MINUTES OF THE

BUDGET SUBCommittee

of the Legislative commission

January 31, 2001

 

The Budget Subcommittee of the Legislative Commissionwas called to order by Chairman William J. Raggio at 8:41 a.m., in Room 1214 of the Legislative Building.  Exhibit A is the Agenda.  Exhibit B is the Attendance Roster.  All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

 

SENATE 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

 

ASSEMBLY COMMITTEE MEMBERS PRESENT:

 

Mr. Morse Arberry Jr.

Ms. Christina R. Giunchigliani

Mr. Bob Beers

Mrs. Barbara K. Cegavske

Mrs. Vonne S. Chowning

Mrs. Marcia de Braga

Mr. Joseph E. Dini, Jr.

Mr. David E. Goldwater

Mr. Lynn C. Hettrick

Ms. Sheila Leslie

Mr. John W. Marvel

Mr. David R. Parks

Mr. Richard D. Perkins

Ms. Sandra J.Tiffany

 

STAFF MEMBERS PRESENT:

 

Gary Ghiggeri, Senate Fiscal Analyst

Mark W. Stevens, Assembly Fiscal Analyst

Bob Guernsey, Principal Deputy Fiscal Analyst

Steve Abba, Principal Deputy Fiscal Analyst

Mike Chapman, Program Analyst

Larry L. Peri, Senior Program Analyst

Rick Combs, Program Analyst

Melinda Braun, Education Program Analyst

Russell Guindon, Deputy Fiscal Analyst

Bob Atkinson, Program Analyst

ElizaBeth Root, Committee Secretary

 

OTHERS PRESENT:

Dennis K. Neilander, Carson City, Chairman, State Gaming Control Board

Bobby L. Siller, Las Vegas, Board Member, State Gaming Control Board

Scott Scherer, Carson City, Board Member, State Gaming Control Board

Donna L. Varin, Chief, Administration Division, State Gaming Control Board

Stephen A. Shaw, Administrator, Division of Child and Family Services, Department        of Human     Resources

Steven Thaler, Director, China Spring Youth Camp

Christa Peterson, Ph.D., Deputy Administrator, Southern Regional Services,    Division of Child and Family Services, Department of Human Resources

Edwin C. Burgess, Superintendent, Nevada Youth Training Center, Division of Child and Family   Services, Department of Human Resources

Sydney H. Wickliffe, C.P.A., Director, Department of Business and Industry

Douglas Walther, Chief, Office of Business Finance and Planning, Department of Business and Industry

Milly Gonzalez-Johnson, Administrator, Office for Hospital Patients, Consumer Affairs   Division, Department of Business and Industry

Joan Buchanan, Administrator, Real Estate Division, Department of Business and Industry

John R. Orr, Deputy Commissioner, Division of Insurance, Department of Business and Industry

Renee Diamond, Administrator, Manufactured Housing Division, Department of   Business and Industry

Charles L. Horsey III, Administrator, Housing Division, Department of Business and Industry

L. Scott Walshaw, Commissioner, Division of Financial Institutions, Department of      Business and Industry

Patricia Jarman-Manning, Commissioner, Consumer Affairs Division, Department of     Business and Industry

Roger Bremner, Administrator, Division of Industrial Relations, Department of        Business and Industry

Nancyann Leeder, Nevada Attorney for Injured Workers, Department of Business and Industry

Robert G. Anselmo, Administrator, Taxicab Authority, Department of Business and Industry

Paul J. Christensen, Chairman, Transportation Services Authority, Department of Business and Industry

Terry Johnson, Labor Commissioner, Office of Labor Commissioner, Department of      Business and Industry

A. William Maupin, Chief Justice, Supreme Court

Karen Kavanau, Court Administrator and Director of the Administrative Office of   the Courts, Office of Court Administrator, Supreme Court

Judy Holt, Manager, Budget and Finance, Office of Court Administrator, Supreme Court

 

PRESENTATION OF BUDGET OVERVIEW

 

GAMING CONTROL BOARD

Gaming Control Board – Budget Page Gaming 1 (Volume 2)

Budget Account 101-4061

 

Dennis K. Neilander, Carson City, Chairman, State Gaming Control Board:

What you have in front of you today is a packet of information containing general information, partitions, which give a general overview of the agency, and some issues facing the agency. Take a look at some of our budget recommendations and enhancements.  You also asked us to discuss some Indian gaming issues and technology issues. 

 

I would like to turn your attention to the booklet entitled, “Legislative Budget Presentation.” (Exhibit C. Original is on file in the Research Library.)  The mission of the Board is to govern the industry through strict regulation of all persons, locations, practices, associations and related activities; to protect the stability of the industry and ensure the collection of gaming taxes and fees. Our organizational chart has not changed.  I would say that if you look at the Electronic Services Division, when we were last before you we needed assistance in trying to get a higher salary for the chief position. We were having trouble recruiting, but made a nationwide recruiting effort and were unable to find somebody who had both the engineering background and the computer background to fill both those functions.  We have allowed the lab to be a stand-alone entity, reporting to the Board.

 

I would point out that under the Tax and License Division we did make a change in our audit policy where we combined the Group II and Group III licensees so that our Audit Division is doing full scope audits on about 97 percent on total gross revenue. The other 3 percent is under a tax review, a lesser review, but we felt that was necessary to try to shorten our audit cycle on the 97 percent of the revenue as opposed to that 3 percent. 

 

For the record, revenue over $3 million is defined for Group I licensees. Those licensees whose revenue is less than $3 million on an annualized basis are not subject to a tax review.  We would go over their internal controls. It is not much different than a full scope audit, but we do not issue an audit opinion on that small percentage of revenue.  Our goal has been to get our audit cycle down to 2.5 years for every major audit.  We were at 3 years, and by taking this step, we were able to cut it down to 2.8 years.

 

Senator Neal:

Could you explain the function of the Executive Secretary?

 

Mr. Neilander:

The Executive Secretary position performs for both the Nevada Gaming Commission (NGC) and the State Gaming Control Board (GCB).  The Gaming Policy Committee is a committee that only meets at the call of the Governor. It is an advisory committee to the Legislature, the Governor, and the GCB and NGC.  I do not believe it has met for some 10 years.  The NGC does have final say on all licensing and disciplinary matters.  So in that sense it is an appellate body, but it also serves as a judge when we are prosecuting a tax case. 

 

The next page in Exhibit C is our “Information Sheet.” I have provided that for your information. I am not going to spend any time on this, but to say we continue to have 432.5 positions.  The majority of those are unclassified positions.  We also have some specific information about the collection of taxes for fiscal year (FY) 2000.  We have collected $707 million in taxes, and the majority goes into the General Fund. 

 

Chairman Raggio:

What is the last month of data we have on gaming revenue?

 

Mr. Neilander:

We would have just released our numbers for November 2000 in January 2001.  We will be releasing the December 2000 data the first week of February 2001. 

 

 

Chairman Raggio:

The percentage was lower than projected.  If they stay low, we are going to be below what The State of Nevada Economic Forum (Economic Forum) has projected for this fiscal year.  What is your thought on this?

 

Mr. Neilander:

Mr. Chairman, one of the factors that must be considered is that those numbers are comparisons on a monthly basis to the same month in the prior year.  The prior year in November we had growth in the range of 21 percent. So we are comparing it against a month that was extremely strong a year ago.  This coming month we are comparing it to a December having a 9 percent growth, so that growth rate was not quite as high.  We will have to keep watching that, but the last 2 months of numbers have been in comparison to some very strong months from the year before.  I am not surprised we came out a little flat. 

 

Chairman Raggio:

The Economic Forum projected 5.9 percent growth for FY 2001.  According to the information we have, the percentage fee collections need to increase an average 11 percent during the remaining 6 months if we are going to reach growth projections.  That is crucial to any decision we make in trying to get a balanced budget between now and the time session ends.  We would appreciate your thinking on this as to whether or not we can realize that kind of increase in the next 6 months. 

 

Mr. Neilander:

Mr. Chairman, based upon the last 6 months’ numbers, it is difficult to say what will happen.  I am fairly optimistic that we will still be close to what we projected.  I think it will take another couple months of data before we can see if there is a developing trend, since it is tough to look at these figures on a month-to-month basis because they swing so much.  But, as you indicated, the way it sits right now it is going to require about 11 percent growth rate.  In talking with people in the industry, it looks as if January 2001 numbers will be fairly strong. 

 

One of the things that happened in November 1999 is we had the Hollyfield-Lewis fight.  Those boxing matches tend to drive the figures higher.  We did not have any similar events in November 2000, so that is one of the factors that contributed to the higher figures in 1999. We did have some new properties come on line previous to November 1999.  There are a lot of variations that make it tough to compare the figures on a month-to-month basis. 

 

I would say that on a going-forward basis for December 2000, we do not have all our numbers compiled yet, but I would tell you that it looks as if the gaming win is going to be up about 4 percent compared to the previous year.  I have not looked at collections because the figures are not in yet.  It looks, at least, as though those figures are positive numbers.  On an on-going basis, it is too early to say that is a trend which will require the Economic Forum to adjust its numbers.

 

There are no new, mega-resort properties opening, but there are a couple of items worthy of note: the Venetian Resort, Hotel & Casino is going to add 1000 rooms, and a site is breaking ground across from the Rio Hotel & Casino in Las Vegas. 

 

The proliferation of gaming worldwide has accelerated in the last decade.  From a regulatory perspective, that has required us to conduct our investigations in a much broader geographic range.  We have a number of multinational public companies involved.  The complexity of the investigations has increased tremendously in the last 10 years, the way these corporations are organized and the manner in which the securities are issued. The way they finance projects is entirely different than it was a decade ago.  This has caused us to change the methodology by which we go about our business. 

 

The heart of our budget is our enhancements.  Exhibit C, tab 3, page 1, is a summary of our budget request (Budget Account 101-4061).  What you can see is that our general appropriation line is our main budget.  Maintenance decision unit M-301 is the classified Cost of Living Adjustment (COLA) the Governor is recommending.  The next category is our contribution to the personnel study.  The next category, M-305 is the unclassified COLA and that is the Governor’s recommended pay increase. The next column of $16,320 is what we are asking for to complete rent money to expand on the second floor of the Sawyer Building in Las Vegas.  We have the entire second floor of that building except a 1,700 square foot portion and we are seeking to occupy this portion.  The next category is computer equipment, being computer software and servers.

 

E-806 Unclassified Pay Changes – Page Gaming-5

 

The big item we are asking for E-806 is a 9 percent pay-raise for employees at a cost of  $2,122,600.  We have increased the investigative fees to pay for that increase, which we are allowed to do administratively.  We had been in discussion with the Governor for over a year about how to solve our salary problem and together we agreed this was an appropriate way to do it, which would not impact the General Fund.

 

Exhibit C, tab 4, on page 16 outlines a survey we did of investigative fees charged in other jurisdictions.  The green line represents the investigative fees at $45 per hour in Nevada as of December 2000.  The dark blue line is the proposed investigative fee now implemented, which is $70 per hour effective January 1, 2001, and this still places us behind two other jurisdictions.  We think that is appropriate because the benefits derived from licensure in Nevada are instant credibility on a worldwide basis.

 

Chairman Raggio:

That represents a 56 percent increase in your fee for nonrestricted applicants.  For a long time applicants have bemoaned they are being assessed more than the actual cost of the investigation. That has been a lament that we have heard for a long time.  How do you justify this rate?  Is it consistent with the cost of the investigation or is it an assessment because you need to raise fees for this purpose?

 

Mr. Neilander:

Mr. Chairman, I believe it is consistent with the actual cost of the investigation.  It is an hourly fee and we do bill for travel time, which is expensive when we have corporations where we are investigating them all over the world.  We do expect the raised investigative fees to cover the cost of the 9 percent salary increase requested by the $2,122,600.

 

 

 

 

 

E-900 Transfer from Gaming Admin-101 – Page Gaming-5

 

Mr. Neilander:

Category E-900 on that same page is the transfer to a new budget account to create a separate account under the heading of the NGC.  There is also an additional enhancement to go into that account to pay for a research person and a secretary that would be dedicated to the work of the NGC. 

 

E-175 Increase Non-Gaming Business – Page Gaming-7

 

Mr. Neilander:

Tab 3, on page 6 of Exhibit C reflects two requests, E-175 which is the new enhancement to pay for a secretary and a researcher for the NGC.  If you look at revenue source code 02, you will see the out-of-state travel.  Revenue source code 03 is the in-state travel for the NGC commissioners.  This is at the request of the NGC and the statute requires administering the budget and providing the commission with what it needs.  This is a generic budget and the numbers in that budget for a senior research analyst and secretary are subject to change because the commission has not had a chance to look at these figures in any detail.  The commission believes it needs staff persons that are dedicated to the policy side of their work, as opposed to a regulatory type of staff person.  There are situations were we are in an adverse position with the commission.  They feel it would be helpful for them to have someone to do some of their research when we are in that adversarial position.  Additionally, there is a myriad of issues including Internet gaming, technology as it relates to gaming, and emerging technology that this person would be researching. 

 

With respect to the salary augmentation, tab 4, on page 11 of Exhibit C shows we are 11 percent behind comparable positions in the classified service.  The proceeding tables show the Audit Division salaries compared with city and county auditors, and investigator and law enforcement salaries with city and county investigators and law enforcement officers.  We are considerably lagging in all these diagrams.  The last table, tab 4, on page 15, reflects our turnover rate.  In 1996 our turnover rate went down 3 percent as a result of a credential pay program the Legislature authorized.  Consistently since then, the turnover rate has escalated until now.  We have reached a point that in FY 2000, we are about 12 percent.  The salary increase discussed in this budget should help us with our turnover rate and, more importantly, they are going to help us be competitive with the other jurisdictions.

 

Chairman Raggio:

Of the turnover rate, have you done the tracking to determine where these people are going, e.g., the public sector, the industry, and are there any restrictions on individuals leaving the agency and going into the industry?

 

Mr. Neilander:

Mr. Chairman, we do have a cooling-off period of one year that applies to certain persons hired in the private sector after a certain date.  People hired before that date are not subject to the cooling off period.  We still do lose people to the private sector.  What is happening is we are losing a lot of people to other state agencies and to local governments.  We do have some figures we can present to you on that.  Having a cooling off period for agents leaving the board to go into the public sector may help, but it is something I have not given a lot of thought to. 

 

Bobby L. Siller, Las Vegas, Board Member, State Gaming Control Board:

Mr. Chairman, I believe you have touched on many of the points I was going to bring up about the turnover.  It goes without saying the NGC is the elite agency for gaming regulation throughout the world.  It is a reputation well deserved and one that gives great benefit to the licensees that are approved by this state.  It is a cherished asset to them.  The professional people who work for the board make that possible.  This is the asset of the GCB, and over the years we have experienced a high turnover.  We have tracked the turnover in exit interviews as to why people are leaving. 

 

I would like to sum up a few examples from two divisions, although what I’m about to tell you is something every division in the board is experiencing   In the Audit Division over the last two years we have lost quite a few people, mostly certified public accountants, and within the last two years we have lost two of these people.  One to the State Controller’s office, six to the gaming industry, two to Arthur Anderson and one to Clark County.  In each one of these cases salary disparity was clearly identified as the main issue.

 

In the Enforcement Division, we lose our enforcement agents to local law enforcement and the gaming industry, which is extremely costly.  In the Enforcement Division we hire former police officers that have a great deal of experience.  In one particular case, a former officer from a Utah sheriff’s office after 20 years joined the Board.  He has exceptional experience in intelligence gathering and computers.  We were putting together an intelligence unit within the GCB to keep track of organized crime and others that are deserving.  This individual had all the talent and skills to perform this job.  He left us for the private sector a few months ago and in his exit interview, he said he enjoyed being with the board, but the salary was just not compatible and he was offered too much.  What he was offered was the going rate for his talents. 

 

We are in the process of losing a young man now to the U. S. Air Force who we sent through the academy.  He will be working with the United States Air Force at a grade GS-12 as a civilian investigator.  In the enforcement division it takes us 38 weeks to train people, put them through Police Officers Standards and Training (P.O.S.T.) and train them to be a gaming agent before we can give them the first case.  A loss like that is really costly and affects our productivity. 

 

I have only given you a few examples for brevity sake, but that is something we are experiencing throughout all our divisions.  In my opinion, the Governor’s recommendation to boost salary increases for agents of the GCB will alleviate this high turnover.  We conducted a study and found that parity to salaries was about 24 percent.  The proposal of the rate increase is about a 9.1 percent increase.  With the Governor’s cost of living and additional increase, it would bring us closer to parity.  My pulse on the personnel and morale is this will have a substantial impact on their attitude, morale and willingness to stay with the board.

 

Chairman Raggio:

I believe we are aware of the other budget enhancements.  The funding for the 1700 square feet of office expansion in Las Vegas, and the $10,000 for the file server.  What about Exhibit C, tab 5 dealing with the NGC statewide network?

 

 

 

 

E-720 New Equipment – Page Gaming-4

 

Donna L. Varin, Chief, Administration Division, State Gaming Control Board:

Mr. Chairman, one of the questions the State Legislature had asked us to talk about was the personnel computing network.  Last year we had proposed that the board would begin converting from its mainframe computer and add to it a personal computer (PC) network.  We were able to move forward on that.  We acquired the hardware, the software, and all the communication equipment necessary to begin this migration from the terminal face mainframe system to the PC network.  It allows for the infrastructure of 5 offices and higher speed communication devices between Las Vegas, Reno, and Carson City. 

 

After we installed the backbone of this system, we were also able to purchase 90 personal computers for the network.  It was the first time personal computers at the board had been networked.  Before that time, they had all been stand-alone.  Our first priority would be on a word processing system, simply because it was the clerical support that was needing to share the information the most.  Our second priority was for those that would be on the state’s integrated financial system.  All of those are now networked and in place.  The third priority was our imaging system, which will convert our paper files in our central file system used by Investigation and Corporate Securities Divisions to a compact disc read-only memory (CD-ROM) based system which will make the information more accessible through the PC network. 

 

We still have about 125 computers needing to be connected to the network.  The priority will be 58 for the Investigations Division.  We believe we have existing funding within our forfeiture funds to pay for those.  The Enforcement Division requests an additional 67 computers that we do not have funding for.  For the future, we are looking for a complete “rollout” of the personal computers for the Enforcement Division.  Then we need to replace the aging inventory of the Audit Division’s laptop, which we acquired 5 years ago.  Then we are going to have to start looking at our mainframe system, particularly with our electronic data interchange system so the industry can communicate with us, as well as our mainframe system that is our data storage system for the board.  All of those have no funding at this point and are a priority as we get funding to begin migrating those on to a network that will be usable and compatible with our personal computing network.

 

Our current Alpha system was built back in the 1980’s.  The operating systems are different between the personal computing network, which is Microsoft Windows based, and the operating system.  So that it is going to be a major undertaking over the next few biennium’s to address that issue.  We have been able to address about 85 percent of the project begun last year, and we have about 15 percent left to complete.

 

We have identified what our priorities are to address these issues, but we do not have the funding to continue unless that is approved by the Legislature.  We have been patient for a long time, and can possibly continue.  We are looking at several million dollars because the Alpha mainframe system is an expensive database system.  Therefore, to convert our mainframe system is down the road. The information we have in our mainframe system is highly proprietary, with lots of personal and financial information about individuals. It is the reason our mainframe system was designed as a stand-alone system, accessible only by GCB agents.

 

 

 

Chairman Raggio:

What do you think will be the effect of Indian Gaming and other factors of that kind during the next biennium?

 

Scott Scherer, Carson City, Board Member, State Gaming Control Board:

The revenue impacts of California Indian gaming are reflected in the handout entitled, “Revenue Impacts of California Indian Gaming” (Exhibit D).  There is no review here of the compacts.  There are 105 federally-recognized tribes, 62 currently have compacts, with about 46 operating casinos with a little over 25,000 slot machines.  The revenues for California Indian gaming in the year 2000 were $1.5 billion and the Tribal Gaming Leaders project $2.2 billion in 2001.  A San Francisco Chronicle article projects that revenues will reach $4.4 billion by 2004.  This is obviously an industry poised to grow very rapidly.

 

The compacts themselves allow for lotteries, card games and slot machines.  They do not appear to allow other table games such as roulette, craps, and games that do not use cards, although theoretically they could come up with a lottery version.  The number of slot machines is limited and it depends on whose interpretation of the compact you look at, as to what those limits are.  The Governor has estimated it at 45,206 machines.  The California legislative analyst estimates it could be as much as 113,000, depending upon the interpretation of the compact.

 

Each tribe is entitled to 350 machines.  Those who decide not to go into gaming make their machines available in a pool to other tribes who want more than 350.  For that, they receive an annual fee paid by those tribes who take more than 350 machines.  The regulatory system is through the Tribal Gaming Commission and there is some state review by the Division of Gambling Control (DGC), an adjunct of the California Attorney General’s Office. 

 

There is a possible loophole for tribal members and those who have been employed for at least 3 years to continue to work, even if they are found unsuitable by the DGC.  That is something Nevada regulatory authorities are concerned about.  According to I. Nelson Rose, a professor at the Whittier College of Law, the tribes are self-regulating, and that is extremely dangerous for the gaming industry as a whole, and for California gaming in particular.

 

There are a number of specific provisions with regard to workplace safety and labor relations, with the major issues being environmental concerns and the authority of local governments.  The tribes are required to make a good faith effort to mitigate concerns and accept local input, but they are not necessarily required to implement that advice.  The issue of financing affects the timing of when Nevada is going to feel the impact of Indian gaming.  The more uncertainty there is, the harder it is to have gaming projects retain financing.  Financing markets have already tightened for gaming projects, which we are now experiencing in Nevada. 

 

We believe the impact on Nevada will begin in FY 2002, and continue into FY 2003.  The markets we see being impacted the most are those near the borders, or those who have a high percentage of their visitors from California, such as Laughlin, downtown Las Vegas, Reno, Washoe County and Lake Tahoe.  We are particularly concerned about Washoe County and Lake Tahoe, in part because of one marketing director from an Indian casino who said: “My next commercial will show a couple driving in the snow and the woman says, “Why are we going to Reno when we could stay at Ortoville at the Gold Country Casino?”  Clearly there is a design by some Indian casinos in California to go after the Reno-Lake Tahoe markets in order to encourage visitors to stay on their side of the mountains.

 

The extent of impact will affect markets that provided approximately 28 percent of state gaming revenue in FY 2000.  We do not expect those to turn down, necessarily, but we do think the growth rates will flatten out significantly.  We have projected growth rates in affected markets will be reduced by 20 percent to 40 percent in FY 2002, and will be basically flat in FY 2003.  These impacts were included in the projections the GCB provided to the Economic Forum.

 

To give you more of the specifics, page 6 of Exhibit D reflects the projected growth rates of Laughlin, downtown Las Vegas, and Lake Tahoe.  The downtown Las Vegas market has been flat for some time.  Laughlin has been competing with Indian gaming in Arizona for a number of years, and we think they have found a way to market their properties more effectively and still weather the storm.  The future is hard to project; however, we believe California will gain additional private racetracks, card clubs, and video lotteries in bars and taverns that will compete with Nevada and Indian gaming in California.  Some of those will require California constitutional amendments, but we believe that is a possibility.  Indian gaming in California currently opposes expansion in some of these venues.  If the economy turns sour and the state is looking for additional revenue, anything could happen.

 

Senator Coffin:

The question I have is budget related and policy related.  I am troubled by the passage of the new policy that is going to allow gambling on Nevada collegiate and amateur sports.  I would like to have a copy of that policy that has been passed by the NGC, and I assume with GCB approval.  I am worried about it because I do not know how you are going to enforce this.  Everybody has known there has been an underground ability to wager on the Wolf Pack and the Rebels, but you had to know where to go, and you had to have money.  You had to be an adult because you would be roaming in areas you would not be welcome unless you were recognized. 

 

Now, if you allow gambling on these local teams, just about any student who looks 21 years of age can place a bet. Knowing full well the health, the dating habits, the grades and the drug use of a roommate or some “dorm mate,” I am troubled that gambling now gets that close to teens.  I realize there was some strategic thinking that this would show the United States Congress that we were not going to be hypocrites, that we could control youth gambling, or gambling on our youth, either way you look at it.  The fact is it is untested, and I would like to know how you are going to cope with this.  No one will ever hear about the people you stop from betting. The first time a bet gets placed, or someone is held, or a game is fixed, we are “done for” in sports betting in Nevada, especially if it involves youths. 

 

Mr. Neilander:

Senator Coffin, I understand those concerns.  Obviously those are things the NGC talked about when they adopted the regulation.  I believe the thinking was that, with Internet gambling and all manner of illegal gambling that is occurring, those issues already exist.  This regulation does not change that.  People are betting on Nevada teams on the Internet all the time.  We cannot control that.  We can control what happens in our legalized sports books.  So I think the thinking was it would be a better policy decision to go ahead and authorize the activity where we could keep an eye on it – at least as it relates to what happens within a licensed gaming establishment.  In that sense we can provide protection for athletes who participate in those games because we can watch the line.  We can monitor events to see if any nefarious activity is occurring.  I think that was the rationale for the NGC’s decision to adopt the regulation. 

 

Senator Neal:

I have a follow-up question regarding whether your sports books will have a facial identity system where the student that Senator Coffin talked about, who might walk in and place a bet, will be readily identified.

 

Mr. Neilander:

Senator Neal, that technology works best when you have an individual sitting in a particular position and actively reads a face.  For the sports wagering counters, it would not be effective to do that.  You can take surveillance photographs and manually check.  The technology you are talking about is more precise and is not workable in a sports betting environment.

 

PRESENTATION OF BUDGET OVERVIEW

 

DIVISION OF CHILD AND FAMILY SERVICES

HR, Children and Family Administration - Budget Page DCFS -1 (Volume 2)

Budget Account 101-3145

 

Stephen A. Shaw, Administrator, Division of Child and Family Services, Department of Human Resources:

Our pamphlet has been distributed entitled, “Division of Child and Family Services, Revenues by Division 2002-2003 Biennium.” (Exhibit E.)  This is the division’s goal of healthy families and building healthy communities.  Page 2 of Exhibit E, is our mission statement, the main points being protection and permanency for children, preservation of families, unification of communities and correctional service for youth.  The last goal was not in our mission statement the last biennium and has been added this session.

 

Page 3 of Exhibit E is our organizational chart.  You will see there we have three regions.  We have two systems that are regionalized: children’s mental health and child welfare.  We have one system, the correctional system, which is a statewide system under a statewide deputy.  We provide three main functions for the state: child welfare services, youth corrections and children’s mental health.

 

On page 5 of Exhibit E you will find several Nevada laws under which we operate.  Those are adoption services, child protection services, children’s mental health services, early child welfare services, and family assessment, preservation and reunification.  By the way, we are one of five states in the United States structured this way, where we have child welfare, mental health and corrections services integrated into one division.  If you add early child welfare services, we are the only organization in the United States so structured. 

 

Continuing on page 6 of Exhibit E, we provide foster care, group care, foster/group care licensing, youth correctional institutions and youth parole.  We would like to work with your staff on our performance indicators on page 7 of Exhibit E.  We have spent quite a bit of time on the indicators trying to boil them down and get them crisp.  The way they appear in your budget does not reflect those programs we want to phase out.  We have federal and state program indicators.  Rather than collect two separate sets of data, we are trying to integrate those and we would like to work with your staff and in the subcommittee hearings to formalize those. 

 

Chairman Raggio:

We do not have any information on those performance indicators.

 

Mr. Shaw:

That is correct, Mr. Chairman.  There are a lot of them we are trying to phase out and we would like to work with your staff in accomplishing that task.  The information is compiled, but we are in the process of changing it.  The federal law requires us to capture certain data and so we are collecting data two different ways.  If they are meaningful we would like to collect them in one.  Our pledge is to do that, and to work with your staff and boil them down to where they make sense, not only to you, but also to the citizens of Nevada.

 

Chairman Raggio:

When do you anticipate submitting that information?  These indicators are rather valuable for us to know, so if you have it compiled, I would be grateful if you would submit that to staff.

 

Mr. Shaw:

We anticipate having that for you during this session.  I will provide the data.  On page 8 of Exhibit E is the biennium budget for the Division of Child and Family Services (DCFS).  You will see that during the 1999-2001 biennium there is $242,000,000. During the coming biennium the Governor’s budget has $293, 691,000.  This is a 21 percent increase.

 

Chairman Raggio:

That in itself, Mr. Shaw, is a reason to submit those indicators to staff.  We are looking at a big budget here.  We like some accountability built into our review of this budget.

 

Mr. Shaw:

Mr. Chairman, the last session, we were complimented on our budget indicators.  I hope we will come out of this session the same way.  We would like to highlight every unit that has positions in it, or any major program change.

 

HR, Youth Community Services- Budget Page DCFS-24 (Volume 2)

Budget Account 101-3229

 

Mr. Shaw:

Budget account 101-3229 is noted on page 9 of Exhibit E.  This is the division’s major placement area, which contains foster care, higher levels of care, acute care, and hospitalization.  In the current biennium roughly 35 percent of this division’s entire budget is budget account 101-3229.  In the coming biennium, this increases to 41 percent. 

 

Our program funding is on page 10 of Exhibit E.  It has not changed that much.  The one thing that jumps out is we have 17 percent for children’s mental health funding.  That is not accurately portrayed, because mental health funding is also including in the 60 percent of budget account 101-3229 that is for child welfare.  The biggest portion of budget account 101-3229 is children’s mental health, acute care, category 13, which is residential treatment centers.  To get an actual look at it you would have to break that apart and you may want to do that for clarity.

 

On page 11 of Exhibit E, this is somewhat misleading in terms of 900 full-time equivalent (FTE) positions during the last biennium.  Technically that is correct, but of the 51 new positions, the majority of them are transfers within the division or within DCFS or the Human Resources Department.  If you count only the new positions, we have a 2 percent increase, which is 21.5 positions. 

 

HR, Children and Family Administration - Budget Page DCFS-1 (Volume 2)

Budget Account 101-3145

 

Mr. Shaw:

The next page, which is page 12 of Exhibit E, starts with our major budgets, budget account 101-3145.  I am also going to indicate when recommendations are a result of the review by the Governor’s Steering Committee to Conduct a Fundamental Review of State Government (fundamental review).  The Governor’s fundamental review took place on a couple levels.  One of them was at the Department of Human Resources (DHR) level, and the other was at the state level.  The first subcategory, decision unit E-250, was a fundamental review issue.  It was to transfer VOCA (Victims of Crime Act) and Family Violence grants to a new unit in the director’s office, Grants Management Unit.  There is a companion transfer later on that transfers the domestic violence program.  We have 3 separate programs within DCFS.  I believe the Welfare Division also funds those, as does the Division of Mental Health and Developmental Services.  The decision was made to consolidate those in the director’s office.  Prior to being in DCFS, these particular budget accounts were in the budget in the Division of Mental Health and Developmental Services.

 

E-275 Working Environment and Wage – DCFS-9

 

Mr. Shaw:

E-275 is on page 12 of Exhibit E, and rehabilitates the existing 16,561 square foot, Belrose Child Welfare Office.  The Belrose Office is by most definitions probably one of the poorer office’s in state government.  We currently pay 61 cents a square foot.  This building houses a major part of our child welfare staff in southern Nevada.  For reasons I will go into in a minute, the possible transfer of child welfare services to the larger counties, we may want to revisit this later in the session, if the Legislature takes action on that.  If they do take action on that, depending on Clark County’s use of that facility, our indication is Clark County would not want to maintain that facility.  During FY 2003 we would like to move staff out of that building, if the child welfare function transfers to the counties.  If they do not, we need a rehabilitation of the Belrose building.  We had originally put that into one-shot funds, but with the potential of our staff transferring, we thought it best to do it all by lease.  We may want to revisit this issue later in the session.

 

HR, UNITY/SACWIS - Budget Page DCFS-13 (Volume 2)

Budget Account 101-3143

 

E225 Reward for More Efficient Operation – Page DCFS-16

E903 Transfer from DOIT – Page DCFS-17

 

Mr. Shaw:

On page 13 of Exhibit E, you will see two fundamental review issues: E225 and E903.  These are part and parcel the same issue.  The Unified Nevada Information Technology for Youth (UNITY) project has been picked as a pilot project to transfer 12 programmers from the Department of Information Technology (DoIT) to the UNITY program within the division.  This is a net savings of $153,000. 

 

HR, Child Care Services - Budget Page DCFS-19 (Volume 2)

Budget Account 101-3149

 

Mr. Shaw:

Budget account 101-3149 on page 14 of Exhibit E is our child care services.  There are 7 new FTE recommended in this budget.  The child care services do the licensing for both group care and foster care.  With the implementation of the Adoption and Safe Families Act (ASFA), and the statewide implementation of Assembly Bill 158 last session, we are required to license relatives. 

 

ASSEMBLY BILL 158 OF THE SEVENTIETH SESSION: Makes various changes in        statutory procedures for protection and placement of children.

 

Mr. Shaw:

Previously our licensing people were not required to license relatives if they were foster parents.  What we did was a safety check, i.e., background and criminal checks.  Now, with ASFA, we have to do full licensure of all relatives.  This 7 FTE is to accomplish this licensure of all relatives.  We currently have about 990 licensed foster homes, both family and group homes.  We project to have an additional 538 over the biennium.  That is about one licensing worker per 100 licensed homes. 

 

HR, Youth Community Services - Budget Page DCFS-24 (Volume 2)

Budget Account 101-3229

 

M-200 – Demographic/Caseload Changes – Page DCFS-27

 

Mr. Shaw:

Continuing on to page 15 of Exhibit E, budget account 101-3229, M-200 is category 09, adoption subsidy caseload growth.  The first fiscal year they went up over 40 percent.  We expect to see that trend continue and that caseload to rise.  M-201 is category 17, caseload growth in Medicaid.  These numbers were taken from the Medicaid caseload projection model.

 

E-225 – Reward More Efficient Operation – Page DCFS-28

 

Mr. Shaw:

The next item is on page 16 of Exhibit E and is E-225 to replace General Funds with Temporary Assistance for Needy Families (TANF) funding.  We believe we will be able to replace one-quarter of a million dollars with TANF.  There are a certain number of relatives out there who cannot meet licensure for various reasons, which means we cannot pay federal dollars to those relatives.  In select cases, if, after a thorough investigation, it is determined, although the relatives cannot meet licensure, that the children are doing well and should be in that home, we can continue to pay and do the safety checks to those families.  In those cases we can substitute TANF dollars and TANF will pay to keep that family together.

 

 

 

 

E- 250 Eliminate Duplicate Effort – Page DCFS-29

 

Mr. Shaw:

In E-250, the money has been placed in the budget by the Governor to expand child welfare services. This would reduce staffing caseloads statewide from 1:34 to 1:28.  In addition to that, there is about $5.8 million in expansion of mental health services.  If the Legislature decides to pass legislation, that I believe will be forthcoming from the legislative study, the money in here is enough for the conversion for Clark County and Washoe County, except for the $5.8 million, which will remain for children’s mental health for community based services.  One of the major issues for the legislative study is a funding formula for the out-years. 

 

As I understand it, Washoe County would be much more comfortable with a funding formula.  I know the state, from our position, believes it to be fundamental to have a funding formula so we know who pays for what in the out-years.  In addition to this money for the conversion, there is also $7.9 million in one-shots that is scheduled for the conversion in the event it happens. 

 

E-350 Service At Level Closest to People – Page DCFS-29

E-351 Service At Level Closest to People – Page DCFS-29

 

Mr. Shaw:

Moving to page 17 of Exhibit E, this is a rate increase in E-350, categories 17 and 18, which is our Medicaid and our non-Medicaid eligibility.  This is an inflation factor and, again, this is worked out in conjunction with Medicaid.  Page 18 of Exhibit E, budget account 101-3229, E-351 is an increase in category 18.  Category 18 pays for non-Medicaid eligible medical, and acute and residential treatment for children in DCFS custody.  Also, it pays for certain foster and adopted children from other states residing in Nevada.  We have seen a rise in category 18 like we have never seen before.  We are trying to analyze that and are starting to see a decrease in it the last 3 months.  For example, kids that have resources, e.g., receive the proceeds of an inheritance or life insurance, which makes them ineligible for Medicaid, we attach that asset to make up for expenses when appropriate.  Also, children over 18 years, if they are not in school, are no longer eligible for Medicaid services.  In 1997, this Legislative body passed a law requiring us to supervise sex offenders beyond the age of 18 until they reached the age of 21. 

 

E-475 Effectiveness of Family Service – Page DCFS-30

 

Mr. Shaw:

Budget account 101-3229, decision unit E-475, and categories 09 and 11, subsidizes individuals adopting special needs children and pays for foster care.  I am particularly pleased with the increase in our foster care rates.  In talking about this increase of 47 percent, we have gone from the bottom third tier in the United States to the top third tier in the United States.  We did a rate study in the biennium with our current foster parents to find out what was happening.  We found out we were losing in excess of 100 percent of our foster parents per year.  The turnover rate was 100 percent per year as we were not competitive with Washoe County.  Our recruitment costs, because of the 100 percent turnover, were tremendous.  Kids were going into higher levels of care because we lacked foster homes for them to go in.  So, you will see in this budget we have reduced category 13 by $1 million, which we believe we can save if we increase these foster care payments.  We expect we will be able to keep siblings together without putting them into higher levels of care, and we can demand a quality that we have not heretofore done.

 

E-476 Effectiveness of Family Service – Page DCFS-30

 

Mr. Shaw:

On page 20 of Exhibit E, budget account 101-3229, decision unit E-476, and category 08, are placement prevention funds and provides funding to pay for immediate needs of children and families, which directly contribute to the retention of the child in the family.  The Legislature authorized this a couple of sessions ago.  What we are able to do is reduce General Fund dollars, which we had planned for placement prevention, and substitute that with TANF dollars.  TANF dollars can be utilized to maintain a family and placement prevention is used in two ways: 1) it is a payment for one month, and no longer that 2-to-3 months, that allows a family to stay together and keeps DCFS from taking them into custody; or 2) it allows us to reunify a family by paying a month’s rent.  We have one case where, instead of taking custody of nine children, we bought a set of bunk beds for a grandparent in Missouri and she was able to care for the children.  In working with the Welfare Division through the director’s office we are able to substitute TANF funds for General Fund dollars, and in fact, double this budget. 

 

Mrs. Chowning:

While we are talking about foster care, could you provide for us an expenditure report of the extracurricular money that we passed for foster care regarding sibling camps, yearbooks, proms, and so forth.

 

Mr. Shaw:

Yes. 

 

Ms. Giunchigliani:

I have a bill draft request (BDR) on foster care to expand it for grandparents.  Is there any money in your budget or is it in Mr. Willden’s budget under the TANF dollars for expanding that?  We narrowed it so that it was only dealing with the grandparents, because I know they wanted to expand it.  We thought we should keep it tight first and get it off the ground.

 

Mr. Shaw:

Ms. Giunchigliani, I do not know if that has been entirely determined.  I have been working with the Welfare Division to see how we could structure that.  I believe before the Legislature adjourns, it will probably have a kinship care program.  There are several ways to structure that and the cost is dependent upon that structuring. 

 

Senator Mathews:

I, also, have a BDR on grandparents with children.  That was my question, have you thought of that and have you looked to include that in your budget?

 

Mr. Shaw:

Senator Mathews, that is not in our budget but I believe something will happen before the end of the Legislature that we will be able to do. 

 

HR, Victims of Domestic Violence - Budget Page DCFS-36 (Volume 2)

Budget Account 101-3181

HR, Children’s Trust Account - Budget Page DCFS-39 (Volume 2)

Budget Account 101-3201

 

 

Mr. Shaw:

Continuing on page 21 of Exhibit E is budget account 101-3181, which is a fundamental review issue.  This would eliminate duplication of effort and will transfer the domestic violence funding.  As I stated earlier, the Victims of Crime Act funding, the Family Violence funding, and we have the third of the triad, the Domestic Violence funding which is funded by a surcharge from marriage license fees.  This would be transferred to the director’s office to the proposed Grants Management Unit, as will the next budget on page 22 of Exhibit E, which is budget account 101-3201, which is a children’s trust account, funded by a surcharge on both birth and death certificates, and a certain amount of federal dollars.  It is a pass-through account, which will be transferred to the director’s office for administration.

 

HR, Youth Alternative Placement - Budget Page DCFS-53 (Volume 2)

Budget Account 101-3147

 

Mr. Shaw:

Page 23 of Exhibit E is budget 101-3147, Youth Alternative Placement.  Decision unit E-402 recommends funding for Aurora Pines.  We do not administer that program, nor do we budget for it.  Mr. Steve Thaler from China Spring is in the audience if you have questions about this.  This is a proposed 24-bed facility for girls.

 

Chairman Raggio:

When is that proposed to open?

 

Mr. Steven Thaler, Director, China Spring Youth Camp:

Mr. Chairman, in answer to your question, originally when we set out on this venture two and one-half years ago, we had planned the facility would open January 1, 2002.  Due to architecture, design, and engineering, we believe we will be open July 1, 2002. 

 

Chairman Raggio:

Was that not a $2.8 million appropriation for construction of the facility?  Is that still adequate?

 

Mr. Thaler:

Yes, Mr. Chairman, I believe so.  We will not know if the appropriation is sufficient until we go out to bid, but that is something we have been working on.  We are making sure that the complex’s design and engineering is completed within the confines of the budget. 

 

Chairman Raggio:

When will the construction begin?

 

Mr. Thaler:

The construction should begin in April, with about a year’s build-out.

 

Chairman Raggio:

Will you need all of this $535,000 funding recommended in FY 2002?

 

 

Mr. Thaler:

We have actually had some amendments to that figure.  I have been working with Steve Shaw and Jim Baumann (Administrative Service Officer IV, Division of Child and Family Services, Department of Human Services) and his office.  I have some new figures for you because of the new opening date.  I will bring those figures for staff’s review.

 

Mr. Shaw:

Moving on to budget account 101-3147 on page 23 of Exhibit E is the recommendation to fund 3 contract placements.  As you will recall, during the current biennium we had a certain amount of money to fund out-of-state placements.  That money goes away during the next biennium because of the opening of Summit View Juvenile Correctional Facility in Las Vegas.  What we have asked for and received is 3 placements for youth when, for whatever reason, we cannot program for a juvenile at Summit View or at our other institutions.  An example of that would be two seriously chronic offenders that belong at Summit View, are in opposing gangs, and one of them is put in danger because of that scenario.  There is a certain amount that we are not going to be able to fund.  I do not believe it will be a great number.  We currently have no kids placed out at Summit View because we have not been able to program for it.  I believe that prudence requires we budget something to program for kids we cannot serve, whether we have to send them to an in-state facility or an out-of-state facility.  Those 3 beds are taken out of budget account 101-3148 (the juvenile correctional facility), which is a 96-bed facility.   It reduces funding for 3 beds down to 93 beds and we are using those funds for the 3 beds.

 

Chairman Raggio:

Do you anticipate there will only be 3 cases of that kind?

 

Mr. Shaw:

Yes.  I do not think there will be a great many.  That is our best guess.  What I would like to do working with your subcommittee – and this just came up yesterday in a pre-budget session I had with my staff – is to ask that we put that back in Summit View, raise it back to 96 beds and give us the flexibility that if we do need to send more than 3 children, we can use a certain amount of that money flexibly.  There would be no General Fund impact.  It would just give us more flexibility in the event that estimate is wrong.  Then, again, I would like to work with the subcommittee of this body to see if we can do that.  I have not discussed that proposition with your staff, but I will make a note to do so. 

 

Mr. Dini:

Steve, is this the category where Rite of Passage students were taken care of, or is that a different category?

 

Mr. Shaw:

That money has been eliminated for the coming biennium. 

 

HR, Southern Nevada Child & Adolescent Services - Budget Page DCFS-83 (Volume 2) Budget Account 101-3646

 

Mr. Shaw:

Continuing on page 25 of Exhibit E is budget account 101-3646, Southern Nevada Child & Adolescent Services.  There are new positions in this budget, 5.51 FTE fiscal staff for fiscal infrastructure so that we can keep up with the billing and the fiscal issues that are a result of Desert Willow Treatment Center (DWTC). 

 

E-475 Effectiveness of Family Service – Page DCFS-88

 

Mr. Shaw:

DWTC is the next decision in budget module E-475.  I know that many on the subcommittee and particularly Senator Coffin have an interest in DWTC and the staffing pattern.  I would like to give you a brief history on Desert Willow and tell you what we are doing about that.  This decision unit adds 9 FTE to DWTC.  We hope to bring that before the Interim Finance Committee (IFC) during the Legislative session. 

 

On September 24, 1998 we began receiving clients at DWTC.  It is a 56-bed facility with 5 distinct programs.  On October 21, 1998, we received provisional accreditation from the Joint Commission on Accreditation of Healthcare Organizations (JCAHO).  We subsequently received full accreditation from JCAHO.  Our scores on the first JCAHO visit were in the low 90’s.  They were higher than most psychiatric facilities get on their continuing accreditation.  So it scored very high on their accreditation scores.  We had a “no-notice” visit in June 2000, at which time we again scored high on our accreditation, but were advised that our staffing pattern was not to the acuity level of the clients that we had at DWTC.  I initially thought this would be a relatively easy fix and we needed to do that quickly.  I indicated to Senator Coffin that we were going to do that as fast as we could.  It became more complicated than that.  The joint accreditation does not tell you how many positions you need.  They just tell you, “You are short on acuity.” 

 

We have 5 separate programs at DWTC with different programming needs and populations.  We have a specialized sex offender program for mild-to-moderate sex offenders. Those are not the same needs as acute psychiatric services for children (8-12 years old).  It was a complicated factor, which we think we have worked out right now.  We have an IFC package prepared that I hope to get for you at IFC.  In one sense, that has been one of the troubling things with the division is getting DWTC the proper staff.  This is a good program.  The JCAHO accreditation team said that it could be a model for the Western United States.  The JCAHO team also said they have never seen an acuity level as acute as we have in that hospital.  So, we are handling cases that private hospitals do not handle.  I hope to do a much better job with that next biennium, both in collections and capturing federal revenue.  This is what the 5.51 FTE in the fiscal infrastructure is related to.  The capacity of DWTC by Friday will be 42 out of a maximum 56-bed capacity.  We hope to bring that up to the 56 beds with the 9 additional FTE.  The sooner that occurs, the better.

 

I apologize to Senator Coffin for indicating I was going to move quicker on this.  I just have not been able to do so.  Also, we have been trying to bring our own money when we come and ask the budget subcommittee for these positions.  I believe we will be able to do that with the help of the director’s office.  I would be glad to answer any questions.

 

Ms. Giunchigliani:

This used to be on the second floor of the Southern Nevada Adult Mental Health Services Inpatient Hospital, where the kids were housed.  Is that correct? Were they JCAHO accredited at that time?

 

Mr. Shaw:

No, Ms. Giunchigliani, they were not, and they were transferred to DWTC.

 

Ms. Giunchigliani:

How did we get around not having some kind of certification or accreditation for those kids at that time?

 

Christa Peterson, Ph.D., Deputy Administrator, Southern Regional Services, Division of Child and Family Services, Department of Human Resources:

In the past, prior to the opening of DWTC, we had 24 in-patient beds for adolescents.  Twelve of those beds were for adolescent sex offenders and 12 of those beds were for adolescents in crisis.  We were temporarily housed in the adult facility and part of that time, we were housed in another building on the West Charleston campus.  The programs were licensed as group foster care homes at that time, and they were funded, in part, through the Medicaid program.

 

Ms. Giunchigliani:

Was there anything wrong with the staffing pattern at that time that had ever been brought to the committee or subcommittee?

 

Dr. Peterson:

Not to my knowledge.  Of course, when those staff and clients transferred to DWTC there were a number of changes that occurred to the program to strengthen it. 

 

Ms. Giunchigliani:

I would like to see what those changes to that program were so we can take a look and make sure we are comparing apples to apples regarding the staffing patterns you are mentioning.  Also, I have a concern about bringing something to IFC while we are in the middle of the budgetary process.  So I am hoping we can deal with it in subcommittee rather than bifurcating the two issues so that we would lose track of where staffing may be or what the needs are.

 

Mr. Shaw:

Again, the issue we are facing is a shortfall of Medicaid revenue.  While we do not have the staff, we have decreased Medicaid revenue.  Every day we do not do that, increases the hole that we are digging, so we are going to bring that up in the subcommittee hearings.

 

Senator Coffin:

I would be curious to know what is happening in the private sector, as well.  DWTC is the last resort, whether we still have Charter, which may be closed, or Montevista?

 

Mr. Shaw:

Senator Coffin, I was notified by the healthcare ombudsman the other day there is another private company interested in purchasing Charter and they expect to open in the near future.  I do not have the exact details, but I will get you that information for you. 

 

You are correct.  We did have two hospitals, Charter and Montevista.  When Charter went out of business all of a sudden, the focus was on DWTC.  The private industry does plan on purchasing Charter and taking the weight off DWTC.  I will get that information to you as soon as I get it.

Senator Coffin:

That puts the crunch on DWTC.  We are faced with a shortage of child psychiatrists and psychologists throughout the community.  Even in the private sector you do not have enough of these professionals.  Then we do not have beds in which to place these kids when parents are desperate and do not know what to do.  They could end up in the juvenile facility and the problem is further complicated, instead of getting any kind of treatment.  Accreditation is important, but sometimes just having a bed in a place that is safe from themselves and the community being safe is better than nothing at all.  Even if they could see a psychiatrist or psychologist every few days, or some mental health technician, that would be helpful.  I do not know the cost per bed at a lower level, but we do not have enough beds.  It obviously takes people, but if you do not have the accreditation, does that mean we just cannot get reimbursement for certain services we provide?

 

Mr. Shaw:

That is correct, Senator Coffin.

 

Senator Coffin:

So, we have to weigh all options, one of which is holding back waiting for accreditation to staff, so that we can get reimbursement.  But, we might be incurring some huge societal costs to our juvenile and police efforts because we have not got the beds to put these kids in.  So, it appears we end up paying for it anyway, with or without federal reimbursement.  I just think we should be bold and move ahead, building as quickly as possible and trying to encourage people to come to this community.  How did it develop, with such a potentially lucrative practice, we would have such a shortage of advanced psychiatric help in this town?  You cannot get an appointment with a child psychiatrist because they are not taking new clients. 

 

Dr. Peterson:

My understanding is that child psychiatrists are in great demand across the country.  It is a very competitive market, and we just have not kept up as well as many other communities have.  Our tremendous growth has made a challenge.  Certainly we are working very hard with the private sector to make sure we can safely and adequately treat these children.  One of the things we do is work very closely with the general hospital emergency rooms.  We are part of a monthly problem-solving group that looks at how these children, who come to the attention of general and psychiatric hospitals, can best be treated.

 

The other thing we are doing is exploring supports we can provide to children and adolescents, other than residential beds, that will keep them safe and treat them effectively, such as intensive community based services.  So, we are looking at every aspect we can.  It is my understanding Charter will be acquired by a private company, which is specifically interested in developing the facility solely for children’s residential needs.  We have been talking with them about the specific types of needs we have so that our programs can be complementary with the ones they develop.

 

Ms. Leslie:

Steve, I have a couple of general questions.  For the UNITY system, I am unclear about how much of that is going to transfer to the counties and if the positions are going to transfer.  Are you going to explain that at some future time or can you give me a broad overview now.

 

Mr. Shaw:

Ms. Leslie, I wish I knew.  There is $3 million of the $7.9 million noted as one shot funding in the budget.  The $3 million would adapt the UNITY system.  If possible, I would rather give you an update at subcommittee.  I am not sure currently where they are going.

 

Ms. Leslie:

Steve, that is fine.  Tell me why is Medicaid in your budget and not in the Medicaid budget?

 

Mr. Shaw:

Ms. Leslie, by having it in my budget, we control about 38 percent of it.  This budget is for higher-level placements, with the balance going for general medical.  Having it in my budget allows me to be continually cognizant of how much of that higher-level placement I am spending.  I cannot over-emphasize that every administrative team is on top of that budget on a monthly basis.  We are pushing the kids down to the lowest level of appropriate care.  If you recall, at the beginning of the newly-created DCFS there was an overrun in that category.  There was no one paying attention to that category.  It is the feeling that if you are responsible for spending the money, you are going to be held responsible for the budget.

 

Ms. Leslie:

I was pleased to see the money in mental health associated with the child welfare system.  I know you will talk more about that, and how the counties will access that money.  Is there money in the budget for the Children’s Behavioral Services (CBS), outpatient unit, adolescent treatment center (ATC), in-patient unit?  Are we still having long waiting lists in Washoe County, in particular?

 

Mr. Shaw:

Ms. Leslie, at subcommittee level we will have the exact figures for you.  We do have the waiting list numbers now, but we will have better data for you then.  The $5.9 million in the budget will be used to reduce the waiting list.  That is CBS and they are handling those now.  If you look in budget account 101-3229, a large part of that is for children’s mental health.  We had a large increase in Medicaid funds and in category 13.  You are correct, Ms. Leslie, the $6 million everyone talks about is to deal with 100 percent of the child welfare population. 

 

Ms. Leslie:

I am concerned about that because I do not want a child to get into child welfare services in order to get mental health care.  It is as if a child has to go to child detention to get mental health care.  People need mental health care and we need to figure out a way to get it to them without pulling them into the system. 

 

My last request is for you to talk about the shortage of social workers and psychiatric nurses.  We have had a lot of testimony in this committee over the last week about other occupations requiring salary enhancements because of employee turnover.  We heard from the Gaming Control Board and their employee turnover caused by salary disparity; and, yet, social workers and psychiatric nurses are in the top four in terms of turnover for the state.  Is that a problem for you insofar as recruitment and training?  Please confirm your budget does not have room for salary enhancements for those professionals.

 

Mr. Shaw:

Ms. Leslie, we have a 25 percent turnover rate in social workers, statewide.  It is particularly critical in the rural areas.  By and large in the rural areas, offices are closed.  We cannot keep social workers there.  We recently went to Internet advertising and, oddly enough, had someone from Tampa, Florida who wanted to go to Tonopah.  They got to Tonopah and kept on going, until that person stopped at Hawthorne.  So we have a worker at Hawthorne that is from Tampa, Florida.  We are doing Internet advertising and appearing at college graduations for recruitment of social workers.  The director has a recruiting position specifically for social workers, working on an aggressive outreach for such professionals. 

 

My other point is, if the child welfare system is transferred to Clark County and Washoe County, they are not going to have that kind of turnover rate.  They are paid too well in those counties, something like 20 to 30 percent more than the state. 

 

Chairman Raggio:

Any other information, Mr. Shaw?  Are there any other speakers?

 

Mr. Shaw:

No, Mr. Chairman, unless you would like to speak to Mr. Burgess.

 

Chairman Raggio:

How many years have you been with the state?

 

Edwin C. Burgess, Superintendent, Nevada Youth Training Center, Division of Child and Family Services, Department of Human Resources:

January 3 was 41 years.  My retirement date is July 14, 2001.  My plans are to try to retire and to relocate in the Reno-Sparks area.

 

Chairman Raggio:

I would like to tell you I have been sitting on this committee since 1972 and I remember when you were a young man coming before us.  You have sat through a lot of these meetings, and I remember some of the personalities you had to deal with on this committee over those years.  You survived somehow.  I want to compliment you on behalf of our committee on all those years of dedicated service, and I know they have been dedicated, because we have had the opportunity to talk with you in these sessions all these years.  You ran a fine facility.  It is a credit to the state, and the system, and your service is very much appreciated.  I would like to know what is going to happen to the Chucker program?

 

I think all of us on this committee who have dealt with you know your integrity, and your capability and I hope you will continue to be available for a lot of information because you have a lot of expertise to impart.  This whole committee joins in extending every good wish for your future.

 

Mr. Burgess:

We intend to keep the (chucker) program going.  I would want to say to you that I have been coming here and appearing officially before the committee since 1973.  I was able to observe from 1965-1973, and it can be a very intimidating experience, particularly for a young person.  What I learned over the years is, if you present your ideas and make your needs known to members of the committee, that I have always had a positive response once you understand what our needs are. 

 

I would want to compliment the staff - Gary Ghiggeri, Mark Stevens, and particularly Larry Peri - in the support they have given me over the years in understanding, or helping me to understand, what our needs are.

 

Chairman Raggio:

Mr. Shaw, why are TANF funds not available for juvenile justice?

 

Mr. Shaw:

When TANF was originally placed in the budget, it was prior to the TANF regulations being issued and going into effect October 2000, I believe.  As of that date, TANF funds can no longer be spent in the realm of juvenile justice.  We have TANF placed in several areas of our budget, but not in that area as it is not a legitimate TANF expenditure.

 

PRESENTATION OF BUDGET OVERVIEW

 

DEPARTMENT OF BUSINESS AND INDUSTRY

B&I Business and Industry Administration - Budget Page B&I-1 (Volume 2)

Budget Account 101-4681

 

Sydney H. Wickliffe, Director, Department of Business and Industry:

Thank you, Mr. Chairman and Members of the Subcommittee.  I am accompanied today by one-half of the administrators of our department, those you indicated you had specific questions of and would like to speak to this afternoon.  I will do a brief résumé of the department and then ask administrators to discuss their agency budgets. 

 

The Department of Business and Industry (B&I) consists of 11 regulatory agencies and 8 other consumer-directed agencies.  The department’s mission is to encourage and promote growth, development, and lawful operation of business and industry for the benefit of citizens and workers of Nevada.  This is accomplished by a well-coordinated and efficient organization that regulates business professions and commercial and industrial enterprises in a proactive, firm and fair manner; that promotes safe working environments and safeguards workers’ rights; that provides consumer services to assure the products, commodities, and services made available to citizens of Nevada are safe, accessible, competitively priced, and marketed through fair, non-deceptive, and lawful practices. 

 

The organization administers, develops, and supports financing and other services for qualified individuals and businesses to startup or expand their business, thus diversifying Nevada’s economy.  The department also implements educational and public awareness programs that inform businesses and consumers of their legal rights, privileges, and obligations. 

 

Before discussing the department’s budget, you asked me about two specific areas you would like to discuss today.  The first are the recommendations from the Governor’s fundamental review.  There are two items incorporated in the Governor’s budget.  The first is that the Office for Hospital Patients is moving from B&I to the Governor’s Office in the Consumers’ Health Assistance Program.  The second is that the Division of Unclaimed Property is not included in the budget for B&I.  That is pursuant to an agreement the Governor entered into with the State Treasurer in October 1999 to move the Division of Unclaimed Property to the Treasurer’s Office.  I assume that will come before you in proposed legislation.

 

The second area you have asked me to discuss today is major issues facing the department.  There are four pieces of proposed legislation that fall into that category, which I would like to mention to you.  The first one is an omnibus bill that our Division of Insurance (DI) has proposed.  This brings us into compliance with the Federal Modernization Act of 1999.  John Orr from the DI, our Deputy Commissioner, is here to address that in more detail.

 

The second would be a proposal by the mortgage brokers’ industry affecting the Division of Financial Institutions (FID) and this is proposing to set up a commission to regulate that industry.  Scott Walshaw, Commissioner, Division of Financial Institutions, will discuss that with you as well. 

 

The third item of interest is the proposed merger of the Transportation Services Authority with the Taxicab Authority.  This is a bill Senator O’Donnell will be introducing, and Paul J. Christensen, Chairman, Transportation Services Authority, and Robert G. Anselmo, Administrator, Taxicab Authority, are here to discuss that with you.

 

The fourth major issue facing our department concerns common interest communities.  Several legislators are proposing changes to the way common interest communities are served by the state of Nevada.  Joan Buchanan, Administrator, Real Estate Division, will discuss that with you as well.

 

In talking about the budget and financing matters, we plan to give you a little more information.  The department’s total budget for all of agencies is about $80 million.  Only about 10 percent to 11 percent of that comes from the General Fund.  The rest comes from the licensees we regulate through fees and assessments, from federal funds, and from money carried forward from prior years, essentially equivalent to using retained earnings.  We have adhered to the Governor’s instructions for flat budgets and so we are asking for minimal enhancement.  The administrators who are present today will address these enhancements as necessary. 

 

I can summarize the enhancements for you primarily as equipment.  This is replacing vehicles and computer equipment, both in accordance with posted and established schedules that have been set.  Also, about 10 to 15 additional personnel for a department of about 600 people, as well as caseload changes in the Taxicab Authority and Division of Insurance, for which the additional personnel are requested. 

 

We are also asking for additional training, primarily supervisory training.  Within the Governor’s one-shot requests, we are seeking your support for a new licensing system for the Real Estate Division, approximately $300,000.  The system they are using is quite antiquated.  I think it is about 18 or 19 years old, definitely in need of replacement.  Also, about $36,000 for new computer and transcription equipment for the Office of the Labor Commissioner and the Consumer Affairs Division is requested.  All these expenditures we are requesting are capital expenditures necessary to properly and efficiently serve our constituents and we appreciate your support of them.

 

Within the Director’s Office, we have set forth requests for enhancements totaling $5,200.  About half that amount of $2,600 is for maintenance and training for specialized equipment, which is used by our visually impaired receptionist.  In-state travel funding that was previously authorized for our Department of Information Technology (DoIT) representative to travel to Las Vegas once a month, and for my attendance at the legislative session is requested. We are also seeking funds for additional computer training for new programs and software to stay current, as well as my attendance, or the Deputy Director’s attendance at various conferences to remain current on technical matters, such as federal requirements for bond issuances and travel within Nevada to promote the bond program.

 

Chairman Raggio:

In the narrative, it indicates the transfer from the bond program has been increased due to the monorail project in Las Vegas.  What is the relationship and impact of that?

 

Douglas Walther, Chief, Office of Business Finance and Planning, Department of Business and Industry:

The monorail bond issuance was unusual in that the authority under which the bonds were issued required the formation of a public interest, nonprofit corporation, which required some additional duties on the part of the State, which are not present in a normal bond issuance.  The Governor appoints and approves the appointment of the board of directors to the Non-Profit Corporation, which is a non-profit public benefit corporation that was formed pursuant to Chapter 82 of the Nevada Revised Statutes (NRS).  Their meetings are publicly held.  We will attend those meetings and will monitor the performance of that company. 

 

The fee for our services was negotiated with the bond borrower to support the function of the state and the additional function of monitoring the company and the project, as well as the extraordinary expense it took to review and make the necessary findings to issue the bond.  It was a very complex project.  The payment is $50,000 a year for the 40-year life of the bond, and because it is a recurring revenue source, it was deemed a logical transfer to help support the director’s office, as it supports the bond program.

 

Ms. Giunchigliani:

Did the two recommendations for the unclaimed property transfer and the office for hospital patients transfer, come out as a result of the fundamental review committee?  We are still waiting for a copy of the fundamental review committee report.  It is hard for us to figure out what was recommended just internally versus what was looked at.  Did they look at any other reorganizing we do not see reflected within the budget?

 

Ms. Wickliffe:

Yes, I believe it did.  I do not recall there were any other recommendations of reorganization not reflected in this budget. 

 

Ms. Giunchigliani:

Since your office will have fewer agencies to manage, why do we not see a commensurate reduction in the number of staff in your office? 

 

Ms. Wickliffe:

The staff of unclaimed property would move with the agency.  It has a staff of 8 people to 12 people.  Also, the staff of Office for Hospital Patients would move, which is a staff of 2 people.  There would be no assessment regarding those agencies to the director’s office.  That has been eliminated, as well.  The assessment would be eliminated.

 

Senator O’Donnell:

You mentioned in your testimony you thought about 11 percent of your budget was paid for out of the General Fund, and the rest is paid for through fees and assessments on the various people you regulate.  Do you find the 11 percent has increased over the last couple of years, or has it decreased or remained the same?  I am concerned about the state government taking on a bigger share of the responsibility of B&I, instead of the licensees.  I want to make sure the licensees are paying their way, and I want to know whether the 11 percent is escalating or is declining.   

 

Ms. Wickliffe:

I am not sure you characterized it correctly, Senator O’Donnell.  All but 10 percent to 11 percent comes from the industries we regulate.  Only 10 to 11 percent comes from the General Fund.  I have not done a study of that, but can certainly do so in order to get some numbers for the past five years to see if there is an historical trend of any kind, and then let you know.  I would be happy to do that for you, Senator.

 

At this point, I would like to turn the presentation over to each respective administrator.  We are going to hear from them in the order in which their budgets appear in The Executive Budget.  The first one is the Commissioner of the Office for Hospital Patients.

 

B&I, Commission For Hospital Patients - Budget Page B&I-8 (Volume 2)

Budget Account 101-3825

 

Milly Gonzalez-Johnson, Administrator, Office for Hospital Patients, CONSUMER AFFAIRS DIVISION, Department of Business and Industry:

Good afternoon, Mr. Chairman and Members of the Committee. 

 

Chairman Raggio:

Any particular comments you would like to make about your budget?  Tell us a little about your department’s activity.

 

Ms. Gonzalez-Johnson:

I have no enhancements at this time.  The Office for Hospital Patients has been in existence for nine years.  The functions of the office are to assist consumers with disputes regarding hospital billing charges.  In addition, the office also ensures that major hospitals in Nevada apply a 30 percent discount to inpatients who have no medical coverage.

 

Chairman Raggio:

You indicate that you had approximately 168 actual cases in FY 2000.  Are you anticipating an increase in cases over the biennium?

 

Ms. Gonzalez-Johnson:

Yes, sir, that is correct.  We also anticipate more cases.  We send out numerous complaint forms on a daily basis, but most of the time we do not get the responses back.  Either consumers do not want to fill them out, or they want us to assist them by telephone.  When this happens, we tell them that in order for us to assist them, they need to fill out a complaint form. 

 

 

 

Ms. Giunchigliani:

Could you comment on the transfer, merger or consolidation of your office to the Governor’s Office.  We will bring this issue up in subcommittee, but I am trying to get a picture of whether it makes sense.  It might make sense, but the consumer advocacy function should not be lost; therefore, we will probe the issue at greater length in the subcommittee.

 

Ms. Gonzalez-Johnson:

I am not really sure.  Thank you.

 

B&I, Real Estate Administration, - Budget Page B&I-13 (Volume 2)

Budget Account 101-3823

 

Joan Buchanan, Administrator, Real Estate Division, Department of Business and Industry:

Good afternoon.  The Real Estate Division’s function, briefly, is to be involved in carrying out statutory duties for real estate transactions of those people that are licensed.  Additionally, we maintain the seller property condition disclosure form; after each session we make revisions to it.  Additionally, we oversee the Common Interest Communities and Ombudsman’s Office, which serves as a liaison between homeowners and home associations. 

 

In the memorandum from Mark Stevens regarding this hearing today, the division was requested to provide an overview of the budget for the Real Estate Division, and speak to how the budget addresses the findings in the November 2000 Legislative Audit.  I would like to provide this information for budget account 101-3823, which is the one you asked me to address. 

 

This particular budget supports our operations for the two offices, Las Vegas being the principle office, and the office in Carson City.  The division is asking for a few items as far as replacing computers and hardware that meet the replacement guidelines of DoIT.  Additionally, to assist in equipping the office in Carson City, we are requesting a laptop computer, which is necessary for our legal administrator.  A laptop is necessary so that the legal administrator does not have to transport files to regulation and commission hearings.  We are also requesting funding for word processing software for the laptop. 

 

On the maintenance level we are asking to increase our staff by one-half position, which would increase a part-time, grade 21, Administrative Aid to full time.  This is a very important change because the appraisal subcommittee has established guidelines we get cases through within one year of receipt.  As a result, the appraisal officer is very busy in accomplishing that task, and needs additional support. 

 

As far as the Legislative audit, the auditors made 7 recommendations, all of which relate to the appropriate tracking and follow-up of collections, disciplinary sanctions, as well as developing procedures to write up collectible accounts.  We did not have the statutory authority to go after debt collection on sanctions, i.e., fines and costs of hearings.  The division has addressed the recommendations by internal reorganization of duties.  We have upgraded a position from grade 25 to grade 27, which takes an hour off the count.  With the changes we have made, we can complete accounts receivable reports and make sure deposits are prepared in a timely manner.

 

Chairman Raggio:

I am not sure I am following you.  I know there were 7 recommendations.  Have you accepted all those recommendations?  What is the status on implementing recommendations?

 

Ms. Buchanan:

Yes, mainly they deal with the disciplinary sanctions for which we always maintain a management report.  Yes, we have accepted all those recommendations.  Our final report is due February 14, 2001. 

 

Chairman Raggio:

You will have those recommendations in place by February 14?  Is the office of the ombudsman for the homeowners and associations within your division?

 

B&I, Common Interest Communities - Budget Page B&I-19 (Volume 2)

Budget Account 101-3820

 

Ms. Buchanan:

Yes.  The ombudsman is located in budget account 101-3820.  During the 1999 Legislative Session, the Legislature provided funding for 1 additional position, which was an increase from the one original position.  However, because there were new duties required of homeowner associations registering with the ombudsman’s office, the duties of unit fees were transferred from the Secretary of State to the ombudsman’s office and the ombudsman’s office could now request the Real Estate Commission to order a subpoena of records of homeowners’ associations they could not obtain.  The director went before the IFC and requested 2 additional positions, which were approved and are now in place; we now have 4 positions in place. 

 

Chairman Raggio:

I am not sure I understood the answer.  What is the status today of the Ombudsman’s Office?  Is there even a person in that position at the present time?

 

Ms. Buchanan:

The status today is that there is a lot of conversation in the Las Vegas area indicating that the community feels the ombudsman’s office should have enforcement powers against a homeowners’ association board of directors when they do not follow the statutes and their governing documents.  This issue will be up for discussion during this legislative session.  Currently, the ombudsman position is vacant and is being covered by other staff.  The office is functioning, and continues to collect dues, answer the telephone, and carry on the work.

 

Ms. Giunchigliani:

Thank you, Mr. Chairman, and I appreciate your bringing this topic up, as I had to point someone in the direction of the ombudsman.  Not that I am pointing fingers, but I did not find the system very helpful, and I think there is more to be done.  I guess what you are saying, Joan, is there is going to be some kind of a bill introduced by someone regarding enforcement and better communication with the public.  Not just sending me a piece of paper, saying, “Read this, these are your rights.”  Anybody could do that and I do not think it assists the consumer.  So, will there be some changes regarding how people are educated and advocated for?  I would say that as the Administrator for the Real Estate Division, there needs to be some looking at how services will actually be provided because I do not necessarily think it was reflective of consumer advocacy.  Can I just double-check the licenses and fees that were collected were $352,000 in budget account 101-3820?

 

Ms. Buchanan:

We have tracked 6 pieces of legislation that will address NRS Chapter 116.  We have also heard from Senator Schneider and Senator O’Connell who will be considering various forms of revision.  So, we do not know how this will change.

 

During 1999, yes, the licenses and fees that were collected were $352,000 in budget account 101-3820. 

 

Ms. Giunchigliani:

What is the Governor anticipating?  There is a huge increase in fees in the Governor recommended budget of $476,000 in FY 2002 and $523,000 in FY 2003.  Has there been, or will there be, a change or increase in the fees that are going to be collected, or is this increase based on finding more common interest communities that need to be assessed?

 

Ms. Buchanan:

I believe, in part, the difference of what was actually estimated is based on those new positions that did not kick in until later on in the year.

 

Ms. Giunchigliani:

So, we are generating revenue based on the positions, rather than based on other needs?  The agency only requested $352,000; the Governor recommended $476,000, and then $523,000.  Where is that increased revenue coming from?  Did the fees increase, and is there a schedule of how much is charged?

 

Ms. Buchanan:

No, there is a lot of money in the reserve account.  Increased revenue is coming in faster than we anticipated.  The number of units increased.  The fee is $3.00 per unit, which is the official terminology.  What happened is in the 1999 Legislative Session, the Legislature eliminated those homeowners’ associations paying under $500, so that added to it.  As a matter of fact, we just received a check from one of the largest master plans in Las Vegas in November 2000 in the amount of $40,000.  We have 972 homeowners’ associations registered on our database and we have five months to go and we will not have all the data until the end of this fiscal year. 

 

Ms. Giunchigliani:

I would like to ask you to come back with some better performance indicators because these do not reflect what I think is suppose to be accomplished.  If, at some point, the need is not there, then we may need to scale back how much we are charging people if we are not doing proper advocacy.  I think that has to be a part of what we are looking at.  I think the performance indicators do not show a picture of what is supposedly going on.  It would be nice to know how many homeowners’ associations there are and like statistics.  Thank you.

 

Chairman Raggio:

There is an appropriation of $321,000 to replace your current licensing system.  Is that correct?  Is that for replacing the system or does that implement it, as well?

 

Ms. Wickliffe:

Yes, that is part of the Governor’s one-shot appropriation. 

 

Ms. Buchanan:

Yes, it will integrate all the county performance indicators, case management, and discipline.  Even when we register a subdivision, if they have a homeowner’s association, it will move that subdivision over to the ombudsman’s office, so we know there is an association.  So, it is integrated into everything we do.

 

B&I, Insurance Regulation - Budget Page B&I-33 (Volume 2)

Budget Account 101-3813

 

John Orr, Deputy Commissioner, Division of Insurance, Department of Business and Industry:

I am appearing on behalf of Alice A. Molasky-Arman, Commissioner, Division of Insurance, who has asked me to extend her apologies for being unable to attend today. 

 

The Insurance Division is responsible for 11 budget accounts, 8 of which are included in The Executive Budget request before you.  Collectively these 8 budgets detail how the division plans to serve an ever-growing constituency while complying with the Governor to hold the line on costs.  These requests have also been designed to ensure compliance with the Federal Modernization Act of 1999, also known as the Gramm-Leach Bliley act.  These requests address findings in a recent Legislative Counsel Bureau audit, which noted deficiencies in how we conduct and supervise examinations, and to achieve National Association of Insurance Commissioners (NAIC) accreditation. 

 

The Federal Modernization Act of 1999 requires states to adopt uniform and reciprocal processes to license unauthorized insurance businesses.  This entails changes in forms, fees, procedures and statutes, all of which have been wrapped in an omnibus bill draft you will be considering this session.  Enactment of this bill will ensure state statutory compliance with federal law and will enable the division to implement the required procedural changes.  The bill will also permit the commissioner to join in the efforts of the NAIC to prevent further federal intervention into the licensing of insurers. 

 

The Gramm-Leach Bliley act requires changes in the treatment of agents and brokers by November of 2002.  Insurer trade associations have warned the commissioners that, unless the states commence a uniform policy of national treatment on licensing insurers, they will lobby Congress to establish a new federal agency to nationally license insurers.  National licensing would threaten every state’s share of collection of insurance premium taxes and other assessments. 

 

The Division projects that a national plan would reduce the number of agents and brokers licensed in Nevada by 25 percent.  For example, this would reduce the amount of license fees we collect by $1.6 million, and more importantly, could reduce the amount of insurance premium taxes collected by this state by $32.3 million.  Obviously, your support of the division’s bill draft is critical.  Also critical to our ability to comply with the uniformity and reciprocity requirements of the Gramm-Leach Bliley act has been your past support for our conversion to COSMOS system.  Last September’s conversion has aligned our data systems with the NAIC’s for purposes of electronic applications and appointments, interfaces with NAIC data for purposes of national analysis and tracking, and has improved our services by freeing us from the mainframe, which enables local license production and control.  Our budget requests ask for your continued support of the COSMOS agent license and database system through hardware and software upgrades. 

 

With respect to the implementation of three-way worker’s compensation insurance, I am pleased to report the market today is stable and competitive.  Since three-way became effective on July 1, 1999, over 200 carriers have been authorized, with about 50 reporting Nevada premiums.  With the final transition steps scheduled for July 2001, the number of authorized carriers and their market share in Nevada is stable.  The opening of the market, however, has increased the number of companies subject to the Division’s domestic oversight, which is a portion of the workload driving our requests for two new positions.  A management analyst is requested to review financial statements of carriers and a compliance investigator to investigate the credentials of applicants.  Neither of these positions would be limited to worker’s compensation, but this work would be part of their assignments. 

 

Other than the new positions requested, the work created by the implementation of three-way has been absorbed into the division’s base budgets.  In summary, the Governor’s recommended budget for the Division of Insurance enables us to continue to regulate the industry and serve the public at existing levels, while introducing careful expansion of service, where required.  I’d be happy to answer any questions.

 

B&I, Manufactured Housing - Budget Page B&I-75 (Volume 2)

Budget Account 271-3814

 

Renee Diamond, Administrator, Manufactured Housing Division, Department of Business and Industry:

Good afternoon, Mr. Chairman.  Thank you for the opportunity to testify here.  The division is a self-funded, fee-based agency.  The division has four budget accounts with numerous programs within it.  The division has prepared a basic budget which maintains service, but which contains no new programs and reduces its employees by two persons, which I will elaborate on later. 

 

Budget account 271-3814 is the division’s main administrative budget account and provides for the core program of insuring that manufactured and mobile homes, travel trailers, commercial coaches, and manufactured buildings are constructed and installed in a safe manner to protect their owners and users.  This includes licensing certificates of ownership, installation inspections, a Department of Housing and Urban Development (HUD) cooperative agreement, contract compliance, factory housing, plant visits, plans checks, and issuing insignia of compliance for units sold in Nevada, as well as the education of inspectors and services people.  This specialized mix of division services is not duplicated in local jurisdictions.

 

Historically, this budget has enjoyed a healthy reserve fund.  In past legislative sessions when asked about the size of the reserve by the members of the committee, I replied it is difficult to foresee industry trends and the reserve functioned as a “rainy day” fund.  Unfortunately, with national annual sales of new manufactured homes down 28 percent to 30 percent, correspondingly Nevada new manufactured home sales declined about 30 percent to 35 percent.  New manufactured home sales generate the majority of our fees because of their titling, installation, inspection, and insignia. 

 

Of course, the market downturn translates to a reduction of revenue for a fee-for-service, self-funded agency.  While we were preparing the budgets for this biennium, it became apparent a deficit would occur in FY 2003 if drastic, corrective measures were not taken.  A previous 1993 audit of the division had recommended a target reserve level of $300,000.  The division’s projected FY 2003 reserve would clearly fall below the recommended level.  After completing a detailed program and workload analysis, I created an action plan that would recommend the reduction of two positions and an increase in fees.  After consultation with the Director of the Department of Business and Industry and the Governor’s Office, the following corrective measures were taken.  On November 1, 2000, two employees were laid off; one in the Las Vegas office and one in Elko.  The resulting increased workload was absorbed by existing staff, which action resulted in salary savings for fiscal year 2001, of $38,574 and a projected salary savings of $77,149 in each year of the 2001-2003 biennium. 

 

Additionally, with the exception of computer upgrades to accommodate current technology, all enhancement decision units were removed from this budget.  The industry association, the Nevada Manufactured Housing Association, which represents manufactured home dealers who account for approximately 85 percent of all Nevada sales, and lenders and manufactures doing business in Nevada, and some service people were consulted.  They sent a letter (Exhibit F, page 2), agreeing to the fee increase the division was recommending.  Fees have not been raised since 1995 and this increase was a result of the 1993 audit. 

 

The division’s fees are set in regulation, and the draft proposal for the proposed fee change will be completed February 7 and 8, 2001.  The proposed fee changes will result in an increase in revenue of $291,844 in FY 2002 and FY 2003.  The reserve will go from a projected deficit to a positive $180,378 in FY 2002 and a positive $119,699 in FY 2003.  This does not include the effect of increased fees on FY 2001 revenues, which would further increase projected FY 2001-2003 reserve balances.

 

B&I, Mobile Home Lot Rent Subsidy - Budget Page B&I-80 (Volume 2)

Budget Account 630-3842

 

Ms. Diamond:

The Lot Rent Subsidy Program is another budget considered important to the division.  The budget provides for a 25 percent subsidy of monthly rental expense for eligible residents who own their own mobile home, but rent a space in a manufactured home community.  The program is funded by a $12 per lot annual assessment on mobile home park owners.  The program currently has a record number of recipients as a result of the division’s aggressive statewide outreach effort.  The division is not anticipating significant growth in the number of new mobile home parks in the coming biennium.  Based on the fiscal nature of the revenues for this program, if the number of qualified applicants continues to rise, since we are not adding new parks in any great number from year to year, it may become necessary for the division to establish a waiting list to ensure the viability of the program.  Statutory authority for establishing a waiting list exists under NRS 118B.217. 

 

B&I, Mobile Home Parks - Budget Page B&I-84 (Volume 2)

Budget Account 271-3843

 

 

Ms. Diamond:

The Landlord-Tenant section of the division resolves public consumer complaints.  Revenues are generated in this account through fees assessed on mobile home park owners.  We have an employee who handles landlord-tenant issues, both in Carson City and Las Vegas. 

 

B&I, MFG Housing Education/Recovery - Budget Page B&I-88 (Volume 2)

Budget Account 271-3847

 

Ms. Diamond:

Budget account 271-3847 is the education and recovery account.  It contains no new programs and has only a small enhancement for scheduled computer replacement.  The funding for this budget comes from licensing fees, and because there is a downturn in the industry, fewer people are being licensed; there is a smaller amount in this budget account.  The education and recovery account also pays those persons who get court-ordered judgments against our licensees who are no longer in business.  We put three dealers out of business this year and in FY 2001 have paid from the recovery fund more than we have in its history.  Not withstanding the record amount of payouts from the fund in FY 2001, the account is stable. 

 

B&I, Housing Division - Budget Page B&I-92 (Volume 2)

Budget Account 503-3841

 

Charles L. Horsey, III, Administrator, Housing Division, Department of Business and Industry:

Good afternoon, Chairman Raggio and members of the committee.  Chairman Raggio, our budget for the upcoming biennium not only reflects the continued high demand for services and products we expect, but also takes into consideration the possible effects of an economic slowdown in the economy.  I would like to bring to your attention two important facts on the demand side of our equation.  One, we continue to exceed our performance indicators by large measures.  I do not know how long we can continue this track record; but, for example, in the current fiscal year, we have projected making 633 mortgages in our single-family program, and the actual number was 1,026.  We had forecast we would produce or finance 1,100 apartment units throughout the state, and in actuality that number was 1,963.  The significance of those figures is shown on Exhibit G, table 2, entitled, “Nevada Housing Division, Budget Issues: FY 2002 & 2003.”  In calendar year 2000, the Nevada Housing Division, which was created in 1975 to augment the lending activities in the private sector, financed 25.6 percent of all the apartment units built in the state of Nevada. 

 

I would like to add that, of those apartments we financed, over 50 percent in the last two years have been for senior citizens and we continue to shift the emphasis of our lending programs to assist senior citizens and other specialty groups.  I should add a cautionary note, however, that local governments in the state of Nevada, with which we have a very good working relationship, are in control of half the bonding authority, which comes to the state of Nevada.  So, the projects they want financed dictate many times the projects we will be able to finance.  Mayor Goodman in Las Vegas has indicated the revitalization of the downtown area is a very high priority.  Therefore, we expect that Las Vegas will prioritize the rehabilitation of existing complexes as their number one priority, which means we will finance more of those units than normal. 

 

In addition, there is one “fly in the ointment” we may see.  The energy crisis, which is getting front-page headlines, and affecting all of us, could have a great impact.  The bonding authority the state Housing Division has been able to garner over the years could be impacted if one of the utilities, especially in Southern Nevada, came to the director with a request for bonding capacity to produce new production facilities.  I do not know if such plans are on the drawing board, but it certainly is a possibility.

 

One of the major items in our budget was the fact that a few months ago we announced the desire of the division to create a special lending program for teachers in the State of Nevada to entice teachers to relocate to our area.  We are about 75 percent of the way there.  We achieved a major victory recently when we were able to get the federal home loan banking district in San Francisco, District 9, to amend their investment policies to allow for the purchase of our taxable bonds.  They did that in response to our urging and it was a major coup on our part.  In addition, the Federal National Mortgage Association (FNMA), Fannie Mae, has agreed to allow us to use their Down Payment Assistance Program in conjunction with this program, and the division has done two things.  We have not only created the structure for this special program, but we have covered the potential cost of issuance.  The missing link, and we are negotiating with three to four financial institutions at this time, is the interest rate buy down we would hope would make our program all the more attractive. 

 

The other factor, which has impacted us, is the decline in mortgage rates, and Mr. Greenspan has lowered the prime rate again today.  As these mortgage rates decline, some of the incentive for our teachers’ program has not remained as attractive.  We are working on our end to put the final pieces of this puzzle in place.

 

There has been a price to pay in our current budget we are currently working under.  We have approximately $120,000 budgeted for a sophisticated general ledger package.  We have not been able to find a general ledger package that meets our specifications.  Each time we add a new bond issue, this puts more pressure on our accounting department.  We will come before this body, if need be, if we are not able to find a package this fiscal year and ask that money be put into the new budget.  We have also requested in the budget a half-time deputy attorney general position, and we are in the process of supporting the upgrade of our current deputy attorney general to a III status. 

 

E-806 Economic Development  – Page B&I-95

 

Mr. Horsey:

The economic study entitled “Budget Issues: FY 2002 & 2003,” passed out previously (Exhibit G), is shown in E-150, with $43,000.  What we hope to do in this calendar year is shift the emphasis of our financing from general, low-to-moderate income population to more specialized groups.  The chart on page 4 of Exhibit G shows the tremendous increase in the disabled population in the state.  Everyone knows about the senior population increase, as well as those persons with mobility limitations.  This is the first step at articulating or getting more accurate data in those areas and other areas shown in our handout entitled, “NHD Apartment Facts, An Apartment Report of the Reno/Sparks Area.” (Exhibit H.  Original is on file in the Research Library.)  I am ready to answer any questions.

 

 

Mr. Arberry:

I see there was a proposal made to the Governor’s fundamental review about making the agency a non-profit, rather than a state agency.

 

Mr. Horsey:

Chairman Arberry, the fundamental review committee recommended the Housing Division be privatized as are the majority of other housing finance agencies across the country.  We testified in support of that initiative, but we have not seen a bill draft request (BDR) as of this date, and therefore, we are not sure what the final result will be.  Therefore, we are proceeding on the assumption we will continue to operate as we have in the past, being a state agency.  We think our track record shows we have been able to respond to changing market conditions quite well.

 

Senator Neal:

What would be your basis for supporting privatizing of this agency?

 

Mr. Horsey:

Senator Neal, the testimony I offered was that, in spite of the fact we have done an excellent job of serving low and moderate income families throughout the state, we welcome the opportunity to have more flexibility, to be able to respond to changing economic conditions quicker.  So, flexibility is what appealed to us the most.  As you can see, we have been able to achieve some of the more enviable records in the entire country, and so we will continue that record.

 

Senator Neal:

That is what troubles me about your answer.  You want to get rid of an agency that seems to have a great success compared to what has been done with other agencies throughout the country.  It did not make sense to me for you to come to that conclusion.  What would be lost if you should happen to privatize the agency in terms of your operation, in being able to do the job you are now doing?

 

Mr. Horsey:

Senator Neal, the Governor’s fundamental review committee, came to this conclusion at their own prompting.  It was not our initiative.  We just testified in support because it seemed to make sense.  I do not think anything would be lost, Senator Neal.  We have developed an awfully good track record.  When the fundamental review committee asked us our position, we stated the worst that could happen is change in the status quo, which is awfully good.  We are very comfortable proceeding as a state agency. 

 

Senator Neal:

Maybe I should ask the question another way.  If you should happen to privatize the agency, how would the agency exist other than the way it exists now? 

 

Mr. Horsey:

Senator Neal, the biggest change would be there would be a board of directors, as, for example, Wells Fargo has.  It would take the place, in many respects, of the Legislature and of the advisory committee we currently have.  The board of directors for the Housing Division would be selected by the Governor after canvassing and talking with various interest groups throughout the state.  Generally speaking, a board of directors would take the place of the elected body.  Again, we have not seen a BDR, so we are going to proceed on the assumption we will be conducting business as usual.

 

Ms. GiuncHiGliani:

I think Senator Neal raised some of the concerns I had, and we can deal with that in subcommittee.  Could you talk a little about your receiving 5 new positions in 1999, or maybe prepare for the subcommittee a response as to why you chose to raise fees, instead of reducing the staff, because your revenues are down?

 

Mr. Horsey:

We do not charge fees, or receive a General Fund appropriation.  If a developer comes to us, or in our single-family program, on a $10 million apartment project, we build into the bond issue sufficient price to cover our overhead.

 

Ms. GiunchIGLIANI:

You mentioned some projects in the downtown Las Vegas area, which happens to be my assembly district.  What exactly would be the benefits, or what are you looking at, Charles?  Also, if we are working on joint projects and commitments are made mostly for senior citizens, for example, would such projects be expanded into weekly rentals?  For example, with the project being developed by the Tom Hom group of San Diego (Campaige Place), the opposite happened after the funding was received.  I think that is an inappropriate use of those funds.  I would like some assurances there are qualifiers in place and there is a way to enforce where the money goes if the project is changed.

 

Mr. Horsey:

There are 3 basic overriding needs in Nevada.  First we have the senior citizen population.  The other need, especially in downtown Las Vegas, is some sort of living accommodation where people who do not have cars can walk to their place of employment.  Campaige Place, which was written up in several magazines throughout the country, is designed exclusively for single workers from the casino industry that do not have cars and who walk to their place of employment. 

 

We will look at this issue, but the Federal Tax Code does not permit tax-exempt long financings to be used for weekly rentals.  Transient populations are generally weekly rentals and are classified as not a permissible use.  Monthly rental leases are permitted.  We go out and inspect one-third of every apartment project we finance.  We make sure the persons living in those apartment units, indeed, qualify; i.e., they do not make too much money.  That is part of our ongoing monitoring efforts. 

 

Ms. Tiffany:

 Most of my questions have been answered.  Can you tell me if this is similar to the bill I did in 1993 based upon a Utah principle.  It sounds like it is identical.

 

Mr. Horsey:

Assemblywoman Tiffany, I remember your bill in 1993.  Your bill draft made sense in privatizing the Housing Division, but we were basically noncommittal at that point in time.  The more we have looked into it, and as more states have gone that route, it seemed to make sense.  There are many similarities between your past initiative and the fundamental review committee’s recommendation.

 

Senator Neal:

Does your agency operate under the “Full Faith and Credit” of a state?  What caused your agency to be incorporated under state laws in the first place?

 

 

Mr. Horsey:

No, it does not, Senator Neal.  The Nevada Housing Division has never received any General Fund support.  When it was created in 1975, it was advanced some $3,800 to cover some of the printing and start-up costs.  That money was paid back the next year.  Our bonds are rated solely on the strength of the bond issue itself, and the Housing Division, which are rated AAA, while the state’s credit is AA.  Every time we sell bonds, it is made very clear the taxing power of the state is not guaranteed to the bondholders.

 

In 1975, the Legislature recognized there was a shortage of decent, safe and affordable housing throughout the state.  This is the legal definition.  The real definition was that if you look at a chart and divided that chart into 3 parts, the private section for all practical purposes, makes loans to persons at 80 percent of the median income and above.  The Housing Division, for all practical purposes, makes loans to individuals at 50 percent to 60 percent of median income and welfare type programs pick up the low 50 percent of median income.

 

Senator Neal:

Do you have any assurance that is going to change now?

 

Mr. Horsey:

No.  The idea was to get persons into home ownership earlier in their economic cycle then they could on their own without our assistance.

 

Mr. Beers:

You mentioned you had trouble finding a general ledger package.  What is unique about your general ledger requirements?

 

Mr. Horsey:

Certain general ledger packages are used most throughout the country by housing finance agencies (in 39 states).  We thought we might be able to use some of what they have.  However, being a state agency, we have to take into consideration two things.  One is the fact we are a mortgage lender and, secondly, is our need to respond and meet the accounting standards of a state agency.  We would be happy to have any input or recommendation.

 

Mr. Beers:

What about the Integrated Financial System (IFS)?

 

Mr. Horsey:

We would have to look into that, and would be happy to meet with you, Mr. Beers, about further information.

 

B&I, Financial Institutions - Budget Page B&I-107 (Volume 2)

Budget Account 101-3835

B&I, Financial Institutions Investigations - Budget Page B&I-112 (Volume 2)

Budget Account 101-3805

B&I, Financial Institutions Audit - Budget Page B&I-115 (Volume 2)

Budget Account 101-3882

 

L. Scott Walshaw, Commissioner, Division of Financial Institutions, Department of Business and Industry:

Good afternoon.  My agency administers three different budget accounts, two of which are, relatively speaking, minor accounts, not subject to General Fund appropriation.  The mission of the division is to license and supervise a variety of financial institutions and financial intermediaries. 

 

There is only one change in the budget from the last biennium we are proposing, and that is a reclassification of a vacant examiner position in the Carson City office.  By reclassifying this position, we are going to ask for 2 Program Assistant II’s to assist in administering the licensing and other administrative responsibilities that have grown over the years in the office.

 

I was also asked to comment on equipment purchases.  In the first year of the biennium from budget account 101-3805, we are proposing to overhaul our entire electronic data processing (EDP) system in the office.  This is the only significant equipment purchase in our budget request.  The other issue I was asked to address is the Legislative Counsel Bureau’s base budget review.  To my knowledge we have implemented or are in the process of implementing the recommendations we agreed to in that review process. 

 

Finally, the director mentioned legislative initiatives.  The division has no legislative initiatives of its own; however, it is aware of the fact the Mortgage Brokers’ Association has requested a BDR to create a new agency.  That new agency would be comprised of a commission and an administrator to oversee the activities of mortgage brokers.

 

Mr. Goldwater:

Thank you, Scott.  They are working on the same model (the Real Estate Division is) to oversee that business and relieve the Division of Financial Institutions (FID) of cumbersome regulations.  So, if that does happen, your division’s budget will change.  Yes, it will, because your responsibilities will change.  Whether that happens or not, are you on record as saying you have the resources to do the job of regulating the folks out there.  I am not accusing you, but I know you are accused by many.  I know we are barraged by a rainforest full of mail from people who want you to do more than you do.  Can you address your current resources and how they might be shifted if that legislative initiative comes to pass?

 

Mr. Walshaw:

That would depend on how the bill is arranged, and how this new entity would be structured.  It would be difficult for me to comment without knowing, but I am speculating if a new agency is created, I would suppose they would proactively do examinations of licensees.  Therefore, they would need a staff of examiners.  Consequently, they would be looking to hire people with expertise.  Obviously, we would have that kind of expertise within our division.  Now, whether they are looking to transfer some of our staff to this new agency, that information was not contained in the proposal I saw.  So, again, I am speculating, but something like that is what I suppose would happen.

 

Mr. Goldwater:

You are correct, but if that does not happen, are your current resources enough to do the job the statute dictates you to do?

 

Mr. Walshaw:

We believe that to be the case, yes.

 

 

 

Ms. Giunchigliani:

On the revenue requested for computer equipment, why are you taking the funding out of the investigations account as opposed to FID’s budget?

 

Mr. Walshaw:

The purpose of taking it out of this account, as opposed to some other account, originally was established some years back.  This is not the first time we have done this.

 

Ms. Giunchigliani:

Well, maybe it is the first time we have noticed.

 

Mr. Walshaw:

It has been in the budget previously.  To make a long story short, the purpose of taking it out of this account was every time we have to upgrade our equipment, which is fairly frequently, it is usually with the purpose in mind of keeping up with our federal counterparts.  So, for instance, this is actually a five-year-old system by the time we get ready to overhaul it.  My understanding is it is based on discussions with the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Bank.  They basically change their EDP equipment almost at will, generally on a yearly or so basis.  The problem we have is our people are supposedly to work off the same programs and equipment, or similar equipment, to that being used by federal examiners.  So, when, for instance, I have someone working in the field with a FDIC examiner on the completion of a bank exam, they have to have the same capabilities as that counterpart examiner, because, essentially, they are being called upon to use the same programs and templates.

 

Ms. Giunchigliani:

Well, Scott, would the person in the field, for example, necessarily be out in the field doing an investigation or for the purpose of just doing what they are suppose to be doing in their job for the FID?

 

Mr. Walshaw:

Well, that is what I am leading up to.  The purpose behind this is to be sure they have the capability to do investigations and examinations and should remain up-to-speed.  The idea behind taking it out of this account was that  it was a one-time or infrequent expense.

 

Ms. Giunchigliani:

Okay, so do you have the funding in the FID account?

 

Mr. Walshaw:

We would have to ask for essentially that same amount of money out of a one-shot appropriation from a special account, other than from the investigative account.

 

Ms. Giunchigliani:

We will have to take a look at that.  I do not know necessarily that it is directly tied to it, and whether we can account for it properly.  I think this is something we need to deal with.  Whether we have probed that before, I do not recall, because I have not served on the subcommittee in a while.

 

B&I, Consumer Affairs Division – Budget Page B&I-119 (Volume 2)

Budget Account 101-3811

 

Patricia Jarman-Manning, Commissioner, Consumer Affairs Division, Department of Business and Industry:

Good afternoon, Mr. Chairman and members of the committee.  We have two budgets in our account.  Our main budget account is 101-3811, of which we do not have any enhancements requested.  The other budget account is 101-3803, which is a pass-through, restitution account and is not a General Fund account. 

 

Our functions in the Consumer Affairs Division continue to be: to provide assistance to consumers and educate them on how to be better consumers;  to register and bond businesses that require prepayment for goods and services of consumers prior to services.  We currently have $7,600,000 in security instruments held for restitution for aggrieved consumers for business.  We continue to monitor throughout the state all businesses having the potential to cause some type of consumer activity of concern.  Ms. Jarman- Manning distributed Exhibit I entitled, “Consumer Affairs Division, Legislative Budget Hearing.”

 

It is very interesting how the terms change each year we come back.  We are now seeing a resurfacing of telemarketing.  It used to be we were the illegal, telemarketing haven for telemarketing businesses housed in the state of Nevada.  We have pretty much eradicated this activity through very aggressive regulatory and enforcement programs enacted through the Office of the Attorney General, as well as federal agencies.  Now, since we have run them out of Nevada, they are now housed in other states and calling Nevadans.  So, one of the things we will be doing this year will be starting up a program to try to educate consumers about hanging up on the telemarketers who once called from here, and are now calling from out of state. 

 

Internet technology and Internet sales are continuing to rise, and we will be addressing it for many years.  There is still not a foothold on how we can stop the fraudulent Internet activities; this is something we will always be addressing.  Any questions?

 

Ms. Giunchigliani:

Are there any calls or concerns coming in about the cash for cars that are out there these days?  You know, you give us your title; we will give you a loan.  Also, on the automotive complaints, are you still dealing with Mrs. Chowning?  How has that been working at this point?

 

Ms. Jarman-Manning:

Not a whole lot, no.  We get some of those cases every once in a while, but it is not an activity we would consider truly egregious. 

 

I am working with Mrs. Chowning, and it is working excellently.  I am so proud to be a member of that board.  I think it is a model for how to get things done when you have an industry problem.  We have some legislation to do some housecleaning on our previous bills, but it is coming along very well.  Our automotive complaints, although they still continue to be our number one complaint, have been reduced. 

 

Ms. Giunchigliani:

Do you have any comment about the Office for Hospital Patients moving out of Consumer Affairs Division?

 

 

 

Ms. Jarman-Manning:

I have not been privy to being a part of that process, so I have not thought about it, one way or the other.  As long as the consumers continue to be assisted, that is my primary concern.

 

Ms. Giunchigliani:

I think we will have to deal with that rationale in subcommittee. 

 

B&I, Industrial Relations - Budget Page B&I-127 (Volume 2)

Budget Account 210-4680

B&I, Occupational Safety & Health Enforcement - Budget Page B&I-135 (Volume 2)

Budget Account 210-4682

B&I, Safety Consultation and Training - Budget Page B&I-140 (Volume 2)

Budget Account 210-4685

 

Roger Bremner, Administrator, Division of Industrial Relations, Department of Business and Industry:

Good afternoon, Mr. Chairman and members of the committee.  The mission of the Division of Industrial Relations is to promote the health and welfare of workers in the state of Nevada, and also to ensure those workers who are injured on the job are afforded all the worker’s compensation benefits to which they are entitled.

 

E-275 Working Environment and Wage – Page B&I-131

 

Mr. Bremner:

Our budgets are basically unchanged; however, I would like to touch upon the few areas that do require some new consideration.  Decision unit E-275, which appears in all of our operating accounts, requests funding for a certificate and management training program for supervisors and managers.  The purpose of the training is to provide supervisors and managers with increased skills in motivating, leading and providing direction to staff members.  This program we went out to bid for, looked it over, and it would be offered in conjunction with the Community College of Southern Nevada, to our supervisor and managers.  We anticipate spending $6,200 in each year of the biennium. 

 

E-276 Working Environment and Wage – Page B&I-131

 

Mr. Bremner:

Decision unit E-276 requests funding to sent two employees from the Industrial Insurance Regulation Section to the International Association of Industrial Accident Boards and Commissions (IAIABC) Workers’ Compensation College for training in worker’s compensation processes and procedures.  This is like a ‘train the trainer’ program, and these people would be able to come back and impart knowledge to other workers within the Industrial Insurance Regulation Section.  The cost is approximately $3,514 in each year of the biennium. 

 

E-277 Working Environment and Wage – Page B&I-132

E-278 Working Environment and Wage – Page B&I-143

E-710 Replacement Equipment – Page B&I-132

E-710 Replacement Equipment – Page B&I-138

E-710 Replacement Equipment – Page B&I-142

E-720 New Equipment – Page B&I-132

E-720 New Equipment – Page B&I-138

E-720 New Equipment – Page B&I-142

Mr. Bremner:

Items E-277 and E-278 recommend the deletion of two support staff positions, one each from Ergonomic Risk Report Sheet (ERRS) and the Occupational Safety and Health Act (OSHA) budgets, respectively.  Items E-710 and E-720 in all budgets request funding for new and replacement equipment.  The most substantial request is for replacement of the division’s network servers and antiquated computers. 

 

One item I would like to discuss is the multi-media campaign budget item, in the budget for the Safety Consultation and Training Section.  We are recommending a reduction of some $325,000 in this particular line item.  The reason for that is the budget in the past has been one that has gone out to bid, and the money have been offered to an advertising agency.  Most of the money has been spent on advertising on radio, television and newspapers.  To be quite truthful with you, it has been very difficult for us to quantify the impact this money has had, and we would prefer to do a more direct advertising campaign and go directly to the shareholders to promote the services of Safety Consultation and Training Section (SCATS) is able to offer.  We would rather do it that way as opposed to media advertisement because, although $325,000 is a lot of money, it is not enough to really have an impact when you are talking about the cost of television, radio and newspapers and their productions costs.  So we propose to reduce it by $325,000.

 

In echoing the words of Mr. John Orr earlier, the transition from three-way back to two-way has gone remarkably well.  We have had what we consider to be minimal problems in the field.  There are a substantial number of private carriers riding the business.  One problem we anticipated that did not materialize was when the Employers Insurance Company of Nevada (EICoN), a mutual insurance company, was privatized and did a mass cancellation of some small policyholders. 

 

We anticipated the influx and the number of uninsured claims.  I am happy to report no problems materialized.  We would like to take partial credit, because we anticipated it and our enforcement personnel were very diligent.  They got out into the field early, and actually did some sweeps in some towns.  In the smaller towns in rural Nevada, it is amazing how the word can spread from one side of town to the other quicker than a telephone call, spreading information about your insurance policy.  The transition has been good.  We are not quite sure what will happen on July 1, 2001 when an unlimited rating competition goes into force.  But, at this point in time, the transition has been accepted quite well.  I would be happy to answer any questions.

 

Mr. HettRick:

I have a couple of comments.  I think it interesting you would bring up ads.  I did hear an advertisement on the radio on the way in this morning.  I have to say I thought the ad was quite effective and well done, in that you talk about the Safety Consultation and Training Section (SCATS).  It was a pretty effective advertisement, but I tend to agree with you.  Probably direct advertisement would be most cost-effective, and the actual people who care about it would be getting it instead of just the average citizen who might hear it driving down the highway.

 

Second is the issue on the cancellation of small policyholders.  I was one of those whom EICoN cancelled, and it was very interesting what happened.  I wrote them back a letter and said, “Do you not realize you ought to go look at my claim, because I have been with you for about 20 years and never filed a claim.  I do not know how I could cost you any money.”  They sent me back a letter telling me they would keep me.

 

Mr. Goldwater:

Roger, when we got rid of the ability for anyone involved in workers’ compensation to sue for bad faith, we put a lot of ability for your agency to levy fines and benefit penalties in a number of instances.  Have you seen a rise in revenue? 

 

Mr. Bremner:

Yes, we have been finding people, but the problem you mention is one we are still wrestling with.  We had two public hearings on trying to get data to formulate a regulation.  We could not draw a consensus.  We have now put together a committee that is advising us.  It is comprised of employer groups, labor, and trial lawyers, all trying to come up with a regulation we can make work with this particular problem.  We are not there yet.

 

B&I, NV Attorney For Injured Workers – Budget Page B&I-150 (Volume 2)

Budget Account 101-1013

 

Nancyann Leeder, Nevada Attorney for Injured Workers, Department of Business and Industry:

Good afternoon, Mr. Chairman and members of the committee.  The Nevada Attorney for Injured Workers (NAIW) is another of the Nevada workers’ compensation system agencies.  All those agencies are funded through the Workers’ Compensation and Safety Fund, not through any General Fund monies. 

 

NAIW has one budget account, 101-1013, and it has three program elements, all of them mandated by the statutes.  NAIW’s role within the Nevada workers’ compensation system is to ensure due process and equal representation for injured workers.  We are a professional staff, i.e., attorneys, legal secretaries, legal researchers, and a law office manager and assistant.  We are appointed as legal counsel for injured workers, by either the appeals office, or by the administrator of the Division of Industrial Relations.  So, we appear in both agencies, trial level and also on judicial review to District Court and the Supreme Court.

 

The three elements of the NAIW program are: first, representation of the client; second, trying to ensure compliance with Workers’ Compensation statutes and regulations, and, therefore, also the decisions made by Appeals Officers, the District Court and the Supreme Court; and third, advising injured workers of their rights, responsibilities, duties, and liabilities through communication directly through them or with family, medical providers, insurers, and employers. 

 

What we do is, once assigned as counsel, what any counsel does for that counsel’s client.  We interview witnesses, try to find witnesses, talk to the clients, and write letters trying to ascertain the facts our clients tell us are accurate facts.  We also review documents from insurers in employer’s files.  Sometimes we have to obtain those documents.  We do depositions, which are out-of-court testimony, and legal and medical research.  We prepare legal documents, such as motions, oppositions, replies and make sure they are timely filed.  We put together legal briefs, because any fact finder sitting as a judge has the power to ask for briefing, which is what the law on a particular issue may be, and which answers how the facts support the law on our client’s side.  Legal briefs must comply with court rules and are usually a maximum of 30 pages. 

 

So, to do all that, we need a functional, up-to-date computer system, research materials, funds to pay for applicable case documents and expert opinions, as needed in any particular case.  We need an improved case management system.  We have been dealing with this problem for several years now.  We need supplies and equipment to produce necessary legal documents and case materials on time because if things are not filed timely, then a case could be lost or extended.   

 

The budget you see before you will enable us to do all of those necessary duties, which I have just described.  I have just a couple of points in looking at the budget pages.  You will notice on the first page under “base,” it states the agency did not request $1,490 for out-of-state travel, but was recommended by the Governor in each year of the biennium.  The only reason it shows this is because we did not actually have to expend that money in base.  So you will notice this particular entry is in base.  Naturally, we did ask for that.  We asked for it in decision unit M-150, so this is the reason the Governor recommended it.  The reason for out-of-state travel is that at any time, since we have no control over the cases we are appointed to, we might be required to travel to California or Utah, for instance, to depose a doctor who happens to be a treating expert, or just a consulting expert.  Naturally, we would have to do that, and we do not really have much time to try to move money around from some other place, where, of course, it would be needed anyway.

 

E-710 Replacement Equipment – Page B&I-153

E-720 New Equipment – Page B&I-154

 

Ms. Leeder:

We have asked for some enhancements in E-710 and E-720.  The computer equipment is pursuant to the replacement schedule previously authorized a few years ago by DoIT.  The new equipment is not actually “equipment,” but DoIT’s estimate on what would be necessary to improve our case management system.  If there are any questions, I would be pleased to try to answer them.

 

B&I, Taxicab Authority – Budget Page B&I-161 (Volume 2)

Budget Account 245-4130

 

Robert G. Anselmo, Administrator, Taxicab Authority, Department of Business and Industry:

Good afternoon.  The Taxicab Authority is a state agency restricted to Clark County.  Our responsibility is to provide for taxicab customers and to regulate the industry by issuing certificates of public convenience of necessity to taxicab companies.  We also determine the number of taxicabs authorized per certificated company.  We issue suspended or revoked driver’s permits, and determine the safety and mechanical operation and comfort standards for the taxicabs within our jurisdiction.  We also determine the fares to be charged by the taxicabs in Clark County, and conduct criminal investigations in conjunction with other law enforcement agencies.

 

The performance indicators for this last year indicate the taxicab industry is alive, well, and very healthy.  We projected we would do approximately 17,000,500 taxicab rides within the last year.  We actually did 21,870,993 rides in the last year.  So, the industry continues to grow and we anticipate future growth.  The adjustments in our budget include adjustments to upgrade our computer system, which is antiquated.  In conjunction with the local courts in Clark County, we are generating a system of case management, which is on-line rather than by paper documents.  We also want to upgrade our drivers’ files in the same instance.  Because of demographic and caseload changes, we have asked for additional staffing.  Our budget was compiled in cooperation with the Director’s Office and the potential consolidation of our agency and the Transportation Services Authority. 

 

The other new piece of equipment we have asked for is to upgrade our telephone system.  Our current telephone system is quite antiquated.  Are there any questions?

 

B&I, Transportation Services Authority – Budget Page B&I-168 (Volume 2)

Budget Account 226-3922

 

Paul J. Christensen, Chairman, Transportation Services Authority, Department of Business and Industry:

Good afternoon.  We do not have much to talk about in the budget, other than we have a base line budget with no enhancements.  Our people are here to answer any questions you might have.  I think we have done a great job with the newness of the agency.  Our indicators have become more performance oriented.  Luckily, I have some very good people to help me, and help us in this endeavor and that is what makes it work well. 

 

B&I, Labor Commissioner – Budget Page B&I-179 (Volume 2)

Budget Account 101-3900

 

Terry Johnson, Labor Commissioner, Office of Labor Commissioner, Department of Business and Industry:

Good afternoon, Mr. Chairman and members of the committee.  I am here to tell you about what has transpired in the 16 months since I was appointed by Governor Guinn to this position.  The commissioner is responsible for enforcing all the labor and industrial laws of this state, that are not otherwise assigned to any other board, agency or commission. 

 

Chiefly, our duties include enforcing claims for wages, for workers who have not received money due and owing, who have had deductions from their paychecks, or who have other issues which necessitate involvement by the agency to ensure workers are paid accordingly.  We also have enforcement oversight with regards to certain public works statutes of this state, including setting the rates for wages on public works construction projects, as well as insuring other government agencies involved in public works projects abide by their statutory obligations.  We license and regulate the employment agencies of this state, and we are responsible for coordinating the state’s apprenticeship training laws and regulations.  Additionally, we enforce child labor laws of this state, and issue permits and bonding for entertainment producers and promoters. 

 

Within the past 16 months I have been in office, I would say that, while we are not where we want to be, I think things are trending in the right direction.  The number of wage claims coming before the agency has been revised because of the manner in which we deal with those items.  We feel it has helped reduce the standing caseload, as well as reduced the number of aging cases. 

 

With regard to our public works responsibilities, we revised the public works regulations we administer for the first time since they were adopted.  We did that by engaging the interested and affected parties in the communities, including labor, management, contractors’ associations, and the like.  They came to the table with us and helped build a better, stronger and fairer system.  We have taken great strides and are proud of the fact that we stand behind the data we publish.  That data is timely and accurate and it is consistent with the laws enacted by this body. 

 

Finally, on the subject of public works duties, when I came on board we had a backlog of about 2 years for those public works payroll reports.  I am pleased to say we have eliminated the backlog over the course of 16 months.  In the apprenticeship training, we have expanded this program into nontraditional areas, such as manufacturing, childcare and law enforcement.  We have done many things we are pleased with the direction of, such as in child labor, where we have taken an aggressive and active stance in banning certain forms of child labor taking place in this state.  So, in all, we are pleased with the direction of the agency.  We will be presenting a legislative package we feel will help us in a number of ways. First, we will close loopholes currently existing in our labor laws.  Second, we will increase penalties for those who willfully violate the law.  Finally, the legislation will enable the agency to reduce the amount of time it takes to process and conclude investigations. 

 

Also, we will be working hard this session to see what we can do to improve how public works are administered in this state, especially given the fact that Nevada spends more, per capita, on public works than any other state in the country.  We will be presenting a package later in this session streamlining some of those functions and increasing the levels of enforcement to ensure not only that persons are paid correctly, but that contractors compete on a level playing field.

 

E – 806 Major Reclassifications – Page B&I-181

 

Mr. Johnson:

In terms of The Executive Budget and how it will help our goals, there is an enhancement model (E-806) providing for increase in salaries of the unclassified positions.  In particular, increasing the salary of the Deputy Labor Commissioner and the Chief Assistant Labor Commissioner.  Those are two unclassified positions that, as it stands now, have supervisory responsibility and they actually earn less than a good number of the persons they supervise.  Also, in my observation, there has been a good deal of turnover in those positions over the past few years, leaving some challenges for the agency.  I know when I came on board those positions were vacant.  We feel by addressing some of the salary issues, it will help us give the agency stable and consistent management, and will help us accomplish the tasks we have been assigned to do.  That having been said, I would like to make myself available for any questions.

 

Ms. Giunchigliani:

Has a salary study been done for your department?  Could you discuss the 72 percent increase for the Deputy Labor Commissioner position, and 19 percent increase for your position, as well as try to give us some background regarding what the salary for those positions is currently, as well as what similarly situated positions make.

 

Mr. Johnson:

I believe there was a salary study done on an unclassified, department-wide basis.  I am not sure I have the salary study with me.  With regards to the Deputy Labor Commissioner position, the deputy currently earns $36,000 a year.  A number of persons the Deputy Labor Commissioner and Chief Assistant Labor Commissioner earn more than they do.  Obviously, this situation has some potential to breed discontent, as well as morale concerns.  These two positions were created about the same time that the Office of Labor Commissioner was formed.  I have seen mention of these positions in some old statutes in the 1920-1930’s.  In my knowledge of B&I, having worked there for 5 to 6 years now, I can see where those labor positions are not consistent in terms of salary even within the department. 

 

Ms. Giunchigliani:

Ms. Wickliffe, if you could get us a copy of what the old salary schedule was, we can make comparisons.  It is just a large increase and we need to look at the equity.  Are the positions filled now?

 

Mr. Johnson:

The chief assistant position is filled, but the Deputy Labor Commissioner position is vacant.

 

Ms. Giunchigliani:

Ms. Wickliffe, I would like information about why there is a proposal to move inspections from the State Board of Health to the Dairy Commission.  Do you even have the inspectors to do that? Please provide the specific information involved with that budget activity and the rationale.

 

Note:  After the conclusion of B&I’s presentation, Mr. Arberry disclosed he is licensed by the FID; Senator O’Donnell and Mrs. Chowning disclosed they are licensed by the Real Estate Division.  Chairman Raggio instructed the subcommittee this meeting was a presentation of budget overviews with no action by any legislator having been taken.

 

PRESENTATION OF BUDGET OVERVIEW

 

SUPREME COURT

Supreme Court - Budget Page Courts-1 (Volume 1)

Budget Account 101-1494

 

Administrative Office of the Courts – Budget Page Courts-9 (Volume I)

Budget Account 101-1483

 

A. William Maupin, Chief Justice, Supreme Court, provided an overview of his presentation: (Full presentation attached as Exhibit J.)

Chairman Raggio, Chairman Arberry, Members of the Senate Committee on Finance and Members of the Assembly Committee on Ways and Means.  I would first like to thank you for the accommodation of allowing us to present the supreme court budget during this very busy start-up period for you all.  I would also like to express the thanks of my colleagues on the Supreme Court, and my colleagues who sit at all levels of the Nevada judiciary, for the support the legislature has provided over the years to the court system.  Without that support, the Nevada judiciary would not have been able to address the needs of the fastest growing state in the U.S.

 

I will now attempt to provide a general statement of purpose and Ms. Kavanau will go through the various budget accounts.  The legislature has consistently asked the Supreme Court to do two things: first, manage our caseload; and second, implement a uniform system for judicial records to report on the performance of the judiciary.  Over the years, you have given us the resources needed to meet your expectations and I am pleased to report we have, indeed, made optimal use of those resources. 

We have significantly reduced our backlog, continue to aggressively address the remaining cases and, last month, we published the judiciary’s very first annual report containing uniform caseload statistics for every district, justice and municipal court in Nevada. 

 

Along with this, the Supreme Court has established more accountability and performance within the judiciary than ever before.  In this we have: established the strong chief judge requirement in the urban districts; upgraded the Nevada Judicial Council to develop uniform standards for judicial administrative performance, court security and court facilities; formed a committee of judges, law enforcement representatives and family advocates to develop standards, including forms, to be used in domestic violence cases, and ordered all courts to use the new forms; and developed a manual for the trial courts on how to improve collections on all levels.  We have enacted rules to implement the short trial program passed as part of the Nevada Arbitration Act by the 1999 Legislature.  We also continue to study and improve the court annexed arbitration system, enacted effective July 1, 1992, which continues to divert over 50 percent of the litigated damage cases in our largest judicial district.

 

Most importantly, our court wants to manage its caseload in terms of quality and in terms of reducing one of the most serious backlogs in the country.  This backlog developed as a result of a tremendous increase in cases in the early and middle 1990s.  (See Exhibit K entitled, “Nevada Supreme Court Yearly Register.”)  Because Nevada has no intermediate appellate court and has only five justices with a relatively modest support staff of attorneys, the 1997 session allowed us to expand the court to seven justices and provided us with generous increases in our staff. 

 

As I have noted, we have made excellent use of these resources.  At the end of FY 1998, our pending case inventory was 2,354 cases, certainly one of the five largest in the country.  Two years later, at the end of FY 2000, we had 1,890 cases pending; a reduction of 464 cases.  The backlog continues to drop dramatically.  Our inventory at year-end 2000 was 1,720 cases.  (Exhibit L, entitled “Nevada Supreme Court Year-end 2000 Caseload Statistics.”)  Our own internal case management measures have contributed to this as well. 

 

The civil settlement program, which you have also funded, is resolving 50 percent to 60 percent of the civil appeals lodged with the court.  The fast track program for processing criminal appeals has substantially increased the speed with which we are disposing of those cases.  Finally, with the resources provided to us by you, we have made significant headway in the reduction of the backlog of prisoners representing themselves in “proper person” cases.

 

E-301 Maximize Internet & Technology – Page Courts-6

 

Justice Maupin:

I ask particular attention be given to budget account 101-1494, and item E-301.  E-301 seeks a new position to provide in-house services to help the justices, law clerks, staff attorneys and the clerk’s office with software technology.  Our computer system, with its specialized programs, is most complex, requires daily updating, and glitches often occur.  We very much need a person to assist us with software problems, maximum utilization of the existing computer programs, and deal with day-to-day breakdowns.  This will help us with the very important process of generating opinions more quickly, identifying issues that tend to repeat themselves, case in and case out, and thus continue in our efforts to reduce the backlog.

 

Long term, we will continue to advocate for an intermediate appellate court.  Although recognizing we now operate both as an intermediate appeals court and a court of final appeal, and recognizing we can justify an intermediate appeal court system today based on the sheer size of our caseload, we have determined not to press for the second leg of the resolution process that would lead to the intermediate appellate court being placed on the 2002 general election ballot.  Instead, we will ask the Senate and Assembly to start the joint resolution process anew so creation of an intermediate appellate court would not reach the voters until the 2004 general election.  This request is reflective of the fact we continue to reduce the backlog and want to further assess trends in new filings with the court.

 

In closing, I would note that the Nevada Supreme Court will continue with its commitment to reduce the backlog, improve the quality of our decisions, and seek new methods of case-flow management.  We will also continue our efforts to improve the quality of statewide programs, such as judicial education and court technology, made possible by administrative assessments collected by our justice and municipal courts.  

 

Thank you again for your courtesies in arranging this hearing at this time.

 

Chairman Raggio:

With reference to the panel system, can you outline how it has been operating?  Have the panels been changed or are they still as originally appointed?  What is the percentage of cases being heard by panels in the North and South?  What is the status?  Are you still hearing cases in Las Vegas and where?  I am leading up to the new project to come on line in 2002, which I believe is lease of the twelfth floor of the Regional Justice Center.

 

Justice Maupin:

The courts have divided the caseload, comprising about 80 percent, into two pieces routinely handled by panels.  The panels get an evenly-divided caseload.  The terminology of “Southern” versus “Northern” panels only has significance geographically, insofar as whether a case is to be orally argued in the North or in the South.  If a case originates out of Lincoln, Clark, or Nye, and sometimes Esmeralda Counties, then it will be heard in Las Vegas.  Everything else in this state would be heard by the Northern panel in Carson City.  Our first panel selection went six months and we experimented with one year from July 1999 to July 2000.  We determined we should go back to switching the panels every 6 months so we have a good cross section and rotation.  There are about 26 permutations with 7 justices.

 

The Regional Justice Center in Las Vegas is to be completed in the fall of 2002. 

 

Ms. Giunchigliani:

Could you clarify the one-shot in your budget account.  It seems to be for ongoing costs, rather than a one-shot.  In addition, the one-shot includes website development that serves the entire state.  That is not usually what we use a one-shot for.   The Administrative Office of the Courts (AOC) budget account might be a more appropriate location for funding the website.

 

Karen Kavanau, Court Administrator and Director of the Administrative Office of the Courts, Office of Court Administrator, Supreme Court:

There are 5 items put together by the Budget Division into one-shots.  Specifically the one you are asking about is for the Supreme Court website and for computer equipment.  We are asking for a website person and some equipment to enable this person to set up a website for the Supreme Court and the judiciary.  The Budget Division felt this type of equipment satisfied the needs for a one-shot.  Therefore, they took part of our request in this decision unit and moved it to one-shot.

 

We intend to use that website for information about rules.  It will be used for the entire judiciary, as well as for the Administrative Office of the Courts (AOC).  It is about a 50-50 spread.

 

Ms. Giunchigliani:

That leads us into the assessments, which is a concern.  What plans do you have and what is going on with regard to collections of the court assessments?

 

Ms. Kavanau: (speech attached as Exhibit M.)

Good afternoon Mr. Chairmen and members of the committee.  The AOC oversees the Supreme Court’s 12 budget accounts.  Our funding sources are the General Fund, peremptory challenge fees, and court administrative assessments.  If you will refer to Exhibit N entitled “Nevada Supreme Court Presentation to Senate Finance and Assembly Ways and Means, Illustrations.” Exhibit N is a list of our budget accounts and their funding sources.

 

The administrative assessments we receive are generated in the limited-jurisdiction courts, those being the justice of the peace and the municipal courts, through statutorily set charges assessed to defendants found guilty of misdemeanors.  By statute, 51 percent of the administrative assessments received from the limited-jurisdiction courts are supposed to be disbursed to the AOC for specific uses, again established by statute.

 

Over the past several years, the amount of administrative assessments received by the state has steadily increased.  If you refer to page 2 of Exhibit N, you will note in FY 1995 the state received approximately $7.5 million in administrative assessments from the lower courts.  By fiscal year 2000, the amount reached $11.6 million, a 55 percent increase.  Using this information, combined with anticipated population growth, we estimated a 7 percent increase in administrative assessments per year for FY 2001, FY 2002 and FY 2003.  Administrative assessments are a critical factor in the success of the judiciary.  They pay for a number of statewide programs, including judicial education and court automation.

 

BILL DRAFT REQUEST 14-515:  Makes changes concerning distribution of        administrative assessments.  (Later introduced as SB139.)

 

Ms. Kavanau:

The Judicial Council has submitted a bill, currently known as BDR 14-515, concerning administrative assessments.  This bill changes the wording of NRS 176.059, which is the statute governing the disbursement of administrative assessments.  The principle behind the bill is that 51 percent of administrative assessments raised by the limited-jurisdiction courts in Nevada is supposed to be paid to the Supreme Court, through the AOC, for statewide judicial programs.  Right now, when the courts collect more administrative assessments than the Legislature projects, the excess goes to the General Fund, not to the Supreme Court.  If you will refer to Exhibit N, page 3, line A, refers to the amount of administrative assessments the state received, by fiscal year, from the limited jurisdiction courts since FY 1995.  Line B is 51 percent of that amount and represents what the Supreme Court should have received, and line C is the actual percentage of administrative assessments received by the Supreme Court.  (All references are to Exhibit N, page 3)

 

As you can see, in each of the past 6 fiscal years, the court has received less than 51 percent.  When that happens, it arguably renders the excess funds paid to the General Fund a tax assessed by the judiciary.  A judicial tax is unconstitutional.  As the Supreme Court and AOC fulfill their missions, the loss of these administrative assessments will hinder our statewide court programs such as judicial education and court automation.  BDR 14-515 will correct the language of the statute to ensure the Supreme Court receives its full 51 percent.

 

Chairman Raggio:

What did you say was unconstitutional?

 

Ms. Kavanau:

The fact that the administrative assessments collected by the courts, the majority deposited in the General Fund, looks just like a tax rather than an assessment for court improvements.

 

Chairman Raggio:

Has there been a determination that it is unconstitutional?  Why is 51 percent a magic percentage?

 

Justice Maupin:

Senator, there has been no determination.  This is just a concern that has been expressed with regard to these funds if the court does not get 51 percent.  The 51 percent was a determination made many years ago before I was on the scene.  If at least half, or more than half (51 percent) is dedicated to use by the court systems, then its use is an administrative assessment for court administration.  But, if it goes into the General Fund, then arguably the amount creates less than 51 percent and could end being considered a tax.  Of course, the court system is not empowered by the State Constitution to tax citizens even in the process of these assessments.  So, this was a determination made a long time ago.  The concern is the way we project the assessments under the statutes now ends up with our excess collections reverting to the General Fund.  So, there is a concern the excess portion might be considered a tax.  There has been no lawsuit filed, but knowing the existence of watchdog groups around, there is the chance we might have to resolve a lawsuit over this issue.

 

Chairman Raggio:

Let us assume the bill passed, then you are saying that instead of a reversion to the General Fund, the money would stay with the court?

 

Ms. Kavanau:

The way the process works is when the courts collect these administrative assessments they forward them to the State Controller’s Office.  The State Controller then looks at our budget.  If we have come to the point in our budget where we have received the amount the Legislature approved for revenues, then the State Controller forwards the excess money to the General Fund.  We never see the excess portion.  It has been about $2.5 million.  We are expecting almost $900,000 this year alone.

 

If the bill passed, the excess portion would go to the AOC and be distributed to the AOC budget accounts by percentage set by statute to be used exactly as the rest of the administrative assessments are currently used.  The proceeds would be placed in the operating budgets of the AOC, the Supreme Court, Judicial Education, the Uniform System for Judicial Records and the Retired Justice Duty Fund.

 

In addition to our normal funding, we have been reasonably successful in obtaining several federal grants to pay for or supplement the cost of some of our statewide projects.  The federal government has traditionally awarded most of its grants for the justice system to law enforcement agencies, leaving very little for the courts.  However, this is starting to change and we intend to pursue federal funding vigorously.

 

The Supreme Court’s 12 budget accounts represent a total General Fund appropriation of approximately $16 million per year; less than 1 percent of the state’s total annual General Fund expenditure and half the 1998 national average of 1.7 percent.

 

Turning your attention now to the Supreme Court’s goals for the next biennium, after carefully reviewing our internal operations, the Court has determined we are doing what we need to do.  The court believes it should, with minor exception, maintain its current level of operation.  As a result, the court identified 3 modest operational goals for the coming biennium and directed the AOC to prepare these budgets accordingly.  The goals documented on page 4 (Exhibit N) are: first, to continue to dispose of 2000 or more cases a year; second, to continue the implementation of the Uniform System for Judicial Records; and third, to begin to implement a court interpreters certification program.

 

Chief Justice Maupin addressed the court’s dispositional goal in his comments.  I will address the other two.  The court’s second goal concerns the Uniform System for Judicial Records (USJR).  The USJR is mandated by NRS 176.059, NRS 3.025, and NRS 3.01056.  It is defined as the physical system by which the judiciary collects, compiles and reports standardized statistical data about the workload of our courts.  It is a collection of manual and automated case management systems in our courts.  The Annual Report of the Nevada Judiciary is the first tangible proof the USJR has indeed been established.  Each year more courts will be automated and each year the USJR will produce more statistics about the performance of our courts.

 

The Supreme Court’s third operational goal for the next biennium is to initiate the implementation of a legislatively mandated NRS 1.510, court interpreters certification program.  Given the large number of non-English-speaking people coming to Nevada, this program is needed to ensure due process for everyone who uses our court system.  Without a certification program, it is impossible to ensure uniform quality of interpretive services throughout the courts in our state.  When substandard interpretation occurs, cases can be reversed or sent back for retrial, significantly increasing court costs.  Poor interpretation also breeds the potential for expensive judgments against our courts. 

 

When a judge uses a noncertified interpreter, such as a law enforcement officer, secretary or prisoner, it is a lawsuit waiting to happen.  Our intent is not to establish a staff of interpreters, but to ensure the interpreters used by Nevada’s courts are qualified.  We have been working with a group of professional interpreters over the past year to develop guidelines for the program and determine the least expensive way to implement it.

 

In addition to tying our budget package to its 3 operational goals, the court also directed the AOC to adhere to the spirit of the Governor’s instructions; i.e., no new positions, except in response to legislative mandates or workload increases.  In all, the Court is proposing 8 new positions: 4 in direct response to legislative mandates and 4 to respond to workload increases.  Five of the 8 new positions are in the Supreme Court’s operating budget and 3 are in the Planning and Analysis Division of the AOC.

 

I will briefly summarize each of our 12 budget accounts and highlight what’s new in each for you. The Supreme Court’s operating budget 101-1494 is our largest and most complex.  The Supreme Court of Nevada is the state’s court of last resort and hears appeals from the district courts.  This budget account includes the 7 justices and their chambers, the Court Clerk’s office, and central legal staff.

 

M-200 Demographics/Caseload Changes – Page Courts-2

M-202 Demographics Caseload Changes – Page Courts-3

M-205 Demographics/Caseload Changes – Page Courts-4

 

Ms. Kavanau:

Budget account 101-1494 is funded through a combination of General Fund appropriations (54 percent) and administrative assessments (46 percent).  In addition to the standard adjustments pursuant to the budget instructions, the maintenance portion of this budget account includes the following: 

 

One Information System Specialist is requested to support the Supreme Court’s case management system because the one existing programmer just isn’t enough to accomplish the system functionality changes required by the court.  In decision unit M-200, one Deputy Staff Attorney is requested to help the clerk’s office prepare and deliver the court’s decisions accurately, on time, and using multiple media.  A critical responsibility within each state’s supreme court, as well as the federal courts, is that of preparing the court’s decisions for official publication.  The process of preparing the decisions for release is extremely complicated and intense and has grown to the point where it requires the full-time oversight of a qualified, legal professional.  

 

Costs to accommodate four externs each summer from the Boyd School of Law is requested in decision unit M-202.  Additionally, funding is requested to enhance the technical design of the court’s case management system and for the services of a consultant to assist us (decision unit M-203).  We know the database software needs to be upgraded to accommodate new functionality and the hardware may need upgrading as well.  

 

Rent, our share of the building’s operation and maintenance costs and parking spaces, and one-time costs associated with moving the court’s Las Vegas office to the Clark County Regional Justice Center (decision unit M-205).  Following testimony during the 1999 Legislative Session, the June 1999 IFC approved our lease with Clark County to become a tenant in their Regional Justice Center during FY 2003.  The construction is very close to being on schedule and our current plan is to move our existing Las Vegas staff into the new building in the summer of 2002.

 

M-305 Unclassified 9%, 4% ADJ – Page Courts-5

 

Ms. Kavanau:

In decision unit M-305, along with the employee raises, there are also raises ($51,000) for the two Supreme Court justices who are eligible to receive one following their election in 2002.  The Legislature only addresses salary increases for these justices once every six years to coincide with the general election of most of the state’s district judges.  The amount of the raise was recommended by a special task force, appointed by the Governor, which reviewed and made recommendations on salaries of supreme court justices, district court judges, legislators and certain elected county officials.  We support the recommendations from the task force and understand there is a trailer bill to be presented later by Judge Gene T. Porter, Eighth Judicial District. 

 

E-225 Reward More Efficient Operation – Page Courts-5

E-276 Working Environment & Wage – Page Courts-6

 

Ms. Kavanau:

The enhancement portion of the Supreme Court’s operating budget includes the Governor’s recommendation for changes to the judges’ retirement system and moving its administration to the Public Employees’ Retirement System in FY 2003 (E-225).  Additionally, new training is requested for central staff attorneys to keep them current in matters most often presented to the Court.  Our legal staff is required to be experts in these topics(E-276).

 

E-300 Maximize Internet & Technology – Page Courts-6

 

Ms. Kavanau:

One Information System Specialist is requested to establish and maintain a website for the Supreme Court and the judiciary.  We envision the website as a collection and distribution point for statewide court information, standardized forms, judicial education schedules, judicial directory, fee schedules, and information on court rules.  We also envision it as a single point of contact for the general public to access the judiciary.

 

E-301 Maximize Internet & Technology – Page Courts-6

 

Ms. Kavanau:

This includes one agency/program Information System Specialist requested to assist the justices and legal staff to better utilize standard computer applications.  This is the position the Chief Justice referred to in his opening remarks.  The justices and their legal staff are highly dependent on these applications and we have no one on staff to help them maximize utilization of these applications.  Whenever someone needs help with these applications, we end up calling around, spending hours trying to locate the expertise.  This position would help the Court become more efficient.   We are also asking for one Management Analyst to establish the legislatively mandated interpreters certification program. 

 

 

 

E-806 Unclassified Pay Changes – Page Courts-7

 

Ms. Kavanau:

This is a pay increase for the Deputy Chief Clerk due to added responsibilities.

 

Chairman Raggio:

Before we have some questions, are you going to talk about the salary increases for the judges and justices later, or are you going to talk about them here?

 

Ms. Kavanau:

I am not going to address them at all.

 

Mrs. Chowning:

Did you say there are 8 positions overall?

 

Ms. Kavanau:

Yes.

 

Mrs. Chowning:

That is considerably less than your last request.  In your performance indicators, why did you project the number of case filings would decrease?

 

Ms. Kavanau:

All the indicators we have indicate the filings will remain flat, as they are right now.  We do not know for sure.  I have to tell you this is not rocket science, but the best information we have.  As you recall, we were absolutely convinced two years ago these cases would go up about 8 percent a year.

 

Senator Coffin:

Regarding the website you have, is it one web page?  Could you install some method by which you had a link so people could contact the Supreme Court?  Right now it is simply a listing of judicial officeholders.

 

Ms. Kavanau:

I believe you are referring to the Supreme Court Law Library’s web page.  I believe the law library’s page is just a static link, and it is part of the state library network.  One of the benefits of having an interactive web page is that the Supreme Court has been very supportive of establishing standardized forms for the judiciary.  We envision this website as a place to be able to put a copy of each form up and distribute it to the courts, instead of going through all of these printing costs.  This is just one example of what we want to use the website for.

 

We also produce our opinions on the Legislature’s web page, meaning we have teamed up with the Legislature to put the opinions there.  We have also collaborated with them on a CD-ROM.

 

Justice Maupin:

I would like to comment on Mrs. Chowning’s question regarding the Supreme Court filings.  Some of those projections have to do with our analysis of experience over the last 6 to 7 years.  In our handout (Exhibit K) you will note that in 1994 and 1995, we had about 1,350.  In 1996 it jumped to 1,903.  This is one of the things that caused us great concern about reaching some sort of a critical mass.  Since then the filings have remained in the 1,800-1,900 range.  A lot of this has to do with the institution of comprehensive case management measures, particularly in the Eighth Judicial District, from where we get about 65 percent of our appeals. 

 

As a result of those case management issues, we have more uncontested resolutions of criminal cases via settlements.  We have increased the number of trial dispositions.  This has uncommonly increased the number of settlements in several cases.  So, while there have been increases, this, and the court annexed arbitration program have done a tremendous job in holding static the case filings.  New measures taken in the Second Judicial District have had something to do with modulating the amount of increases.  We know in time, the measures we have taken will become marginalized as the population grows, and then we expect increased case filings.  That is one of the reasons we want to back up and start up over again on the Intermediate Appellate Court Joint Resolution.

 

Senator Neal:

I am concerned about how you list your cases here.  I notice you have cases filed in the Supreme Court called “original proceedings.”  What is that?

 

Justice Maupin:

Under our rules of procedure and under certain circumstances, a party can seek relief originally in the Supreme Court, instead of going to the trial court.  Usually it is addressed to try to force some action by a district court in a separate action.  There are measures by which you can actually file an extraordinary writ with the Supreme Court directly to address something happening below, in the district court or otherwise.  We are a court of original jurisdiction on extraordinary relief matters.

 

Administrative Office of the Courts – Budget Page Courts-9 (Volume I)

Budget Account 101-1483

 

Ms. Kavanau:

The AOC’s operating budget 101-1483 provides administrative support to the Supreme Court including payroll, personnel, budgeting, accounting, and technology.  We also process payroll for district judges, pensions for retired judges, and travel claims from the entire judiciary.  The AOC staffs and pays for, with administrative assessments, Supreme Court-appointed task forces and commissions formed to improve the statewide court system.  Examples include the Study Committee to Standardize Domestic Violence forms used by our justice system, Court Interpreter’s Advisory Committee, Judicial Assessment Commission, Judicial Collections Task Force, State Judicial Council Planning Committee, and the Pro Se Litigant Council.  The State Court Administrator, also known as the Director of the AOC, serves as the Secretary to the Commission on Judicial Selection and is an ex-officio member of the State Judicial Council.

 

E-710 Replacement Equipment – Page Courts-11

E-806 Unclassified Pay Changes – Page Courts-12

 

Ms. Kavanau:

This budget account is funded entirely by administrative assessments.  We developed this budget on the premise FY 2002 and FY 2003 will be much like FY 2000 and FY 2001.  The maintenanceportion of this budget account is limited to adjustments according to the budget instructions.  The enhancementportion of this budget account includes:  Replacement of old technology (E-710); and salary increase for the State Court Administrator and the one deputy paid from this account.  The State Court Administrator is expected to perform in the role as senior court administrator in the state, yet at the moment, the State Court Administrator’s pay ranks ninth out of 18 in Nevada.  The salary increase for this position is especially important because the court will soon be looking for a new State Court Administrator due to my retirement this year (E-806).

 

Division of Planning & Analysis – Budget Page Courts-13        (Volume I)

Budget Account 101-1484

 

Ms. Kavanau:

Budget account 101-1484 is the Division of Planning and Analysis, which was created to research and report on the statewide judicial system, primarily through the collection, analysis and publication of court workload statistics as mandated by NRS 1.360, NRS 3.025, and NRS 3.01056.  It is this budget account that produced the Annual Report of the Nevada Judiciary and it is directly tied to the Supreme Court’s operational goal to continue implementation of the USJR statistical reporting program.

 

M-200 Demographics/Caseload Changes – Page Courts-14

 

Ms. Kavanau:

This budget account is funded entirely by General Fund appropriation.  In addition to the standard adjustments pursuant to the budget instructions, the maintenance portion of this budget include: three new positions; one is a Management Analyst to help in the collection of additional information for the annual report in response to legislative and Supreme Court mandates and to allow us time to analyze the data we receive.  The two other positions will help the trial courts respond to the Legislature’s mandates.  One is a Management Analyst to assist the trial courts in selecting, modifying and maintaining their software to comply with statistical reporting requirements and one is Computer Network Specialist to assist the trial courts with hardware and network problems. 

 

Most of our 91 trial courts have little or no access to technical support. When their software or hardware fails or needs attention the success of the statewide court statistical program is at risk, if we do not have someone they can turn to.  The speed with which we can successfully respond to the Legislature’s mandate for court statistics is directly tied to these positions (M-200). 

 

E-710 Replacement Equipment – Page Courts-16

E-806 Unclassified Pay Changes – Page Courts-16

 

Ms. Kavanau:

The enhancementportion of this budget includes minimal technology upgrades in (E-710) and a pay increase for the AOC Deputy Director paid in (E-806).

 

Uniform System of Judicial Records – Budget Page Courts-18 (Volume I)

Budget Account 101-1486

 

Ms. Kavanau:

Budget account 101-1486 is an account dedicated to the implementation of technology in the trial courts to help them manage caseloads and judicial records, and to respond to the legislatively mandated Supreme Court ordered statewide statistical reporting requirements.  It is funded entirely by administrative assessments.

 

Repeating something I said earlier, the USJR is defined as the physical system by which the judiciary collects and reports data to the AOC for the annual report.  This is the budget that provides the funding for grants and loans for the trial courts to purchase technology.  Courts applying for this funding must complete a rigorous application process, sign a formal contract with the AOC, and be approved by the Supreme Court.  We already have signed contracts, or will have signed contracts, in FY 2001 to obligate about $800,000 from this budget in FY 2002 and another $500,000 in FY 2003.  In other words, demand for financial assistance in automating our courts is outpacing supply.

 

We prepared this budget on the premise FY 2002 and FY 2003 will be much like FY 2000 and FY 2001, except the amount allocated for grants and loans in FY 2002 and FY 2003 is much greater because we have a larger number of automation projects going on in the trial courts.  The maintenance portion of this budget account is limited to adjustments in accordance with the budget instructions.  There is no enhancement section in this budget account.

 

Chairman Raggio:

Maybe you could furnish us a list of grants that were approved.  I believe they totaled a little in excess of $300,000.  You are requesting in this budget over $644,000 for grants each year.  By your projections, you would have $78,000 in reserve.  Your performance indicators show the projected grants are expected to be $572,000 each year of the biennium.  So, have you augmented that? What was granted in the current year?

 

Ms. Kavanau:

Yes, we have augmented that.  We will get you a list of what was granted in the current year.  A lot depends on when the contracts were signed.

 

Chairman Raggio:

I think what was granted in the current year was something like $600,000.  So, my question is, “Why double it?”

 

Mr. Kavanau:

This is because of the number of contracts coming on line.  We are not in total control.  Because most of these contracts involve multiple courts, there are a number of steps we have to go through before we expend the money, although it is considered committed money.

 

Chairman Raggio:

I am just alerting you if you are concerned about overusing administrative assessments, this is a place where you are doubling the amount with more than a 110 percent increase.

 

Ms. Kavanau:

That is true, Chairman Raggio.  We feel we are going as fast as we can because we have only given you filings in our annual report.  There is a lot more information you have asked for from our trial courts.  In order for the trial courts to accurately and uniformly track those statistics, they will need the technology to do it.

 

Chairman Raggio:

If it is not in your report, please give us a list of the grants and the nature of the projects, including what you are anticipating in the next biennium.

 

Ms. Kavanau:

Okay. 

 

Judicial Education – Budget Page Courts-21 (Volume I)

Budget Account 101-1487

 

Ms. Kavanau:

Budget account 101-1487 is an account that provides education through annual conferences and individual training for district court judges, municipal court judges, justices of the peace, court clerks, court administrators, and other support staff in the trial courts.  Judges are required by the Legislature and the Supreme Court to attend certain education conferences.  The AOC sponsors, coordinates and staffs two educational conferences per year for limited jurisdiction judges, one per year for general jurisdiction judges, and at least one per year for court support personnel. 

 

This budget also pays for judges to attend specialized training and is funded entirely by administrative assessments.  In developing this budget, we assumed FY 2002 and FY 2003 would be very similar to FY 2000 and FY 2001.  The maintenance portion of this budget is limited to adjustments pursuant to the budget instructions.  The enhancementportion of this budget includes minor technology replacements.

 

District Judges’ Salary – Budget Page Courts-25 (Volume I)

Budget Account 101-1490

 

Ms. Kavanau:

Budget account 101-1490 is the account that pays the salaries of sitting district judges throughout the state.  There are currently 56 district judges.  This budget is funded entirely by General Fund appropriation.  In addition to standard adjustments pursuant to the budget instructions, the maintenance portion of this budget includes raises for the 49 district court judges who are eligible to receive them in 2003, following the 2002 election.  Again, the Legislature only addresses salary increases for these judges once every 6 years to coincide with the election of the vast majority of district judges in the state. 

 

M-305 Unclassified District Court Judges’ Salary– Page Courts-26

 

Ms. Kavanau:

The amount of the raise was recommended by a special task force created by the Governor that reviewed salaries of Supreme Court justices, district court judges, legislators and certain elected county officials.  We support the recommendations from the task force and, again, there is a trailer bill to be presented by Judge Gene T. Porter.  The enhancement portion of this budget reflects the Governor’s recommendation for changes in FY 2003 to the judges’ retirement program.  The reason I am not going into this, is the district judges have requested all testimony on this subject be done by two people: Judge Gene T. Porter and John Papageorge, Lobbyist, Nevada District Court Judges Association.

 

Chairman Raggio:

Well, we may have questions of other people.

 

District Judges’ and Widows’ Pension – Budget Page       Courts-28 (Volume I)

Budget Account 101-1491

Ms. Kavanau:

Budget account 101-1491 represents the cost for pensions for district court judges and their surviving spouses pensions.  It is funded entirely by General Fund appropriation.  There are currently 26 pension recipients in this budget.  There is no maintenance section for this account. The enhancement portion of this budget reflects the Governor’s recommendation for changes in FY 2003 to the judges’ retirement program.

 

Please note, a supplemental appropriation to this budget account is necessary in FY 2001 due to the unexpected passing of Judge Gary L. Redmon and retirement of Judges Joseph S. Pavlikowski and Merlyn H. Hoyt.  Our estimates for FY 2002 and FY 2003, as reflected in this budget, are low and will need to be revised.  When we prepared our budget we did not know those three events would occur and they have since occurred.

 

Mrs. Chowning:

If there are 26 pension recipients, why are their 24 positions needed in this budget? (Referring to Exhibit L, page 12)

 

Judy Holt, Manager, Budget and Finance, Office of Court Administrator, Supreme Court:

I can answer that question, Mrs. Chowning.  At the time we prepared this there were 24 pensioners.  Since that time, one passed away and three have been added. 

 

Mrs. Chowning:

So, this terminology is incorrect.  Instead of “positions” is should be “pension recipients.”

 

Supreme Court Justices’ and Widows’ Pensions – Budget Page Courts-30 (Volume I)

Budget Account 101-1492

 

Ms. Kavanau:

Budget account 101-1492 represents the cost of pensions for the Supreme Court Justices and their surviving spouses.  There are currently 8 individuals receiving benefit payments from this budget.  It is entirely funded by General Fund appropriation.  There is no maintenance section for this account, and the enhancement portion of the budget reflects the Governor’s recommendation for changes in FY 2003 to the judges’ retirement program.

 

District Judges Travel – Budget Page Courts-32 (Volume I)

Budget Account 101-1493 – Page Courts-32

 

Ms. Kavanau:

Budget account 101-1493 is the district judges’ travel account, which is funded through peremptory challenge fees and is used to pay for one position, the Statewide Court Program Coordinator and the travel expenses of district and senior judges.  We prepared this budget based on the premise FY 2002 and FY 2003 will be much like FY 2000 and FY 2001.  The maintenance portion of this budget includes adjustments pursuant to the budget instructions, and there is no enhancement section in this budget.  Page 5 of Exhibit N reflects revenues from peremptory challenges have been on the decline since FY 1998.

 

Chairman Raggio:

That raises the question whether there will be adequate revenue from peremptory challenge fees for this budget.

 

Ms. Kavanau:

Yes, Mr. Chairman, there will be.  We have a good reserve in that account.

 

Senator Coffin:

It might be a little awkward for us to try to raise revenues in that particular area of peremptory challenge fees.

 

Retired Justice Duty Fund – Budget Page Courts-35 (Volume I)

Budget Account 101-1496

 

Ms. Kavanau:

Budget account 101-1496 is the retired justice duty fund authorized by Article 6, Section 19 of the Nevada Constitution, and enables retired district judges and Supreme Court justices to be commissioned by the Supreme Court to help the courts with congested calendars and sit for judges who are unable to perform.  This budget is funded entirely by administrative assessments.  We are attempting to keep costs down in this budget by spending time seeking sitting district judges who are able to temporarily take the bench in other districts, but often we must rely upon our seniors. 

 

Chairman Raggio:

How many eligible sitting judges are participating?

 

Ms. Kavanau:

Quite a few sitting judges are participating.  We are very active at this time.

 

Judicial Selection – Budget Page Courts-36 (Volume I)

Budget Account 101-1498

 

Ms. Kavanau:

Budget account 101-1498 is the judicial selection.  The Commission on Judicial Selection is authorized by Article 6, Section 20 of the Nevada Constitution.  The commission’s mission is to select 3 qualified applicants to fill a Supreme Court or District Court vacancy that occurs unexpectedly mid-term.  The commission’s workload is driven by the number of vacancies and applicants per vacancy.  This relatively small budget is funded by General Fund appropriation, and there is no maintenance budget proposed.  The enhancement portion represents one meeting per year of the commission’s 7 permanent members to review the selection process, the extensive application form, and other pertinent matters.  The commission members have tried to have these meetings before and after applicant interviews.  Page 6 of Exhibit N, reflects the number of vacancies in FY 2001 so far is 3 times the number in the base year, FY 2000.  This is inserted to compare what we spent in FY 2000 to what we currently need.  We have had three selections so far.

 

Law Library – Budget Page Courts-38 (Volume I)

Budget Account 101-2889

 

 

 

M-101 Inflation and Per Unit Adjustment – Page Courts-39

 

Ms. Kavanau:

Budget account 101-2889 pertains to the law library located in the Supreme Court Building, which serves as a resource for justices, staff, legal community and general public.  Each year the cost for books and materials increases.  The proposed values for inflation have been calculated based on actual expenditures and includes known, fixed contractual costs.  This budget is funded entirely by General Fund appropriation and the maintenance portion of the budget is limited to the adjustments to the base budget and includes the cost of inflation in law book prices (8 percent a year).  The enhancement portion includes the cost for library staff to travel to Las Vegas for 3 one-day trips to train staff in how to perform on-line legal research.  Also included is the replacement of several pieces of old technology and a pay increase for the law librarian.  This would bring her in line with other law librarians in this state.

 

Chairman Raggio:

Thank you. Justice Maupin do you have any last comments to make.

 

Justice Maupin:

Thank you very much for hearing us today, and for scheduling us at this particular time.  If, at any time, anyone on the joint committees needs any assistance, we are available for any facilitation you might need from my office, please do not hesitate to call.

 

Mr. Marvel:

I think Justice Maupin and Ms. Kavanau should be complimented on standardizing the collection of the administrative assessment fees.  That was a tremendous problem for a long time.

 

Chairman Raggio adjourned the meeting at 4:30 p.m.

 

RESPECTFULLY SUBMITTED:

 

 

 

         

Liz Root

Committee Secretary

 

 

APPROVED BY:

 

 

                                                                                         

Senator William J. Raggio, Chairman

 

DATE:                                                                             

 

 

                                                                                         

Assemblyman Morse Arberry, Chairman

 

DATE: