MINUTES OF THE MEETING OF THE
joint subcommittee on general government
of the
SENATE Subcommittee on Finance
and the
assembly committee on ways and means
Seventy-First Session
May 11, 2001
The Joint Subcommittee on General Government of the Senate Committee on Finance and the Assembly Committee on Ways and Means was called to order by Chairman William R. O’Donnell at 8:16 a.m., on Friday, May 11, 2001, in Room 2134 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
SENATE MEMBERS PRESENT:
Senator William R. O’Donnell, Chairman
Senator Lawrence E. Jacobsen
Senator Joseph M. Neal Jr.
ASSEMBLY MEMBERS PRESENT:
Mrs. Vonne S. Chowning, Chairman
Mr. Bob Beers
Ms. Christina R. Giunchigliani
Mr. Lynn C. Hettrick
Ms. Sheila Leslie
Mr. David R. Parks
STAFF MEMBERS PRESENT:
Gary L. Ghiggeri, Senate Fiscal Analyst
Bob Guernsey, Principal Deputy Fiscal Analyst
Steven J. Abba, Principal Deputy Fiscal Analyst
Jim Rodriguez, Program Analyst
Rick Combs, Program Analyst
Georgia J. Rohrs, Program Analyst
ElizaBeth Root, Committee Secretary
OTHERS PRESENT:
Terry Savage, Director, Department of Information Technology
Diane Jungwirth, Chief Assistant Budget Administrator, Budget Division, Department of Administration
Michael J. Willden, Administrator, Welfare Division, Department of Human Resources
Charles W. Fulkerson, Executive Director, Office of Veterans’ Services
Jonathan Sias, Director, Nevada State Veterans’ Nursing Home, Office of Veterans’ Services
Sherry Blackwell, Budget Analyst, Budget Division, Department of Administration
Jim Manning, Budget Analyst, Budget Division, Department of Administration
Chairman O’Donnell:
Before we commence with the agenda, I would like to call Terry Savage forward, as well as the representative from the Budget Division.
DEPARTMENT OF INFORMATION TECHNOLOGY
Chairman O’Donnell:
We have two significant issues to address before we can close certain budgets. One of those issues is the Department of Information Technology’s (DoIT) utilization projections for Fiscal Year (FY) 2002 and FY 2003, which may require reconsideration of the “R-46” mainframe upgrade proposal. Secondly, in its projections, it did not appear that DoIT adequately accounted for Nevada Operations Multi Automated Data Systems (NOMADS) future processing and development needs.
Mr. Savage, we were supposed to get requested responses back from you by May 10, 2001, which we did not receive. Do you have an explanation for that failure?
Terry Savage, Director, Department of Information Technology:
There were a couple of reasons for that, Mr. Chairman. There were two main issues for which we were to tender written responses to committee staff. One is that the forecasting methodology we typically use has a linkage between the central processing unit (CPU) utilization and other characteristics, such as disc storage. In a normal environment that linkage makes sense. However, because we have expended such effort to drive down the NOMADS CPU utilization, which worked, that linkage in the model between CPU and storage no longer made sense. Therefore, we had to make a readjustment to correct for that change in the conditions.
The other reason is that when we were forecasting a significantly reduced utilization for NOMADS, the Welfare Division was quite reasonably concerned about whether it would have enough funds to cover the actual costs. The forecasting before we implemented our current methodology was ineffective. There were cases in which they simply did not get enough money to cover the cost of actual utilization.
The Welfare Division raised a number of specific points, essentially saying, “Have you considered all options?” So, we agreed to take another look. While the individual issues that were raised by the Welfare Division were reasonable, the actual impact on the utilization forecast was negligible. They did not significantly alter the forecast numbers. If we had known that in advance, it would have made sense not to do that analysis, but the Welfare Division is our biggest customer and they had raised reasonable concerns. Rather than go forward with the number we were sure was correct, DoIT decided the prudent course was to take another look based on the specific issues the Welfare Division had raised. I can go into the specifics if you like, Mr. Chairman?
Chairman O’Donnell:
What were your findings?
Mr. Savage:
Our findings were that most of the issues raised by the Welfare Division had already been addressed in the forecast. We were going to finalize this and get the data to Diane Jungwirth, Chief Assistant Budget Administrator, Budget Division, Department of Administration, but that change in the projected utilization from what we had forecast in our April capacity plan would not have significantly altered the results.
A concern raised in recent discussions is whether that changes the conclusion that we came to last week that we do not need the upgrade. The answer is it most certainly does not. Taking this into account, under current forecast conditions, we still will not need to do the CPU mainframe upgrade of the “R-46 to R-56” during the upcoming biennium.
Chairman O’Donnell:
Does the Budget Division have comments or objections to this recommendation?
Diane Jungwirth, Chief Assistant Budget Administrator, Budget Division, Department of Administration
Yes, Mr. Chairman. We need to receive DoIT’s information.
Chairman O’Donnell:
When will the Budget Division have the updated budget adjustment figures?
Ms. Jungwirth:
As soon as we receive those figures from DoIT, and I understand I will receive those at 1:00 p.m. today. There is still a tremendous amount of work that needs to be done to balance all those accounts. I will be working throughout the weekend to try to get that accomplished so that I may give the information to the budget analysts first thing Monday morning. They will then need to balance those figures in all the affected budgets as quickly as possible.
Ms. Giunchigliani:
We need these adjustments and this information by Monday afternoon. I cannot close our budgets and this will impact every single budget.
Ms. Jungwirth:
I understand that, but this is a tremendous amount to do. There are almost 400 budget accounts that have to be reviewed.
Ms. Giunchigliani:
Are you saying that it is far more significant than what Mr. Savage is indicating?
Ms. Jungwirth:
It is more significant to review and process these figures for the Budget Division, yes. This entails a process that will take a while.
Chairman O’Donnell:
Mechanically, we are trying to close this budget. Our committee staff is working Saturdays and Sundays and at all times of the evening. I know this because last Sunday afternoon I called Gary Ghiggeri, Senate Fiscal Analyst, Fiscal Division, Legislative Counsel Bureau (LCB), and he answered the telephone. Mr. Ghiggeri was there working on budgets. LCB staff is working diligently to get this budget closed. Mr. Savage, I do not know if you are working weekends, but we are working Saturdays and Sundays.
Mr. Savage:
Yes, Sir, our staff worked through the night, basically, to get this analysis completed and we will be continuing until we turn this information over to the Budget Division today. We will be available all weekend and through the night as required to assist with the additional process required by the Budget Division.
Just for clarification, I did not mean to suggest that the Budget Division did not have a lot of work to do. Just that the change to the utilization forecast from the additional issues that NOMADS has raised was not a significant change to that forecast. I did not mean to suggest that there was not a great deal of additional work to balance the individual budgets. I apologize if I was confusing in that regard.
Chairman O’Donnell:
We need to make sure that your and your staff’s eyes are just as bloodshot as our committee staff’s eyes.
Mr. Savage:
Yes, Sir, and we are prepared to continue that condition until we deliver as required.
Chairman O’Donnell:
So, you will provide the information to the Budget Division by 1:30 p.m. and they will work on it all weekend. Do you have a time when you think you will be able to get that information to committee staff?
Ms. Jungwirth:
No, I do not, but I will contact Jim Rodriguez, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, first thing Monday morning and let him know for sure when it is coming.
Chairman O’Donnell:
When we are not able to close the budget on time, we will remember this meeting and those responsible.
Ms. Giunchigliani:
I appreciate your comments, Mr. Chairman. Ms. Jungwirth, I also appreciate your deadlines, but know we are also under pressure to keep our deadlines for closing budgets. We have to have those adjustments by Tuesday, May 15, 2001.
Ms. Jungwirth:
We will do everything we can to get them to you by Tuesday, but I cannot commit to any earlier date.
Ms. Giunchigliani:
We need to get the Budget Division’s responses on record regarding this issue, because we cannot close any budget until we get those adjustments. No one on this subcommittee wants to have to blame the Budget Division for delaying the business of the Legislature. We need those adjustments no later than Tuesday, May 15, 2001.
Mr. Savage:
I am sure Ms. Jungwirth, with whatever assistance we can provide, will be working this and will forward the adjustments as quickly as possible. If there is a delay, the failure is not with the Budget Division, but with DoIT’s failure to present that properly in the first instance.
Ms. Giunchigliani:
Please do everything you can, Ms. Jungwirth, to have those adjustments to us by
Tuesday.
Mr. Savage, I would like to ask you a question about the “box?” Do you need the extra “box” or not?
Mr. Savage:
No, that will not be a problem.
Chairman O’Donnell:
Mr. Willden, are you comfortable with the utilization projections that Mr. Savage has put forth for NOMADS?
Michael J. Willden, Administrator, Welfare Division, Department of Human Resources:
Chairman O’Donnell, I have not seen the most recent “rework,” but I am sure we will be satisfied. I want to be clear for the record because I know NOMADS has a bad enough reputation and I do not want this issue to be an additional nail in the coffin for NOMADS. Our position is simply that on Tuesday, May 8, 2001, we saw the forecasts and had several concerns. The first concern was a typographical error in the data for utilization. Other concerns were batch time-sharing options (TSO) and database management systems (DBMS) showing a significant drop in utilization.
Our concern was simply that we may be taking a very short period of new efficiency and forecasting into the future. We were asking if we were going to be made whole. I apologize if raising those issues has slowed the process down, but I did not want to be coming to an Interim Finance Committee (IFC) meeting next year saying, “I only got three-quarters of what I needed to run the system.” I am now sure that we will be able to sit with Mr. Savage and Ms. Jungwirth and others and feel more comfortable. We wanted to make sure that everyone was comfortable with using a couple of data points and that NOMADS would not be short of revenue.
Senator O’Donnell, the Welfare Division received the final certification letter yesterday and I wanted to report that to you.
Chairman O’Donnell:
There is one more issue. On or before May 14, 2001, DoIT needs to provide the Assembly Committee on Ways and Means with a status report on the DoIT budget adjustments figures. Is that what you just said committee staff will receive by May 15, 2001? Are you committing to that date?
Ms. Jungwirth:
Tuesday at what time?
Jim Rodriquez, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau:
We are all in a difficult position. If I get those figures by midnight on May 15, 2001, the Fiscal Analysis Division will have 2 days to incorporate them into the budget for the full committee meeting on May 18, 2001. That is just not feasible, and I do not know what the alternative solution is. I am at a loss for a solution. If midnight May 15 is the Fiscal Analysis Division’s only choice, then we will just have to work with what we have.
Chairman O’Donnell:
Mr. Savage and Ms. Jungwirth, we are going to send you on your way to commence your duties and get the job completed as quickly as possible.
Mr. Savage:
If it pleases the subcommittee, we have copies of our most recent capacity plan, which we will distribute for your review (Exhibit C).
OFFICE OF VETERANS’ SERVICES
Commissioner for Veterans’ Affairs - Budget Page VETERAN-1 (Volume 3)
Budget Account 101-2560
Rick Combs, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau (Mr. Combs summary is presented in Exhibit D, Closing List Number 9, Page 1):
This account includes the Office of Veterans’ Services as well as the two veterans’ cemeteries. The technical adjustments include reductions for personal computer prices in module E-710 and E-720.
The budget closing issues before this subcommittee include determination on the continuation of three positions in decision unit M-200 (2 Grounds Equipment Operators and 1 Management Assistant) approved by the IFC at the meeting on September 12, 2000. The agency indicates the 2 Grounds Equipment Operator positions are needed to maintain the eight new acres of burial space at the veterans’ cemetery in Boulder City. The Management Assistant is needed to serve as a receptionist at the veterans’ chapel.
Decision unit M-200 recommends $13,408 in FY 2002 and $16,029 in FY 2003 for the costs of providing janitorial services and electricity for the new chapel and for the cost of watering and fertilizing the additional improved acreage. Staff believes the recommendation in this decision unit appears reasonable.
The next decision unit is E-710, which includes funding for the replacement of equipment at the Office of Veterans’ Services and the two state veterans’ cemeteries. In addition to 4 personal computers in the first year, and 3 in the second year of the biennium, I have listed the various computer items that are recommended for replacement in this decision unit in Closing List Number 9 (Exhibit D, page 2).
The biggest issue in this list is the dump trucks requested for replacement at the northern and southern Nevada veterans’ cemeteries. The subcommittee asked committee staff to determine whether the costs indicated were the lowest possible prices for these items. Should the subcommittee decide to approve new dump trucks, the cost of the dump trucks could be reduced by $13,000 each for $27,000 rather than $40,000. Committee staff has made that adjustment on the closing document. If the subcommittee does not wish to approve new dump trucks, the agency has submitted a cost of $15,000 for a used vehicle from a dealership that would be in satisfactory condition. There is also the surplus vehicle option.
Senator O’Donnell
Are those the vehicles that look like a steam engine when they start up?
Charles W. Fulkerson, Executive Director, Office of Veterans’ Services:
Yes, they are. I have even been at the Nevada Department of Transportation (NDOT) when they have had to “jump-start” these old diesel engines.
Mrs. Chowning:
$40,000 down to $27,000 is a big difference. Is this the price for a brand new dump truck at $27,000?
Mr. Combs:
Yes.
Mr. Fulkerson:
To my knowledge, when the agency first prepared its request for the budget, the State Purchasing Division was contacted and asked what NDOT was paying for a dump truck. The figure we received at that time was $40,000. I have subsequently been told that NDOT trucks have more “bells and whistles” than we requested because they are used for highway construction.
Mr. Combs:
Decision unit E-720 requests new equipment for a total $10,323 in FY 2002 and $34,208 in FY 2003. For FY 2002 it includes four new radios, a computer desk for the northern Nevada veterans’ cemetery (NNVC), a 12‑port network hub, four personal computers and three printers for the Las Vegas office. My understanding is the need for the computer equipment for the Las Vegas office is that the federal government had been providing equipment for the agency, which they are now not willing to replace. The agency would now like to obtain its own equipment.
In FY 2003 the new equipment includes a new street sweeper attachment for a grasshopper mower at NNVC and a hydraulic dump trailer and a new headstone trimmer for southern Nevada veterans cemetery (SNVC). SNVC frequently experiences 7 to 8 burials in a day and they often have more than one burial occurring at a time. The need to have two separate options for conducting the burials is important. If the committee approves the new dump truck, I recommend eliminating the $3,500 for the hydraulic dump trailer in this decision unit.
Decision unit E-730 recommends $16,000 in FY 2002 for resealing the roadways and parking lots in the two cemeteries. The agency has indicated that they like to do this every 5 years at the NNVC and every 4 years at the SNVC.
Mrs. Chowning:
I would like to ask about an Assembly bill regarding Veterans’ Services. There is a position in that bill that would more than pay for itself because of the benefits. The federal money that would be available for veterans is a part of that bill. Could someone speak to that issue because I do not know if we need to handle that in this budget?
ASSEMBLY BILL 212: Makes appropriation to Churchill County for expenses related to operation of veterans’ field service office in Churchill County. (BDR S-375)
Mr. Combs:
Assembly Bill (A.B.) 212 is currently in the Assembly Committee on Ways and Means. In its current form that bill seeks to provide an appropriation to Churchill County to continue a veterans’ services representative position for that county. If the state is going to be funding the position, there was discussion whether it should be approved as a state position working for the Office of Veterans’ Services, rather than a Churchill county position, therefore eliminating the need for an appropriation to the county. However, it would still require an addition of General Fund revenue to this budget for the cost of the position. If the subcommittee wishes to approve that it can provide the funding for that position in A.B. 212, funding it at that time.
Mrs. Chowning:
How much General Fund revenue would it be?
Mr. Combs:
I believe it was $115,000 appropriation over the biennium. The cost, if it is included as a state position, would be slightly over $50,000 per year with all of the other associated costs.
Senator O’Donnell:
Subcommittee, my suggestion would be to close the budget and put the position in. If A.B. 212 passes, the position will be augmented to the veterans’ budget.
Mr. Combs:
As the bill is written, this position would be a Churchill County position. I believe discussion in the Assembly Committee on Ways and Means is leaning towards this position being a state position, if the decision is made to provide state revenue for it.
Senator O’Donnell:
We have heard the explanation of the Commissioner for Veterans Affairs’ budget. The chair will accept a motion to approve this budget with the technical adjustments, including the recommendations by committee staff leaving the dump trailer, the deletion of some of the revenue in terms of the $40,000 dump truck, and allocation of $27,000 for the dump trucks. It is important to have a quality vehicle when doing funeral services. I appreciate committee staff’s ability to recognize that and adjust the budget accordingly.
Mrs. Chowning:
Mr. Chairman, I would make that motion as well as putting that position in, depending on the passage of A.B. 212 making that a state position.
Senator O’Donnell:
Committee staff, do you have any comment on that motion?
Mr. Combs:
My recommendation to the subcommittee would be to close this budget and, if A.B. 212 passes and that bill specifies that it is a state position, this is the budget account that it will go into, and it would be done through a work program.
ASSEMBLYWOMAN CHOWNING MOVED TO CLOSE BUDGET ACCOUNT 101-2560 AS RECOMMENDED BY THE GOVERNOR SUBJECT TO TECHNICAL ADJUSTMENTS RECOMMENDED BY STAFF, INCLUDING REDUCTION OF FUNDING FOR TWO DUMP TRUCKS FROM $40,000 EACH TO $27,000 EACH, INCLUDING CONTINUATION OF THREE POSITIONS PREVIOUSLY APPROVED BY THE INTERIM FINANCE COMMITTEE, AND INCLUDING ADJUSTING THIS BUDGET ACCOUNT SUBJECT TO THE PASSAGE OF ASSEMBLY BILL 212.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR NEAL WAS ABSENT FOR THE VOTE.)
* * * * *
Veterans Home Account – Budget Page VETERAN-7 (Volume 3)
Budget Account 101-2561
Chairman O’Donnell:
I have a few opening remarks regarding the Veterans Home Account. When we initially heard this budget, we were highly concerned about the opening and operation of the veterans’ home and the funding for that project. As a veteran myself, and on behalf of other veterans such as Senator Jacobsen and Assemblyman Parks, those of us sitting on this subcommittee are highly concerned about this home. We have taken a lot of time and effort to explain our frustration as to the status of this home and the delay in its opening. The subcommittee has placed time and effort in this budget because we have an interest in seeing this project succeed.
My opinion is that this budget was created with an inadequate analysis. This subcommittee found very quickly where the holes in this budget were. I have instructed committee staff to look carefully at this budget and see what can be accomplished to cure the defects of this account.
I am happy to report to you that Mr. Combs has done an outstanding job and we will be augmenting this budget to $1.8 million. Mr. Combs will present those details now.
Rick Combs, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau (Mr. Combs’ summary is presented in Exhibit D, Closing List Number 9, page 4):
The technical adjustments made to this account are relatively minor. First, there is the elimination of the cost for computer software totaling $29,810. Second, there is the reduction in the cost for a personal computer, which has been adjusted based on updated pricing information.
Regarding budget closing issues, this budget account has three major funding sources. One is General Fund revenue, the second is a per diem reimbursement of costs from the federal Department of Veterans’ Affairs, and the third is co‑payments from the residents of the veterans’ home. The Governor also recommended the $720,000 in Medicaid reimbursements during each year of the biennium.
The Division of Health Care Finance and Policy (DHCFP) was heavily involved in development of this account. They have confirmed that the veterans’ home will be able to receive Medicaid reimbursements for residents who meet the eligibility requirements.
The reason for the reduction in General Fund appropriation appears to be mainly related to the fact the home decided not to accept Medicaid residents in the first 6 months of operation in FY 2002. When the home does begin admitting Medicaid residents, it plans to do so using a cost reimbursement methodology, rather than the prospective rate methodology currently used by all private nursing homes in the state. The long-term rates proposed by the Myers & Stouffer Rate Study have been used for budgeting purposes. The established rates are approximately $168.10 per bed day in the first year and $173.81 per day in the second year of the biennium.
The office has determined that delaying the receipt of Medicaid revenue while the state Medicaid plan change is sought to allow this cost reimbursement methodology is going to ultimately result in more Medicaid funding for the veterans’ home. Regarding the prospective rate methodology, the problem is that most residents of the veterans’ home will have two sources of federal reimbursements. One is the Veterans Administration at $51.38 per day for each veteran admitted to the home, and the other is an Aid and Attendance payment from the federal government for wartime veterans admitted to the nursing home. Although those amounts do not affect the eligibility of people who apply to the home, they are used as an offset to the Medicaid payments.
The Medicaid budget account has closed with authority to increase the General Fund appropriation in that account, if necessary, based on this subcommittee’s determination. The amounts that would be necessary are $332,248 in the first year and $1,266,283 in the second year of the biennium. In addition to delaying the admission of Medicaid residents until January 2002, the home has also lowered its projected occupancy rate from 80 percent of available beds for the first year to 70 percent of available beds for the first year. That is based, in part, on the revised opening date for the home, which is now August 1, 2001, and based, in part, on figures Medicaid staff provided in regards to private nursing homes’ “ramp‑up levels.”
Although projections indicate the General Fund appropriation for this account can be reduced, committee staff recommends not eliminating any of the General Fund appropriation from this account because of the many uncertainties that are there regarding assets of the residents who will ultimately be admitted to the facility. Instead, staffs recommends using that amount to reduce the amount of residents’ co-payments.
Mrs. Chowning:
The amount of General Fund appropriations on this account has been like a “roller coaster ride.” Now we are down to $1.5 million. I congratulate everyone for all the hard work put into analysis of this account. In the future, this subcommittee will be very watchful of the activity of this account.
Mr. Combs:
In addition to not reducing the General Fund appropriation, committee staff is recommending an increase in the first year of the biennium. Based on the fact that 80 percent of the veterans in the state, according to estimates of the Office of Veteran’ Services, are wartime veterans, and only the fact that wartime veterans are authorized to receive these payments, committee staff recommends reducing the amount for Aid and Attendance payments to about 80 percent of what is recommended in The Executive Budget. That would increase the General Fund appropriation the first year by $155,302.
The Office of Veterans’ Services was asked to provide written confirmation from the federal Department of Veterans Affairs indicating that the nursing home will receive the veterans’ reimbursement of $51.38 per day for each wartime and non‑wartime veteran admitted to the home. The agency has provided that documentation, and it is attached to Closing List Number 9 (Exhibit D). They have indicated they expect to have more in the first year because they will get transfers from hospitals at a more frequent rate at that point due to the fact they will have the available beds. Once they start filling their beds, that rate will go down.
The decision for the subcommittee is whether to approve the revised revenue projections provided by the Office of Veterans’ Services and adjusted by committee staff.
There are a number of items to go over regarding expenditures. The first one is regarding the reclassification of a position. It is actually moving a position from the unclassified service to the classified service. The Office of Veterans’ Services received permission from the IFC on September 12, 2000, to reclassify a Director of Nursing position to a Personnel Analyst position. Now the agency is requesting to change the unclassified Deputy Administrator position to a Grade 41 Director of Nursing Services. The additional costs at a step 6 would only be about $3,800 the first year and $6,400 the second year, assuming vacancy savings will be incurred because the nursing home is not planning on being up to full occupancy during the biennium. Staff is, therefore, recommending the subcommittee approve the reclassification.
Decision unit E-475 contains a number of items. There is $13,013 in FY 2002 and $37,064 in FY 2003 for additional operating expenses. Out-of-state travel is $3,516 in each year of the biennium. It is essential for the director to attend two national conferences and for the Director of Nurses to attend the American Nurses Association conference. Based on the information provided by the office and the limited amount of travel, the recommendation appears reasonable.
The operating expenses are for personal care supplies, medical records forms, physical therapy supplies, canteen supplies, and barber and beauty shop supplies. The agency indicated the reason for this part of this decision unit is those items were not anticipated when the budget for the previous biennium was prepared.
There is a recommendation for $406,281 in FY 2002 and $417,592 in FY 2003 to provide additional funding for laboratory services, drug testing of employees, and contract physical therapy, occupational therapy, and speech pathology services. Based on the information provided by the administrator, committee staff recommends the approval of these amounts until the home develops a history of actual expenditures upon which to base the need for such further services in the future.
Regarding information technology expenditures, the one large item has to do with the fact that The Executive Budget included funding for a transmission line (“T-1”) for data carrying capacity at a total of $10,200 in each year of the biennium. Of that amount, approximately $8,064 would be paid for Department of Information Technology (DoIT) services and $2,136 would be paid to the local telephone company that provides the service. Although digital subscriber line (DSL) service is less expensive than the cost of a “T‑1” line, DoIT has indicated that service is not currently available in the Boulder city area at this time and they do not know when that service might become available.
DoIT indicated that the only other option beside a transmission line (T-1) was a 56 kilobits per second (kb), and they have indicated that they do not advise using that type of line for the veterans’ home because the home is expected to have more than 30 computer users by the end of the biennium. Based on the recommendation from DoIT, staff has not adjusted the cost of the “T-1” line. If the subcommittee wishes to approve funding for the 56 kb line, the cost would be reduced by about $6,048 in each year of the biennium.
Decision unit E-475 also recommends $9,900 in each year of the biennium for software maintenance fees and additional software and $4,272 in FY 2002 and $3,254 in FY 2003 for computer equipment. Committee staff believes this appears reasonable.
There is $17,860 in FY 2002 and $13,740 in FY 2003 for training. This is in addition to the $10,885 in each year in the base budget. The administrator of the home has indicated that the funds are for the training of all staff in their assigned duties and to provide training programs for persons who wish to work as certified nursing assistants. Committee staff believes this appears reasonable.
Finally, decision unit E-475 includes an increase of $29,434 in FY 2002 and $63,577 in FY 2003 for additional utility costs for the facility. I completed analysis based on an average of the FY 2000 utility costs at that facility, adjusted for the differences in square footage and the inflationary adjustments recommended in The Executive Budget. After extensive analysis, committee staff recommends increasing utility expenditures by $54,077 in the first year and $50,309 in the second year of the biennium.
In decision unit E-720, there is a request for new equipment in the amounts of $28,147 in FY 2002 and $3,500 in FY 2003. This includes a wheelchair scale, a wheelchair lift, wheelchairs, walkers, a blanket warmer, bed and wheelchair alarms, gait belts, and blood pressure cuffs. There is also a recommendation for $3,500 in the second year for power tools for facility maintenance. Committee staff believes all items appear reasonable.
Chairman O’Donnell:
As a subcommittee, we have augmented this budget and the Medicaid budget by $511,000 in FY 2002 and $1.3 million in FY 2003 for this nursing home. It would be my intent to ask the subcommittee for a Letter of Intent to require the veterans’ home administrator to report quarterly to the IFC on what they have done so far, and what the status of the nursing home is. The subcommittee is very cognizant of the fact that revenue is an integral part of the success of this home. We want to make sure the agency is on track.
I would also like to ask the subcommittee to approve language in the Letter of Intent that will allow the Veterans Home to ask IFC for a loan. At some point the agency will become certified, but until that time, the agency will not have access to Medicaid funds or be reimbursed by the Department of Veterans’ Affairs. Until that time, the agency will need assistance to see it through until certification is realized. However, the subcommittee wants the agency to pay that loan back once the agency receives the funds from the federal Department of Veterans Affairs and Medicaid.
We do not want to give the agency the funds now, but we want to make sure they have the opportunity to come back to IFC and apply for funds, if needed. We do not want the nursing home to fail, but to succeed.
Mrs. Chowning:
I agree, Mr. Chairman, and I was going to make that motion regarding the Letter of Intent.
How is the application form coming along? I understand that it has now been approved. Since it has been approved, I would like to know how many applications have been sent out and what the reaction has been in terms of returns.
Jonathan Sias, Director, Nevada State Veterans’ Nursing Home, Office of Veterans’ Services:
It gives me great pleasure to tell you that every single person who has indicated an interest in residency at the home has received an application form. We are in the process of having a print run completed at the State Printing Division. In the meantime, we will send additional applications as requested and they will be in the mail the day the request comes in. The nursing home admissions coordinator looked at the initial communications that we received back to get some sort of a gauge for acuity levels, but because we did not request medical history in the original communication, there was not a lot to look at.
We know that we have 46 people who have indicated they have Alzheimer’s disease, but basically that was the only clinical information we received from that material. The answer to your question is that all of the applications have been forwarded.
Mrs. Chowning:
Approximately how many is that?
Mr. Sias:
172 applications have been forwarded.
Mrs. Chowning:
When do you think you will be able to determine the acuity levels so that you can properly hire your nursing staff?
Mr. Sias:
The application itself is a multi-part document. It has a fiscal statement in it, as well as medical history, and military history, and it is quite comprehensive. We anticipate that it is going to take about 10 days to 2 weeks for an average cognizant applicant to complete that application and then return it in the mail to us. I do not anticipate we will begin to see return of these applications before the first of June.
This has been a great exercise and education for me. This is the first state budget that I have worked on. We have worked with committee staff and with the staff from the Division of Health Care Finance and Policy to get the Medicaid components fixed.
Your description of a “roller coaster ride” is exactly what this experience has been. When all is said and done, the cooperation we have received from both committee staff and from other agencies is what has enabled us to get to the point where we are at today.
Senator O’Donnell:
We are all on the same side and it is important this project succeed. I think with this new budget and its augmentation, we will be successful. Does the representative from the Budget Division approve of these recommendations before we take a motion?
Sherry Blackwell, Budget Analyst, Budget Division, Department of Administration:
Mr. Combs and I have been working closely together on these budgets and meeting with Medicaid representatives. We are comfortable with the revised figures and the new Medicaid caseloads.
Steven J. Abba, Principal Deputy Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau:
The initial cash flow would actually be a funding transfer that comes from the Office of the State Controller. This is done with a number of agencies, and there is no need for the veterans’ home to come to IFC. They can do it through the normal process going to the Office of the State Controller. The veterans’ home would have the ability to come to IFC if they run into shortfalls later on in the fiscal year. The motion the subcommittee is considering to allow the transferring of General Fund appropriations between fiscal years gives the agency the utmost flexibility to handle its available funding.
Chairman O’Donnell:
Would they have the ability to come to IFC?
Mr. Abba:
They could if they run into a funding problem, such as if the Medicaid state plan could not be changed to get the high reimbursement rate or if the veterans’ co‑payments do not come in at the expected levels. Ultimately the agency would have IFC as a safety valve.
Mr. Fulkerson:
Our quarterly reports that we will be submitting to IFC would indicate all that activity.
ASSEMBLYWOMAN GIUNCHIGLIANI MOVED TO CLOSE BUDGET ACCOUNT 101-2561 AS RECOMMENDED BY THE GOVERNOR SUBJECT TO RECOMMENDATIONS BY STAFF, INCLUDING THE LETTER OF INTENT.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Jacobsen:
The message should be sent out to veterans that this is their home and their responsibility has not diminished, but increased. So, every veteran in this state has an obligation to support the home in every manner. It behooves all of us to give it a great deal of concern and interest. I have a lot of faith in the personnel at this agency and this home will be a great success.
Mr. Fulkerson:
The agency would like to thank this committee and Legislative Counsel Bureau staff for holding our hand and leading us through this process. Hopefully, the upcoming budgets will not be so traumatic.
Mr. Sias:
You all have a standing invitation when you are down in Las Vegas to visit the home. Even before we are open, I would be more than happy to show you the complex.
Chairman O’Donnell:
The next budget is the Public Employees’ Benefits Program (PEBP). We need a representative from the Budget Division, as well as the PEBP, to come up to the table to testify. There is no one here from PEBP to testify today?
That seems to be indicative of what we have experienced in the past with this agency. Mr. Manning, did PEBP know its budget was being discussed today?
Public Employees’ Benefits Program - Budget Page PEBP-1 (Volume 3)
Budget Account 625-1338
Jim Manning, Budget Analyst, Budget Division, Department of Administration:
Yes, they did, Mr. Chairman. They chose not to be here today. They were notified their budget was closing today. I believe the agency was just willing to have their budget closed.
Georgia J. Rohrs, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau (Ms. Rohrs summary is presented in Exhibit D, Closing List Number 9, page 13):
The subcommittee should note that the Governor’s budget recommends a state subsidy amount of $357.50 for FY 2002 and $384.50 for FY 2003, compared to $327.20 and $368.75 for FY 2000 and FY 2001, respectively.
Assembly Bill 558 has been amended to provide state subsidy amounts of $368.75 for FY 2002 and $384.50 for FY 2003. The bill may need to be amended based on how the subcommittee closes this budget.
ASSEMBLY BILL 558: Establishes for next biennium amount to be paid by this state for group insurance for certain public employees, public officers and retired public employees. (BDR S-1437)
Ms. Rohrs:
As to the retiree rate structure, the PEBP Board adopted a rate structure in which retirees continue to be pooled with active participants in a rate structure that blends retiree rates with active participants to subsidize retirees above the legislative subsidy amount. Establishing a separate pool for retirees has been of concern to retirees and was proposed by PEBP and its actuary, Segal Company (Segal). The PEBP Board considered, but rejected, the separate pooling proposal.
Assembly Bill 564 is pending and would mandate the continued combining of claims experience for actives and retirees.
ASSEMBLY BILL 564: Makes various changes relating to public employees’ benefits program. (BDR 23-1346)
Ms. Rohrs:
In decision unit M-400, projections were revised to reflect current estimates by Segal for claims and contract costs and to fund the incurred but not reported (IBNR) reserve (for incurred but not yet reported claims) at a level recommended by Segal. At the hearing, PEBP indicated they had overestimated the cost of claims for participants shifting from a health maintenance organization (HMO) plan to the self-funded plan after the loss of Washoe Medical as an HMO. PEBP indicated that would be revised to reflect a balance forward to FY 2002 of $4 million to $6 million more than what was anticipated in the budget.
The subcommittee asked Segal to review the assumptions for the $4 million to $6 million carry forward and to review and analyze the amount for accuracy. Segal concluded there was a surplus of $4.3 million based on: increases in enrollments in the self-funded preferred provider organization (PPO) from the HMO plans; an enrollment shift among the dependent coverage tiers; and fewer claims per covered active and retired employee than expected having been submitted for payment during the January to March period. The closing sheets include these adjustments, which reflect a $4.3 million balance forward for FY 2002 and FY 2003, with a corresponding increase of $4.3 million in the IBNR reserve.
The subcommittee may wish to consider directing the PEBP, through a Letter of Intent, to report to the IFC at the first meeting following the close of FY 2001 and FY 2002 on the financial stability of this budget and, specifically, the reserve level.
The PEBP revised its projections of claims expenses based on calendar year 2000 actual costs. After adjusting for increases in medical costs for FY 2000, specifically vision and dental by 8 percent, medical by 6 percent, and prescription drugs by 22.5 percent, Segal recommends an inflationary rate of 8 percent per year for FY 2002 and FY 2003 for vision and dental costs; 10 percent per year for medical costs, and 20 percent per year for prescription costs. This is consistent with national trend projections.
Segal recommends a reserve equal to 16.7 percent of medical claims for the IBNR reserve, an amount equal to approximately the value of 2 months of claims. This equates to $17,504,877 in FY 2002 and $19,676,034 for FY 2002. The Governor’s budget reflects an IBNR reserve in the amount of $21,805,277 for FY 2002 that funds the reserve and provides for a $4.3 million cushion, which is an amount equal to the additional balance forward monies added. The Governor also reflects an IBNR reserve in the amount of $23,976,034, which funds the reserve and provides for an additional $4.3 million cushion. In addition, the cost saving from the technical adjustments made by committee staff are recommended to increase the IBNR reserve each year for the next biennium.
Decision unit E-225 provides for a study of program compliance with federal and state laws and regulations at a cost of $70,000 over the upcoming biennium. Funding is also recommended for phases II and III of the Retiree Health Study, as a continuation of phase I conducted by Segal. Phase II will explore potential solutions to delivering and funding future retiree health care coverage. The cost of phases II and III will be $60,000 over the biennium. Audit software is recommended at a cost of $2,035 in FY 2002 to improve quality controls through enhanced audits along with training for staff.
A decision for the subcommittee is whether to approve the transfer to, and combining of, the Retired Employee Group Insurance budget (101-1368) with this PEBP budget (625-1338).
PEBP requires very little to maintain under its current methodology. On the expenditure side, the only accounting activity is the preparation and processing of one journal voucher each month to pay the required monthly premium. In total the PEBP prepared and processed only 25 documents for this account during the entire FY 2000. This includes deposits and journal vouchers.
With all of the challenges facing the PEBP in the upcoming biennium, staff recommends retaining this separate budget account, rather than commingling the active and retiree funds in one budget account.
Chairman O’Donnell:
Are there any objections to this recommendation?
Ms. Rohrs:
The agency is requesting replacement and upgrades of two laser jet printers, a fax machine, and 11 personal computers. PEBP purchased printers, fax machine and printers during the current year and the program did not respond to a request for details on the $1,446 each year for equipment costing less than $500, so it was deleted. The decision unit was eliminated in its entirety saving $14,386 in FY 2002 and $11,396 in FY 2003.
The agency had also requested a paper shredder and 3 hand-held wireless, palm‑sized computers. Technical adjustments to this request include the elimination of the shredder because PEBP recently entered into a contract for shredding and disposal of documents, and hand-held wireless computers are not standard equipment for state positions, and were also eliminated. The deletion of this decision unit in its entirety provided a total savings of $2,600 in FY 2002.
Other adjustments include printing costs, which were reduced by $6,100 each year. This is because the program purchased printers in the current biennium, which were projected to save $6,100 per year in printing costs. A contract for shredding and disposal of documents was added at a cost of $3,224 per year. The result is a savings of $2,876 per year, which was added to the IBNR reserve.
The Wellness Program category was also eliminated, as this was essentially incorporated into the contract for both the PPOs and HMOs. Savings of $150,803 each year of the biennium will now be added to the IBNR reserve.
On May 9, 2001, the Committee on Government Affairs adopted Senate Concurrent Resolution No. 40.
SENATE CONCURRENT RESOLUTION NO. 40: Declares that certain regulations to which Legislative Commission has objected will not become effective. (BDR R-1486)
Ms. Rohrs:
The Legislative Commission objected to the regulation on the basis that it failed to conform to the statutory authority and did not carry out the legislative intent in granting that authority.
Chairman O’Donnell:
Does any committee member have a problem with retaining the separate accounts as discussed earlier, rather than commingling the accounts? With no objections heard, does the Budget Division have any objection?
Mr. Manning:
As much time as I have had to review it, I have no objections.
Chairman O’Donnell:
Do you think there is going to be an increase of employee’s contributions over the next biennium?
Mr. Manning:
Only if A.B. 558 is approved.
Chairman O’Donnell:
Ms. Rohrs, is the budget crafted on the fact that A.B. 558 is not passed or is passed?
Ms. Rohrs:
A.B. 558 was amended to change the amount. The budget is constructed on the original language in the bill to align with that. Therefore, the language in the bill would have to be changed if the subcommittee approves the budget as presented.
Mr. Manning:
Assembly Bill 558 would allow another $3 million to be received or charged to the agency accounts if it were approved at that rate. That would be about $1.8 million of the General Fund.
Chairman O’Donnell:
What is the subcommittee’s pleasure?
ASSEMBLYWOMAN GIUNCHIGLIANI MOVED TO CLOSE BUDGET ACCOUNT 625-1338 AS RECOMMENDED BY STAFF, INCLUDING THE FOLLOWING: A LETTER OF INTENT THAT THE AGENCY REPORT TO THE INTERIM FINANCE COMMITTEE AT THE FIRST MEETING FOLLOWING THE CLOSE OF FISCAL YEAR 2001 AND FISCAL YEAR 2002 ON THE FINANCIAL STABILITY AND RESERVE LEVEL, NOT APPROVING COMBINING THIS BUDGET WITH THE RETIRED EMPLOYEE INSURANCE BUDGET ACCOUNT 101-1368; AND ENSURING NO CONFLICT WITH ASSEMBLY BILL 558.
SENATOR JACOBSEN SECONDED THE MOTION.
Chairman O’Donnell:
Ms. Giunchigliani, does your motion include closing this budget with the aspect of the modified A.B. 558 language or the original language of that bill? Does the Governor support A.B. 558 as introduced, or does he not support the bill at all?
Mr. Manning:
The Governor’s office supports the bill as it was originally intended. Based on my experience with this account and the problems it has had, maintaining it at the same level would help to have, if nothing else, adequate reserve in their budget to deal with unforeseen problems. But other than that, we are supporting the way the bill was originally presented.
Chairman O’Donnell:
At the present time this budget account is crafted as the bill was originally presented. Is that the way you would like to present your motion, Ms. Giunchigliani?
Ms. Giunchigliani:
Yes, Mr. Chairman.
Senator Neal:
May I ask the current status of A.B. 558?
Ms. Giunchigliani:
We just heard that bill in the Assembly Committee on Ways and Means 2 days ago.
Senator Neal:
Are we assuming this bill will pass?
Ms. Giunchigliani:
There did not seem to be any objections or concerns to this bill, Senator. We will be taking action on that bill next week. I do not foresee any problems with passage of this bill in the Assembly.
Chairman O’Donnell:
It is painful to close this budget this way, but let me make closing remarks. It is more painful not to have good quality health care. As the cost of health care goes up, so does the cost of premiums. It is a natural course of events.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Retired Employee Group Insurance - Budget Page PEBP-8 (Volume 3)
Budget Account 101-1368
Georgia J. Rohrs, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau (Ms. Rohrs summary is presented in Exhibit D, Closing List Number 9, page 20):
The Governor’s budget, as revised, recommends increasing the payroll assessment rates from 1.32 percent in FY 2001 to 1.51 percent in FY 2002 and 1.69 percent in FY 2003. The difference between the total premium for coverage and the state subsidy amount is the portion of the total insurance premium that is paid by the participant.
The subcommittee should note that the Governor’s budget recommends state subsidy amounts of $202.34 for FY 2002 and $217.84 for FY 2003, compared to $183.59 and $208.92 for FY 2000 and FY 2001, respectively.
ASSEMBLY BILL 558: Establishes for next biennium amount to be paid by this state for group insurance for certain public employees, public officers and retired public employees. (BDR S-1437)
Ms. Rohrs:
Assembly Bill 558, previously discussed, provides state subsidy amount of $208.92 and $217.84. The bill may need to be amended based on how the subcommittee closes this budget.
The issues for the subcommittee to consider include the transfer to, and combining of, the Retired Employee Group Insurance budget (101-1368) with the PEBP (625‑1338). Again, committee staff recommends retaining separate accounts and that the transfer and consolidation be considered next biennium once this budget is stabilized.
The next issue is whether the subcommittee wishes to approve restructuring the assessment process to automatically collect the assessment charge for retirees on the fourth pay period into each fiscal year. The Budget Division recommends restructuring the assessment process to parallel that for personnel and payroll assessments. On the fourth pay period in each fiscal year, the assessment charge would be collected automatically from all budget accounts. Since the assessment charge would be levied on the fourth pay period, there would be a fiscal impact to the extent that assessments would not be charged against positions “while they were vacant under the current assessment procedure.”
Collecting assessment charges in the fourth pay period would address the need to collect sufficient assessments to cover the cost of retiree subsidies. In the past, when payroll projections did not materialize, a shortfall was created.
Other issues include an inflationary increase of 11 percent each year for retiree medical and dental claim costs. Segal recommended the 11 percent rate of inflation for retiree claim costs. The last matter is the decision unit M-200, which provides for a projected growth rate of 7 percent each year for retired enrollees in the plan.
Chairman O’Donnell:
The big decision in this budget account is how to close this budget and whether to close it with the amended version of A.B. 558. I believe the Budget Division suggested to close this account according to A.B. 558, as introduced.
Ms. Giunchigliani, how did you want to address the assessment process? Do you want to restructure it to have it automatically collect the assessment charge for retirees on the fourth pay period of the fiscal year?
Ms. Guinchigliani:
Probably to restructure it.
Ms. Rohrs:
Yes, with the segregated budget accounts, it has been a problem in the past when there was a hiring freeze and vacancies were created. This would alleviate that problem and be a benefit.
Ms. Guinchigliani:
Then, I would include that notice, Mr. Chairman.
ASSEMBLYWOMAN GIUNCHIGLIANI MOVED TO CLOSE BUDGET ACCOUNT 101-1368 AS RECOMMENDED BY THE GOVERNOR SUBJECT TO ADJUSTMENT RECOMMENDATIONS BY STAFF, AND INCLUDING APPROVAL OF RESTRUCTURING THE ASSESSMENT PROCESS TO AUTOMATICALLY COLLECT THE ASSESSMENT CHARGE FOR RETIREES ON THE FOURTH PAY PERIOD INTO EACH FISCAL YEAR, INCLUDING NOT APPROVING THE TRANSFER TO, AND COMING THIS BUDGET WITH THE PUBLIC EMPLOYEES’ BENEFITS PROGRAM BUDGET ACCOUNT 625-1338, AND ENSURING NO CONFLICT WITH ASSEMBLY BILL 558.
ASSEMBLYMAN HETTRICK SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Chairman O’Donnell adjourned the hearing at 9:43 a.m.
RESPECTFULLY SUBMITTED:
ElizaBeth Root
Committee Secretary
APPROVED BY:
Senator William R. O’Donnell, Chairman
DATE:
Mrs. Vonne S. Chowning, Chairman
DATE: