MINUTES OF THE
SENATE Committee on Finance
Seventy-First Session
March 5, 2001
The Senate Committee on Financewas called to order by Chairman William J. Raggio at 8:11 a.m., on Monday, March 5, 2001, in Room 2134 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Senator William J. Raggio, Chairman
Senator Raymond D. Rawson, Vice Chairman
Senator Lawrence E. Jacobsen
Senator William R. O’Donnell
Senator Joseph M. Neal Jr.
Senator Bob Coffin
Senator Bernice Mathews
STAFF MEMBERS PRESENT:
Gary L. Ghiggeri, Fiscal Analyst
Bob Guernsey, Principal Deputy Fiscal Analyst
Debra Petrelli, Committee Secretary
OTHERS PRESENT:
Ronald P. Dreher, Lobbyist, PORAN/Peace Officers Research Association of Nevada
George Pyne, Executive Officer, Public Employees’ Retirement System
Andy Anderson, Lobbyist, Las Vegas Police Protective Association, Nevada Conference of Police & Sheriffs
Larry Arnold, Forensic Specialist 3, Department of Prisons
Sharon Wilson, Psychologist, Department of Prisons
Brian T. Linstrom, Psychologist, Northern Nevada Correctional Center, Department of Prisons
Sharon Wallace, Licensed Clinical Social Worker, Northern Nevada Correctional Center, Department of Prisons
Bobbie Gang, Lobbyist, Nevada Women’s Lobby, representing the National Association of Social Workers, Nevada Chapter
Steve Barr, Lobbyist, Nevada Corrections Association
Bob Gagnier, Lobbyist, Executive Director, State of Nevada Employees Association (SNEA/AFSCME)
Gary H. Wolff, Lobbyist, Nevada Highway Patrol Association
Jeanne Greene, Director, Department of Personnel
Samuel G. Covelli, Lobbyist, State of Nevada Employees Association (SNEA/AFSCME)
Mary Keating, Chairperson, Nevada Deferred Compensation Committee
Lorne J. Malkiewich, Director, Legislative Counsel Bureau
Gary L. Ghiggeri, Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, began with a report on the status of the Senate Finance Committee (Exhibit C) as of March 5, 2001. He said the Senate Finance and joint subcommittees have heard 220 of 418 budgets in The Executive Budget. He noted they are scheduled to hear 21 Capital Improvement Projects (CIP) this week in the meeting of the Joint Subcommittee on Capital Improvement. He added there are 56 bills in committee, 7 having been heard, 8 currently scheduled, and 1 indefinitely postponed.
Senator Raggio stated that any bill in this committee has fiscal impact. Unless the cost is included in The Executive Budget, the hearings will be held, but final action will not be taken on these measures until we know what our revenues are going to be and what the fiscal impact will be on the final budget.
SENATE BILL (S.B.) 11: Reduces number of years of service required for retirement of police officer or fireman at any age. (BDR 23-134)
Senator Bernice Mathews introduced S.B. 11. Currently, she said, police and fire employees that are employed full time in this state by a public employer can retire at age 65, if that person has at least five years of service. She explained that at age 55 these employees must have at least ten years of service, and at age 50 at least 20 years of service. She added that they may retire at any age with 30 years of service.
Senator Mathews said S.B. 11 would reduce the number of years of service required for a police officer or firefighter, so they would be able to retire at any age.
Senator Raggio noted the current law allows these people to retire after 30 years of service, and passing this bill would reduce that by five years. He asked what would be the fiscal impact of this measure. Senator Mathews said if this law is enacted, it would not impact very many people currently employed. She added it would become effective for those persons hired after July 1, 2001.
Senator Raggio pointed out that the act would become effective on July 1, 2001, and it would apply to all those who are currently in service.
Ronald P. Dreher, Lobbyist, Police Officers Research Association of Nevada (PORAN), referred the committee to his handout referencing S.B. 11. (Exhibit D.) He explained that S.B. 11 would provide for a benefit enhancement to the police and fire employee retirement fund. He said the benefit modification would allow members of the police and fire retirement fund to retire at any age with 25 years of service, without penalty.
Mr. Dreher remarked this enhancement to the current police and fire retirement fund has been sought by the peace officers in Nevada for over 10 years. He said this benefit enhancement would not trigger a contribution rate increase to either local government or to employees. He added there would be a potential for salary savings to local government.
Mr. Dreher pointed out that this bill received a unanimous vote of support and approval by the Public Employees Retirement Board, Public Employees Retirement System (PERS), on February 21, 2001. He mentioned that S.B. 11 would allow an officer who has 25 years of service, and who has not reached the age of 50, to have the option of retiring without a penalty. He said the policy for earlier retirement, recognizing the need to maintain a youthful and vigorous public safety work force, is shared with the PERS board.
Mr. Dreher commented that at 46 years of age, a peace officer assigned to uniform patrol faces many critical incidents daily, including “burn-out.” He added that S.B. 11 would allow an officer the opportunity to retire without the current 4 percent per year penalty, by removing that penalty.
Mr. Dreher said PERS recently conducted a study of how many police and fire employees could benefit by the enactment of S.B. 11. He noted that the results of their research indicated approximately 25 percent of the current members of police and fire could take this benefit.
Continuing, Mr. Dreher commented on the request that the multiplier be increased to either 2.75 or 3 percent. He added this would provide retroactive enhancements for the current police and fire members and would provide increased benefits to newly-hired members. He explained that an actuarial analysis conducted in 2000, indicated that increasing the multipliers would result in mandatory contribution rate increases to local governments and to employees. He added they do not wish this to happen.
Mr. Dreher explained that the “25 and out” enhancement would not trigger any contribution rate increase based on the PERS formula. He stated this benefit provides an affordable retirement option to qualifying peace officers and eliminates the current retirement penalty. He added that 98 percent of the officers that responded to a survey conducted by PORAN, indicated they want this option.
Mr. Dreher testified the actuarial analysis revealed the cost of the benefit can be absorbed by PERS without increasing contribution rates. He explained that, as a result of a memorandum report received by PERS, recommendations for legislative benefit enhancements were made.
Mr. Dreher pointed out that on February 21, 2001, the PERS board unanimously voted to support reduction of the indexing of the deferred vesting enhancement. He added that this resulted in the reduction of the actuarial cost of that enhancement.
Mr. Dreher reiterated that S.B. 11 would benefit 25 percent of current members. He mentioned that the PERS board and the actuarial analysis affirms that this benefit modification can take place without contribution rate increases. He said neither local government employers nor the employee will have out-of-pocket costs. He noted that local government may see cost savings through salary savings.
Mr. Dreher concluded that the peace officers of Nevada request the support of this committee by passing S.B. 11. He said:
There will be some comments made today on behalf of this bill from Mr. George Pyne, Executive Officer of PERS, we share in his statements that he is going to provide to you momentarily that we are willing to absorb this into his bill that he is going to have coming before this board.
Senator Neal asked how many police and fire officers are involved. Mr. Dreher said there are approximately 8,000 police and fire employees in the PERS retirement system. He pointed out that 25 percent of them or approximately 2,400 officers and fire employees would be affected.
Senator Neal asked what the public benefit would be to reduce the retirement age. Mr. Dreher said the benefit would be allowing those officers within the ages of 46 to 50, to be able to retire, causing “turnover” in employment and providing more opportunities for youth to get into law enforcement. Senator Neal inquired whether an officer could leave at the age of 46. Ms. Dreher said, ”Conceivably, some officers could leave at 43 years of age if they purchase five years of service, yes sir.”
George Pyne, Executive Officer, Public Employees’ Retirement System (PERS), referring to Exhibit E, said that at the February 21, 2001, meeting of the PERS board, they voted to include 25-year retirement at any age for police and fire members in its fiscal legislation for 2001. He said this is part of a comprehensive retirement package that addresses vesting, benefit accruals, pre-retirement death benefits, and early retirement for police and fire members.
Mr. Pyne commented that S.B. 11 contains one of several items that make up a proposed fiscal bill coming from PERS. Senator Raggio asked whether Mr. Pyne has that bill number. Mr. Pyne said he does not, and requested that the committee postpone consideration of S.B. 11 until their fiscal bill comes through. Senator Raggio explained that action would not be taken on S.B. 11 today, but testimony would be taken.
Senator Raggio asked whether the PERS board endorses the concept of S.B. 11. Mr. Pyne said:
The PERS board has endorsed this concept when it is considered as part of our overall package. When the board considered this bill on a stand-alone basis, the only time it did consider it, it voted against it, but as part of our package it voted to include it in the overall fiscal bill that we have.
Senator Raggio asked Mr. Pyne whether the analysis Mr. Dreher presented is correct in that the cost of the benefit can be absorbed without increasing contribution rates, including the other measures that were referenced. Mr. Pyne said this is correct and it is reflected in the Fiscal Note provided to the committee.
Andy Anderson, Lobbyist, Las Vegas Police Protective Association, Nevada Conference of Police & Sheriffs, said, “S.B. 11 was the bill that George Pyne and Ron Dreher testified to, and I signed in as against the bill and just wanted to give you my opinion on that.” He added he is not against the concept of early retirement. He noted there are limited resources within the retirement system, and the amount of resources needed to pay for S.B. 11 could be better spent on increasing the multiplier.
Mr. Anderson explained he is not disputing Mr. Dreher’s surveys. He said he recently polled the membership of the organization he represents and the membership of the Metropolitan Police Department and Firefighters in Henderson and North Las Vegas. He said the proposal was, that with the present bill being proposed by PERS, there is a 2.6 percent multiplier and a “25 and out”. He added the amount of money for the “25 and out” is the same amount it would take the 2.6 percent multiplier up to 2.75 percent.
Mr. Anderson testified it has always been his stand to increase the multiplier to make it possible to retire earlier with more money. He said although the “25 and out” wouldn’t have an impact in increasing the contribution rate, the resources could be better spent increasing the multiplier from 2.6 percent to 2.75 percent.
Senator Raggio asked whether that would result in mandatory rate increase contributions. Mr. Anderson said it would not. Senator Raggio questioned whether that would exclude “25 and out”, and leave it at “30 and out.” Mr. Anderson explained they would leave it at “30 and out” and better spend the money by increasing the multiplier, because an increased multiplier affects 100 percent of the people. He said the “25 and out” affects a smaller percentage of people. He added that over 70 percent of the people in the Metropolitan Police Department, would not qualify for any portion of that benefit, and records show that less than 10 percent of these employees would take advantage of “25 and out.”
Senator Raggio asked how many people are in the membership of Nevada Conference of Police and Sheriffs. Mr. Anderson answered approximately 2,500. Senator Raggio inquired whether they are also represented by Peace Officers Research Association of Nevada (PORAN). Mr. Anderson said they are not.
Mr. Anderson reiterated that they want increased multipliers because it would increase the income they get when they retire.
SENATE BILL 81: Increases salaries of certain state employees. (BDR S946)
Senator Jacobsen introduced this measure. He indicated that S.B. 81 involves correctional officers. He noted there was an increase in the pay rate for correctional officers during the last legislative session. However, he added, some positions were overlooked.
Senator Raggio referred to a letter (Exhibit F) addressed to the Committee from Cynthia Elefante. He requested this be part of the record. He noted Ms. Elefante’s letter is in support of S.B. 81. She works for the Department of Prisons and is a correctional officer, a forensic in the Medical/Mental Health Unit. She explains in her letter the dangers of her duties and the loss of personal property because of inmate violence, he added.
Larry Arnold, Forensic Specialist III, Department of Prisons, and Teamsters Chairman of the Political Action Committee for the State of Nevada, presented a letter (Exhibit G), to the committee. He spoke in support of S.B. 81 on behalf of the Nevada State workers and requested the assistance of the Legislature.
Mr. Arnold noted that the last legislative session passed a bill that gave the Department of Prisons (DOP) Correctional Officers a pay grade increase. He added that the position of Forensic Specialist was overlooked and excluded from that bill. He explained that these officers are Correctional Officers plus have special training in the medical field.
Mr. Arnold testified that these are non-uniform officers and some of them work with criminals with mental disorders. He noted for the last ten years, this classification of officer has been paid an extra grade pay higher than correctional officers because of the extra training and duties. He said included in S.B. 81 is a 5 percent retroactive increase, from January 1, 2001, for these employees.
Mr. Arnold pointed out that another part of the bill provides a 5 percent increase for hazardous duty pay for working in a dangerous work environment for some state workers. He said employees that have direct contact with the mentally ill or patients with behavioral problems would be eligible. He noted that offenders in prison, county jails, and Lake’s Crossing Center for the Mentally Disordered Offender that can not be handled, are sent to their facility as a last step.
Mr. Arnold concluded there are numerous incidents of violence and physical attacks against these workers. He added this makes it very difficult, not only to fill these positions, but also to keep qualified employees in these state jobs.
Senator Raggio said the Fiscal Note indicates the retroactivity would cost in excess of $80,471 for FY 2001, and $440,416 for each year of the biennium.
Mr. Ghiggeri said they have not yet had a chance to review this Fiscal Note. Senator Raggio explained this is for the forensic adjustment and does not include hazardous duty pay. He requested that an update on this information would need to be provided to the committee.
Sharon Wilson, Psychologist, Department of Prisons, referred the committee to a letter (Exhibit H) supporting S.B. 81. She explained that for the past 11 years she has worked in the in-patient Mental Health Unit (MHU) with the DOP. She said she received 5 percent extra pay, called hazardous duty pay, from 1990 through 1999, because of the health hazards within this unit. She explained this unit continues to be extremely dangerous.
Ms. Wilson testified that these inmates are very violent, unpredictable, and ill. She said individuals with mental disorders are at higher risk for acting out. Their thinking is disordered, and they are not concerned about spreading diseases, she added. She testified that staff working in this type of environment, work at greater risks than staff working with the general population in the prison.
Ms. Wilson noted that staff working at the Lakes Crossing Center for the Mentally Disordered Offender and the Nevada Mental Health Institute, currently receive an extra 5 percent for hazardous duty pay.
Senator Raggio asked who had made the determination to discontinue the hazardous duty pay in 1999, in this area. Ms. Wilson said it was the medical administration of the prison. She explained there were problems with the way it had been applied.
Ms. Wilson pointed out that over the last few years, the DOP’s Medical/Mental Health Unit has reduced millions of dollars from their budget and she would like to see some of that money restored to these employees.
Brian T. Linstrom, Psychologist, Northern Nevada Correctional Center, Department of Prisons, presented a letter (Exhibit I) to the committee. He stated he has been employed with the state for 19 years, and for the last 7 years with the DOP.
Mr. Linstrom noted that statistics for the medically-infirmed prisoner indicates that Hepatitis B and C ranges from 20 to 60 percent of the prison population. He said the extreme range is due to the fact that inmates do not inform prison officials or inmates do not want to know whether they are infected. He added that the administrations of some prisons do not test for these viruses because of the high cost of treating both Hepatitis B and C. He noted some prisoners do not even know they have these viruses.
Mr. Linstrom testified that in interacting with prisoners, staff fear the possibility of spittle, urine, or other body fluids being thrown on to them. He said if this occurs, the employee must undergo testing. He added that the greatest fear for employees, is taking diseases home to their families. Mr. Linstrom pointed out that when he came into this position he understood there were certain risk factors, but he did not expect life-threatening diseases. He stated this is one reason for the request for a pay increase.
Sharon Wallace, Licensed Clinical Social Worker, Northern Nevada Correctional Center, Department of Prisons, presented a letter (Exhibit J) to the committee in support of S.B. 81. She mentioned she has witnessed mentally ill inmates threaten to throw bodily fluids into the faces of staff, slash the throats of staff, and sexually assault staff. She added that many of these inmates carry infectious diseases.
Ms. Wallace said she knows this is hazardous work, but she is a dedicated mental health worker and wants to help any way she can. She pointed out that inmates are often sent to the Northern Nevada Correctional Center Medical/Mental Health Unit from Lakes Crossing Center for the Mentally Disordered Offender, and the Nevada Mental Health Institute, because they cannot handle them, and employees of those facilities are receiving extra pay as hazardous duty pay. She added that she and her co-workers are just as deserving as their counterparts in other state departments.
Bobbie Gang, Lobbyist, Nevada Woman’s Lobby, who indicated she represents the National Association of Social Workers, Nevada Chapter, expressed support for S.B. 81 and urged its passage. She pointed out that in a recent salary review by administration, social workers in state employment have some of the highest turnover of all state categories. She added that this is especially true in the prison system.
Steve Barr, Lobbyist, Nevada Corrections Association, expressed support for S.B. 81. He said not only do the people who have testified today need recognition in the form of salary increases, but also there are other individuals within the maintenance and free‑cook status that also supervise inmates and attention should also be paid to them.
Senator Raggio said a raise was granted for correctional officers at the last legislative session because information they had been given and the Legislature later found that some employees had been left out. He asked, “If these current pay raises are granted, will another group step forward and say they were left out?” He said it would be nice to give all state employees a raise, but, unfortunately there are some serious fiscal constraints as a result of revenues. He asked whether this is an inclusive list for those that have this type of job duty.
Mr. Barr said he would prepare an all-inclusive list for the committee’s review. Senator Raggio asked whether he intended to bring back an additional group of people who should be considered for extra pay. Mr. Barr said the group he spoke of includes maintenance workers that are in supervisory positions over inmates and correctional cooks that are in supervisory positions over inmates, and were not included in the last bill. He added that this was no fault of the committee.
Senator Raggio requested that Mr. Barr prepare a list for the committee with the positions that are currently requesting a raise in salary.
Senator Jacobsen asked whether the incidents of violence from inmates mentioned today are documented in prison records. Mr. Barr said all assaults on staff are documented.
Senator Raggio pointed out that the Governor’s budget currently recommends an additional 5 percent salary increase for custody officers, but not for forensic positions.
SENATE BILL 95: Revises provisions authorizing state employees to obtain additional retirement credit as payment for unused sick leave. (BDR 23-210)
Senator Raggio pointed out that S.B. 95 was introduced by Senator Dina Titus.
Bob Gagnier, Lobbyist, Executive Director, State of Nevada Employees Association (SNEA), testified that S.B. 95 has already been heard in the Senate Committee on Government Affairs, and from there was re-referred to the Senate Committee on Finance. He said S.B. 95 sets a formula for people who are retiring to be compensated for their unused sick leave in a new methodology. He pointed out that, individuals who leave state service with more than of ten years of service can be paid in cash. He noted the cash can be used to purchase pre-payed health insurance premiums as they retire, or to buy additional retirement.
Mr. Gagnier said SNEA has developed a new method that would allow an employee who is retiring to purchase additional retirement credit. He explained that S.B. 95, as originally written, says “each hour of unused sick leave” can be used to purchase one day of retirement. He stated that based upon testimony of the retirement system, and additional figuring, SNEA decided that was not a good formula. He said they believe the formula should be, “two and one-half hours of sick leave” can be used to purchase one day of retirement.
Mr. Gagnier said SNEA proposes on page 1, line 21, of S.B. 95, there be a change from “each hour” to “every two and one-half hours.” He added that in order to satisfy the needs of PERS, they also propose it say, “the agency must pay the full actuarial cost of purchase of the service.” He noted that two and one-half hours is more than sufficient. However, he added, the retirement system is reluctant to accept this and they want to be sure they receive the full actuarial cost.
Mr. Gagnier said the cost is approximately the same for 2 hours as it is for 2.5 hours, and by using 2.5 hours it should be sufficient. He said this is his organization’s proposed amendment.
Senator Raggio asked whether this amendment is in writing. Mr. Gagnier said it is not. Senator Raggio explained that any proposed amendments must be submitted in writing to the secretary or staff. Mr. Gagnier acknowledged that and said he would have the amendment written and submitted to the Senate Committee on Finance.
Mr. Gagnier called attention to his handout (Exhibit K), which was generated by a hearing that took place in the Senate Committee on Government Affairs. He remarked there were extensive discussions regarding S.B. 95 and suggestions were made as to the difficulty with the current law calling for “flat dollar caps” for pay of unused sick leave. Currently, he said, if a person with ten or more years of service retires or leaves “through no fault of their own,” that person will be paid for all sick leave in excess of 30 days up to the “flat dollar cap.” He added that the problem with caps is that they are “flat dollars,” and become outdated very quickly.
Mr. Gagnier said that since the law was first passed in 1979, the “flat-dollar caps” have been raised. He reminded the committee the last time they were increased was in 1991. He pointed out that Senator O’Donnell had suggested “flat-dollar caps” be indexed for inflation. He added that SNEA had done this. He explained they went back to the last time the “flat-dollar caps” were increased and indexed it exactly to the consumer price index and these amounts are reflected in Exhibit K.
Mr. Gagnier restated that the original purpose of the bill is to address the formula of hours of sick leave for days of retirement as an additional method, which is separate from the issue of the “flat-dollar caps.” He added that if the committee would prefer the methodology that was suggested during the meeting of the Senate Committee on Government Affairs, the figures outlined in Exhibit K would be correct. A phrase tying it to the Consumer Price Index could be added, he said.
Mr. Gagnier commented that the Fiscal Note the committee had received from the retirement system is very excessive for several reasons. He said one reason is they do not take into account the amount of pay currently received for unused sick leave. He pointed out this might be the cost to the retirement system, but it is not the cost to state government.
Senator Raggio said the committee needs an amendment from Mr. Gagnier and a new Fiscal Note based on the suggested amendments.
Mr. Barr added that the organization he represents, Nevada Corrections Association, also supports S.B. 95.
Mr. Pyne said that at the February 21, 2001, meeting of the retirement board, the board took a position in opposition to S.B. 95 based on their interpretation of the current language. He drew attention to Mr. Gagnier’s offer to prepare an amendment that would satisfy the concerns of the retirement board that any purchase of service would be paid at the full actuarial cost as determined by the system. He added if this were incorporated into the bill, it would remove the PERS opposition to S.B. 95.
Senator Raggio inquired how this bill would affect employers. He asked whether Mr. Pyne is saying that one day of service credit for each hour of unused sick leave has a potential impact on the Public Employees Retirement System between $13.5 million and $14.5 million. He asked whether these amounts would be reduced if the amendment included “two and one-half hours.”
Mr. Pyne testified that the “two and one-half hour formula” is somewhat misleading. He referred to his handout (Exhibit K), and said S.B. 95, as originally written, in Section 1, line 19, provides for the purchase of one day of service credit for each hour of unused sick leave. He said the real question is who will pay for the cost of this service credit.
Mr. Pyne said the way S.B. 95 is currently written, PERS would be providing a substantial subsidy for the purchase-of-service credit. He called attention to Exhibit L and explained this is an example of a person who retires, makes $50,000 per year, and is 56 years of age at the time of purchase. He pointed out that the actuarial cost of purchase of one year of service credit is 33.2 percent of that person’s average wage. Therefore, he said, the cost to purchase one year of time would be $50,000 times 33.2 percent, equaling $16,600. He explained that the cost of two years of service credit would be $33,200 which is the full actuarial cost. He said this would be the cost the system would need to pay for the enhanced benefit this person would receive.
Mr. Pyne emphasized that his concern with S.B. 95 is reading this formula. Senator Raggio asked whether the PERS Fiscal Note is only the cost to PERS, and does not include any other cost to state government. Mr. Pyne said, “exactly right.” He added there are two costs, one is the subsidy to PERS and the other is the additional cost to the employer. He pointed out that if Mr. Gagnier’s amendment comes to be, PERS will be fine, but the state of Nevada would incur additional costs.
Senator Raggio asked that Fiscal Notes for state government be prepared based on S.B. 95 in its current form, as well as with the proposed amendment. He said someone will need to request Fiscal Notes from the local governments that are involved. He asked whether there would be a cost to local governments. Mr. Payne said this is just for state employees.
SENATE BILL 131: Provides for additional compensation for additional duties of certain state employees. (BDR 23-607)
Bob Gagnier, Lobbyist, Executive Director, State of Nevada Employees Association (SNEA), said S.B. 131 includes two totally separate issues. He commented that the first issue deals with standby pay. He said at present time standby pay in state government is not a statutory provision. He added, “It is a creature of regulation of the state Personnel Commission.” He said standby pay, which totals 5 percent of an hourly rate, was established by the Personnel Commission. He explained that SNEA is proposing in S.B. 131 to put standby pay into statute, and at the same time increase the rate of compensation for standby.
Mr. Gagnier testified that presently, employees who are directed to remain on standby status are paid 5 percent of their regular hourly rate for every hour they are in standby status. He added that, for an average employee, this totals 85 cents an hour. He stressed this is the total they receive for remaining at a phone or with a pager, and limiting their outside activities, including not consuming alcoholic beverages.
Mr. Gagnier said this bill has been introduced in the past and at that time did not have the limitation found in Section 1, subsection 1(a), the portion that reads “at grade 42.” He noted that when they introduced this bill the first time, the highest amount of standby pay would go to doctors. He explained that the employees now being targeted, for example, are people in the information technology area. He said people who are, for example, assistant directors and currently classified to get standby, would be excluded from S.B. 131, but would still be covered by regulation at 5 percent. He noted that the 10 percent being sought would only be for those in “grade 42” and below.
Mr. Gagnier said he has no reason to doubt the Fiscal Note that has been prepared on S.B. 131. He remarked that the Department of Personnel indicated they estimate the cost at $589,000 per year, in total funds, not General Fund. He concluded this is a good step forward because many employees must limit their time-off activities, with no option as to whether they will be on standby or not. He mentioned that 85 cents an hour is insufficient for these life-limiting activities.
Senator Raggio said the Fiscal Note on Section 1 of S.B. 131 indicates a cost of just under $590,000 per year for the state and that it may be State Highway Fund or General Fund money.
Senator Neal inquired whether this average was estimated using the total number of people known that work in this particular circumstance. Mr. Gagnier said the estimate given was based on an average wage of $17 per hour. Senator Neal said this may or may not include people who are on standby. Mr. Gagnier said this is true. Senator Neal emphasized the committee needs to know who would be on standby that would actually be affected by this bill. Mr. Gagnier said the total number of classes is unknown. Within the classes, he added, these numbers would vary, leaving someone to be on standby at one time and then not be on standby again for a considerable length of time. He added there would be a substantial number of medical personnel, below the level of doctors, who would be affected.
Mr. Gagnier said people in information technology, which is a large group, would also be affected by standby. He added that if a person is involved with an ongoing project and the project goes for 24-hours a day and seven-days a week, that person would need to be on standby.
Senator Neal asked whether there is such a classification as a duty officer within state service. Mr. Gagnier said he believes there is no such classification, but in the Department of Prisons (DOP) there is a person classified as Duty Director. He added that possibly there are persons who accept the task of duty officer, but do not have that classification.
Senator Neal explained that usually such a classification as duty officer, within state service, would have a list of people who could be called out, and not necessarily be on standby. Mr. Gagnier said one group that does not receive standby is the highway maintenance personnel, and they are not normally placed on standby, but rather called out frequently. He reiterated they do not receive standby pay. He noted this is disturbing to SNEA, because these employees make themselves available whether they are called or not and receive no extra pay.
Gary H. Wolff, Lobbyist, Nevada Highway Patrol Association (NHPA), testified that his organization supports S.B. 131, with one exception. He said traditionally, over the years, NHPA has taken exception to putting pay grades on bills. He pointed out that state troopers all over the state are typically on standby status and are not paid for it. He said he would like to see an amendment to remove the “grade 42” portion of S.B. 131.
Senator Raggio asked what the salary is for a grade 42 position. Mr. Wolff answered it would be a captain in the Nevada Highway Patrol Division. Mr. Gagnier said they used a grade 42 because it has been used before in other legislation. Senator Raggio asked the Department of Personnel to provide this information.
Jeanne Greene, Director, Department of Personnel, responded the base salary for a grade 42 employee is between $49,882 and $68,445.
Mr. Gagnier said Section 2 of S.B. 131 deals with correctional officers and custody personnel up to the rank of Correctional Lieutenant, which sets up a system of pay for muster time. He pointed out that the Fiscal Note is separate from Section 1 of S.B. 131, and is slightly more than $3 million per year. He said after reviewing the Fiscal Note, he cannot find any fault and assumes the figures in the Fiscal Note are correct.
Samuel G. Covelli, Lobbyist, State President of the State of Nevada Employees Association (SNEA) said he is a Correctional Sergeant at the High Desert State Prison and spoke in favor of S.B. 131. He pointed out that a Correctional Officer coming on duty at a state prison is basically taking responsibility for a housing unit containing a minimum of 200 people. He explained that a muster is an on-shift briefing similar to what police officers on the street go through insofar as being briefed on the activities in their areas of responsibility during the previous shift.
Mr. Covelli said this is a very necessary item and he would very much like to see it implemented.
Senator Raggio asked what additional pay correctional officers get over and above standard pay. Mr. Covelli said in the southern division they receive a “remote-area differential.” He added they do receive overtime pay and shift-differential pay. Senator Raggio asked whether Mr. Covelli is aware of the large Fiscal Note on this measure. Mr. Covelli said he is aware. Senator Raggio remarked that the committee is not optimistic about finding this funding within the budget. He added, however, this issue certainly does deserve attention.
SENATE BILL 132: Provides for matching contributions by state to public employees’ deferred compensation program for state employees.
(BDR 23-606)
Bob Gagnier, Lobbyist, Executive Director, State of Nevada Employees Association (SNEA), said S.B. 132 is a new concept. Senator Raggio stated, “Presently, if we understand it, we do have a deferred compensation plan, but there are no employer contributions to the plan, correct?” Mr. Gagnier answered this is correct. He added there has been a deferred compensation plan in place since approximately 1979, which allows employees to defer a portion of their income to be used in later years to supplement their retirement. He noted it is an excellent program.
Mr. Gagnier said S.B. 132 would take deferred compensation to a new level, by following 15 other jurisdictions in providing an employer match. He explained that presently he has information from state and local governments throughout the United States and those jurisdictions offer matching contributions, ranging anywhere from $15 to 3 or 4 percent of salary. He added that many have a $50 limit as contained in S.B. 132.
Mr. Gagnier reiterated that S.B. 132 would provide that the state agency match employee’s contribution up to $50 per month. He noted the employee could defer larger amounts, but the state would only match up to $50. He said this is very similar to the plan that currently exists in the state of Maryland. He presented a Match Plan Profile (Exhibit M) listing other states and what they provide.
Mr. Gagnier stated that the Fiscal Note presented to the committee is probably low. He said the reason for this is that the Fiscal Note is based on a potential of 6,147 participants and he has been advised there are 8,700 participants in the states deferred compensation plan. He added these are total figures and not just General Fund.
Mary Keating, Chairperson, Nevada Deferred Compensation Committee, provided testimony specifically addressing the Internal Revenue Service (IRS) vehicle by which the contribution would be placed. She said the state of Nevada participates in a Section 457 Plan, which is an IRS code section. She pointed out that this code section currently has an $8,500 limitation. She said if the state of Nevada chooses to have a participatory plan, any monies placed in the Section 457 Plan would equally reduce the amount at which an individual could participate.
Ms. Keating recommended that any contribution made on behalf of the state go into a 401A Plan. She indicated she can provide to the committee and staff the specific language for an amendment.
Senator Raggio advised she should submit a written amendment to the committee regarding the 401A Plan. Ms. Keating said she would submit one. She added that as administrators of this plan, her organization is making no recommendation regarding funding.
Senator Neal inquired why the 401A Plan is the choice of the Nevada Deferred Compensation Committee. Ms. Keating said the 401A is the vehicle for public employees. She noted the Section 457 Plan, which is the plan the State of Nevada participates in, currently has an $8,500 cap, no matter who puts in the funds. She added that any contribution on behalf of the state would reduce the amount of the participant’s deferral. She said if the state chooses to match, the preference would be to go into a 401A Plan. She pointed out that it has the same withdrawal and rollover features as the Section 457 Plan for public employees.
Senator Raggio said the committee would need to have an adjusted Fiscal Note, based upon Mr. Gagnier's representations.
SENATE BILL 199: Makes appropriation for purchase and light renovation by Legislative Counsel Bureau of Capitol Apartments as described in land description verified pursuant to NRS 218.255. (BDR S-733)
Senator Raggio said S.B. 199 contains an appropriation of $1,753,100, which is included in The Executive Budget.
Lorne J. Malkiewich, Director, Legislative Counsel Bureau, testified on behalf of S.B. 199. He explained this appropriation is a “one-shot” for FY 2001, and is included in The Executive Budget for the purchase of the Capitol Apartments. He said, “This recommendation was reviewed by the committee to consult with the director, which assumed the duties of the building subcommittee this interim.” He pointed out that the proposal was brought to the committee because this property is in bankruptcy. He noted this would give the state the opportunity to acquire the property at a reasonable price.
Mr. Malkiewich said the Capitol Apartments are adjacent to the Sedway Office Building in Carson City. He commented the Sedway Office Building and the two parking lots on the west and south side form an “L.” He said the Capitol Apartments fill the “L” to make a large square. He remarked the location is perfect for future expansion or other use.
Mr. Malkiewich said the committee was concerned the property may be sold in bankruptcy, so they entered into an option to purchase. He noted this option extends from November 1, 2000 through April 30, 2001. He said the option provided that the purchase price would be $1.2 million or less depending on the appraisal amount. He explained that $553,100 is the estimated cost of renovation. He noted that “light renovation” means they do not plan to remodel the Capitol Apartments, but rather to bring it up to code for use as an office complex.
Mr. Malkiewich said the appraisal came in last week at $1,025,000, which is $75,000 under the maximum price set by the budget committee.
Mr. Malkiewich explained that, in the agreement, if the appraisal is between $1.1 million and $1.2 million, the appraisal amount would be the purchase price. He added it was also agreed that if the appraisal was below $1.1 million, the state would need court approval for that purchase amount. He said he has talked to the trustee and she will recommend to the court that the court accept the lower price of $1,025,000.
Senator Raggio requested confirmation that this appropriation is based on a purchase price of $1.2 million and that the building was appraised at $1,025,000. Mr. Malkiewich responded it was appraised at $1,025,000 or $175,000 lower than expected, and he would really like to have this additional money for remodeling.
Senator Raggio asked whether the Capitol Apartments could be purchased for $1,025,000. Mr. Malkiewich said it could, with the approval of the court. Senator Raggio asked whether S.B. 199 should be amended to provide for this. Mr. Malkiewich explained the bill could be amended by delineating $175,000 for restoration. Senator Raggio remarked the bill should reflect the delineation of $175,000 if the measure is to be properly processed, so the court can be fully aware of the amount appropriated for purchase. Mr. Malkiewich said he expects a court order in the next few weeks approving $1,025,000.
Senator Raggio inquired whether there is a deadline for the bill to get processed. Mr. Malkiewich said there is and stated if we do not proceed, the option will run out. He explained that ideally, if this legislation could be processed by the end or March 2001 the court could give notice to the few remaining tenants. He noted that it is about two-thirds empty at this time and at the end of the option, April 30, 2001, possession of the property could be transferred to the Legislative Counsel Bureau (LCB).
Senator Raggio inquired as to the committee’s feelings regarding this measure if the amendments are included. Senator Coffin commented that he was an alternate serving on the committee at the time of the first proposal of this bill and he had opposed the purchase because he didn’t feel another building was needed. He added he had concerns about the second part of the appropriation, but agrees that the purchase price and renovation price should be separated.
Senator Coffin pointed out that “light renovation” often turns into “heavy renovation” anytime you do work on an old building. He expressed concern that they are moving very fast and asked why they actually need more office space. Mr. Malkiewich said he has previously discussed this matter with John P. Comeaux, Director, Department of Administration, and they agree that $1 million is a lot to spend for a parking lot, but they believe they could make better use of it. He added that one of the reasons this property works well for the LCB is it would be an investment.
Mr. Malkiewich remarked, “When you acquire physical property, it is something you are going to use eventually. Are we in desperate need for it now? Could we use more space? Sure.”
Mr. Malkiewich explained there are a number of things that could be done with this property, including freeing up room in the existing building by moving on-site storage into it. He said LCB does not need the entire Capitol Apartments, but possibly another branch of the state could use it. He noted it contains 31 apartment units.
Mr. Malkiewich concluded that it is possible to acquire this building at a time when the price is reasonable, before it is deteriorated so much that the renovation costs would go much higher. He added this would be a good purchase for LCB because they can put a lot of “sweat equity” into it. He noted LCB has full-time buildings, grounds, and media services staff that could do work during the interim without additional expense to the state for renovation. He said they would mainly be putting in sprinklers and cleaning carpets, and walls.
Mr. Malkiewich pointed out that by having the property in the name of the state, it would give the state flexibility in the future. He said, “It could be twenty years before LCB would expand to the point where we would use the whole thing, but we would have it at a time when we can get it at a reasonable price.”
Senator Coffin asked what the current off-site storage costs are for LCB to maintain sufficient storage space. Mr. Malkiewich said he will get those numbers for the committee, and currently they use a facility on U.S. Highway 50 for storage purposes.
Senator Raggio explained it would be appropriate to prepare an amendment so that S.B. 199 could be considered as amended. He requested that Mr. Malkiewich work with the committee staff to prepare the amendment specifying a maximum appropriation for the purchase and a reduction in the total appropriation.
BILL DRAFT REQUEST (BDR) 23-1137: An act relating to state employees: Increasing the amount of longevity payments to state employees and providing other matters properly relating thereto. (Later introduced as S.B. 276.)
Senator Coffin commented that this bill is in line with other state employee benefit enhancements. Senator Raggio asked whether this proposal would double the amount from $75 to $150 for longevity pay. Senator Coffin said that it would.
SENATOR COFFIN MOVED FOR INTRODUCTION OF BDR 23-1137.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
SENATE BILL 136: Eliminates exclusion of certain employees from provisions requiring additional compensation for overtime. (BDR 53-306)
S.B. 136 was not discussed at this meeting.
Senator Raggio adjourned the meeting at 9:44 a.m.
Debra Petrelli
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE: