,000. Because districts relied on an accounting handbook first published in 1979, instructional costs were not always charged to appropriate categories. The inconsistencies affected comparisons between the districts. The handbook provided a common framework for districts to report information but had not kept up with changes in the educational environment. Since the publication of the handbook, instructional software had become a more frequently used educational tool. Because the handbook had not provided direction on accounting for those types of expenditures some districts reported little or no software expenditures. More defined guidance in the handbook would help ensure costs were properly recorded and accounted for, and would result in more comparable information. Mr. Townsend commented more guidance was also needed in accounting for consumable textbooks – workbooks frequently used in elementary grades where students actually wrote in the books. Districts were on a seven-year adoption cycle, and the workbooks were consumed annually and had to be replaced. Some districts, and even some schools within a district, charged purchases of consumable books to the textbook category and others charged them to the instructional supplies category. The inconsistent accounting resulted in inaccurate reporting of expenditures for textbook and instructional supplies.

Douglas Peterson, Information Systems Audit Supervisor, Audit Division, Legislative Counsel Bureau, stated he and Mr. Townsend had reviewed a number of classes throughout the state in the sample of schools and determined three categories existed: 1) classes that used materials other than traditional textbooks, 2) classes that used a concept known as a bookset, and 3) classes where each student was assigned a book. Mr. Peterson referred to a chart on page 10 of Exhibit F, and explained 42 percent of the classes reviewed used something other than traditional textbooks – science kits, photocopies or other handouts, computer software, and other instructional items. In many classes students shared textbooks. For example, if four periods of algebra class were taught throughout the day, instead of a book being purchased for every student, one set of books was purchased and those books would be used in each of the four periods. Mr. Peterson stated 35 percent of secondary classes reviewed used booksets. When all classes in the sample were reviewed, 5 percent experienced textbook shortages. Mr. Peterson stated only three districts had adopted a formal textbook policy -- Clark, Churchill and Douglas. The audit revealed wide variations in the use and availability of basic instructional materials. Assistance in establishing formal textbook policies could be provided by the NDE.

Mr. Peterson commented the availability of textbooks for special education programs had also been reviewed, and, due to the unique nature of each student’s Individual Education Plan, the availability of textbooks had to be considered on a case‑by‑case basis. The audit also revealed the textbook adoption process needed improvement. Two districts had purchased textbooks that had not received the required State Board of Education approval. The textbook approval process did not always cover classes that used a non‑traditional textbook. Mr. Peterson recognized the NDE was currently addressing the non-traditional textbook issue by taking into account computer software. However, of the classes reviewed, only 9 percent used software, the remainder used teacher-created materials and instructional kits. The Textbook Adoption List, a list of books approved by the State Board of Education and maintained by the NDE, was incomplete and, in some cases, inaccurate. Prices and identifying numbers were not included for many of the textbooks.

During the review, teachers were asked if parents had been requested to provide supplies or money, and 33 percent of the teachers indicated they had asked parents to provide money and 79 percent asked parents to provide classroom supplies. Page 33 of Exhibit F contained a chart of supply items teachers most often asked parents to provide. Senator Coffin wondered how the parents were asked to provide money or supplies. Mr. Peterson indicated a wide variety of methods were used. For example, at the beginning of the school year, either through the principal’s office or through individual teachers, a memorandum or note was sent home with the students that listed items parents could provide. The money was often tied to a particular event such as field trips. In some cases, a notice had been placed in the newspapers. Senator Coffin asked if the data included in the report (Exhibit F) detailed the difference between the results based on the income levels served by a school and Mr. Peterson stated it did not. In response to a question posed by Senator Coffin, Mr. Peterson indicated he would have to go back and review all the audit data to determine if the requested information could be captured. Mr. Peterson stated 92 percent of the teachers interviewed had purchased classroom supplies with their own funds. The most frequent amount reported was $500.

Mrs. Cegavske indicated one of the biggest problems principals and administrators incurred was students not returning textbooks. Mrs. Cegavske disclosed parents had to pay for the textbooks in some states. Because some textbooks could not be removed from the school, Mrs. Cegavske had purchased textbooks to assist her children and donated the books to the school at the end of the school year. Mrs. Cegavske stated more funding was provided for special education than for regular education, and wondered why special education classrooms did not have the same availability of textbooks. Another concern was often a substitute teacher instructed special education students rather than a properly licensed special education teacher. The salary for a substitute was much less than for a licensed teacher and Mrs. Cegavske wondered where the additional funds were placed. Mrs. Cegavske asked staff to provide the information. Mrs. Cegavske stated the audit revealed the money for textbooks was available, but had not been spent as the legislature intended.

Gary Crews referred back to a chart on page 17 (Exhibit F) and stated some years the districts had spent much more than what was included in the Nevada Plan and other years less was expended. Chairman Goldwater wanted to know who had responsibility for the district funding and how those funds were spent. Mr. Crews pointed out the funds were appropriated to the local school districts and how the funds were expended was a local district option. Mr. Crews indicated there seemed to be very little policy in the districts to establish the availability of textbooks, and thought, based on a suggestion by Chairman Goldwater, appointing someone at the district the responsibility for textbooks was an excellent idea. Mr. Crews indicated the Audit Subcommittee had directed audit staff to present the report to the education committees and money committees and relay their concerns with the use of booksets -- 35 percent of secondary students did not have textbooks to take home.

Senator Mathews asked if 35 percent of the secondary students did not have textbooks to take home, when did the students use the books. Mr. Peterson indicated in some cases students were asked to complete homework or take open-book tests during class time. Senator Mathews voiced concern that instructional time was reduced due to textbook availability. In a two-hour class, one hour would be spent on instruction and another hour homework -- two hours of instruction should have been provided and the homework completed at home. Mr. Peterson noted some teachers allowed books to be taken home if special arrangements were made.

Ms. Tiffany asked if there would be a fiscal impact on the DSA if there was a state policy on textbooks. Mr. Crews indicated there would definitely be a fiscal impact, and to provide textbooks for every student would cost between $7 million and $8 million. Ms. Tiffany stated, once purchased, the textbooks were used for seven years so the initial costs would not be ongoing. Ms. Tiffany wondered if the booksets were used only in Clark County and Mr. Crews indicated use was statewide. Ms. Tiffany asked if library books or compact discs had been included, and Mr. Crews responded the audit reviewed materials used specifically in the classrooms. Ms. Tiffany wondered if the audit revealed a heavier reliance on computer software and less on textbooks. Mr. Crews stated the survey instrument was developed February 1, 2000, therefore audit staff could not provide a historical trend. Chairman Goldwater commended Mr. Crews on the audit report.

Vaughn Higbee, Superintendent of Schools, Lincoln County School District, stated his appreciation for everything the legislature had done for the district in the six years of his superintendence and indicated his retirement would be effective March 15, 2001. Mr. Higbee stated inflation was a real problem for rural districts and referred to a handout (Exhibit G). Funding was not available to purchase a new school bus, which placed the district in a 23-year replacement cycle. In the past, buses had been replaced every 20 years. Mr. Higbee addressed arbitration, another issue that was important to the small school districts. Mr. Higbee felt there was no way a small district could win salary arbitration and Chairman Goldwater asked what led to that conclusion. Mr. Higbee stated it was a history of not winning past arbitrations. The district did not have the staff to compile all the information required for arbitration and did not have the resources to hire personnel for that purpose. Mr. Higbee suggested a state salary schedule be established for the small districts and the salaries needed to be negotiated by the state. A 2 percent salary increase for teachers had been rumored in Lincoln County -- it would take approximately 4 percent with roll-ups and the way steps and lanes were negotiated over the years. The district worked very closely with teachers who had been very understanding, had looked at the available funds and not gone to arbitration, but sooner or later salary increases would be needed. Any salary increase in FY2002 would require programs to be eliminated and/or not refilling vacated positions.

Senator Coffin asked if the arbitrators had awarded too much and Mr. Higbee responded in the negative. Mr. Higbee stated to his knowledge only one small district, Pershing County, had won an arbitration in the last six years. Senator Coffin asked if the budget as presented would be adequate for Lincoln County School District and Mr. Higbee stated it was not.

Chairman Goldwater asked what information was required for arbitration. Mr. Higbee stated the district would be defending its position against someone with the time, energy, and dollars to focus on one issue. The superintendent had to focus on 40 issues, did not have the time or the staff to devote only to arbitration, and was never as well prepared as the association.

The Chair recognized Don Francom, Superintendent of Schools, Esmeralda County School District, who indicated he had been superintendent in Lincoln County. At one time Lincoln County had hired an individual for arbitration at a cost of $12,000. The district lost the arbitration and was placed $30,000 in the red. Dr. Francom indicated the arbitrators from Triple A tended to be very liberal and very favorable to the teachers’ association. Teachers were going to ask for 4 percent in Esmeralda County and the district could not afford the increase. Mr. Higbee stated he did not blame anyone for the losses, but again indicated the district was not able to play on the same playing field.

Mr. Francom indicated his appreciation for the funding Esmeralda County received and stated the district’s enrollment was 94.4 and asked the subcommittee to consider funding Esmeralda County at 110 students regardless of the actual enrollment. Funding was not sufficient to recruit teachers. The three schools were far apart – Dr. Francom traveled 190 miles to visit the schools. The cost to be held harmless was $117,000 over the current year’s budget.

Chairman Goldwater stated the assembly had to leave, but the Senate had agreed to stay and hear the rest of the testimony and Senator Rawson would continue the meeting.

Senator Raggio referred to staff information and stated Esmeralda County’s enrollment in FY2000 was 94.4 and in FY2001 it was 92.6. The fiscal impact of hold harmless was $712,342, however, Senator Raggio asked staff to check the number because it appeared to be high. Dr. Francom wanted an enrollment of 110 and Senator Raggio asked how the 110 number had been determined. Dr. Francom stated the 110 would provide sufficient funding. Senator Raggio stated the hold harmless formula would be distorted if any year other than the previous year’s enrollment was used. Dr. Francom said the district had nine teachers and one counselor and if enrollment continued to drop a position would have to be cut. Senator Rawson stated Esmeralda County had the highest per pupil amount in the state, and recognized the district had special problems, and asked staff to review the problems. Dr. Francom asked the subcommittee to refer to the information provided (see Exhibit H).

Senator Coffin had reviewed the handout (Exhibit H) and referred to a letter from one board member who was concerned about consolidation with Nye County. Senator Coffin did not suggest the elimination of the Esmeralda County School District, but did recommend Dr. Francom meet with the Nye County School District and discuss the possibility of combining some services. Dr. Francom indicated that had been done and some services had been combined – in-service and teacher development. Dr. Francom indicated he was the only administrator for three schools in Esmeralda County. The district also employed a business manager and a secretary-clerk in the front office. Senator Coffin indicated another method needed to be used to address the problem rather than creating an artificial pupil count that skewed the Nevada Plan formula.

Washoe County School District had information to share with the subcommittee and Senator Rawson indicated it was important the Assembly also hear the presentation and asked the district to attend the next meeting.

Senator Coffin asked who had responsibility for setting up video conferencing and Senator Rawson indicated staff was aware of the problem.

RESPECTFULLY SUBMITTED:

__________________________

Linda Smith

Committee Secretary

APPROVED BY:

Assemblyman David Goldwater, Chairman

DATE: