MINUTES OF THE
SENATE Committee on Finance
Seventy-First Session
February 12, 2001
The Senate Committee on Financewas called to order by Chairman William J. Raggio at 8:00 a.m., on Monday, February 12, 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.
COMMITTEE MEMBERS PRESENT:
Senator William J. Raggio, Chairman
Senator Raymond D. Rawson, Vice Chairman
Senator Lawrence E. Jacobsen
Senator William R. O’Donnell
Senator Joseph M. Neal Jr.
Senator Bob Coffin
Senator Bernice Mathews
STAFF MEMBERS PRESENT:
Gary L. Ghiggeri, Senate Fiscal Analyst
Rick Combs, Program Analyst
Bob Guernsey, Principal Deputy Fiscal Analyst
Bob Williston, Committee Secretary
OTHERS PRESENT:
Daniel G. Miles, Vice Chancellor, Finance and Administration, System Administration Office, University and Community College System of Nevada
Frankie Sue Del Papa, Nevada Attorney General
Don Hataway, Deputy Director, Budget Division, Department of Administration
David Wasick, Special Assistant Attorney General, Office of the Attorney General
Charles M. Moltz, Chief, Data Processing Manager and Chief, Information Services, Office of the Attorney General
David J. Young, Computer Network Specialist I, Office of the Attorney General
John Albrecht, Senior Deputy Attorney General, Human Resources Division, Office of the Attorney General
Kevin Higgins, Chief Deputy Attorney General, Fraud Control Unit for Industrial Insurance, Office of the Attorney General
Dr. Tara Shepperson, Executive Director, Technical Crime Division, Office of the Attorney General
Paul P. Hewen, Chief Financial Officer, Office of the Attorney General
Tim Terry, Senior Deputy Attorney General, Medicaid Fraud Control Unit, Office of the Attorney General
Timothy Hay, Chief Deputy Attorney General, Consumer Advocate, Bureau of Consumer Protection, Office of the Attorney General
Stan Miller, Tort Claims Administrator, Litigation Division, Office of the Attorney General
Beverly J. Saucedo, Extradition Coordinator, Criminal Justice Division, Office of the Attorney General
Daniel G. Miles, Vice Chancellor, Finance and Administration, System Administration Office, University and Community College System of Nevada, announced that he was present to request that the committee sponsor a bill draft to restore the revenue bond authority. He handed out a copy of Assembly Bill (A.B.) 527 (Exhibit C), which was processed last session.
ASSEMBLY BILL 527 OF THE SEVENTIETH SESSION: Revises provisions regarding bonding for facilities of University and Community College System of Nevada. (BDR S-1283)
Mr. Miles said there have been several bonds issued under this authority in the last two years, and he is asking now to have the authority to restore a level of funding so certain projects become viable. He said this would be contingent on approval by the Board of Regents, and that it is on their agenda of March 1 for consideration. Mr. Miles said the specific amounts have not yet been determined.
Senator Raggio called attention to the amounts in Section 2. Mr. Miles explained that the handout is the bill that was processed last session. Mr. Miles said that bill brought the University of Nevada, Reno, (UNR) total to $25 million and said he is asking that a similar bill be processed with different amounts in it.
Senator Raggio asked how a bill draft request (BDR) could be prepared if there are no amounts given. Mr. Miles said that he would have tentative amounts to give the bill drafter by the time the bill comes to the committee. He said he is interested in being ahead of the February 26 deadline for committee bill draft requests.
Senator Raggio ask what the purpose of the enhanced authority is, and Mr. Miles said it is to have authority at both campuses. He said that UNR has a list of 7 or 8 projects and the University of Nevada, Las Vegas, (UNLV) has a couple of projects. He said this is the bill that originally authorized revenue bond authority for a dental school, and a portion of that needs to be restored on the UNLV site. He said that UNLV processed bonds in the amount of $27 million in December, which took from the initial amount contemplated for the dental school.
SENATOR COFFIN MOVED TO REQUEST A BILL DRAFT TO RESTORE THE REVENUE BOND AUTHORITY TO THE UNIVERSITY AND COMMUNITY COLLEGE SYSTEM OF NEVADA.
SENATOR MATHEWS SECONDED THE MOTION.
THE MOTION CARRIED (SENATORS NEAL AND O’DONNELL WERE ABSENT FOR THE VOTE)
* * * * *
Senator Raggio asked Mr. Miles to provide the specific information to the Committee staff, and Mr. Miles said he would do that.
ATTORNEY GENERAL ADMIN FUND – Budget Page ELECTED-26 (Volume 1)
Budget Account 101-1030
Frankie Sue del Papa, Nevada Attorney General, introduced the members of her staff. She opened her presentation by mentioning that there is a serious problem with turnover in her office. She drew attention to her handout, Comparison of Public Attorney Pay Scales, (Exhibit D) showing how salaries in her office compare to salaries in other public entities. Ms. Del Papa said she also wants to impress on the committee the need for budget flexibility.
Ms. Del Papa said that, in the last year, 100 positions turned over in her office. She said her office is the law office for the state of Nevada, consisting of 12 divisions. She noted some of the accomplishments of the Office of the Attorney General during her tenure, including major expansion in fraud prevention efforts. She listed implementation of the Medicaid Fraud Control Unit, Fraud Control Unit for Industrial Insurance, and the Nevada Missing Children Clearinghouse and Crime Prevention Unit; the combining of telemarketing with the Consumer’s Advocate into the Bureau of Consumer Protection in 1997; and the establishment of the Litigation Division. She expressed pleasure at having a new solicitor general in January in the Litigation Division.
Ms. Del Papa related that in 1993 her office moved into the old Supreme Court Building that was remodeled, but some employees are still located in outside offices. In July 1997 a task force was formed, which led to the statutory creation of the Advisory Board for the Nevada Task Force for Technological Crime. She said that on any given day there are approximately 6,000 active and pending cases. She said that in the last biennium there were over $15 million in judgments awarded to the state. She said her office defended claims in that biennium against the state totaling $180 million.
Senator Raggio asked how many positions there were in her entire budget, and Ms. Del Papa said there were 331. Senator Raggio asked in what period this turnover had occurred, and Ms. Del Papa responded that in the calendar year 1999, 49 staff positions had turned over, and in calendar year 2000 over 100 turned over. Senator Raggio asked whether that means the staff members left the Office of the Attorney General, and Ms. Del Papa replied that it does.
Ms. Del Papa referred again to Exhibit D, stressing that the salaries have been significantly lower and the pension benefits unequal for employees in her office. She noted that one recent article in the Reno Gazette-Journal on Sunday, February 4, reported that the average turnover in the United States in a year is 15 percent. Senator Raggio asked whether she had tracked that turnover as to where these employees go. He asked whether they go to other state positions, other public sector positions, or to the private sector. Ms. Del Papa referred to the current organizational chart entitled Attorney General Administration (Exhibit E.) and indicated that the chief of litigation of the Civil Division in Las Vegas was lost to the city of North Las Vegas where her starting salary was about $5,000 more than the Attorney General’s office could pay her. Within a five month period she got another raise in salary. Her new employer pays the retirement, and operates on a four-day work week, she added. Ms. Del Papa recalled that she also lost two employees in the last year to the city of Reno where the benefits are notably better.
Ms. Del Papa referred again to Exhibit D and pointed out that on average the salaries in the Attorney General’s office are 40 percent less than those in Clark County. Senator Raggio said it has been known for some time there is no way to match Clark County salaries, and pointed out that their assistant district attorney earns more than the Governor. He noted the ability of Las Vegas to pay so much more than the state is one of the problems with the allocation of revenues in this state.
Ms. Del Papa said it would be ridiculous to attempt to be competitive with the private sector, particularly with positions at the upper end, but the chart is designed to show how the state competes with the public sector. She noted that the state is approximately 20 percent behind Washoe County. At the bottom of the exhibit she indicated that the differences in benefits are shown.
Senator Raggio returned to the question of tracking where the lost employees have gone over the last two years. Ms. Del Papa said she could find out where they went, but she did not have that information presently available. Senator Raggio asked whether some of them had retired. Ms. Del Papa explained that, regardless, she has lost a position that now has to be filled. She said that training new employees in such large numbers is a real challenge. Both she and the Governor are interested in knowing what this turnover costs an agency, including the hidden costs involved, she noted. She said that last year was the worst year she had seen. She noted that in the previous year there was a turnover of 59 positions, and last year there was a turnover of 100 positions. This, she said, represents an average of two employees per week. This volume of turnover hurts both productivity and morale.
Senator Raggio indicated he was aware of the problems caused by turnover, and asked what she would propose that would solve this problem. Ms. Del Papa proposed that the legislators look very hard at the benefit package for all state employees as well as the wages. Senator Raggio noted that the Governor has proposed some increase, and asked what she feels is essential to reduce the turnover to an acceptable level. He asked what she is seeking, if anything, in addition to what the Governor is recommending in the budget. Ms. Del Papa suggested if they go with the traditional unclassified pay bill, there are certain inequities within the office that need to be dealt with, and she said the Governor attempted to address this issue. Senator Raggio asked whether most of these positions are unclassified, and Ms. Del Papa said they are.
Senator Raggio repeated his point that there is no way the state can match some of the public sector salaries. He said that in many instances, in any department, people are being trained and then move to another public sector that can pay a higher salary. He suggested that one solution to the situation might be some restriction on persons who are trained by the state to require them to work for a year before they can join another public sector agency. This, he said, could apply to professional positions where the individuals have been trained at the expense of the state. Ms. Del Papa said she did not think that would be as appropriate for the Office of the Attorney General as for the prison or parole and probation situation. Senator Raggio persisted in asking how this can be curbed, noting that the state cannot pay $175,000 as Clark County does to an assistant district attorney.
Ms. Del Papa responded that it is her opinion the state budget has been ”balanced on the backs of state employees.” She pointed out that state employees were told during the last biennium that there could be no help for them, yet the government turned up with a surplus. She said it was her personal opinion that the surplus belonged, in part, to the state employees who were told they could not have a raise. She said state employees can be helped by matching some of the benefits, and described the retirement benefits as outrageous. She testified she had come to the session three times and asked for a simple thing, such as payment of bar dues for employees, and three times the Legislature has turned her down. She noted that it does not cost the state a lot to pay for bar dues. Senator Raggio asked why bar dues should be paid if the employees are going to leave. Ms. Del Papa protested that every other public entity pays attorney’s bar dues. Senator Raggio questioned whether that makes it right, and Ms. Del Papa responded that her point is her concern for real challenges that her office has faced regarding turnover.
Senator Raggio explained that the surplus is not continuing dollars, so it would not be available for long-term continuing pay increases. He said he would like to raise these salaries, as would the Governor, but the surplus consists of dollars that exist only for this biennium. He said the government has to operate based on projections of the economic forum. The budget is based on compensation, which is a high priority this session, but it must be funded through dollars that continue.
Ms. Del Papa suggested that a one-time bonus would have been appreciated, and Senator Raggio agreed that is a possibility, and he noted the Governor had recommended that for teachers because there were insufficient dollars to pay for continuing salary increases. The Senator said a budget can only be constructed on available revenue, and asked whether the Attorney General is proposing a tax increase.
Ms. Del Papa said it is not her place to propose a tax increase. Senator Raggio said that is the only way to get increases in continuing dollars. Ms. Del Papa said that if the agencies, particularly the constitutional officers, were allowed to have flexibility within their own budgets the way the Governor was given flexibility for his budget, it would be an additional method for the Attorney General’s office to manage available resources.
Senator Raggio recalled an inequity in attorneys’ salaries began to occur in the whole state system, and a major effort was made about 3 sessions ago to equalize professional salaries among the budgets of agencies that employ attorneys. He noted that there are attorneys in the Supreme Court, the Legislative Counsel Bureau, the Attorney General’s office, and in some other budgets. He pointed out that the state had finally equalized them. If flexibility were now granted, he pointed out, there is the possibility that attorneys will again be paid unequal salaries. He insisted that he was not saying flexibility is not right, but that it causes these kinds of problems. He acknowledged it is clear the state must increase compensation, but said he feels there needs to be some disincentive for people who come into state service knowing what the compensation is, get trained, and leave for another public sector agency.
Ms. Del Papa referred again to Exhibit D and suggested that the Office of the Attorney General got left behind because there are huge inequities between that office and the Legislative Counsel Bureau and the Supreme Court. She reminded the committee that the pay scales for the Legislative Counsel Bureau do not include paid overtime during the legislative session or off-session reduced work hours. She said she can give neither of those compensations to her people.
Senator Raggio suggested she submit that argument with her recommendations in the proposal for the unclassified salary pay bill, and Ms. Del Papa said she would.
Ms. Del Papa directed attention to the handout entitled Attorney General Source of Funds (Exhibit F). This exhibit shows total funds from all sources. Senator Raggio pointed out “Boards and Commissions” and “Fees and Premiums”. He recalled the Attorney General had come to the Interim Finance Committee (IFC) during the interim because revenues from boards and commissions had not reached expectations. Ms. Del Papa said that matter will be addressed elsewhere in the presentation.
Ms. Del Papa then referred to the chart, entitled Total Attorney General Budget, Fiscal Year 2000 (Exhibit G), which shows how money is distributed. She said the Main Budget is 55 percent of the total budget, and the other category includes tort claims, the Investigation Division, the Advisory Council for Prosecuting Attorneys, the Extradition Coordinator, the Office of Ombudsman for Victims of Domestic Violence, and the Nevada Missing Children Clearinghouse and Crime Prevention Unit. These expenditures are shown in percentages, she noted.
The next document Ms. Del Papa presented was entitled Total Attorney General Personnel Cost by Budget (Exhibit H) and shows how much is attributable to personnel costs. Ms. Del Papa explained that these figures represented labor costs attributable to specific budget areas.
Another document, Attorney General’s Office Staffing, Total of 331 Positions (Exhibit I) shows the percentages of positions found in the various budgets. She noted that in the main budget 101-1030 there are 224 positions, which are 69 percent of the total operation of the Attorney General’s office. She said that the “Other” category consists of the Office of Ombudsman for Victims of Domestic Violence, the Extradition Coordinator, tort claims, the Investigation Division, the Advisory Council for Prosecuting Attorneys, the Nevada Missing Children Clearinghouse and Crime Prevention Unit, the Bureau of Consumer Protection, the Insurance Fraud Control Unit, the Fraud Control Unit for Industrial Insurance, and the Medicaid Fraud Control Unit. Ms. Del Papa said that attorneys account for 44 percent of the Attorney General’s budgets. Investigators make up approximately 12 percent and small percentages of personnel are for fiscal and grants management.
Ms. Del Papa explained that her next document, The Attorney General’s Office Staffing (Main Budget 1030 only) (Exhibit J), breaks down the main budget even further. She noted that the “Civil” division of the chart is 25 percent of the main budget, and there is a breakdown of the composition of the civil division. One of the groups included is 14 conservation and natural resource people who are always busy on water cases and environmental actions. Other groups of personnel are devoted to boards and commissions, government affairs, commerce, and tax.
Ms. Del Papa said she will be forwarding a letter to the committee explaining how the Taxation Section has turned over the backlog of cases. She said the Civil Division is a very busy area, and noted the Criminal Justice Division has been restructured and now works with the Extradition Coordinator’s office. The Special Prosecution Unit deals with death row cases, she added. There are 90 individuals on death row in Nevada, and those cases are very paper and labor intensive. Conflict cases involve the missing children’s clearinghouse, which last year dealt with 608 cases and recovered 497 missing children.
Ms. Del Papa said she has some information on the Human Resources Division because that is one of the positions her office requested and the Governor recommended. That area deals with extremely complex federal laws. She said the number of parental termination cases has skyrocketed.
Ms. Del Papa said the gaming area is always very busy. The Gaming Division opened 364 new files during the last biennium and closed 397. She testified the Division handled the increased litigation that resulted from the last legislative session
Ms. Del Papa explained a great deal of time was spent litigating gaming tax issues. Two of the deputies Attorney General assist with the athletic commission. Ms. Del Papa explained there has been a great deal of additional prize-fight activity that generates revenue for the state and staff from the Office of the Attorney General assist in that regard.
Ms. Del Papa said the staff in her information services unit handles the wide area network for Reno, Carson City, Las Vegas, and Ely. They work on 11 file servers, service 300 computer users in six geographic locations, and work with the optic fiber backbone. She said the Investigation Division handled 214 investigations, and 745 subpoenas in the last biennium.
Ms. Del Papa then introduced a memorandum, Adjustments to FY01 and FY02 for Budget 1030 (Exhibit K). She referred to Senator Raggio’s question on boards and commissions, and indicated that budget had been fiscally challenged and remained so during the last biennium. This, she said, was due in part to the fact that some of the board and commission charges revenue was not realized, and due in part to some “phantom money” that was built into another category. She said her office has been “scrambling” because of the problems with the budget, and has been forced to leave positions open this whole year. She said this, combined with the high turnover of personnel, has been a great challenge for her office.
Ms. Del Papa directed the committee to budget page ELECTED-32 of the Attorney General Admin Fund budget 101-1030 and to the line item “Board and Commission Charges”. She said this indicates that $396,000 was generated from boards and commissions charges in FY 2000, but it has been recommended that $645,000 be generated in FY 2002. She said this is the issue of first priority for the committee’s consideration in Exhibit K. She said she has concerns about the revenue her office is expected to generate. She explained that the $100,000 that comes from the State Board of Nursing must be subtracted from the $396,000. She said the State Board of Nursing is the Number one client in the boards and commissions category; and the Office of the Attorney General provides extensive legal services to that board. She said their remaining clients generate $296,000, and pointed out that is why this concern must be addressed.
Ms. Del Papa said her office must also look at raising their hourly billing rate, but said the cost allocation process has not yet been completed. Her staff is still trying to work this out with the Budget Division, she added. Senator Raggio asked whether this would require an infusion of more than $500,000 of General Fund money. He inquired whether discussion with the budget office addressed whether charges for boards and commissions should be raised. He said some direction is needed at this point because the committee is reluctant to subsidize boards and commissions unless it is absolutely essential.
Don Hataway, Deputy Director, Budget Division, Department of Administration, said the committee’s staff has a sheet that is identified as Attorney General Payroll Distribution. He said he had learned on the previous Friday the agency may not have allocated some of the percentages in the categories for General Fund for boards and commissions for Attorney General charges as accurately as they could have. He said that is being worked on, but he would not know whether all of that is General Fund until the process is completed. He said some of the commissions are 100 percent General Funded, but there are others with their own fee structure. He said that once these percentages are known he can determine whether funds should be added to the Attorney General charges or to the General Fund. He said that since the recommended budget for the Office of the Attorney General has been submitted to the committee, that budget had been submitted to the consultant, David M. Griffith and Associates (DMG)/MAXIMUS, who is preparing the cost allocation plan.
Senator Raggio asked when this might be available. Mr. Hataway said that an effort is being made to have that by March 15 so adjustments in the other agency budgets can be given to the committee staff. Senator Raggio asked that the Budget Division keep the Legislative staff informed, and Mr. Hataway said they would do that.
Senator Neal asked whether the Office of the Attorney General charges an hourly rate. The question, he said, is based on the fact that there is a difference between the request on the boards and commissions and what the Governor had recommended. He asked how the recommended figure could be reached if there is no authority to raise the rates. Senator Raggio said he thought that question could be better answered when the issue is better understood.
Ms. Del Papa said her office charges an hourly rate of $78. She said that normally these things are worked out with the budget office before the budget goes to print. That opportunity was not provided this year because of delays in the budget process this year. She admitted there remain matters to be worked out with the Budget Division.
Ms. Del Papa said she has concerns she would like to have on the record now. She stated she believes her office will have to raise its hourly rate. She said that, from the information provided to her staff, it is her understanding her office would have to bill for some secretarial time, investigative time, and other things her office has never billed for previously. She said there are some General Fund categories that cannot be double billed. She said her office is in the process of trying to work that out, but acknowledged there will have to be some rate increase.
Senator Neal suggested to the committee that the rates charged by the Office of the Attorney General are a lot less than what private law firms charge.
Ms. Del Papa referred to Priority #2 in Exhibit K, and noted the estimated cost of replacement computers is not sufficient. The budget instructions provided for $2,064 per computer, and the Governor recommended $1,606. She pointed out the model her agency is currently buying costs $2,107.
Ms. Del Papa said her third priority in Exhibit K has to do with the full-time status of the executive director of the Advisory Board for the Nevada Task Force for Technological Crime, and the restoring of some high-technology operating expenses.
The fourth priority, Ms. Del Papa said, is a data entry person, which is needed for the integrated financial system (IFS) payroll data entry for Las Vegas. She said it is her understanding the computer implementation has not proceeded as quickly as anticipated and this data entry will have to be done manually over the biennium.
Ms. Del Papa said her fifth priority is to increase a half-time Computer Network Specialist I to a full-time position.
David Wasick, Special Assistant Attorney General, Office of the Attorney General, introduced Charles M. Moltz, Data Processing Manager and Chief, Information Services, Office of the Attorney General and David J. Young, Computer Network Specialist I, Office of the Attorney General. The Committee was given a document entitled e-Government Initiative (Exhibit L).
Mr. Wasick testified the Office of the Attorney General would like to start an e‑government initiative to save the taxpayers of Nevada money with regard to providing the citizens with information. He said his office would like to take the first step to provide services with the increased half-time position. More particularly, the automated services would be more efficient and effective. He said the filing of a consumer complaint could be done on-line. The individual could get a case number, and the office could provide information regarding common questions the Office of the Attorney General has received. He noted as examples such things as the tobacco settlement, information on testing, and information on licensing. This would reduce the existing, more labor-intensive, things that the employees do in the office. He noted that with automation these services could be provided 24 hours a day with a speedy response time, and the expectation of the public for readily available information could be met.
Mr. Wasick projected a number of such web pages on a screen. He explained that the web pages provide valuable services to the people and save time that would be spent answering telephone calls to get the same information. One example was of a consumer complaint form that can be completed on-line with a case number assigned. He said the Office of the Attorney General is striving to keep up with other agencies in Nevada. He said the half-time position would be the first step.
Mr. Wasick drew attention to a document entitled e-Government (Exhibit M). He said that Item 5, which refers to the services that will be offered, is of greatest importance.
Senator Raggio asked whether just increasing this position to full time is going to enable them to accomplish this. Mr. Wasick said it would not. He said that without the requested position they will not be able to take any steps toward saving the taxpayers money and increasing services. Senator Raggio asked what would occur if they were granted this position full time. Mr. Wasick said they will need more, but this is the first step in that direction.
Mr. Moltz said there is an incumbent who has vast experience in website development, and if that individual’s time could be increased it would provide the additional programming time and additional maintenance time to bring the office up to speed. He said this is the first time his office has earmarked a position strictly for “web work.” He noted that over the past four years his office has never requested a position identified with web-type development. He said the Computer Network Specialists’ main function now is support for the local area networks (LANs) and wide area networks (WANs), and they have been used to their maximum capacity. Mr. Moltz said the demand has become much greater for Internet services, and more people will browse the services on the website than will ever walk into the office.
Senator Raggio asked what would be accomplished by getting to the level of the examples Mr. Moltz had shown. Mr. Moltz said that Kevin Higgins, Chief Deputy Attorney General, Fraud Control Unit for industrial Insurance, Office of the Attorney General, will speak on a request for money in the general computer budget. Senator Raggio noted that was not on this priority list, and Mr. Moltz agreed it is not. Senator Raggio asked whether it is recommended by the Governor. Mr. Moltz said he did not think it is.
Senator Raggio asked what good it would do to increase this position to full-time toward these goals if they may not get any further. He asked whether something else is necessary to get this website effective to the point that people can do financial transactions.
David J. Young, Computer Network Specialist I, Office of the Attorney General, said that personnel, hardware, and software are the three things necessary. Senator Raggio asked if those elements were requested and recommended in the budget. Mr. Young said they were requested by the Information Services division of the Office of the Attorney General, but he did not know whether they had been recommended in the budget.
Senator Raggio requested that someone put together a one-page document to show the committee what is needed. Mr. Young said that would be done.
Senator Coffin noted this is the second agency to have made such a request, with the Supreme Court being the other. He suggested the committee compare the expenses of the various agencies so it could be determined what is fair. He commented that some websites are better than others, and they are all necessary. He noted the Supreme Court has asked for a lot of pages, and suggested the Attorney General’s request might be considerably less than what the Supreme Court has asked for.
Ms. Del Papa volunteered to prepare the comparison for the Committee. Senator Raggio asked that it be included in their other request, and asked that the budget office also receive a copy.
Senator Raggio asked how many new positions are in the Attorney General Administration account 101-1030. Ms. Del Papa said she understands there is a Nevada Department of Transportation (NDOT) request for a Management Assistant III.
Senator Raggio asked whether there is some way to develop a better performance indicator to show the accomplishments of the office. Ms. Del Papa said she had a document of about 160 pages. Senator Raggio said that when the committee considers budgets, members need a quick glance at some performance indicators. He suggested that some of the document could be incorporated into the performance indicators. Ms. Del Papa responded she would be happy to do that.
Ms. Del Papa said that in fiscal year 2000 the Human Resources Division collected $1,940,000, and through December 2000 collected another $964,000. These recoveries are through Medicaid subrogation cases, Medicaid recovery, and recovery of overpayments to recipients. Senator Raggio asked whether some of this could be put into a performance indicator, and Ms. Del Papa said her office would be happy to do that.
Senator Raggio noted Ms. Del Papa could not make projections because she does not control some factors, but he asked whether there are some projections that could be made. Ms. Del Papa said “projections” is probably a misnomer because it is difficult to anticipate who is going to sue the Office of the Attorney General. Senator Raggio said it is usual to request a budget augmentation based on the fact that the agency could increase its collections if it added a number of employees. He suggested this could also be used for performance indicators.
Ms. Del Papa said her office will provide any information requested of them. Senator Raggio said that when the committee receives the budget each biennium they would like to see that information included. Ms. Del Papa pointed out there is something lost in translation between her office and the budget office. Senator Raggio noted the committee uses a budget format they are required to use, and would like to have it as uniform as possible.
M-200 Demographic/Caseload Changes – Page ELECTED-29
Ms. Del Papa said she had requested and the Governor recommended a Management Assistant III for NDOT. She also asked for a Deputy Attorney General for child support enforcement, which is justified. She said her office has been very aggressive in assisting to implement the Welfare Reform Act. She said she also asked for and received a half-time Deputy Attorney General for the environmental area and a half-time Deputy Attorney General for housing, based on the workloads and types of cases. Ms. Del Papa said three other positions were not recommended: a legal secretary for the Civil Division, a data entry person for Las Vegas, and an Administrative Secretary for Las Vegas. The one that is really important, she indicated, is the data entry person for Las Vegas.
Ms. Del Papa said the half-time web master was a late submission on the part of her office. She expressed appreciation for Senator Coffin’s comment, and said she would work with all concerned in that regard.
Senator Raggio asked whether the contract with the Food and Drug Administration (FDA) on the enforcement of tobacco sales to minors had been cancelled. He said he understood that since the United States (U.S.) Supreme Court ruled the Food and Drug Administration (FDA) does not have the authority to adopt and enforce regulations, that funding is not now available. He said he had heard good things about the success of the program, and asked how the Office of the Attorney General is funding that. He also asked what the status of funding is now for the Fund for a Healthy Nevada since Ms. Del Papa’s request for such funding had been denied.
Ms. Del Papa introduced John Albrecht, Senior Deputy Attorney General, Human Resources Division, Office of the Attorney General, who is in charge of enforcement of the Synar Amendment and all the activities of the Office of the Attorney General with respect to the prevention of sale of tobacco to our youth. She praised him for his leadership and national recognition of his efforts in this area.
Mr. Albrecht related that in March 2000 the FDA contract was terminated after the United States Supreme Court held that the FDA could not regulate the sale of tobacco. Senator Raggio asked what the basis of that ruling is. Mr. Albrecht said the U.S. Supreme Court said it was beyond the authority of the FDA. He said the agency had made a finding that a cigarette was a nicotine delivery device, and under the words of the statute it was not found to be a drug delivery device. This meant that the FDA could not regulate tobacco. Senator Raggio asked whether the state received federal funding from the Bureau of Alcohol and Drug Abuse (BADA) for this purpose.
Mr. Albrecht said his office had received about $70,000 from BADA. He said it is important to note the federal government prohibits the use of federal money for enforcement of a state tobacco law. He explained that some of the federal grant can be used to conduct the random probability study, which must be 20 percent or less. He estimated 25 percent of the budget for this activity is attributable to the random probability study every year.
Senator Raggio said he understands there is a 20 percent goal which has to be met to continue the federal funding. Mr. Albrecht said that is correct. He added that, otherwise, the state could lose up to 40 percent of the BADA grant that funds programs such as Nevada Area Substance Abuse Council (NASAC) in Reno. Senator Raggio asked whether it is a requirement of the Synar Amendment, and Mr. Albrecht said it is. Senator Raggio asked whether the budget as recommended provides adequate funding to meet the requirement. Mr. Albrecht said it is recommended by the budget office to take funds from the Fund for a Healthy Nevada. This provides adequate funds to provide enforcement activity for the next two years to keep the level down where it needs to be to keep the $10 million in federal funds.
Senator Raggio asked why the Task Force for the Fund for a Healthy Nevada denied the request before. Mr. Albrecht said they did not give a reason. Senator Raggio asked whether the task force was aware of this requirement and that the FDA would not fund it any longer, and Mr. Albrecht said they were so aware.
Mr. Albrecht said he has a letter from the Attorney General (Exhibit N) which summarizes this as well as the enforcement activities under the Master Settlement Agreement. Senator Raggio asked that he submit the letter and make it part of the record.
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Senator Raggio asked what other positions were requested. Ms. Del Papa said the positions that were requested and recommended were NDOT Management Assistant III, a Human Resources Division Deputy Attorney General for child support, and a half-time deputy for environmental and a half-time deputy for housing.
Senator Raggio reiterated that three positions have been recommended, and noted one is a deputy for child support enforcement. He asked why there is a need for a new attorney for that position if that program is being transferred to Clark County, at least in collection and public assistance cases. Ms. Del Papa said the transfer will occur over a three-year period, and transfer is not expected to occur during the coming biennium. She said it has not yet been determined where each of the deputies will go. She explained that as a result of the Adoption and Safe Families Act passed by Congress, the termination of parental rights caseload has more than tripled during the last biennium. She noted that the juvenile court caseload has tripled. She also said she was told by the Chief of the Human Resources Division of her department that they will still have major responsibility in this area for the next three years. She said statistics are available on these developments.
Senator Raggio indicated the Committee would need confirmation of that, and Ms. Del Papa said she would provide it. Ms. Del Papa said the Human Resources Division was handling 3,379 open cases as of December 2000. She said that is an increase, and their caseload continues to increase. She said the deputies are engaged in a huge number of court appearances, making the division a very busy one.
Senator Raggio asked whether there were two human resources deputies in Las Vegas since the creation of the Division in 1991. Ms. Del Papa said she would need to provide that information later, but she indicated that the Human Resources Division has a total of 36 positions.
Senator Raggio asked how many attorneys are presently assigned to the Housing Division and the Division of Environmental Protection (DEP). Ms. Del Papa said the problem is that there are 14 deputies, and some of them have cross responsibilities. Senator Raggio asked whether the module will provide for a half‑time Deputy Attorney General for DEP and a half-time deputy for the Housing Division, and Ms. Del Papa said it will. Senator Raggio asked how many are serving those two divisions, and whether they are assigned particularly to these divisions or are spread out. Ms. Del Papa said they are all assigned to the Civil Division of her office. She said the two half-positions in question make a whole position for the Civil Division.
Senator Raggio asked what the factors are that lead to the increased need. Ms. Del Papa said the Housing Division had a huge backlog of cases and reviews, as did the DEP. She said the request was made specifically with reference to those two positions based on the caseload and workload in those areas.
Senator Raggio asked whether the Governor’s fundamental review recommended privatization of the Housing Division. Mr. Hataway confirmed that was one of the recommendations of the fundamental review, but it is not reflected in the budget. Mr. Hataway said the Governor is still looking at a number of those recommendations because of their complexity. He said there may be something provided to the committee on those issue in the near future.
Ms. Del Papa pointed out that these positions were requested at the behest of the agencies themselves. Senator Raggio suggested that Ms. Del Papa check with the agencies again and revisit some of the questions presented.
E-710 Replacement Equipment – Page ELECTED-31
Senator Raggio noted that this decision unit is about $136,000 the first year and $200,000 the second year, and noted that forensic software is included.
Kevin Higgins, Chief Deputy Attorney General, Fraud Control Unit for Industrial Insurance, Office of the Attorney General, explained those figures reflect replacement equipment on the agency’s replacement schedule. He said the forensic software is to assist the two forensic investigators in the forensic laboratory, but the majority is for replacement costs based on the agency’s computer replacement schedule.
Senator Raggio noted that the budget recommends the transfer of certain programs within Child and Family Services to Clark and Washoe Counties. He said there will be a number of positions that will be assumed by the counties in connection with child welfare services. He asked whether the attorney services rendered to that agency will be reduced during the biennium. He noted that he sees no reflection of such reductions in the budget.
Ms. Del Papa said the transfer will occur over a three-year period. Senator Raggio said he was of the understanding it is recommended for immediate implementation.
Mr. Hataway said the concept is for transfers to Washoe County to occur in 2002. He said Clark County needs to do fundamental connection to the state’s data processing system, and that transfer is projected for 2003. He said that at this stage that is still being worked out.
Senator Raggio suggested that since the committee is being asked for $12 million to do that, the committee would need a specific time schedule. He also asked whether the new positions would also be transferred. Ms. Del Papa said it is her understanding the total cost to the state is going to be $20 million. She said it is her understanding that it is scheduled to occur over a three-year period, but the details have not been worked out. Senator Raggio said he needs the schedule to understand the proposal.
Mr. Hataway said the dollars that were in the budget were the dollars that were worked out through the Interim Legislative Study on Integration of State and Local Child Welfare Systems. He said the Attorney General’s staff and the committee’s staff are still trying to work the numbers out to make sense of them. He explained that it is a multi-year process. He noted it will probably go beyond the projected years of 2002 and 2003. He said the details have to be reduced to bill draft form. He said his office has input what the interim committee indicated was the best estimate.
Senator Raggio asked whether there will be adjustments, and Mr. Hataway confirmed there would. Mr. Hataway said no one has been able to determine to date what the actual cost will be.
Mr. Higgins said the Advisory Board for the Nevada Task Force for Technological Crime was funded last year through the tobacco litigation fees. He said they are asking it to be funded by the General Fund this year.
SENATE BILL 485 OF THE SEVENTIETH SESSION: makes various changes to provisions governing use of technology. (BDR 15-310)
Mr. Higgins explained that S.B. 485 of the Seventieth Session authorized the advisory board to set the salary of the executive director at approximately $80,000. He said that salary of the executive director is at the pleasure of the board, which consists of gubernatorial appointees Senator Valerie Wiener, Assemblyman Bernard Anderson, and members of the public.
Mr. Higgins pointed out that somehow the unclassified pay bill set the executive director’s salary at approximately $35,000. He said it proved impossible for the board to hire a full-time person who is knowledgeable of high-tech crime issues for $35,000 a year. He said the decision of the board was to fill it on a half-time basis and make it a half-time position. He noted that Dr. Tara Shepperson agreed to come on board as a half-time employee.
Mr. Higgins said his office is now asking that the position be made full time, which will require an increase in the salary to reflect the level of expertise needed. He indicated that Dr. Shepperson could speak in more detail about what the advisory board has done in the last two years. He noted there have been two major conferences conducted, training Nevada prosecutors and law enforcement personnel in this area, as well as the establishment of high-tech task forces in the North and the South. Curriculum has been developed for the Clark County School District for school children, warning them of the proper way to use the Internet. He said there has been a level of cooperation with law enforcement that he has never seen before. He said the federal government and the Federal Bureau of Investigation (FBI) are also cooperating in this area. He noted the board has come a long way and would like to continue this progress.
Senator Raggio asked whether this is in the base budget, and Mr. Higgins said that it is. Senator Raggio asked whether the base budget reflects the augmented, full‑time salary. Mr. Higgins said it appears on Exhibit K. He recalled that a request was made for the position to be increased to a full-time position, but that was not recommended.
Senator Raggio asked whether there is any funding that could be available for the position, other than the General Fund. He suggested, as an example, that funding could be provided from local agencies, since they would also benefit from the activities of the board.
Ms. Del Papa indicated Dr. Shepperson is assisting in the pursuit of grant opportunities, but there is a lag time and a lead time with that, as well as the administrative costs involved. She said that, because of the current budget problems, she has only been available on a part-time basis.
Senator Raggio interjected the reason he was bringing this up is there had been a hearing on this bill, and someone from the Office of the Attorney General testified the bill was being funded “through legal fee reimbursement funds because the executive director will be responsible for making the initiative mostly self‑supporting, with the ability to seek federal government or private foundation grants.” He asked how the Office of the Attorney General will make this “mostly self-supporting” if they are requesting to continue to fund it with General Fund revenue.
Mr. Higgins said the goal of the advisory board is to establish task forces. He said those task forces are being paid for locally through the donation of time and personnel from local agencies. He said Dr. Shepperson’s salary cannot be paid by those agencies because they are in the same financial situation. He noted his office has applied for numerous federal grants. The federal government is just beginning to recognize the fact that this is an issue. He said the Edward M. Byrne Memorial Foundation Grant program is targeted at drug enforcement, and his office tried to get such a grant but has been unsuccessful. He said they are also partially supported by registration fees charged to people who attend the conferences.
Senator Neal commented that the position was funded for $35,000 and the request is for $43,000 in 2002 and $45,000 in 2003. He suggested that if the committee does not feel this is merited it should just take out the $35,000 and not go forward with the position. He pointed out the committee was apparently of the opinion, when they were dealing with this, that it was something that was needed. He suggested if it is needed, it should be funded.
Senator Raggio said he did not believe there was any disagreement on that point. He said he believed the committee is acting on the representation that was made when the bill was heard. He said the question is, “What are they doing to make this self-supporting?”
Dr. Tara Shepperson, Executive Director, Technical Crime Division, Office of the Attorney General, informed the committee there is an inner core membership of forensic people who can use computers and find crimes. She said this includes the Las Vegas Metropolitan Police Department, Reno Police Department, Washoe County Sheriff’s Department, and Henderson Police Department. She said many federal agencies have also come on board, even those who may not have a physical presence in the state but include it as their region. Among them, she noted, are the Federal Bureau of Investigation, the United States Secret Service, the Internal Revenue Service, the Office of Inspector General, the Department of Health and Human Services, the Department of Energy, the United States Postal Inspector, and the Environmental Protection Agency.
Senator Raggio said what the committee really wants to know is related to what was represented to them when this bill was enacted regarding how it is going to be fulfilled, and if that is still valid. Dr. Shepperson said she was not in her present position when the legislation was passed. She said it was her understanding that her core obligation was to establish a task force in the North and one in the South as stipulated in the legislation. She said work is going forward on that and is progressing quite well.
Dr. Shepperson said she was also responsible for researching ways to gain additional funding for this position, and noted that this represents two issues she has been working on. She explained that the best way to find funding for something is to show a need. She pointed out that in Nevada there are no hard facts and statistics about Internet crime, because this is a new kind of data that has not been collected. She said she has been working to that end with the Internet Fraud Complaint Center, which has been put together by the National White Collar Crime Center and Federal Bureau of Investigation. She said there will be a complaint form developed that will hyperlink with a national database. This will allow immediate delivery of complaints to law enforcement both in the North and in the South. She added that it will allow her office to begin accumulating data and to avoid the lag time, which has in the past represented weeks of time.
Dr. Shepperson said the other reason the work of the board is important is that, since the Internet Fraud Complaint Center has been developing, Nevada continues to be in the top ten states with alleged perpetrators. She said Nevada must deal with “spamming” issues and illegal telemarketing, which are just now turning to the Internet. Considering those statistics, she said, it appears that several federal grants through the Department of Justice and elsewhere have recently come to the forefront and really fit what the agency is trying to do through the task forces. She said this makes it much easier to make the case because to apply for funding it is necessary to have that kind of task force and show that kind of partnership.
Dr. Shepperson said that there are often grant restrictions. She said most grants will allow between 5 and 10 percent for administrative costs, and that means any place in the task force, whether to the director’s salary, the administration of the office, or anything else. She said this limits the ability to bring in more money for administration. But, she said, that will be an ongoing effort and will in time prove very helpful, not only for the development of the task forces, but for helping to cover the costs.
Continuing, Dr. Shepperson said that other things that have been done are “in‑kind” additions. She said she worked with Clark County School District and the Internet Crimes Against Children Task Force doing a lot of outreach. She said that did not cost the office a lot of money because they were able to piggyback on the efforts of the others. She estimated that within the next two years her office will be able to provide the kind of law enforcement training needed, and add to the local commitment to administrative costs.
Senator Raggio said he believes the value and goals of the office are appreciated, and concluded that the short answer is that it is unlikely in the foreseeable future that this is going to be self-supporting, as was represented to the legislators when they passed the bill. Dr. Shepperson explained that most of the governmental grants are about 5 to 10 percent. Senator Raggio explained that these programs are authorized based upon what is represented during testimony, and expressed concern that they are now finding out that this program is not going to be mostly self-supporting and some General Fund support will be necessary.
Senator Raggio called attention to the Capital Improvement Project (CIP) on the old court house. He asked how that is going to be occupied, when the occupation is anticipated, and who will be transferred in there. He asked whether there can be any adjustment on outside rent in the recommended budget.
Ms. Del Papa said that the 2001 CIP request for the Carson Court House Phase 2 provides $1,700,000 to complete the remodel. She said that the 1999 CIP included the initial amount. The bids came in over the budgeted CIP amount, and additional money was required. She said the remodeled facility will be 14,985 square feet and could house a maximum of 65 individuals. The architect’s plans are available for examination. She said they are currently contemplating moving the Medicaid Fraud Control Unit, the Private Investigator’s Licensing Board, the Bureau of Consumer Protection, the Transportation/Public Safety Division, the Gaming Division, and others into the remodeled facility. She said the Public Works Board is currently compiling the information that would demonstrate that the remodel is comparable in cost to the recent remodel of the library building on Carson Street. This information will be made available to the committee, she noted.
Ms. Del Papa said the date of occupancy was estimated to be December 2001. She said a large part of the prep work has already taken place, and if the funding is secured they can anticipate moving in by December 2001.
Senator Raggio said he thought he had been told it would not be ready until July 2002. He suggested she may want to review that and make some adjustment for the need for equipment, rent, and so forth.
Senator Raggio referred to a question asked by Senator Neal about salary. Senator Raggio said that committee staff checked the fiscal note that was provided by the Office of the Attorney General for the high-tech crime bill, which put the $35,000 in as salary. So, he pointed out, that salary amount came from Ms. Del Papa’s Office. He recalled that someone said it was for a half-time position, but that is not what the fiscal note showed.
Special Fund – Budget Page ELECTED-34 (Volume 1)
Budget Account 101-1031
Ms. Del Papa said that this is her office’s litigation fund. Senator Raggio asked whether there is anything to discuss on this fund. Ms. Del Papa said it is straightforward. She noted that the Governor recommended the $102,000 that was requested. She said litigation is continuously growing more complex, but her office is happy with this budget.
Senator Raggio asked what specific matters this budget covers. Ms. Del Papa explained that this is not the contract budget. She said it is for expenses that are basically unknown when budgets are developed and approved. This is the fund that provides for investigation, preparation, prosecution, or defense of suits that are unknown at this particular time. She noted that most states have much larger litigation funds, but what was actually spent in this account in FY 1999 budget was $103,000.
Senator Raggio noted that the IFC provided another $100,000 and asked how that is being used. Paul P. Hewen, Chief Financial Officer, Office of the Attorney General, explained that the $172,000 had to do with high-tech crime.
Rick Combs, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, explained that this account was budgeted lower last session because of the shortage of General Fund money, and because revenues were low. When the Attorney General received a portion of the reimbursements for costs in the tobacco settlement, the Office of the Attorney General came to IFC and asked to use a portion of that money to fund the Yucca Mountain litigation costs. It was money that would have gone to the General Fund as reimbursement of legal costs to be used for Yucca Mountain. The money came in to budget account 101-1030, so the expenditure authority was out of budget account 101-1030. He pointed out that such costs would normally be funded from this budget account 101-1031. Mr. Hewen indicated that was also his understanding.
Ms. Del Papa said she believed the next 18 months will be extraordinary regarding what transpires with respect to Yucca Mountain. She said that based on discussions with the Governor she believes her office has a detailed report as to where Nevada is and where Nevada might head.
Senator Raggio noted that the Governor has asked for $5 million for specific uses. However, he said, he is interested in what has occurred with the $100,000 authorization through the IFC in September. Ms. Del Papa said it is her understanding that money was to pay for outside consulting contracts that have been made in this area. She noted she has detailed information on that.
Senator Coffin asked whether litigation could be increased because of the state’s advertising in adjacent states about the issue of travel and hazardous waste. He suggested that the state be prepared to defend statements made in such advertising. He asked whether that concern falls within the realm of this account.
Ms. Del Papa said it does not, but acknowledged the appropriateness of the concern. She said she feels the state has presented a much-needed united front, and she supports wholeheartedly what the Governor is proposing. She said the Governor has kept her well informed on what he intends to do. She said she will know more after her March meeting in Washington how the other attorneys general feel. She noted that 80 percent of the high level radioactive waste in the country is generated east of the Mississippi River, so having information regarding those transportation corridors is very important.
Senator Coffin assured the Attorney General that he supports the Governor’s plan and that he understands she cannot be responsible for what ad hoc groups do. But he stressed that when the government spends money it should not trespass in an area where lawsuits can be created. Ms. Del Papa said she does not foresee that happening.
Ms. Del Papa cautioned that all Nevadans must be aware that there are some major legal issues looming on the horizon that are not covered by this fund, and at some point the state will need to “bite the bullet.” She assured Senator Coffin that she would get the information for him and meet with him personally. She said her major concern is that she would like to see the state do retainers in certain areas. She explained that the work the office is about to enter into could be extraordinarily complicated and be outside the area, and she does not know that this fund would allow her office to participate in that way. Senator Coffin thanked her.
Senator Neal asked what Ms. Del Papa anticipates in terms of legal problems outside the issue of interstate commerce. Ms. Del Papa replied that one of the legal issues may be the whole question of licensing. She pointed out the Department of Energy has already committed $16 million to a law firm with reference to the whole licensing issue. She said if that issue were to come to pass it would necessitate the state’s hiring a major licensing firm to combat that issue. She said she could send Senator Neal a report on where her office stands regarding this issue on a number of fronts.
Senator Neal asked how many lawsuits the Office of the Attorney General has had in reference to the Yucca Mountain issue. Ms. Del Papa replied that there have been at least nine that she is aware of. She said nothing can go forward until there is some sort of resolution regarding the site selection. She said the Legislature will be asked during this session to take a position with respect to Nevada’s being the site selected. Senator Neal asked how many lawsuits have been won by the state. Ms. Del Papa said most of those cases were held by the Ninth Circuit Court of Appeals to be brought prematurely. Nothing can go forward on the legal front until the site selection has occurred.
Senator Neal asked whether Ms. Del Papa is suggesting to the committee that she has not won any cases. Ms. Del Papa said that some of those suits were not brought during her time as Attorney General, but stated that the state has not won any at this point. She said she would be happy to come back to the committee with a full presentation regarding Yucca Mountain and the state’s position in that regard.
Senator O’Donnell asked whether any lawsuits have been settled prior to going to court. Ms. Del Papa replied there have been a few cases settled. Senator O’Donnell asked whether those lawsuits were settled because it was in the best interest of the state, and asked for a “yes” or “no” answer. Ms. Del Papa said she would explain it. She said that every question the Office of the Attorney General faces is based on what the law is and what is the right thing to do. She said that they look at every case and, if it is appropriate under the circumstances, they will agree to settle it.
Senator O’Donnell asked Ms. Del Papa whether she has a good chance of winning the Yucca Mountain lawsuit, and will not need to settle, if her Office is given some of the $5 million advertising budget. Ms. Del Papa said that she would need much more time than is available to discuss that matter. She said she would prefer to have a half hour to an hour and would prefer to have her other staff with her to discuss it. She noted she has a whole Yucca Mountain team. She said it is an issue of such significance that there needs to be a separate hearing. Senator O’Donnell said the committee would hold up allocating funds to the Attorney General’s budget for that purpose, until such a hearing is accomplished. Senator Raggio said the committee would provide opportunity for Ms. Del Papa to address Senator O’Donnell’s questions.
ATTORNEY GENERAL INSURANCE FRAUD – Budget Page ELECTED-35 (Volume 1)
Budget Account 101-3806
E-275 Working Environment and Wage – Page ELECTED-37
Senator Raggio said there are problems with this budget, and asked whether someone could explain some negative adjustment numbers to the committee.
Don Hataway, Deputy Director, Budget Division, Department of Administration, indicated that this budget has a revenue problem. He said it does not have sufficient revenue to meet the projected expenditures for the next year. He said that regardless of how the budget is constructed, this is the bottom line issue.
Senator Raggio said he understands the personnel costs reflected in The Executive Budget are understated by $106,000 in 2002 and $109,000 in 2003. Mr. Hataway said one of the available options was to reduce expenditures to balance the budget. The other option was to enter a negative amount in the personnel category. He said the Attorney General requested that the Budget Division do the latter because the key issue is revenue. He said that if the revenue issue is not addressed, something will have to be done.
Senator Raggio asked what has to be done, and specifically inquired whether that means increased assessment to the insurers. Mr. Hataway said that could be found in Decision Unit E-275. Senator Raggio asked whether there has been an agency bill requested for this. Ms. Del Papa responded that Assemblyman Dini has addressed it through BDR 57-331, which is on file. Ms. Del Papa said that there is industry support for that bill.
BILL DRAFT REQUEST 57-331: Makes various changes concerning the assessment the commissioner of insurance may impose upon insurers to pay for the program to investigate certain violations and fraudulent acts of insurers. (Later introduced as Assembly Bill 134.).
Ms. Del Papa said that the Insurance Fraud Control Unit is totally supported by fees; there is no General Fund money that goes to that unit. She said the current structure is that each insurance company that does business in Nevada, regardless of its size, pays a flat $500 fee. Senator Raggio confirmed that the law states it is not to exceed $500. Ms. Del Papa said the bill draft will create a graduated scale on which some companies will fall into the $500 category. The scale is projected to show $500, $750, $1,000, and the $2,000. She said most companies will pay $2,000. She said that money has been split 85 percent to the Office of the Attorney General and 15 percent to the Division of Insurance office. She said the sliding scale will be a more equitable system, and has the support of the Governor and the industry.
Senator Raggio asked whether that is going to make up the shortfall. Mr. Hataway said it would, and would also provide a reasonable reserve for the future. Senator Raggio asked about the amount being paid to the Division of Insurance. Ms. Del Papa said the Division of Insurance collects the fees. Senator Raggio indicated that the Division of Insurance receives a fee for that process and noted that the suggestion has been made that the Division of Insurance will be cut out of that income.
Mr. Hataway said that the Division of Insurance has heretofore not received any of the revenue from the insurance fraud assessment. He said that under the new proposal that office would receive 15 percent of the assessment. Based upon that, he said it was the opinion of the Budget Division that the allocation that the Attorney General Insurance Fraud account had provided the insurance division would no longer be needed because it could be part of the 15 percent.
Senator Raggio pointed out it would be necessary to act on the bill to have this budget balanced. He said the committee would not close this budget until that is accomplished.
AG MEDICAID FRAUD – Budget Page ELECTED-40 (Volume 1)
Budget Account 101-1037
Ms. Del Papa said that during the last legislative session this unit did extraordinary things. She said this was the first major fraud unit to come to the Office of the Attorney General during her tenure. She said that during the last legislative session her office had requested two new investigative positions in anticipation of federal law expanding the jurisdiction of the office. She said those positions have not come to the office.
Ms. Del Papa said that the federal law has now been enacted, and referred to the memorandum titled Adjustments to FY01/02 and FY02/03 for Budget 1037 (Exhibit O). She said the new federal law expands the jurisdiction of the Medicaid Fraud Control Unit to investigate patient abuse and neglect in adult home and care facilities, and some other services. She commended Mr. Tim Terry on being recognized as a national leader and having served as the national head of the Medicaid Fraud Control Unit.
Tim Terry, Senior Deputy Attorney General, Medicaid Fraud Control Unit, Office of the Attorney General, said this request came from the 1999 Legislative Session. He said his unit had asked for two new investigators in anticipation of expanded jurisdiction. He explained the federal law was not enacted before the end of the 1999 session and he had been asked to return when that law was passed. He said that it has now been enacted. A copy of the legislation is found in Exhibit O. He said the law is called the Ticket to Work and Work Incentive Improvement Act of 1999 and covered a number of things, including the expansion of jurisdiction.
Mr. Terry said that prior to the enactment of this bill his office was only allowed to handle complaints and conduct investigations in the area of patient abuse and neglect at facilities that receive Medicaid payments. This primarily involved nursing homes, of which there are 49 or 50 in the Nevada, he added. As a result of the expansion of jurisdiction, he said, his office is permitted to investigate allegations of abuse or neglect in any facility that involves care for senior citizens or vulnerable adults. This means that over 350 facilities now need to be considered. This includes group care homes and adult group care facilities as well as nursing homes.
Mr. Terry said the federal government does pay 75 percent of this budget, and the payment recoveries in the Medicaid Fraud Control Unit work have always exceeded the amount needed for the 25 percent state match. He said no difficulty in funding is anticipated.
Senator Raggio asked what had been recovered in restitution payments in fiscal year 2000. Mr. Terry referred to a document entitled Medicaid Fraud Control Unit Fact Sheet (Exhibit P). Senator Raggio noted that in fiscal year 1999 recoveries were $276,000; in fiscal year 2000 recoveries were $1 million; and in this fiscal year over $3 million. He asked whether this is correct, and Mr. Terry said that it is. Senator Raggio asked what is meant by “state share of grant.” Mr. Terry said it refers to what would be the state’s 25 percent obligation. Senator Raggio asked if $1 million was recovered in fiscal year 2000, what does it mean, and where does the $1 million go. Mr. Terry said that, as part of his unit’s work, they recover restitution, which is the amount that was improperly gained by a fraudulent provider. Those sums are returned to the Nevada Medicaid office and to the federal government on a ratio of about 50/50. Senator Raggio asked how much of the $1 million was paid to the state Medicaid program in fiscal year 2000. Mr. Terry said that breakdown is not in Exhibit P, but he can provide it to the committee. He said that a quarterly report is provided to the IFC in which those numbers are reflected.
Senator Raggio said he was asking this because, according to staff analysis, the report indicated that the unit recovered $440,000 in restitution payments during fiscal year 2000. Mr. Terry said it may not also reflect the amounts that were recovered for penalties and investigative costs, which could raise that up to $1 million. Senator Raggio asked how much of the $1 million went to Medicaid. Mr. Terry said it would be the restitution amounts that would be reflected in the quarterly reports. Senator Raggio asked what that amount was for the year 2000, and Mr. Terry said he can get that information.
Mr. Terry indicated a second chart in Exhibit P reflects the investigative work done with respect to pharmaceutical manufacturers for the past couple of years. He said “enormous” price reductions were achieved for the Medicaid program. He said it is probably also possible in other programs, such as the senior prescription drug program, which is currently proposed to be included for investigation. Senator Raggio asked whether this resulted in a drop in some of the prices that are charged. Mr. Terry indicated that the chart shows, for April 2000, what the manufacturers had previously charged and what was paid by the state. The second column shows the amount of reimbursements effective in May 2000. Senator Raggio remarked that the price of Amikacin has dropped from $54 to $6.75 as a result of this investigation and Mr. Terry confirmed that. Mr. Terry said this effort has been a tremendous undertaking by a number of states with respect to drug prices, and it is a continuing effort, which will potentially affect hundreds, if not thousands, of drugs.
Attorney General–Workers’ Comp Fraud – Budget Page ELECTED-45 (Volume 1)
Budget Account 101-1033
Mr. Higgins said the Workers’ Compensation Fraud budget is a non-General Fund budget. It is paid for through the administrative assessment the Division of Industrial Relations (DIR) charges to all employers in Nevada. DIR also funds the appeals process for workers’ compensation in Nevada. He referred the committee to a memorandum entitled Adjustments to FY01/02 and FY02/03 for Budget 1033 (Exhibit Q). He said most items in this memorandum are items his office is asking to be put back into the budget because they managed to pay for them in the non‑base year.
Mr. Higgins said that Priority 1 in Exhibit Q is the rent for space his unit occupies in the Attorney General’s office in Las Vegas. He said that, for whatever reason, this budget did not get charged in the base year and paid for it in the non-base year, so it is not reflected in the budget. He said this represents an amount of $12,960. He said an increase in the rent of a non-state-owned building in Reno was not included in the budget, and this cost is $2,001. He indicated that these are increases to Category 04, Operating Expenses, to cover rent obligations.
Priority 2, he said, is for Category 03, In-state Travel. He said the State Motor Pool rates increased after the budgets closed after the last session. He said this meant increases for them. Also, he added, the rent for the investigators’ cars changed from a flat rate per month to a rate that includes an additional charge for miles exceeding 400 per month. He said this request is to cover the increase in this cost.
Mr. Higgins said that in Priority 3, Litigation Expense, his office has a litigation expense similar to that of the main Attorney General litigation expenses. It is to pay for expert witnesses, out-of-state travel, and having in-state witnesses come back. He said his unit has been very successful in going out of state on workers’ compensation fraud investigations. They have also done quite well, he added, in checking on out-of-state insurers, which had not been done in the past. He said his unit tries to send people out of state on these investigations in a responsible manner, and only after the most egregious insurers; and his unit tries to investigate more than one at a time. He said the $15,984 requested would increase the budget to what the budget was in the base year. He said his office did not use all the litigation expense in the base year, and the amount was reduced to reflect what had actually been spent.
Senator Raggio asked who is in charge of this unit. Mr. Higgins replied that he is in charge of it. Senator Raggio asked whether there had been any complaints during the last biennium from employers who feel that not enough dedication is given to investigating worker fraud. Mr. Higgins said he has had those complaints. Senator Raggio recalled that he and Mr. Higgins had discussed one such complaint. Mr. Higgins explained that the case they had discussed was concerning a self‑insured employer that disagreed with a litigation decision made by Mr. Higgins’ office. However, he pointed out, the decision had been explained to the satisfaction of the property owner. Senator Raggio asked whether this represents a pattern of complaints from self-insured employers. Mr. Higgins said he felt self‑insured employers are treated in the same manner as other employers.
Mr. Higgins said that in the past the self-insured employers have had a much more aggressive claims system and have watched their cases more closely. He said fewer cases have been referred to his unit, and everything that has been referred has been looked into. He said that cases his unit was prosecuting in the past were for the State Industrial Insurance System (SIIS) and Employers Insurance Corporation of Nevada (EICON) and those had passed through the system and were egregious frauds. He noted that such cases from self-insured employers generally did not get that far. He said his unit has attempted to market themselves to self‑insured employers. He said he has met with the self-insured employers’ association, and he speaks regularly before business and trade groups. He said his office also talks to third party administrators and encourages them to report such cases to the fraud unit.
Senator Raggio asked whether his office is adequately staffed to handle these kinds of complaints, and Mr. Higgins said that it is. Senator Raggio said he hoped that blatant cases of fraud against self-insured employers, which are well documented by the employer, are being prosecuted. Mr. Higgins said that they are. He explained that the challenge is the offense actually has to have been committed during the period that the employees were receiving unemployment compensation. He gave the example of a person caught water skiing six months after he was no longer on disability, and said that such evidence does not indicate that they should not have been entitled to disability when they received the benefits.
Senator Coffin asked whether this work is being done on behalf of the insurers. Mr. Higgins said that in one sense they are doing it on behalf of the insurers because it will end a claim that they would otherwise have to pay out. He said that in the broader effort, if that reduces insurance cost and rates go down, employers benefit because they will pay lower insurance premiums.
Senator Coffin noted there was a time when the state was in this business. He asked whether the entire expense for this will be coming in some way or another from the carriers. Mr. Higgins said his office is funded entirely out of the administrative assessment that every employer pays as part of his premium.
Senator Coffin asked whether the state has the authority to use body wires during investigations, and Mr. Higgins said his staff did not have any body wires. Senator Coffin asked whether investigators are approaching unsuspecting people without a court order. Mr. Higgins replied that court orders are not needed for a body wire.
Senator Coffin said he is concerned about how aggressive the state is getting. He asked whether it would be more beneficial to concentrate on abuse by employers who aggressively attempt to catch malingerers, instead of being the agency which does the catching of the malingerers. He described the process as insidious and dangerous, and one that could also be abused. Mr. Higgins agreed that it can be dangerous and abused, but he disagreed that it is insidious. As an example, he said, one of his investigators may go to an employer who he believes does not have workers’ compensation coverage. The employer claims not to have employees, and refers to his crew as partners or volunteers. When one of the crew is later approached on the conditions of the job, he may reveal that he gets paid cash with the understanding that the employer can pay more because he does not pay workers’ compensation and other tax obligations.
Senator Coffin asked whether insurance companies are allowed by statute to do that. Mr. Higgins said there is no Nevada law prohibiting anyone from wearing a body wire and recording anything anyone else says, so they could do that, but he does not believe they do. He said it would not be to the insurance company’s benefit to try to catch an employer that does not have insurance. He said they may want to try to catch a client with employees who are not covered by the existing policy.
Senator Neal asked whether Mr. Higgins’ office handles fraud complaints from the EICON agency. Mr. Higgins replied they still handle complaints referred by that agency. Senator Neal asked how Mr. Higgins’ office is paid when they receive those complaints. Mr. Higgins said that every time an employer in Nevada opens a workers’ compensation policy an administrative assessment is built into the premium. That assessment pays for the Fraud Control Unit for Industrial Insurance and other administrative costs. He said that if someone is convicted, his office is entitled to recover the investigation and prosecution costs, and every effort is made to recover those costs. He said those funds go into the reserve fund.
Senator Neal asked whether EICON is considered a private company. Mr. Higgins described it as being “quasi-state” because of a constitutional trust fund that is involved. Senator Neal asked whether EICON pays for services received from the Office of the Attorney General. Mr. Higgins said EICON pays the same way that any other insurance company does because every policy they sell has administrative overhead included as part of the premium. He said that DIR has a long process by which such rates are assessed.
Senator Neal asked whether Mr. Higgins is satisfied with the amount EICON is paying. Mr. Higgins said he is, and there is no request in the budget for that service.
Mr. Higgins said that contingent upon the success of BDR 57-331 there is an additional BDR pending which would administratively combine the Insurance Fraud Control Unit and the Fraud Control Unit for Industrial Insurance. Senator Raggio asked whether there could be a reduction in positions if that were done. Mr. Higgins said he thinks that is possible. He said he also anticipates that doing that will save money. Mr. Higgins noted that the two units are funded by completely different methods, and the challenge would be to figure out how to integrate the two funding processes so that it is fair to everyone.
Senator Raggio noted that when the bill draft comes before the committee there will be a need for a fiscal note, and the committee will be looking for some cost savings.
AG Office of Consumer Protection – Budget Page ELECTED-50 (Volume 1)
Budget Account 330-1038
Timothy Hay, Chief Deputy Attorney General, Consumer Advocate, Bureau of Consumer Protection, Office of the Attorney General, distributed a document to the committee entitled Nevada Attorney General Bureau of Consumer Protection, B/A 1038 Budget Request FY 01-02 and FY 02-03 (Exhibit R).
Mr. Hay said that the Bureau of Consumer Protection has been very busy since April when he took over. He said his budget request is quite straightforward. He said that one new position has been requested from the General Fund, a Management Assistant II for Las Vegas. This position is to handle consumer complaints, which have increased greatly in volume because of the growth in population and the higher visibility of the bureau. Mr. Hay said the rest of the budget is relatively static.
Senator Raggio asked how many units are in this budget. Mr. Hay said that they have the consumer fraud unit, mostly located in Las Vegas, and two antitrust attorneys comprise the antitrust unit in the northern part of the state.
Senator Raggio asked what portion of the budget is funded through the annual assessment of public utilities (mill assessment). Mr. Hay said that all the utility functions are funded through the mill assessment. He said the consumer fraud and consumer protection functions are funded through the General Fund.
Senator Raggio asked whether the mill assessment was still at 0.75 mills, and whether it is still necessary to be that high. Mr. Hay said that the budget submitted was premised on reducing that to 0.70 mills, but he was not certain where in the process it was raised to the 0.75 level. He explained that the mill assessment is set for both the Public Utilities Commission (PUC) and the bureau every May. There is a one-year lag on how those revenues are calculated and collected. Mr. Hay said his office would be in a position to re-evaluate if the mill assessment could be reduced.
Senator Raggio noted that the bureau ends up with a reserve of about $765,000 at the end of fiscal year 2003, and suggested that an adjustment could be made. He asked Mr. Hay whether a reserve of that size is necessary. Mr. Hay said he anticipates a reduction in the reserve amount. He pointed out that there are a number of contingencies that affect the reserve. He noted that the municipalities are considering buying the Sierra Pacific Water Division some time in the first two quarters of this year, and that would result in an immediate loss of revenue. Senator Raggio asked whether they would continue to be subject to that assessment. Mr. Hay said that they would be outside of the jurisdiction of the PUC, and as soon as the transfer occurs, those revenues will disappear.
Senator Raggio asked whether it is appropriate now for them to be subject to regulation. Mr. Hay said that it would amount to a major change if municipal organizations such as electric cooperatives or municipal water companies were to be brought under the jurisdiction of the commission. He said there may be an appropriate time to evaluate that.
Senator Raggio noted that this is being proposed in the Washoe County area. He questioned the appropriateness of a water authority, which is now under regulation, to become a municipal function, or even a jointly-operated water authority similar to Clark County. He asked who regulates the utility after such a change occurs, and if there is some necessity for regulation. Specifically, he asked, who regulates the Clark County Water Authority.
Mr. Hay said that the historical answer is that all municipal utilities, both electric co-ops and water authorities, are governed by boards of directors who set the rates and have the ability to administer the system, so there is no responsibility to the PUC. They are responsible to the local elected officials who comprise the board, he added.
Senator Raggio asked whether the public is served as well under that type of situation. He said he is curious about a possible imbalance of a municipally-owned utility versus one that is regulated by the state. Mr. Hay said that historically the municipal organizations have done a good job. He said that in the case of the Sierra Pacific sale, his office, as well as the PUC staff, will be looking at issues such as whether rates can actually be reduced as it becomes a municipal utility. He said there will be some regulatory issues on the front end of the conversion.
Senator Raggio expressed curiosity about whether the consumer gets the same protection as to whether a rate is reasonable. Mr. Hay said that is a policy decision that, in light of recent trends both in electricity and water utilities, may need to be re-evaluated. He said he believes the theory is that the municipal corporations are quasi-public entities that are performing these functions and are directly responsible to the constituents they serve. He noted that most of the boards are comprised of elected officials, so the regulatory structure designed to protect consumers against unreasonable rates is not quite parallel to the procedure of the PUC.
Senator Raggio asked whether Mr. Hay has the staff necessary to make the same kind of judgments and analyses that are made at the PUC level. Mr. Hay said it was his impression that system has operated effectively and has actually faced some major challenges during the decade of the 1990s. He said that a question that may need to be examined is whether there should be a consumer advocate or a conventional regulatory function if the trend toward greater “municipalization” of these services continues.
Senator Neal noted that the cooperatives in this state are not affected by the ups and downs of cost pricing that Sierra Pacific is now facing. He said co-operatives can give cheaper services to their customers. He said the same would be true of a company such as Los Angeles Water and Power; they are unaffected by the great fluctuations in rates because it is a publicly-owned utility. He also noted that Southern Nevada Water Authority went to the Colorado River Commission when they were faced with increased rates because that power would have been cheaper to them than a privately-owned or investment-owned utility. He expressed hope that these questions will be evaluated if there are going to be any changes made.
E-350 Service at Level Closest to People – Page ELECTED-53
Mr. Hay said that when the state first considered moving towards a more competitive electric marketplace, the PUC was allocated $500,000 for consumer education, and his office was allocated a smaller amount. He said that because deregulation has been essentially halted in the state, there are probably some other issues in which the consumer education funds could be appropriately used. He said he expects there will be a number of complicated issues to explain to the public in the future. He said that his office has an extensive outreach program that is apart from these funds.
Senator Neal noted that Mr. Hay had indicated that deregulation has been essentially halted. He said it appears to him that deregulation is on its way. He recalled that in January 1999 there was a divestiture by the PUC in order to effect the merger between Nevada Power and Sierra Pacific Power. He noted that they were required to divest themselves of a number of their generating facilities, and that had gone forward. The following year the utilities were losing money, so a global settlement was reached which allowed them to raise their rates from 1.0 percent to 1.8 percent a month over a three-year period or about 64 percent.
Mr. Hay said that he had left the PUC by the time the order Senator Neal referred to was entered. But he explained that the divestiture was ordered as a condition of the merger of Sierra Pacific and Nevada Power. The rationale was that once the two companies were combined there would be the potential for marketplace manipulation if the company owned all of its own power generation; greater than if they remained separate utilities, he added.
Mr. Hay said that his office filed a petition early in January with the PUC to reconsider whether this divestiture should go forward in light of the very volatile conditions in the western energy markets. He said the PUC has noticed their petition for comments, which are due by February 23. He said his office believes that once those power plants have been divested, the state will have little or no regulatory authority over either the rates charged or where that energy is marketed. He suggested that power we have been accustomed to receiving in Nevada could go to other jurisdictions and at higher prices than we are used to. He noted that the California Legislature in January prohibited further divestiture of power plants in California, that state being in a somewhat similar circumstance.
Mr. Hay said that the global settlement was entered into after extensive negotiations that his office participated in from about June 1 to mid July. He said that at that time there was a real potential that later in the year the utility might not be able to access power markets to buy the power necessary to serve southern Nevada. Among the circumstances were an unusually warm May in the Las Vegas area, rising energy prices in the West, and the fact that Nevada Power had to import about 50 percent of its power over the summer. He said they did enter into an agreement that allowed them to incrementally raise their rates on a monthly basis through a fairly complicated formula. He said that at the time he believed, and he still believes, that is an appropriate mechanism to prevent consumers from seeing “rate shock” in their bills and to allow the company to be fiscally healthy enough to continue to buy the power it needs to buy.
Senator Neal asked whether the PUC accepted the Bureau’s stipulation. Mr. Hay said that it did. Senator Neal said he could not see in the order whether or not they had. Mr. Hay said they adopted it in two components, one on July 20, 2000, and the second about August 3, 2000. Senator Neal asked whether this is the same stipulation on which Fred Schmidt gave testimony.
Mr. Hay said it is not. He said that at the time the stipulation was agreed to, Mr. Schmidt was representing the Southern Nevada Water Authority, which had been a party to some of the litigation that the stipulation also settled, and was not a signer of the agreement.
Senator Neal asserted that he had properly identified the stipulation. He said that a staff counsel for the Public Utility Commission signed this stipulation. He asked whether the stipulation actually allowed the power companies to divest themselves of certain power plants. Mr. Hay responded that the stipulation itself was only related incidentally to the divestiture. It provided that if the divestiture did go forward the above-book value of proceeds received from the plant sales would benefit Nevada consumers through several different mechanisms.
Senator Neal asked what the status is of the overall general question of power as the Bureau of Consumer Protection is involved. He said this is an important concern for this Legislature, and the committee needs to know what is going on.
Ms. Del Papa suggested it might be important for Mr. Hay and his staff to make a full presentation to the committee. She said that it is an issue that impacts every resident of the state.
Senator Raggio noted that the Senate Committee on Commerce and Labor is going into this issue extensively and he suggested that the discussion not all be replicated in this committee. Mr. Hay said he would be happy to brief any members of the committee individually as well.
Senator Raggio asked what is going on in the telemarketing area. Ms. Del Papa said that the telemarketing and consumer fraud unit recovered more than $1.5 million for the General Fund during the last biennium. She said that another $1.5 million was paid in restitution.
Senator Raggio asked whether telemarketing is still as bad a practice as it was in the past, or whether there had been a reduction in the number of complaints received. Ms. Del Papa replied that it “ebbs and flows;” when they appear to have done away with something it reappears in another form. She said it is anticipated that such practices will switch to the Internet. This unit is very valuable, and works on a lot of multi-state activities, she added.
Mr. Hay pointed out that their anti-trust unit has received a lot of money on behalf of the state, and they are in the gearing up phase of that function. He said he feels the anti-trust and deceptive-trade practices staff has established a credible record in a short period of time.
AG Crime Prevention – Budget Page ELECTED-56 (Volume 1)
Budget Account 101-1036
Ms. Del Papa said the Nevada Missing Children Clearinghouse and Crime Prevention Unit has been involved in, among other things, 608 cases of family or parental abductions during the biennium. She said this unit deals with runaways, lost children, injured children, and occasionally non-family abductions. She said the unit received 381 referrals over the biennium requesting assistance from different sources, including law enforcement, agencies, family courts, attorneys, and others. Of this number, she said, 467 have been recovered. She explained this operation is based primarily in the Las Vegas office, but they attempt to provide service throughout the state.
Ms. Del Papa said this unit does a lot of work with the national missing children clearing house, and provides a lot of training. She said that if there is a parental abduction, it is reported to this unit, and the unit enters it into the National Crime Information Center (NCIC). She said they also do fingerprint work with schools.
Ms. Del Papa said the budget is straightforward and there is nothing to add but what was included.
Senator Raggio asked which special license place is involved in this budget. Ms. Del Papa said it is the missing children plate. Senator Raggio asked whether it has been successful, and Ms. Del Papa replied it took a while to get the program going and it has not generated a lot of revenue.
Senator Raggio asked whether many have been issued since 1995. Ms. Del Papa said she does not know the number issued. Senator Raggio asked whether it was intended to raise revenue for this budget account. Ms. Del Papa said that it has not been that successful. Senator Raggio noted that it had been a requirement that there be 250 applications, and asked whether that many had been received.
Mr. Higgins stated that these license plates have just begun to be issued in the last few months.
AG Tort Claim Fund – Budget Page ELECTED-60 (Volume 1)
Budget Account 715-1348
Ms. Del Papa said this function falls within the Solicitor General’s responsibilities. She said the rates that cover the costs and the reserves have to be examined, and she expects a related BDR regarding this issue.
Senator Raggio asked whether there is a proposal to increase the level of tort immunity for the state, and, if that occurs, how it would affect this budget. Ms. Del Papa said a fiscal note has not yet been prepared for that proposal, but that it should be done. Senator Raggio pointed out that the limit applies to action in state courts, and not to any actions in federal court.
Senator Raggio noted the budget recommends an insurance policy, and asked what kind of coverage is involved. He asked whether it is correct that there is a $10 million limit and a $1 million deductible.
Stan Miller, Tort Claims Administrator, Litigation Division, Office of the Attorney General, said the excess liability coverage indicated in the budget would cover the state for any claim over $1 million and up to a cap of $10 million. Senator Raggio asked whether out-of-state claims and federal claims are subject to the cap. Mr. Miller said that they are not.
Senator Raggio asked whether that coverage is adequate for this situation. Mr. Miller said he thinks it is. He noted there is a case in which the state of Washington received a $27 million judgment against the state, but pointed out that is quite unusual. He said he does not feel the state is at risk for anything over $10 million.
Senator Raggio noted there is a 33 percent increase indicated in the policy cost. Mr. Miller said he believes the cost of the policy for this year is $158,000. He said $200,000 has been budgeted for 2002 because an increase in the premium is expected.
Senator Raggio noted the budget recommends carrying a reserve of about $2 million. Mr. Miller said that is correct.
Ms. Del Papa said her office is in the process of issuing an Attorney General’s opinion regarding the tort claims fund and has worked closely with the Budget Division. She explained that more entities are wanting to access this fund, and she wants to make certain there are clear guidelines. She said that her office has found a greater interest by non-state entities that want their liability covered by accessing the tort claim fund. She indicated her personal concern, and said she has had discussions about it with the Director of the Department of Administration. She indicated her concern that, if non-state entities are allowed to access this fund, then they should contribute to it.
Senator Raggio asked for an example. Ms. Del Papa replied her office is in litigation right now regarding one example. She said the court employees of Elko County, for liability purposes, have indicated a desire to use this fund. She said another example is a fire academy case, “which is primarily a contractual action, but has some tort elements alleged.” She said if the state is “hit” with this case, it will be a huge liability for the state. She noted that the Director of the Department of Administration has asked for the Attorney General’s opinion on this matter.
Ms. Del Papa explained that there are two separate issues. One of them concerns a BDR that would change the rate-setting process.
Mr. Hataway said that right now NRS provides that both the Risk Management Division in the Department of Administration and the Attorney General Tort Claim Fund can assess state agencies. He said the BDR proposal is for more flexibility for state agencies and other governmental units that may participate in the fund. He said it is proposed that if any non-state agencies participate in the tort claims fund there should be flexibility to allow them to be charged rates that would allow them to contribute to the fund.
Senator Raggio asked whether that could be done without assuming additional and unwanted liability. Mr. Hataway said that is part of the whole complex issue. He said the purpose of the BDR he is discussing is only to give the state the ability to charge premiums. Senator Raggio asked whether it would create liabilities for the state that it would not otherwise have. Mr. Hataway agreed, but pointed out that the ability to charge premiums is just part of the issue. He said his office is awaiting the Attorney General’s opinion, but in the meantime decided to get the BDR started to provide the flexibility to collect premiums.
AG Extradition Coordinator – Budget Page ELECTED-64
Budget Account 101-1002
Ms. Del Papa said that the extradition coordinator has been working aggressively, and credited her and her staff for being vigilant in keeping costs down.
Senator Raggio asked where the restitution indicated in the performance indicators in this account comes from.
Beverly J. Saucedo, Extradition Coordinator, Office of the Attorney General, responded that the restitution comes mainly from the Division of Parole and Probation (P&P) for fugitives who have been ordered to pay back to the state what it cost to extradite them. It is part of their agreement to be on probation, she noted. She said some restitution also comes from the Department of Prisons. She said there are “a few fugitives who for one reason or another will call once they get out and try to make payments.”
Ms. Saucedo said a great effort will be made to bring in more money. She noted that the Division of Parole and Probation has implemented a new system, and not as much money has been received from them as was previously received. She said P&P is working to streamline the process. She said she intends to have a meeting with the Department of Prisons to determine whether more restitution can be collected from inmates who have been ordered to pay restitution. She pointed out that not much money has come from the prison system.
Ms. Saucedo distributed a Program Statement (Exhibit S) and a Budget Status Report (Exhibit T) to the committee.
AG Council for Prosecuting Attorneys – Budget Page ELECTED-68 (Volume 1)
Budget Account 101-1041
Mr. Higgins said the budget for the Advisory Council for Prosecuting Attorneys provides funds for training programs for prosecutors throughout the state. Mr. Higgins noted that in the last 26 months there have been 12 training session across the state for training rural and urban prosecutors.
E-225 Reward More Efficient Operation – Page ELECTED-69
Mr. Higgins indicated that the Advisory Council has a question regarding enhancement decision unit E-225, which changes the revenue from General Fund to court fees. Senator Raggio noted this represents $92,000 the first year and $108,000 the second year of the biennium, replacing General Fund. Mr. Higgins said that is correct. Senator Raggio asked whether this would replace General Fund money, and Mr. Higgins confirmed that it would.
Senator Raggio asked whether this would be court assessment fees. Mr. Higgins clarified that it refers to justice court fees, of which there is currently an $800,000 surplus reserved. He said the district court fees are more problematic, so the budget should indicate justice court rather than district court fees.
Mr. Higgins pointed out no additional personnel is requested in this budget.
Senator Raggio asked whether the amounts in the budget are reasonable.
Mr. Hataway confirmed that the revenue change in E-225 does not refer to district court fees, but to court assessments. He noted the judicial system receives 51 percent of the court assessments and the executive branch receives 49 percent. He said his office will be submitting a BDR to add the Advisory Council for Prosecuting Attorneys as one of the eligible entities to receive a portion of that 49 percent. Senator Raggio indicated that this refers to Nevada Revised Statute (NRS) 176.059.
Mr. Hataway said that BDR will have to be passed for this decision unit to be implemented. He indicated it will be pointed out to the committee when the bill is introduced for consideration. He said it is felt that the projected court assessment revenue will not only handle what has been traditionally done on the judicial side, but also the executive branch. He explained that all of this revenue now goes to the Peace Officers Standards and Training Committee (P.O.S.T.) and to the Department of Motor Vehicles and Public Safety. He said it is his opinion that there is no better use of fees collected from prosecution efforts than to train prosecutors to do a better job.
Senator Raggio asked why any amount was left in the budget from the General Fund. Mr. Hataway replied he thought it had all been taken out. Senator Raggio pointed out there is about $1,800 General Fund revenue in each year. Mr. Hataway responded that if that is so, the budget needs to be adjusted because the intent is to switch the entire amount to court assessments.
Senator Raggio recalled that the Supreme Court had raised the issue that more and more of the assessments are being diverted from judicial functions. Mr. Hataway explained that the Supreme Court staff was talking about the section in the statute that says they cannot spend or receive more than what is legislatively approved. He said that over the last biennium the state has collected more revenue than was legislatively approved, and that amount reverted to the General Fund.
Senator Raggio noted the Supreme Court representatives had said that the reversion caused it to be less than 51 percent going to the judicial system, and therefore there is the potential for some legal difficulty. Mr. Hataway said he understands what that issue is, “but it is different than the 49 percent that is collected.”
Senator Raggio asked about the registration fees indicated in the budget. Mr. Higgins explained that minimal registration fees are charged participants for the conferences and training seminars.
Senator Raggio asked whether the prosecuting attorneys liked the programs, and Mr. Higgins responded that they do. Mr. Higgins said it is an opportunity the prosecuting attorneys have not had in the past, and many of the conferences are held in rural locations for their convenience.
Ms. Del Papa said the council consists of representatives from the district attorneys, the city attorneys, the sheriffs’, and the chiefs of police. She said it is the hub of communication, cooperation, and coordination among all those entities. She indicated appreciation is especially forthcoming from the rural entities.
Senator Raggio asked who is replacing Michael McCormick as the Executive Director of the council. Ms. Del Papa said there have been two replacements in that position, and the position is currently vacant. She said this office is in the process of being reorganized because of the challenges presented by the turnovers. Senator Raggio asked whether it is an appointed position. Ms. Del Papa said that, pursuant to the statute, this is a council, which involves representatives, and Mr. McCormick’s position is actually a council position. She said she is responsible for the budget, but the Advisory Council for Prosecuting Attorneys is the appointing authority for the executive director.
Ms. Del Papa noted that she does not see the budget for the Private Investigator’s Licensing Board in The Executive Budget. Senator Raggio said that it is not on the list.
Rick Combs, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, said that prior to session there was some discussion between the Fiscal Analysis Division and the Budget Division regarding accounts that would and would not be included in The Executive Budget. He said it was agreed occupational licensing boards would not be included. Although the Private Investigator’s Licensing Board is under the Office of the Attorney General, it technically fell into that category, so it is not included in The Executive Budget.
AG, Victims of Domestic Violence – Budget Page ELECTED-72 (Volume 1)
Budget Account 101-1042
Ms. Del Papa referred to a chart entitled Administrative Dollars From STOP Grants (Exhibit U). She also referred to the Budget Page ELECTED-74. She explained that these grants are indications of the great progress made in Nevada in addressing the challenges of domestic violence. She noted that every 9 seconds someone is battered in this country.
Ms. Del Papa said most of this funding over the last several years has come through what are called STOP Violence Against Women (STOP) grants. That is money that came from the Omnibus Crime Bill. She said it started in 1995 with Nevada receiving $426,000 and went as high as $1,178,000 in 1999. She noted that in fiscal year 2000 the grant dropped to $1,156,000. She pointed out she has been informed the amount Nevada will receive, for the application now pending, is $1,118,000.
Senator Raggio said that page ELECTED-74 of the budget shows $1,700,000 from STOP. Ms. Del Papa replied that figure includes other grants that are lumped together under STOP. Senator Raggio asked whether the amounts listed are appropriate. Ms. Del Papa said she believes the numbers are appropriate; it is just not fully described.
Ms. Del Papa pointed out that there is also the Rural Victimization Enforcement Grant. Senator Raggio noted that is $92,000 a year, and noted the arrest policies grant revenue for $118,000 indicated on the budget page ELECTED-74.
Senator Raggio said his question regarding the STOP grant revenue was prompted because the figure for anticipated revenues in the budget is greater than the STOP grant amounts mentioned by the Attorney General. He noted that if her office does not receive that amount, the outgoing grants, or expenditures, would need to be reduced.
Ms. Del Papa said most of the money received from the STOP grants is in turn granted out in accordance with the percentage restrictions the federal government requires. Senator Raggio asked whether this money goes to such organizations as CAAW (Committee to Aid Abused Women). Ms. Del Papa said that it does.
According to new formulas starting with the 2001 grant, Ms. Del Papa said there will be a larger percentage going to the advocacy groups, and there is now a 5 percent mandatory amount to go to the court system. Ms. Del Papa explained that under the old formula, 25 percent went to law enforcement, 25 percent to prosecution, 25 percent to advocacy groups; and 25 percent was discretionary.
Senator Raggio noted that agencies like CAAW get a percentage of some of the filing fees as well. Ms. Del Papa said that one of the things Jan Evans worked on prior to coming to the Legislature was strongly advocating for funding from filing fees.
Senator Raggio asked Mr. Combs whether he had received information on where these grants have been going. Mr. Combs said that he had in the past. Senator Raggio asked that Ms. Del Papa furnish the committee with an updated list. Ms. Del Papa agreed.
Ms. Del Papa said that in calendar year 1999 there were 9,400 arrests for domestic violence statewide that resulted in 1,700 convictions. She added those convictions resulted in payments to the account for programs related to domestic violence. She said her office is in the process of taking an internal look at all this because they need to get a better handle on how arrests move to convictions and what is happening to those cases between the time of arrest and conviction.
Senator Raggio asked for discussion on the private investigator’s account. Ms. Del Papa said that in the past a salary increase had been requested for the executive director, and this is included in this budget. Senator Raggio suggested that if the Attorney General has anything supplemental to this presentation that she let the committee know. Ms. Del Papa expressed her thanks.
Senator Jacobsen commented that he had reviewed the audit for the Office of the Attorney General and noted a few discrepancies. He said that there were nine recommendations, all of which met with the approval of the Office of the Attorney General. He noted that there were some telephone cards that were not accounted for, and that concerns him.
Senator Raggio announced that there were a number of BDR’s that had been delivered.
BILL DRAFT REQUEST 34-835: Requires state board of education to adopt policy regarding sale of snack foods on public school campuses. (Later introduced as Senate Bill 107.)
Senator Raggio said this bill came from the Legislative Committee on Education. He said it requires the establishment of standards and programs pertaining to the promotion of health, welfare, wellness, physical fitness, and good nutrition at the public school. He said it has a fiscal note.
SENATOR RAWSON MOVED TO INTRODUCE BILL DRAFT REQUEST 34-835.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
BILL DRAFT REQUEST 34-834: Authorizes school districts and charter schools to provide instruction via distance education. (Later introduced as Senate Bill 108.)
Senator Raggio said this BDR also comes from the Legislative Committee on Education with a fiscal note.
SENATOR RAWSON MOVED TO INTRODUCE BILL DRAFT REQUEST 34-834.
SENATOR MATHEWS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
BILL DRAFT REQUEST S-838: Makes appropriations for education. (Later introduced as Senate Bill 109.)
Senator Raggio said this BDR is also from the Legislative Committee on Education. He said it makes appropriations to the Department of Education to improve public relations concerning the standards of content and performance established by the standards council. He said it has an appropriation of $213,000.
SENATOR RAWSON MOVED TO INTRODUCE BILL DRAFT REQUEST S-838.
SENATOR MATHEWS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
There being no further business, Senator Raggio adjourned the meeting as 12:21 p.m.
RESPECTFULLY SUBMITTED:
Bob Williston
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE: