MINUTES OF THE meeting

of the

ASSEMBLY committee on Ways and Means

AND SENATE COMMITTEE ON FINANCE

JOINT SUBCOMMITTEE ON GENERAL GOVERNMENT

 

Seventy-First Session

March 22, 2001

 

 

The Assembly Committee on Ways and Means and Senate Committee on Finance Joint Subcommittee on General Government was called to order at 8:09 a.m. on Thursday, March 22, 2001.  Chairwoman Vonne S. Chowning presided in Room 3137 of the Legislative Building, Carson City, Nevada.  Exhibit A is the Agenda.  Exhibit B is the Guest List.  All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

 

 

COMMITTEE MEMBERS PRESENT:

 

Mrs.                     Vonne Chowning, Chairwoman

Mr.                     Bob Beers

Ms.                     Chris Giunchigliani

Mr.                     Lynn Hettrick

Ms.                     Sheila Leslie

Mr.                     David Parks

 

SENATE COMMITTEE MEMBERS PRESENT:

 

            Senator William R. O’Donnell, Chairman

            Senator Lawrence Jacobsen

 

COMMITTEE MEMBERS ABSENT:

 

Senator Joseph Neal, Jr.

 

STAFF MEMBERS PRESENT:

 

Steve Abba, Principal Deputy Fiscal Analyst

Mindy Braun, Education Program Analyst

Mike Chapman, Program Analyst

Rick Combs, Program Analyst

Lila Clark, Committee Secretary

 

Chairwoman Chowning started the meeting with an announcement that Senator O’Donnell had no voice due to a throat ailment. 

 

Budget and Planning

ADMIN 1 – Volume I

 

Chairwoman Chowning asked Mr. John P. Comeaux, Director of the Department of Administration, to start his budget presentation with a discussion of the performance indicators.  She said the performance indicators in The Executive Budget appeared to be essentially the same as the performance indicators in The 1999 Executive Budget. 

 

Mr. Comeaux introduced himself and said that the performance indicators were very similar to those presented two years ago.  For performance indicator number 1, percent of adjusted base budget accounts accepted by the Legislative Counsel Bureau’s (LCB) fiscal staff, a tally had not been made for the current session.  Last session, LCB did issue a letter indicating the percent of agreement was approximately 80 percent.  The division was targeting 90 percent agreement for the upcoming biennium.  There were some accounts that could not be agreed upon before the start of session.

 

He went on to discuss the performance indicators that attempted to measure the reasonableness of the revenue forecasts that the division provided to the Economic Forum.  The division was within the range that had been targeted in the performance indicators.  They were 4.6 percent off on the gaming percentage fee forecast and 2.8 percent off on the sales tax. 

 

Next, Mr. Comeaux discussed performance indicator number 6, the percent of budget accounts whose performance measures were reviewed each biennium.  The division targeted 25 percent and relied on the budget analysts to do the review.  They conducted the review in the normal course of business.  Mr. Comeaux did not have a report from the budget analysts on the percent of those that they reviewed during the budget preparation cycle.  He said he would provide the report to the subcommittee. 

 

Performance indicator number 7 dealt with the number of financial managers’ meetings held each year.  Mr. Comeaux originally thought they would hold a meeting once each quarter with the purpose being improved communication.  Instead, they had managed with meetings twice a year.  Mr. Comeaux thought that two times a year was probably a good target because the communications had been improved in other ways, mainly with e-mail.  The division had an address list that included not only agency heads and the chief financial people, but other financial people in agencies.  The e-mail had been used to distribute all agency memorandums and other items of general interest.  He believed that the division had found another way to help improve communications.

 

The other two performance indicators dealt with grants review and clearinghouse activities and the division was pretty much on target with those. 

 

Chairwoman Chowning asked about the performance indicator relating to the percent of grants identified that met agency needs.  She said that looked better than projected and Mr. Comeaux agreed.  Chairwoman Chowning said she had constantly heard that Nevada was below the rest of the nation in grants received.  It appeared that the division had exceeded the projection and she asked Mr. Comeaux how he felt about that.  She also wanted to know how much better the division would be able to do in securing grants that met the agency’s needs. 

 

Mr. Comeaux said the division had gotten better at it.  When they originally started, their grants analyst would review the grants available and send the information to agencies that appeared to qualify for the grants and could use them.  The division’s acceptance rate on those initially was not very good for a variety of reasons.  One of the reasons was the grants analyst’s lack of familiarity with some of the programs.  Grants that appeared like they would be useful were, in fact, not.  The grants analyst had gotten better at zeroing in on the grants that agencies ought to be interested in.  The grants analyst also had provided some assistance in applying for grants and he thought that had helped. 

 

Chairwoman Chowning asked if Mr. Comeaux envisioned that the 75 percent projected for the future would be better than that.  Mr. Comeaux thought so and if it were, the next time they would adjust their goal upwards. 

 

Chairwoman Chowning asked Mr. Comeaux to discuss the Integrated Financial System (IFS).  She wanted an updated estimate of total project costs in comparison to the $66.6 million estimate provided in the ten-year plan presented to the 1997 legislature. 

 

Mr. Comeaux said the project appeared to be right on budget.  The project manager had provided him with a worksheet within the last two months that plugged in the amount of the supplemental requests that were before the legislature for the current year as well as the request for funding for the next two years of the biennium.  Comparing what had already been spent plus those amounts with what had been originally laid out for the legislature several sessions ago, adjusted by the addition of the Department of Transportation to the original plan, it appeared the division would spend approximately $1 million less than originally planned.  The division had a request for a supplemental appropriation before the legislature in the amount of $295,000.  That was mainly connected with two unplanned activities; the most expensive one had to do with acquiring an upgrade to the software that included the pieces necessary to implement the Governmental Accounting Standards Board statement number 34 (GASB34).  Mr. Comeaux said he had not planned to discuss that at the hearing because he did not have complete information but he wanted to inform the subcommittee that the division had had a chance to take a good look at that upgrade and they were not particularly thrilled with it.  The division might end up recommending something else to the legislature.  He understood that they would need to do that very quickly.  Mr. Comeaux said that the division had to do something to accommodate GASB34 but he was not satisfied with the upgrade available.  He said he would provide the subcommittee information on that as soon as he could. 

 

Mr. Comeaux said that the state was approximately one year or a little less behind the originally scheduled completion date for the IFS.  He said that good progress was being made.  They still had some elements of the system that would be brought up over the next biennium but the main task was to “get the system rolled out” to the agencies.  The system had been “rolled out” to approximately 12 or 15 agencies and the schedule called for having the main pieces, namely the vouchering process, and receipting, completely rolled out by June 2002, and then having the rest of the system rolled out by the end of June 2003.  The rest of it would include grants accounting and some things like that.  Mr. Comeaux thought they were making good progress.  It was a good system but certainly not perfect.  They still had the problem with GASB34 to solve but he thought that, basically, they were doing “ok.” 

 

Chairwoman Chowning asked whether more than the previously requested $295,000 would be necessary.  Mr. Comeaux said that he hoped it would not be more than that.  He needed to obtain additional information from the project manager and talk to the project management group to find out where they would go from there.  He wanted to identify all of the options for solving the GASB34 problem and Mr. Comeaux said he would provide the information to the subcommittee as quickly as he could. 

 

Mr. Beers asked if the recently identified problems with the GASB34 software made ignoring GASB34 any more of an attractive alternative than it was three weeks ago. 

 

Mr. Comeaux said that had always been a fairly attractive alternative to him but it was not his call.  He believed that the approach would be to find a way to comply that was reasonable.  The price tag on the software upgrade was approximately $500,000 to $600,000 and he believed it should be a very good package for that amount of money.  The division had not been impressed with the system and they would have to explore other options to see what could be done. 

 

Mr. Beers asked if the upgrade included more than fixed assets management.  Mr. Comeaux said he believed so.  There were a few other things involved but he was not intimately familiar with everything that was involved.  One of the problems the division faced was that the IFS system was a canned system that had been purchased with the idea that they would make as few modifications to it as possible.  He said they had been fairly successful in that.  They ended up making more modifications than they set out to make but, in his opinion, they had held it down pretty well.  If the software was upgraded the system would have to be modified.  He said there were some complications that had arisen and they needed to take a close look at the options and decide what to do. 

 

Chairwoman Chowning asked if Mr. Comeaux would be able to provide information to the subcommittee within two weeks and he answered that he would. 

 

Chairwoman Chowning asked Mr. Comeaux to discuss S.B. 229 that would eliminate the Advisory Commission on Sentencing and what impact the elimination would have on the Department of Administration. 

 

Mr. Comeaux said the budgetary impact would be slight.  The department built funding for the Sentencing Commission into the budget in case the bill did not pass.  If it did pass, there was a grand total of $2,591 in each year of the biennium to cover the expenses of the Commission and that could be removed.  The bill was a result of a recommendation made by the Sentencing Commission itself.  The Commission decided that its work was done and there was no purpose for it to continue.  That was the reason the bill was requested. 

 

Mr. Comeaux said that he would discuss the M-200 decision unit that contained a request for an additional Budget Analyst IV position.  The department currently had nine budget analysts, two management analysts, and two unclassified positions that were intimately involved in preparing and monitoring the budget.  The department was organized with two supervising analysts who supervised the budget analysts.  The main purpose was to answer questions, solve problems, and provide consistency.  Unfortunately, the supervising budget analysts had a workload that was just as heavy as the analysts they supervised.  The quality of the budget in terms of consistency of presentation could be improved immensely with the addition of the budget analyst and the workloads of the two supervising analysts could be reduced so they would have time to supervise.  The department recommended a start date of October 1, 2001, for the position. 

 

Mr. Comeaux then discussed decision unit M-300 that was the fringe benefit changes included in all budgets.  M-301 and M-305 were the salary adjustments that the Governor recommended for classified and unclassified positions.  M‑800 was the Budget Division’s share of the additional cost to operate the department’s Administrative Services Division.  Enhancement unit 225 recommended the transfer of the New Executive Budget System (NEBS) from the mainframe to a UNIX platform.  The decision unit consisted of moving funding from the second year of the biennium, which was where the department incurred its heavy information technology costs because of the budget preparation cost, to the first year of the biennium.  The funding would be used to actually acquire the hardware and software, make the move, and complete the testing required so in the second year of the biennium the department would be ready to utilize the system on the new platform.  The costs that were included in E-225 unfortunately were not firm costs.  He believed the $358,000 that was recommended was probably a fairly accurate figure.  However, the Department of Information Technology (DoIT) was helping the department with the project.  A group from the DoIT had been meeting with the budget analysts from the department that took care of the system.  That group was supposed to recommend to Mr. Comeaux prior to April 1 the platform that would be best.  After that, Mr. Comeaux would be able to provide the subcommittee firm costs. 

 

Chairwoman Chowning asked Mr. Comeaux to discuss what benefit the new system would provide. 

 

Mr. Comeaux said the recent budget preparation cycle had been a disaster for the department.  The department had anticipated nearly 100 percent direct agency input of budget requests into The Executive Budget system.  Traditionally, agencies sent the budget input in paper form and the department’s budget analysts spent countless hours inputting into the system.  The department had hoped that the NEBS would allow the agencies to input their requests directly into the department’s system.  For a number of reasons, that ended up being impossible.  There had been agencies that entered data, selected the “enter” key, and waited seven minutes before any other entry could be made.  That was due in part to modifications that had been made in the system that had not appeared to be important but that had apparently caused a great deal of crunching in the computer every time certain types of entries were made.  Another piece of the problem was that the department shared a mainframe with the GENESIS and Nevada Operations Multi-Automated Data Systems (NOMADS).  Those other units could not be “kicked off the system” for the department’s convenience.  The department could not ask DMV to process so the department was trying to work at unconventional times, such as 7 p.m. until 1 or 2 a.m.  The department made the accommodations that it could.  The advantage to the new system was that the NEBS software was designed to run on a UNIX platform and it was supposed to be much more efficient.  Also, the department would not be sharing the system with anyone and Mr. Comeaux believed that the problems the department experienced in the last budget cycle would go away with the new system.  A side benefit was that it would free up capacity on the mainframe for other uses. 

 

Chairwoman Chowning commented that both NOMADS and GENESIS were getting better. 

 

Senator O’Donnell stated that NOMADS needed a major fix and that was well known.  It was not working as well as it could but compared to what it had been, it was better. 

 

Chairwoman Chowning added that the department’s system should provide advantages and less frustration for the department’s staff.  Mr. Comeaux stated that the system needed to be completed so it could be tested and completely debugged prior to the next budget preparation. 

 

Mr. Comeaux discussed E-275 that contained several requests.  The department recommended the elimination of one of the Management Analyst III positions to be traded for a Public Service Intern position at a reduced cost.  Initially, elimination of the Management Analyst III position was predicated on the assumption that the bill that the department requested to exempt occupational licensing boards from the Budget Act would pass.  Now, however, the department would like to reclassify the position even if the bill did not pass.  Mr. Comeaux said that the Public Service Intern II position would be a more efficient position given the kinds of duties and responsibilities that would be assigned.  The other recommendation included in decision unit E-275 was a reclassification of one of the Management Analyst III positions to a Budget Analyst IV.  Over time, the workload and responsibilities of that position had evolved to the point where they were exactly like those of a Budget Analyst IV position.  The Management Analyst III position needed to be reclassified as an equity issue.  The net cost was a savings in the first year of the biennium of approximately $8,900 and an additional cost in the second year of approximately $6,400. 

 

Senator O’Donnell announced that the Dow Jones average looked like cattle futures.  It was down 314 points that morning.  He said, “We’re probably in for the long haul.” 

 

Mr. Comeaux referred to decision unit E-710 that recommended funds for replacement equipment.  The department requested funding to replace some personal computers, printers, calculators, and chairs.  He said that the department would send the subcommittee additional information because the replacement costs that had been included for PCs had gone down since the budget was prepared and would need to be adjusted. 

 

Chairwoman Chowning said it appeared that out of 25 positions overall, the department was replacing five printers and five computers.  She said that the department had done a good job on management of equipment.  Mr. Comeaux agreed and said the most critical thing for the department was the replacement of the printers.  He said that the printers experienced heavy use when the budgets were being prepared.  The high-end printers were the ones that were the most important to the department. 

 

Mr. Comeaux then discussed E-805 that dealt with major reclassifications.  That was a request to reclassify over time the positions the department had in its Pre-Audit Section.  That was requested to prepare for a transition to a post-audit function as the IFS system was rolled out.  The pre-audit function had been almost a clerical review of vouchers and other accounting documents sent to Pre-Audit from the various agencies before they went to the Controller for processing.  There was a checklist that the pre-audit staff used to be sure that the “i’s were dotted and the t’s were crossed and that the document looked ok.”  The department used to look at every single claim against the state before it was processed.  A number of years ago the law was changed to allow the department to use sampling techniques to determine that claims were generally correct.  Moving to post-audit would be a continuation of that but at a higher level.  It was the department’s opinion that it needed a professional auditing staff that would be required to go out to the agencies to audit their documentation for the claims that they processed electronically.  Once the system was rolled out, agencies would process vouchers from their own place of business electronically and maintain the supporting documentation there.  It was the department’s plan to select vouchers for examination at the agency’s place of business based on a statistically valid sample selection.  The department had previously reclassified the supervisor of Pre-Audit.  The current budget request would allow the department to reclassify three more staff positions in FY2002 and as the roll out was completed, to reclassify the final two positions in FY2003.  The positions would be reclassified to the Auditor III level.

 

Chairwoman Chowning asked if the current employees would qualify for the reclassified positions.  Mr. Comeaux said he did not believe that any of the current employees would qualify for the Auditor III positions.  State Personnel had developed a plan to help place those employees, hopefully, at other positions within the Department of Administration.  If not, Personnel would assist in the placement in other agencies.  Mr. Comeaux said the department had included in the budget request the funding necessary to reclassify the three positions in the first year and two positions in the second year, however, the department’s plan was to do the reclassifications as the employees were placed in other positions.  The department did not intend to let the current employees go, effective June 30, and hire other people. 

 

Chairwoman Chowning asked how the public would be assured that with the change to a post-audit system all the safeguards were in place so agencies were not overspending their budgets. 

 

Mr. Comeaux answered by saying that the Internal Audit Division was reviewing the internal control procedures that each agency was required to have developed and in place before the IFS was made available to them.  The post-audit would be designed to test whether those procedures were consistently used.  The procedures were designed to prevent overspending and to prevent inappropriately charging costs.  If the department used a statistically valid sampling technique to test those procedures the department would be reasonably assured that the agencies were spending their money legally and appropriately. 

 

Mr. Comeaux went on to discuss decision unit E-900 that was the transfer of the Pre-Audit Section to the Internal Audit Division.  He said that was a very natural connection because if in the post-audit process, some problems were detected that needed further investigation, the Internal Audit Division would already have the information.  He thought the system would be much better than the clerical review that had been provided in the past.  Mr. Comeaux said that the transfer was necessary to provide a high level of professional auditing expertise and supervision and also to provide the connection with the internal audit function.

 

Chairwoman Chowning asked Mr. Comeaux to keep the subcommittee posted on the progress and reiterated that the post-audit process should not begin without safeguards in place.  Mr. Comeaux agreed.

 

Chairwoman Chowning asked where the section would be housed.  Mr. Comeaux said they should be moved into the same space that Internal Audit was in but it had not been determined where that would be.  They were located currently on the second floor of the Blasdel Building and Internal Audit was on Silver Sage Drive.  The department intended to combine both offices but that would be done within the budgets that had been presented after they determined the best way to accomplish it. 

 

Division of Internal Audits (101 – 1342)

ADMIN 8 – Volume I

 

Ms. Becky Moody, Chief of the Division of Internal Audits, introduced herself.  She introduced the division’s three supervising auditors, Mike Colburn, Lee Pierson, and Bill Chisel.  She also introduced Mary Keating, Manager of Financial Management, Training and Controls. 

 

Chairwoman Chowning welcomed the staff and asked the division to discuss the performance indicators. 

 

Ms. Moody indicated that they had developed five new performance indicators for the new audit section.  There were another ten indicators for the training section that had been established since inception in 1995.  The most measurable performance indicators for the training section were the test scores and participant evaluations.  She believed that the division had either met or exceeded the majority of the performance indicators for the division as a whole. 

 

Chairwoman Chowning agreed that it appeared the division had met or exceeded the standards set by the performance indicators.  Chairwoman Chowning questioned performance indicator number 14 that was the percent of evaluations completed as a percent of total evaluations planned.  That level was not completed but the division retained the same projection for the future.

 

Ms. Moody said that once agencies got their internal control systems documented, the Training Section would go out and evaluate their policies and procedures.  Until the policies and procedures were put in writing, the division could not evaluate them. 

 

Chairwoman Chowning said the audit operations had begun in October 1999, and Mr. Beers questioned the division on the performance indicators.

 

Mr. Beers asked about performance indicator number 12 that was the percent of agencies implementing 75 percent or more of the recommendations within a year.  He asked if there was any legislation needed to help improve the implementation rate.  Ms. Moody said that had been a question last session and the percentage varied from 54 percent in 1997, 37 percent in 1998, 49 percent in 1999 and 46 percent in 2000.  The department’s responsibility was to identify and analyze problems and make recommendations for agencies but they had no control over the agency’s implementation.  The division could monitor the compliance but it could not control how the agencies implemented the recommendations. 

 

Mr. Beers said that for the K-12 schools there was a disciplinary room concept that had been enabled through legislation.  He said that if there was legislation needed by the division to advise him. 

 

Ms. Moody added that there was a state regulation that allowed agencies a one-year time period to implement the recommendations.  However, the focus of the Training Section was to help the agencies, not to criticize them. 

 

Chairwoman Chowning said the subcommittee would like to know what had been accomplished and what the division envisioned to accomplish in the next biennium.  She also wanted to be advised about the potential cost savings anticipated. 

 

Ms. Moody said she was pleased to report that the division had worked very hard with the agencies to develop positive solutions to the audit findings and to provide training and technical assistance to the agencies.  The Audit Section had presented nine audit reports to the Executive Branch Audit Committee as of December 31, 2000.  They were kept on the Web site so they were available for viewing.  Those reports contained over 100 recommendations, many of which improved the efficiency and effectiveness of state government.  Two of the audits specifically identified cost savings.  In the audit of the Division of Parole and Probation, the division quantified cost savings for independent contracts for the pre-sentencing investigations.  The division estimated that could save the state approximately $1.3 million per year when fully implemented.  It was Ms. Moody’s understanding, from talking to representatives of Parole and Probation, that they did have a decision unit in their budget to request starting a pilot program.  They were planning to take two positions and transfer those costs to contract so that they could begin the program.  Another cost savings was in the Department of Motor Vehicles.  The division identified that $250,000 annually could be saved in interest income on gasoline tax payments by reestablishing the due date back to the 25^th of the month.  They could also earn another $150,000 annually in interest income by amending the special fuel tax date to the 25^th of the month and accepting electronic fund payments.  She was unsure how Motor Vehicles had implemented the program.  Ms. Moody said that her understanding from representatives at the Department of Motor Vehicles was that they had talked to representatives of the fuel industry who indicated that they had “struck a deal with the legislature” that if the collection of the tax was moved from the Department of Taxation to the Department of Motor Vehicles, the industry would agree to move the payment date.  Ms. Moody believed that the Department of Motor Vehicles did not request a bill to move the date because they did not want to lose the support of the industry. 

 

Chairwoman Chowning said she had been told that there was a Bill Draft Request on the Parole and Probation change but it was not out yet. 

 

Ms. Moody added that it was difficult to quantify the cost savings associated with the work the division had done.  She pointed out some efficiency that had been accomplished even though the cost savings might not be identified immediately.  In the Motor Vehicles branch of the Department of Motor Vehicles, the division suggested that they explore the possibility of the bank automatically re-depositing checks in coordination with the state Treasurer.  That was a statewide issue and the state Treasurer implemented the policy effective November 1, 2000, so all state agencies were benefiting from the recommendation now.  Another example was identified in the audit of the Division of Child and Family Services.  The administrator stated that the audit recommendations would decrease the agency’s contracting load by 30 to 40 percent and would result in savings.  Ms. Moody said two more audit reports would be presented at a tentatively scheduled April meeting and another three or four reports would be presented at the June meeting. 

 

Mr. Beers asked Ms. Moody to direct him to the division’s Web site and she did.  He asked Ms. Moody what percentage of the division’s emphasis was on internal controls versus compliance and general fiscal management issues.  He said that the interest issue with the DMV and the Department of Taxation was more of a financial accountant’s sense being applied to the situation and the realization that an opportunity was being missed.  He wanted to know what percentage of the division’s time was focused on peer review of internal controls. 

 

Ms. Moody said that over 80 percent of the division’s time was focused on efficiency issues and effectiveness.  She said the focus was determined by the type of agency being audited.  At Parole and Probation, the division concentrated on ways to improve efficiency.  In an upcoming Welfare audit, the division would point out possible efficiencies.

 

Chairwoman Chowning asked if the division had developed performance indicators that dealt with the performance after the pre-audit positions were moved to post-audit status.  She also wanted to know whether an audit plan had been developed for the post-audit program and what type of report would be produced. 

 

Ms. Moody envisioned that the division would prepare a report to management with its findings and file quarterly summaries with the Board of Examiners.  The division was working on a draft audit plan.  The division was cognizant that it needed performance indicators and they would be developed in the future. 

 

Ms. Moody said that during the last biennium the Training Section, managed by Mary Keating, had provided training to over 480 participants from 70 agencies and issued over 750 recommendations to improve agencies’ internal control systems.  There was a Bill Draft Request (BDR) to clarify the division’s responsibilities that had not yet been introduced.  It clarified the division’s training responsibilities to only those executive branch agencies as originally approved during the 1995 legislature.  It also reestablished the educational and occupational requirements for the Manager of Internal Controls.  That position was the former Chief of Financial Management.  It would ensure that qualified professionals served in that capacity. 

 

Ms. Moody discussed the three components of decision unit E-276.  The first component was $15,000 in FY2003 for a peer review.  A peer review was an audit of the auditors.  The standards were recently revised to require a peer review once every five years and the first review would be conducted prior to October 2002 and then five years thereafter.  The second component was that the standards required the staff to maintain proficiency through continuing education.  They needed 80 hours every two years.  There was Master Auditor Training for $5,000 requested in FY2002 and FY2003.  It allowed an instructor to go on site to train the staff in audit-related issues.  The last component of the decision unit was out-of-state travel for $7,200 for each year of the biennium.  That allowed one-half of the staff to travel one year and the other one-half to travel the next year to classes on performance-related audits.  The performance training classes were not typically held in Nevada.  Those classes were for eight employees each year. 

 

Chairwoman Chowning said that in some budgets the employees were traveling every single year and it sounded as if the division was much more efficient in sending the employees every other year. 

 

Ms. Moody said that decision unit E-275 equipped the Post-Audit Unit.  It included travel, operating supplies, equipment, and training that was needed. 

 

Chairwoman Chowning commented that decision unit E-710 was for replacement of office equipment.  She asked about E-720 that would replace software and purchase six portable printers.  She wanted to know why the printers were needed and how they would be used. 

 

Ms. Moody answered that the division had four portable printers that were sent into the field with the staff.  The 4 printers were shared with 12 auditors and the requested printers were to replace the printers as they wore out. 

 

Chairwoman Chowning asked Ms. Moody if she was leaving state service.  Mr. Comeaux addressed the subcommittee and told them that Ms. Moody would be leaving to accept a position as controller of a company in Reno.  He said the move would be a good move professionally for Ms. Moody and also allow her to stop commuting from Mogul each day.  Her last day in the office was March 28, 2001.  Mr. Comeaux went on to say that before Ms. Moody took over the new Division of Internal Audit, she ran the Financial Management, Training and Controls Division and had done a great job.  He was sorry to see her go.  Mr. Comeaux said he would try to find a suitable replacement from the existing staff. 

 

Chairwoman Chowning asked how many years of service Ms. Moody had given the state.  Ms. Moody responded that she had been a state employee for five and one-half years.  Chairwoman Chowning said she had done an excellent job; she thanked her for her work, and said that the state was losing some of its best people to the private sector. 

 

Athletic Commission (101 – 3952)

B&I 175 – Volume II

 

Mr. Marc Ratner, Executive Director of the Nevada Athletic Commission, introduced himself and introduced the Vice Chairman of the Nevada Athletic Commission, Dr. Luther Mack. 

 

Chairwoman Chowning welcomed the gentlemen and asked them to comment on the commission’s performance indicators. 

 

Mr. Ratner said that when he constructed the budget he was very conservative because it was very difficult to predict the future.  With the number of Indian gaming casinos and with boxing going on-line, he was sure some fights would be lost to other states.  In the current fiscal year ending June 30, 2001, the commission had already taken in approximately $2,300,000.  The performance indicators showed $1 million but the commission had been extraordinarily busy the last two years.  He was very pleased to say that in each of the last two fiscal years the commission would earn over $2 million.  He hoped that would continue on forever but he was hesitant that it would.  The Atlantic City Convention Center had been closed for remodeling for the last two years and would be back as a viable competitor to Las Vegas.  The Foxwoods Casino in Connecticut, a large Indian casino, and the Mohican Sun in Connecticut, were both building 10,000-seat arenas that would be viable competitors for boxing.  He said for those reasons he had been conservative in estimating revenue. 

 

Chairwoman Chowning said the subcommittee understood that and asked Mr. Ratner to provide the figures available as of the hearing date.  He said that he believed Nevada’s Athletic Commission was the most respected athletic commission in the world and he was proud to be the executive director working with the commission. 

 

Chairwoman Chowning said she was also proud of the commission and the good work done by the commission made tourists happy and improved the state’s image.  The good work should be continued.

 

Senator O’Donnell asked the commission’s intentions regarding “ultimate boxing.”  He had seen a special on television and it appeared to be a very brutal sport. 

 

Mr. Ratner said the commission was aware of the sport that had been licensed in New Jersey and California.  There was some interest expressed in coming to Nevada.  Mr. Ratner did not foresee anyone coming before the commission until the fall.  The commission had not approved the sport in Nevada.  The commissioners and Mr. Ratner had gotten some films from the last ultimate show done in Atlantic City in February but had not formed any opinions.  It was a brutal sport.

 

Senator O’Donnell said that in the state of Nevada, we were proud of the Athletic Commission and the image of the sport of boxing in the state.  The commission had put Nevada on the map in terms of being the pristine place in the world to have a good, legal fight.  He would hate to see that reputation tarnished by brutality that would be shown on national television.  In ultimate fighting, the fighters did not wear gloves and there were no rules except one that prohibited biting.  The fight went on until one of the fighters was knocked out.  He thought the sport was dangerous.

 

Mr. Ratner said he thought some rules had been included recently in an effort to conform to athletic commissions.  Senator O’Donnell said the fighters could break arms or choke the other fighter until they lost consciousness or even died.  He cautioned the commission and asked that discretion be used in allowing the sport into Nevada. 

 

Mr. Ratner said that was fair and he and Commissioner Mack would take the message to the other commissioners. 

 

Chairwoman Chowning commented that the legislature counted on the commission to keep the state’s image pristine and professional.  She asked Mr. Ratner to continue his presentation with a discussion of “out-of-pocket” travel expenses that had occurred.

 

Mr. Ratner said the commission had been unable to use its out-of-state travel as it wanted to in the last couple of years.  Most of the conventions had been held in Las Vegas so the out-of-state travel had not been used.  The commissioners had been using their own money to attend even those scheduled in Las Vegas.  He anticipated that the commission would need to travel out of state more.  More trips to Washington, D.C. would be needed.  The United States Senate and House of Representatives were passing some boxing legislation that Nevada needed to be a large part of and he foresaw the need to testify in Washington.  Former Senator Bryan and Senator Reed were working with the commission to establish some national laws and standardization so that the same prerequisites would exist in every state.  Mr. Ratner said there needed to be some national regulations, not a federal commission, where the same rules would be in every state for medicals and the rules for the fight.  He said the commission’s goal was standardization throughout America.

 

Chairwoman Chowning asked what travel Mr. Ratner expected the commission’s Medical Advisory Board to take.  Mr. Ratner said that he anticipated the Medical Advisory Board to travel much more than it had.  One of the problems associated with having as many fights as they had had, was that there were more payments necessary to the independent contractor inspectors.  The commission had to move money from the out-of-state travel fund and the Medical Advisory Board fund to cover those expenses.  He had kept the amounts the same because the budget had not been increased. 

 

Mr. Ratner said he was pleased to be part of the commission and they were happy with their computers and equipment.  He said there was one area that he would like changed.  Each day the commission had a bank deposit that had to be taken to the bank.  Mr. Ratner said that currently employees left the office early to go to the bank and that did not make sense to him.  He would like the deposit picked up at the Sawyer Office Building because he believed there was a danger to the employees taking thousands of dollars to the bank themselves. 

 

Chairwoman Chowning invited Ms. Sydney Wickliffe to address the subcommittee on the issue.  She asked if it would require a change in regulation or other action. 

 

Ms. Sydney Wickliffe, C.P.A., Director of the Department of Business and Industry, introduced herself and said that she and Mr. Ratner had discussed the issue of a bank deposit pick-up.  Her understanding was that the pick-ups were controlled through a contract that the state Controller managed.  She had been in touch with the Controller and did not believe it would require any change in regulation or statute.  She said that she was trying to have the pick-up arranged not only for the Sawyer Office Building but also for the Bradley Building and other state agencies around town.  Ms. Wickliffe said there was a fee charged to each agency that participated in the pick-up.  The difficulty was that although the commission was a very lucrative agency, it was a small agency with a small budget.  That seemed to be a problem with some of the agencies. 

 

Chairwoman Chowning asked that the deposit pick-up be arranged in the next couple of weeks so that it could be built into the budget. 

 

Mr. Beers asked if a Letter of Intent from the subcommittee would be appropriate directing the Controller to attempt to negotiate the pick-ups into the next contract with the bank.  Ms. Wickliffe said that was a wonderful idea and she would appreciate the assistance.  Chairwoman Chowning added that she thought the Letter of Intent should be directed to the state Treasurer. 

 

Commissioner Mack addressed the subcommittee to state that Mr. Ratner had done an excellent job for the commission.  The budget did not include fines the commission had imposed last year for some promoters that had done some illegal things in boxing.  The commission had imposed fines of approximately $375,000 that were not included in the budget.  Mr. Ratner added that the fines had not all been paid yet.  The fines would be revenue going to the state General Fund.  He said that he concurred with Senator O’Donnell regarding ultimate boxing.  It was a brutal sport that the commission was closely observing. 

 

Mr. Beers added his voice to the chorus praising what the commission had accomplished.  He was of the opinion that the economy rose and fell with fuel prices.  Fuel prices were going up and the economy would be “hurting.”  The legislature was relying upon the commission to combat that. 

 

Chairwoman Chowning asked Mr. Ratner to name the big events that were upcoming.  Mr. Ratner said that on Saturday, March 24, Oscar De La Hoya would fight at the MGM Hotel.  It would be a big fight broadcast on national television on Home Box Office (HBO).  On Friday, March 23, to be broadcast from the Texas Station on a national television Showtime show, there would be a heavyweight elimination fight featuring David Tua, who fought Lennox Lewis in Las Vegas last November.  The biggest fight of the year would be April 7 at the MGM.  It was a featherweight fight with a man named Prince Naseem who was a small Englishman.  It was believed that the fight would be a sellout.  He was fighting a Mexican fighter named Marco Antonio Barrera.  Mr. Ratner said there would be a large, live gate and that it was a worldwide pay-per-view.  There was a possible fight scheduled with Mr. De La Hoya in June depending upon the outcome of the March 24 fight.  Mr. Ratner said the hotels in both northern and southern Nevada had really stepped up.  There was a fight scheduled for April 27 at Caesars Tahoe with a man named Pernell Whitaker who had been a former champion.  The boxing business was very strong in Nevada according to Mr. Ratner. 

 

Administrative Services (716 – 1371)

ADMIN 103 – Volume I

 

Mr. Tracy Raxter, Chief of Administrative Services Division for the Department of Administration, introduced himself.  Mr. Raxter reviewed the division’s performance indicators and said that there were two indicators where the division failed to meet the level of projection planned.  Those were performance indicator number 2, percent of financial reports completed within the scheduled time frame, and number 4, percent of department’s internal service fund revenue rate structures analyzed.  The reason the division did not meet the projections was because the division lost three out of five of its professional fiscal staff within a one-month period.  That happened during the last half of the year and they were unable to do as many rate studies as they had planned and it resulted in the division not being as timely in some of its financial reporting.  Mr. Raxter said he was happy to report that currently the division was fully staffed with an excellent staff and that was the reason the division kept the performance indicators at the prior biennium’s level.  He felt that would provide a good level of customer service to clients. 

 

Chairwoman Chowning asked Mr. Raxter to discuss the transfer of eight accounting positions into the division from other agencies. 

 

Mr. Raxter said The Executive Budget recommended that the seven accounting positions located at Public Works and one accounting position located at the Victims of Crime program be consolidated into the Administrative Services Division.  Those were the two agencies in the department that had their own existing accounting staff.  The Administrative Services Division currently did all the accounting for all the other divisions within the department.  The division felt there would be some benefit to consolidating the accounting.  As far as the Public Works Board was concerned, having those positions under the Administrative Services Division would allow some independent oversight over the capital improvement program by the division’s staff separate from the project managers and the management staff of the Public Works Board.  The division could also provide the Public Works Board a higher level of professional fiscal staff than currently existed.  A larger staff would also allow opportunities for cross training of the existing staff so when vacancies occurred it would mitigate the impact on those agencies.  The division had in the past been involved with cost allocation plans.  They had been responsible for coordinating the statewide cost allocation plan and had done internal cost allocation plans within the division.  Mr. Raxter believed that the staff’s experience would be of benefit to the Public Works Board, especially with the project management fees that were charged to the Capital Improvement Projects (CIP).  That had been an area of concern for the legislature in the past.  The development of a good cost allocation plan for that aspect was an area that Mr. Raxter felt the division could assist in.  In the case of the Victims of Crime program, the division had provided accounting services for that agency with the one exception of the victim’s payments process.  That was handled by the one accounting position in the agency.  The division felt that including the position in the Administrative Services Division would give the division an opportunity to improve the internal controls.  Currently there was one individual doing a number of steps in a process.  There was not the level of segregation of duties that probably should have existed there because there was only one position.  Including the position in the division’s existing staff of 13 allowed opportunities to segregate duties to improve the internal controls.  It also allowed for cross-training opportunities and would allow for more timely access to financial information for the professional staff within the agency.  The division provided budget reporting to the administrator of the Victims of Crime program.  Because the one position, and the responsibilities of the position, were separate from the division the information flow was not as good as it should be.  The financial reporting would be improved with the position reporting to the division because the financial information could be accessed on a more timely basis. 

 

Chairwoman Chowning asked if there would be any cost savings by moving the positions into the division. 

 

Mr. Raxter said the division charged an administrative assessment to each agency that it serviced and the assessment was based on the number of financial transactions processed on the agency’s behalf.  There was no change in The Executive Budget in expense or revenue for the Public Works Board and the Victims of Crime program.  The reason for that was that the division had no history.  Whenever a transfer was brought in from another agency, and it had happened occasionally in the past, there was no history to determine how it should be allocated so for the first biennium the revenue source would be left the way it currently existed.  In two years the division would review the actual work the Administrative Services Division had processed on the agency’s behalf and adjust the administrative assessment accordingly.  It could go up or down depending on what happened to the agency during the biennium.  The division stressed to the agencies it served that it was always looking for opportunities to make their operations more efficient and much of it was dependent upon whether they took the division’s recommendations and implemented the recommended changes. 

 

Chairwoman Chowning asked where the additional eight positions would be located when they were transferred into the Administrative Services Division.

 

Mr. Raxter reported that he had spent the last month or so working with the Division of Buildings and Grounds, who had been working with the Public Works Board, to identify space.  One of the CIP projects was to purchase the Employer’s Insurance Company of Nevada (EICON) building in Carson City.  With that purchase, the Public Works Board and the Division of Buildings and Grounds had been attempting to identify which agencies would be housed there.  It appeared that the State Purchasing Division, that currently resided on the third floor of the Blasdel Building, would be going into the EICON building if the project was approved by the legislature.  If that were to happen, the 3,600 square feet of space on the third floor of the Blasdel Building would meet the needs of the Administrative Services Division to house the current 13 positions and the 8 additional positions.  The Executive Budget provided sufficient funding in rent for that square footage and would meet the needs of the division. 

 

Chairwoman Chowning asked where the division would be housed if the purchase of the EICON building was not approved. 

 

Mr. Raxter said that if the EICON building purchase was not approved, the division would look at alternatives.  The best option would be to work with Buildings and Grounds to determine if existing agencies could be reconfigured.  For example, the Department of Personnel was located on the first and third floors of the Blasdel Building.  Maybe there would be a way to rearrange agencies to allow more room. 

 

Chairwoman Chowning asked for confirmation that the budget included an adequate amount for the space rent and Mr. Raxter indicated that it did. 

 

Mr. Raxter brought up the division’s request for certain replacement equipment.  The request was for the replacement of four personal computers in the second year of the biennium.  The division was on a four-and-one-half year to five-year replacement schedule for the PCs.  The request met the replacement schedule.  Funding for an upgrade to the existing Office Suite software was included in the first year of the biennium. 

 

Mr. Beers said that a four-year cycle for the replacement of computers for an administrative agency was too long.  That would put the current PCs at about a 386.  Mr. Raxter said that the existing computers were Pentium IIs.  He said that he believed the improvements and technology included in the PCs available in today’s market allowed the replacement time to be stretched out and to still meet the division’s needs for both memory and processing power. 

 

Ms. Leslie said she had not heard anything about the Commission for Women in years and she asked whether it still existed and what services the division provided to the commission.

 

Mr. Raxter said the commission did have a budget with the only monies included being from private donations that were received three or four years ago.  The budget had just rolled forward as it had not had any activity that he was aware of in the last two fiscal years. 

 

Employee Management Relations Board (101 – 1374)

B&I 156 – Volume II

 

Ms. Shari Thomas, Commissioner for the Local Government Management Relations Board (EMRV), introduced herself.  She explained that the board was primarily an adjudication board that served over 190 bargaining units, 70 local governments, and more than 55,000 workers.  The board’s purpose was to foster and maintain a smooth and cohesive collective bargaining process.  The board had taken in over 50 percent more revenue than it usually did which moved the board from $2,000 to $3,000 in the current year. 

 

Ms. Thomas discussed the goals the board had achieved that she was proud of.  The filings with the board had increased but they had managed to decrease the number of hearings by encouraging mediation and training.  Many of the governments had gone to the federal mediation service and gotten additional training and better management and labor relations techniques.  Interest-based bargaining seemed to be helping many agencies build strong relationships that resulted in quicker and longer contracts.  That saved taxpayers’ dollars.  The board had also gotten the board secretary certified as a mediator at no cost to the state.  She participated in a Neighborhood Justice Program, which was a Clark County Social Services Program.  Her services were now available to the board’s clientele. 

 

Ms. Thomas said that it was difficult to predict what revenue would come in so they had taken the growth statistics for the state to project what the growth would be.  Some of the local governments had experienced phenomenal growth; the city of Mesquite had seen its population grow over 100 percent.  The city of Henderson was doing the same thing.  The board tried to project what the local governments would need in employees and that could fluctuate.  Some governments, such as Clark County, had not added as many employees as the growth in the county would indicate were needed.  The cities of Henderson and Mesquite had proportionately added several employees.  She said that the numbers were hard to calculate but the board tried to calculate them from the growth projections.  She commented that the board tended to receive more cases in years of heavy negotiating.  In the current year, the board had been bombarded with cases. 

 

Ms. Thomas had two minor requests of the subcommittee.  Due to circumstances out of the board’s control, one board member resigned so the board could not schedule several meetings last year.  Assemblyman Goldwater’s father, the chairman of the board, passed away and that caused the board to be short on meetings in the current year.  She said the board requested funds to maintain the level of hearings that they had been funded for prior to the time the board had been unable to hold the hearings due to vacancies.  Normally, the board would have 18 to 20 hearings per year.  The other request the board made in the budget was for replacement computer equipment.

 

Chairwoman Chowning said that the board would normally have 18 to 20 hearings per year but that had been brought down to about 13 to 14 hearings per year.  She asked why the board would be able to return to 20 hearings per year. 

 

Ms. Thomas said the board had reduced the number of hearings for two reasons.  One board member resigned and it took several months to replace that member and Mr. Goldwater passed away.  Ms. Thomas said it was a three-member board so when one member was absent, the board was unable to conduct hearings.  The board met approximately one to two days per month.  Ms. Thomas said the board currently had in place all three members and had three hearing dates in April 2001 scheduled. 

 

Chairwoman Chowning said that explained the additional funding requested in decision unit M-200.  She asked Ms. Thomas to explain decision unit E-710.

 

Ms. Thomas said that the board had purchased MMX 200 computers in 1997 and they were both past due to be replaced.  The board had chosen to replace the computers in alternating years so it would have a new computer one year and then another new computer the next year.  The equipment the board currently had would not allow the board to operate its daily operations and the IFS system.  The computer would “crash.” 

 

Chairwoman Chowning said that the budget included funds for the replacement of two fax modems and she wondered why the board needed two fax modems when there were only two positions.  Ms. Thomas said the board had accepted DoIT’s recommendations on replacements.  She said she and her secretary were not “computer people.”  They had relied upon DoIT for recommendations on replacements.  Chairwoman Chowning asked Ms. Thomas to provide backup information on exactly what was being requested. 

 

Chairwoman Chowning thanked Ms. Thomas and told her to keep up the good work that had been done.  She said she knew that with the astronomical growth in the state the board’s work would continue to be needed. 

 

Minerals (101 – 4219)

MINERALS 1 – Volume I

 

Mr. Alan Coyner, Administrator of the Nevada Division of Minerals, introduced himself and said it was a pleasure to address the subcommittee regarding a budget that was stable with no outstanding needs.

 

Chairwoman Chowning thanked Mr. Coyner, saying that had not been the story in the past and Mr. Coyner said the division was in a much better situation than it had been two years before.

 

Mr. Coyner reminded the subcommittee that the division and the Commission on Mineral Resources was 100 percent fee funded.  It received no state funding allocation.  Mr. Coyner said he had thoroughly examined the performance indicators and had eliminated those that did not adequately reflect the division’s mission and had added some new ones that would be more helpful with regard to what the division did.  Regarding the education mission, the division had used a body count, a number, and he changed that to presentations per staff member to recognize that as the division’s staff was reduced, a certain number of presentations per staff be kept.  That accounted for the changes in performance indicators numbers 2 and 3.  Regarding the drilling permits, those were based on the permits the division received and the division had no control over that number.  In performance indicator number 4, the division had projected receiving applications for 40 of the permits and received only 3 in FY2000.  The division developed new performance indicators, numbers 6 and 7, that would look at processing time and inspections of permitted operations.  Those were things that the division could control internally and there were some targeted percentages regarding those goals.  He added that with the renewed interest in energy sources, both fossil fuel and geothermal, the division expected additional permit and inspection activities in those areas.  Regarding the abandoned mine land program (AML), performance indicators numbers 8, 9 and 10, Mr. Coyner chose to shift away from a number-counting approach that in part could not be controlled by the division because the numbers the department reviewed involved those securings that were done by industry.  The division had had a contraction in the amount of exploration work that industry had done so the numbers had been falling.  By translating performance indicator number 10 into a percentage, the division would have control of the ratio of sites that had been identified versus those that had been secured.  Mr. Coyner stated that he hoped the new performance indicators would meet with the subcommittee’s approval. 

 

Chairwoman Chowning thanked Mr. Coyner for the new performance indicators.  She said that was what the subcommittee had envisioned the performance indicators would show.  She described the new performance indicators as outcome oriented rather than workload oriented.  The performance indicators would be much more indicative of what had been accomplished and what would be accomplished in the future. 

 

Mr. Hettrick agreed with Chairwoman Chowning’s comments.  Chairwoman Chowning complimented Mr. Coyner on the new performance indicators.

 

Mr. Coyner pointed out that FY2000 was an excellent year for the division as it received two one-time extraordinary grants from the Bureau of Land Management (BLM).  Those grants were removed from the base in order to more realistically reflect the division’s revenue stream.  The AML security fee of $97,140 was due to a large open-pit mine opening in Crescent Valley, which was not the norm.  Mr. Coyner chose to reflect that in the base revenue figures before he went forward with the preparation of the budget. 

 

The largest impact to the agency over the biennium would be the raises in salaries to employees.  The division would go from ten employees to nine employees in the new biennium but the division had a rather senior staff.  The division had good, experienced people who did a good job but they were at the top of their pay levels.  The percentage increases recommended in the budget did have a major impact on the overall budgetary picture of the division. 

 

Mr. Coyner discussed a maintenance decision unit that dealt with Web site services for $4,349 in FY2002 and $4,376 in FY2003.  He said he wanted to take issue with those amounts and with DoIT for that charge because the division had been very aggressive and had been very blessed to have an employee that was very good with Web site hosting and coordination who had done all the work for the division.  The Web site had been expanded to include all forms and publications for the public to access.  The division had received a bill of approximately $8,000 over the biennium for the hosting of the Web site by DoIT.  He said he was aware that the subcommittee had heard similar complaints from other agencies and also understood that the billing from DoIT was still in a state of flux.  There could be changes.  Mr. Coyner wanted the committee to be aware of the situation and made a point that private services were approximately $100 to $150 per month and DoIT charges to the division could be approximately $1,000 per month.  He thought the subcommittee should review the situation. 

 

Chairwoman Chowning thanked Mr. Coyner for bringing the subject to the subcommittee’s attention and said that was something that needed to be reviewed.  She asked the subcommittee members who were familiar with Web site charges to comment. 

 

Mr. Coyner shared with the subcommittee a cost comparison chart (Exhibit C) between DoIT’s charges and three private Web site hosting agencies.  Under the cost schedule provided by DoIT, the division would be paying approximately $965 per month to run its Web site and the other three quotes received were $54 per month, $56 per month, and $106 per month. 

 

Mr. Beers stated that his company charged $40 per month if the user maintained the site.  Mr. Beers asked if it was possible that other charges had been included in the quote from DoIT.  He asked if there could be telephone charges or any other changes included.  Mr. Beers asked Mr. Coyner if he was confident that the charge was based solely on the fact that the division had a Web site. 

 

Mr. Coyner referred to Exhibit C that included a document called, “DoIT Agency Web Services Billing Rates FY2002 & 2003.”  The charges shown totaled $85 per month for the domain name, 10MB storage and 199 sessions per month.  Additional services, based on number of sessions, were an additional $785 per month. 

 

Mr. Beers asked when DoIT supplied the billing information to the division.  Mr. Coyner said he had received the information within the past two days.  Mr. Beers said it was probably based on DoIT’s new allocation formulas.  Mr. Coyner stated again that he was under the impression that the DoIT charges were in a state of flux.

 

Mr. Coyner said that it was helpful that DoIT showed the number of hits per month the agency experienced.  There was data available through the DoIT Web site to aid the division in monitoring the usage of the site.  Mr. Coyner said that this was a usage-based approach to user-fee charging and that was fine, however, the user-fee charges were extraordinarily out of line with what was available privately.  He assumed he would be able to contract with a private vendor and that would be one of the alternatives he would need to consider.  He added that he assumed that as agencies went to private vendors, the charges for DoIT services would increase for those agencies remaining. 

 

Chairwoman Chowning said that Mr. Coyner was commenting on the DoIT rate study and the subcommittee did not have information on that yet.  She asked if Mr. Coyner had information that the subcommittee did not have. 

 

Mr. Coyner provided the subcommittee with the information he had received from DoIT (Exhibit C). 

 

Mr. Coyner discussed the enhancement units included in the budget.  He said the division was asked by the Department of Business and Industry to vacate the Bradley Building in Las Vegas.  They had reviewed options for space and any move would entail an increase in rent along with moving expenses.  The office was a two-person office so it would not be a large expense. 

 

Chairwoman Chowning stated that the additional expense would be approximately $10,000 in the first year and $11,000 in the second year to move to non-state-owned space.  She asked where the office would be moved.  Some other small state agencies were leaving the Sawyer Building and she asked if the division had considered combining with other agencies so they would have a better opportunity to find space. 

 

Mr. Coyner indicated that the division had discussed the issue with two agencies who were moving out of the Sawyer Building in an attempt to determine if it would be fiscally beneficial for the three agencies to rent space together.  They had also looked at space with the Desert Research Institute (DRI) at the University of Nevada, Las Vegas (UNLV).  They also could turn to the state’s Buildings and Grounds Division that would look for space and they were doing their own research.  There was no plan in effect yet and he thought that what would ultimately result would depend on what happened to some of the Department of Business and Industry agencies in the Bradley Building.  There could ultimately be space in the Bradley Building and the division would not have to move.  The funds had been budgeted for use in the event the division had to move. 

 

Mr. Coyner budgeted $12,356 per year for personnel in decision unit E-350.  That reflected a new summer intern program that the division started last year.  They had been very successful in having two Mackay School of Mines’ students work in the abandoned mines land program.  The division was pleased with the productivity of the students and wanted to repeat the program in the summer.  There was an abandoned mines support cost that went along with the program and that would pay for a replacement truck in the second year of the biennium.  The division had not had a new truck for six years as much of the division’s work was conducted in the hinterlands of Nevada. 

 

Chairwoman Chowning asked how many trucks the division would have and whether the intern would use the truck.  If so, would that leave some time when the truck would not be used? 

 

Mr. Coyner reported that, historically, the division had had one truck.  There were approximately four people that traveled in the field so the division had not had enough trucks for a number of years.  Last year, in order to provide for the intern program, the division rented a truck from another division in the building and ended up with a free truck from Mine Safety at the end of the year.  The division used one of their older trucks and ended up with a total of two trucks.  One was free and one was worn out.  With the purchase of the new truck, the division would have three trucks.  That was needed so a truck could be stationed in southern Nevada. 

 

Chairwoman Chowning summarized that the division would have a worn-out truck, a free truck and a new truck.  She asked if the free truck was worn out and Mr. Coyner said it had been refurbished and was a good truck.

 

Mr. Beers asked about the fees by type of resource.  The fee for geothermal wells was increased from $300 to $475.  He said that might have been an insignificant amount in the investment required to harness geothermal resources, but he thought the state should encourage the use of geothermal resources.  He did not mean to use the division for social engineering but he was curious if it was beneficial to the ongoing energy development efforts to have such an increase in fees for an alternative source of energy. 

 

Mr. Coyner said the fees charged for the geothermal program were complex with regard to size of well, the volume of water pumped, and other factors.  He said that he could generalize by saying that if the total revenue stream from the geothermal industry and the oil and gas industry were looked at together, they were less than the cost of the program manager within the division that staffed the program.  The fees barely covered the manager’s costs, let alone the administrative costs of running the program.  The industry was receiving good value for its dollar.  The division was regulatory with regard to geothermal and oil and gas in contrast to the division’s role with mining.  The division actually went into the field, had permitting processes, safety inspections and other things such as that.  The division also promoted the industry.  The division belonged to the Geothermal Resource Council and maintained a display at the annual meeting.  They had been very active with Senator Reid and the Geo‑powering the West initiative.  The division had recently been put in the grants stream with the Office of Energy and the Nevada Bureau of Mines and Geology to help with the database development of the geothermal resources of the state.  Mr. Coyner repeated that the industry had gotten a good value for the fees charged. 

 

Mr. Beers asked if the division, or any other agency, had any domain over or involvement in, wind-generated power.  Mr. Coyner answered that the division had no regulatory or developmental role for wind resources. 

 

Chairwoman Chowning stated that the state needed to find any additional resources available as soon as possible due to the energy crisis.  She believed that was money well spent.  Chairwoman Chowning said that one position would be eliminated and she asked if the division would be able to continue to accomplish the work without the position.  She also asked about the reduction in the budget reserve.  She asked if any of the fees would be increased. 

 

Mr. Coyner said the position was within the AML program.  The division had offset the loss with the summer intern program.  They had also looked at the database that handled all of the AML data that flowed to the division with the hope to make that more efficient in the process of notification of owners and tracking of openings.  They had achieved some efficiency that had allowed the division to save time.  Mr. Coyner said the division continued to be sensitive about the state of the industry.  There had been an upswing in production in the last year when 8.58 million ounces of gold had been produced, but the exploration side of the business continued to be down.  The number of mining claims continued to be down.  That was the division’s revenue source.  Mr. Coyner described the division as quite sensitive and conservative about any fee increase or additional sources of revenue that might impact industry.  He said they would hold their own with the nine positions and continue forward from there.  Mr. Coyner indicated that the division would be fine and not need a fee increase as long as the mining claim total stayed up.  He believed that with the new management of the Bureau of Land Management (BLM), Nevada would see a renewed interest in exploration.  With that, he hoped the revenue stream would stay the same and the division would be fine.  He did not anticipate fee increases.  He commented that the division was relying on the reserve, it would go from $168,000 in FY2002 to a calculated $106,000 in FY2003. 

 

Chairwoman Chowning said that she appreciated the division’s work in closing dangerous, abandoned mines and that fortunately she had not heard of injuries or deaths.  She encouraged the continuation of that protection of Nevada’s citizens. 

 

Mr. Coyner said the division had a new program developed in cooperation with BLM and the Nevada Mining Association to do backfilling of abandoned mines in or near urban areas.  There had been two very successful closures in the Las Vegas area in recent months and they had their first closures scheduled for northern Nevada in April.  They would be on Prison Hill, less than ten minutes from the room the subcommittee was meeting in.  He said all subcommittee members would receive notification of the scheduled date and the media would be notified.  It would provide an opportunity to demonstrate what the division could do with regard to closures in the northern part of the state. 

 

Chairwoman Chowning asked if the subcommittee could attend the closures and Mr. Coyner said that the subcommittee would be invited.  Chairwoman Chowning said that either last year or the year before a gentleman had been rescued in southern Nevada in an abandoned mine.  Someone just happened to be there and there had been a signal left outside the mine that someone was inside and the person was rescued.  She commented that if the signal had been left outside but the person that came by did not understand the signal, the outcome would have been different with drastic consequences.

 

Veterans’ Home Account (101 – 2561)

Staff Update

 

Mr. Rick Combs, Program Analyst, reported that the second subcommittee hearing on the Veterans’ Home had originally been scheduled for that meeting but had been removed from the agenda.  Because of that, an update was scheduled for the current hearing with the second hearing before the subcommittee being rescheduled for April 5, 2001. 

 

Mr. Combs met with the Veterans’ Home personnel after the last subcommittee hearing with regard to the revenue concerns and there was some indication that after discussing their plans with a Veterans’ Home in Phoenix, Arizona, they now believed they could increase the number of residents they thought would be Medicaid eligible to approximately 50 percent of the residents of the Home.  Currently, there was approximately $720,000 of Medicaid revenue built into the budget.  Using rough calculations, that was approximately 11 residents.  Such an increase in Medicaid residents resulted in a significant change in the funding structure for the Home.  He said that he needed more time to involve Nevada Medicaid and make sure the communication between the two agencies was adequate.  If there was that level of Medicaid eligible residents, the budgets for Nevada Medicaid and the Veterans’ Home would need to be adjusted accordingly.  Mr. Combs said he had sent a request to Nevada Medicaid to respond to a number of issues, one of which included the differences between the Arizona Medicaid Program and the Nevada Medicaid Program.  That could make a marked difference on the number of residents who were eligible for Medicaid.  He would rely upon their expertise in that area before advising the subcommittee.  He was trying to facilitate discussion between the Office of Veterans’ Services and Nevada Medicaid to accurately estimate the amount of Medicaid revenue that was realistic in the budget.

 

Mr. Combs said that the subcommittee might recall that there was $51.38 in reimbursement revenue per resident per day from the Veterans Administration.  That $51.38 per day may not start within the first six months of the Home being opened.  The Veterans Administration would do a review of the facility and its operations.  If the facility and the program were approved, the payments would start.  They would pay retroactively back to the first day the Home was opened once they approved it.  He said that facet would not cause a large hole in the budget.  Last session and then again in The Executive Budget, the Budget Office recommended including language in the Appropriations Act that would allow the Veterans’ Home to get an advance from the General Fund to help plug the hole in the “in between” time and then the advance would be repaid when the retroactive reimbursements were received.  He did not think that was necessarily critical to the operation but he wanted the subcommittee to know that it was more than just a contingency that it might happen.  The exact date that the reimbursement revenue would be received was unknown but it was known that it would not be received the first day the Home opened. 

 

Mr. Combs said staff was still looking into some other issues.  It seemed to him that daily a new issue was brought to his attention that needed to be addressed.  He was not prepared at the hearing to go into any detail but he planned to give the subcommittee the details on April 5, 2001.  He said he would give the subcommittee the information it needed to make its decisions. 

 

Chairwoman Chowning asked Mr. Combs what the total amount of the advance would be.  Mr. Combs said it would depend upon how many residents the Home was being reimbursed for.  It would be the number of residents times the reimbursement rate for up to six months.  It could be in the millions of dollars that would be paid once the Home had been approved. 

 

Mr. Hettrick asked Mr. Combs to verify all of the numbers and he agreed with waiting until the subcommittee knew what it had before they got into the middle of it with half of it right and half of it wrong.  He said the subcommittee would need the facts before making decisions. 

 

Chairwoman Chowning asked if there were members of the public who wished to comment. 

 

Mr. Ed Gobel, President of the Council of Nevada Veterans’ Organizations, introduced himself.  He said that he had recently mentioned to Mr. Combs that only veterans who served in time of war would get the $51.38 veterans’ per diem reimbursement and that could possibly cause another budget hole of over $1 million per year. 

 

Mr. Gobel said that on Sunday, March 25, 2001, a news conference was held at the Council of Nevada Veterans’ Organizations with the leaders of 50 different veteran’s organizations.  They asked Mr. Gobel to talk to the subcommittee and that was why he traveled to Carson City at his own expense and time at great expense to his health.  There was a serious situation and he believed that before the budget was analyzed, it should be determined how many other situations would tax Mr. Combs and the Fiscal Division.  The issue of the size greatly affected the staffing that had not been accounted for.  When there were four people to a commode, there would have to be additional staffing to take the people to the bathroom.  That had not been accounted for.  Mr. Gobel referred to Exhibit D that contained a letter from the Department of Human Resources Health Division that said as early as July 24, 1998, plans were submitted for review calling for 81,100 square feet.  That was not what the veterans’ organizations had been told.  Also included in Exhibit D was a copy of a March 21, 2001, letter sent to Senator Ann O’Connell from Charles W. Fulkerson, Executive Director of the Nevada Office of Veterans’ Services, that said that legislators received notice of that fact in early 1999.  Mr. Gobel said he had not found a single legislator that knew about that.  In fact, he had found that as late as September 2000, a copy of the IFC minutes said it would be 88,000 square feet.  He asked when the accurate figure would be known. 

 

Mr. Gobel said the problems with the budget related to the inexperience of the director of the Nevada Veterans’ Nursing Home, Mr. Jon Sias.  Mr. Gobel said that at a prior hearing, Mr. Sias had stated that he was a director of nursing homes or had been a director of nursing homes in the state of Maine.  In a letter dated March 21, 2001, to Senator Ann O’Connell from Charles W. Fulkerson, Executive Director of the Nevada Office of Veterans’ Services (Exhibit D), it was stated that Mr. Sias had never been an administrator or director of a nursing home in Maine or any other state.  Mr. Gobel questioned the accountability of Mr. Sias.  He said Mr. Sias had taken a six-month’s course in the administration of long-term-care facilities and had failed the state licensing exam.  Eventually, he was licensed for an entry level license on April 20, 1999, not a long term care license as claimed.  He said the Home would not be qualified unless it filled the positions that were required. 

 

Mr. Gobel said that he understood that in the budget there was a contract for medical director.  He said the amount budgeted for the medical director was $31,000 and that was not enough money to secure the services of a doctor in Las Vegas.  There were many other problem areas in the budget and he thought it was unreasonable to expect the fiscal staff to research all of the laws of the Veterans Administration. 

 

Mr. Gobel said his understanding of the reimbursement was that it was retroactive back to the date of qualification, not the date the Home opened.  If the VA qualifications were not met, the retroactive money would not be received. 

 

Mr. Gobel said he did not care whether the Home was privatized or not but someone should be required “to tell the truth.”  He said that Mr. Sias had claimed he was a director of nursing homes in Maine but he did not have the necessary experience and that was why all of the current difficulties were being experienced. 

 

Mr. Gobel apologized for his nervousness and said he had been authorized to tell the subcommittee how outraged the veterans of southern Nevada were that the Office of Veterans’ Services blamed the legislature, saying it knew as early as 1999 of the problems.  He said he had attended a slide presentation in early 1999 given by Mr. Abbott and Mr. Clark.  That presentation indicated there were two people to a bathroom and the building was still the same size.  Mr. Gobel said he had interviewed over 30 legislators so far since the information had been received and none of them had any knowledge that the size of the Home had been reduced.  It would cost a tremendous amount of money to add the staff necessary to take care of those things.  He said he did not know where to begin because he did not know what to believe.  He said that the veterans’ organizations still had not been told that the Home would be reduced to 81,100 square feet.  The first time he knew it was less than 115,600 square feet was on September 20, 2000, because it was shown in the minutes from the IFC meeting.  At that time, it was shown as 88,000 square feet.  He reiterated that an “honest” budget could not be developed without complete, reliable information.  He went on to say that the private nursing homes in southern Nevada such as Life Care Center of Las Vegas, charged $130 to $132 per day with more nursing care than the Veterans’ Home would have.  It had two people to a bathroom and was a gorgeous facility, according to Mr. Gobel.  He said that the “real” numbers for the Home were $244 per day.  The veterans’ organizations were tired of being attacked by state employees telling them that they had no right to look into the information.  He said the subcommittee was the only hope and prayer to correct the situation and he appreciated their help.

 

Mr. Gobel asked that appropriate action under the Nevada Revised Statutes (NRS) be taken against Mr. Sias and others who participated in what he referred to as a “hoax.” 

 

Mr. Combs stated that when the budget was originally built for the last legislature, the position of director of medical services was planned to be a contract position.  The $31,000 figure referred to was a figure developed very early on in the process.  The Home had a lot of money budgeted for contractual services and he planned to determine how much of the contract money would be used for the director of medical services and how many hours the position would work.  The information would be provided to the subcommittee on April 5, 2001. 

 

Senator O’Donnell asked if Mr. Gobel was alleging that Mr. Sias had no management experience or had never been an administrator of a nursing home or a Veterans’ Home, ever. 

 

Mr. Gobel said that he was not only stating it, but a letter from Mr. Fulkerson, who had sat beside Mr. Sias while he testified that he was director of nursing homes in Maine, he stated for the record in a response to a question asked by Senator O’Connell, that Mr. Sias had never been an administrator or director of a nursing home in Maine or any other state.  Mr. Gobel said the information he had gathered came from the Maine licensing board who had sent him over 100 pages of information.  He would make the information available to the subcommittee if it wanted it.  Since Mr. Fulkerson had testified that he had knowledge of Mr. Sias’ experience, perhaps even while he sat next to Mr. Sias when he testified, was considered a concern by Mr. Gobel.  Also, it had been spread across the state to veterans’ organizations that the legislators had been complicit in the problems of the Home because they had a copy of the information since early 1999 that showed the size of the Home had been reduced. 

 

Senator O’Donnell asked Mr. Gobel if he had the information and documentation to prove that Mr. Sias had never been an administrator in Maine. 

 

Chairwoman Chowning asked staff to follow up on the issue as well.  She indicated that it had been determined that Mr. Sias did have the qualifications to serve as administrator of the Home.

 

Senator O’Donnell read to the subcommittee a verbatim transcription of the testimony presented at an earlier legislative hearing as follows:

 

Vonne Chowning:  Thank you.  Could you tell us a little about yourself and your background and maybe you can enlighten this committee if you have had any experience in other states then.  If you can let us know then what is the standard for Veterans’ Homes in other states and things like this that we are, I mean, it is $135 up to $165 per square foot.  Do most Veterans’ Homes with difficult levels of care, some are dementia, some are high need, some are not so high need, they are -- is that the standard to have four patients to a bath?  You know, it just doesn’t seem to me that there was much privacy there but maybe you can let us know what your experience is and what other homes across the nation and what their standards are, with your permission, Ms. Chairman.

 

Jon Sias:  Director of nursing home.  My experience certainly in nursing home management indicates that.  What I have seen in the nursing homes in New England, where I came from, is usually much like the hospital scenario that Senator O’Donnell described, which is two residents or two patients per bathroom.  I don’t believe that it is uncommon to have more residents or a double room to a bathroom.  It is certainly not the first choice but I think, as both Mr. Fulkerson and Mr. Abbott have indicated, that these changes are driven by a budgetary issue that was outside the scope and outside the control of the Office of Veterans’ Services and happened a while before I came on board.

 

Vonne Chowning:  Well, you have been the director of nursing homes in which states? 

 

Jon Sias:  Maine.

 

Vonne Chowning:  In Maine, in any other states?

 

Jon Sias:  No. 

 

Vonne Chowning:  Only in Maine?

 

Jon Sias:  That’s correct. 

 

Senator O’Donnell continued by saying, “It seems to me like somebody lied here.  Somebody’s been misinformed and somebody withheld the correct information from this committee.  I am a little bit offended.  I am going to ask the staff to get to the bottom of it and find out what the truth really is and make a presentation to this committee.  I am going to have somebody’s head in my back pocket when it’s done.”

 

Mr. Gobel stated that he would provide the subcommittee with the name of the licensing board member of the state of Maine.

 

Chairwoman Chowning told Mr. Gobel that that would not be necessary as the subcommittee’s staff had been asked to follow up.  She said that the subcommittee would not go into the qualifications or lack thereof at that hearing.  The subcommittee might do that on April 5.  Chairwoman Chowning said the subcommittee needed to find out if Mr. Sias understood the question correctly as it was posed.  The question was, “Were you a director of a nursing home?  If so, in which states?”  The gentleman had a bachelor’s degree, a master’s degree, and 1,000 hours of training in the state of Maine.  He had a license in Maine and a license in Nevada.  Apparently, it was on that basis that the Office of Veterans’ Services made their choice.  Chairwoman Chowning said she did not know if it was within the purview of the subcommittee to question the appointment of Mr. Sias.  That was the decision that had been made based on the qualifications.  Whether the person said something that was untrue was another matter and, certainly, the subcommittee had to look at that.  She pledged to everyone that the subcommittee would look at all matters regarding the four persons to a bathroom.  She had also asked the staff to look into that problem to see what national standards were and what was legal in nursing home standards within Nevada.  She said she thought that was legal at the time the facility was built.  Currently, there were other regulations that had been adopted requiring fewer than four persons to a bathroom.  At the time the decision was made, that was legal and that was what the subcommittee had to look at.  Everything so far seemed to be legal; the person was hired based on personnel standards and the agency made the decision that it did.  The number of patients to a bathroom was legal within Nevada’s rules. 

 

There were concerns brought up at the hearing regarding the revenue and the subcommittee had several decisions to make.  Some of the decisions would be within the purview of the subcommittee and some would not.  None of the subcommittee members were nursing home administrators.  None of the subcommittee members had the background necessary to make those decisions.  However, the subcommittee could ask questions and decide where to go from there.  The Home was scheduled to be opened and the subcommittee would have to decide whether to stop the Home from being opened or should the subcommittee allow the Home to continue to be opened with very careful oversight and communication.  Those were difficult decisions the subcommittee would have to make.

 

Senator O’Donnell said the bottom line to him was what kind of care and what kind of treatment would the veterans receive in the Veterans’ Home.  It looked to him like “a ball of spaghetti.”  It did not look like it would work well at all.  If it could not be straightened out, the end result would be that the veterans would suffer.  He said he wanted to privatize the Home since day one but he was overruled.  Now the pieces had to be picked up and if the Home was not funded to the level it needed and if support was not guaranteed, it would guarantee that it would fail.  All of the members of the subcommittee would share in the blame for that failure.  He wanted to know how much money it would take to make absolutely sure the Home succeeded.  He wanted to make sure it was properly staffed with the appropriate nursing staff.  Otherwise, every one of the subcommittee members would be to blame. 

 

Ms. Giunchigliani said she believed the subcommittee had a responsibility to double check with Mr. Sias on qualifications.  She said she had received calls from representatives of veterans’ groups supporting what the Veterans’ Home was attempting to accomplish.  She cautioned the subcommittee not to be on a witch-hunt.  The issue was, had the Home been adequately funded by the last session of the legislature?  The answer was, no.  Also, had Public Works done its job?  Absolutely not.  Because of Public Works dragging its feet and making irresponsible errors, the subcommittee was faced with a larger budget impact than it had anticipated.  Be that as it may, the subcommittee would need to “bite the bullet” to find the funds to make sure that the quality of care was adequate.  Ms. Giunchigliani said that she would like to be sure the subcommittee focused on the Home and the needs of the veterans so that they were treated with dignity.  That was the concern and ought to be the focus of the subcommittee. 

 

Mr. Charles W. (Chuck) Fulkerson, Executive Director of the Office of Veterans’ Services, addressed the subcommittee regarding the issue of the testimony that had been provided at a past legislative subcommittee meeting.  He stated that in that meeting he sat beside Jon Sias and he understood the question asked of Mr. Sias to be whether he had been involved in management.  Mr. Fulkerson said he wore two hearing aids and sometimes he missed things.  He did not hear the question as to whether Mr. Sias had been a director of an establishment.  The qualifications that were read earlier in the hearing and the information that was sent to Senator O’Connell was the information that the selection board used in the selection of Jon Sias as the Administrator of the Nevada Veterans’ Nursing Home.  Mr. Fulkerson went on to say that Mr. Sias had been hired by the state of Nevada in May 1999 to run a nursing home.  Nevada had not been able to provide him with a facility to run and it was almost May of 2001.  He really had not had a chance to do the job he was hired to do.  Mr. Fulkerson thanked the subcommittee for the opportunity to speak.

 

Chairwoman Chowning told Mr. Fulkerson that the testimony regarding the qualifications of Mr. Sias had been a verbatim transcription and Mr. Fulkerson said that he understood that.  Chairwoman Chowning asked Mr. Fulkerson if he understood the question to be, “Have you had management experience?”  Mr. Fulkerson said yes.  Chairwoman Chowning said that no one was questioning whether the decision to hire was right or wrong.  The person that was hired had a bachelor’s degree, a master’s degree, and 1,000 hours of training experience.  It was only a 1,000 hour training program.  That did not include management.  This experience would be Mr. Sias’ first management experience.  Mr. Fulkerson said it was his understanding that this would be the first time Mr. Sias would be an administrator of a nursing home.  He understood the six months of training was a specific six-month training that covered all aspects of running a nursing home so, in fact, it would be an administrator-in-training program where he was exposed to management.  Mr. Fulkerson said that had satisfied the committee that made the decision to hire Mr. Sias.  Chairwoman Chowning described the training as an internship and Mr. Fulkerson agreed. 

 

Ms. Leslie disclosed that Mr. Fulkerson was her former father-in-law.  She did not believe that would in any way sway her feelings on the subject but she did not want to read in any documents that she failed to disclose the fact. 

 

There being no further business, the meeting was adjourned at 10:54 a.m.

 

 

RESPECTFULLY SUBMITTED:

 

 

 

Lila Clark

Committee Secretary

 

 

APPROVED BY:

 

 

 

                        ___

Assemblywoman Vonne S. Chowning, Chairwoman

 

 

DATE:                        ___